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Preliminary Information Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14c-5(d)(2))
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Definitive Information Statement
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CCUR HOLDINGS, INC.
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(Name of Registrant as Specified In Its Charter)
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By Order of the Board of Directors,
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/s/ Igor Volshteyn
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Igor Volshteyn
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President and Chief Operating Officer
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1.
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On or after the 20th day following the mailing of this information statement, the Company will effect a 3,000-for-1 Reverse Stock Split of the Company’s Common Stock by filing a Certificate of Amendment to the Certificate of Incorporation (the “Certificate of Amendment”) with the Secretary of State of the State of Delaware and will become effective immediately thereafter (the “Effective Date”).
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2.
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On or after the 20th day following the mailing of this information statement, American Stock Transfer & Trust Company, LLC will process the Reverse Stock Split of the Company’s Common Stock at the rate of 3,000-for-1, whereby every 3,000 shares of the Company’s existing Common Stock will be combined and converted into one share of new CCUR Common Stock. No fractional shares will be issued, and:
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Stockholders who hold fewer than 3,000 shares of existing Common Stock on the Effective Date will receive cash in the amount of $2.86 per share of existing pre-reverse split Common Stock.
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Stockholders who hold 3,000 or more shares of existing Common Stock on the Effective Date will receive:
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one share of new Common Stock for every 3,000 shares of existing Common Stock held on the Effective Date; and
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cash in lieu of any fractional share of new Common Stock that such holder would otherwise be entitled to receive on the basis of $2.86 per share of existing Common Stock.
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3.
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All stock certificates evidencing ownership of the Company’s outstanding Common Stock 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.
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By Order of the Board of Directors,
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/s/ Igor Volshteyn
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Igor Volshteyn
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President and Chief Operating Officer
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Stockholders who hold fewer than 3,000 shares of existing Common Stock on the Effective Date will receive cash in the amount of $2.86 per share of existing pre-reverse split Common Stock and will cease to be stockholders of CCUR after the Reverse Stock Split. The amount of cash each holder of fractional common stock will receive will be calculated by multiplying the number of shares of existing Common Stock held by the stockholder on the Effective Date by $2.86.
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Stockholders who hold 3,000 or more shares of existing Common Stock on the Effective Date will receive:
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one share of new common stock for every 3,000 shares of existing Common Stock held on the Effective Date; and
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cash in lieu of any fractional share of new Common Stock that such holder would otherwise be entitled to receive on the basis of $2.86 per share of existing Common Stock. For detailed information concerning the terms and provisions of the Reverse Stock Split, see “Special Factors.”
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3,496 stockholders currently hold fewer than 3,000 shares of Common Stock; and
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235 stockholders currently hold 3,000 or more shares of Common Stock.
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JDS1, LLC (“JDS1”), who owns approximately 3,586,269 shares of our Common Stock, Dimensional Fund Advisors LP (“Dimensional”), who owns approximately 597,562 shares of our Common Stock, and each of our directors and our executive officers, except Matthew Gerritsen and Jonathan Tegge, currently own more than 3,000 shares of the Company’s Common Stock and, therefore, expect to continue as stockholders of the Company after the implementation of the Reverse Stock Split. As a result of the Reverse Stock Split, the Company’s officers and directors, JDS1 and Dimensional will go from a minority ownership position (approximately 48.5% of the Company’s outstanding Common Stock) to a majority ownership position (approximately 53.0% of the Company’s outstanding Common Stock following completion of the Reverse Stock Split) as follows:
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Ownership Prior to
Reverse Stock Split
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Ownership After
Reverse Stock Split
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Name and Position
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Actually
Owned
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Beneficially
Owned
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Actually
Owned
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Beneficially
Owned
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Igor Volshteyn,
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56,005(1)
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*
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18
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*
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President and Chief Operating Officer
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Jonathan Tegge,
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0
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*
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0
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*
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Chief Financial Officer
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Matthew Gerritsen,
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0(2)
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*
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0
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*
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Secretary and General Counsel
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David Nicol,
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30,000(3)
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*
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10
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*
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Director
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Robert Pons,
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20,000(3)
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*
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6
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*
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Director
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Steven G. Singer,
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62,200(4)
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*
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20
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*
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Director
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JDS1, LLC
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3,586,269
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39.70%
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1,195
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43.66%
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Dimensional Fund Advisors LP
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597,562
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6.66%
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199
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7.27%
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(1)
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Includes 20,000 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.
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(2)
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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.
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(3)
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Includes 7,500 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.
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(4)
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Includes 10,000 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.
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Unlike stockholders who own fewer than 3,000 shares of CCUR’s Common Stock on the Effective Date, JDS1, Dimensional and each of our directors and our executive officers, except Matthew Gerritsen and Jonathan Tegge, will have the opportunity to participate in the potential upside of any increase in the value of the Company’s Common Stock after the Reverse Stock Split.
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The Company expects each director and executive officer to retain their respective current positions as directors or executive officers of the Company following the Reverse Stock Split, although they are not obligated to do so.
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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.
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an annual management fee equal to 2% of the fair market value of the Assets (as defined in the Management Agreement), payable quarterly in arrears, which payment may be made in cash or through the issuance of contractual stock appreciation rights (“SARs”);
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a performance fee in respect of each performance period, which shall be equal to 20% of the appreciation of end-of-fiscal year net asset value as calculated pursuant to the 2019 CCUR Bonus Plan, payable quarterly in arrears through the issuance of SARs; and
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a quarterly cash payment of $50,000 for full satisfaction of the related expenses of the Asset Manager.
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The Board has obtained a report from ValueScope, Inc. (“ValueScope”), an outside financial advisor, as to the fairness of the consideration to be received by holders of Common Stock who would otherwise hold fractional shares immediately following 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. The report by ValueScope arrived at a fair price to pay of $2.86 per outstanding share. ValueScope has over 30 years’ experience providing financial services and include valuation services among their core services.
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The Company has not required the approval of the Reverse Stock Split by the holders of a majority of its unaffiliated stockholders. For additional information, see “Special Factors-Factors Considered by the Board and Company Affiliates as to the Fairness of the Reverse Stock Split-Procedural Factors Disfavoring the Reverse Stock Split.”
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The Company has not appointed a special committee of independent directors or other unaffiliated persons to determine the fairness of the terms of the Reverse Stock Split. For additional information concerning the appointment of a special committee, see “Special Factors-Factors Considered by the Board and Company Affiliates as to the Fairness of the Reverse Stock Split-Procedural Factors Disfavoring the Reverse Stock Split.”
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The Company does not intend to appoint any representative (or appoint an unaffiliated representative) to act solely on behalf of unaffiliated security holders for purposes of negotiation of the terms of the transaction described in this information statement or preparing a report concerning the fairness of the Reverse Stock Split. For additional information concerning the appointment of an unaffiliated representative to act on behalf of unaffiliated stockholders, see “Special Factors-Factors Considered by the Board and Company Affiliates as to the Fairness of the Reverse Stock Split-Procedural Factors Disfavoring the Reverse Stock Split.”
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The fairness of the Reverse Stock Split;
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The cash consideration to be paid to stockholders who would otherwise be entitled to receive a fractional share of new Company Common Stock as a result of the Reverse Stock Split; and
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The benefits and consequences of the Reverse Stock Split.
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Section 228 of the Delaware General Corporation Law (“DGCL”) provides that the written consent of the holders of outstanding shares of voting capital stock having not less than the minimum number of votes which would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted can approve an action in lieu of conducting a special stockholders’ meeting convened for the specific purpose of such action.
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On the Record Date for notice of action by written consent of the Company’s stockholders included at the beginning of this information statement, the Company had 8,972,524 shares of Common Stock outstanding, each of which was entitled to one vote.
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The Company’s directors and executive officers beneficially own an aggregate of 1.87% of its issued and outstanding stock, and JDS1 and Dimensional beneficially owns 39.70% and 6.66% respectively, of the Company’s issued and outstanding stock.
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On December 21, 2020, the Company received the Written Consents from the Consenting Stockholders, approving the Reverse Stock Split. The Consenting Stockholders, and the number of shares of Common Stock owned by each as of the Record Date, is as follows:
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JDS1 LLC –3,586,269 shares of Common Stock;
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Edidin Partners LLC – 288,000 shares of Common Stock;
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David S. Oros – 207,128 shares of Common Stock;
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Live Microsystems Inc. – 168,348 shares of Common Stock;
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Airb Trust – 137,818 shares of Common Stock;
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Neb Trust – 137,818 shares of Common Stock; and
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Zoab Trust – 137,818 shares of Common Stock.
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Pursuant to Section 228(e) of the DGCL, we are delivering notice of action by written consent of CCUR’s stockholders to stockholders of record as of the close of business on the Record Date.
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No further stockholder vote, action or consent is necessary, and there will not be a special meeting of stockholders. WE ARE NOT ASKING YOU FOR A PROXY AND WE REQUEST THAT YOU DO NOT SEND US A PROXY. For additional information concerning the stockholders' approval of the reverse stock split, see “The Reverse Stock Split- Stockholder Approval of the Reverse Stock Split; Affiliated Stockholder Ownership.”
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The Company’s Common Stock is traded over-the-counter on the OTCQB market maintained by the OTC Markets Group Inc. under the symbol “CCUR.”
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On December 18, 2020, shortly before the public announcement of the proposed Reverse Stock Split, the high and low prices for the Company’s common stock were $2.99 and $2.82, respectively. For price ranges of CCUR’s common stock, see “Market for Common Stock and Dividend Policy.”
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The average trading volume of the Company’s Common Stock in the 90 days prior to December 21, 2020 was 7,343 shares per day and the daily dollar volume during such period was approximately $22,079.
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As of December 21, 2020, the Company had 8,972,524 shares of common stock issued and outstanding.
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Q:
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When will the Reverse Stock Split be effective?
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A.
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The Reverse Stock Split will become effective upon our filing of the certificate of amendment to our certificate of incorporation with the Delaware Secretary of State (the “Effective Date”), which we plan to do on or about 20 days after the mailing of this information statement. In addition, the processing of the Reverse Stock Split on the OTCQB is subject to completion of regulatory review by the Financial Industry Regulatory Authority. The date on which the certificate of amendment is accepted for filing by the Delaware Secretary of State is sometimes referred to in this information statement as the “effective date of the reverse stock split.”
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When will the Company cease to be an SEC reporting public company?
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The registration of the Company’s Common Stock under the Exchange Act will be terminated upon the filing of a Form 15 with the SEC, which the Company will do as promptly as possible after we file the certificate of amendment to our certificate of incorporation with the Delaware Secretary of State. After our Form 15 is filed with and accepted by the SEC, the registration of our Common Stock, as well as our duty to file reports with the SEC under Sections 13(a) and 15(d) of the Exchange Act will terminate and our Common Stock will no longer be publicly traded on the over the OTCQB.
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What are some of the advantages of the Reverse Stock Split?
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A.
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The Board believes that the Reverse Stock Split will have the following advantages, among others:
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Terminating the registration of the Company’s Common Stock will eliminate the expenses, time and effort related to the Company’s registration and periodic reporting obligations under the Exchange Act, as well as the related stockholder servicing expenses associated with being an SEC reporting company and subject to the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), which are estimated to be in excess of $1,000,000 annually. The Company, its affiliates and remaining stockholders are expected to benefit from the anticipated savings in regulatory and SEC compliance-related costs;
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Providing complete liquidity for the Company’s unaffiliated stockholders holding fewer than 3,000 shares and partial liquidity for other unaffiliated stockholders where liquidity has been lacking in the market, and doing so at a fair price through a transaction in which unaffiliated stockholders may be eligible to receive capital gains tax treatment for any realized gains, and avoid paying brokerage commissions and fees; and
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Allowing the Company’s officers and employees to focus exclusively on business goals and objectives.
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What are some of the disadvantages of the Reverse Stock Split?
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The Board believes that the Reverse Stock Split will have the following disadvantages, among others:
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Stockholders owning fewer than 3,000 shares of the Company’s Common Stock will not have an opportunity to liquidate their shares at a time and for a price of their choosing; instead, they will be cashed out and will no longer be stockholders of the Company and will not have the opportunity to participate in or benefit from any future potential appreciation in the Company’s value.
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Stockholders remaining in the Company following the Reverse Stock Split will no longer have available all of the information regarding the Company’s operations and results that is currently available in its filings
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quarterly financial information;
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information concerning the Company’s properties, assets and business;
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management’s annual and quarterly reports on the Company’s financial condition, results of operations and liquidity and capital resources;
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information concerning the Company’s directors and executive officers and their compensation, stock ownership and transactions in the Company’s Common Stock;
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information concerning the stock ownership of the Company’s principal stockholders;
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information concerning, and copies of, the Company’s corporate and organizational documents and material contracts and agreements; and
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information concerning material transactions that the Company enters into.
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The Company anticipates that it will no longer prepare proxy materials for its annual meetings of stockholders, and its stockholders may elect to act by written consent of stockholders in lieu of holding annual meetings of stockholders. The Company will no longer be subject to the liability provisions of the Exchange Act, and will no longer be subject to the provisions of the Sarbanes-Oxley Act, and its officers will no longer be required to certify the accuracy of the Company’s financial statements.
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Following the Reverse Stock Split, the Company’s remaining stockholders will no longer be able to trade the Company’s Common Stock on the over the OTCQB, the effect of which is a loss of liquidity.
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The Company will be less likely to be able to use stock to acquire other companies; and it will be more difficult for the Company to access the public equity markets.
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The Company has been publicly held for several years; what are some of the reasons for “going private” now?
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The Board believes the Company currently derives no material benefit from its public company status. In addition to the direct financial burden from being a public company, the thin trading market in its Common Stock has not provided liquidity to the Company’s stockholders, nor does the Company expect that it will be able to use its stock as currency for acquisitions or other transactions in the future. These factors, combined with the implementation costs and ongoing expenses to be incurred by the Company during 2020 related to the internal controls requirements of Section 404 of the Sarbanes-Oxley Act, led the Board to conclude that the Company should terminate its public company reporting status.
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What are some of the factors supporting the Board’s determination to approve the Reverse Stock Split?
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The Board and certain affiliates of the Company based the determination to approve the Reverse Stock Split on several factors. Importantly, they considered the relative advantages and disadvantages discussed below and under “Special Factors - Background of the Reverse Stock Split; Alternatives Considered by the Board.” “- Reasons for the Reverse Stock Split.” “- Factors Considered by the Board and Company Affiliates as to the Fairness of the Reverse Stock Split” and “- Position of the Company Regarding the Fairness of the Reverse Stock Split.” The Board also considered certain other factors, including:
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The analysis regarding the Reverse Stock Split of the Board’s discussions and conclusions about the fairness, from a financial point of view based upon the report of ValueScope, of the pre-split share price of $2.86 to be paid for fractional shares to our stockholders owning less than 3,000 shares or a number of shares not evenly divisible by 3,000.
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The projected tangible and intangible cost savings to the Company by terminating its public company status.
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Attempts by Company stockholders to achieve liquidity in the existing trading market would be frustrated due to the low average daily trading volume of the Company’s Common Stock on the OTCQB. Only a small number of shares could be purchased or sold on the OTCQB without the risk of significantly increasing or decreasing the trading price.
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What is the total cost of the Reverse Stock Split to the Company?
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The Company estimates that the total cost of the Reverse Stock Split will be approximately $3,325,000 - consisting of approximately $3.2 million to cash out fractional shares, approximately $75,000 in legal and accounting fees, approximately $10,000 related to the mailing of this information statement, approximately $20,000 for the Exchange Agent (as defined below) and $20,000 in other costs and expenses to effect the Reverse Stock Split. This total amount could be larger or smaller if the estimated number of fractional shares that will be outstanding after the Reverse Stock Split changes as a result of purchases or sales of Common Stock by unaffiliated stockholders.
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Why didn’t the Board form a committee of disinterested (or unaffiliated) directors to approve the Reverse Stock Split or require the approval of the holders of a majority of shares which are unaffiliated with the Board or management?
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The Board considered whether, and determined not, to form a committee of disinterested directors or representatives to approve the Reverse Stock Split for several reasons. First, the Reverse Stock Split will be applied equally to the Company’s Common Stock, whether held by affiliated or unaffiliated stockholders, and the interests of unaffiliated and affiliated stockholders are the same. Second, the Board is comprised of persons with many years of corporate experience. Finally, the Board believes its long-standing familiarity with the Company, its financial condition, and its prospects make the time and expense of a special committee or independent representative unwarranted.
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Will I have appraisal rights in connection with the Reverse Stock Split?
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No. Neither Delaware law nor the Company’s Certificate of Incorporation, as amended, or bylaws provide you with appraisal rights in connection with the Reverse Stock Split.
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Will I be able to sell my shares following the Reverse Stock Split?
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The Company’s Common Stock is currently quoted on the OTCQB market. After the Reverse Stock Split, the Company’s Common Stock will no longer be eligible to be quoted on the OTCQB. As a result, stockholders may no longer have the ability of selling their shares of Common Stock on the public market, and there may be no effective trading market for the Company’s Common Stock.
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What will be my tax consequences if I hold 3,000 or more shares of Common Stock at the time of the Reverse Stock Split and remain a stockholder of the Company after the Reverse Stock Split?
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Depending on your individual situation and depending upon whether you receive cash in addition to shares of new Common Stock as a result of the Reverse Stock Split, the Reverse Stock Split may give rise to certain income tax consequences:
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If you (1) continue to hold the Company’s Common Stock immediately after the Reverse Stock Split, and (2) receive no cash as a result of the Reverse Stock Split, you should not recognize any gain or loss in the Reverse Stock Split. Your aggregate adjusted tax basis in your shares of the Company’s Common Stock held immediately after the Reverse Stock Split should be equal to your aggregate adjusted tax basis in your shares of Common Stock held immediately prior to the Reverse Stock Split and you should have the same holding period in the Company’s Common Stock as you had in such stock immediately prior to the Reverse Stock Split.
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If you both receive cash as a result of the Reverse Stock Split and continue to hold the Company’s Common Stock immediately after the Reverse Stock Split, you generally will recognize gain, but not loss, in an amount equal to the lesser of (1) the excess of the sum of aggregate fair market value of the shares of the Company’s Common Stock held by you immediately after the Reverse Stock Split plus the cash received over your adjusted tax basis in the shares held by you immediately before the Reverse Stock Split, or (2) the amount of cash received in the Reverse Stock Split. Your aggregate adjusted tax basis in your shares of the Company’s Common Stock held immediately after the Reverse Stock Split will be equal to your aggregate adjusted tax basis in your shares of the Company’s Common Stock held immediately prior to the Reverse Stock Split, increased by any gain recognized in the Reverse Stock Split, and decreased by the amount of cash received in the Reverse Stock Split.
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What will be my tax consequences if I hold fewer than 3,000 shares of Common Stock at the time of the Reverse Stock Split and do not remain a stockholder of the Company after the Reverse Stock Split?
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A.
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Depending on your individual situation, the Reverse Stock Split may give rise to certain income tax consequences. If you (1) receive cash in exchange for a fractional share as a result of the Reverse Stock Split, (2) do not continue to hold any Common Stock immediately after the Reverse Stock Split, and (3) you are not related to any person or entity which holds Common Stock immediately after the Reverse Stock Split, you will recognize capital gain or loss. For additional information concerning the potential federal income tax consequences of the Reverse Stock Split. See “Special Factors-Certain Material Federal Income Tax Consequences.”
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Will I continue to receive information about the Company if I remain a stockholder?
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Stockholders may under certain circumstances obtain information from the Company in accordance with the requirements of the DGCL upon submitting a written request to the Company which specifies the information sought and the purpose of the request. Under Delaware law, the Company may withhold information from a stockholder who does not have a “proper purpose” or otherwise fails to comply with statutory requirements.
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Q:
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Should I send in my stock certificates now?
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A.
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No. The Company has appointed American Stock Transfer & Trust Company, LLC to act as exchange and paying agent (the “Exchange Agent”) for holders of Common Stock in connection with the Reverse Stock Split. You may contact the Exchange Agent by mail at TWiener@astfinancial.com or by phone at 718-921-8544.
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Q:
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Does the Company have any plans for growth and will the Reverse Stock Split enhance the value of the Company’s Common Stock?
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A.
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Company management always hopes that the Company will grow and has strategic plans related to its growth. These plans are speculative and contain no factual information which the Board considers material to the Company’s stockholders.
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1.
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Cash-Out merger. The Board considered a “cash-out” merger, in which the Company would merge with an entity controlled by certain of the Company’s executive officers and directors and certain affiliates of the Company, that would result in many of the unaffiliated holders of Common Stock receiving cash for their shares. The Board discussed the fact that, as with a sale transaction, in a cash-out merger, all holders of Common Stock, other than the members of the buy-out group, would be paid cash for their shares whether or not they wanted to retain their equity position. A cash-out merger would be more costly to the Company and stockholders who were not invited to participate as members of the buy-out group would have all of their Common Stock acquired in the cash-out merger, would not continue as stockholders of the acquiring or surviving entity, and therefore would not have the opportunity to participate in any growth in
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2.
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Sale of the Company or substantially all of its assets. Under this alternative, CCUR would attempt to sell (subject to the stockholders’ approval) the Company or substantially all of the assets of the Company. However, without costly engagement of an investment banking firm or a business broker to market the Company or its assets, sale efforts may be ineffective in reaching potential buyers (if any). The Board concluded that, under the current conditions, the interest in the market to purchase the shares or assets of the Company is extremely low or absent. Further, this alternative would take an extended amount of time while likely incurring significant legal and audit fees to complete, and, there would be no assurance that a potential buyer would be found or, if found, such potential buyer would proceed to completion of the acquisition.
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3.
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Dissolution of the Company and liquidation of its assets. Under this alternative, CCUR would (subject to the stockholders’ approval) dissolve the Company in accordance with the DGCL and wind up and liquidate the Company’s assets. However, winding up and selling (as part of liquidation) the Company’s assets would require costly engagement of an investment banking firm or a business broker to market the Company’s assets in order to reach potential buyers (if any). In addition, the dissolution of the Company would result in the loss of the Company’s net operating losses (“NOLs”), which the Company can use to offset future taxable income. Even after filing a Certificate of Dissolution, the Company may still be deemed to have such number of record stockholders in excess of the Exchange Act Rule 12g-4 thresholds. Accordingly, the Company would likely be required to continue its reporting under the Exchange Act until the time all assets and liabilities of the Company are wound up and sorted out pursuant to state law, which would continue to be costly for the Company.
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4.
|
Other transactions. The Board also considered other possible transactions, such as purchases of shares on the open market or an issuer tender offer. However, the Board concluded that these and similar transactions would be more costly, including due to higher legal costs and other transactional expenses, lack certainty in reducing the number of stockholders of record to fewer than 300 and/or take a longer time to effectuate.
|
1.
|
forming a special committee of the Board to consider and review the Reverse Stock Split and to make a recommendation to the full board as to the approval of the Reverse Stock Split. The Board is comprised solely of independent directors, so the Board as a whole could function in a similar method, and the Board decided that it did not need to retain separate, independent advisors from those already engaged by the Company in connection with the Reverse Stock Split. In addition, while each of the directors own Common Stock, the Board noted that no officer or director owns a significant amount of Common Stock, which as a group, only beneficially owns less than 3.0%. In addition, the Board discussed the fact that the Reverse Stock Split applies equally to all stockholders, including the directors and officers, and that no director, executive officer or affiliate of the Company would receive any benefit not received by any other stockholder. Based on these factors, the Board determined not to appoint a special committee.
|
2.
|
requiring the approval of the Reverse Stock Split by the holders of a majority of the shares of Common Stock held by our unaffiliated stockholders. In considering whether to require the approval of our unaffiliated stockholders, the Board discussed the fact that stockholders would have the option to remain stockholders of the Company if they purchase sufficient shares to bring their holdings to at least 3,000 shares immediately prior to the Effective Date, the fact that the Reverse Stock Split applies equally to all stockholders, the fact that the Company’s affiliate stockholders’ percentage ownership would likely not significantly change after the Reverse Stock Split and the likely inability to have a majority of the non-affiliate stockholders participate in such a vote. Based on these factors, the Board determined not to require the approval of the Reverse Stock Split by the holders of a majority of the shares of Common Stock held by unaffiliated stockholders of the Company.
|
•
|
Current and historical market prices of the Company’s Common Stock. On January 27, 2021, immediately after the announcement of the issues with our aviation deposits, the high and low prices for the Company’s common stock were $2.97 and $2.58, respectively. Between January 27 and February 12, the volume weighted average price for the Company’s common stock was $2.86 a share.
|
•
|
Valuation report. The report of ValueScope, setting out the valuation of the Common Stock, including the methods used with such report, were considered.
|
•
|
Other valuation methods not considered. The Board and Company Affiliates did not consider the following valuation methods because such information was not available to, or does not apply to, the Company:
|
-
|
Prices paid in previous purchases by the Company of its securities during the past two years. The Board did not consider this valuation method because while the Company had made purchases of securities during the past two years in connection with a stock repurchase plan, the number of shares repurchased was limited, and those shares were repurchased during the first quarter of 2019 at market prices, which is not reflective of the Company’s current stock price.
|
-
|
Liquidation value. The Board does not believe liquidation value to be a reliable indicator of its value because the liquidation of its assets through one or more transactions would not provide a price reflective of the value of such assets because a portion of the assets cannot be easily sold. The Board was unable, as a result of the uncertainty regarding the additional costs and taxes, to establish a reliable estimate of liquidation value.
|
-
|
Going concern value. The Board did not assign a “going concern” value to the Company’s Common Stock. A going concern valuation is an attempt to value a company as an operating business. It is often expressed as the present value of future earnings of a company in the context of the returns an investor could expect to receive on the investment over a future period. The Board determined that the cost of such a valuation far outweighed any benefit and that the valuation would not be material to its discussion concerning whether the offer was fair to stockholders, because the Company itself was not for sale, and only a small percentage of the Company’s stock may be repurchased in connection with the Reverse Stock Split.
|
-
|
Firm offers of which CCUR is aware made by an unaffiliated person during the past two years for the merger or consolidation of CCUR with another company, the sale or other transfer of assets and purchase of CCUR’s securities enabling the holder to exercise control over CCUR. The Company is not aware of any such offers in the past two years.
|
-
|
audited financial statements and quarterly financial information;
|
-
|
information concerning Company properties, assets and business;
|
-
|
management’s annual and quarterly reports on the Company’s financial condition, results of operations and liquidity and capital resources;
|
-
|
information concerning the Company’s directors and executive officers and their compensation, stock ownership and transactions in the Company’s Common Stock;
|
-
|
information concerning the stock ownership of the Company’s principal stockholders;
|
-
|
information concerning, and copies of, the Company’s corporate and organizational documents and its material contracts and agreements; and
|
-
|
information concerning material transactions that the Company enters into.
|
•
|
The cash consideration of $2.86 per share to be paid for fractional shares represents the volume weighted average price for the two week trading period after the Company announced the issues with its aviation deposits;
|
•
|
Those unaffiliated stockholders who continue as stockholders following the Reverse Stock Split will maintain a substantially similar percentage ownership that they had prior to the Reverse Stock Split;
|
•
|
Cashed-out stockholders will be unable to participate in the future growth of the Company, if any;
|
•
|
The potential loss of liquidity in shares of the Company’s Common Stock does not appear to be a significant loss given the historically small trading volume of the Company’s Common Stock over the past 12 months; and
|
•
|
Any detriment associated with the reduction in public information available regarding the Company’s business, financial conditions and results of operations will be offset by the savings in costs and officer and employee time expected to result from termination of its registration and periodic reporting obligations; and
|
•
|
The fact that the transaction was structured so as to not require the approval of at least a majority of the unaffiliated stockholders;
|
•
|
The absence of a special committee or independent representative for the Company’s unaffiliated stockholders;
|
•
|
The equal application of the Reverse Stock Split on all shares of Common Stock, whether held by an affiliated or unaffiliated stockholder;
|
•
|
The experience of the Board;
|
•
|
Unaffiliated stockholders will have an opportunity to liquidate their historically illiquid holdings at a premium and without brokerage fees; and
|
•
|
Unaffiliated stockholders can decide to remain stockholders of the Company after the Reverse Stock Split by simply acquiring sufficient shares so that they hold at least 3,000 shares in their account immediately prior to the Reverse Stock Split.
|
|
| |
Ownership Prior to
Reverse Stock Split
|
| |
Ownership After
Reverse Stock Split
|
||||||
Name and Position
|
| |
Actually
Owned
|
| |
Beneficially
Owned
|
| |
Actually
Owned
|
| |
Beneficially
Owned
|
Igor Volshteyn,
|
| |
56,005(1)
|
| |
*
|
| |
18
|
| |
*
|
President and Chief Operating Officer
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
Jonathan Tegge,
|
| |
0
|
| |
*
|
| |
0
|
| |
*
|
Chief Financial Officer
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
Matthew Gerritsen,
|
| |
0(2)
|
| |
*
|
| |
0
|
| |
*
|
Secretary and General Counsel
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
David Nicol,
|
| |
30,000(3)
|
| |
*
|
| |
10
|
| |
*
|
Director
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
Robert Pons,
|
| |
20,000(3)
|
| |
*
|
| |
6
|
| |
*
|
Director
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
Steven G. Singer,
|
| |
62,200(4)
|
| |
*
|
| |
20
|
| |
*
|
Director
|
| |
|
| |
|
| |
|
| |
|
|
| |
|
| |
|
| |
|
| |
|
JDS1, LLC
|
| |
3,586,269
|
| |
39.70%
|
| |
1,195
|
| |
43.66%
|
|
| |
|
| |
|
| |
|
| |
|
Dimensional Fund Advisors LP
|
| |
597,562
|
| |
6.66%
|
| |
199
|
| |
7.27%
|
(5)
|
Includes 20,000 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.
|
(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 7,500 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.
|
(8)
|
Includes 10,000 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.
|
•
|
reviewed the Company’s financial statements for the fiscal years ended June 30, 2014 through June 30, 2020 and the interim period ended December 31, 2020;
|
•
|
reviewed certain documents recently filed publicly with the Securities and Exchange Commission;
|
•
|
interviewed senior management of the Company telephonically regarding past and current performance and prospects for the Company going forward;
|
•
|
reviewed pricing data and multiples for comparable publicly traded companies in the industry;
|
•
|
reviewed historical trading prices of the Company's Common Stock; and
|
•
|
conducted such financial analyses and reviewed such other information as ValueScope deemed appropriate in order to render its report.
|
Summary
|
| |
Price
|
| |
P/B
|
FMV of Stock Price for Transaction[4]
|
| |
$2.86
|
| |
0.46
|
[1]
|
Volume Weighted Average Price
|
[2]
|
On January 26, 2021 CCUR disclosed the potential inability to collect approximately $14M in aviation deposits.
|
[3]
|
On February 11, 2021 CCUR disclosed that it would write down the full $13.8M in aviation deposits due to an inability to collect.
|
[4]
|
Equal to the VWAP since January 27, 2021, the first trading day since the 8K disclosure of uncertainty related to $14 mm of aircraft deposits.
|
•
|
as of the Effective Date. have his or her shares of Common Stock converted into shares of post-Reverse Stock Split Common Stock and will receive one new share of Common Stock for every 3,000 shares of pre-Reverse Stock Split Common Stock in his or her account; and
|
•
|
receive cash in lieu of any fractional share they would otherwise have been entitled on the basis of $2.86 per share of existing Common Stock not divisible by 3,000.
|
Auditors' and Accountants Fees
|
| |
624,000
|
Attorneys' Fees
|
| |
64,000
|
Transfer Agent, SEC Filings, OTC Annual Fees & Stockholder Relations Fees
|
| |
78,000
|
D&O Insurance Premiums & Employee Public Company Administration
|
| |
202,000
|
Total
|
| |
968,000
|
•
|
an individual who is a citizen or resident of the United States;
|
•
|
a corporation or other entity taxed as a corporation created or organized in or under the laws of the United States or any political subdivision thereof;
|
•
|
an estate the income of which is subject to U.S. federal income tax regardless of its source; or
|
•
|
a trust (A) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more “U.S. persons” (as defined in the Code) have the authority to control all substantial decisions of the trust, or (B) that has a valid election in effect to be treated as a U.S. person.
|
•
|
Stockholders who hold fewer than 3,000 shares of existing Common Stock on the Effective Date will receive cash in the amount of $2.86 per share of existing pre-reverse split Common Stock.
|
•
|
Stockholders who hold 3,000 or more shares of existing Common Stock on the Effective Date will receive:
|
-
|
one share of new Common Stock for every 3,000 shares of existing Common Stock held on the Effective Date; and
|
-
|
cash in lieu of any fractional share of new Common Stock that such holder would otherwise be entitled to receive on the basis of $2.86 per share of existing Common Stock.
|
•
|
purchase a sufficient number of shares of Common Stock on the open market and have them registered in your name and consolidated with your current record account if you are a record holder, or have them entered in your account with a nominee, such as your broker or bank, in which you currently hold shares of Common Stock, so that you hold at least 3,000 shares of Common Stock in your record account immediately prior to the Effective Date of the Reverse Stock Split; or
|
•
|
if applicable, consolidate your record accounts, or your accounts with nominees, so that you hold at least 3,000 shares of Common Stock in a single record account immediately prior to the Effective Date of the Reverse Stock Split.
|
•
|
$3.2 million in cash consideration to stockholders in lieu of fractional shares of new Common Stock;
|
•
|
$75,000 in legal and accounting fees;
|
•
|
$10,000 for printing, mailing and other costs in connection with the mailing of this information statement;
|
•
|
$20,000 to American Stock Transfer & Trust Company, LLC for exchange agent services; and
|
•
|
$20,000 for miscellaneous expenses.
|
Quarter Ended
|
| |
High Bid
|
| |
Low Bid
|
Fiscal Year 2021
|
| |
|
| |
|
March 31, 2021 (as of March 25, 2021)
|
| |
$3.04
|
| |
$2.58
|
December 31, 2020
|
| |
$3.34
|
| |
$2.70
|
September 30, 2020
|
| |
$3.31
|
| |
$2.90
|
|
| |
|
| |
|
Fiscal Year 2020
|
| |
|
| |
|
June 30, 2020
|
| |
$3.75
|
| |
$3.05
|
March 31, 2020
|
| |
$5.00
|
| |
$3.00
|
December 31, 2019
|
| |
$4.50
|
| |
$3.35
|
September 30, 2019
|
| |
$3.95
|
| |
$3.25
|
|
| |
|
| |
|
Fiscal Year 2019
|
| |
|
| |
|
June 30, 2019
|
| |
$4.05
|
| |
$3.00
|
March 31, 2019
|
| |
$3.85
|
| |
$3.30
|
December 31, 2018
|
| |
$4.85
|
| |
$3.26
|
September 30, 2018
|
| |
$5.36
|
| |
$4.80
|
Name
|
| |
Age
|
| |
Positions
|
| |
Term
|
Igor Volshteyn
|
| |
44
|
| |
President and Chief Operating Officer
|
| |
January 2019 - Present
|
Jonathan Tegge
|
| |
31
|
| |
Chief Financial Officer
|
| |
September 2020 - Present
|
Matthew Gerritsen
|
| |
52
|
| |
Secretary and General Counsel
|
| |
September 2020 - Present
|
David Nicol
|
| |
75
|
| |
Director
|
| |
February 2018 - Present
|
Robert Pons
|
| |
64
|
| |
Director
|
| |
June 2020 - Present
|
Steven G. Singer
|
| |
59
|
| |
Director
|
| |
July 2017 - Present
|
Name
|
| |
Number of Shares and
Nature of Beneficial Ownership
|
| |
Ownership
Percentage
|
Principal Stockholders:
|
| |
|
| |
|
JDS1, LLC
|
| |
3,586,269(1)
|
| |
39.7%
|
Dimensional Fund Advisors LP
|
| |
597,562(2)
|
| |
6.7%
|
Directors and Named Executive Officers:
|
| |
|
| |
|
David Nicol
|
| |
30,000(3)
|
| |
*
|
Robert Pons
|
| |
20,000(3)
|
| |
*
|
Steven G. Singer
|
| |
62,200(4)
|
| |
*
|
Igor Volshteyn
|
| |
56,005(5)
|
| |
*
|
Jonathan Tegge
|
| |
0
|
| |
*
|
Name
|
| |
Number of Shares and
Nature of Beneficial Ownership
|
| |
Ownership
Percentage
|
Matthew Gerritsen
|
| |
0(6)
|
| |
*
|
Directors and executive officers as a group (6 persons)
|
| |
168,205(7)
|
| |
1.87%
|
*
|
Less than 1%.
|
(1)
|
This information is based on a Schedule 13D/A filed with the SEC on February 21, 2019 by JDS1, LLC, whose address is 2200 Fletcher Avenue, Suite 501, Fort Lee, New Jersey 07024.
|
(2)
|
This information is based on a Schedule 13G/A filed with the SEC on February 12, 2020 by Dimensional Fund Advisors LP (“Dimensional”), whose address is Building One, 6300 Bee Cave Road, Austin, Texas 78746. The Schedule 13G/A reports that Dimensional has sole voting power over 583,755 shares, shared voting power over no shares, and sole investment power over all of the shares shown. Dimensional furnishes investment advice to four investment companies registered under the Investment Company Act of 1940 and serves as investment manager or sub-advisor to certain other commingled funds, group trusts and separate accounts (such investment companies, funds, trusts and accounts, collectively referred to as the “Funds”). In certain cases, subsidiaries of Dimensional may act as an adviser or sub-adviser to certain Funds. In its role as investment adviser, sub-adviser and/or manager, Dimensional or its subsidiaries may possess voting and/or investment power over the securities of the Company owned by the Funds and may be deemed to be the beneficial owner of these shares. However, all securities reported on the Schedule 13G/A are owned by the Funds, and Dimensional and its subsidiaries disclaim beneficial ownership of all of the shares shown.
|
(3)
|
Includes 7,500 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.
|
(4)
|
Includes 10,000 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.
|
(5)
|
Includes 20,000 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.
|
(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.
|
•
|
an annual management fee equal to 2% of the fair market value of the Assets (as defined in the Management Agreement), payable quarterly in arrears, which payment may be made in cash or through the issuance of SARs;
|
•
|
a performance fee in respect of each performance period, which shall be equal to 20% of the appreciation of end-of-fiscal year net asset value as calculated pursuant to the 2019 CCUR Bonus Plan, payable quarterly in arrears through the issuance of SARs; and
|
•
|
a quarterly cash payment of $50,000 for full satisfaction of the related expenses of the Asset Manager.
|
|
| |
For Fiscal Year Ended
June 30,
|
|||
|
| |
2020
|
| |
2019
|
|
| |
US$
(audited)
|
| |
US$
(audited)
|
Statement of operation data:
|
| |
|
| |
|
Revenues
|
| |
$5,873
|
| |
$3,456
|
Operating expenses
|
| |
7,364
|
| |
6,213
|
Loss from operations
|
| |
(1,491)
|
| |
2,757
|
Other income
|
| |
19
|
| |
249
|
Net income
|
| |
13,029
|
| |
550
|
Earnings per share, basic
|
| |
1.39
|
| |
0.08
|
Earnings per share, diluted
|
| |
1.38
|
| |
0.08
|
Weighted average ordinary shares outstanding, basic
|
| |
8,772,969
|
| |
8,941,413
|
Weighted average ordinary shares outstanding, diluted
|
| |
8,832,519
|
| |
8,958,462
|
|
| |
June 30, 2020
|
| |
June 30, 2019
|
Balance sheet data
|
| |
|
| |
|
Current assets
|
| |
$54,655
|
| |
$50,233
|
Total assets
|
| |
69,850
|
| |
62,474
|
Current liabilities
|
| |
3,644
|
| |
1,410
|
Total liabilities
|
| |
8,561
|
| |
10,118
|
Total equity
|
| |
61,289
|
| |
52,356
|
|
| |
For the three months ended
December 31,
|
| |
For the six months ended
December 31,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
|
| |
US$
|
| |
US$
|
| |
US$
|
| |
US$
|
Statement of operation data:
|
| |
|
| |
|
| |
|
| |
|
Revenues
|
| |
$1,197
|
| |
$1,787
|
| |
$2,107
|
| |
$3,518
|
Operating expenses
|
| |
15,073
|
| |
1,196
|
| |
16,307
|
| |
2,876
|
Loss (income) from operations
|
| |
(13,876)
|
| |
591
|
| |
(14,200)
|
| |
642
|
Other interest income
|
| |
679
|
| |
2,145
|
| |
2,039
|
| |
4,282
|
Net (loss) income
|
| |
(8,334)
|
| |
3,034
|
| |
(7,967)
|
| |
6,595
|
Earnings (loss) per share, basic
|
| |
(0.95)
|
| |
0.31
|
| |
(0.90)
|
| |
0.70
|
|
| |
For the three months ended
December 31,
|
| |
For the six months ended
December 31,
|
||||||
|
| |
2020
|
| |
2019
|
| |
2020
|
| |
2019
|
|
| |
US$
|
| |
US$
|
| |
US$
|
| |
US$
|
Earnings (loss) per share, diluted
|
| |
(0.95)
|
| |
0.31
|
| |
(0.90)
|
| |
0.70
|
Weighted average ordinary shares outstanding, basic
|
| |
8,800,171
|
| |
8,758,710
|
| |
8,798,928
|
| |
8,757,433
|
Weighted average ordinary shares outstanding, diluted
|
| |
8,800,171
|
| |
8,840,870
|
| |
8,798,928
|
| |
8,825,583
|
|
| |
December 31, 2020
|
| |
June 30, 2020
|
Balance sheet data
|
| |
|
| |
|
Current assets
|
| |
$46,729
|
| |
$54,655
|
Total assets
|
| |
64,889
|
| |
69,850
|
Current liabilities
|
| |
3,605
|
| |
3,644
|
Total liabilities
|
| |
8,629
|
| |
8,561
|
Total equity
|
| |
56,889
|
| |
61,289
|
•
|
A review of the Company’s financial statements for the fiscal years ended June 30, 2014 through June 30, 2020 and the interim period ended December 31, 2020
|
•
|
A review of the Company’s recent filings with the Securities and Exchange Commission
|
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A review of pricing data and multiples for comparable publicly traded companies in the industry
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Discussions with Company management regarding past and current performance and prospects for the Company going forward
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Discussions with Company management regarding the loss of nearly $14 million in aviation deposits as a result of alleged fraud by a third party escrow agent
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An application of appropriate valuation techniques and procedures
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LM Funding America, Inc. (NasdaqCM: LMFA)
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IOU Financial Inc. (TSXV: IOU)
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TruFin plc (AIM:TRU)
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