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Our stock price has responded favorably to these unprecedented circumstances as well.
+Added: Although our profits and the price of our stock have retreated from their all time highs, our profitability and stock price remain well above their pre-pandemic levels.
While it is not possible to predict with any accuracy future market trends, our business may revert at some point to levels more closely in line with industry activity prior to such events, particularly in the direct-to-consumer business of the Company.
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We are alert to the special sensitivity of our business to economic, social and political trends and events, and we attempt to project their effects on our business over the long term.
−Removed: For example, we have been placing increasing emphasis on our direct-to-consumer business, in anticipation that the economic uncertainties, market volatilities and global challenges that we face will continue to make investment in precious metals and numismatics more attractive to individual consumers.
+Added: For example, we have placed increasing emphasis on our direct-to-consumer business, in anticipation that the economic uncertainties, market volatilities and global challenges that we face will continue to make investment in precious metals and numismatics more attractive to individual consumers.
There can be no assurance, however, that we will be correct in our assessments of market trends or evolving business and consumer preferences, or that, even if our judgments are correct, our response to projected trends and preferences will be timely or effective.
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Our business depends substantially on our ability to obtain financing for our operations.
−Removed: On December 21, 2021, we entered into a committed facility provided by a syndicate of financial institutions (the “Trading Credit Facility”), with a total current revolving commitment of up to $350.0 million and with a termination date of September 20, 2025.
+Added: On December 21, 2021, we entered into a committed facility provided by a syndicate of financial institutions (the “Trading Credit Facility”), with a total current revolving commitment of up to $350.0 million and with a termination date of September 20, 2025.
The Trading Credit Facility provides the Company with the liquidity to buy and sell billions of dollars of precious metals annually.
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and limitations on the amount of ownership-based financings (as defined).
+Added: Owing to the cyclicality of our business, we sometimes are required to request limited waivers of compliance with certain financial covenants under the Trading Credit Facility.
+Added: Our lenders, many of whom have been lenders to the Company for an extended period of time, understand our business and have provided such waivers in the past, but there can be no assurance that they will do so in the future.
Upon the occurrence of an event of default under the Trading Credit Facility that was not cured or waived pursuant to the terms of the Trading Credit Facility, the lenders under the Trading Credit Facility could elect to declare all amounts outstanding under the Trading Credit Facility to be due and payable immediately.
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We engage in a variety of financing activities with our customers:
−Removed: Receivables from our customers with whom we trade in precious metal products are effectively short-term, non-interest bearing extensions of credit that are, in certain cases, secured by the related products maintained in the Company’s possession or by a letter of credit issued on behalf of the customer.
+Added: • Receivables from our customers with whom we trade in precious metal products are effectively short-term, non-interest bearing extensions of credit that are, in certain cases, secured by the related products maintained in the Company’s possession or by a letter of credit issued on behalf of the customer.
On average, these receivables are outstanding up to 10 days.
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• The Company periodically extends short-term credit through the issuance of notes receivable to approved customers at interest rates determined on a customer-by-customer basis.
−Removed: The Company operates a financing business through CFC which makes secured loans at loan-to-value ratios—principal loan amount divided by the liquidation value, as conservatively estimated by management, of the collateral—of, in most cases, 50% to 85%.
+Added: • The Company operates a financing business through CFC which makes secured loans at loan-to-value ratios—principal loan amount divided by the liquidation value, as conservatively estimated by management, of the collateral—of, in most cases, 50% to 85%.
These loans are both variable and fixed interest rate loans, with some maturities on-demand and others from three to twelve months.
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We may experience supply chain disruptions in our operations.
−Removed: As a result of various macro-economic factors, including in the past few years the COVID-19 pandemic, businesses in a variety of industries have experienced difficulty in obtaining the source materials required for their operations.
+Added: As a result of various macro-economic factors, including in recent times the COVID-19 pandemic, businesses in a variety of industries have experienced difficulty in obtaining the source materials required for their operations.
We require coin and other bullion products, particularly products manufactured by government mints, for resale to our customers, and silver for the productions of bullion bars and rounds by our Silver Towne mint.
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If significant supply chain constraints were to occur, we might be required to cut back on our minting operations or we might be unable to timely satisfy customer requirements for coin and bullion products.
−Removed: This could lead to a loss of sales or could adversely impact our reputation.
+Added: This could lead to a loss of sales and could adversely impact our reputation.
We are dependent on our key management personnel and our trading experts.
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Breaches, damage or malfunctions affecting our systems may require significant investment for repair or replacement, and could interrupt our ability to provide quotations or trading services, or to conduct our e-commerce business.
−Removed: We are subject to ransomware attacks, in which malicious actors seek to deprive us of access to our computer systems unless we pay them a fee, which could be substantial.
−Removed: Also, if personal data were compromised, we could be subject to costly litigation or government fines.
+Added: We are also subject to ransomware attacks, in which malicious actors seek to deprive us of access to our computer systems unless we pay them a fee, which could be substantial.
+Added: If personal data were compromised, we could be subject to costly litigation or government fines.
Risks Related to World Events
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On the other hand, we have a marketing support operation in Austria and have significant business in Germany and other parts of Europe that could be materially and adversely affected by the continuing or expanded military activity in that region.
−Removed: Hamas' attack on Israel and Israel's response have the potential for further disruption of economic markets, particularly if the war expands to include state and other non-state actors.
+Added: Hamas' attack on Israel and Israel's response have the potential for further disruption of economic markets, particularly as hostilities expand to include other state and non-state actors.
The Company has no operations in the Middle East at the current time.
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Also, the turmoil in the Middle East could have global economic effects that are the same as or more severe than those of the war in the Ukraine, with similar consequences for our business.
−Removed: In particular, a depressing effect on the global economy as a consequence of the military action in Ukraine and the Middle East could similarly dampen our business activity and reduce the demand for our products and services.
−Removed: The Company has experienced outsized growth in its revenues and operating profits since the onset of the COVID-19 pandemic, but there can be no assurance that this level of performance will continue.
+Added: In particular, a depressing effect on the global economy as a consequence of the military action in Ukraine and the Middle East could dampen our business activity and reduce the demand for our products and services.
+Added: The Company experienced outsized growth in its revenues and operating profits following the onset of the COVID-19 pandemic, but there can be no assurance that this level of performance is sustainable.
The recent growth of the business of the Company generally, and the business of its JMB subsidiary in particular, may be attributed to the unprecedented uncertainties and volatility in the financial markets resulting from the COVID-19 pandemic, its effects on the economy and the related government responses.
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There can be no assurance that the recent growth in the precious metals business will continue in future periods.
−Removed: Consumer perceptions with respect to precious coins and metals could shift, these commodities may no longer be viewed as secure investments and the demand for the Company’s products could substantially decline.
−Removed: We cannot predict the performance of our business and operations if and when business conditions revert to more normalized levels.
−Removed: A decline in our revenues and earnings would have adverse effects on our operations and would likely cause our stock price to decline.
+Added: Consumer perceptions with respect to precious coins and metals could shift, these commodities may no longer be viewed as secure investments and the demand for the Company’s products could substantially decline.
+Added: Our business in the past has been subject to cyclical fluctuations, and we are beginning to experience to a degree a return to cyclicality in our more recent operating results.
+Added: Slower precious metals markets with lower volatility and greater supply, as we have experienced recently, have had and could continue to have the effect of decreasing the volume of products sold and also adversely impact our product premiums, which are a key driver of our overall performance.
+Added: A sustained decline in our revenues and earnings would have adverse effects on our operations and would likely cause our stock price to decline.
Moreover, because of the nature of the current business and financial environment, particularly in regards to the precious metal industry, it is difficult to create with any acceptable measure of precision customary financial projections and forecasts for our business over the next several years.
This could adversely affect our ability to engage in financial and operational planning for the future.
−Removed: We have significant operations outside the United States.
+Added: We derive significant revenues from business outside the United States.
We derive a significant portion of our revenues from business outside the United States, including from customers in developing countries.
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However, if our business in these areas of the world were to increase, we would also face risks that are particular to developing countries, including the difficulty of enforcing agreements, collecting receivables, protecting inventory and other assets through foreign legal systems, limitations on the repatriation of earnings, currency devaluation and manipulation of exchange rates, and high levels of inflation.
−Removed: We try to manage these risks by monitoring current and anticipated political, economic, legal and regulatory developments in the countries outside the United States in which we operate or have customers and adjusting operations as appropriate, but there can be no assurance that the measures we adopt will be successful in protecting the Company’s business interests.
+Added: We try to manage these risks by monitoring current and anticipated political, economic, legal and regulatory developments in the countries outside the United States in which we operate or have customers and adjusting operations as appropriate, but there can be no assurance that the measures we adopt will be successful in protecting the Company’s business interests.
The current inflationary and high interest rate environment may adversely affect our costs and expenses and the demand for our products.
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However, inflation may also increase our expenses of operations, which because of the nature of our business we cannot generally pass along to our customers.
−Removed: Our Trading Credit Facility bears interest at a variable rate of interest, so that higher interest rates will also increase our cost of borrowing under that facility, and rising interest rates may also increase the costs under our product financing arrangements, and we may be unable to compensate for these increases through higher interest income and other fees and charges received from our counterparties.
+Added: Our Trading Credit Facility bears interest at a variable rate of interest, so that higher interest rates will also increase our cost of borrowing under that facility, and rising interest rates may also increase the costs under our product financing arrangements.
+Added: We may be unable to compensate for these increases through higher interest income and other fees and charges received from our counterparties.
Also, inflation, together with high interest rates, may reduce discretionary spending among consumers, thereby reducing product demand in the retail sector.
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The loss of a government purchaser/distributorship arrangement could materially adversely affect our business.
−Removed: A-Mark’s business is heavily dependent on its purchaser/distributorship arrangements with various governmental mints.
+Added: A-Mark’s business is heavily dependent on its purchaser/distributorship arrangements with various governmental mints.
Our ability to offer numismatic coins and bars to our customers on a competitive basis is based on the ability to purchase products directly from a government source.
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Our AMST subsidiary, which operates our Silver Towne Mint, depends on critical pieces of equipment which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures or business interruptions.
−Removed: AMST’s facilities are subject to equipment failures and the risk of catastrophic loss due to unanticipated events such as fires, earthquakes, accidents or violent weather conditions.
+Added: AMST’s facilities are subject to equipment failures and the risk of catastrophic loss due to unanticipated events such as fires, earthquakes, accidents or violent weather conditions.
AMST has insurance to cover certain of the risks associated with equipment damage and resulting business interruption, but there are certain events that would not be covered by insurance, and there can be no assurance that insurance will continue to be available on acceptable terms.
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In the past, the demand for skilled personnel has been high and the supply limited.
−Removed: The inability to employ or retain skilled technical personnel could adversely affect AMST’s operating results.
−Removed: We have in the past engaged, and continue to engage, in transactions with Stack’s Bowers, an affiliate of the Company, which could be perceived as not being made at arms-length.
−Removed: Stack’s-Bowers Numismatics, LLC ("Stack's Bowers"), which is primarily engaged in the business of auctions of high-value and rare coins and in coin retailing, is a wholly-owned subsidiary of Spectrum Group International, Inc.
+Added: The inability to employ or retain skilled technical personnel could adversely affect AMST’s operating results.
+Added: We have in the past engaged, and continue to engage, in transactions with Stack’s Bowers, an affiliate of the Company, which could be perceived as not being made at arms-length.
+Added: Stack’s-Bowers Numismatics, LLC ("Stack's Bowers"), which is primarily engaged in the business of auctions of high-value and rare coins and in coin retailing, is a wholly-owned subsidiary of Spectrum Group International, Inc.
("SGI"), our former parent and a related party.
−Removed: We have engaged in the past, and continue to engage, in transactions with Stack’s Bowers.
−Removed: These transactions include secured lending transactions in which Stack’s Bowers is the borrower, and other transactions involving the purchase and sale of rare coins, including with JMB.
+Added: We have engaged in the past, and continue to engage, in transactions with Stack’s Bowers.
+Added: These transactions include secured lending transactions in which Stack’s Bowers is the borrower, and other transactions involving the purchase and sale of rare coins, including with JMB.
SGI and the Company have a common chief executive officer, and the chief executive officer and the general counsel of the Company are board members of SGI.
In addition, a majority of the board of directors of the Company have an ownership interest in SGI that in the aggregate represents a controlling interest in SGI.
−Removed: All transactions between the Company and Stack’s Bowers are approved by our Audit Committee, and we believe that all such transactions are on terms no less favorable to the Company than would be obtained from an unaffiliated third-party.
+Added: All transactions between the Company and Stack’s Bowers are approved by our Audit Committee, and we believe that all such transactions are on terms no less favorable to the Company than would be obtained from an unaffiliated third-party.
Nonetheless, these transactions could be perceived as being conflicted.
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There is a risk that gold and other precious metals held by A-Mark, whether on its own behalf or on behalf of its customers, could be lost, damaged or stolen.
−Removed: In addition, access to A-Mark’s precious metals could be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack).
+Added: In addition, access to A-Mark’s precious metals could be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack).
Although we maintain insurance on terms and conditions that we consider appropriate, we may not have adequate sources of recovery if our precious metals inventory is lost, damaged, stolen or destroyed, and recovery may be limited.
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To the extent that we grow through acquisitions or investments, we cannot ensure that we will be able to adequately or profitably manage this growth.
−Removed: JMB’s search engine optimization strategies have provided it with an important competitive advantage, but this may not continue.
+Added: JMB’s search engine optimization strategies have provided it with an important competitive advantage, but this may not continue.
We believe that the internally developed search engine optimization (SEO) strategies of JMB provide its business with a competitive advantage in driving traffic to its sites over other e-commerce precious metal retailers and have been a significant factor in the growth of JMB.
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JMB relies on paid and unpaid internet search engines to attract consumer interest in its product offerings.
−Removed: Search engine companies change their natural search engine algorithms periodically, and these changes may adversely affect JMB’s product offerings in paid and/or unpaid searches.
+Added: Search engine companies change their natural search engine algorithms periodically, and these changes may adversely affect JMB’s product offerings in paid and/or unpaid searches.
JMB may also at times be subject to ranking penalties if the operators of search engines believe it is not in compliance with their guidelines.
−Removed: If JMB’s search engine rankings decline, and JMB is unable to timely regain its prior rankings, it may have to use more expensive marketing channels to sustain and grow its revenues, resulting in reduced profitability.
+Added: If JMB’s search engine rankings decline, and JMB is unable to timely regain its prior rankings, it may have to use more expensive marketing channels to sustain and grow its revenues, resulting in reduced profitability.
If JMB and Goldline do not respond effectively to technological and market changes, they will cease to be competitive with other channels that consumers may have for the purchase of precious coins and bullion.
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The internet and the electronic commerce industry are characterized by rapid technological change, changes in user and customer requirements and preferences, frequent new product and service introductions embodying new technologies, and the emergence of new industry standards and practices.
−Removed: The evolving nature of the internet could render JMB’s existing technology and systems obsolete.
+Added: The evolving nature of the internet could render JMB’s existing technology and systems obsolete.
Its continuing success will depend, in part, on its ability to:
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The increased pace of change also means that the window in which a technologically advanced or sophisticated product or service can achieve and maintain partner and consumer interest is shrinking and, to the extent JMB and Goldline fail to timely anticipate or respond to changes in their industry, the effects of such missteps may be amplified.
−Removed: Future advances in technology may not be beneficial to, or compatible with, JMB’s or Goldline’s businesses.
+Added: Future advances in technology may not be beneficial to, or compatible with, JMB’s or Goldline’s businesses.
Furthermore, JMB and Goldline may be unsuccessful in using new technologies effectively or adapting their technology and systems to user requirements or emerging industry standards on a timely basis.
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JMB must continually update its websites (on all relevant platforms, including mobile) to improve and enhance its content, accessibility, convenience and ease of use.
−Removed: Failure to do so may create a perception that the websites of JMB’s competitors are easier to use and navigate or that they are better able to service customer needs for precious metal coins and bullion.
−Removed: If such a perception were to gain currency, traffic to JMB’s websites and its revenues would suffer.
−Removed: Certain of JMB’s websites publish data concerning the precious metal and cryptocurrency markets obtained from third parties, which could be inaccurate.
−Removed: JMB’s GoldPrice.org and SilverPrice.org publish data on precious metal and cryptocurrency pricing which is obtained from third parties.
+Added: Failure to do so may create a perception that the websites of JMB’s competitors are easier to use and navigate or that they are better able to service customer needs for precious metal coins and bullion.
+Added: If such a perception were to gain currency, traffic to JMB’s websites and its revenues would suffer.
+Added: Certain of JMB’s websites publish data concerning the precious metal and cryptocurrency markets obtained from third parties, which could be inaccurate.
+Added: JMB’s GoldPrice.org and SilverPrice.org publish data on precious metal and cryptocurrency pricing which is obtained from third parties.
While we believe that the sources of the published data are reliable, the data is not independently verified by JMB or us.
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The suspension or discontinuance of the Direct-to-Consumer Purchase Program because of adverse market conditions could impair the perception among JMB's and Goldline's customers that precious coin and bullion is a safe and attractive investment.
−Removed: The Company’s joint venture, Precious Metals Purchasing Partners, LLC, is subject to risks which may affect our ability to successfully profit from the joint venture.
+Added: The Company’s joint venture, Precious Metals Purchasing Partners, LLC, is subject to risks which may affect our ability to successfully profit from the joint venture.
The Company owns a 50% joint venture interest in PMPP.
PMPP purchases products primarily from end-user retail customers, which are then sold to the Company or affiliated companies.
−Removed: The Company’s interest in PMPP is subject to the risks customarily associated with the conduct of joint ventures, including the risk of (i) failure to agree on strategic decisions requiring the approval of both parties, (ii) failure of the joint venture partner to meet its obligations, and (iii) disputes between the joint venturers or litigation regarding joint venture matters.
−Removed: Each of these risks could have a material adverse impact on the viability of PMPP, and its potential contributions to the Company’s future cash flows and earnings.
+Added: The Company’s interest in PMPP is subject to the risks customarily associated with the conduct of joint ventures, including the risk of (i) failure to agree on strategic decisions requiring the approval of both parties, (ii) failure of the joint venture partner to meet its obligations, and (iii) disputes between the joint venturers or litigation regarding joint venture matters.
+Added: Each of these risks could have a material adverse impact on the viability of PMPP, and its potential contributions to the Company’s future cash flows and earnings.
In addition, PMPP is subject to the risks that it will be unable to sell the product that it acquires at economic prices or at all, as described above with respect to the Company's overall Direct-to-Consumer Purchase Program.
Risks Related to our Secured Lending Segment
−Removed: CFC is subject to certain risks under a securitization financing.
−Removed: CFC entered into a securitization financing whereby it transferred to its AMCF subsidiary loans secured by precious metal coins or bullion.
−Removed: AMCF issued 4.98% Class A Notes due 2023 and 5.98% Class B Notes due 2023 (collectively, the "AMCF Notes") which are secured by these loans and related assets.
−Removed: The Company has been subject to various risks in connection with this securitization facility, including:
−Removed: CFC’s obligations to cure breaches of warranties made with respect to the loans placed in the facility or to repurchase such loans;
−Removed: the Company’s exposure to CFC’s retained equity interest in the transaction, as required by SEC Regulation RR;
−Removed: the refinancing risk of the AMCF Notes at maturity;
−Removed: the requirement under the servicing arrangements for the facility to liquidate collateral, even if this would impair relationships with the Company’s customers.
−Removed: The AMCF Notes mature on December 15, 2023.
−Removed: The Company has made arrangements to repay the AMCF Notes at maturity, at which time the securitization facility would terminate.
−Removed: While the Company has no reason to expect that repayment will not occur, unforeseen events could delay or even prevent the repayment.
−Removed: If that were to happen, this could result in the exercise of remedies against the collateral for the AMCF Notes, and may cause the lenders to exercise their right of termination under the Trading Credit Facility.
Our lending business depends on the ability of CFC to originate or acquire loans secured principally by bullion and numismatic coins .
−Removed: The performance of our Secured Lending segment depends on its having a portfolio of loans of sufficient size and quality to justify the expenses and allocation of financial resources committed to the Company’s loan business.
+Added: The performance of our Secured Lending segment depends on having a portfolio of loans of sufficient size and quality to justify the expenses and allocation of financial resources committed to the Company’s loan business.
CFC both originates loans to customers of our wholesale and trading business and also acquires portfolios of loans originated by other parties.
−Removed: The Company typically stores
−Removed: the bullion and numismatics that serve as collateral for the loans.
−Removed: As CFC does not independently market its lending business, it is dependent on the interest of the customers of the Company’s wholesale and trading business in financing their acquisition of bullion and numismatics with loans made by CFC.
−Removed: The interest of the Company’s customers in obtaining loans from CFC is dependent on numerous factors, including the availability of other sources of financing, the interest rate environment, other alternatives for the storage of their bullion and numismatics, their business relationship with the Company and the level and types of businesses conducted by the Company’s Wholesale Sales & and Ancillary Services segment.
−Removed: The Secured Lending segment is also dependent on CFC’s ability to identify and acquire portfolios of loans secured by bullion and numismatics originated by third parties satisfying the Company’s standard for quality and risk.
+Added: The Company typically stores the bullion and numismatics that serve as collateral for the loans.
+Added: As CFC does not independently market its lending business, it is dependent on the interest of the customers of the Company’s wholesale and trading business in financing their acquisition of bullion and numismatics with loans made by CFC.
+Added: The interest of the Company’s customers in obtaining loans from CFC is dependent on numerous factors, including the availability of other sources of financing, the interest rate environment, other alternatives for the storage of their bullion and numismatics, their business relationship with the Company and the level and types of businesses conducted by the Company’s Wholesale Sales & and Ancillary Services segment.
+Added: The Secured Lending segment is also dependent on CFC’s ability to identify and acquire portfolios of loans secured by bullion and numismatics originated by third parties satisfying the Company’s standard for quality and risk.
There can be no assurance the CFC will be successful in continuing to originate and acquire secured loans in amounts sufficient to justify the conduct of this business.
−Removed: The number of loans and the size of CFC’s loan portfolio can vary significantly from period to period.
−Removed: CFC’s loan portfolio can vary considerably from period to period, both as to the number of loans in the portfolio and the total size of the portfolio in terms of dollar amount.
−Removed: The variation of CFCs loan portfolio is attributable to a variety of factors, including the success of the Company in originating and acquiring loans discussed above, as well as the maturities of the loans in the portfolio and the decisions of borrowers to prepays or extend the terms of their loans.
+Added: The number of loans and the size of CFC’s loan portfolio can vary significantly from period to period.
+Added: CFC’s loan portfolio can vary considerably from period to period, both as to the number of loans in the portfolio and the total size of the portfolio in terms of dollar amount.
+Added: The variation of CFCs loan portfolio is attributable to a variety of factors, including the success of the Company in originating and acquiring loans discussed above, as well as the maturities of the loans in the portfolio and the decisions of borrowers to prepay or extend the terms of their loans.
As a consequence, the performance of the Secured Lending segment in a particular financial reporting period may not be indicative of the how the segment will perform in any future period, either in the short or the long term.
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The opportunity to finance purchases of bullion and numismatics with secured loans obtained from CFC is part of a suite of ancillary services that the Company provides to its customers.
−Removed: The Company has not actively marketed or promoted its secured lending business to a greater audience of potential borrowers.
−Removed: The business of the Secured Lending segment, with respect to both the origination and acquisition of loan portfolios, is constrained by the Company’s borrowing capacity under its Trading Credit Facility, on which it relies to finance the much larger business of the Wholesale Sales & Ancillary Services segment.
−Removed: Any significant future growth of the Secured Lending segment will require the application of significant additional resources to this business, and there can be no assurance that such resources will be available or that the Company will not determine that such resources, even if available, should be applied to other areas of the Company’s business.
+Added: The business of the Secured Lending segment, with respect to both the origination and acquisition of loan portfolios, is constrained by the Company’s borrowing capacity under its Trading Credit Facility, on which it relies to finance the much larger business of the Wholesale Sales & Ancillary Services segment.
+Added: Any significant future growth of the Secured Lending segment will require the application of significant additional resources to this business, and there can be no assurance that such resources will be available or that the Company will not determine that such resources, even if available, should be applied to other areas of the Company’s business.
Risks Relating to Commodities
−Removed: A-Mark’s business is heavily influenced by volatility in commodities prices.
−Removed: A primary driver of A-Mark’s profitability is volatility in commodities prices, which leads to wider bid and ask spreads.
+Added: A-Mark’s business is heavily influenced by volatility in commodities prices.
+Added: A primary driver of A-Mark’s profitability is volatility in commodities prices, which leads to wider bid and ask spreads.
Among the factors that can impact the price of precious metals are supply and demand of precious metals;
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The period to period changes in volatility may cause our revenues to fluctuate, as a consequence of which our results for any one period may not be indicative of the results to be expected for any future period.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations.
+Added: See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Our business is exposed to the risk of changes in commodity prices, and our hedging activity to protect our inventory is subject to risks of default by our counterparties.
−Removed: A-Mark’s precious metals inventory is subject to market value changes created by changes in the underlying commodity price, as well as supply and demand of the individual products the Company trades.
+Added: A-Mark’s precious metals inventory is subject to market value changes created by changes in the underlying commodity price, as well as supply and demand of the individual products the Company trades.
In addition, open sale and purchase commitments are subject to changes in value between the date the purchase or sale is fixed (the trade date) and the date metal is delivered or received (the settlement date).
A-Mark seeks to minimize the effect of price changes of the underlying commodity through the use of financial derivative instruments, such as forward and futures contracts.
−Removed: A-Mark’s policy is to remain substantially hedged as to its inventory position and its individual sale and purchase commitments.
−Removed: A-Mark’s management monitors its hedged exposure daily.
−Removed: However, there can be no assurance that these hedging activities will be adequate to protect the Company against commodity price risks associated with A-Mark’s business activities.
+Added: A-Mark’s policy is to remain substantially hedged as to its inventory position and its individual sale and purchase commitments.
+Added: A-Mark’s management monitors its hedged exposure daily.
+Added: However, there can be no assurance that these hedging activities will be adequate to protect the Company against commodity price risks associated with A-Mark’s business activities.
Furthermore, even if we are fully hedged as to any given position, there is the risk of default by our counterparties to the hedge.
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The Company buys and sells precious metals contracts on commodity exchanges around the world, both in support of its customer operations and to hedge its inventory and transactional exposure against fluctuations in commodity prices.
−Removed: The Company’s ability to engage in these activities would be compromised if the exchanges on which the Company trades or any of their clearinghouses were to discontinue operations or to experience disruptions in trading, due to computer problems, unsettled markets, sanctions against commodity exporting countries or other factors.
+Added: The Company’s ability to engage in these activities would be compromised if the exchanges on which the Company trades or any of their clearinghouses were to discontinue operations or to experience disruptions in trading, due to computer problems, unsettled markets, sanctions against commodity exporting countries or other factors.
For example, if there were to be disruptions in the supply chain for gold, silver, platinum or palladium, our ability to buy and sell these metals on the commodity exchanges would be materially and adversely affected.
1 unchanged sentence
Our business is subject to the risk of fraud and counterfeiting.
−Removed: The precious metals (particularly bullion) business is exposed to the risk of loss as a result of “materials fraud”
−Removed: in its various forms.
+Added: The precious metals (particularly bullion) business is exposed to the risk of loss as a result of “materials fraud” in its various forms.
We seek to minimize our exposure to this type of fraud through a number of means, including third-party authentication and verification, reliance on our internal experts and the establishment of procedures designed to detect fraud.
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The Company has concluded that it is not currently subject to the conflict minerals rules because it is not a manufacturer of conflict minerals under the definitions set forth in the rules.
−Removed: Depending on developments in the Company’s business, it could become subject to the rules at some point in the future.
+Added: Depending on developments in the Company’s business, it could become subject to the rules at some point in the future.
In that event, there will be costs associated with complying with these disclosure requirements, including costs to determine the origin of gold used in our products.
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The Company believes that its Direct-to-Consumer operations are generally conducted in a manner that does not implicate the jurisdiction of the Commodity Futures Trading Commission ("CFTC"), as it does not sell products to retail customers for future delivery.
−Removed: The Commodity Exchange Act (the “CEA”) and the rules and regulations of the CFTC are drafted broadly, however, and practices that the Company does not regard as futures transactions may be regarded as such by the CFTC.
+Added: The Commodity Exchange Act (the “CEA”) and the rules and regulations of the CFTC are drafted broadly, however, and practices that the Company does not regard as futures transactions may be regarded as such by the CFTC.
During the first quarter of fiscal 2023, the Company and Goldline settled an action in which the CFTC alleged, among other things, that certain financing arrangements that were made available to customers constituted off-exchange retail commodity transactions.
Although this matter was settled on terms satisfactory to the Company with no material financial impact, and Goldline has discontinued these particular arrangements and practices, there can be no assurance that the CFTC will not in the future accuse us of violating the CEA or the rules and regulations of the CFTC, or otherwise (along with other federal or state agencies) seek to assert oversight over aspects of our operations which could adversely affect us.
+Added: On October 7, 2023, California Governor Gavin Newsom signed into law Senate Bill ("SB") 261, Greenhouse Gases:
+Added: Climate-Related Financial Risk, and SB 253, the Climate Corporate Data Accountability Act, which significantly expand climate-related disclosure requirements for companies doing business in California.
+Added: As a company with operations in California, we may fall under the jurisdiction of these new laws, which impose rigorous reporting obligations regarding our climate-related financial risks and extensive requirements for the disclosure of greenhouse gas emissions.
+Added: SB 253 imposes its greenhouse gas reporting obligations on companies with annual revenues exceeding $1.0 billion.
+Added: Given our current revenue levels, we are subject to the requirements of SB 253.
+Added: SB 253 requires the reporting of Scope 1 greenhouse gas emissions (direct emissions from our operations) and Scope 2 greenhouse gas emissions (indirect emissions from our operations) for the prior fiscal year beginning in 2026.
+Added: SB 253 requires reporting of Scope 3 greenhouse gas emissions (emission from third parties in our value chain) for the prior fiscal year beginning in 2027.
+Added: Although we will not know the full requirements of this law until the California Air Resources Board issues implementing rules, the law will likely require us to report emissions from our operations in and outside of California, including our mint operations in Winchester, Indiana, and emissions from our suppliers and customers.
+Added: Commencing on January 1, 2026, and biennially thereafter, SB 261 mandates that we publicly disclose our climate-related financial risks, which may include risks to our own operations, the operations of our suppliers and customers and the precious metals markets generally.
+Added: This includes detailing the strategies we have adopted to mitigate and adapt to these risks.
+Added: Our compliance reports must be made publicly available on our company's website.
+Added: Non-compliance with the requirements of SB 261 could expose us to a fine of up to $50,000 per reporting year and we may also be required to pay an annual filing fee.
+Added: The European Union adopted new disclosure standards and rules related to environmental, social, and corporate governance ("ESG") matters in the Corporate Sustainability Reporting Directive (CSRD) which became effective in 2023 and applies to both EU and non-EU entities.
+Added: Because our operations in Europe surpass the net turnover threshold in the rule and we may be deemed to have an EU branch or subsidiary, we may be subject to CSRD reporting requirements.
+Added: We will know more about the specific disclosure requirements when the EU adopts implementing regulations for the non-EU groups that are covered by the rule.
+Added: These changing rules, regulations and the stakeholder expectations related to ESG described in " Risk Factors of General Applicability – Third-party expectations relating to ESG " factors my impose additional costs and expose us to new risks, have resulted in and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
There can be no assurance that the regulation of our trading and lending businesses will not increase or that compliance with the applicable regulations will not become more costly or require us to modify our business practices.
−Removed: For other risks related to government regulation, see “
−Removed: Risk Factors of General Applicability —
−Removed: We are subject to other laws and regulations ,”
+Added: For other risks related to government regulation, see “ Risk Factors of General Applicability — We are subject to other laws and regulations ,” below.
Compliance with new data protection/privacy statutes could increase our costs and expose the Company to possible sanctions for violation.
By reason of our Direct-to-Consumer business in particular, we collect personal data.
−Removed: In 2016, the European Union ("EU") adopted a comprehensive overhaul of its data protection regime from a national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
−Removed: The EU data protection regime expands the scope of the EU data protection law to all foreign companies processing personal data of EU residents, imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide turnover or €20 million, and includes new rights such as the “portability”
−Removed: of personal data.
+Added: In 2016, the European Union ("EU") adopted a comprehensive overhaul of its data protection regime from a national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
+Added: The EU data protection regime expands the scope of the EU data protection law to all foreign companies processing personal data of EU residents, imposes a strict data protection compliance regime with severe penalties of up to the greater of 4% of worldwide turnover or €20 million, and includes new rights such as the “portability” of personal data.
Although the GDPR applies across the EU without a need for local implementing legislation, EU member states have the ability to interpret the GDPR opening clauses, which permit region-specific data protection legislation and have the potential to create inconsistencies on a country-by-country basis.
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Also, a violation by the Company of this regulation could expose us to penalties and sanctions under the regulation.
−Removed: In 2020, California passed amendments to the California Consumer Privacy Act (“CCPA”) that took effect on January 1, 2023.
+Added: California passed amendments to the California Consumer Privacy Act (“CCPA”) that took effect on January 1, 2023.
This law provides California consumers with a high level of transparency and broad rights and choices with respect to their personal information.
−Removed: For example, CCPA grants consumers privacy rights including the rights of data correction and data portability, the right to limit the Company’s use of a new subset of personal information called “sensitive personal information”
−Removed: that requires heightened protections, and the right to appeal the Company’s response to an individual’s exercise of these new or existing privacy rights.
−Removed: The “personal information”
−Removed: regulated by CCPA is broadly defined to include identification or association with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create a profile about a consumer, government identification numbers, and education information.
+Added: For example, CCPA grants consumers privacy rights including the rights of data correction and data portability, the right to limit the Company’s use of a new subset of personal information called “sensitive personal information” that requires heightened protections, and the right to appeal the Company’s response to an individual’s exercise of these new or existing privacy rights.
+Added: The “personal information” regulated by CCPA is broadly defined to include identification or association with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create a profile about a consumer, government identification numbers, and education information.
Compliance with CCPA requires the implementation of a series of operational measures such as:
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conducting risk assessments for the use of sensitive personal information;
−Removed: establishing mechanisms (including, at a minimum, a toll-free telephone number and an online channel) to respond to consumers’
−Removed: data access, deletion, portability, and opt-out requests;
−Removed: and providing clear and conspicuous links on the home page of the business’
−Removed: website, where applicable, allowing residents to limit or opt-out of certain data processing activities.
+Added: establishing mechanisms (including, at a minimum, a toll-free telephone number and an online channel) to respond to consumers’ data access, deletion, portability, and opt-out requests;
+Added: and providing clear and conspicuous links on the home page of the business’ website, where applicable, allowing residents to limit or opt-out of certain data processing activities.
CCPA prohibits businesses from discriminating against consumers who have opted out of the sale of their personal information, subject to narrow exceptions.
Failure to comply with CCPA can result in civil penalties up to $7,500 per violation or actual damages suffered by a consumer.
−Removed: Colorado, Virginia, and Connecticut also passed comprehensive privacy laws, modeled in part after the CCPA, that took effect in 2023.
−Removed: Eight other states have passed similar privacy laws that will take effect between 2023 and 2025, including Texas, Delaware, Oregon, Tennessee, Iowa, Indiana, Utah, and Montana.
+Added: Colorado, Virginia, Utah, and Connecticut also passed comprehensive privacy laws, modeled in part after the CCPA, that took effect in 2023.
+Added: Nine other states have passed similar privacy laws that will take effect between 2024 and 2026, including Florida, Texas, Delaware, Oregon, Tennessee, Iowa, Indiana, New Jersey, and Montana.
privacy laws have some provisions and requirements similar to the CCPA.
However, preparing to comply with the varying requirements of these laws has already subjected the Company to costs and legal fees and will subject the Company to additional costs and risks as they take effect.
−Removed: For example, these laws may limit the Company’s ability to use personal information for advertising purposes, may limit the ways in which the Company may use certain categories of personal information, may require the Company to obtain additional permissions from the consumer, and may require revision of the Company's contracts with service providers with whom the Company shares personal information in the course of providing its products and services.
−Removed: These laws may also limit the Company’s ability to process sensitive personal information, which includes financial data, account information, identification card numbers, social security numbers, and precise geolocation.
+Added: For example, these laws may limit the Company’s ability to use personal information for advertising purposes, may limit the ways in which the Company may use certain categories of personal information, may require the Company to obtain additional permissions from the consumer, and may require revision of the Company's contracts with service providers with whom the Company shares personal information in the course of providing its products and services.
+Added: These laws may also limit the Company’s ability to process sensitive personal information, which includes financial data, account information, identification card numbers, social security numbers, and precise geolocation.
The Company will have to update is policies, notices, procedures, and permissions in response to these new privacy laws.
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The law also requires operators of internet websites or online services to establish a designated request address through which a consumer may submit a verified request directing such operators not to make any sale of covered information collected about the consumer.
−Removed: The “covered information”
−Removed: regulated by the Nevada law is defined to include an enumerated list of items of personally identifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow a specific person to be contacted).
−Removed: In addition, the SEC recently changed its disclosure requirements regarding cybersecurity risk management, strategy, governance and incident reporting.
−Removed: These changes require companies to investigate all cybersecurity incidents without unreasonable delay, determine their level of materiality, and report specific details about any material cybersecurity incidents in a separate filing within four business days.
−Removed: These changes also require additional information in annual disclosures regarding the Company’s cybersecurity risk management and reporting processes, as well as the cybersecurity expertise of relevant Company personnel and third-party service providers or auditors.
−Removed: The changes introduced by these statutes, and other similar regulations enacted by other jurisdictions, will subject the Company to additional costs and complexity of compliance, by requiring, among other things, changes to the Company’s security systems, policies, procedures and practices.
+Added: The “covered information” regulated by the Nevada law is defined to include an enumerated list of items of personally identifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow a specific person to be contacted).
+Added: We have evaluated these state privacy laws and their requirements, and believe we are currently in compliance in all material respects with those that are in effect.
+Added: Going forward, however, the changes introduced by state privacy laws that will soon take effect, and other similar regulations enacted by other jurisdictions, will subject the Company to additional costs and complexity of compliance, by requiring, among other things, changes to the Company’s security systems, policies, procedures and practices.
In addition, a violation by the Company of the new regulations could expose us to penalties and sanctions.
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Furthermore, the requirements by state or local governments on out-of-state sellers to collect sales and use taxes could deter futures sales, which could have an adverse impact on our business.
−Removed: For other risks related to taxation, see “
−Removed: Risk Factors of General Applicability —
−Removed: Changes in U.S.
−Removed: tax law could adversely affect our business ,”
+Added: For other risks related to taxation, see “ Risk Factors of General Applicability — Changes in U.S.
+Added: tax law could adversely affect our business ,” below.
We use lead providers and marketing affiliates to assist us in obtaining new customers, and if lead providers or marketing affiliates do not comply with an increasing number of applicable laws and regulations, or if our ability to use such lead providers or marketing affiliates is otherwise impaired, it could adversely affect our business.
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Our marketing affiliates place our advertisements on their websites that direct potential customers to our websites.
−Removed: Generally, lead providers operate, and also work with their own marketing affiliates who operate, separate websites to attract prospective customers and then sell those “leads”
−Removed: to online traders and lenders.
+Added: Generally, lead providers operate, and also work with their own marketing affiliates who operate, separate websites to attract prospective customers and then sell those “leads” to online traders and lenders.
As a result, the success of our Direct-to-Consumer and Secured Lending businesses depends materially on the willingness and ability of lead providers or marketing affiliates to provide us customer leads at acceptable prices.
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We may not continue to pay any dividends in the future.
−Removed: A-Mark’s board of directors has adopted a regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis).
+Added: A-Mark’s board of directors has adopted a regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis).
The initial quarterly cash dividend under the policy was paid on October 24, 2022 to stockholders of record as of October 10, 2022.
−Removed: The most recent cash dividend under the policy was paid on October 24, 2023 to stockholders of record as of October 10, 2023.
−Removed: The declaration of regular cash dividends in the future is subject to the determination each quarter by the board of directors, based on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants.
+Added: The most recent cash dividend under the policy was paid on January 29, 2024 to stockholders of record as of January 16, 2024.
+Added: The declaration of regular cash dividends in the future is subject to the determination each quarter by the board of directors, based on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants.
There can be no assurance that the Company will pay dividends in the future on a regular basis or otherwise.
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There is no assurance that any such non-recurring special dividend will be paid in the future, and if made, the timing or amount of any such dividend.
−Removed: See Note 20 to the Company’s condensed consolidated financial statements for more information regarding our dividends.
+Added: See Note 20 to the Company’s condensed consolidated financial statements for more information regarding our dividends.
Your percentage ownership in the Company could be diluted in the future.
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Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain certain anti-takeover provisions that could have the effect of making it more difficult for a third-party to acquire, or of discouraging a third-party from attempting to acquire, control of the Company without negotiating with our board of directors.
−Removed: Such provisions could limit the price that certain investors might be willing to pay in the future for the Company’s securities.
+Added: Such provisions could limit the price that certain investors might be willing to pay in the future for the Company’s securities.
Certain of such provisions allow the Company to issue preferred stock with rights senior to those of the common stock, impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions and set forth rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings.
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Our procedures to protect against unauthorized access to secured data may be inadequate to safeguard against all data security breaches.
−Removed: The Company’s failure or inability to protect its intellectual property could harm its competitive position.
+Added: New rules have recently become effective that will require the Company to provide disclosures regarding cybersecurity management and events.
+Added: While the Company believes it has exemplary cybersecurity risk management procedures for addressing cybersecurity events, the new rules may increase the costs of cybersecurity protection and require disclosure of cybersecurity event that the Company might not otherwise deem to be material.
+Added: The SEC recently changed its disclosure requirements regarding cybersecurity risk management, strategy, governance and incident reporting.
+Added: These changes require companies to investigate all cybersecurity incidents without unreasonable delay, determine their level of materiality, and report specific details about any material cybersecurity incidents in a separate filing within four business days.
+Added: These changes also require additional information in annual disclosures regarding the Company’s cybersecurity risk management and reporting processes, as well as the cybersecurity expertise of relevant Company personnel and third-party service providers or auditors.
+Added: The Company’s failure or inability to protect its intellectual property could harm its competitive position.
The Company relies on a combination of patent, trade secret, copyright and trademark laws and contractual restrictions, such as confidentiality agreements and licenses, to protect its business, services, know-how and information.
−Removed: The Company’s patent, trademarks or service marks may be challenged or found to be unenforceable, and contractual arrangements to protect our intellectual property may be insufficient to prevent its misappropriation.
−Removed: If that were the case, the Company’s competitive position would suffer.
+Added: The Company’s patent, trademarks or service marks may be challenged or found to be unenforceable, and contractual arrangements to protect our intellectual property may be insufficient to prevent its misappropriation.
+Added: If that were the case, the Company’s competitive position would suffer.
Third parties may assert violations of their intellectual property rights against the Company.
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This could result in an increase in our tax liability or require changes in our business in order to mitigate any adverse effects of changes in tax laws.
−Removed: Third-party expectations relating to Environment, Social and Governance (“ESG”) factors may impose additional costs and expose us to new risks.
−Removed: In recent years, there has been an increasing focus by stakeholders of public companies—including investors, employees, customers, suppliers, and governmental and non-governmental organizations—on ESG matters.
+Added: Third-party expectations relating to ESG factors may impose additional costs and expose us to new risks.
+Added: In recent years, there has been an increasing focus by stakeholders of public companies—including investors, employees, customers, suppliers, and governmental and non-governmental organizations—on ESG matters.
A failure, whether real or perceived, to address ESG could adversely affect our business, including by heightening other risks that we face, such as those related to consumer behavior and consumer perceptions of us.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.