****

**UNITED STATES** 

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, DC 20549**

 

**FORM 10-K**

 

| ☐ | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|------------------------------------------------------------------------------------------|

 

**For the fiscal year ended December 31, 2019**

 

**or**

 

| ☐ | **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|---------|----------------------------------------------------------------------------------------------|

 

**Commission file number: 000-53504***

 

**CrossroadsLiquidating Trust**

(Exact Name of Registrant as Specified in its Charter)

 

| **Maryland**                                                  |   | **82-6403908**                     |
|---------------------------------------------------------------|--------|------------------------------------|
| State or Other Jurisdiction of

Incorporation or Organization |   | I.R.S. Employer Identification No. |
|                                                          |   |                               |
| **128 N. 13th Street, Suite #1100, Lincoln, NE**              |   | **68508**                          |
| Address of Principal Executive Offices                        |   | Zip Code                           |

 

Registrant’s telephone number, includingarea code **(402) 261-5345**

 

Securities registered pursuant to Section 12(b) of the Act:

 

| **Title ofeach class** | **Trading Symbol(s)** | **Name of eachexchange on which registered** |
|------------------------|-----------------------|----------------------------------------------|
| N/A                    | N/A                   | N/A                                          |

 

Securities registered pursuant to Section 12(g) of the Act:

 

None

(Title of Class)

 

Indicate by check mark if the registrant is a well-knownseasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

 

Indicate by check mark if the registrant is not requiredto file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☐ *

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☐ *

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☐ No☐  *

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “accelerated filer,” “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

| Large accelerated filer ☐ | Accelerated filer ☐              |
|-------------------------------------------------|---------------------------------------------------|
| Non-accelerated filer ☒         | Smaller reporting company ☐ |
|                                            | Emerging growth company ☐        |

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐ No ☒.

 

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.  Not applicable.*

 

As of May 15, 2020, the number of outstanding units of beneficial interest in Crossroads Liquidating Trust was 9,563,130.

 

**DOCUMENTS INCORPORATED BY REFERENCE**

 

None.

 

| * | Crossroads Capital, Inc. converted to Crossroads Liquidating Trust on June 23, 2017. Accordingly, Crossroads Liquidating Trust files reports under the Commission file number for Crossroads Capital, Inc.  Crossroads Capital, Inc. filed a Form N-54C on June 23, 2017, indicating the withdrawal of its election to be subject to sections 55 through 65 of the Investment Company Act of 1940 (the “Act”), pursuant to the provisions of section 54(c) of the Act. |
|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

 

 

**TABLE OF CONTENTS**

 

|       |                                                                                                                | **Page** |
|------------|---------------------------------------------------------------------------------------------------------------------|----------|
|       | **PartI**                                                                                                           |     |
| Item 1.    | Business                                                                                                            | 4        |
| Item 1A.   | Risk Factors                                                                                                        | 5        |
| Item 1B.   | Unresolved Staff Comments                                                                                           | 9        |
| Item 2.    | Properties                                                                                                          | 9        |
| Item 3.    | Legal Proceedings                                                                                                   | 9        |
| Item 4.    | Mine Safety Disclosures                                                                                             | 9        |
|       |                                                                                                                |     |
|       | **PartII**                                                                                                          |     |
| Item 5.    | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 10       |
| Item 6.    | Selected Financial Data                                                                                             | 10       |
| Item 7.    | Management’s Discussion and Analysis of Financial Condition and Results of Operations                        | 10       |
| Item 7A.   | Quantitative and Qualitative Disclosures About Market Risk                                                          | 13       |
| Item 8.    | Financial Statements                                                                                                | 14       |
| Item 9.    | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                                | 15       |
| Item 9A.   | Controls and Procedures                                                                                             | 15       |
| Item 9B.   | Other Information                                                                                                   | 15       |
|       |                                                                                                                |     |
|       | **PartIII**                                                                                                         |     |
| Item 10.   | Directors, Executive Officers and Corporate Governance                                                              | 16       |
| Item 11.   | Executive Compensation                                                                                              | 16       |
| Item 12.   | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters                      | 16       |
| Item 13.   | Certain Relationships and Related Transactions, and Director Independence                                           | 17       |
| Item 14.   | Principal Accountant Fees and Services                                                                              | 17       |
|       |                                                                                                                |     |
|       | **PartIV**                                                                                                          |     |
| Item 15.   | Exhibits and Financial Statement Schedules                                                                          | 18       |
| Item 16.   | Form 10-K Summary                                                                                                   | 18       |
| Signatures | 19                                                                                                                  |

 

 

 

 

**INTRODUCTORY NOTE**

 

As used in this annual report on Form 10-K, unless otherwise indicated, the “Trust”, “Liquidating Trust”, “we”, “us” or “our” refer to Crossroads Liquidating Trust.

 

**Forward-Looking Statements**

 

This annual report on Form 10-K contains forward-looking statements that involve substantial risks and uncertainties.  These forward-looking statements represent our current expectations, assumptions, estimates and projections regarding Crossroads Liquidating Trust, including estimates of the net assets of the Trust, statements about the amount and timing of the payment of additional liquidating distributions and statements about the Trust’s operating costs through termination of the Trust, which will vary with the length of time it operates.  These forward-looking statements are subject to substantial risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed in, or implied by, these forward-looking statements.

 

Although we believe that the assumptions on which these forward-looking statements are based are reasonable, any of those assumptions could prove to be inaccurate, and as a result, the forward-looking statements based on those assumptions also could be materially inaccurate.  In light of these and other uncertainties, the inclusion of projections or forward-looking statements in this annual report on Form 10-K should not be regarded as a representation by us that our Plan of Liquidation will be achieved.  These risks and uncertainties include those described or identified in “Risk Factors” in this annual report on Form 10-K.  You should not place undue reliance on these forward-looking statements, which apply only as of the date of this annual report on Form 10-K.  Except as required by the federal securities laws, we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, to reflect events or circumstances occurring after the date of this annual report on Form 10-K.

 

 

3 

 

**PART I**

 

**Item 1.  Business**

 

**Overview**

 

Crossroads Liquidating Trust (the “Liquidating Trust” or the “Trust”) operates as a statutory trust under the general laws of the State of Maryland following the conversion of Crossroads Capital, Inc. (“Crossroads Capital”) into Crossroads Liquidating Trust pursuant to a Plan of Liquidation (the “Plan”).  The sole purpose of the Trust is the liquidation of its assets and distribution of its proceeds to the holders of the beneficial interests in the Liquidating Trust. 

 

Pursuant to the Plan, the Liquidating Trust is scheduled to complete liquidation activities on or before June 23, 2020.  On February 28, 2020, the Liquidating Trust engaged a market advisory firm to locate potential purchasers and assist selling the remaining assets of the Trust.

 

Prior to conversion, Crossroads Capital, Inc. (“Crossroads Capital”) elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).  On June 23, 2017, Crossroads Capital and each of the trustees of the Liquidating Trust (the “Trustees”) executed the Liquidating Trust Agreement (the “Liquidating Trust Agreement”) in connection with the conversion of Crossroads Capital into Crossroads Liquidating Trust pursuant to the Plan.  On June 23, 2017, Crossroads Capital filed Articles of Conversion with the State of Maryland and all of the assets and liabilities of Crossroads Capital became assets and liabilities of the Trust (the “Conversion”).  Stockholders of Crossroads Capital received one unit of beneficial interest for each share of common stock held by such stockholder on the date of conversion. 

 

The Liquidating Trust will terminate upon payment to the holders of the beneficial interests in the Liquidating Trust (“Trust Units”) of the net proceeds realized from all of the Liquidating Trust’s assets and in any event on June 23, 2020, the third anniversary of the effectiveness of the Conversion.  The life of the Liquidating Trust may, however, be extended to more than three years if the Trustees then determine that an extension is reasonably necessary to fulfill the purposes of the Trust.  The Trustees are authorized to engage the services of other professionals or service organizations to assist in managing the Liquidating Trust’s affairs.  Under the Liquidating Trust Agreement, Trust Units are not transferable or assignable, except for certain exceptions described in the Liquidating Trust Agreement.  The Trust Units are not certificated, listed on any exchange or quoted on any quotation system.  The Liquidating Trust Agreement provides that neither the Trustees nor anyone associated with the Liquidating Trust may take any action to facilitate or encourage any trading in the Trust Units.  The Liquidating Trust’s activities are specifically limited to conserving, protecting and selling its assets and distributing the proceeds therefrom. These activities include holding the Liquidating Trust’s assets for the benefit of the holders of the Trust Units and enforcing their rights, temporarily investing asset sale proceeds and collecting income therefrom, providing for the liabilities of the Liquidating Trust, making liquidating distributions to the holders of Trust Units, and taking such other actions as may be necessary to conserve and protect the assets of the Liquidating Trust. 

 

The Liquidating Trust remains subject to the restrictions under the 1940 Act from engaging in transactions with affiliated parties, except under certain circumstances.  The Liquidating Trust is required to file with the U.S. Securities and Exchange Commission (the “SEC”) annual reports showing the assets and liabilities of the Liquidating Trust at the end of each calendar year and its receipts and disbursements for the period.  The annual reports will describe the changes in the Liquidating Trust’s assets during the reporting period and the actions taken by the Trustees during the period.  The financial statements contained in such reports will be prepared in accordance with generally accepted accounting principles and will be reviewed by the Liquidating Trust’s independent registered public accounting firm. The financial statements, however, will not be audited.  The Liquidating Trust will file with the SEC a Form 8-K whenever an event occurs that requires such a report to be filed for or whenever, in the opinion of the Trustees, any other material event relating to the Liquidating Trust has occurred.****

 

**Distributions**

 

The Plan provides that liquidating distributions will be made at such times as determined by the Trustees in their sole discretion. Consideration of potential liquidating distributions shall occur no less frequently than annually and in any event within a reasonable period of time following the disposition of the Liquidating Trust’s assets. 

 

On September 10, 2019, the Trust made a liquidating distribution of $0.35 per Trust Unit to the holders of beneficial interest in the Trust, pursuant to the Plan.  This liquidating distribution was apportioned pro rata according to the beneficial unit holders’ respective interest in the Trust.

 

The Trust did not make any liquidating distributions during 2018.

 

On July 12, 2017, the Trust made an initial liquidating distribution of $1.60 per Trust Unit to the holders of beneficial interest in the Trust, pursuant to the Plan.  This initial liquidating distribution was apportioned pro rata according to the beneficial unit holders’ respective interest in the Trust.

 

4

 

**Tax Treatment**

 

For Federal income tax purposes, the Trust is treated as a “grantor” trust.  As such, the Trust itself is not subject to federal or state income tax.  Instead, each beneficiary will be treated as having a direct interest in an allocable pro rata share of each asset and liability of the Trust.  As a result, an allocable portion of all items of Trust income (including any gains and losses recognized by the Trust), deductions and credits must be reported by beneficiaries on their income tax return(s). 

 

The Trust will issue an annual information statement to its beneficiaries with information for their tax returns. Beneficiaries are urged to consult with their tax advisers as to their own filing requirements and the appropriate tax reporting of this information on their returns.

 

**Employees**

 

We have no employees or executive officers.  All of our work is performed by the Trustees directly or through contract services.  1100 Capital Consulting, LLC (the “Administrator”) serves as our administrator, performing the administrative services necessary for our operation, including without limitation, providing equipment, clerical, bookkeeping, accounting and record keeping services.

 

**Item 1A. Risk Factors**

 

In addition to other information in this annual report on Form 10-K, the following risk factors should be carefully reviewed because such factors may have a significant impact on the execution of the Plan and the timing and amount of future liquidating distributions, if any, to the holders of beneficial interest in the Trust.  As a result of the risk factors set forth below and elsewhere in this Form 10-K, actual results could differ materially from those projected herein.

 

**Risks Related to our Liquidation**

 

*****We cannot assure you of the amount or timing of future distributions, if any.*****

 

Our estimate of net assets in liquidation at December 31, 2019 of $1,593,812, or $0.17 per Trust Unit is based on a number of estimates and assumptions. These include asset hold periods, expected revenues and expenses and other factors not within our control, such as capitalization rates and market conditions. In addition, the liquidation and dissolution process is subject to numerous uncertainties and may result in smaller distributions than anticipated or no capital available for future distribution to our beneficial unitholders. The precise nature, amount and timing of any future distribution will depend on and could be delayed by a number of factors including: 

 

|  | ● | Adverse changes in general and local economic conditions which affect the market for our portfolio companies; |
|--|---------|---------------------------------------------------------------------------------------------------------------|

 

|  | ● | Longer than anticipated hold periods for our assets; |
|--|---------|------------------------------------------------------|

 

|  | ● | Adverse changes in the performance of our portfolio companies; |
|--|---------|----------------------------------------------------------------|

 

|  | ● | Competition from other companies; |
|--|---------|-----------------------------------|

 

|  | ● | Fluctuations in interest rates; |
|--|---------|---------------------------------|

 

|  | ● | The financial condition of our portfolio companies; or |
|--|---------|--------------------------------------------------------|

 

|  | ● | Increase in the Trust’s maintenance, insurance and operating costs. |
|--|---------|----------------------------------------------------------------------------|

 

*****There can be no guarantee that the holders of beneficial interests will realize the current******estimated liquidation values******of our assets under the Plan.*****

 

We cannot accurately estimate the expected proceeds that the Liquidating Trust might realize from the sale of our remaining portfolio investments pursuant to the Plan or the timing thereof.  The amounts realized may be more or less than the estimated liquidation values as of December 31, 2019.  It is possible that the final liquidation value or the proceeds received from the sale of our portfolio investments may be less than the value or proceeds an investor might receive from holding such investments through any potential initial public offering or other sale or liquidity event. It is possible that we will experience substantial differences in the exit prices ultimately achieved by the Liquidating Trust on our portfolio investments as compared to the respective current estimated liquidation values. We cannot provide any assurance as to the amount of proceeds, if any, we will receive from the disposition of our portfolio company investments.

 

*****Our period of liquidation may be extended beyond the current three-year liquidation period.*****

 

We may determine to attempt to extend our period of liquidation beyond the three-year liquidation period permitted under IRS rules, which might require us to seek an IRS letter ruling for an extension.  Seeking such a letter ruling may result in an increase in our administrative expenses.  If such a letter ruling is denied, we may be required to sell our assets at below fair market value.  

 

5

 

*****Our units are not transferable or assignable except for certain exceptions and lack liquidity.*****

 

The Trust Units are not certificated, listed on any exchange or quoted on any quotation system.  The Liquidating Trust Agreement provides that neither the Trustees nor anyone associated with the Liquidating Trust may take any action to facilitate or encourage any trading in the Trust Units.  Under the Liquidating Trust Agreement, Trust Units are not transferable or assignable, except for certain exceptions described in the Liquidating Trust Agreement.  Thus, our beneficiaries do not have authority or power to sell or in any other manner dispose of their beneficial interests.  

 

*****We may be delayed in completing our liquidation.*****

 

Our ability to accomplish the Plan is contingent upon the disposition of our portfolio company investments and all liabilities.  Our current timeframe for liquidating is to conclude by June 23, 2020, which is the end of the three year period to liquidate the Trust.  

 

*****If our liquidation costs or unpaid liabilities are greater than we expect, our liquidating distributions to our beneficiaries may be delayed and reduced.*****

 

Before making the final liquidating distribution to our beneficiaries, we will need to pay or arrange for the payment of all of our transaction costs in the liquidation, and all other costs and all valid claims of our creditors. The total amount of transaction costs in the Plan is not yet known and, therefore, we have used estimates of these costs in calculating the amount of our projected liquidating distributions to our beneficiaries. Estimates are based on assumptions regarding costs to be incurred in executing the Plan. The actual costs incurred during liquidation may differ, which could reduce net assets available for distribution. To the extent that we have underestimated these costs in calculating our projections, our actual net liquidation values may be lower than our estimates. In addition, if the claims of our creditors are greater than we have anticipated, payment of liquidating distributions to our beneficiaries may be delayed, reduced and/or eliminated.

 

*****The disposition of our portfolio investments will be subject to contingent liabilities.*****

 

We continue to incur liabilities and expenses from operations as we complete the liquidation of our assets. To the extent that these expenses and liabilities exceed our current estimates, they will reduce the amount of assets available to fund future distribution to beneficiaries. While we anticipate that our existing cash and cash equivalents will be sufficient to fund our cash needs for expenses related to completion of the Plan, we cannot provide any assurances that this will be the case.

 

*****Liquidation basis accounting requires certain assumptions that may result in actual results being materially different from those that have been estimated.*****

 

The Liquidating Trust presents its financial statements in accordance with liquidation basis accounting, which requires us to make estimates and judgments that affect the reported amounts of assets (including net assets in liquidation), liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. Valuation of assets requires management to make difficult estimates and judgments with incomplete information. Estimates necessarily require assumptions, and changes in such assumptions could materially affect reported results. Estimates are made and evaluated on an on-going basis using information that is currently available, as well as various other assumptions believed to be reasonable under the circumstances. Due to the inherently uncertain nature of estimates and the underlying assumptions, the actual values realized for assets and settlement of liabilities may differ materially, perhaps in adverse ways, from the estimated amounts.  The determination of the estimated liquidation value of a portfolio company may be based on an analysis of available financial results, public market comparables, prevailing discounts in the secondary market for comparable assets, market conditions and/or other factors related to such portfolio company.  Additionally, because of uncertainty in the timing and proceeeds of any anticipated sale, actual results may differ materially from estimated amounts.

 

*****We depend on our Trustees and Administrator and the loss of our Trustees or our Administrator’s key personnel could harm our operations and adversely affect the value of our Trust Units.*****

 

We have no employees or executive officers. All of our work is performed by the Trustees directly, through contract services or through our Administrator. We have no separate facilities and are completely reliant on our Trustees who have significant discretion as to the sale of our assets. We are subject to the risk that the Administrator may terminate its Administrator Consulting Agreement with us and that no suitable replacement will be found. Furthermore, we are dependent on the efforts, diligence, skill, network of business contacts and close supervision of all aspects of our business by our Trustees and our Administrator. While we believe that we could find replacements for these key personnel, the loss of their services could have a negative impact on our operations and the value of the Trust Units.

 

*****Payment of fees to our Trustees and Administrator will reduce cash available for distribution.*****

 

Our Trustees and Administrator will perform services for us in connection with the liquidation of our assets. They will be paid fees for these services, which will reduce the amount of cash available for distribution to our beneficiaries.

 

6

 

**Risks Related to Existing Trust Assets**

 

*****Our portfolio companies are subject to many risks, including volatility, intense competition, current operating losses, shortened product life cycles and periodic downturns.*****

 

Our portfolio companies consist primarily of investments in companies in industries that our former investment adviser believed were poised to grow at above-average rates relative to other sectors, which may have relatively limited operating histories and may be particularly vulnerable to fluctuations in U.S. and foreign economic environments.These companies may experience operating losses, have limited access to capital and higher funding costs, have a weaker financial position and may need additional capital to expand, complete their business plans or remain in business. They may face intense competition, including from larger, more established companies with greater financial, technical and marketing resources. These companies generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence, and require substantial additional capital to support their operations, finance expansion or maintain their competitive position. The revenues, income (or losses) and valuations of these companies can and often do fluctuate suddenly and dramatically. For these reasons, our portfolio companies, if rated by one or more ratings agencies, would typically be rated below “investment grade.” In addition, the companies that were selected for investment by the former investment adviser were in industries generally characterized by abrupt business cycles and intense competition, and the competitive environment can change abruptly due to rapidly evolving technology. Therefore, these portfolio companies may face considerably more risk than companies in other industry sectors. Accordingly, these factors could impair their cash flow or result in other events, such as bankruptcy, which could limit their ability to repay their obligations to us and may materially adversely affect the return on, or the recovery of, our investments in these businesses.

 

Because of rapid technological change, the average selling prices of products and some services provided by our portfolio companies may decrease with corresponding rapid speed over their productive lives. These decreases could adversely affect their operating results and cash flow, their ability to meet obligations under their debt securities and the value of their equity securities. This could, in turn, materially adversely affect our ability to sell the Trust’s assets and ability to make distributions to holders of beneficial interests.

 

*****The recent global outbreak of COVID-19 may negatively affect the marketability and sales price of our portfolio investments.*****

 

The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain. The operational and financial performance of the companies in which we hold investments depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn impact the marketability and proceeds, if any, received from the sale of our portfolio assets.

 

*****Our investments in private companies present certain challenges, including the lack of available company information, a dependence on the talents and efforts of only a few key personnel at a given portfolio company, a lack of a diversified product line, a dependence on several key customers and a greater vulnerability to fluctuating economic conditions.*****

 

The value of our portfolio companies is dependent in large part, upon the abilities of the key management personnel of our portfolio companies, who are responsible for their day-to-day operations. Competition for qualified personnel is intense at any stage of a company’s development, particularly so in the growth industries in which we hold investments. The loss of one or more key managers can hinder or delay a company’s implementation of its business plan and harm its financial condition. Our portfolio companies may not be able to attract and retain qualified managers and personnel. Any inability to do so may negatively affect the value of the companies, our ability to sell our interest in such companies, and thus the amount of cash available to distribute to our holders of beneficial interests.

 

*****The amount of cash available for distribution could be negatively affected if a significant portfolio investment fails to perform as expected.*****

 

Our total investment in companies may be significant individually or in the aggregate. As a result, if a significant investment in one or more companies fails to perform as expected, our financial results could be negatively affected and the magnitude of the loss could be more significant than if we had smaller investments in more companies.

 

We cannot assure you that any of our investments in our portfolio companies will be successful. There can be no assurance as to the levels of defaults or recoveries that may be experienced on our debt investments. We may lose our entire investment in any or all of our portfolio companies.

 

***Most of our portfolio companies will need additional capital, which may not be readily available.***

 

Most of the portfolio companies targeted under our former investment strategy may have limited financial resources and typically require substantial additional financing to satisfy their continuing working capital and other capital requirements. We cannot predict the circumstances or market conditions under which these portfolio companies will seek additional capital. Each round of institutional equity financing is typically intended to provide a company with only enough capital to reach the next stage of development. It is possible that one or more of our portfolio companies will not be able to raise additional financing or may be able to do so only at a price or on terms that are unfavorable to the portfolio company, either of which would negatively impact our ability to make distributions to our beneficiaries. In some cases, financing may be arranged in a manner that would have the interests of current shareholders reduced if they do not participate in the financing. Some of these companies may be unable to obtain sufficient financing from any provider of capital under any terms, thereby requiring these companies to cease or curtail operations. Accordingly, investments in these types of companies generally entails a higher risk of loss than investments in companies that have the ability to raise capital. 

 

7

 

**Risks Related to Our Business in General**

 

*****An occurrence of an uncontrollable event such as the COVID-19 pandemic may negatively affect our operations. *****

 

The occurrence of an uncontrollable event, such as the COVID-19 pandemic, could have a material adverse effect on the marketability and sales price of the Trust assets. An uncontrollable event may also limit the ability of our operations team to gather, meet, and conduct business for the Trust. Likewise, it may substantially hamper our efforts to provide the Trust’s beneficiaries with timely information and to comply with our filing obligations with the U.S. Securities and Exchange Commission.

 

*****Global economic conditions may affect our operations and financial condition, including our ability to make distributions to beneficial interest holders.*****

 

Our business is subject to a number of general econocmic conditions and uncertainties that are largely out of our control and  may contribute to increased market volatility and instability, which could have a material adverse effect on our business, results of operations and financial condition. These include the current worldwide financial markets, recessionary economic cycles, various changes in U.S. regulatory conditions, tariff and trade discussions and various social, regulatory and political uncertainites in the U.S. and around the world. In addition, the fiscal and monetary policies of foreign nations may have a severe impact on the U.S. and worldwide financial markets.  These conditions may adversely affect the value of our portfolio companies and our ability to sell them at acceptable prices.

 

*****We face cyber-security risks.*****

 

Our business operations rely upon secure information technology systems for data processing, storage and reporting. Despite our security controls,  hardware and implementation and updating of security programs, our information and data systems or the similar systems of our vendors and agents could become subject to cyber-attacks. Network, system, application and data breaches could result in operational disruptions or information misappropriation, which could have a material adverse effect on our business, results of operations and financial condition.

 

*****The failure in cyber security systems, as well as the occurrence of events unanticipated in our disaster recovery systems and management continuity planning could impair our ability to conduct business effectively.*****

 

The occurrence of a disaster such as a cyber-attack, a natural catastrophe, an industrial accident, a terrorist attack or war, events unanticipated in our disaster recovery systems, or a support failure from external providers, could have an adverse effect on our ability to conduct business and on our results of operations and financial condition, particularly if those events affect our computer-based data processing, transmission, storage, and retrieval systems or destroy data. If a significant number of our professional staff were unavailable in the event of a disaster, our ability to effectively conduct our business could be severely compromised.

 

We depend upon computer systems to perform necessary business functions. Despite our implementation of a variety of security measures, our computer systems could be subject to cyber-attacks and unauthorized access, such as physical and electronic break-ins or unauthorized tampering. Like other companies, we may experience threats to our data and systems, including malware and computer virus attacks, unauthorized access, system failures and disruptions. If one or more of these events occurs, it could potentially jeopardize the confidential, proprietary and other information processed and stored in, and transmitted through, our computer systems and networks, or otherwise cause interruptions or malfunctions in our operations, which could result in damage to our reputation, financial losses, litigation, increased costs, regulatory penalties and/or customer dissatisfaction or loss.

 

*****We are dependent on information systems and systems failures could significantly disrupt our business, which may, in turn, negatively affect our ability to make distributions.*****

 

Our business is dependent on our and third parties’ communications and information systems. Any failure or interruption of those systems, including as a result of the termination of an agreement with any third-party service providers, could cause delays or other problems in our activities. Our financial, accounting, data processing, backup or other operating systems and facilities may fail to operate properly or become disabled or damaged as a result of a number of factors including events that are wholly or partially beyond our control and adversely affect our business. For example, there could be:

 

|  | ● | sudden electrical or telecommunication outages; |
|--|---------|-------------------------------------------------|

 

|  | ● | natural disasters such as earthquakes, tornadoes and hurricanes; |
|--|---------|------------------------------------------------------------------|

 

|  | ● | disease pandemics; |
|--|---------|--------------------|

 

8

  

|  | ● | events arising from local or larger scale political or social matters, including terrorist acts; and |
|--|---------|------------------------------------------------------------------------------------------------------|

 

|  | ● | cyber-attacks. |
|--|---------|----------------|

 

These events, in turn, could negatively affect our ability to make distributions to our holders of beneficial interest.

 

*****We incur public reporting costs.*****

 

The Liquidating Trust is subject to certain disclosure requirements. Consequently, we incur legal, accounting and other expenses, including costs associated with reporting requirements applicable to a company whose securities were registered under the Exchange Act, as well as additional corporate governance requirements and other rules implemented by the SEC, including those imposed by the SEC staff in connection with our plan to convert into a liquidating trust.

 

*****Our operations could be negatively affected if we become subject to any material legal proceedings, which could cause us to incur significant expense, hinder execution of the Plan and impair the amount of any distributions made to holders of beneficial interests.*****

 

We and our Trustees are not currently a party to any material legal proceedings.  However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies, which could cause us to incur substantial expense and negatively impact our operations by distracting the Trustees, hinder the execution of the Plan and reduce the amount of any distributions made to holders of beneficial interests.

 

**Federal Income Tax Risks**

 

*****Investors may realize taxable income without cash distributions, and may have to use funds from other sources to pay their tax liabilities.*****

 

For Federal income tax purposes, the Trust is treated as a “grantor” trust. As such, the Trust itself is not subject to federal or state income tax. Instead, each beneficiary is treated as having a direct interest in an allocable pro rata share of each asset and liability of the Trust. As a result, an allocable portion of all items of Trust income (including any gains and losses recognized by the Trust), deductions and credits must be reported by beneficiaries on their income tax return(s).  Beneficiaries will be required to report their allocable share of our taxable income on their personal income tax return regardless of whether they have received any cash distributions from us. It is possible that units of beneficial interest will be allocated taxable income in excess of their cash distributions. We cannot assure beneficiaries that cash flow will be available for distribution in any year. As a result, beneficiaries may have to use funds from other sources to pay their tax liability.

 

**Item 1B.  Unresolved Staff Comments**

 

Not applicable.

 

**Item 2.   Properties**

 

We do not own any real estate or other physical properties.  Our principal office is located at 128 North 13th Street, Suite 1100, Lincoln, Nebraska 68508.  

 

**Item 3. Legal Proceedings**

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. 

 

**Item 4. Mine Safety Disclosures**

 

Not applicable.

9

 

**PART II**

 

**Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities**

 

**Market Information**

 

The Trust Units are not certificated, listed on any exchange or quoted on any quotation system.  The Liquidating Trust Agreement provides that neither the Trustees nor anyone associated with the Liquidating Trust may take any action to facilitate or encourage any trading in the Trust Units.  The Trust Units are not transferable or assignable, except for certain exceptions described in the Liquidating Trust Agreement. 

 

**Beneficiaries**

 

As of May 15, 2020, there were approximately 700 record holders of beneficial interest in the Trust. 

 

**Item 6.  Selected Financial Data**

 

Not applicable.

 

**Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations**

 

The following discussion should be read in conjunction with our financial statements and notes and other information contained elsewhere in this annual report on Form 10-K. 

 

**Overview**

 

On June 23, 2017, Crossroads Capital converted into Crossroads Liquidating Trust and all of the assets and liabilities of Crossroads Capital, including eight portfolio company investments, became assets and liabilities of the Trust pursuant to the Plan and the Liquidating Trust Agreement.  Crossroads Liquidating Trust is responsible for liquidating its assets and distributing the proceeds to the holders of beneficial interests in the Trust.   

 

**Portfolio Company Activity**

 

We had the following portfolio company activity during the year ended December 31, 2019:

 

On January 28, 2019, Deem, Inc. completed a merger transaction and our 46,461 shares of common stock were canceled.  We did not receive any proceeds as a result of the this transaction.

 

On April 10, 2019, our 2,844 shares of Class A Common Stock in Suniva, Inc. were deemed canceled and extinguished pursuant to an approved plan of liquidation.  We did not receive any proceeds as a result of the liquidation.

 

On July 1, 2019, Zoosk, Inc. (“Zoosk”) completed a merger transaction with Spark Networks SE (NYSE American: LOV)(“Spark”).  In the merger transaction, our 715,171 shares of Series E Preferred Stock in Zoosk were cancelled in exchange for 193,793 American Depository Shares (“ADSs”) in Spark and $1,624,093 in cash, $146,987 of which is subject to holdback and escrow restrictions until December 31, 2020. See also “Commitments and Contingencies” below. During the fourth quarter of 2019, we sold our entire position of Spark ADSs in open market sales for total net proceeds of $972,702. 

10

 

 

 

The following table summarizes the estimated liquidation value of our portfolio company holdings as of December 31, 2019 and 2018 and the change in estimated liquidation value, proceeds received and the net change in net assets in liquidation related to portfolio company activity for the year ended December 31, 2019.

 

|                                         |   | **Estimated****Liquidation Value** |      |   | **For the Year Ended****December 31, 2019** |   |
|----------------------------------------------|--------|------------------------------------|-----------|--------|---------------------------------------------|--------|
|                                         |   | **As of****December 31, 2018**     |      |   | **As of****December 31, 2019**              |   |   | **Net Change in Estimated Liquidation Value** |   |   | **Total Proceeds****Received** |   |   | **Net Changein Net Assets in Liquidation from Portfolio Activity** |   |
| Portfolio Company Investments                |   | $                                  | 6,027,000 |   |                                        | $      | 160,000 |   |   | $ | (5,867,000 | ) |   | $ | 2,449,709 |   |   | $ | (3,417,291 | ) |
| Funds Held in Escrow from Sale of Investment |   |                               | —  |   |                                        |   | 120,000 |   |   |   | 120,000 |   |   |   | — |   |   |   | 120,000 |   |
| **Total**                                    |   |                               | 6,027,000 |   |                                        |   | 280,000 |   |   |   | (5,747,000 | ) |   |   | 2,449,709 |   |   |   | (3,297,291 | ) |

 

We did not have any portfolio company dispositions during the year ended December 31, 2018.  During the year ended December 31, 2018, we received the proceeds from our sale of Harvest Power, which was completed during the prior year and held as a receivable for investments sold as of December 31, 2017.

 

The following table summarizes the estimated liquidation value of our portfolio company holdings as of December 31, 2018 and 2017 and the change in estimated liquidation value, proceeds received and the net change in net assets in liquidation related to portfolio company activity for the year ended December 31, 2018.

 

|                          |   | **Estimated****Liquidation Value** |      |   | **For the Year Ended****December 31, 2018** |   |
|-------------------------------|--------|------------------------------------|-----------|--------|---------------------------------------------|--------|
|                          |   | **As of****December 31, 2017**     |      |   | **As of****December 31, 2018**              |   |   | **Net Change in Estimated Liquidation Value** |   |   | **Total Proceeds****Received** |   |   | **Net Changein Net Assets in Liquidation from Portfolio Activity** |   |
| Portfolio Company Investments |   | $                                  | 6,650,687 |   |                                        | $      | 6,027,000 |   |   | $ | (623,687 | ) |   | $ | — |   |   | $ | (623,687 | ) |

 

**Changes in Net Assets in Liquidation**

 

Net assets in liquidation were $1,593,812 and $8,093,375 as of December 31, 2019 and 2018, respectively.

 

*****Assets*****

 

As of December 31, 2019, the Trust held four portfolio company investments and had total assets of $2,208,346 which were comprised of $1,917,786 in cash and cash equivalents, $280,000 in remaining portfolio company investments and funds held in escrow at estimated liquidation value and $10,560 in prepaid expenses and other assets.  See also “Recent Developments” below.

 

As of December 31, 2018, the Trust held seven portfolio company invesetments and had total assets of $9,303,072, which were comprised of $6,027,000 in portfolio company investments at estimated liquidation value, $3,246,072 in cash and cash equivalents and $30,000 in prepaid expenses and other assets.

 

*****Liabilities*****

***** *****

As of December31, 2019, the Trust had $614,534 in total liabilities, comprised of $27,873 in accounts payable and $586,661 in estimated costsrelated to the liquidation, including legal expenses, portfolio selling costs, accounting expenses, tax reporting expenses, contractorservices, and miscellaneous other expected future costs. As of December 31, 2019, the liability for estimated costs during liquidationincluded at total of $30,000 of fees to be paid to our Board of Trustees over the remaining liquidation period.

 

As of December31, 2018, the Trust had $1,209,697 in total liabilities, comprised of $26,373 in accounts payable and $1,183,324 in estimated costsrelated to the liquidation. As of December 31, 2018, the liability for estimated costs during liquidation included a total of $90,000of fees to be paid to our Board of Trustees over the remaining liquidation period.

 

*****Changes in Net Assets*****

 

Net assets in liquidation decreased $6,499,563, or $0.68 per Trust Unit, during the year ended December 31, 2019.  This decrease in our net assets was due primarily to: (i) a net decrease of $5,747,000, or $0.60 per Trust Unit, in the net estimated liquidation value of our portfolio company investments and funds held in escrow during the period, and (ii) a liquidating distribution of $3,347,096, or $0.35 per Trust Unit, in September 2019; partially offset by: (i) an increase of $2,449,709, or $0.26 per Trust Unit, from proceeds related to the sale of portfolio investments, and (ii) an increase of $144,824, or $0.01 per Trust Unit, as a result of current operating expenses and other activities.

 

 

11

 

Net assets decreased $590,826, or $0.06 per Trust Unit, during the year ended December 31, 2018.  This decrease in our net assets was due primarily to: (i) a net decrease of $623,687, or $0.06 per Trust Unit, in the net estimated liquidation value of our portfolio company investments during the period, and (ii) an increase of $32,861, as a result of current operating expenses and other  activities.

 

The following table sets forth the net assets in liquidation and net asset value per Trust Unit as of December 31, 2019 and 2018.

 

|                                   |   | **December 31, 2019** |      |   | **December 31, 2018** |   |
|----------------------------------------|--------|----------------------------|-----------|--------|----------------------------|--------|
| Net assets in liquidation              |   | $                          | 1,593,812 |   |                       | $      | 8,093,375 |   |
| Number of beneficial units outstanding |   |                       | 9,563,130 |   |                       |   | 9,563,130 |   |
| Net asset value per unit               |   | $                          | 0.17      |   |                       | $      | 0.85 |   |

 

**Liquidity and Capital Resources**

 

*****Cash and Cash Equivalents*****

 

As of December 31, 2019, we had cash and cash equivalents of $1,917,786. Our ability to accomplish the Plan is contingent upon the disposition of our portfolio company investments.  While we anticipate that our existing cash and cash equivalents will be sufficient to fund our cash needs for expenses related to the completion of the Plan, we cannot provide any assurances that this will be the case.  Further, we cannot provide any assurance as to the proceeds, if any, we will receive from the disposition of our portfolio company investments.

 

As of December 31, 2019, our cash and cash equivalents were held in bank deposit accounts.  We expect to continue to hold our cash and cash equivalents primarily in bank deposit accounts while we execute the Plan.

 

**Commitments and Contingencies**

 

On July 1, 2019, Zoosk completed a merger transaction with Spark Networks SE (NYSE American: LOV).  At the closing of the merger, we were required to set aside $146,987 as security for the indemnity and other obligations of the stockholders under the merger agreement (“Escrowed Funds”).  The Escrowed Funds are subject to escrow and holdback restrictions until December 31, 2020.  As of December 31, 2019, the Escrowed Funds had an estimated liquidation value of $120,000.  On February 14, 2020, Escrowed Funds totaling $19,983 were released to us from the Zoosk escrow without any offset for indemnity claims.  Although recovery under the stockholder indemnity and other obligations is generally limited to the escrow, holdback and expense funds, we may be liable for our pro rata amount of any damages for certain types of indemnity claims not to exceed the cash consideration received by us, provided, however, in the case of the Trust’s fraud or intentional misrepresentation, there is no limitation on liability.  Our indemnity obligations under the merger agreement continue until July 1, 2024, or the fifth anniversary of the merger closing date.  We have not been notified of any stockholder indemnity claims.

 

On November 13, 2017, Harvest Power completed a merger transaction with a third party.  In connection with the merger transaction, we entered into a Contingent Payment and Release Agreement with the company, the acquirers and certain other stockholders entitling us to our pro rata interest of certain contingent payments over a four-year period in consideration of and as a condition to the release of certain actions and claims related to Harvest Power.  We have not been notified of and do not expect any payments in connection with this agreement prior to the termination date of the Trust.

 

We maintain a directors and officers liability insurance policy that provides liability insurance coverage for our Trustees and other specified parties.  We have also agreed to indemnify our Trustees to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.

 

As of December 31, 2019, we and our Trustees are not a party to any material legal proceedings.  However, from time to time, we may be party to certain legal proceedings incidental to the normal course of our business including the enforcement of our rights under contracts with our portfolio companies.

 

 

12

 

**Recent Developments**

 

On January 6, 2020, Agilyx Corporation (“Agilyx”) redeemed our entire position of 16 shares of common stock for a total purchase price of $1,600.

 

On February 14, 2020, Escrowed Funds totaling $19,983 were released to us from the Zoosk escrow without any offset for indemnity claims.  The released funds included a positive working capital adjustment of $6,741 which will be recognized as a short-term capital gain.

 

The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain. The operational and financial performance of our portfolio companies depends on future developments, including the duration and spread of the outbreak, and such uncertainty may in turn impact the proceeds, if any, received from the sale of our portfolio assets.  The COVID-19 pandemic has impacted our ability to dispose of our remaining portfolio company investments and, as such, it may be necessary to extend the life of the Trust.

 

**Tabular Disclosure of Contractual Obligations**

 

We are currently not a party to any long-term debt obligations, purchase obligations or other long-term liabilities and thus have omitted the tabular disclosure of contractual obligations.****

 

**Off Balance Sheet Arrangements**

 

As of December 31, 2019, we had no off-balance sheet arrangements.

 

**Critical Accounting Policies**

 

*****Use of Estimates*****

 

The preparation of financial statements in accordance with GAAP and under the liquidation basis of accounting requires us to make estimates and judgments that affect the reported amounts of assets (including net assets in liquidation), liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.  We believe that our critical accounting policies are those that require significant judgments and estimates.  These estimates are made and evaluated on an on-going basis using information that is currently available as well as various other assumptions believed to be reasonable under the circumstances. Actual results could vary from those estimates, perhaps in material adverse ways, and those estimates could be different under different assumptions or conditions.

 

*****Liquidation Basis of Accounting*****

 

Under the liquidation basis of accounting, all assets are stated at their estimated liquidation values.  Liabilities, including estimated costs associated with implementing and completing our plan of liquidation, are stated at their estimated settlement amounts.  These amounts are presented in the accompanying statement of net assets in liquidation.  The net assets in liquidation represent the estimated liquidation value of our assets available to our beneficiaries upon liquidation.  The actual values realized for assets and settlement of liabilities may differ materially, perhaps in adverse ways, from the estimated amounts.  The determination of the estimated liquidation value of a portfolio company may be based on an analysis of available financial results, public market comparables, prevailing discounts in the secondary market for comparable assets, and other factors of such portfolio company.  Due to the uncertainty in the timing of any anticipated sale date and the proceeds, if any, therefrom, results may differ materially from estimated amounts.  Our portfolio company investments are continually evaluated and we adjust our net estimated liquidation value accordingly. 

 

*****Estimated Costs During Liquidation*****

 

Under the liquidation basis of accounting, we are required to estimate the cash flows from operations and accrue the costs associated with implementing and completing our plan of liquidation.  These costs are estimated and are expected to be paid over the remaining liquidation period.

 

**Item 7A. Quantitative and Qualitative Disclosures about Market Risk**

 

Market risks include risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments that are beyond our control.  We are exposed to interest rate risk through our portfolio of cash and cash equivalents. As of December 31, 2019, we had no debt or borrowed money.  Additionally, none of our income-bearing debt investments in portfolio companies bore interest based on floating rates.

 

 

13

 

**Item 8. Financial Statements**

 

**CROSSROADS CAPITAL, INC.**

 

**INDEX TO FINANCIAL STATEMENTS**

 

| **Financial Statements**                                                                    | **Page** |
|---------------------------------------------------------------------------------------------|----------|
| Unaudited Statement of Net Assets in Liquidation as of December 31, 2019 and 2018           | F-1      |
| Unaudited Statement of Changes in Net Assets for the years ended December 31, 2019 and 2018 | F-2      |
| Notes to Unaudited Financial Statements                                                     | F-3      |

 

 

14

 

**Crossroads Liquidating Trust**

**Statement of Net Assets in Liquidation (Unaudited)**

**Liquidation Basis**

 

|                                             |   | **As of December 31,** |      |
|--------------------------------------------------|--------|------------------------|-----------|
|                                             |   | **2019**               |      |   | **2018** |   |
| **Assets**                                       |   |                   |      |   |   |   |   |   |
| Investments in portfolio company securities      |   | $                      | 160,000   |   |   | $ | 6,027,000 |   |
| Funds held in escrow from sales of investments   |   |                   | 120,000   |   |   |   | — |   |
| Cash and cash equivalents                        |   |                   | 1,917,786 |   |   |   | 3,246,072 |   |
| Prepaid expenses and other assets                |   |                   | 10,000    |   |   |   | 30,000 |   |
| Receivable for investments sold                  |   |                   | 560       |   |   |   | — |   |
| Total assets                                     |   |                   | 2,208,346 |   |   |   | 9,303,072 |   |
|                                             |   |                   |      |   |   |   |   |   |
| **Liabilities**                                  |   |                   |      |   |   |   |   |   |
| Accounts payable and accrued expenses            |   |                   | 27,873    |   |   |   | 26,373 |   |
| Liability for estimated costs during liquidation |   |                   | 586,661   |   |   |   | 1,183,324 |   |
| Total liabilities                                |   |                   | 614,534   |   |   |   | 1,209,697 |   |
| **Commitments and contingencies (Note 7)**       |   |                   |      |   |   |   |   |   |
| Net assets in liquidation                        |   | $                      | 1,593,812 |   |   | $ | 8,093,375 |   |

 

*The accompanying notes are an integral part of these statements.*

 

 

F-1

 

**Crossroads Liquidating Trust**

**Statement of Changes in Net Assets (Unaudited)**

**(Liquidation Basis)**

 

|                                                    |   | **Year EndedDecember 31, 2019** |       |   | **Year EndedDecember 31, 2018** |   |
|---------------------------------------------------------|--------|---------------------------------|------------|--------|---------------------------------|--------|
| Net assets in liquidation, beginning of period          |   | $                               | 8,093,375  |   |                            | $      | 8,684,201 |   |
|                                                    |   |                            |       |   |                            |   |   |   |
| Cash receipts:                                          |   |                            |       |   |                            |   |   |   |
| Proceeds from sales of portfolio investments            |   |                            | 2,449,709  |   |                            |   | 7,044 |   |
| Release of funds held in escrow from sale of investment |   |                            | —   |   |                            |   | — |   |
| Interest income                                         |   |                            | 24,886     |   |                            |   | 32,860 |   |
| Total cash receipts                                     |   |                            | 2,474,595  |   |                            |   | 39,904 |   |
|                                                    |   |                            |       |   |                            |   |   |   |
| Cash disbursements:                                     |   |                            |       |   |                            |   |   |   |
| Liquidating distributions to beneficiaries              |   |                            | (3,347,096 | )      |                            |   | — |   |
| Operating expenses                                      |   |                            | (455,785   | )      |                            |   | (491,466 | ) |
| Total cash disbursements                                |   |                            | (3,802,881 | )      |                            |   | (491,466 | ) |
|                                                    |   |                            |       |   |                            |   |   |   |
| Changes in portfolio assets:                            |   |                            |       |   |                            |   |   |   |
| Change in portfolio investment cost basis               |   |                            | (3,560,000 | )      |                            |   | — |   |
| Change in estimated liquidation value                   |   |                            | (2,307,000 | )      |                            |   | (623,687 | ) |
| Change in funds held in escrow from sale of investment  |   |                            | 120,000    |   |                            |   | — |   |
| Total changes in portfolio assets                       |   |                            | (5,747,000 | )      |                            |   | (623,687 | ) |
|                                                    |   |                            |       |   |                            |   |   |   |
| Other items:                                            |   |                            |       |   |                            |   |   |   |
| Change in receivable for investments sold               |   |                            | 560        |   |                            |   | (7,044 | ) |
| Change in estimated costs during liquidation            |   |                            | 596,663    |   |                            |   | 459,016 |   |
| Changes in other assets/liabilities                     |   |                            | (21,500    | )      |                            |   | 32,451 |   |
| Total other items                                       |   |                            | 575,723    |   |                            |   | 484,423 |   |
|                                                    |   |                            |       |   |                            |   |   |   |
| Total changes in net assets in liquidation              |   |                            | (6,499,563 | )      |                            |   | (590,826 | ) |
|                                                    |   |                            |       |   |                            |   |   |   |
| Net assets in liquidation, end of period                |   | $                               | 1,593,812  |   |                            | $      | 8,093,375 |   |

 

*The accompanying notes are an integral part of these statements.*

 

 

F-2

 

**Crossroads Liquidating Trust**

**Notes to Financial Statements**

**(Unaudited)**

 

**Note 1 - Description of Business **

 

Crossroads Liquidating Trust (the “Liquidating Trust” or the “Trust”) operates as a statutory trust under the general laws of the State of Maryland following the conversion of Crossroads Capital, Inc. (“Crossroads Capital”) into Crossroads Liquidating Trust pursuant to a Plan of Liquidation (the “Plan”). The sole purpose of the Trust is the liquidation of its assets and distribution of its proceeds to the holders of the beneficial interests in the Liquidating Trust. 

 

Prior to conversion, Crossroads Capital, Inc. (“Crossroads Capital”) elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”).  On June 23, 2017, Crossroads Capital and each of the trustees of the Liquidating Trust (the “Trustees”) executed the Liquidating Trust Agreement (the “Liquidating Trust Agreement”) in connection with the conversion of Crossroads Capital into Crossroads Liquidating Trust pursuant to the Plan.  On June 23, 2017, Crossroads Capital filed Articles of Conversion with the State of Maryland and all of the assets and liabilities of Crossroads Capital became assets and liabilities of the Trust (the “Conversion”).  Stockholders of Crossroads Capital received one unit of beneficial interest for each share of common stock held by such stockholder on the date of conversion. 

 

The Liquidating Trust will terminate upon payment to the holders of the beneficial interests in the Liquidating Trust (“Trust Units”) of the net proceeds realized from all of the Liquidating Trust’s assets and in any event on June 23, 2020, the third anniversary of the effectiveness of the Conversion. The life of the Liquidating Trust may, however, be extended to more than three years if the Trustees then determine that an extension is reasonably necessary to fulfill the purposes of the Trust.  The Trustees are authorized to engage the services of other professionals or service organizations to assist in managing the Liquidating Trust’s affairs.  Under the Liquidating Trust Agreement, Trust Units are not transferable or assignable, except for certain exceptions described in the Liquidating Trust Agreement.  The Trust Units are not certificated, listed on any exchange or quoted on any quotation system.  The Liquidating Trust Agreement provides that neither the Trustees nor anyone associated with the Liquidating Trust may take any action to facilitate or encourage any trading in the Trust Units.  The Liquidating Trust’s activities are specifically limited to conserving, protecting and selling its assets and distributing the proceeds therefrom.  These activities include holding the Liquidating Trust’s assets for the benefit of the holders of the Trust Units and enforcing their rights, temporarily investing asset sale proceeds and collecting income therefrom, providing for the liabilities of the Liquidating Trust, making liquidating distributions to the holders of Trust Units, and taking such other actions as may be necessary to conserve and protect the assets of the Liquidating Trust. 

 

The Liquidating Trust remains subject to the restrictions under the 1940 Act from engaging in transactions with affiliated parties, except under certain circumstances.  The Liquidating Trust is required to file with the U.S. Securities and Exchange Commission (the “SEC”) annual reports showing the assets and liabilities of the Liquidating Trust at the end of each calendar year and its receipts and disbursements for the period.  The annual reports will describe the changes in the Liquidating Trust’s assets during the reporting period and the actions taken by the Trustees during the period.  The financial statements contained in such reports will be prepared in accordance with generally accepted accounting principles and will be reviewed by the Liquidating Trust’s independent registered public accounting firm; the financial statements, however, will not be audited. The Liquidating Trust will file with the SEC a Form 8-K whenever an event occurs that requires such a report to be filed or whenever, in the opinion of the Trustees, any other material event relating to the Liquidating Trust has occurred.****

 

The Trust has entered into agreements with MidFirst Bank to be the custodian of its portfolio securities and Frontier Bank to be the custodian of the majority of its cash and cash equivalent assets.  1100 Capital Consulting, LLC (the “Administrator”) serves as the Trust’s administrator, performing the administrative services necessary for its operation, including without limitation providing it with equipment, clerical, bookkeeping, accounting and record keeping services.

 

**Note 2 - Summary of Significant Accounting Policies**

 

**Basis of Presentation**

 

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America, (“U.S. GAAP”).

 

**Liquidation Basis of Accounting**

 

Under the liquidationbasis of accounting, all assets are stated at their estimated liquidation value and liabilities, including estimated costs associatedwith implementing the Plan, are stated at their estimated settlement amounts over the remaining liquidation period. The net assetsin liquidation represent the estimated liquidation value of the Trust’s remaining assets available to its beneficiaries uponliquidation. The actual amounts realized for assets and settlement of liabilities may differ materially, perhaps in adverse ways,from the estimated amounts. The Trust has determined that its liquidation is imminent.

 

 

F-3

 

**Crossroads Liquidating Trust**

**Notes to Financial Statements**

**(Unaudited)**

 

The determination of the estimated liquidation value of a portfolio company may be based on an analysis of available financial results, public market comparables, prevailing discounts in the secondary market for comparable assets and other factors relating to such portfolio company.  The Trust may also consider other events, including the transaction in which the securities were acquired, subsequent equity sales by the portfolio company or mergers, acquisitions or other exit events affecting the portfolio company.  The Trust considers the rights, preferences and limitations of the securities owned in each portfolio company.  Due to the uncertainty in the timing of any anticipated sales dates of the Trust’s portfolio company investments and the proceeds, if any, therefrom, results may differ materially from estimated amounts.

 

An independentvaluation firm assisted the Trust in its determination of the estimated liquidation value of one investment as of December 31,2019. The Administrator assisted the Trust in its determination of the estimated liquidation value of all of the Trust’sportfolio company investments and funds held in escrow as of December 31, 2019.

 

**Use of Estimates**

 

The preparation of financial statements in conformity with U.S. GAAP and under the liquidation basis of accounting requires the Trust to make estimates and assumptions that affect the reported amounts of assets (including net assets in liquidation) and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reported period. Such estimates and judgments could change in the future as more information becomes known, and actual results could differ from these estimates and the differences could be material.

 

**Cash and Cash Equivalents**

 

Cash and cash equivalents include short-term liquid investments in demand deposit accounts and money market funds.  Cash and cash equivalents are carried at amortized cost which approximates market value.

 

**Costs to be Incurred During Liquidation**

 

Under the liquidation basis of accounting, an accrual is made for the estimated remaining costs to be incurred during liquidation, including legal expenses, portfolio selling costs, accounting expenses, tax reporting expenses, contractor services, and miscellaneous other expected future costs.  Estimates are based on assumptions regarding costs to be incurred in executing the Liquidating Trust Agreement through June 23, 2020, the termination date of the Trust.  The actual costs incurred during liquidation may differ, which could reduce net assets available in liquidation.

 

**Interest and Dividend Income**

 

Interest income from certificates of deposit and other short-term investments is recorded on an accrual basis to the extent such amounts are expected to be collected and accrued interest income is evaluated periodically for collectability.  Payment-in-kind (“PIK”) interest represents contractually deferred interest computed at a contractual rate specified in the loan agreement.  PIK interest may be prepaid by either contract or the portfolio company’s election, but generally is paid at the end of the loan term.  PIK interest is added to the principal balance of the loan and is generally recorded as interest income on an accrual basis to the extent such PIK interest is expected to be collected.  The Trust did not accrue PIK interest on any of its notes for the years ended December 31, 2019 or 2018.  As of December 31, 2019, all of the Trust’s notes were on non-accrual status.

 

**Income Taxes**

 

The Trust is treated as a grantor trust for federal income tax purposes and accordingly, will not be subject to federal or state income tax on any income earned or gain recognized.  The Trust beneficiaries will be treated as the owner of a pro rata portion of each asset held by us and will be required to report on his or her federal, state or foreign tax return his or her pro rata share of taxable income, including any gains and losses recognized by the Trust.  Accordingly, there is no provision for federal or state income taxes in the accompanying financial statements.

 

**Recently Issued Accounting Pronouncements**

 

There are no previously issued or new accounting pronouncements or changes in accounting pronouncements that have had or are expected to have a material impact on the Trust’s financial statements.

 

 

F-4

 

 

**Crossroads Liquidating Trust**

**Notes to Financial Statements**

**(Unaudited)**

 

**Note 3 - Portfolio Investments**

 

The following table outlines the type of securities held in each of the Trust’s four portfolio companies as of December 31, 2019.  See Note 8 – Subsequent Events.

 

| **Portfolio Company**     |   | **Shares / Principal** |      |   | **Type of Investment** |                                                                           |
|---------------------------|--------|------------------------|-----------|--------|------------------------|--------------------------------------------------------------------------------|
| Agilyx Corporation(1)     |   |                   | 16        |   |                   | Common Stock                                                                   |   |
| BrightSource Energy, Inc. |   |                   | 132,972   |   |                   | Common Stock                                                                   |   |
|                      |   |                   | 2,134,523 |   |                   | Series 1A Preferred Stock                                                      |   |
|                      |   |                   | 108,136   |   |                   | Series 1 Convertible Preferred Stock                                           |   |
|                      |   | $                      | 205,193   |   |                   | Subordinated Convertible Bridge Notes; PIK interest 11.5%, compounded annually |   |
|                      |   | $                      | 107,977   |   |                   | Subordinated Secured Notes; PIK interest 11.5%, compounded annually            |   |
|                      |   | $                      | 44,361    |   |                   | Senior Secured Notes; PIK interest 11.5%, compounded annually                  |   |
| Metabolon, Inc.           |   |                   | 890,719   |   |                   | Series D Convertible Preferred Stock                                           |   |
| Mode Media Corporation(2) |   |                   | 1,196,315 |   |                   | Series F Convertible Preferred Stock                                           |   |

|   |                                                                                                             |
|--------|------------------------------------------------------------------------------------------------------------------|
| (1)    | On January 6, 2020, Agilyx Corporation redeemed the Trust’s entire position of 16 shares of common stock. |

| (2) | Mode Media ceased operations and subsequently announced the assignment of substantially all the assets of Mode Media to its liquidating agent in September 2016. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 The Trust had the following portfolio company activity during the year ended December 31, 2019:

 

On January 28, 2019, Deem, Inc. completed a merger transaction and the Trust’s 46,461 shares of common stock were canceled.  The Trust did not receive any proceeds as a result of the merger transaction.

 

On April 10, 2019, the Trust’s 2,844 shares of Class A Common Stock in Suniva, Inc. were deemed canceled and extinguished pursuant to an approved plan of liquidation.  The Trust did not receive any proceeds as a result of the liquidation.

 

On July 1,2019, Zoosk, Inc. (“Zoosk”) completed a merger transaction with Spark Networks SE (NYSE American: LOV)(“Spark”).In the merger transaction, the Trust’s 715,171 shares of Series E Preferred Stock in Zoosk were cancelled in exchange for193,793 American Depository Shares (“ADSs”) in Spark and $1,624,093 in cash, $146,987 of which is subject to holdbackand escrow restrictions until December 31, 2020. See Note 7 – Commitments and Contingencies. During the fourth quarter of2019, the Trust sold its entire position of Spark ADSs in open market sales for total net proceeds of $972,702.

 

The following table summarizes the estimated liquidation value of the Trust’s remaining portfolio company holdings and funds held in escrow as of December 31, 2019 and 2018 and the change in estimated liquidation value, proceeds received and the net change in net assets in liquidation for the Trust’s portfolio company investments and funds held in escrow for the year ended December 31, 2019.

 

|                                                                       |   | **Estimated****Liquidation Value** |      |   | **For the Year Ended****December 31, 2019** |   |
|-----------------------------------------------------------------------|--------|------------------------------------|-----------|--------|---------------------------------------------|--------|
|                                                                  |   | **As of****December 31, 2018**     |      |   | **As of****December 31, 2019**              |   |   | **Net Change in Estimated Liquidation Value** |   |   | **Total Proceeds****Received** |   |   | **NetChange in****Net Assets in Liquidation fromPortfolio Activity** |   |
| Portfolio                                         Company Investments |   | $                                  | 6,027,000 |   |                                        | $      | 160,000 |   |   | $ | (5,867,000 | ) |   | $ | 2,449,709 |   |   | $ | (3,417,291 | ) |
| Funds Held in Escrow from Sale of Investment                          |   |                               | —  |   |                                        |   | 120,000 |   |   |   | 120,000 |   |   |   | — |   |   |   | 120,000 |   |
| **Total**                                                             |   |                               | 6,027,000 |   |                                        |   | 280,000 |   |   |   | (5,747,000 | ) |   |   | 2,449,709 |   |   |   | (3,297,291 | ) |

 

 

The Trustdid not have any portfolio company dispositions during the year ended December 31, 2018. During the year ended December 31, 2018,the Trust received the proceeds from its sale of Harvest Power, which was completed during the prior year and held as a receivablefor investments sold as of December 31, 2017.

 

 

F-5

 

**Crossroads Liquidating Trust**

**Notes to Financial Statements**

**(Unaudited)**

 

The following table summarizes the estimated liquidation value of the Trust’s portfolio company holdings as of December 31, 2018 and 2017 and the change in estimated liquidation value, proceeds received and the net change in net assets in liquidation for the Trust’s portfolio company investments for the year ended December 31, 2018.

 

| ** **                    |   | **Estimated****Liquidation Value** |      |   | **For the Year Ended****December 31, 2018** |   |
|-------------------------------|--------|------------------------------------|-----------|--------|---------------------------------------------|--------|
| ** **                    |   | **As of****December 31, 2017**     |      |   | **As of****December 31, 2018**              |   |   | **Net Change in Estimated Liquidation Value** |   |   | **Total Proceeds****Received** |   |   | **Net Changein****Net Assets in Liquidation fromPortfolio Activity** |   |
| Portfolio Company Investments |   | $                                  | 6,650,687 |   |                                        | $      | 6,027,000 |   |   | $ | (623,687 | ) |   | $ | — |   |   | $ | (623,687 | ) |
|                          |   |                               |      |   |                                        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

**Note 4 - Distributions**

 

The Plan provides that liquidating distributions will be made at such times as determined by the Trustees in their sole discretion. Consideration of potential liquidating distributions shall occur no less frequently than annually and in any event within a reasonable period of time following the disposition of the Liquidating Trust’s assets.

 

On September 10, 2019, the Trust made a liquidating distribution of $0.35 per Trust Unit to the holders of beneficial interest in the Trust, pursuant to the Plan.  The liquidating distribution was apportioned pro rata according to the beneficial unit holders’ respective interest in the Trust.

 

The Trust did not make any liquidating distributions during 2018.

 

On July 12, 2017, the Trust made an initial liquidating distribution of $1.60 per Trust Unit to the holders of beneficial interest in the Trust, pursuant to the Plan.  This initial liquidating distribution was apportioned pro rata according to the beneficial unit holders’ respective interest in the Trust.

 

**Note 5 - Net Assets in Liquidation**

 

Net assets in liquidation were $1,593,812 and $8,093,375 as of December 31, 2019 and 2018, respectively.

 

*****Assets*****

 

As of December31, 2019, the Trust held four portfolio company investments and had total assets of $2,208,346 which were comprised of $1,917,786in cash and cash equivalents, $280,000 in portfolio company investments and funds held in escrow at estimated liquidation valueand $10,560 in prepaid expenses and other assets. See Note 8 – Subsequent Events.

 

As of December 31, 2018, the Trust held seven portfolio company invesetments and had total assets of $9,303,072 which were comprised of $6,027,000 in portfolio company investments at estimated liquidation value, $3,246,072 in cash and cash equivalents and $30,000 in prepaid expenses and other assets.

 

*****Liabilities*****

 

As of December 31, 2019, the Trust had $614,534 in total liabilities, comprised of $27,873 in accounts payable and $586,661 in estimated costs related to the liquidation, including legal expenses, portfolio selling costs, accounting expenses, tax reporting expenses, contractor services, and miscellaneous other expected future costs.  As of December 31, 2019, the liability for estimated costs during liquidation included at total of $30,000 of fees to be paid to the Board of Trustees over the remaining liquidation period.

 

As of December 31, 2018, the Trust had $1,209,697 in total liabilities, comprised of $26,373 in accounts payable and accrued expenses and $1,183,324 in estimated costs related to the liquidation.  As of December 31, 2018, the liability for estimated costs during liquidation included a total of $90,000 of fees to be paid to the Board of Trustees over the remaining liquidation period.

 

*****Changes in Net Assets*****

 

Net assets in liquidation decreased $6,499,563, or $0.68 per Trust Unit, during the year ended December 31, 2019.  This decrease in our net assets was due primarily to: (i) a net decrease of $5,747,000, or $0.60 per Trust Unit, in the net estimated liquidation value of our portfolio company investments and funds held in escrow during the period, and (ii) a liquidating distribution of $3,347,096, or $0.35 per Trust Unit, in September 2019; partially offset by: (i) an increase of $2,449,709, or $0.26 per Trust Unit, from proceeds related to the sale of portfolio investments, and (ii) an increase of $144,824, or $0.01 per Trust Unit, as a result of current operating expenses and other activities.

 

 

F-6

 

**Crossroads Liquidating Trust** 

**Notes to Financial Statements** 

**(Unaudited)**

 

Net assets in liquidation decreased $590,826, or $0.06 per Trust Unit, during the year ended December 31, 2018.  This decrease in the Trust’s net assets was due primarily to: (i) a net decrease of $623,687, or $0.06 per Trust Unit, in the net estimated liquidation value of our portfolio company investments during the period, and (ii) an increase of $32,861 as a result of current operating expenses and other activities.

 

**Note 6 – Estimated Costs of Liquidation**

 

Under the liquidation basis of accounting, the Trust is required to estimate the cash flows from operations and accrue the costs associated with completing the Plan, including legal expenses, portfolio selling costs, accounting expenses, tax reporting expenses, contractor services, and miscellaneous other expected future costs.  For the year ended December 31, 2019, estimated costs of liquidation decreased $596,663 which consisted of: (i) the completion of cash payments, and therefore a reversal of the related accrual of $476,725 for liquidation costs, and (ii) a reassessment of the estimated portfolio selling costs for the Trust’s remaining portfolio, which resulted in a $119,938 reversal of the related accrual.  For the year ended December 31, 2018, the Trust completed cash payments, and therefore reversed the related accrual, for $459,016 of liquidation costs.  The Trustees believe that the estimated costs of liquidation represent the remaining costs to be incurred during liquidation as of December 31, 2019.  As a result, the Trust estimates that $586,661 of liquidation expenses are expected to be paid over the remaining liquidation period.

 

**Note 7 - Commitments and Contingencies**

 

On July 1, 2019, Zoosk completed a merger transaction with Spark Networks SE (NYSE American: LOV).  At the closing of the merger, the Trust was required to set aside $146,987 as security for the indemnity and other obligations of the stockholders under the merger agreement (“Escrowed Funds”).  The Escrowed Funds are subject to escrow and holdback restrictions until December 31, 2020.  As of December 31, 2019, the Escrowed Funds had an estimated liquidation value of $120,000.  On February 14, 2020, Escrowed Funds totaling $19,983 were released to the Trust from the Zoosk escrow without any offset for indemnity claims.  Although recovery under the stockholder indemnity and other obligations is generally limited to the escrow, holdback and expense funds, the Trust may be liable for our pro rata amount of any damages for certain types of indemnity claims not to exceed the cash consideration received by the Trust, provided, however, in the case of the Trust’s fraud or intentional misrepresentation, there is no limitation on liability.  The Trust’s indemnity obligations under the merger agreement continue until July 1, 2024, or the fifth anniversary of the merger closing date.  The Trust has not been notified of any stockholder indemnity claims.

 

On November 13, 2017, Harvest Power completed a merger transaction with a third party.  In connection with the merger transaction, the Trust entered into a Contingent Payment and Release Agreement with the company, the acquirers and certain other stockholders entitling the Trust to its pro rata interest of certain contingent payments over a four-year period in consideration of and as a condition to the release of certain actions and claims related to Harvest Power. 

 

The Trust maintains a directors and officers liability insurance policy that provides liability insurance coverage for its Trustees and other specified parties.  The Trust has also agreed to indemnify its Trustees to the maximum extent permitted by Maryland law subject to the restrictions in the 1940 Act.

 

As of December 31, 2019, neither the Trust nor its Trustees was a party to any material legal proceedings.  However, from time to time, the Trust may be party to certain legal proceedings incidental to the normal course of its business including the enforcement of its rights under contracts with its portfolio companies.

 

**Note 8 - Subsequent Events**

 

In preparing these financial statements, the Trust has evaluated events after December 31, 2019.  Except as set forth below, there were no subsequent events since December 31, 2019 that would require adjustment to or additional disclosure in these financial statements.

 

On January 6, 2020, Agilyx Corporation (“Agilyx”) redeemed the Trust’s entire position of 16 shares of common stock for a total purchase price of $1,600. 

 

 

F-7

 

**Crossroads Liquidating Trust** 

**Notes to Financial Statements **

**(Unaudited)**

 

On February 14, 2020, Escrowed Funds totaling $19,983 were released to the Trust from the Zoosk escrow without any offset for indemnity claims.  The released funds included a positive working capital adjustment of $6,741 which will be recognized by the Trust as a short-term capital gain.

 

Pursuant to thePlan, the Liquidating Trust is scheduled to complete liquidation activities on or before June 23, 2020. On February 28, 2020, theLiquidating Trust engaged a market advisory firm to locate potential purchasers and assist selling the remaining assets of theTrust. The recent global outbreak of COVID-19 has disrupted economic markets and the prolonged economic impact is uncertain. Theoperational and financial performance of the Trust’s portfolio companies depends on future developments, including the durationand spread of the outbreak, and such uncertainty may in turn impact the proceeds, if any, received from the sale of the Trust’sportfolio assets. The COVID-19 pandemic has impacted the Trust’s ability to dispose of its remaining portfolio company investmentsand, as such, it may be necessary to extend the life of the Trust.

 

 

F-8

 

**Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure**

 

None.

 

**Item 9A. Controls and Procedures**

 

**Evaluation of Disclosure Controls and Procedures**

 

As of December 31, 2019 (the end of the period covered by this annual report), we evaluated the effectiveness of our disclosure controls and procedures as defined in Rule 13a-15(e) of the Exchange Act.  Based on that evaluation, we concluded that our disclosure controls and procedures were effective and provided reasonable assurance that information required to be disclosed by us in the reports filed or submitted by us under the Exchange Act 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, as appropriate, to allow timely decisions regarding required disclosure.  However, in evaluating the disclosure controls and procedures, we believe that a controls system, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud or error, if any, within an entity have been detected.

 

**Management’s Report on Internal Control over Financial Reporting**

 

The Trustees, with the Administrator, are responsible for establishing and maintaining adequate internal control over financial reporting and performed an assessment of the effectiveness of our internal control over financial reporting as of December 31, 2019 based upon the criteria set forth in*Internal Control - Integrated Framework* issued by the Committee of Sponsoring Organizations of the Treadway Commission.  Based on that assessment, management determined that our internal control over financial reporting was effective as of December 31, 2019.

 

**Changes in Internal Control over Financial Reporting**

 

There has been no change in internal control over financial reporting that occurred during the year ended December 31, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

**Item 9B. Other Information**

 

None.

 

 

15

 

**PART III**

 

**Item 10.  Directors, Executive Officers and Corporate Governance**

 

We have no directors or executive officers.  The Trustees manage the business affairs and assets of the Trust.

 

**Responsibilities of our Trustees**

 

Pursuant to the Liquidating Trust Agreement, the Trustees shall be responsible for the general policies of the Trust and for the general supervision of the activities of the Trust.  The Trustees shall have the power to contract third parties to assist with management of our operations.

 

**Audit Committee**

 

The Trust does not have an audit committee or other committee that performs similar functions and, consequently, has not designated an audit committee financial expert. 

 

**Sections 16(a) Beneficial Ownership Reporting Compliance**

 

Section 16(a) of the Exchange Act requires that each director, officer, and individual beneficially owning more than 10% of a registered security report their ownership of such securities and any subsequent changes in that ownership to the SEC.  Based solely on a review of the written statements and copies of such reports furnished to us pursuant to Section 16(a) of the Exchange Act, to the best of our knowledge, we believe that all Section 16(a) filing requirements applicable to the Trust, if any, were timely satisfied.

 

**Code of Ethics**

 

We have not adopted a code of ethics nor do we currently intend to due to the fact that we have no employees and our Trustees manage our business and affairs subject to fiduciary duties.  Our Trustees intend to promote honest and ethical conduct, full and fair disclosure in our reports to the SEC and compliance with applicable governmental laws and regulations.

 

**Item 11.  Executive Compensation**

 

As of December 31, 2019, we had no directors or executive officers.  The Trustees manage the business affairs and assets of the Trust.  Pursuant to the Liquidating Trust Agreement, the Trustees are entitled to receive fees and compensation for their services as Trustees.  The following table sets forth compensation to the Trustees for the year ended December 31, 2019.

 

| **Trustee**       |   | **Fees Earned or****Paid in Cash** |   |   | **All Other Compensation** |   |     | **Total** |   |
|-------------------|--------|------------------------------------|--------|--------|----------------------------|--------|----------|-----------|--------|
| Andrew Dakos      |   | $                                  | 20,000 |   |                       | $      | — |      |   | $ | 20,000 |   |
| Phillip Goldstein |   | $                                  | 20,000 |   |                       | $      | — |      |   | $ | 20,000 |   |
| Gerald Hellerman  |   | $                                  | 20,000 |   |                       | $      | — |      |   | $ | 20,000 |   |

 

**Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters**

 

**Principal Beneficiaries**

 

The Trust does not have any “voting securities” within the meaning of the Exchange Act and the regulations thereunder applicable to the disclosure of 5% holders of voting securities.

 

The following table sets forth information as of December 31, 2019 regarding the beneficial ownership of units by each of our Trustees.  The percentage of beneficial ownership is calculated based on 9,563,130 units of beneficial interest.

 

| **Beneficial Owner** |   | **Beneficial Interest Units Owned Beneficially** |      |   | **Percentage of Class** |   |
|----------------------|--------|--------------------------------------------------|-----------|--------|-------------------------|--------|
| **Trustees**         |   |                                             |      |   |                    |   |   |   |
| Phillip Goldstein(1) |   |                                             | 1,029,736 |   |                    |   | 10.77 | % |
| Andrew Dakos(1)      |   |                                             | 1,029,736 |   |                    |   | 10.77 | % |
| Gerald Hellerman     |   |                                             | —  |   |                    |   | — | % |

 

| (1) | Asof December 31, 2019, Bulldog Investors, LLC is deemed to be the beneficial owner of 1,029,736 units of the Trust. These 1,029,736units of the Trust include 596,438 units that are beneficially owned by the following entities over which Messrs. Goldstein andDakos exercise control: Opportunity Partners LP, Calapasas West Partners LP, Full Value Special Situations Fund, LP, Full ValuePartners, LP, and MCM Opportunity Partners, LP (collectively, “Bulldog Investors Group of Funds”). BulldogInvestors Group of Funds may be deemed to constitute a group. All other units included in the aforementioned 1,029,736 units ofthe Trust beneficially owned by Bulldog Investors, LLC are also beneficially owned by clients of Bulldog Investors, LLC who arenot members of any group. The total number of these “non-group” units is 433,298 units. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

16

 

**Equity Compensation Plan Information**

 

The Trust does not have any equity compensation plans.

 

**Item 13.  Certain Relationships and Related Transactions, and Director Independence**

 

**Transactions with Related Persons**

 

Pursuant to the Liquidating Trust Agreement, the Trustees are entitled to receive fees and compensation for their services as Trustees comparable to that paid by Crossroads Capital to its independent directors prior to the Conversion.  Each Trustee previously served on the Board of Directors of Crossroads Capital, Inc.  For each of the years ended December 31, 2019 and 2018, we paid a total of $60,000 in trustee fees.  We had no payables to related parties as of December 31, 2019 or 2018.  As of December 31, 2019, the liability for estimated costs during liquidation included a total of $30,000 of fees to be paid to the Board of Trustees over the remaining liquidation period.

 

**Trustee Indemnification**

 

Pursuant to the Liquidating Trust Agreement, the Trust shall, to the maximum extent permitted by law, indemnify the Trustees against, and hold the Trustees harmless as to, any and all claims, actions, liabilities and expenses (including reasonable attorneys’ fees), arising out of or in connection with their service as trustee under the Liquidating Trust Agreement or any acts or omissions taken or omitted to be taken as trustee under the Liquidating Trust Agreement, except to the extent that it is finally determined that the Trustee did not act in good faith or such actions or omissions constitute gross negligence or willful misconduct on the part of the Trustee. 

 

**Item14.  Principal Accountant Fees and Services**

 

Not applicable.

 

 

17

 

**PART IV**

 

**Item 15.  Exhibits and Financial Statement Schedules**

 

The following exhibits are included, or incorporated by reference, in this Annual Report on Form 10-K for the year ended December 31, 2018 (and are numbered in accordance with Item 601 of Regulation S-K).

 

**a. Financial Statement Schedules**

 

See the Index to the Financial Statements at page 13 of this report.

 

**b. Exhibits**

 

The following exhibits are filed as part of this Annual Report or hereby incorporated by reference to exhibits previously filed with the SEC:

 

| **ExhibitNo.** | ** ** | **Description**                                                                                                                                                                                                   |
|----------------|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1            |       | Plan of Liquidation, dated May 3, 2016 (Incorporated by reference to Current Report on Form 8-K filed on June 23, 2017)                                                                                           |
| 3.1            |       | Articles of Conversion, as filed with the State Department of Assessments and Taxation of the State of Maryland on June 23, 2017 (Incorporated by reference to Current Report on Form 8-K filed on June 23, 2017) |
| 3.2            |       | Certificate of Trust, as filed with the State Department of Assessments and Taxation of the State of Maryland on June 23, 2017 (Incorporated by reference to Current Report on Form 8-K filed on June 23, 2017)   |
| 4.1*           |       | Description of Registrant’s Securities pursuant to Item 601 of Regulation S-K                                                                                                                              |
| 10.1           |       | Liquidating Trust Agreement, dated June 23, 2017 (Incorporated by reference to Current Report on Form 8-K filed on June 23, 2017)                                                                                 |
| 31.1*          |       | Certification of Trustee pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                |
| 31.2*          |       | Certification of Trustee pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                |
| 31.3*          |       | Certification of Trustee pursuant to Section 302 of The Sarbanes-Oxley Act of 2002                                                                                                                                |
| 32.1*          |       | Certification of Trustee pursuant to Section 906 of The Sarbanes-Oxley Act of 2002                                                                                                                                |

 

*Filed herewith.

 

**c. Financial statement schedules**

 

No financial statement schedules are filed herewith because (i) such schedules are not required, or (ii) the information has been presented in the aforementioned financial statements.

 

**Item 16.  Form 10-K Summary**

 

**None.**

 

 

18

 

**SIGNATURES**

 

Pursuant to the requirementsof Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. 

|         |                          |
|--------------|-------------------------------|
|         | CROSSROADS LIQUIDATING TRUST  |
|         |                          |
| May 15, 2020 | /s/ Andrew Dakos              |
|         | **Andrew Dakos**

**Trustee** |

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacity and on the dates indicated.

 

|         | /s/ Andrew Dakos                   |
|--------------|------------------------------------|
| May 15, 2020 | **Andrew Dakos**

**Trustee**      |
|         |                               |
|         | /s/ Phillip Goldstein              |
| May 15, 2020 | **Phillip Goldstein**

**Trustee** |
|         |                               |
|         | /s/ Gerald Hellerman               |
| May 15, 2020 | **Gerald Hellerman**

**Trustee**  |

 

 

19