References herein to “CCUR Holdings,” the “Company,” “we,” “us,” or “our” refer to CCUR Holdings, Inc. and its subsidiaries on a consolidated basis, unless the context specifically indicates otherwise.

We are a holding company owning and seeking to own subsidiaries engaged in a variety of business operations. Following the disposition of our legacy operating businesses in calendar year 2017, we began identifying business alternatives to redeploy the proceeds of such divestitures. As of December 31, ~~2019,~~2020, we had two existing operating segments: (i) merchant cash ~~advance~~advances (“MCA”) and other financial services operations, conducted primarily through our subsidiary LM Capital Solutions, LLC (d/b/a “LuxeMark Capital”) (“LMCS”), and (ii) real estate operations, conducted through our subsidiary Recur Holdings LLC (“Recur”) and its subsidiaries.

On July 17, 2020, LMCS entered into a series of transactions resulting in its recapitalization. The transactions included an amendment to LMCS’ operating agreement 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 transactions 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. 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~~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 ~~MCA~~operational and ~~real estate operating segments, we actively evaluate acquisitions~~financial performance will depend on future developments, including the duration and spread of ~~additional businesses or operating assets, either as part~~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 ~~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~~which are uncertain 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.cannot be predicted.

The unaudited consolidated financial statements included herein have been prepared by the Company ~~pursuant~~in conformity with the instructions to Form 10-Q and Article 8 of Regulation S-X and the related rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to applicable rules and regulations. In the opinion of management, all adjustments of a normal recurring nature which were considered necessary for a fair presentation have been included. The year-end consolidated balance sheet data as of June 30, ~~2019~~2020 was derived from our audited consolidated financial ~~statements and may not include all disclosures required by U.S. GAAP.~~statements. The results of operations for the three ~~months~~ and six months ended December 31, ~~2019~~2020 are not necessarily indicative of the results to be expected for the entire year. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020 filed with the SEC on ~~August 28, 2019.~~September 15, 2020.

We meet the SEC’s definition of a “Smaller Reporting Company,” and therefore qualify for the SEC’s reduced disclosure requirements for smaller reporting companies. The significant accounting policies used in preparing these consolidated financial statements are consistent with the accounting policies described in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019,~~2020, except for those as described below.

~~Goodwill~~Principles of Consolidation and ~~Intangible Assets~~Reclassifications

~~Goodwill represents~~The consolidated financial statements include the ~~excess of purchase price over~~Company and its subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts were reclassified to conform to the ~~fair value of the~~current period presentation. These reclassifications did not affect total revenues, costs and expenses, net income, assets, of businesses acquired. We review goodwill at least annually for impairment. In our evaluation of goodwill impairment, we perform a qualitative assessment that requires management judgment and the use of estimates to determine if it is more likely than not that the fair value of a reporting unit is less than its carrying amount. An entity has an unconditional option to bypass the qualitative assessment for any reporting unit and proceed directly to performing the quantitative goodwill impairment test. An entity may resume performing the qualitative assessment in any subsequent period. We perform our annual impairment tests as of December 31 of each year, unless circumstances indicate the need to accelerate the timing of the tests. We completed our annual impairment test of goodwill as of December 31, 2019 and concluded that there was no impairment.

Intangible assets include trade name, non-competition agreements, and syndicate participant/originator relationships, are subject to amortization over their respective useful lives, and are classified in definite-lived intangibles,liabilities, stockholders’ deficit, or net ~~in the accompanying consolidated balance sheets. These intangibles are evaluated for impairment whenever events~~operating, investing, or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. If facts and circumstances indicate that the carrying value might not be recoverable, projected undiscounted netfinancing cash flows associated with the related assets or groups of assets over their estimated remaining useful lives is compared against their respective carrying amounts. If an asset is found to be impaired, the impairment charge will be measured as the amount by which the carrying amount of an asset exceeds its fair value.

We have potential exposure to transaction losses as a result of ~~uncollectability~~uncollectibility of commercial mortgage and other loans. We base our reserve estimates on prior charge-off history and currently available information that is indicative of a transaction loss. We reflect additions to the reserve in current operating results, while we make charges to the reserve when we incur losses. We reflect recoveries in the reserve for transaction losses as collected.

We have the intent and ability to hold these loans to maturity or payoff, and as such, have classified these loans as held-for-investment. These loans are reported on the balance sheet at the outstanding principal balance adjusted for any charge-offs, allowance for loan losses, and deferred fees or costs. As of December 31, ~~2019,~~2020, we have not recorded any charge-offs, and believe that an allowance for loan losses is not required.

Land investment assets are stated at acquired cost. Pre-acquisition and development costs are capitalized. Gains and losses resulting from the disposition of real estate are included in operations. As of December 31, ~~2019,~~2020, all land held by the Company is considered to be held for use and development.

Investments in unconsolidated entities over which we have significant influence are accounted for under the equity method of accounting. Under the equity method of accounting, the Company does not consolidate the investment’s financial statements within its consolidated financial statements. Equity method investments are initially recorded at cost, then our proportional share of the underlying net income or loss is recorded as equity in net loss from equity method investments in our statement of operations, with a corresponding increase or decrease to the carrying value of the investment. Distributions received from the investee reduce our carrying value of the investment and are recorded in the consolidated statements of cash flows using the cumulative earnings approach. These investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable. There were no indicators of impairment related to our equity method investments for the three and six months ended December 31, 2020.

Basic earnings ~~(loss)~~ per share is computed by dividing net income ~~(loss)~~ by the weighted-average number of common shares outstanding during each fiscal period. Diluted earnings ~~(loss)~~ per share is computed by dividing net income ~~(loss)~~ by the weighted-average number of common shares outstanding during each fiscal period including dilutive common share equivalents. Under the treasury stock method, incremental shares representing the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued are included in the computation. Weighted-average common share equivalents of ~~7,598~~8,179 and ~~10,937~~7,598 for the three months ended December 31, 2020 and 2019, respectively, and ~~2018,~~10,021 and 8,644 for the six months ended December 31, 2020 and 2019, respectively, were excluded from the calculation, as their effect would have been anti-dilutive. Weighted-average common share equivalents of 8,644 and 13,420 for the six months ended December 31, 2019 and 2018, respectively, were excluded from the calculation, as their effect would have been anti-dilutive.

The following table presents a reconciliation of the numerators and denominators of basic and diluted net income ~~(loss)~~ per share for the periods indicated:

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly fashion between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be either recorded or disclosed at fair value, we consider the most advantageous market in which ittransactions would ~~transact~~occur and we consider assumptions that market participants would use when pricing the asset or liability.

Accounting Standards ~~Codification (ASC) Topic 820,~~Update (“ASU”) 2018-13, Fair Value ~~Measurements and Disclosures~~Measurement (Accounting Standards Codification (“ASC”) 820): Disclosure Framework Changes to the Disclosure Requirements for Fair Value Measurement, requires certain disclosures ~~around~~regarding fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which are determined by the lowest level input that is significant to the fair value measurement in its entirety. ~~These~~The levels are:

Our investment portfolio consists of money market funds, equity securities, commercial mortgage loans, and corporate debt. All highly liquid investments with an original ~~maturity~~maturities of three months or less when purchased are considered to be cash equivalents. All cash equivalents are carried at cost less any unamortized premium or discount, which approximates fair value. All investments with original maturities of more than three months when purchased are classified as available-for-sale, trading, or held-to-maturity investments. Our marketable securities, other than ~~warrants and~~ equity securities, are classified as available-for-sale, and are reported at fair value, with unrealized gains and losses, net of tax, reported in the accompanying consolidated balance sheets in stockholders’ equity as a component of accumulated other comprehensive income or loss. ~~Warrants to purchase stock are held as trading~~Interest on securities ~~and are~~is reported ~~at fair value with gains and losses reported within~~in the accompanying consolidated statements of ~~operations. Interest on securities is recorded~~operations in interest income. Dividends paid by securities are ~~recorded~~reported in the accompanying consolidated statements of operations in other income. ~~Any realized~~Realized gains or losses are reported in the accompanying consolidated statements of ~~operations. Equity securities are reported at fair value, with unrealized gains and losses resulting from adjustments to fair value reported within our consolidated statements of operations.~~operations in net realized gain on investments.

We ~~use~~used Level 3 inputs to determine the fair value of our preferred stock investments. The Company has elected the measurement alternative and will record the investments at cost adjusted for observable price changes for an identical or similar investment of the same issuer. Observable price changes and impairment indicators will be assessed each reporting period.

We also use Level 3 inputs to determine the fair value of our contingent consideration and common stock purchase warrants related to our acquisition of the assets of Old LuxeMark (the “LuxeMark Acquisition”). The Company uses a Monte Carlo simulation technique to value the performance-based contingent consideration and common stock purchase warrants. This technique is a probabilistic model which relies on repeated random sampling to obtain numerical results. The concluded values represent the means of those results.

We provide fair value measurement disclosures of our available-for-sale securities in accordance with one of the three levels of fair value measurement. Our financial assets and liabilities that were measured at fair value on a recurring basis as of December 31, ~~2019~~2020 and June 30, ~~2019~~2020 are as follows:

The carrying amounts of certain financial instruments, includingcash equivalents, MCAs, and ~~MCAs,~~other advances, approximate their fair values due to their short-term nature. Included in available-for-sale securities is a loan which we purchased from the syndicated loan market. Quotations are available for this security on the syndicated loan market. During the three months ended December 31, 2020, this loan was exchanged for a preferred stock investment. The ~~following table provides a reconciliation~~fair value of ~~the beginning~~our syndicated portion of this loan was $0 and ~~ending balances for the~~$3,240,000 as of December 31, 2020 and June 30, 2020, respectively. The Company’s assets and obligations measured at fair value using Level 3 ~~inputs:~~inputs were valued at $2,686,000 as of December 31, 2020 and $2,883,000 as of June 30, 2020.

In ~~February 2018,~~October 2020, the FASB issued ASU No. ~~2018-02,~~2020-08, ~~Reclassification of Certain Tax Effects from Accumulated~~Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other ~~Comprehensive Income (Topic 220)~~Costs (“ASU ~~2018-02”~~2020-08”), ~~which permits entities~~and ASU No. 2020-10, Codification Improvements (“ASU 2020-10”). ASU 2020-08 and ASU 2020-10 provide changes to reclassify the tax effects stranded in accumulated other comprehensive income as a result of recent United States federal tax reforms to retained earnings. Entities can elect to apply the guidance retrospectivelyclarify or ~~in the period of adoption.~~improve existing guidance. This guidance is effective for fiscal years beginning after December 15, ~~2018 and interim periods therein, with early adoption permitted. We adopted the new guidance effective July 1, 2019 with no material impact on our consolidated financial statements or disclosures.~~

~~In November 2019, the FASB issued ASU 2019-10,~~~~Financial Instruments – Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842): Effective Dates~~ ~~(“ASU 2019-10”). Among other things, ASU 2019-10 provides that ASU 2016-13,~~~~Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~ (“ASU 2016-13”) will be effective for Public Business Entities that are SEC filers, excluding smaller reporting companies such as the Company, for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. For all other entities, including smaller reporting companies like the Company, ASU 2016-13 will be effective for fiscal years beginning after December 15, 2022,2020, including interim periods within those fiscal years. ~~For all entities, early~~Early adoption ~~will continue to be~~is not permitted. We are currently evaluating the impact that ASU ~~2016-13~~2020-08 and ASU 2020-10 will have on our consolidated financial statements and disclosures.

In December 2019 the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes” (“ASU 2019-12”). ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. We are currently evaluating the impact that ASU 2019-12 will have on our consolidated financial statements and disclosures.

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Investments

Fixed-Maturity and Equity Securities Investments

The following tables provide information relating to investments in fixed-maturity and equity securities:

December 31, 2019	Cost		Unrealized Gains		Unrealized Losses			Fair Value
December 31, 2020										Cost		Unrealized Gains		Unrealized Losses			Fair Value

	(Amounts in thousands)									(Amounts in thousands)
Equity securities
Common stock and common stock options	$	4,098	$	69	$	(1,411	)	$	2,756	$	9,577	$	1,119	$	(2,300	)	$	8,396
Common stock warrants		288		-		(288	)		-
Preferred stock		2,883		-		-			2,883		4,709		1,757		(1,593	)		4,873
Total equity securities	$	7,269	$	69	$	(1,699	)	$	5,639	$	14,286	$	2,876	$	(3,893	)	$	13,269

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value			Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Fixed-maturity securities
Corporate debt	$	29,752	$	138	$	(7,114	)	$	22,776	$	13,880	$	443	$	(1,430	)	$	12,893
Total fixed-maturity securities	$	29,752	$	138	$	(7,114	)	$	22,776	$	13,880	$	443	$	(1,430	)	$	12,893

June 30, 2019	Cost		Unrealized Gains		Unrealized Losses			Fair Value
June 30, 2020										Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Amounts in thousands)									(Amounts in thousands)
Equity securities
Common stock	$	5,706	$	-	$	(1,185	)	$	4,521
Common stock warrants		288		-		(287	)		1
Common stock and common stock options										$	6,746	$	203	$	(2,460	)	$	4,489
Preferred stock		2,883		-		-			2,883		2,883		-		-			2,883
Total equity securities	$	8,877	$	-	$	(1,472	)	$	7,405	$	9,629	$	203	$	(2,460	)	$	7,372

	Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
Fixed-maturity securities
Corporate debt	$	25,761	$	-	$	(5,368	)	$	20,393	$	26,594	$	455	$	(5,620	)	$	21,429
Total fixed-maturity securities	$	25,761	$	-	$	(5,368	)	$	20,393	$	26,594	$	455	$	(5,620	)	$	21,429

During the three months ended December 31, 2020, we reported unrealized gains on equity securities, net, of $2,285,000 within our consolidated statements of operations. During the three months ended December 31, 2019, we reported ~~$627,000 of~~ unrealized ~~loss~~losses on equity securities, net, of $627,000 within our consolidated ~~statement~~statements of operations. ~~Additionally,~~During the three months ended December 31, 2020 and 2019, we reported $876,000 and $843,000 of realized ~~gain~~gains on the sale of debt and equity securities within our consolidated ~~statement~~statements of operations, respectively.

During the six months ended December 31, 2020, we reported unrealized gains on equity securities, net, of $1,240,000 within our consolidated statements of operations. During the six months ended December 31, 2019, we reported ~~$158,000 of~~ unrealized ~~loss~~losses on equity securities, net, of $158,000 within our consolidated ~~statement~~statements of ~~operations,~~operations. During the six months ended December 31, 2020 and 2019, we reported $1,408,000 and $1,919,000 of realized ~~gain~~gains on the sale of debt and equity securities within our consolidated ~~statement~~statements of ~~operations.~~operations, respectively.

Maturities of Fixed-Maturity Securities Available-for-Sale

The amortized cost and fair values of fixed-maturity securities available for sale as of December 31, ~~2019~~2020 are shown by contractual maturity in the table below. Actual maturities can differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~Fixed-Maturity Securities

	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(Amounts in thousands)
Fixed-maturity securities
					(Amounts in thousands)
Due after one year through three years	$	21,769	$	15,245	$	5,698	$	4,268
Due after three years through five years		-		-		-		-
Due after five years through 10 years		7,983		7,531
Due after five years through ten years						8,182		8,625
Total fixed-maturity securities	$	29,752	$	22,776	$	13,880	$	12,893

Mortgage and Commercial Loans Receivable

We had ~~$7,127,000~~$3,738,000 of loan assets as of December 31, ~~2019,~~2020, of which ~~$1,627,000 are~~$1,958,000 were mortgage loans secured by real property in certain markets throughout the United States, and the remaining balance was comprised of loans to ~~MCA originators. A summary~~Funders. Summaries of mortgage loan activity for the six months ended December 31, 2020 and 2019 isare as follows:

Provision
Principal Deferred for Loan Carrying
Mortgage Loans Receivable Balance Fees Loss Value
(Amounts in thousands)
Balance at July 1, 2019 $ 4,195 $ (81 ) $ - $ 4,114
Additions during the period:
Amortization of deferred fees - 67 - 67
Deductions during the period:
Collections of principal (2,554 ) - - (2,554 )
Balance at December 31, 2019 $ 1,641 $ (14 ) $ - $ 1,627

Mortgage Loans Receivable

~~On July 1, 2019, one~~

	Principal Balance			Deferred Fees/ Prepaid Interest			Accrued Interest		Carrying Value

	(Amounts in thousands)
Balance at July 1, 2020	$	1,738		$	(86	)	$	43	$	1,695
Additions during the period:
New mortgage loans		2,432			-			-		2,432
Additions to deferred fees		-			(40	)		-		(40	)
Amortization of deferred fees		-			43			-		43
Interest due at maturity		-			-			12		12
Deductions during the period:
Collections of principal		(2,184	)		-			-		(2,184	)
Balance at December 31, 2020	$	1,986		$	(83	)	$	55	$	1,958

Balance at July 1, 2019	$	4,195		$	(84	)	$	3	$	4,114
Additions during the period:
Amortization of deferred fees		-			67			-		67
Interest due at maturity		-			-			-		-
Deductions during the period:
Collections of principal		(2,554	)		-			-		(2,554	)
Balance at December 31, 2019	$	1,641		$	(17	)	$	3	$	1,627

Summaries of ~~our customers defaulted on a $1,400,000 commercial mortgage loan. This~~ loan ~~was repaid in full during~~activity to Funders for the ~~three~~six months ended December 31, ~~2019.~~

~~A summary of loan activity to MCA originators for the period is~~2020 and 2019 are as follows (amounts in thousands):

Other Loans Receivable Carrying
Value
Balance at July 1, 2019 $ 2,750
Additions during the period:
Borrowings 2,750
Balance at December 31, 2019 $ 5,500

Other Loans Receivable

Balance at July 1, 2020	$	3,878
Deductions during the period:
Collections of principal		(2,098	)
Balance at December 31, 2020	$	1,780

Balance at July 1, 2019	$	2,750
Additions during the period:
Borrowings		2,750
Balance at December 31, 2019	$	5,500

Loans reported under “Other Loans Receivable” have two-year, ~~interest only~~interest-only terms, bearing interest at 17.0% per annum, and are to a single ~~MCA originator.~~Funder. The borrower may pay down principal without incurring a prepayment penalty and paid down $2,098,000 of principal during the six months ended December 31, 2020. See Note 16 for further discussion.

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Advances Receivable, net

Total advances receivable, net, as of December 31, 2020, consisted of the following:

															Provision
						Provision					Advance		Deferred		for Credit			Carrying
	Advance		Deferred			for Credit			Carrying		Principal		Fees		Losses			Value
	Principal		Fees			Losses			Value
	(Amounts in thousands)										(Amounts in thousands)
Merchant cash advances	$	4,905	$	-		$	(359	)	$	4,546	$	120	$	-	$	(9	)	$	111
Aviation advance		5,000		(193	)		-			4,807
Aviation advances												13,760		-		(13,760	)		-
Advances receivable, net	$	9,905	$	(193	)	$	(359	)	$	9,353	$	13,880	$	-	$	(13,769	)	$	111

Total advances receivable, net, as of June 30, 2020, consisted of the following:

						Provision
	Advance		Deferred			for Credit			Carrying
	Principal		Fees			Losses			Value

	(Amounts in thousands)
Merchant cash advances	$	1,919	$	-		$	(124	)	$	1,795
Aviation advances		10,000		(359	)		-			9,641
Advances receivable, net	$	11,919	$	(359	)	$	(124	)	$	11,436

As of December 31, ~~2019,~~2020, 100% of MCAs in which we hold a participation interest were ~~originated~~funded through a single Funder. As of June 30, 2020, 100% of MCAs in which we held a participation interest were funded through three ~~MCA originators.~~Funders.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Changes in the allowance for MCA credit losses are as follows (amounts in thousands):

Allowance for credit losses, July 1, 2019 $ 736
Provision for credit losses 396
Receivables charged off (911 )
Recoveries of receivables previously charged off 138
Allowance for credit losses, December 31, 2019 $ 359

Allowance for credit losses, July 1, 2020	$	124
Provision for credit losses		13,827
Receivables charged off		(99	)
Recoveries of receivables previously charged off		1
Sale of portfolios		(84	)
Effects of exchange rate differences		1
Allowance for credit losses, December 31, 2020	$	13,770

Allowance for credit losses, July 1, 2019	$	736
Provision for credit losses		396
Receivables charged off		(911	)
Recoveries of receivables previously charged off		138
Allowance for credit losses, December 31, 2019	$	359

During the ~~three and~~ six months ended December 31, 2020 and 2019, we provided ~~$5,000,000~~$9,000,000 and $8,000,000 of ~~cash~~gross advances, ~~to an aviation business~~respectively, to fund ~~the deposit required for the recipient’s~~ aircraft ~~purchases for up~~purchasers’ deposits to ~~four months,~~purchase aircraft in exchange for paying us ~~an upfront~~a fee and a guaranty of the full repayment obligation from the principal of ~~the~~a third-party business. These deposits are typically outstanding for less than six months. The prepaid fees are netted against the principal balance, earned over the ~~four-month~~ advance period, and ~~are~~ reported as part of MCA and other financial services income within the ~~statement~~accompanying consolidated statements of operations. During the six months ended December 31, 2020 and 2019, we collected $5,000,000 and $3,000,000, respectively, of these advances. See Note 16 for further discussion.

Equity Method Investments

Our investment in Spartacus Sponsor LLC (the “Sponsor”) of $3,850,000 is accounted for under the equity method and is included within equity method investment in our consolidated balance sheet as of December 31, 2020. Our ownership percentage in the Sponsor, which is recorded under the equity method investment, is 38.5%. The Company could potentially increase its investment through grants of additional units up to 44.5% subject to certain return hurdles for the Sponsor. As of December 31, 2020, the Sponsor controls all of the founders’ shares of Spartacus Acquisition Corporation (“Spartacus”). During the three and six months ended December 31, ~~2019~~2020, we ~~collected $3,000,000~~recorded $53,000 of ~~these advances.~~losses from this investment as equity in net loss from equity method investment within our consolidated statements of operations.

On October 19, 2020, Spartacus completed its initial public offering (“IPO”). In connection with the IPO, the Sponsor, of which the Company is a Managing Member and holds 50% voting control, purchased 8,104,244 warrants at a price of $1.00 per warrant. Each ~~quarter, we review~~warrant is exercisable into one share of Spartacus’ Class A common stock at a price of $11.50 per share. Spartacus is a newly organized special-purpose acquisition company formed for the ~~carrying value~~purpose of ~~this cash advance, and determine if~~effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, which is referred to as an ~~impairment reserve~~initial business combination.

Summarized financial information relating to our equity method investment is ~~necessary.~~as follows (amounts in thousands):

	Three Months Ended December 31,		Six Months Ended December 31,
	2020		2020
Statements of Operations:

Operating loss	$	138	$	138
Net loss	$	138	$	138

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	December 31, 2020
	(Amounts in thousands)
Balance Sheets:

Current assets	$	204,162
Current liabilities		10
Long-term liabilitiies		199,286

6.7.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses ~~consist~~as of December 31, 2020 and June 30, 2020 consisted of the following:

					December 31, 2020		June 30, 2020
	December 31, 2019		June 30, 2019		(Amounts in thousands)
	(Amounts in thousands)
Accounts payable, trade	$	199	$	221	$	228	$	294
Lease liability, short-term portion						75		225
Dividends payable, short-term portion						37		53
Unrecognized income from research and development tax credits						20		35
Accrued compensation		412		56		287		29
Unrecognized income from research and development tax credits		35		35
Other accrued expenses		240		348		43		167
Total accounts payable and accrued expenses	$	886	$	660	$	690	$	803

7.8.

Pensions

~~Defined Benefit~~Defined-Benefit Plans

The following table provides the components of net periodic benefit cost of our German ~~defined benefit~~defined-benefit pension plans recognized in earnings for the three ~~months~~ and six months ended December 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands):

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

	Three Months Ended December 31,						Six Months Ended December 31,						Three Months Ended December 31,					Six Months Ended December 31,
	2019			2018			2019			2018			2020		2019			2020		2019
Net Periodic Benefit Cost
Interest cost	$	8		$	15		$	15		$	30		$	10	$	8		$	19	$	15
Expected return on plan assets		(1	)		(1	)		(2	)		(2	)		1		(1	)		2		(2	)
Recognized actuarial loss		22			16			44			32			22		22			44		44
Net periodic benefit cost	$	29		$	30		$	57		$	60		$	33	$	29		$	65	$	57

~~Term Loan~~

In fiscal year 2019, we entered into an 18-month, $1,600,000 term loan with a commercial bank to finance part of a land purchase for the purpose of entitling and reselling the land. The term loan has an interest rate of 4.53% (2.75% plus the one-month London Interbank Offered Rate (the “LIBOR”)) at December 31, 2019, with interest-only payments due monthly. All principal and any unpaid interest are due in full upon maturity in November 2020. As of December 31, 2019, we have capitalized $44,000 of interest from this loan as part of the land cost.

Income Taxes

The Company and its subsidiaries file income tax returns in the ~~U. S.~~U.S. federal jurisdiction and in various states and foreign jurisdictions. With a few exceptions, we are no longer subject to ~~U. S.~~U.S. federal, state and local, or ~~non-U. S.~~non-U.S. income tax examinations by tax authorities for fiscal years before ~~1999.~~2000.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The domestic and foreign components of (loss) income ~~(loss)~~before income taxes and equity in net loss from ~~operations before~~equity method investment are as follows (amounts in thousands):

	Three Months Ended December 31,						Six Months Ended December 31,
	2020			2019			2020			2019

United States	$	(9,965	)	$	3,058		$	(9,349	)	$	6,832
Foreign		(41	)		(41	)		(59	)		(81	)
(Loss) income before income taxes and equity in net loss from equity method investment	$	(10,006	)	$	3,017		$	(9,408	)	$	6,751

The components of the provision for income taxes are as follows (amounts in thousands):

Three Months Ended
December 31, Six Months Ended
December 31,
2019 2018 2019 2018
United States $ 3,058 $ (1,470 ) $ 6,832 $ (1,428 )
Foreign (41 ) (60 ) (81 ) (103 )
Income (loss) from operations $ 3,017 $ (1,530 ) $ 6,751 $ (1,531 )

~~The components of the (benefit) provision for income taxes are as follows (amounts in thousands):~~

										Three Months Ended December 31,						Six Months Ended December 31,
	Three Months Ended December 31,					Six Months Ended December 31,				2020			2019			2020			2019
	2019			2018		2019		2018
Domestic	$	(17	)	$	-	$	156	$	2	$	(1,725	)	$	(17	)	$	(1,494	)	$	156
Foreign		-			-		-		-		-			-			-			-
Total	$	(17	)	$	-	$	156	$	2	$	(1,725	)	$	(17	)	$	(1,494	)	$	156

~~NOLs~~Net Operating Losses (“NOLs”)

As of June 30, ~~2019,~~2020, we had U.S. federal NOL carryforwards of approximately ~~$58,429,000~~$51,438,000 for income tax purposes, of which none ~~expire~~expired in our fiscal year 2020, and the remainder expire at various dates through our fiscal year 2037; however, with the enactment of the Tax Cuts and Jobs Act ~~(the “TCJA”)~~ on December 22, 2017, federal NOLs generated in taxable years beginning after December 31, 2017 now have no expiration date. We recently completed an evaluation of the potential effect of Section 382 of the Internal Revenue Code (the “IRC”) on our ability to utilize these NOLs. The study concluded that we have not had an ownership change for the period from July 22, 1993 to June 30, ~~2019;~~2020; therefore, the NOLs will not be subject to limitation under Section 382. If we experience an ownership change as defined in Section 382 of the IRC, our ability to use these NOLs will be substantially limited, which could therefore significantly impair the value of that asset.

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

As of June 30, ~~2019,~~2020, we had state ~~NOLs~~NOL carryforwards of ~~$42,563,000~~$22,856,000 and foreign ~~NOLs~~NOL carryforwards of ~~$8,296,000.~~$8,258,000. The state ~~NOLs~~NOL carryforwards expire according to the rules of each state, and expiration will occur ~~between fiscal year 2020 and~~at various dates through our fiscal year 2037. The foreign ~~NOLs~~NOL carryforwards expire according to the rules of each country. As of June 30, ~~2019,~~2020, the foreign NOLs can be carried forward indefinitely in each country, although some countries do restrict the amount of NOL that can be used in a given tax year.

Deferred Tax Assets and Related Valuation Allowances

In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. In determining whether or not a valuation allowance for tax assets is needed, we evaluate all available evidence, both positive and negative, including: trends in operating income or losses; currently available information about future years; future reversals of existing taxable temporary differences; future taxable income exclusive of reversing temporary differences and carryforwards; taxable income in prior carryback years if carryback is permitted under the tax law; and tax planning strategies that would accelerate taxable amounts to utilize expiring carryforwards, change the character of taxable and deductible amounts from ordinary income or loss to capital gain or loss, or switch from tax-exempt to taxable investments. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. As of ~~December 31, 2019,~~June 30, 2020, we ~~maintained~~have released the valuation allowance on our U. S. deferred tax assets, with the exception of certain federal and state NOLs and credits expected to expire before usage. We continue to maintain a full valuation allowance on our ~~net~~German deferred tax assets in all jurisdictions, with the exception of the $237,500 alternative minimum tax (“AMT”) credit carryforward that is now considered refundable in post-fiscal year 2019 after the enactment of the TCJA. The Company has a total of $950,000 in federal AMT credit carryforward. Of this amount, $475,000 was pending receipt as of December 31, 2019 and received in the third quarter of our fiscal year 2020. The remaining $475,000 has an indefinite life and will be 50% refundable on the Company’s June 30, 2020 tax return, with the remainder being refundable by fiscal year 2022.

asset.

We do not have sufficient evidence of future income to conclude that it is more likely than not that the Company will realize its entire deferred tax inventory in any of its jurisdictions (United States and Germany). Therefore, we have recognized a full valuation allowance on the Company’s deferred tax inventory, other than the alternative minimum tax credit. We reevaluate our conclusions regarding the valuation allowance quarterly and will make appropriate adjustments as necessary in the period in which significant changes occur.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Unrecognized Tax Benefits

We have evaluated our unrecognized tax benefits and determined that there has not been a material change in the amount of such benefits for the three months ~~or six months~~ ended December 31, ~~2019.~~2020.

10.

Stock-Based Compensation

We have a stock incentive plan providing for the grant of ~~incentive stock options to employees and non-qualified stock options~~stock-based awards to employees and directors. The Compensation Committee of the Board of Directors (“Compensation Committee”) administers the Amended and Restated 2011 Stock Incentive Plan ~~(the”Stock~~(the “Stock Plan”). Under the Stock Plan, the Compensation Committee may award stock options and shares of common stock on a restricted basis. The Stock Plan also specifically provides for stock appreciation rights (“SARs”) and authorizes the Compensation Committee to provide, either at the time of the grant of an award under the Stock Plan or otherwise, that such award may be cashed out upon terms and conditions to be determined by the Compensation Committee or the Board of Directors.

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Option awards are granted with an exercise price equal to the market price of our stock at the date of grant. We recognize stock compensation expense in accordance with ~~ASC 718-10~~ASU 2018-07, Compensation – Stock Compensation (ASC 718): Improvements to Nonemployee Share-Based Payment Accounting, over the requisite service period of the individual grantees, which generally equals the vesting period. All of our stock compensation is accounted for as equity instruments.

~~The Stock Plan became effective November 1, 2011 and replaced the 2001 Stock Option Plan that expired on October 31, 2011. At~~ As of December 31, ~~2019,~~2020, there were ~~787,219~~733,706 shares available for future ~~grants.~~grant under the Stock Plan.

WeDuring the three months ended December 31, 2020, we recorded ~~$96,000 and $15,000~~a reduction of $6,000 of stock-based compensation expense to selling, general, and administrative expense ~~for~~due to forfeitures exceeding expenses. During the three months ended December 31, 2019, we recorded $96,000 of stock-based compensation ~~related~~expense to selling, general, and administrative expense. During the six months ended December 31, 2020 and 2019, we recorded $53,000 and $195,000, respectively, of stock-based compensation expense. Our stock-based compensation expense results from the issuance of stock options and restricted stock to employees and board members during the ~~three months ended December 31, 2019~~current and ~~2018, respectively. We recorded $195,000~~prior years, for which expense is recognized over the respective vesting periods of the granted stock and $75,000 to general and administrative expense for stock-based compensation related to the issuance of stock options and restricted stock to employees and board members during the six months ended December 31, 2019 and 2018, respectively.options.

Restricted Stock Awards

AsA summary of ~~December 31, 2019, we had 162,500 service-condition~~our restricted stock ~~awards outstanding at a weighted-average grant date fair value of $3.98.~~

~~Stock-based compensation expense~~activity for the ~~three months and~~ six months ended December 31, ~~2019 and 2018 resulted from vesting of shares over their respective vesting periods.~~2020 is as follows:

Restricted Stock Awards	Shares			Weighted- Average Grant Date Fair Value
Non-vested at July 1, 2020		204,190		$	4.41
Granted		45,000			2.95
Vested		(41,673	)		4.57
Forfeited		(86,513	)		4.36
Non-vested at December 31, 2020		121,004		$	3.85

Total remaining compensation cost of restricted stock awards issued but not yet vested as of December 31, ~~2019 is $275,000,~~2020 was $219,000, which is expected to be recognized over the ~~weighted average~~weighted-average recognition period of ~~2.02~~2.31 years.

~~Restricted Stock Awards to be Granted Under the Company’s 2019 Bonus Plan~~

Under the terms of the Company’s 2019 bonus plan, the Company will grant $350,000 of restricted stock to eligible participants, based upon the Company’s net asset value as of December 31, 2019. The restricted stock award will be subject to the Stock Plan, which requires a service period following the restricted stock award grant. The share-based compensation expense attributable to these awards will be recorded over the requisite service period starting with the service inception date and ending on the final vest date.

Stock Options

~~We use a Black-Scholes option valuation model to determine~~During the ~~grant date fair value~~three and six months ended December 31, 2020, 5,000 unvested stock options were forfeited, and 10,000 vested stock options expired. During the three and six months ended December 31, 2020 and 2019, there were no grants or exercises of ~~stock-based compensation for~~ stock options. ~~The Black-Scholes model incorporates various assumptions including~~During the expected term of awards, volatility of stock price, risk-free rates of return, and dividend yield. The expected term of an award is no less than the option vesting period and is based on our expectations under our current operating environment. Expected volatility is based upon the historical volatility of the Company’s stock price. The risk-free interest rate is approximated using rates available on U.S. Treasury securities with a remaining term similar to the option’s expected life. The dividend yield used in the Black-Scholes option valuation model is based upon expectations of cash dividends.

As of December 31, 2019, we had 15,000 stock options outstanding, of which 5,000 options had vested and were exercisable, at a weighted-average exercise price of $5.42, with a weighted-average remaining contractual term of 8.39 years.

~~The total intrinsic value of options both outstanding and exercisable was nil for the~~ three ~~months~~ and six months ended December 31, 2019, ~~and 2018. Total remaining compensation cost~~there were no forfeitures of stock ~~options granted, but not yet vested, at~~options. As of December 31, 2020, there were no stock options outstanding.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.

Stock Repurchase Plan

On March 5, 2018, the Company announced its Board of Directors authorized the repurchase of up to 1,000,000 shares of the Company’s common stock. In February 2019 ~~is $8,000, which is expected~~we completed the purchase of the authorized 1,000,000 shares, and the Board of Directors 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 ~~be recognized over~~trading plans subject to the ~~weighted average remaining period~~restrictions and protections of ~~1.38 years. We generally issue new shares to satisfy option exercises. During~~Rule 10b5-1 and/or Rule 10b-18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The repurchase program does not have an expiration date. No purchases were made under this program during the three ~~months and~~or six months ended December 31, ~~2019 and 2018,~~2020. As of December 31, 2020, there were ~~no grants, forfeitures, or exercises of stock options.~~364,298 shares available for repurchase under the program.

~~11.~~

12.

Accumulated Other Comprehensive ~~Income (Loss)~~Loss

The following table summarizes the changes in accumulated other comprehensive ~~income (loss)~~loss by component, net of taxes, for the six months ended December 31, ~~2019:~~2020:

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Pension and
Postretirement
Benefit Plans Currency
Translation
Adjustments Unrealized
Loss on
Investments Total
(Amounts in thousands)
Balance at June 30, 2019 $ (1,707 ) $ 496 $ (5,368 ) $ (6,579 )
Other comprehensive income (loss) before reclassifications 44 56 (1,609 ) (1,509 )
Effect of exchange rates on the pension plans 24 (24 ) - -
Net current period other comprehensive income (loss) 68 32 (1,609 ) (1,509 )
Balance at December 31, 2019 $ (1,639 ) $ 528 $ (6,977 ) $ (8,088 )

	Pension and Postretirement Benefit Plans			Currency Translation Adjustments			Unrealized Loss on Investments			Total

	(Amounts in thousands)
Balance at June 30, 2020	$	(1,517	)	$	523		$	(5,212	)	$	(6,206	)
Other comprehensive income (loss)		44			(379	)		4,178			3,843
Effect of deferred taxes on unrealized losses		-			-			(942	)		(942	)
Effect of exchange rates on the pension plans		(138	)		138			-			-
Net current period other comprehensive (loss) income		(94	)		(241	)		3,236			2,901
Balance at December 31, 2020	$	(1,611	)	$	282		$	(1,976	)	$	(3,305	)

~~12.~~

13.

Segments

We operate in two segments: (i) “MCA and Other Financial Services Operations,” conducted primarily through LMCS, and (ii) “Real Estate Operations,” conducted primarily through Recur.

Our President and Chief ~~Executive~~Operating Officer (“COO”) is our chief operating decision maker (the “CODM”). Our CODM uses revenue and operating income to evaluate the profitability of our operating segments; all other financial information is reviewed by the CODM on a consolidated basis. Segment operating contribution reflects segment revenue, less operating expenses that are directly attributable to the operating segment, not including corporate and unallocated expenses. All of our principal operations and assets are located in the United States.

Segment operating results are as follows (amounts in thousands):

Three Months Ended
December 31, Six Months Ended
December 31,
2019 2018 2019 2018
Segment revenue:
MCA advance income $ 990 $ 185 $ 1,795 $ 316
Syndication fees 388 - 938 -
MCA originator loan income 235 - 439 -
Other MCA revenue 62 - 155 -
MCA operations revenues 1,675 185 3,327 316
Real estate operations revenues 112 185 191 220
Consolidated revenues 1,787 370 3,518 536

Segment operating expenses:
MCA operations 199 - 988 -
Real estate operations - - - -
Add:
Corporate expenses 997 1,287 1,888 2,122
Consolidated operating expenses 1,196 1,287 2,876 2,122

Segment operating income (loss):
MCA operations 1,476 185 2,339 316
Real estate operations 112 185 191 220
Add:
Corporate (997 ) (1,287 ) (1,888 ) (2,122 )
Consolidated operating income (loss) $ 591 $ (917 ) $ 642 $ (1,586 )

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended December 31,						Six Months Ended December 31,
	2020			2019			2020			2019
Segment revenue:
Advance income	$	927		$	990		$	1,466		$	1,795
Syndication fees		85			388			214			938
Interest on loans to Funders		105			235			253			439
Other MCA revenue		34			62			34			155
MCA and other financial services operations revenues		1,151			1,675			1,967			3,327
Real estate operations revenues		46			112			140			191
Consolidated revenues		1,197			1,787			2,107			3,518

Segment operating expenses:
Selling, general, and administrative		41			369			233			723
Change in fair value of contingent consideration		-			(470	)		-			(370	)
Amortization of purchased intangibles		96			119			193			239
Provision for credit losses on advances		13,775			181			13,827			396
MCA and other financial services operations		13,912			199			14,253			988
Real estate operations		-			-			-			-
Add:
Corporate expenses		1,161			997			2,054			1,888
Consolidated operating expenses		15,073			1,196			16,307			2,876

Segment operating (loss) income:
MCA and other financial services operations		(12,761	)		1,476			(12,286	)		2,339
Real estate operations		46			112			140			191
Add:
Corporate		(1,161	)		(997	)		(2,054	)		(1,888	)
Consolidated operating (loss) income	$	(13,876	)	$	591		$	(14,200	)	$	642

Segment assets are as follows:

December 31,
2019 June 30,
2019
(Amounts in thousands)
Segment assets:
MCA operations $ 22,090 $ 18,277
Real estate operations 5,173 7,379
Add:
Corporate assets 50,519 47,190
Corporate intercompany loan to LMCS (10,348 ) (10,372 )
Total consolidated assets $ 67,434 $ 62,474

	December 31, 2020			June 30, 2020

	(Amounts in thousands)
Segment assets:
MCA and other financial services	$	5,353		$	19,287
Real estate		17,497			9,275
Add:
Corporate assets		44,175			48,065
Corporate intercompany loan to LMCS		(2,136	)		(6,777	)
Total consolidated assets	$	64,889		$	69,850

~~13.~~

14.

Leases

The Company leases office space in ~~two locations: (i)~~ Duluth, ~~Georgia, and (ii) New York City, New York.~~Georgia. The Duluth, Georgia lease ~~expired on January 31, 2020 and the New York City, New York lease~~ expires in 2023. The Company signed a new lease for a corporate headquarters location in Duluth, Georgia, that commenced in January 2020 and expires on May 31, 2023. Minimum payment commitments over the life of the new lease are $271,000. We prospectively adopted ASU 2016-02 effective for the fiscal year ended June 30, 2019.2025. For leases with a term of 12 months or less, we made an accounting policy election not to recognize lease assets and lease liabilities. During the three months ended December 31, 2020, the Company terminated its lease in New York New York, and forfeited its $46,000 security deposit related to that lease. The following information represents the amounts included in the financial statements related to leases (amounts in thousands):

Three Months Ended
December 31, Six Months Ended
December 31,
2019 2018 2019 2018
Operating lease cost $ 54 $ 1 $ 109 $ 2
Total lease cost $ 54 $ 1 $ 109 $ 2

Gross sublease income 48 - 100 -
Operating cash flows from operating leases (6 ) (1 ) (9 ) (2 )
Right-of-use assets obtained in exchange for new operating lease liabilities - - - -
Weighted-average remaining lease term - operating leases 33 months N/A 33 months N/A
Weighted-average discount rate - operating leases 6.50 % N/A 6.50 % N/A

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Three Months Ended December 31,						Six Months Ended December 31,
	2020			2019			2020			2019
Operating lease cost	$	(25	)	$	54		$	34		$	109

Gross sublease income		-			48			4			100
Operating cash flows from operating leases		(19	)		(6	)		(74	)		(9	)

Operating lease cost is reported as part of selling, general, and administrative expenses on the consolidated ~~statement~~statements of operations. Sublease income is reported as a reduction of selling, general, and administrative expenses on the consolidated ~~statement~~statements of operations. Operating cash flows from leases are reported as part of net income (loss) on the consolidated ~~statement~~statements of cash flows. Right-of-use assets obtained in exchange for new operating lease liabilities are reported as part of other long-term assets on the consolidated balance ~~sheet.~~sheets. The short-term portions of the operating lease liabilities are reported as part of accounts payable and accrued expenses on the consolidated balance ~~sheet.~~sheets. The long-term portions of the operating lease liabilities are reported as part of other long-term liabilities on the consolidated balance ~~sheet.~~sheets. The weighted-average remaining lease term for operating leases as of December 31, 2020 is 54 months. The weighted-average annual discount rate used for operating leases as of December 31, 2020 is 6.5%.

AtAs of December 31, ~~2019,~~2020, lease payments for operating leases for the next five years are as ~~follows:~~follows (amounts in thousands):

Fiscal Year Ending June 30 Amount
2020 $ 91,000
2021 183,000
2022 183,000
2023 46,000

~~CCUR HOLDINGS, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

Fiscal Year Ending June 30	Amount
2021	$	37
2022		75
2023		77
2024		79
2025		81

The total lease liability on the consolidated balance ~~sheet~~sheets as of December 31, ~~2019~~2020 is ~~$461,000.~~$367,000. Total unrecognized expected interest expense related to ~~the lease~~leases is ~~$41,000.~~$46,000.

~~14.~~15.

Commitments and Contingencies and Related Party Transactions

Commitments and Contingencies

Severance Arrangements

Pursuant to the terms of the employment ~~agreements~~agreement with our ~~Chief Executive Officer, Chief Financial Officer,~~President and ~~other senior employees,~~COO, employment may be terminated either by the ~~respective~~ employee or by the Company at any time. In the event anthe agreement is terminated by us without cause, or in certain circumstances terminates constructively or expires, ~~the terminated employee~~our President and COO will receive severance compensation for a period ~~from~~of six ~~to 12 months, depending on the employee, and bonus severance.~~months. Additionally, if terminated, our ~~Chief Executive Officer, Chief Financial Officer~~President and ~~certain other senior executives~~COO will continue to receive the employer portion of health coverage during ~~their~~the severance period. AtAs of December 31, ~~2019,~~2020, the maximum contingent liability under ~~these agreements~~this agreement was ~~$760,000~~$99,000.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Inadvertent Investment Company

We do not believe that we are engaged in the ~~aggregate.~~business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in the business of investing, reinvesting, or trading in securities. However, with the assistance of the Asset Manager, as defined below, we hold excess liquid resources in marketable securities to preserve resources needed to acquire operating businesses or assets and fund our finance and real estate activities. The Board of Directors and management monitor the Company’s status relative to the inadvertent investment company test under the Investment Company Act of 1940 (the “ICA”) and believe that the Company is not, and as of December 31, 2020 was not, an inadvertent investment company based on the assets test under Section 3(a)(1)(C) of the ICA.

If we were deemed to be an inadvertent investment company and determined to or were required to become a registered investment company, we would be subject to burdensome and costly compliance requirements and restrictions that would limit our activities, including limitations on our capital structure, additional corporate governance requirements, and other limitations on our ability to transact business as currently conducted. We do not believe that it would be practical or feasible for a company of our size, management, and financial resources to operate as a registered investment company. To avoid being deemed an inadvertent investment company or becoming a registered investment company, we may decide or be required to sell certain of our investments on disadvantageous terms, hold a greater proportion of our investments in marketable securities in U.S. government securities or cash equivalents that have a lower rate of return than other investment securities, or make other material modifications to our business operations and strategy, any or all of which could have a material adverse effect on our business, financial condition, results of operations, and future prospects.

Related Party Transactions

Management Agreement

In February 2019, the Company entered into a management agreement ~~(as amended, the “Management Agreement”)~~ with CIDM LLC ~~(“CIDM” or the “Asset~~(the “Prior Asset Manager”) under which CIDM LLC provides consulting services and advice to the Board of Directors and the Company’s management regarding asset allocation and acquisition strategy. During our fiscal year 2020, the management agreement was assigned to CIDM II, LLC (“CIDM II,” or the “Asset Manager”). CIDM II exclusively manages the Company’s portfolio of publicly traded investments and, subject to the terms of the ~~Management Agreement~~management agreement and the guidelines set forth therein, maintains investment authority over such portfolio, in order to better position the Company to increase its return on assets. CIDM II is an affiliate of the Company’s largest stockholder, JDS1, LLC.

Under the terms of the management agreement, the Company pays the Asset Manager both (i) an asset management fee on a quarterly basis, based upon the total assets of the Company, and (ii) an annual performance fee, based upon calendar year asset growth. Both the management fee and performance fee were settled through the issuance of cash-settled SARs with a base price of $0.01 per share.

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, the Asset Manager and the Prior Asset Manager amending certain terms of the original management agreement, dated as of February 14, 2019 (the “Management Agreement”), by and between the Company and the Prior Asset Manager, including the form of SARs agreement (the “Form of SARs Agreement”), and the SARs agreements entered into pursuant to the Management Agreement between the Company and the Prior Manager (the “Prior SARs Agreements”). Pursuant to the Management Agreement, the Asset Manager, among other things, (i) provides the Company with advisory services with respect to the management and allocation of the assets of the Company and its subsidiaries, and (ii) exercises discretionary management authority over the Company’s trading portfolio of publicly traded securities.

The Omnibus Amendment amended the terms of the Management Agreement to provide that:

(i)

the Management Fee (as defined in the Management Agreement) due to the Asset Manager shall continue to be payable via a grant of SARs for services rendered through the quarter ending June 30, 2020. Thereafter, the Management Fee shall be payable in cash. The Performance Fee (as defined in the Management Agreement) shall continue to be payable in SARs;

(ii)

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 SAR; and

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(iii)

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.

The Omnibus Amendment also affects the assignment of the Prior SARs Agreements from the Prior Manager to the Asset Manager and amends the Prior SARs Agreements and the Form of SARs Agreement, pursuant to which SARs will be granted to the Asset Manager in ~~addition~~the future, in each case, to ~~a quarterly cash payment~~provide that SARs granted thereunder are exercisable as of the date of grant, subject to ~~compensate CIDM for expenses incurred~~any restrictions in ~~connection with providing these services,~~the applicable agreement.

Prior to this Omnibus Amendment, the Company ~~pays~~granted 797,446 SARs, to be settled in cash, to the Prior Manager, as compensation for ~~these services through~~ the ~~issuance~~Management Fee and the calendar year 2019 Performance Fee, with a base price of ~~cash-settled stock appreciation rights (“SARs”) based on increases in~~$0.01 per share, that were earnable upon completion of both service and performance conditions. The service condition was completed each quarter as the asset ~~value~~management services were provided, and annually upon calculation of the ~~Company. Based on the terms of the SARs and the Management Agreement, CIDM may not exercise the SARs unless there are certain qualifying changes of control of~~Performance Fee. The vesting performance condition required the Company ~~(which does not include any~~to undergo a qualifying change of control ~~related~~before the SARs are exercisable by the Prior Asset Manager. As such, because a qualifying change of control had neither occurred nor become probable before the Omnibus Amendment, the Company did not record expense attributable to the ~~stock ownership~~granted SARs.

The Omnibus Amendment modified the granted SARs’ and future SAR grants’ vesting criteria by removing the performance condition of ~~CIDM or its affiliates, including JDS1, LLC). CIDM and its affiliates~~a qualifying change of control so that SARs are ~~subject to standard trading restrictions and standstill provisions~~exercisable upon grant. With this modification, the Company recorded $2,552,000 of compensation expense during the effective term of the Management Agreement. Based on the Company’s total assets as of December 31, 2019 and growth in net asset value (as defined in the Management Agreement) over the course of calendar year 2019, we expect to issue an additional 460,814 SARs to CIDM during the thirdfourth quarter of our fiscal year 2020 attributable to SARs for which vesting was previously subject to a qualifying change of control. Additionally, the Company recorded $289,000 of expense during the three months ended June 30, 2020 for the 90,310 cash-settled SARs that it granted to the Asset Manager during the three months ended September 30, 2020 as compensation for the Management Fee during the three months ended June 30, 2020. During the three and six months ended December 31, 2020, the Company also recorded $287,000 and $603,000, respectively, of expense as compensation for the Management Fee, and $116,000 and $214,000, respectively, of reductions of expense related to revaluation of previously issued SARs. These expenses are included in selling, general, and administrative expenses on the consolidated statements of operations. $2,915,000 and $2,841,000 are accrued as management fee payable on our consolidated balance sheets as of December 31, 2020 and June 30, 2020, respectively.

On October 15, 2020, the Company amended the Management Agreement to align the Performance Fee, as that term is defined in the Management Agreement, with the Company’s fiscal year, as opposed to the calendar year.

Other Fees Paid to the Asset Manager

In addition to the SARs-settled Management and Performance Fees and the cash Management Fees, the Company provides the Asset Manager with $50,000 per quarter for the purpose of expense reimbursements.

CCUR HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.	Subsequent Events

Wright Brothers Aircraft Title, Inc. (“Wright Brothers”)

Since August 2018, the Company has been providing fully refundable deposits into the aircraft finance market, which are used during the initial due diligence period for aircraft (“aviation deposits”). The Company has financed 12 transactions, each of which has utilized the services of Wright Brothers, based in Oklahoma City, Oklahoma, as the escrow agent. Prior to January 12, 2021, each aviation deposit funded by the Company had been collected under the contractually agreed upon terms.

On January 12, 2021, the Company was due to collect $8,500,000 in aviation deposits from Wright Brothers. Upon inquiry to Wright Brothers and following repeated unsuccessful attempts to contact it or its principal, Debbie Mercer-Erwin, the Company learned that on or about December 17, 2020, Ms. Mercer-Erwin had been arrested by law enforcement and that all assets of Wright Brothers had been frozen.

In addition to the deposit funds mentioned above, the Company was also due to collect a further $5,500,000 in aviation deposits from Wright Brothers on January 25, 2021.

As reported in an 8-K filed on January 26, 2021, the Company has been unable to recover $13,761,000 of aviation deposits.

Based on an examination of all information currently available to the Company, the Company has determined that it is probable a loss has occurred related to its aviation deposits. Due to the limited information available and uncertainty related to the specific sources of recovery and their timing, the Company is unable to make the determination that any amount of recovery is probable. As a result, the Company’s Board of Directors and management determined on February 6, 2021 that the appropriate action is a full write-down of its aviation deposits during the three and six months ended December 31, 2020. The ~~contingent liability associated with this cash-settled SAR commitment~~write-down is ~~dependent~~reported as part of provision for credit losses on ~~certain change-of-control events. Neither~~advances on the ~~amount nor~~consolidated statements of operations.

The Company expects to aggressively pursue all remedies for recovery, including those related to insurance and actions against all parties that may have contributed to the ~~range of possible amounts associated with this contingent liability is able to be estimated at the present time, as the future stock price~~loss of the aviation deposits.

Amendment to Management Agreement

On January 6, 2021, the Company ~~cannot be predicted, but such liability is not limited by~~amended the ~~terms~~Management Agreement to allow the Asset Manager to choose the method of payment of the Management ~~Agreement and if realized may be material to the financial condition and results~~Fee as either cash or a grant of ~~operation of the Company.~~SARs.

Legal action

On February 9, 2021, LMCS was served with an action in New York County, New York, alleging that LMCS was jointly liable for approximately $456,000, plus other costs and interests, under a contract entered into by LuxeMark, LLC., from whom LMCS purchased certain assets.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the consolidated financial statements and the related notes thereto, which appear elsewhere herein. Except for ~~the~~statements of historical ~~financial information,~~facts, many of the matters discussed in this Item 2 ~~may be~~are considered “forward-looking” statements that reflect our plans, estimates and beliefs. Actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section below entitled “Cautionary Statement Regarding Forward-Looking Statements,” in the section below entitled “Item 1A. Risk Factors,” and in other filings made with the Securities and Exchange Commission (“SEC”), including our Annual Report on Form 10-K for the year ended June 30, ~~2019.~~2020.

References herein to “CCUR Holdings,” the “Company,” “we,” “us,” or “our” refer to CCUR Holdings, Inc. and its subsidiaries, unless the context specifically indicates otherwise.

Overview

As of December 31, ~~2019, the Company had~~2020, we operate with two ~~existing operating~~business segments: (i) merchant cash ~~advance~~advances (“MCA”) ~~operations,~~and other financial services, conducted primarily through our subsidiary LM Capital Solutions, LLC (d/b/a “LuxeMark Capital”) (“LMCS”), and (ii) real estate, ~~operations,~~ conducted through our subsidiary Recur Holdings LLC (“Recur”) and its subsidiaries.

~~The Company holds an 80%~~As of December 31, 2020, we hold a 51% interest in LMCS, with the remaining ~~20%~~49% held by AZOKKB, LLC (formerly named LuxeMark Capital, LLC ~~(“Old~~and herein referenced as “Old LuxeMark”). Through LMCS, we manage a ~~connected~~ network of MCA ~~originators~~funders (the “Funders”) and syndicate participants who provide those ~~originators~~Funders with capital by purchasing participation interests in or co-funding MCA transactions. In addition, we provide loans to ~~MCA originators,~~Funders, the proceeds of which are used by the ~~MCA originators~~Funders to fund ~~MCAs themselves.~~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.

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. On

Recent Events

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

Our MCA and other financial services segment experienced a decline in revenues during the three and six months ended December ~~10, 2019,~~31, 2020, which management believes is predominantly due to the ~~Board announced~~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 shutdowns 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 and six months ended December 31, 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 and six months ended December 31, 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 been providing fully refundable deposits into the aircraft finance market, which are used during the initial due diligence period for aircraft (“aviation deposits”). We have financed 12 transactions, each of which has ~~initiated further review~~utilized the services of ~~capital allocation alternatives~~Wright Brothers, based in Oklahoma City, Oklahoma, as the escrow agent. Prior to ~~maximize stockholder value, including a potential limited~~January 12, 2021, each aviation deposit we provided had been returned on time and without incident.

On January 12, 2021, we were due the return of ~~capital~~$8,500,000 in aviation deposits. Upon inquiry to ~~stockholders through~~Wright Brothers and following repeated unsuccessful attempts to contact it or its principal, Debbie Mercer-Erwin, we learned that on or about December 17, 2020, Ms. Mercer-Erwin had been arrested by law enforcement and that all assets of Wright Brothers had been frozen.

In addition to the deposit funds mentioned above, we were also due the return of a ~~special distribution.~~further $5,500,000 in aviation deposits on January 25, 2021.

We are currently fully cooperating with authorities to expedite the return of all aviation deposits that were due. We have been told by authorities that we are not the subject of any investigations related to Ms. Mercer-Erwin or Wright Brothers. Based on an examination of all information currently available to us, we have determined that it is probable a loss has occurred related to our aviation deposits. Due to the limited information available and uncertainty related to the specific sources of recovery and their timing, we are unable to make the determination that any amount of recovery is probable. As a result, our Board of Directors and management determined on February 6, 2021 that the appropriate action is a full write-down of our aviation deposits during the three and six months ended December 31, 2020. The ~~timing~~write-down is reported as part of ~~such distribution, if~~provision for credit losses on advances on the consolidated statements of operations.

We expect to aggressively pursue all remedies for recovery, including those related to insurance and actions against all parties that may have contributed to the loss of the aviation deposits. Since the loss of our aviation deposits held by Wright Brothers, we are re-evaluating our aviation funding business.

Through most of the three and six months ended December 31, 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 ~~is uncertain and the Company does not currently intend~~acquisitions that we decide to ~~provide announcements or updates except as required by applicable law.~~pursue may take longer to consummate.

Critical Accounting Policies and Estimates

The SEC defines “critical accounting estimates” as those that require application of management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Our critical accounting policies and estimates are disclosed under the section “Application of Critical Accounting Policies” in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020, except for those as described below.

Equity Method Investments

Investments in unconsolidated entities over which we have significant influence are accounted for under the equity method of accounting. Under the equity method of accounting, the Company does not consolidate the investment’s financial statements within its consolidated financial statements. Equity method investments are initially recorded at cost, then our proportional share of the underlying net income or loss is recorded as equity in net income or loss from equity method investments in our statement of operations, with a corresponding increase or decrease to the carrying value of the investment. Distributions received from the investee reduce our carrying value of the investment and are recorded in the consolidated statements of cash flows using the cumulative earnings approach. These investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable. There were no indicators of impairment related to our equity method investments for the three and six months ended December 31, 2020.

Results of Operations

We recognize revenue in accordance with the appropriate accounting guidance as described in our critical accounting policies. See the section titled “Application of Critical Accounting Policies” in “Item 7. Management’s DiscussionMCA and ~~Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended June 30, 2019. MCA~~other financial services revenue includes income from the discount at which we provide advances on future merchant receivables, as well as fees earned for sourcing both syndication capital and merchant leads for ~~MCA originators.~~Funders. We generate revenue from interest on loans by entering into commercial loan agreements to ~~fund third party~~Funders and third-party originators in the ~~MCA industry and~~ real estate industry.

~~Sales and marketing expenses consist primarily of commissions, travel, employee salaries, benefits, and consulting fees.~~

~~General~~Selling, general, and administrative expenses consist primarily of salaries, benefits, ~~overhead, management travel,~~rent, administrative personnel, ~~rent,~~ information systems, insurance, accounting, legal services, board of director fees and expenses, and other professional services.

Other interest income is earned on cash overnight sweep accounts and money market deposits as well as investments in debt securities. Interest income also includes accretion of discounts related to transactions in which we purchased debt securities on the secondary markets at ~~discounts.~~a discount. Such discounts are amortized over the terms of each debt security to the commitment values that will be due on each maturity date, as well as early repayment. Additionally, we earn payment-in-kind (“PIK”) interest from one of our debt securities whereby interest is paid in the form of an increase in the commitment value due from the debt security issuer on the maturity date.

Three Months Ended December 31, ~~2019~~2020 in Comparison to the Three Months Ended December 31, ~~2018~~2019

Consolidated Revenues and Income.During the three months ended December 31, ~~2019,~~2020, we generated ~~$1.8 million~~$1,197,000 of total revenue, compared to ~~$0.4 million~~$1,787,000 in the three months ended December 31, ~~2018,~~2019, with the decline driven largely by our ~~increasing~~decreasing participation in the MCA industry. Our net ~~income~~loss for the ~~second quarter of fiscal year~~three months ended December 31, 2020 ~~increased to $3.0 million,~~was $8,333,000, compared to ~~a loss~~net income of ~~$1.5 million in~~$2,737,000 for the ~~second quarter of fiscal year~~three months ended December 31, 2019. This ~~increase~~decrease was primarily attributable ~~largely~~ to aviation advance loss provisions, reductions of revenue and other interest income, and an increase in ~~our income before income tax driven by our MCA operations~~operating expenses due primarily to increased management and ~~returns from our investments in certain debt and equity securities.~~

~~MCA Operations Segment Revenues~~~~. In December 2018, we began participating in the MCA industry by purchasing participation interests in advances to merchants through third-party originators. For~~performance fees. Additionally, the three months ended December 31, 2019 ~~we maintained a larger weighted average outstanding balance~~included an adjustment for the decrease in fair value of ~~funded MCAs compared to~~contingent consideration for which the ~~prior year, and consequently earned higher MCA revenue~~agreement was terminated during the ~~current period relative to~~fourth quarter of the fiscal year ended June 30, 2020. This was offset by increases in realized gains on sales of securities and unrealized gains on equity securities.

MCA and Other Financial Services Segment Revenues. We generated $1,151,000 of revenue from MCA and other financial services operations during the three months ended December 31, ~~2018. After closing~~2020, compared to $1,675,000 during the ~~acquisition of~~three months ended December 31, 2019. During the ~~assets of Old LuxeMark (the “LuxeMark Acquisition”) in the third quarter of our fiscal~~ year 2019, we began generating additional revenue in the MCA sector by earning fees on sourcing syndication capital for MCA originators, earning interest on loans to MCA originators, and generating leads for MCA originators in exchange for a fee. Additionally, as part of our MCA business, we originated term loans to an MCA originator soended June 30, 2020, management concluded that it ~~may fund additional MCAs. These loans generated $0.2 million~~would not resume funding MCAs with Funders. This resulted in a decrease of ~~interest income~~MCA revenue during the current period. Our ~~quarterly~~ MCA and other financial services operations revenues for the three months ended December 31, 2020 and 2019 are as follows:

Three Months Ended
December 31,
2019 2018
(Amounts in thousands)
MCA revenue $ 990 $ 185
Syndication fee revenue 388 -
Fee income on leads generation 62 -
MCA fees and other revenue 1,440 185
Interest on loans to MCA originators 235 -
Total MCA operations segment revenue $ 1,675 $ 185

	Three Months Ended December 31,
	2020		2019

	(Amounts in thousands)
MCA and other financial services revenue	$	927	$	990
Syndication fee revenue		85		388
Fee income on MCA leads generation		34		62
MCA fees and other revenue		1,046		1,440
Interest on loans to MCA originators		105		235
Total MCA and other financial services operations segment revenue	$	1,151	$	1,675

MCA revenue from interest on loans to ~~MCA originators~~Funders is categorized as MCA and other financial services operations revenue for ~~purposes of~~ segment reporting purposes but reported ~~within the line item~~~~Interest~~as interest on mortgage and commercial loans within our consolidated statements of operations.

Revenues from each of the revenue sources within our MCA segment decreased with the onset of the COVID-19 pandemic. We experienced declines of MCA revenues during the three months ended December 31, 2020. This occurred as (i) fewer merchants are meeting MCA underwriting criteria, which reduces our syndication fee income and ability to generate revenue by funding MCAs, (ii) underwriters are less interested in purchasing leads, and (iii) a portion of our merchants, in coordination with the Funders, have reduced or paused payments to better weather the current economic downturn, which reduces our MCA revenues. Furthermore, we reduced our volume of MCA funding during the three months ended December 31, 2020, primarily as a result of our efforts to better evaluate the impact of the pandemic on MCA assets before funding additional assets. We anticipate continued lower funding and collection volume over the next few months and are uncertain as to the long-term impact of the pandemic at this point. 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 the 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 our continued participation in the MCA industry.

Real Estate Operations Segment Revenues. We generated ~~$0.1 million~~$46,000 of revenue from interest on commercial mortgage loans during the three months ended December 31, ~~2019,~~2020, compared to ~~$0.2 million~~$112,000 during the three months ended December 31, ~~2018.~~2019. The decrease in revenue resulted from ~~the decrease in interest on commercial mortgage loans due to~~originations outpacing borrower ~~payoffs outpacing originations.~~

repayments.

~~Sales and Marketing Expenses.~~During the third quarter of our fiscal year 2019, we began incurring sales and marketing expenses attributable to new business development resources that are focused on augmenting our current businesses and identifying potential new businesses. We incurred $0.1 million of these business development costs during the three months ended December 31, 2019, which are reported as part of our corporate operating expenses. Additionally, the principals of Old LuxeMark, who now lead the LMCS daily operations following closing of the LuxeMark Acquisition, are predominantly focused on generating incremental syndication income and other MCA income for our MCA operations segment. As a result, our MCA operations segment incurred $0.2 million of sales and marketing expenses during the three months ended December 31, 2019.

Selling, General, and Administrative Expenses.~~General~~Corporate selling, general, and administrative expenses were ~~$1.0 million~~$1,161,000 for the three months ended December 31, ~~2019,~~2020, a ~~$0.2 million,~~$164,000, or ~~26%~~16.4%, increase from the $997,000 for the three months ended December 31, ~~2018. Legal,~~2019. Decreases in salaries and benefits, real property lease costs, and travel and entertainment, offset by increases in accounting ~~compensation~~fees and legal fees compared to the prior period caused the period-over-period decrease.

Selling, general, and administrative expenses for our MCA and other ~~administrative expenses attributable to our MCA operations accounted~~financial services segment were $41,000 for $0.1 million of the increase, as we did not have MCA operations in the prior year period. The remaining $0.1 million increase was due to corporate salaries from additional headcount and financial performance bonuses accrued during the three months ended December 31, ~~2019.~~

~~Change in Fair Value of Contingent Consideration.~~ ~~During~~2020, a $328,000, or 88.9%, decrease from the $369,000 for the three months ended December 31, ~~2019, we recorded a $0.4 million reversal of previously recorded expense for change~~2019. This decrease was caused by decreases in ~~the fair value of contingent consideration due~~commissions and fees related to ~~Old LuxeMark. The~~the decrease in ~~estimated contingent consideration payments associated with~~MCA revenue during the ~~LuxeMark acquisition resulted from LMCS not meeting~~period. There were no selling, general, and administrative expenses for our real estate segment in either the ~~minimum performance levels to earn calendar year 2019 contingent consideration.~~three months ended December 31, 2020 or 2019.

Amortization of Purchased Intangibles.Our amortization of purchased intangibles includes amortization over the respective useful lives of the trade name, non-competition agreements, and investor/originator relationships attributable to our acquisition of the assets of Old LuxeMark ~~Acquisition.~~(the “LuxeMark Acquisition”). Our intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. We acquired these intangibles as part of the LuxeMark Acquisition on February 13, 2019 and no impairments or circumstances requiring a testing of impairment of these intangible assets were identified as of or during the three months ended December 31, ~~2019. Additionally, we completed our annual impairment test of goodwill as of December 31, 2019 and concluded that goodwill was not impaired.~~2020.

Provision for Credit Losses on ~~Advances~~Advances. . During the three months ended December 31, ~~2019,~~2020, we recorded a ~~$0.2 million~~$13,775,000 provision for credit losses on aviation advances and MCAs, a ~~$0.3 million, or 64%, decrease~~$13,595,000 increase from the ~~provision expense~~$180,000 for the three months ended December 31, ~~2018.~~2019. The ~~period over period decrease~~period-over-period increase in provision expense resulted primarily from ~~a lower amount of MCAs funded~~the loss provision recorded against the aviation advances in the current period versus the prior period ~~and lower expected default rates for the current period originators compared to the originators with whom we funded MCAs in the prior year period.~~(see Note 16).

Other Interest Income. Other interest income includes interest earned on investments in debt securities and cash and money market balances. The components of our interest income for the three months ended December 31, ~~2019~~2020 and ~~2018~~2019 are as follows:

					Three Months Ended December 31,
	Three Months Ended December 31,				2020		2019
	2019		2018
	(Amounts in thousands)				(Amounts in thousands)
Interest from cash deposits and debt securities	$	716	$	416	$	359	$	716
Accretion of discounts on purchased debt securities		1,190		265		311		1,190
Payment-in-kind interest		239		209		9		239
Other interest income	$	2,145	$	890	$	679	$	2,145

Other interest income for the three months ended December 31, ~~2019 increased~~2020 decreased by ~~$1.3 million,~~$1,466,000, or ~~141%~~68.3%, compared to the three months ended December 31, ~~2018,~~2019, primarily due to ~~higher~~lower yields on incremental investments in debt securities since December 31, 2019 and accretion of ~~any~~the discounts on these securities.

Realized Gain on Investments, Net.During the three months ended December 31, ~~2019,~~2020, we sold investments in certain debt and equity securities for which we recognized ~~$0.8 million~~$876,000 of net realized gains, as compared to $0$843,000 of realized gains on the sale of certain equity and debt securities during the same period in the prior year.

Unrealized ~~Loss~~(Loss) Gain on Equity Securities, ~~Net~~Net.. During the three months ended December 31, ~~2019,~~2020, we reported unrealized ~~loss~~gains on equity securities, net, of ~~$0.6 million,~~$2,285,000, compared to unrealized ~~loss~~losses of ~~$1.5 million~~$627,000 during the three months ended December 31, 2018. Our unrealized losses on equity securities each period are a function of changes in the fair value of the equity securities that we hold as of the current reporting period balance sheet date relative to the preceding balance sheet date. Our unrealized losses during the current period were primarily attributable to sale of equity securities during the period for which we had previously recognized unrealized gains, and upon sale in the current period, resulted in a transfer of the gain from unrealized to realized, while the unrealized loss in the comparative prior period is primarily attributable to declines in the market values of securities.

~~Income Tax (Benefit) Provision~~. We reported $17 thousand of income tax benefit for the three months ended December 31, 2019, due to updated estimates of our estimated state income taxes during the period. Our available federal NOLs offset any federal taxable income for our fiscal year 2019.

~~Six Months Ended December 31, 2019 in Comparison to the Six Months Ended December 31, 2018~~

~~Consolidated Revenues and Income~~. During the six months ended December 31, 2019, we generated $3.5 million of total revenue, compared to $0.5 million in the six months ended December 31, 2018, driven largely by the growth in our participation in the MCA industry. Our net income for the first six months of fiscal year 2020 increased to $6.6 million, compared to a loss of $1.5 million in the first six months of fiscal year 2019. This increase was attributable largely to an increase in our income before income tax driven by our MCA operations and our investments in certain debt and equity securities.

~~MCA Operations Segment Revenues~~. In December 2018, we began participating in the MCA industry by purchasing participation interests in funds advanced to merchants through third-party originators. We generated $3.3 million of revenue from MCA operations during the six months ended December 31, 2019, compared to $0.3 million during the six months ended December 31, 2018. For the six months ended December 31, 2019, we maintained a larger weighted average outstanding balance of funded MCAs compared to the prior year, and consequently earned higher MCA revenue during the current period relative to the six months ended December 31, 2018. Additionally, as part of our MCA business, we originated term loans to an MCA originator so that it may fund additional MCAs. These loans generated $0.4 million of interest income during the period. Our MCA operations revenues for the six months are as follows:

Six Months Ended
December 31,
2019 2018
(Amounts in thousands)
MCA revenue $ 1,795 $ 316
Syndication fee revenue 938 -
Fee income on MCA leads generation �� 155 -
MCA fees and other revenue 2,888 316
Interest on loans to MCA originators 439 -
Total MCA operations segment revenue $ 3,327 $ 316

~~MCA revenue from interest on loans to MCA originators is categorized as MCA operations revenue for purposes of segment reporting but reported within the line item~~~~Interest on mortgage and commercial loans~~ ~~within our consolidated statements of operations.~~

~~Real Estate Operations Segment Revenues~~~~. We generated $0.2 million of revenue from real estate operations during both the six months ended December 31, 2019 and December 31, 2018.~~

~~Sales and Marketing Expenses.~~During the third quarter of our fiscal year 2019, we began incurring sales and marketing expenses attributable to new business development resources that are focused on augmenting our current businesses and identifying potential new businesses. We incurred $0.2 million of these business development costs during the six months ended December 31, 2019, which are reported as part of our corporate operating expenses. Additionally, the principals of Old LuxeMark, who now lead the LMCS daily operations following closing of the LuxeMark Acquisition, are predominantly focused on generating incremental syndication income and other MCA income for our MCA operations segment. As a result, our MCA operations segment incurred $0.4 million of sales and marketing expenses during the six months ended December 31, 2019.

~~General and Administrative Expenses~~. General and administrative expenses were $2.0 million for the six months ended December 31, 2019, a $0.4 million, or 25%, increase from the six months ended December 31, 2018. Legal, accounting, compensation and other administrative expenses attributable to our MCA operations accounted for $0.3 million of the increase, as we did not have MCA operations in the prior year period. The remaining $0.1 million increase was due to corporate salaries from additional headcount and financial performance bonuses accrued during the six months ended December 31, 2019.

~~Change in Fair Value of Contingent Consideration.~~ During the six months ended December 31, 2019, we recorded a $0.4 million reduction of previously recorded expense for change in the fair value of contingent consideration due to Old LuxeMark. The decrease in estimated contingent consideration payments associated with the LuxeMark Acquisition resulted from LMCS not meeting the minimum performance levels to earn calendar year 2019 contingent consideration.

~~Amortization of Purchased Intangibles~~. Our amortization of purchased intangibles includes amortization over the respective useful lives of the trade name, non-competition agreements, and investor/originator relationships attributable to the LuxeMark Acquisition. Our intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. We acquired these intangibles as part of the LuxeMark Acquisition on February 13, 2019 and no impairments of these intangible assets were identified as of December 31, 2019. Additionally, we completed our annual impairment test of goodwill as of December 31, 2019 and concluded that goodwill was not impaired.

~~Provision for Credit Losses on Advances~~. During the six months ended December 31, 2019, we recorded a $0.4 million provision for credit losses on MCAs, a $0.1 million, or 20%, decrease from the six months ended December 31, 2018. The period over period decrease in provision expense resulted from a lower amount of MCAs funded in the current period versus the prior period, and lower expected default rates for the current period originators compared to the originators with whom we funded MCAs in the prior year period.

~~Other Interest Income~~. Other interest income includes interest earned on investments in debt securities and cash and money market balances. The components of our interest income for the six months ended December 31, 2019 and 2018 are as follows:

Six Months Ended
December 31,
2019 2018
(Amounts in thousands)
Interest from cash deposits and debt securities $ 1,433 $ 794
Accretion of discounts on purchased debt securities 2,366 517
Payment-in-kind interest 483 412
Other - 12
Other interest income $ 4,282 $ 1,735

Other interest income for the six months ended December 31, 2019 increased by $2.5 million, or 147%, compared to the six months ended December 31, 2018, due to higher yields on incremental investments in debt securities since December 31, 2019 and accretion of any discounts on these securities.

~~Realized Gain on Investments, Net~~. During the six months ended December 31, 2019, we sold investments in certain equity securities for which we recognized $1.9 million of net realized gains, as compared to $0.2 million of realized gains on the sale of certain equity and debt securities during the same period in the prior year.

~~Unrealized Loss on Equity Securities, Net~~. During the six months ended December 31, 2019, we reported unrealized losses on equity securities, net, of $0.2 million, compared to an unrealized loss of $2.0 million during the six months ended December 31, 2018. Our unrealized gains and losses on equity securities each period are a function of changes in the fair value of the equity securities that we hold as of the current reporting period balance sheet date relative to the preceding balance sheet date. Our unrealized ~~losses~~gains during the current period were attributable to increases in the fair value of our equity securities holdings during the period.

Equity in Net Loss from Equity Method Investment. During the three months ended December 31, 2020, we recorded net loss from equity method investment of $53,000. There was no net income or loss from equity method investment during the same period in the prior year.

Income Tax (Benefit) Provision. We reported $1,725,000 of income tax benefit for the three months ended December 31, 2020, primarily due to the tax effects of the aviation advance loss. The effective tax rate ("ETR") each period is impacted by a number of factors, including the relative mix of domestic and international earnings, adjustments to the deferred tax valuation allowances, and other items. The currently forecasted ETR may vary from the actual year-end ETR due to the changes in these factors. The Company’s global ETR for the three months ended December 31, 2020 and 2019 was 17% and -1%, respectively. The difference between the ETR’s for the three months ended December 31, 2020 and 2019 was driven by differences in the magnitude of taxable gains in the periods, as well as by the release of the bulk of the deferred tax valuation allowance during the fiscal year ended June 30, 2020, offset by the tax effects of the aviation advance loss provision recorded during the current period.

Six Months Ended December 31, 2020 in Comparison to the Six Months Ended December 31, 2019

Consolidated Revenues and Income. During the six months ended December 31, 2020, we generated $2,107,000 of total revenue, compared to $3,518,000 in the six months ended December 31, 2019, with the decline driven largely by our decreasing participation in the MCA industry. Our net loss for the six months ended December 31, 2020 was $7,944,000, compared to net income of $6,143,000 for the six months ended December 31, 2019. This decrease was primarily attributable to ~~sale~~aviation advance loss provisions, reductions of ~~equity securities~~revenue and other interest income, and an increase in operating expenses due primarily to increased management and performance fees. Additionally, the six months ended December 31, 2019 included an adjustment for the decrease in fair value of contingent consideration for which the agreement was terminated during the ~~period for which we had previously recognized~~fourth quarter of the fiscal year ended June 30, 2020. This was offset by an increase in realized gains on sales of securities and unrealized gains on equity securities.

MCA and ~~upon sale~~Other Financial Services Segment Revenues. We generated $1,967,000 of revenue from MCA and other financial services operations during the six months ended December 31, 2020, compared to $3,327,000 during the six months ended December 31, 2019. During the year ended June 30, 2020, management concluded that it would not resume funding MCAs with Funders. This resulted in a decrease of MCA revenue during the current period. Our MCA and other financial services operations revenues for the six months ended December 31, 2020 and 2019 are as follows:

	Six Months Ended December 31,
	2020		2019

	(Amounts in thousands)
MCA and other financial services revenue	$	1,466	$	1,795
Syndication fee revenue		214		938
Fee income on MCA leads generation		34		155
MCA fees and other revenue		1,714		2,888
Interest on loans to MCA originators		253		439
Total MCA and other financial services operations segment revenue	$	1,967	$	3,327

MCA revenue from interest on loans to Funders is categorized as MCA and other financial services operations revenue for segment reporting purposes but reported as interest on mortgage and commercial loans within our consolidated statements of operations.

Revenues from each of the revenue sources within our MCA segment decreased with the onset of the COVID-19 pandemic. We experienced declines of MCA revenues during the six months ended December 31, 2020. This occurred as (i) fewer merchants are meeting MCA underwriting criteria, which reduces our syndication fee income and ability to generate revenue by funding MCAs, (ii) underwriters are less interested in purchasing leads, and (iii) a portion of our merchants, in coordination with the Funders, have reduced or paused payments to better weather the current economic downturn, which reduces our MCA revenues. Furthermore, we reduced our volume of MCA funding during the six months ended December 31, 2020, primarily as a result of our efforts to better evaluate the impact of the pandemic on MCA assets before funding additional assets. We anticipate continued lower funding and collection volume over the next few months and are uncertain as to the long-term impact of the pandemic at this point. 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 the 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 our continued participation in the MCA industry.

Real Estate Operations Segment Revenues. We generated $140,000 of revenue from interest on commercial mortgage loans during the six months ended December 31, 2020, compared to $191,000 during the six months ended December 31, 2019. The decrease in revenue resulted from originations outpacing borrower repayments.

Selling, General, and Administrative Expenses. Corporate selling, general, and administrative expenses were $2,054,000 for the six months ended December 31, 2020, a $166,000, or 8.8%, increase from the $1,888,000 for the six months ended December 31, 2019. Increases in accounting fees and legal fees, offset by decreases in salaries and benefits compared to the prior period, caused the period-over-period increase.

Selling, general, and administrative expenses for our MCA and other financial services segment were $233,000 for the six months ended December 31, 2020, a $490,000, or 67.8%, decrease from the $723,000 for the six months ended December 31, 2019. This decrease was caused by decreases in commissions and fees related to the decrease in MCA revenue during the period. There were no selling, general, and administrative expenses for our real estate segment in either the six months ended December 31, 2020 or 2019.

Amortization of Purchased Intangibles. Our amortization of purchased intangibles includes amortization over the respective useful lives of the trade name, non-competition agreements, and investor/originator relationships attributable to our acquisition of the assets of Old LuxeMark (the “LuxeMark Acquisition”). Our intangible assets are evaluated for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be fully recoverable. We acquired these intangibles as part of the LuxeMark Acquisition on February 13, 2019 and no impairments or circumstances requiring a testing of impairment of these intangible assets were identified as of or during the six months ended December 31, 2020.

Provision for Credit Losses on Advances. During the six months ended December 31, 2020, we recorded a $13,827,000 provision for credit losses on aviation advances and MCAs, a $13,431,000 increase from the $396,000 for the six months ended December 31, 2019. The period-over-period increase in provision expense resulted from the loss provision recorded against the aviation advances in the current period ~~resulted in a transfer of~~versus the ~~gain from unrealized to realized, while the unrealized loss in the comparative~~ prior period ~~is primarily attributable to declines in the market values of securities.~~(see Note 16).

Other Interest Income. Other interest income includes interest earned on investments in debt securities and cash and money market balances. The components of our interest income for the six months ended December 31, 2020 and 2019 are as follows:

~~Income Tax Provision (Benefit).~~ ~~We reported $0.2 million of~~

	Six Months Ended December 31,
	2020		2019

	(Amounts in thousands)
Interest from cash deposits and debt securities	$	858	$	1,433
Accretion of discounts on purchased debt securities		916		2,366
Payment-in-kind interest		265		483
Other interest income	$	2,039	$	4,282

Other interest income ~~tax expense~~ for the six months ended December 31, 2020 decreased by $2,243,000, or 52.4%, compared to the six months ended December 31, 2019, primarily due to ~~taxes owed~~lower yields on incremental investments in debt securities since December 31, 2019 and accretion of the discounts on these securities.

Realized Gain on Investments, Net. During the six months ended December 31, 2020, we sold investments in certain debt and equity securities for which we recognized $1,408,000 of net realized gains, as compared to $1,919,000 of realized gains on the sale of certain equity and debt securities during the same period in the prior year.

Unrealized (Loss) Gain on Equity Securities, Net. During the six months ended December 31, 2020, we reported unrealized gains on equity securities, net, of $1,240,000, compared to unrealized losses of $158,000 during the six months ended December 31, 2019. Our unrealized gains and losses on equity securities each period are a function of changes in the fair value of the equity securities that we hold as of the current reporting period balance sheet date relative to the preceding balance sheet date. Our unrealized gains during the current period were attributable to an increase in the fair value of equity securities during the period.

Equity in Net Loss from Equity Method Investment. During the six months ended December 31, 2020, we recorded net loss from equity method investment of $53,000. There was no net income ~~earned~~or loss from equity method investment during the same period in ~~states where we do not have NOLs available~~the prior year.

Income Tax Provision. We reported $1,494,000 of income tax benefit for the six months ended December 31, 2020, primarily due to the tax effects of the aviation advance loss provision. The ETR each period is impacted by a number of factors, including the relative mix of domestic and international earnings, adjustments to the valuation allowances, and other items. The currently forecasted ETR may vary from the actual year-end ETR due to the changes in these factors. The Company’s global ETR for the six months ended December 31, 2020 and 2019 was 16% and 2%, respectively. The difference between the ETR’s for the six months ended December 31, 2020 and 2019 was driven by differences in the magnitude of taxable gains in the periods, as well as by the release of the bulk of the deferred tax valuation allowance during the fiscal year ended June 30, 2020, offset ~~such taxable income.~~by the tax effects of the aviation advance loss provision recorded during the current period.

Liquidity and Capital Resources

We do not currently expect the COVID-19 pandemic to significantly affect our liquidity and currently have access to sufficient liquidity and capital resources to continue funding our operations and sustain currently expected levels of capital expenditures over the next twelve months. While we maintain significant amounts of cash and cash equivalents and marketable securities which we may use to fund our operations and make investments, the COVID-19 pandemic has had a significant impact on credit markets, which may adversely affect our ability to access third-party financing. Given our substantial cash balances, we do not anticipate that our future liquidity will be materially impacted by any funding obligations related to our affiliates. Due to the impairment in our aviation deposits held by Wright Brothers, the Company will cease recognizing any related revenue in future periods. Still, the Company does not believe this will affect its overall future liquidity. Our future liquidity will be affected by, among other things:

	·	our future access to capital;
	·	~~our exploration and evaluation of strategic alternatives and development of new operating assets;~~
	·	~~our ability to collect on our commercial loans and advances receivable;~~
	·	~~the liquidity and fair value of our debt and equity securities;~~
	·	~~our ongoing operating expenses; and~~
	·	~~potential liquidation of the Company pursuant to an organized plan of liquidation.~~

our exploration and evaluation of strategic alternatives and development of new operating assets;

our ability to collect on our commercial loans and advances receivable;

the liquidity and fair value of our debt and equity securities; and

our ongoing operating expenses.

Uses and Sources of Cash

Cash Flows from Operating Activities

We used $96,000 and generated ~~$2.1 million and used $0.1 million~~$2,080,000 of cash ~~for~~from operating activities during the six months ended December 31, 2020 and 2019, respectively. Operating cash used during the six months ended December 31, 2020 was primarily attributable to income from operations, adjusted for advance loss provisions, realized and ~~2018, respectively.~~unrealized gains on investments, and the timing of collection of interest income. Operating cash generated during the six months ended December 31, 2019 was primarily attributable to cash income ~~from~~generated by our operations ~~adjusted for non-cash items, partially offset by the timing of collection of interest income. Operating cash usage during the six months ended December 31, 2018 was primarily attributable to~~and investments exceeding our operating ~~costs during the period exceeding cash generating income, as approximately $1.0 million of our income for the period was from non-cash accretion and PIK interest.~~costs.

Cash Flows from Investing Activities

During the six months ended December 31, ~~2019~~2020, we generated ~~$1.9 million~~$7,072,000 of cash, net, from investing activities. Our net cash inflows were primarily driven by liquidations of ~~$2.4 million~~$10,625,000 more in debt and equity securities than investments during the six months ended December 31, ~~2019.~~2020. We also collected $1,850,000 more in mortgage and commercial loans receivable than we funded during the six months ended December 31, 2020. We funded $1,277,000 more in aviation advances and MCAs than we collected during the six months ended December 31, 2020. Additionally, we invested $3,850,000 in an equity method subsidiary during the six months ended December 31, 2020. Remaining investing cash outflows during the six months ended December 31, 2020 resulted from our purchase of a small minority interest in an operating business, and from our continued investment in land parcels for development and resale.

During the six months ended December 31, 2019, we generated $1,893,000 of cash, net, from investing activities. Our net cash inflows were primarily driven by liquidations of $2,384,000 more in debt and equity securities than investments during the period. Partially offsetting the net cash inflows from debt and equity securities, we funded ~~$0.2 million~~$196,000 more in mortgage and commercial loans than we collected during the period, ~~due~~primarily attributable to new loans that we made to ~~originators in the MCA industry.~~Funders. Remaining investing cash outflows during the six months ended December 31, 2019 resulted from our purchase of land parcels for development and resale.

Cash Flows from Financing Activities

During the six months ended December 31, ~~2018~~2020, we used ~~$11.3 million~~$59,000 of cash ~~net,~~for financing activities for distributions to the non-controlling interest and used $2,000 in ~~investing activities. During the prior year period, we originated $4.5 million~~cash for financing activities for payment of short-term mortgage loans and collected $2.0 million in repayments of loans through Recur. Additionally, we provided $7.9 million in MCA funding through our MCA originators, and received $0.9 million in repayments through LMCS. Our remaining investing activities consisted of $8.0 million in purchases and $6.2 million in maturities or sales of debt and equity securities for the purpose of funding our operating expenses as we continuedaccrued dividends related to ~~evolve our real estate and MCA operating businesses and actively search for additional operating businesses to acquire.~~restricted stock releases.

~~Cash Flows from Financing Activities~~

On March 5, 2018, we announced that our Board of Directors authorized the repurchase of up to one million shares of the Company’s common stock. In January 2019, we completed the purchase of the authorized one million shares, and the Board of Directors 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. Purchases are made through private transactions or open market purchases, which 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 Exchange Act of 1934, as amended (the “Exchange Act”)~~. We did not repurchase any shares during~~During the six months ended December 31, 2019, ~~compared~~we used $1,000 of cash for financing activities for payment of accrued dividends related to ~~156,423 shares of the Company’s common~~restricted stock totaling $0.6 million during the six months ended December 31, 2018. All repurchased stock was retired. We may purchase up to 381,119 additional shares pursuant to our previously announced repurchase plan.releases.

Liquidity

We had working capital (current assets less current liabilities) of ~~$50.2~~$43.1 millionat as of December 31, ~~2019,~~2020, compared to working capital of ~~$48.8~~$51.0 million atas of June 30, ~~2019. At~~2020. While the loss of the Company’s aviation deposits had a significant impact on working capital during the quarter, the Company’s working capital remains strong and sufficient to execute on its stated business plans. As of December 31, ~~2019,~~2020, we had no material commitments for capital expenditures.

As of December 31, ~~2019,~~2020, less than 0.1% of our cash was in foreign accounts, and there is no expectation that any foreign cash would need to be transferred from these foreign accounts to cover U.S. operations in the next 12 months.Based upon our existing cash balances, equity securities, and available-for-sale investments, historical cash usage, and anticipated operating cash flow in the current fiscal year, we believe that existing U.S. cash balances will be sufficient to meet our anticipated working capital requirements for at least the next 12 months from the issuance date of this report.

Off-Balance Sheet Arrangements

We had no material off-balance sheet arrangements as of December 31, ~~2019.~~2020.

Recent Accounting Guidance

See “Note 2. Recent Accounting Guidance,” to the accompanying consolidated financial statements for a full description of recent accounting standards, including the respective expected dates of adoption and the expected effects on our consolidated results of operations and financial condition.

Cautionary Statement Regarding Forward-Looking Statements

Certain statements made or incorporated by reference in this Quarterly Report on Form 10-Q may constitute “forward-looking statements” within the meaning of the federal securities laws. When used or incorporated by reference in this report, the words “believes,” “expects,” “estimates,” “anticipates,” and similar expressions, are intended to identify forward-looking statements. Statements regarding future events and developments, our future performance, payment of dividends, ability to utilize our net deferred tax assets and availability of earnings and profits with respect to dividend income, as well as our expectations, beliefs, plans, estimates, or projections relating to the future and current assessments of business opportunities, are forward-looking statements within the meaning of these laws. Examples of our forward-looking statements in this report include, but are not limited to, the duration and impact of the illness caused by the COVID-19 pandemic on the Company’s business plans and expected operating results, the ability of the Board of Directors and the Asset Management Committee of the Board of Directors (the “Asset Management Committee”) to identify suitable business opportunities and acquisition targets and the Company’s ability to consummate transactions with such acquisition targets; our ability to successfully develop our real estate operations; the future of our MCA and ~~MCA operations,~~other financial services operations; the impact of any strategic initiatives we may undertake; the impact of the current reestablishment of and potential for future release of our tax valuation allowances on future income tax provisions and income taxes paid; our expected level of capital additions; our expected cash position; the impact of interest rate changes and fluctuation in currency exchange rates; our sufficiency of cash; ~~and~~ the impact of ~~litigation~~litigation; and the payment of any declared dividends. These statements are based on beliefs and assumptions of our management, which are based on currently available information. All forward-looking statements are subject to certain risks and uncertainties that could cause actual events to differ materially from those projected. The risks and uncertainties which could affect our financial condition or results of operations include, without limitation: the process of evaluating strategic alternatives; the Company’s ability to compete with experienced investors in the acquisition of one or more additional ~~businesses,~~businesses; our ability to utilize our ~~net operating losses~~NOLs to offset cash taxes, in general, and in the event of an ownership change as defined by the Internal Revenue ~~Service;~~Service (the “IRS”); changes in and related uncertainties caused by changes in applicable tax ~~laws,~~laws; the current macroeconomic environment generally and with respect to acquisitions and the financing thereof; continuing unevenness of the global economic recovery; the availability of debt or equity financing to support any liquidity needs; global terrorism; and earthquakes, tsunamis, floods, pandemics, and other natural disasters.

Our forward-looking statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of future events, new information, or otherwise, except as may be required by ~~federal securities~~applicable law.

Other important risk factors that could cause actual results to differ from any forward-looking statements made in this report are discussed in “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019~~2020 and in “Item 1A. Risk Factors” in this report or elsewhere herein.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Pursuant to Item 305(e) of Regulation S-K (Section 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company” as defined by Rule 229.10(f)(1).

Item 4.

Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our periodic and current reports that we file with the SEC is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our President and Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable and not absolute assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As of December 31, ~~2019,~~2020, under the supervision and with the participation of our management, including our ~~Chief Executive Officer~~President and ~~Chief Financial Officer,~~CFO, we conducted an evaluation of the effectiveness of the design and ~~design~~operation of our disclosure controls and procedures, ~~(as that~~as such term is defined in ~~Rule~~Securities Exchange Act of 1934, as amended (the “Exchange Act”) Rules 13a-15(e) ~~of the Exchange Act)~~and 15d-15(e). Based upon that evaluation, our ~~Chief Executive Officer~~President and ~~our Chief Financial Officer~~CFO concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, ~~2019.~~2020.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal controls over financial reporting ~~(as~~as such term is defined ~~by Rule 13a-15(f) of~~in the Exchange ~~Act)~~Act Rules 13a-15(e) and 15d-15(e) during the three months ended December 31, ~~2019~~2020 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

Part II - Other Information

Item 1.

Legal Proceedings

We are, from time to time, party to various routine legal proceedings arising out of our business. While the resolution of any such matter cannot be predicted with certainty, we are not presently involved in any litigation, nor is any legal proceeding currently threatened against us, that we believe, individually or in the aggregate, would have a material adverse effect on our business, financial condition, or results of operations.

Item 1A.

Risk Factors

~~There have been no material changes in~~Our business is subject to risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. Except as noted below, our risk factors have not changed materially from those ~~included~~described in ~~“Item~~“Part I, Item 1A. Risk Factors” inof our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2019.~~2020, filed with the SEC on September 15, 2020.

General Business Risks

The Company may be classified as an inadvertent investment company if we acquire investment securities in excess of 40% of our total assets.

We are engaged in the business of being a diversified holding company engaged in significant finance and real estate activities while we continue to seek to acquire or establish other finance or operating businesses or assets. Our acquisition strategy focuses on evaluating acquisition targets that have reasonable growth prospects and that could benefit from our substantial NOLs, and our management spends a significant portion of its time reviewing potential acquisitions, conducting due diligence, and seeking to negotiate transaction terms. From time to time, we have purchased investment securities as part of a deliberate strategy to obtain control of an operating business.

Under the Investment Company Act of 1940 (the “ICA”), a company may fall within the scope of being an “inadvertent investment company” under Section 3(a)(1)(C) of the ICA if the value of its investment securities (as defined in the ICA) is more than 40% of the company’s total assets on an unconsolidated basis (exclusive of government securities and cash and cash equivalents). We do not believe that we are engaged in the business of investing, reinvesting, or trading in securities, and we do not hold ourselves out as being engaged in the business of investing, reinvesting, or trading in securities. However, with the assistance of CIDM II, LLC (“CIDM II,” or the “Asset Manager”), we seek prudently to hold excess liquid resources in marketable securities to preserve resources needed to acquire operating businesses or assets and fund our finance and real estate activities.

An inadvertent investment company can avoid being classified as an investment company if it can rely on one of the exclusions under the ICA. One such exclusion, Rule 3a-2 under the ICA, allows an inadvertent investment company a grace period of one year from the earlier of (i) the date on which an issuer owns securities and/or cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis, and (ii) the date on which an issuer owns or proposes to acquire investment securities having a value exceeding 40% of the value of such issuer’s total assets (exclusive of government securities and cash items) on an unconsolidated basis. We are putting in place policies that we expect will work to keep the investment securities held by us at less than 40% of our total assets, which may include selling certain of our investments on disadvantageous terms, holding a greater proportion of our investments in marketable securities in U.S. government securities or cash equivalents that have a lower rate of return than other investment securities, or making other material modifications to our business operations and strategy, any or all of which could have a material adverse effect on our business, financial condition, results of operations, and future prospects.

As Rule 3a-2 is available to a company no more than once every three years, and assuming no other exclusion were available to us, we would have to keep within the 40% limit for at least three years after we ceased being an inadvertent investment company. This may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to become an investment company engaged in the business of investing and trading securities.

The Board of Directors and management regularly monitor the Company’s status relative to the inadvertent investment company test under the ICA and believe that the Company is not, currently or as of December 31, 2020, an inadvertent investment company based on the assets test under Section 3(a)(1)(C) of the ICA. The effects of the COVID-19 pandemic and resulting economic downturn have adversely impacted the Company’s acquisition activities due to the reduced level of merger and acquisition activity and the difficulty for buyers and sellers to agree on valuations and transaction terms.

Classification as an investment company under the ICA requires registration with the SEC. If an investment company fails to register, it would have to stop doing almost all business, and its contracts would become voidable. Registration is time-consuming and restrictive and would require a restructuring of our operations, and we would be very constrained in the kind of business we could do as a registered investment company. Further, we would become subject to substantial regulation concerning management, operations, transactions with affiliated persons, and portfolio composition, and would need to file reports under the ICA regime. The cost of such compliance would result in our incurring substantial additional expenses, and the failure to register if required would have a materially adverse impact to conduct our operations. We do not believe that it would be practical or feasible for a company of our size, management, and financial resources to operate as a registered investment company.

Our limited operating history makes it difficult to evaluate our future business prospects and to make decisions based on our historical performance.

Although our executive officers have been engaged in the industries in which we operate for varying degrees of time, we did not begin operations of our current business until recently. We have a very limited operating history in our current form, which makes it difficult to evaluate our business on the basis of historical operations. As a consequence, it is difficult, if not impossible, to forecast our future results based upon our historical data. Reliance on our historical results may not be representative of the results we will achieve, and for certain areas in which we operate, will not be indicative at all. Because of the uncertainties related to our lack of historical operations, we may be hindered in our ability to anticipate and timely adapt to increases or decreases in sales, product costs or expenses. If we make poor budgetary decisions as a result of unreliable historical data, we could be less profitable or incur losses, which may result in a decline in our stock price.

We have an evolving business model, which increases the complexity of our business.

Our business model has evolved in the past and continues to do so. In prior years we have added additional types of services and product offerings and, in some cases, we have modified or discontinued those offerings. We intend to continue to try to offer additional types of products or services, and we do not know whether any of them will be successful. From time to time, we have also modified aspects of our business model relating to our product mix. We do not know whether these or any other modifications will be successful. The additions and modifications to our business have increased the complexity of our business and placed significant strain on our management, personnel, operations, systems, technical performance, financial resources, and internal financial control and reporting functions. Future additions to or modifications of our business are likely to have similar effects. Further, any new business or website we launch that is not favorably received by the market could damage our reputation or our brand. The occurrence of any of the foregoing could have a material adverse effect on our business.

We are a holding company whose subsidiaries are given certain degree of independence and our failure to integrate our subsidiaries may adversely affect our financial condition.

We have given our subsidiary companies and their executives a certain degree of independence in decision-making. On the one hand, this independence may increase the sense of ownership at all levels, on the other hand, it has also increased the difficulty of the integration of operation and management, which has resulted in increased difficulty of management integration. In the event we are not able to successfully manage our subsidiaries, this will result in operating difficulties and have a negative impact on our business.

Acquisition Risks

If we make any additional acquisitions, they may disrupt or have a negative impact on our business.

We have plans to eventually make additional acquisitions beyond the LuxeMark Acquisition. Whenever we make acquisitions, we could have difficulty integrating the acquired companies’ personnel and operations with our own. In addition, the key personnel of the acquired business may not be willing to work for us. We cannot predict the effect expansion may have on our core business. Regardless of whether we are successful in making an acquisition, the negotiations could disrupt our ongoing business, distract our management and employees, and increase our expenses. In addition to the risks described above, acquisitions are accompanied by a number of inherent risks, including, without limitation, the following:

	~~Item 2.~~·	~~Unregistered Sales~~difficulty of ~~Equity Securities~~integrating acquired products, services, or operations;
	·	potential disruption of the ongoing businesses and ~~Use~~distraction of ~~Proceeds~~our management and the management of acquired companies;
	·	difficulty of incorporating acquired rights or products into our existing business;
	·	difficulties in disposing of the excess or idle facilities of an acquired company or business and expenses in maintaining such facilities;
	·	difficulties in maintaining uniform standards, controls, procedures, and policies;
	·	potential impairment of relationships with employees and customers as a result of any integration of new management personnel;
	·	potential inability or failure to achieve additional sales and enhance our customer base through cross-marketing of the products to new and existing customers;
	·	effect of any government regulations which relate to the business acquired; and
	·	potential unknown liabilities associated with acquired businesses or product lines, or the need to spend significant amounts to retool, reposition, or modify the marketing and sales of acquired products or the defense of any litigation, whether or not successful, resulting from actions of the acquired company prior to our acquisition.

~~None.~~Our business could be severely impaired if and to the extent that we are unable to succeed in addressing any of these risks or other problems encountered in connection with these acquisitions, many of which cannot be presently identified. These risks and problems could disrupt our ongoing business, distract our management and employees, increase our expenses, and adversely affect our results of operations.

No assurance of successful expansion of operations.

Our increase in the scope and the scale of our operations, including the hiring of additional personnel, has resulted in higher operating expenses. We anticipate that our operating expenses will continue to increase. Expansion of our operations may also make significant demands on our management, finances, and other resources. Our ability to manage the anticipated future growth, should it occur, will depend upon a significant expansion of our accounting and other internal management systems and the implementation and subsequent improvement of a variety of systems, procedures, and controls. We cannot assure that significant problems in these areas will not occur. Failure to expand these areas and implement and improve such systems, procedures, and controls in an efficient manner at a pace consistent with our business could have a material adverse effect on our business, financial condition, and results of operations. We cannot assure that attempts to expand our marketing, sales, manufacturing, and customer support efforts will succeed or generate additional sales or profits in any future period. As a result of the expansion of our operations and the anticipated increase in our operating expenses, along with the difficulty in forecasting revenue levels, we expect to continue to experience significant fluctuations in our results of operations.

MCA Risks

The MCA industry faces potential regulation from the U.S. Department of Treasury.

With the growing emergence of MCA providers and concerns raised by small business advocacy groups, the U.S. Department of Treasury (the “Treasury”) released a statement outlining its objectives regarding small business financing, calling for more robust small business borrower protections and effective oversight, with commentators arguing that small businesses should receive enhanced protections. The statement also details the Treasury’s desire to expand small business access to capital through partnerships between traditional and non-traditional lenders. The Treasury highlights two possible types of partnerships: (i) a referral partnership in which merchants that are unable to meet certain criteria or seeking products not offered by their financial institution are directed to an MCA provider or other alternative financing provider and (ii) co-branded or white-label partnerships, where financial institutions contract with non-traditional lenders to integrate technology services.

The legal requirements applicable to both non-traditional and traditional financing institutions may vary depending on the type of partnership. These laws may include consumer protection statutes and regulations, anti-money laundering regulations, and fair lending requirements, in addition to relevant state laws or regulations. Before engaging in these partnerships, traditional financiers may request all transactions be monitored by the institutions’ prudential regulator to the extent an MCA provider is performing functions on behalf of the financial institution. An increasing number of partnerships may cause the Treasury to re-examine registration requirements for non-traditional financing lenders, including MCA providers.

If our MCA transactions are characterized as loans, we face potential legal and financial risks.

As the MCA industry has gained popularity, more focus has been placed on the contractual obligations in MCA agreements. An ambiguous and unclear contract may result in the transaction being regarded as a loan. Currently, the common law rules in each state, generally, hold that an unconditional repayment obligation classifies an advance as a “loan.” An MCA that is classified as a “loan” creates potential legal and financial risks, including, but not limited to: (i) non-compliance with federal and state regulations; (ii) breach of good faith and classification as an unconscionable contract; and (iii) non-possession of the required lending licenses. In order to prevent an MCA from being classified as a “loan,” we take the following actions: (i) create a clear and unambiguous agreement between a funder and a merchant; (ii) establish conditional and non-illusory repayment terms that are contingent on the future sales receipts of a merchant; (iii) restrict the use of collateral and the requirement of absolute repayment; and (iv) ensure the conditional repayment obligations for both the business and the personal guaranty are equivalent. Notwithstanding the steps we take to clarify that our MCA transactions are not loans, courts may interpret our agreements differently.

Our MCA transactions are subject to the ability of merchants to continue to make payments.

The amount of customer purchases at a given business tends to change rather frequently, with fluctuations occurring daily. Therefore, there is no guarantee that a certain daily payment, as agreed to in the terms, will remain stable, if at all. The volatility of the market and conditional repayment terms of an MCA can cause the expected repayment term to vary. An MCA may result in a loss or total loss within a short period of time if a merchant is unable to maintain its business. Such volatility stems from various sources, including market information, supply and demand for a particular product, and national and international news.

Due diligence in MCA transactions is not as stringent as that of traditional loans, which presents a greater risk of fraud and inaccurate valuations.

The required information to be provided by a merchant for an MCA is less stringent and differs from that provided for traditional capital advances and loans from institutional lenders, giving rise to numerous risks. These risks include, but are not limited to, a Funder receiving fraudulent or inaccurate financial data from a merchant, entering into a transaction with a merchant who has historical and/or current credit related issues, and facing market shifts which may outdate the market research a Funder uses to create its approval methodology. Although the Uniform Commercial Code governs MCA transactions as commercial transactions and provides for certain legal protections, the lack of collateral required in MCA transactions presents a risk of total and unrecoverable loss.

We face risks by using Automated Clearing House (“ACH”) payments.

ACH transactions are payments that are electronically transferred from one verified bank account to another. ACH payments are used by funders to debit a merchant’s account. The time difference between when an ACH payment is initiated and when it is settled is referred to as “floating.” The floating time when participating in an MCA originated by a funder is approximately 11 days. ACH payments are not guaranteed to a funder and can be returned. Thus, we must take the floating time into consideration when calculating collections. In addition, there is an inherent risk that a merchant’s ACH payment may be denied and a funder may not receive a payment from a merchant when due.

Item 6.

Exhibits

Exhibit No.		Description of Document

3.1		Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-2 (File No. 33-62440)).

3.2		Certificate of Amendment of the Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Proxy on Form DEFR14A filed on June 2, 2008 (File No. ~~000-13150)~~001-13150)).

3.3		Certificate of Amendment to its Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on June 30, 2011 (File No. 000-13150)).

3.4		Certificate of Correction to Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2002 (File No. 000-13150)).

3.5		Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002 (File No. 000-13150)).

3.6		Amendment to Amended Certificate of Designations of Series A Participating Cumulative Preferred Stock (incorporated by reference to the Form 8-A/A, dated August 9, 2002) (File No. 000-13150).

3.7		Certificate of Designations of Series B Preferred Stock (incorporated by reference to the Company’s Current Report on Form 8-K filed on March 1, 2016).

3.8		Certificate of Amendment to the Restated Certificate of Incorporation of Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 7, 2016).

3.9		Certificate of Elimination of Series B Participating Preferred Stock of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 7, 2016).

~~3.10~~
3.10	Certificate of Amendment to the Restated Certificate of Incorporation of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 31, 2017).

3.11		Amended and Restated Bylaws of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 5, 2018).

3.12		Certificate of Amendment to Restated Certificate of Incorporation dated as of January 2, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on January 5, 2018).

3.13		Certificate of Amendment to Restated Certificate of Incorporation dated as of November 8, 2018 (incorporated by reference to the Company’s Current Report on Form 8-K filed on November 13, 2018).

10.1	Amendment to Operating Agreement of LM Capital Solutions, LLC by and among LM Capital Solutions, LLC, AZOKKB LLC, CCUR Holdings, Inc., Igor Volshteyn, Warren Sutherland and Oskar Kowalski (incorporated by reference to the Company’s Current Report on Form 8-K filed on July 22, 2020).

10.6*	Amendment to Amended Management Agreement, dated January 6, 2021

31.1*		Certification of Principal Executive Officer, Pursuant to Rule 13a-14(a)/15d-14(a), as ~~Adopted Pursuant~~adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certification of Principal Financial Officer, Pursuant to Rule 13a-14(a)/15d-14(a), as ~~Adopted Pursuant~~adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1**		~~Certification~~Certifications of Principal Executive Officer ~~Pursuant~~and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as ~~Adopted Pursuant~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2**		~~Certification of Principal Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~

101.INS*		XBRL Instance Document.

101.SCH*		XBRL Taxonomy Extension Schema Document.

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*		XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document.

* Filed herewith

** 
^* Filed herewith
^** Furnished herewith

SIGNATURES

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

Date: February ~~5, 2020~~

16, 2021

CCUR HOLDINGS, INC.

	By:	/s/ Igor Volshteyn
		Igor Volshteyn
		President and Chief Operating Officer
		(Principal Executive Officer and Principal Financial Officer)

	By:	/s/ ~~Warren Sutherland~~Jonathan Tegge
		~~Warren Sutherland~~Jonathan Tegge
		Chief Financial Officer
		(Principal ~~Financial Officer and Principal~~ Accounting Officer)

Delaware		04-2735766
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification ~~No.)~~Number)

		~~Name of each exchange on which~~
~~Title of each class~~	~~Trading Symbol(s)~~	~~registered~~
~~None~~

Large accelerated filer ¨		Accelerated filer ¨
Non-accelerated filer þx		Smaller reporting company þx
		Emerging growth company ¨

		Page
	Part I – Financial Information

Item 1.	Financial Statements

	Consolidated Balance Sheets (Unaudited)	3

	Consolidated Statements of Operations (Unaudited)	4

	Consolidated Statements of Comprehensive (Loss) Income ~~(Loss)~~ (Unaudited)	5

	Consolidated Statements of Stockholders’ Equity (Unaudited)	6

	Consolidated Statements of Cash Flows (Unaudited)	8

	Notes to Consolidated Financial Statements (Unaudited)	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2327

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3036

Item 4.	Controls and Procedures	3036

	Part II – Other Information

Item 1.	Legal Proceedings	3137

Item 1A.	Risk Factors	3137

Item 2.6.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Exhibits	31

~~Item 6.~~	~~Exhibits~~	3141

								December 31, 2020			June 30, 2020
	December 31, 2019			June 30, 2019				(Unaudited)
ASSETS							ASSETS
Current assets:
Cash and cash equivalents	$	12,043		$	8,083			$	16,223		$	9,336
Equity securities, fair value		5,639			7,405				13,269			7,372
Fixed maturity securities, available-for-sale, fair value		22,776			20,393				12,893			21,429
Current maturities of mortgage and commercial loans receivable		637			3,184				3,634			3,878
Advances receivable, net		9,353			9,389				111			11,436
Prepaid expenses and other current assets		2,202			1,779				599			1,204
Total current assets		52,650			50,233				46,729			54,655

Land investment		3,546			3,265				3,596			3,568
Deferred income taxes, net		237			475				7,691			6,632
Mortgage and commercial loans receivable, net of current maturities		6,490			3,680				104			1,695
Definite-lived intangibles, net		2,671			2,910				1,677			1,870
Goodwill		1,260			1,260				480			480
Equity method investment									3,850			-
Other long-term assets, net		580			651				762			950
Total assets	$	67,434		$	62,474			$	64,889		$	69,850

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	886		$	660			$	690		$	803
Notes payable, current		1,600			-
Contingent consideration, current		-			750
Management fee payable									2,915			2,841
Total current liabilities		2,486			1,410				3,605			3,644

Long-term liabilities:
Pension liability		4,086			4,136				4,396			4,005
Contingent consideration, long-term		2,690			2,340
Long-term debt		-			1,600
Other long-term liabilities		535			632				628			912
Total liabilities		9,797			10,118				8,629			8,561

Commitments and contingencies (Note 14)
Commitments and contingencies (Note 15)

Stockholders' equity:
Shares of series preferred stock, par value $0.01; 1,250,000 authorized; none issued		-			-				-			-
Shares of class A preferred stock, par value $100; 20,000 authorized; none issued		-			-				-			-
Shares of common stock, par value $0.01; 14,000,000 authorized; 8,761,156 and 8,756,156 issued and outstanding at December 31, 2019, and June 30, 2019, respectively		87			87
Shares of common stock, par value $0.01; 14,000,000 authorized; 8,839,344 and 8,797,671 issued and outstanding at December 31, 2020, and June 30, 2020, respectively									88			88
Capital in excess of par value		209,076			208,881				209,276			209,223
Non-controlling interest		1,214			762				1,179			1,261
Accumulated deficit		(144,652	)		(150,795	)			(150,978	)		(143,077	)
Accumulated other comprehensive loss		(8,088	)		(6,579	)			(3,305	)		(6,206	)
Total stockholders' equity		57,637			52,356				56,260			61,289
Total liabilities, non-controlling interest, and stockholders' equity	$	67,434		$	62,474			$	64,889		$	69,850

	Three Months Ended December 31, 2020
											Accumulated
	Common Stock				Capital In						Other			Non-
			Par		Excess Of			Accumulated			Comprehensive			Controlling
	Shares		Value		Par Value			Deficit			Income (Loss)			Interest			Total
Balance at September 30, 2020		8,797,671	$	88	$	209,283		$	(142,674	)	$	(7,093	)	$	1,224		$	60,828
Share-based compensation expense						166												166
Lapse of restrictions on restricted stock		41,673																-
Forfeitures of restricted stock						(161	)											(161	)
Forfeitures of stock options						(12	)											(12	)
Dividends forfeited with restricted stock forfeitures									29									29
Distributions to non-controlling interest															(44	)		(44	)
Other comprehensive (loss) income, net of taxes:
Net loss									(8,333	)					(1	)		(8,334	)
Unrealized gain on available-for-sale investments												3,964						3,964
Foreign currency translation adjustment												(127	)					(127	)
Pension plan												(49	)					(49	)
Total comprehensive loss																		(4,546	)
Balance at December 31, 2020		8,839,344	$	88	$	209,276		$	(150,978	)	$	(3,305	)	$	1,179		$	56,260

	Three Months Ended December 31, 2019																	Three Months Ended December 31, 2019
										Accumulated																	Accumulated
	Common Stock				Capital In					Other			Non-					Common Stock				Capital In					Other			Non-
			Par		Excess Of		Accumulated			Comprehensive			Controlling							Par		Excess Of		Accumulated			Comprehensive			Controlling
	Shares		Value		Par Value		Deficit			Income (Loss)			Interest		Total			Shares		Value		Par Value		Deficit			Income (Loss)			Interest		Total
Balance at September 30, 2019		8,756,156	$	87	$	208,980	$	(147,389	)	$	(6,562	)	$	917	$	56,033			8,756,156	$	87	$	208,980	$	(147,389	)	$	(6,562	)	$	917	$	56,033
Share-based compensation expense						96										96							96										96
Lapse of restrictions on restricted stock		5,000																	5,000														-
Other comprehensive income, net of taxes:
Net income								2,737						297		3,034									2,737						297		3,034
Unrealized loss on available-for-sale investments											(1,438	)				(1,438	)											(1,438	)				(1,438	)
Foreign currency translation adjustment											(42	)				(42	)											(42	)				(42	)
Pension plan											(46	)				(46	)											(46	)				(46	)
Total comprehensive income																1,508																	1,508
Balance at December 31, 2019		8,761,156	$	87	$	209,076	$	(144,652	)	$	(8,088	)	$	1,214	$	57,637			8,761,156	$	87	$	209,076	$	(144,652	)	$	(8,088	)	$	1,214	$	57,637

	Three Months Ended December 31, 2018
													Accumulated
	Common Stock						Capital In						Other			Non-
				Par			Excess Of			Accumulated			Comprehensive			Controlling
	Shares			Value			Par Value			Deficit			Income (Loss)			Interest		Total
Balance at September 30, 2018		9,094,069		$	91		$	210,027		$	(151,480	)	$	(3,469	)	$	-	$	55,169
Share-based compensation expense								16											16
Repurchase and retirement of stock		(133,415	)		(1	)		(499	)										(500	)
Lapse of restrictions on restricted stock		7,500
Other comprehensive loss, net of taxes:
Net loss											(1,530	)							(1,530	)
Unrealized loss on available-for-sale investments														(1,813	)				(1,813	)
Foreign currency translation adjustment														53					53
Pension plan														16					16
Total comprehensive loss																			(3,274	)
Balance at December 31, 2018		8,968,154		$	90		$	209,544		$	(153,010	)	$	(5,213	)	$	-	$	51,411

	Six Months Ended December 31, 2020
											Accumulated
	Common Stock				Capital In						Other			Non-
			Par		Excess Of			Accumulated			Comprehensive			Controlling
	Shares		Value		Par Value			Deficit			Income (Loss)			Interest			Total
Balance at June 30, 2020		8,797,671	$	88	$	209,223		$	(143,077	)	$	(6,206	)	$	1,261		$	61,289
Share-based compensation expense						292												292
Lapse of restrictions on restricted stock		41,673																-
Forfeitures of restricted stock						(227	)											(227	)
Forfeitures of stock options						(12	)											(12	)
Dividends forfeited with restricted stock forfeitures									43									43
Distributions to non-controlling interest															(59	)		(59	)
Other comprehensive (loss) income, net of taxes:
Net loss									(7,944	)					(23	)		(7,967	)
Unrealized gain on available-for-sale investments												3,236						3,236
Foreign currency translation adjustment												(241	)					(241	)
Pension plan												(94	)					(94	)
Total comprehensive loss																		(5,066	)
Balance at December 31, 2020		8,839,344	$	88	$	209,276		$	(150,978	)	$	(3,305	)	$	1,179		$	56,260

	Six Months Ended December 31, 2019
										Accumulated
	Common Stock				Capital In					Other			Non-
			Par		Excess Of		Accumulated			Comprehensive			Controlling
	Shares		Value		Par Value		Deficit			Income (Loss)			Interest		Total
Balance at June 30, 2019		8,756,156	$	87	$	208,881	$	(150,795	)	$	(6,579	)	$	762	$	52,356
Share-based compensation expense						195										195
Lapse of restrictions on restricted stock		5,000														-
Other comprehensive income, net of taxes:
Net income								6,143						452		6,595
Unrealized loss on available-for-sale investments											(1,609	)				(1,609	)
Foreign currency translation adjustment											56					56
Pension plan											44					44
Total comprehensive income																5,086
Balance at December 31, 2019		8,761,156	$	87	$	209,076	$	(144,652	)	$	(8,088	)	$	1,214	$	57,637

	Six Months Ended December 31, 2018
													Accumulated
	Common Stock						Capital In						Other			Non-
				Par			Excess Of			Accumulated			Comprehensive			Controlling
	Shares			Value			Par Value			Deficit			Income (Loss)			Interest		Total
Balance at June 30, 2018		9,117,077		$	91		$	210,083		$	(151,795	)	$	(2,313	)	$	-	$	56,066
Share-based compensation expense								74											74
Repurchase and retirement of stock		(156,423	)		(1	)		(613	)										(614	)
Lapse of restrictions on restricted stock		7,500
Adoption of ASU 2016-01											318			(318	)
Other comprehensive loss, net of taxes:
Net loss											(1,533	)							(1,533	)
Unrealized loss on available-for-sale investments														(2,690	)				(2,690	)
Foreign currency translation adjustment														76					76
Pension plan														32					32
Total comprehensive loss																			(4,115	)
Balance at December 31, 2018		8,968,154		$	90		$	209,544		$	(153,010	)	$	(5,213	)	$	-	$	51,411

	Three Months Ended December 31,			Six Months Ended December 31,			Three Months Ended				Six Months Ended
		2019	2018		2019	2018	December 31,				December 31,
Basic weighted average number of shares outstanding		8,758,710	9,034,368		8,757,433	9,069,947
							2020		2019		2020		2019
Basic weighted-average number of shares outstanding								8,800,171		8,758,710		8,798,928		8,757,433
Effect of dilutive securities:
Restricted stock		82,160	-		68,150	-		-		82,160		-		68,150
Diluted weighted average number of shares outstanding		8,840,870	9,034,368		8,825,583	9,069,947
Diluted weighted-average number of shares outstanding								8,800,171		8,840,870		8,798,928		8,825,583

									As of December 31, 2020 Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	As of December 31, 2019 Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(Amounts in thousands)								(Amounts in thousands)
Cash	$	7,109	$	7,109	$	-	$	-	$	14,886	$	14,886	$	-	$	-
Money market funds		4,934		4,934		-		-		1,337		1,337		-		-
Cash and cash equivalents	$	12,043	$	12,043	$	-	$	-	$	16,223	$	16,223	$	-	$	-

Common stock	$	2,756	$	2,756	$	-	$	-
Common stock and common stock options									$	8,396	$	8,396	$	-	$	-
Preferred stock		2,883		-		-		2,883		4,873		2,187		-		2,686
Equity investments	$	5,639	$	2,756	$	-	$	2,883	$	13,269	$	10,583	$	-	$	2,686

Corporate debt	$	22,776	$	-	$	22,776	$	-	$	12,893	$	-	$	12,893	$	-
Available-for-sale investments	$	22,776	$	-	$	22,776	$	-	$	12,893	$	-	$	12,893	$	-

Contingent consideration - cash earn-out	$	2,520	$	-	$	-	$	2,520
Contingent consideration - warrants		170		-		-		170
Liabilities	$	2,690	$	-	$	-	$	2,690

									As of June 30, 2020 Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	As of June 30, 2019 Fair Value		Quoted Prices in Active Markets (Level 1)		Observable Inputs (Level 2)		Unobservable Inputs (Level 3)
	(Amounts in thousands)								(Amounts in thousands)
Cash	$	5,223	$	5,223	$	-	$	-	$	4,473	$	4,473	$	-	$	-
Money market funds		2,860		2,860		-		-		4,863		4,863		-		-
Cash and cash equivalents	$	8,083	$	8,083	$	-	$	-	$	9,336	$	9,336	$	-	$	-

Common stock warrants	$	1	$	1	$	-	$	-
Common stock		4,521		4,521		-		-
Common stock and common stock options									$	4,489	$	4,489	$	-	$	-
Preferred stock		2,883		-		-		2,883		2,883		-		-		2,883
Equity investments	$	7,405	$	4,522	$	-	$	2,883	$	7,372	$	4,489	$	-	$	2,883

Corporate debt	$	20,393	$	-	$	20,393	$	-	$	21,429	$	-	$	21,429	$	-
Available-for-sale investments	$	20,393	$	-	$	20,393	$	-	$	21,429	$	-	$	21,429	$	-

Contingent consideration - cash earn-out	$	2,890	$	-	$	-	$	2,890
Contingent consideration - warrants		200		-		-		200
Liabilities	$	3,090	$	-	$	-	$	3,090

	Assets		Obligations
	Preferred		Contingent
	Stock		Consideration
	(Amounts in thousands)
Balance at June 30, 2019	$	2,883	$	3,090
Fair value adjustment to contingent consideration		-		(400	)
Balance at December 31, 2019	$	2,883	$	2,690

		Fair Value		Valuation Methodology	Unobservable Inputs	Range of Inputs
Equity securities, fair value
	Preferred stock	$	2,883	cost, or observable price changes	not applicable	not applicable

Contingent consideration
	Contingent cash payments	$	2,520	Monte Carlo simulations	discount rate	12.0%
					expected volatility	25.0%
					drift rate	1.6%
					credit spread	8.0%

	Contingent warrants	$	170	Black-Scholes, Monte Carlo simulations	expected term	5.37 years
					expected volatility	25.0%
					risk free rate	1.7%
					dividend yield	0.0%

Other Loans Receivable	Carrying Value
Balance at July 1, 2019	$	2,750
Additions during the period:
Borrowings		2,750
Balance at December 31, 2019	$	5,500