What changed in this filing

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Item 1. Financial Statements

2020-11-12 compared with 2020-05-08 · 347 added, 435 removed, 968 unchanged (45% of the section changed)

1 unchanged sentence

Index to the Condensed Consolidated Financial Statements and Notes thereof

Condensed Consolidated Balance Sheets as of March 31, 2020 and June 30, 2019

Condensed Consolidated Statements of Income for the Three and Nine Months ended March 31, 2020 and 2019

Condensed Consolidated Statement of Stockholders' Equity for the Three and Nine Months ended March 31, 2020 and 2019

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2020 and 2019

Notes to Consolidated Financial Statements

Condensed Consolidated Balance Sheets as of September 30, 2020 and June 30, 2020

Condensed Consolidated Statements of Income for the Three Months Ended September 30, 2020 and 2019

Condensed Consolidated Statements of Stockholders' Equity for the Three Months Ended September 30, 2020 and 2019

Condensed Consolidated Statements of Cash Flows for the Three Months Ended September 30, 2020 and 2019

Notes to Condensed Consolidated Financial Statements

Description of Business

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(amounts in thousands, except for share data) (unaudited)

September 30,

Current assets:

5 unchanged sentences

Restricted inventories

Income taxes receivable

Prepaid expenses and other assets (1)

Total current assets

Operating lease right of use assets, net

Operating lease right of use assets

Property, plant, and equipment, net

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Long-term investments

Deferred tax assets - non-current

Other long-term assets

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Accrued liabilities (1)

Income tax payable

Total current liabilities

Notes payable (1)

Deferred tax liabilities

Other liabilities

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and outstanding:

none as of March 31, 2020 and June 30, 2019

none as of September 30, 2020 and June 30, 2020

Common stock, par value $0.01;

40,000,000 shares authorized;

shares issued and outstanding as of March 31, 2020 and June 30, 2019

and 7,031,500 shares issued and outstanding as of September 30, 2020

and June 30, 2020, respectively

Additional paid-in capital

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A-MARK PRECIOUS METALS, INC.

AND S UBSIDIARIES

AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

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AMCF is a VIE because its equity may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company.

The securitization is primarily secured by bullion loans and precious metals, and the Company is required to continuously hedge the value of certain collateral and make future contributions as necessary.

The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., secured loans or precious metals) placed into the entity, has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

The securitization is primarily secured by cash, bullion loans, and precious metals, and the Company is required to continuously hedge the value of certain collateral and make future contributions as necessary.

The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., cash, secured loans, or precious metals) placed into the entity, has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

The following table presents the assets and liabilities of this VIE, which is included in the condensed consolidated balance sheets above.

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See Note 14 for additional information.

September 30,

ASSETS OF THE CONSOLIDATED VIE

Receivables, net

Derivative assets

Secured loans receivable

Precious metals held under financing arrangements

Prepaid expenses and other assets

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Total liabilities of the consolidated variable interest entity

This is an intercompany balance, which is eliminated in consolidation and hence not shown on the consolidated balance sheets.

$5.0 million of the Notes are held by A-Mark, which is eliminated in consolidation and hence not shown on the consolidated balance sheets.

This is an intercompany balance, which is eliminated in consolidation and hence not shown on the condensed consolidated balance sheets.

$5.0 million of the Notes are held by A-Mark, which is eliminated in consolidation and hence not shown on the condensed consolidated balance sheets.

See accompanying Notes to Condensed Consolidated Financial Statements

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Three Months Ended

Nine Months Ended

September 30,

Cost of sales

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Interest expense

Other income, net

Unrealized loss on foreign exchange

Other income (expense), net

Unrealized losses on foreign exchange

Net income before provision for income taxes

Income tax expense

Net income (loss) attributable to non-controlling interests

Net income attributable to non-controlling interests

Net income attributable to the Company

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A-MARK PRECIOUS METALS, INC.

AND S UBSIDIARIES

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

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Balance, June 30, 2019

Net income (loss)

Share-based compensation

Transactions with non-controlling interest

Balance, September 30, 2019

Share-based compensation

Balance, December 31, 2018

Net income (loss)

Share-based compensation

Balance, March 31, 2019

Stockholders'

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Share-based compensation

Net settlement on issuance of common shares on exercise of options

Dividends declared ($1.50 per common share)

Balance, September 30, 2020

Share-based compensation

Balance, December 31, 2019

Share-based compensation

Balance, March 31, 2020

See accompanying Notes to Condensed Consolidated Financial Statements

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(amounts in thousands) (unaudited)

Nine Months Ended March 31,

Three Months Ended September 30,

Cash flows from operating activities:

Adjustments to reconcile net income to net cash used in operating activities:

Provision (reversal) for doubtful accounts

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization

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Interest added to principal of secured loans

Change in accrued earn-out

Debt extinguishment costs

Share-based compensation

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Derivative assets

Income taxes receivable

Income tax receivable

Precious metals held under financing arrangements

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Accrued liabilities

Net cash (used in) provided by operating activities

Income tax payable

Net cash used in operating activities

Cash flows from investing activities:

Capital expenditures for property, plant, and equipment

Purchase of long-term investments

Purchase of intangible assets

Secured loans receivable, net

Other loans originated

Net cash provided by (used in) investing activities

Net cash used in investing activities

Cash flows from financing activities:

Product financing arrangements, net

Dividends paid

Borrowings and repayments under lines of credit, net

Repayments on notes payable to related party

Proceeds from issuance of notes payable

Borrowings on unsecured advance

Debt funding issuance costs

Net cash provided by (used in) financing activities

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net settlement on issuance of common shares on exercise of options

Net cash provided by financing activities

Net (decrease) increase in cash, cash equivalents, and restricted cash

Cash, cash equivalents, and restricted cash, beginning of period

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Supplemental disclosures of cash flow information:

Cash paid during the period for:

Interest paid

Income taxes paid

Income taxes refunded

Non-cash investing and financing activities:

Interest added to principal of secured loans

Investment transactions with non-controlling interest

See accompanying Notes to Condensed Consolidated Financial Statements

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The condensed consolidated financial statements comprise those of A-Mark Precious Metals, Inc.

("A-Mark" or the "Company") and its consolidated subsidiaries.

("A-Mark" or the "Company"), its wholly owned consolidated subsidiaries, and its joint ventures in which the Company has a controlling interest.

Business Segments

The Company conducts its operations in three reportable segments:

(1) Wholesale Trading & Ancillary Services, (2) Secured Lending, and (3) Direct Sales.

(i) Wholesale Trading & Ancillary Services, (ii) Secured Lending, and (iii) Direct Sales.

Each of these reportable segments represents an aggregation of operating segments that meets the aggregation criteria set forth in the Segment Reporting Topic 280 of the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification (“ASC”).

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The Company's wholly owned subsidiary, A-M Global Logistics, LLC.

("Logistics"), operates the Company's logistics fulfillment center.

("Logistics" or “AMGL”), operates the Company's logistics fulfillment center.

Logistics provides customers an array of complementary services, including packaging, shipping, handling, receiving, processing, and inventorying of precious metals and custom coins on a secure basis.

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own 69% and 31%, respectively, of AMST.

The Company acquired its interest in AMST from SilverTowne L.P.

to provide greater product selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to silver products during volatile market environments.

Secured Lending

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(“AMCF”), a wholly owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC.

AMCF issued and administers Secured Senior Term Notes:

Series 2018-1, Class A, with an aggregate principal amount of $72.0 million and Secured Subordinated Term Notes:

Series 2018-1, Class B with an aggregate principal amount of $28.0 million (collectively, the "Notes".) The Class A Notes bear interest at a rate of 4.98% and the Class B Notes bear interest at a rate of 5.98%.

The Notes have a maturity date of December 15, 2023.

For additional information regarding this notes payable, see Note 14 .

AMCF issued and administers the Notes.

For additional information, see Note 14 .

The Company's wholly-owned subsidiary, Goldline, Inc.

("Goldline"), is a direct retailer of precious metals to the investor community.

Goldline markets its precious metal products primarily on radio and the internet.

Goldline markets its precious metal products primarily on television, radio, and the internet.

Goldline sells gold and silver bullion in the form of coins, rounds, and bars.

("AMIP"), a wholly owned subsidiary of Goldline, manages its intellectual property.

In the fourth quarter of 2019, Goldline entered into a joint venture agreement with one of the Company's related parties to form Precious Metals Purchasing Partners, LLC, ("PMPP"), a 50% owned subsidiary, primarily for the purpose of purchasing precious metals from the partners' retail customers for resale back into the marketplace.

PMPP was capitalized in fiscal 2019, and commenced operations in fiscal 2020.

Metals purchased by the joint venture are sold to the partners or their affiliates per terms of the joint venture agreement.

Precious Metals Purchasing Partners, LLC, ("PMPP") is a 50% owned subsidiary of Goldline.

PPMP acquires precious metals from retail customers and resells the metals to partners or affiliates of the joint venture.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements reflect the financial condition, results of operations, statement of stockholder equity, and cash flows of the Company, and were prepared using accounting principles generally accepted in the United States (“U.S.

The condensed consolidated financial statements reflect the financial condition, results of operations, statement of stockholders’ equity, and cash flows of the Company, and were prepared using accounting principles generally accepted in the United States (“U.S.

The Company consolidates its subsidiaries that are wholly owned, majority owned, and entities that are variable interest entities where the Company is determined to be the primary beneficiary.

Our condensed consolidated financial statements include the accounts of:

A-Mark, CFC, AMTAG, TDS, Logistics, Goldline, AMIP, AMST, AMCF, and PMPP (collectively the “Company”).

A-Mark, AMTAG, TDS, AMGL, AMST, CFC, AMCF, Goldline, AMIP, and PMPP (collectively the “Company”).

Intercompany accounts and transactions are eliminated.

Comprehensive Income

For the three and nine months ended March 31, 2020 and 2019, there were no items that gave rise to other comprehensive income or loss, and, as a result net income equaled comprehensive income.

For the three months ended September 30, 2020 and 2019, there were no items that gave rise to other comprehensive income or loss, and, as a result net income equaled comprehensive income.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

These estimates include, among others, determination of fair value, allowances for doubtful accounts, impairment assessments of property, plant and equipment and intangible assets, valuation allowance determination on deferred tax assets, contingent earn-out liabilities, determining the incremental borrowing rate for calculating right of use assets and lease liabilities, and revenue recognition judgments.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods.

These estimates include, among others, determination of fair value, allowances for doubtful accounts, impairment assessments of property, plant and equipment and intangible assets, valuation allowance determination on deferred tax assets, determining the incremental borrowing rate for calculating right of use assets and lease liabilities, and revenue recognition judgments.

Significant estimates also include the Company's fair value determination with respect to its financial instruments and precious metals inventory.

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These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the condensed consolidated balance sheets, condensed consolidated statements of income, condensed consolidated statement of stockholders’ equity, and condensed consolidated statements of cash flows for the periods presented in accordance with U.S.

Operating results for the nine months ended March 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2020 or for any other interim period during such fiscal year.

Operating results for the three months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021 or for any other interim period during such fiscal year.

Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S.

GAAP have been omitted in accordance with the rules and regulations of the SEC.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended 2019 (the “2019 Annual Report”), as filed with the SEC.

These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (the “2020 Annual Report”), as filed with the SEC.

Amounts related to disclosure of June 30, 2020 balances within these interim condensed consolidated financial statements were derived from the aforementioned audited consolidated financial statements and notes thereto included in the 2020 Annual Report.

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Based on an assessment of credit risk, the Company typically grants collateralized credit to its customers.

The Company enters into inventory hedging transactions, principally utilizing metals commodity futures contracts traded on national futures exchanges or forward contracts with credit worthy financial institutions.

Credit risk with respect to loans of inventory to customers is minimal.

All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions.

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A VIE is consolidated for accounting purposes by its primary beneficiary, which is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

The Company consolidates VIE's when it is deemed to be the primary beneficiary.

The Company consolidates VIEs when it is deemed to be the primary beneficiary.

Management regularly reviews and reconsiders its previous conclusions regarding whether it holds a variable interest in potential VIEs, the status of an entity as a VIE, and whether the Company is required to consolidate such VIE's in the consolidated financial statements.

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AMCF is required to maintain separate books and records.

The assets and liabilities of this VIE, as of March 31, 2020 and June 30, 2019, are indicated on table that follows the condensed consolidated balance sheets .

AMCF is a VIE because the Company's initial equity investment may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company.

The assets and liabilities of this VIE, as of September 30, 2020 and June 30, 2020, are indicated on the table that follows the condensed consolidated balance sheets.

AMCF is a VIE because its initial equity investment may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company.

The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., secured loans or precious metals), has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., cash, secured loans, or precious metals), has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

(See Note 14 .)

Cash and Cash Equivalents

Cash and Cash E quivalents

The Company considers all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents.

The Company does not have any cash equivalents as of March 31, 2020 and June 30, 2019.

As of March 31, 2020 and June 30, 2019, the Company has $0.2 million and $0.3 million, respectively, in a bank account that is restricted and serves as collateral against a standby letter of credit issued by the bank in favor of the landlord for our office space in Los Angeles, California.

The Company does not have any cash equivalents as of September 30, 2020 and June 30, 2020.

As of September 30, 2020 and June 30, 2020, the Company has $0.2 million and $0.2 million, respectively, in a bank account that is restricted and serves as collateral against a standby letter of credit issued by the bank in favor of the landlord for our office space in Los Angeles, California.

Precious Metals held under Financing Arrangements

The Company enters into arrangements with certain customers under which A-Mark purchases precious metals from the customers which are subject to repurchase by the customer at the spot value of the product on the repurchase date.

The precious metals purchased under these arrangements consist of rare and unique items, and therefore the Company accounts for these transactions as precious metals held under financing arrangements, which generate financing income rather than revenue earned from precious metals inventory sales.

In these repurchase arrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement.

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Upon termination, the customer’s right to repurchase any remaining precious metal is forfeited, and the related precious metals are reclassified as inventory held for sale.

As of March 31, 2020 and June 30, 2019, precious metals held under financing arrangements totaled $187.0 million and $208.8 million respectively.

As of September 30, 2020 and June 30, 2020, precious metals held under financing arrangements totaled $158.8 million and $178.6 million respectively.

The Company’s precious metals held under financing arrangements are marked-to-market.

Inventories principally include bullion and bullion coins that are acquired and initially recorded at fair market value.

The Company's inventory primarily includes bullion and bullion coins, which is acquired and initially recorded at cost and then marked to fair market value.

The fair market value of the bullion and bullion coins comprises two components:

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We lease warehouse space, office facilities, and equipment.

Our operating leases with terms longer than twelve months are recorded on the condensed consolidated balance sheets at the sum of the present value of the lease's fixed minimum payments as operating lease right of use assets ("ROU assets") in the condensed consolidated balance sheets.

Our finance leases (previously considered by the Company as capital leases prior to our adoption of ASC 842) are another type of ROU asset, but are classified in the condensed consolidated balance sheets as a component of plant, property and equipment at the present value of the lease payments.

Our operating leases with terms longer than twelve months are recorded at the sum of the present value of the lease's fixed minimum payments as operating lease right of use assets ("ROU assets") in the condensed consolidated balance sheets.

Our finance leases (previously considered by the Company as capital leases prior to our adoption of ASC 842) are another type of ROU asset, but are classified in the condensed consolidated balance sheets as a component of property, plant, and equipment at the present value of the lease payments.

For leases that contain termination options, where the rights to terminate are held by either us, the lessor, or both parties and it is reasonably certain that we will exercise that option, we factor these extended or shortened lease terms into the minimum lease payments.

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Operating lease cost is recognized on a straight-line basis over the lease term.

Finance lease cost is recognized as a combination of the amortization expense for the R OU assets and interest expense for the outstanding lease liabilities using the discount rate discussed above.

The depreciable life of ROU assets are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certa in of exercise.

Our lease agreements do not contain any significant residual value guarantees or material restrictive covenants.

Finance lease cost is recognized as a combination of the amortization expense for the ROU assets and interest expense for the outstanding lease liabilities using the discount rate discussed above.

The de preciable life of ROU assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise.

Our lease agreem ents do not contain any significant residual value guarantees or material restrictive covenants.

Income from subleases was not significant for any period presented.

During the three months ended March 31, 2020, we incurred lease costs of $0.4 million, which is primarily comprised of operating lease cost of $0.3 million.

During the nine months ended March 31, 2020, we incurred lease costs of $1.3 million, which is primarily comprised of operating lease cost of $1.0 million.

During the three months ended September 30, 2020, we incurred lease costs of $0.5 million, which is primarily comprised of operating lease cost of $0.3 million.

The other costs are insignificant and relate to our finance leases, short-term leases, and variable lease payments.

For the nine months ended March 31, 2020, we made cash payments of $1.1 million for operating lease obligations.

For the three months ended September 30, 2020, we made cash payments of $0.4 million for operating lease obligations.

These payments are included in operating cash flows.

At March 31, 2020, the weighted-average remaining lease term under our capitalized operating leases was 4.7 years, while the weighted-average discount rate for our operating leases was approximately 4.9%.

The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities, as of March 31, 2020:

At September 30, 2020, the weighted-average remaining lease term under our capitalized operating leases was 4.3 years, while the weighted-average discount rate for our operating leases was approximately 4.9%.

The following represents our future undiscounted cash flows for each of the next five years and thereafter and reconciliation to the lease liabilities, as of September 30, 2020:

Years ending June 30,

2020 (excluding the nine months ended March 31, 2020)

2021 (9 months remaining)

Total lease payments

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Operating lease liability - long-term

Represents the present value of the capitalized operating lease liabilities as of March 31, 2020.

Represents the present value of the capitalized operating lease liabilities as of September 30, 2020.

Current operating lease liabilities are presented within accrued liabilities on our condensed consolidated balance sheets.

Long-term operating lease liabilities are presented within other liabilities on our condensed consolidated balance sheets.

Following is a summary of our future minimum operating lease commitments, as determined under ASC 840, for all non-cancelable lease agreements, for each of the next five years and in the aggregate, as of June 30, 2019:

Years ending June 30,

The Company has no related party leases.

We do not have leases that have not yet commenced, which would create significant rights and obligations for us, including any involvement with the construction or design of the underlying asset.

(Refer to the section below captioned Recently Adopted Accounting Pronouncements for the elections adopted pursuant to ASU 2016-02, Leases (Topic 842) .)

Property, Plant, and Equipment

Property, plant, and equipment is stated at cost less accumulated depreciation.

Depreciation is calculated using a straight line method based on the estimated useful lives of the related assets, ranging from three years to twenty-five years.

Depreciation commences when the related assets are placed into service.

Property, plant, and equipment is stated at cost less accumulated depreciation and amortization.

Depreciation and amortization are calculated using a straight-line method based on the estimated useful lives of the related assets, ranging from three years to twenty-five years.

Depreciation and amortization commence when the related assets are placed into service.

Internal-use software development costs are capitalized during the application development stage.

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Goodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangible assets acquired.

Goodwill and other indefinite-lived intangibles (such as trade names) are not subject to amortization, but are evaluated for impairment at least annually.

Goodwill and other indefinite-lived intangibles (such as trade names and trademarks) are not subject to amortization but are evaluated for impairment at least annually.

However, for tax purposes, goodwill acquired in connection with a taxable asset acquisition is generally deductible.

The Company evaluates its goodwill and other indefinite-lived intangibles for impairment in the fourth quarter of the fiscal year (or more frequently if indicators of potential impairment exist) in accordance with the Intangibles - Goodwill and Other Topic 350 of the ASC.

Goodwill is reviewed for impairment at a reporting unit level, which in our case, corresponds to the Company’s reportable operating segments.

Goodwill is reviewed for impairment at a reporting unit level, which for the Company, corresponds to the Company’s reportable operating segments.

Evaluation of goodwill for impairment

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Evaluation of indefinite-lived intangible assets for impairment

The Company evaluates its indefinite-lived intangible assets (i.e., trademarks and trade-names) for impairment.

The Company evaluates its indefinite-lived intangible assets (i.e., trade names and trademarks) for impairment.

In assessing its indefinite-lived intangible assets for impairment, the Company has the option to first perform a qualitative assessment to determine whether events or circumstances exist that lead to a determination that it is unlikely that the fair value of the indefinite-lived intangible asset is less than its carrying amount.

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Long-Term Investments

Investments in privately-held entities that are at least 20% but less than 50% owned by the Company are accounted for using the equity method.

Under the equity method, the carrying value of the investment is adjusted for the Company’s proportionate share of the investee’s earnings or losses, with the corresponding share of earnings or losses reported in other income (expense), net.

The carrying value of the investment is reduced by the amount of the dividends received from the equity-method investee, as they are considered a return of capital.

We evaluate our long-term investments for impairment quarterly or whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable.

Investments in privately-held entities are accounted for using the equity method when the Company has significant influence but not control over the investee.

Significant influence is generally deemed to exist if the Company’s ownership interest in the voting stock of the investee ranges between 20% and 50%, although other factors are considered in determining whether the equity method of accounting is appropriate.

carrying value of the investment is reduced by the amount of the dividends received from the equity-method investee, as they are considered a return of capital.

We evaluate our long-term investments for impairment quarterly or whenever events or changes in circumstances indicate that a decline in the fair value of these assets is determined to be other-than-temporary.

Additionally, the Company performs an on-going evaluation of its equity method investments with which the Company has variable interests to determine if any of these entities are VIEs that are required to be consolidated.

None of the Company’s long-term investments are VIEs as of September 30, 2020 and June 30, 2020.

Other Long-Term Assets

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Revenue is recognized on the settlement date, which is defined as the date on which:

(1) the quantity, price, and specific items being purchased have been established, (2) metals have been delivered to the customer, and (3) payment has been received or is covered by the customer’s established credit limit with the Company

(i) the quantity, price, and specific items being purchased have been established, (ii) metals have been delivered to the customer, and (iii) payment has been received or is covered by the customer’s established credit limit with the Company

All derivative instruments are marked-to-market during the interval between the trade date and the settlement date, with the changes in the fair value charged to cost of sales.

The Company’s hedging strategy to mitigate the market risk associated with its sa les commitments is described separately below under the caption “Hedging Activities.”

Types of Trades Orders that are Physically Delivered

The Company’s hedging strategy to mitigate the market risk associated with its sales commitments is described separately below under the caption “Hedging Activities.”

Types of Trade Orders that are Physically Delivered

The Company’s contracts to sell precious metals to customers are usually settled with the physical delivery of metals to the customer, although net settlement (i.e., settlement at an amount equal to the difference between the contract value and the market price of the metal on the settlement date) is permitted.

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All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions.

Commodity forward, futures, and option contracts entered into for hedging purposes are recorded at fair value on the trade date and are marked-to-market each period.

The difference between the original contract values and the market values of these contracts are reflected as derivative assets or derivative liabilities in the condensed consolidated balance sheets at fair value, with the corresponding unrealized gain or losses included as a component of cost of sales.

When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded in revenue and cost of sales and the net realized gains and losses for futures and option contracts are recorded in cost of sales.

The Company enters into futures, forward, and option contracts solely for the purpose of hedging our inventory holding risk and our liability on price protection programs, and not for speculative market purposes.

Commodity forward and futures contracts entered into for hedging purposes are recorded at fair value on the trade date and are marked-to-market each period.

The difference between the original contract values and the market values of these contracts are reflected as derivative assets or derivative liabilities in the condensed consolidated balance sheets at fair value, with the corresponding unrealized gains or losses included as a component of cost of sales.

The Company enters into futures and forward contracts solely for the purpose of hedging our inventory holding risk and our liability on price protection programs, and not for speculative market purposes.

The Company’s gains (losses) on derivative instruments are substantially offset by the changes in the fair market value of the underlying precious metals inventory, which is also recorded in cost of sales in the condensed consolidated statements of income.

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Other Sources of Revenue

The Company recognizes its storage, logistics, licensing, and other services revenues in accordance with the FASB's release ASU 2014-09 Revenue From Contracts With Customers Topic 606 ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized:

The Company recognizes its storage, logistics, licensing, and other services revenues in accordance with the FASB's release ASU 2014-09 Revenue From Contracts With Customers Topic 606 and subsequent related amendments ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized:

(i) identify the contract with a customer;

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A performance obligation is satisfied over time if one of the following criteria are met:

(1) the customer simultaneously receives and consumes the benefits as the Company performs, (2) the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (3) the Company's performance does not create an asset with an alternative use to the Company, and the Company has an enforceable right for payment of performance completed-to-date.

When none of those are met, a performance obligation is satisfied at a point-in-time.

The Company recognizes storage revenue over time, as the customer simultaneously receives and consumes the storage services (e.g., fixed storage fees based on the passage of time).

The Company recognizes logistics (i.e., fulfillment) revenue at a point-in-time, when the customer receives the benefit of the services (e.g., stated number of packages are shipped on behalf of the customer during a month).

The Company recognizes revenue from the licensing of its functional intellectual property ("IP"), which include customer lists and sales lead information, at the point in time when the right to use the IP is transferred to the licensee.

Any revenue generated from usage-based royalties associated with the licensing of the IP is recognized at the point in time when the licensee converts and actualizes customers from the IP.

(i) the customer simultaneously receives and consumes the benefits as the Company performs, (ii) the Company's performance creates or enhances an asset that the customer controls as the asset is created or enhanced, or (iii) the Company's performance does not create an asset with an alternative use to the Company, and the Company has an enforceable right for payment of performance completed-to-date.

When none of those is met, a performance obligation is satisfied at a point-in-time.

The Company recognizes storage revenue as the customer simultaneously receives and consumes the storage services (e.g., fixed storage fees based on the passage of time).

The Company recognizes logistics (i.e., fulfillment) revenue when the customer receives the benefit of the services.

In aggregate, these types of service revenues account for less than 1% of the Company's combined revenue from all revenue streams.

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Repayment is usually in the same form as the metals advanced but may be settled in cash.

Other Income and Expense, Net

The Company's other income and expense is derived from the Company's proportional interest in the reported net income or loss of our investees that are accounted for under the equity method of accounting (see Note 9 ), earn-out revaluation adjustments related to a contingent payable due to SilverTowne L.P, and costs associated with the settlement of our purchase of Goldline (see Note 15 ).

Advertising expense was $0.8 million and $0.6 million, respectively, for the three months ended March 31, 2020 and 2019.

Advertising expense was $1.6 million and $1.9 million, respectively, for the nine months ended March 31, 2020 and 2019.

Other Income an d Expense, Net

The Company's other income and expense is derived from the Company's proportional interest in the reported net income or loss of our investees that are accounted for under the equity method of accounting (see Note 9 ), royalty income, and costs associated with the purchase of Goldline.

Advertising expense is recorded as incurred and was $0.7 million and $0.5 million, respectively, for the three months ended September 30, 2020 and 2019.

Shipping and Handling Costs

Shipping and handling costs represent costs associated with shipping product to customers, and receiving product from vendors and are included in cost of sales in the condensed consolidated statements of income.

Shipping and handling costs incurred totaled $3.7 million and $1.7 million, respectively, for the three months ended March 31, 2020 and 2019.

Shipping and handling costs incurred totaled $6.5 million and $4.8 million, respectively, for the nine months ended March 31, 2020 and 2019.

Shipping and handling costs incurred totaled $3.2 million and $1.4 million, respectively, for the three months ended September 30, 2020 and 2019.

Share-Based Compensation

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Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.

Under this method, deferred tax assets and liabilities are determined based on the differences betwee n the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in i ncome in the period that includes the enactment date.

Under this method, deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets will not be realized.

The factors used to assess the likelihood of realization i nclude the Company's forecast of the reversal of temporary differences, future taxable income, and available tax planning strategies that could be implemented to realize the net deferred tax assets.

Failure to achieve forecasted taxable income in applicabl e tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate on future earnings.

Based on our assessment, it appears more likely than not that all of the net deferred t ax assets will be realized through future taxable income.

The Company's condensed consolidated financial statements recognizes the current and deferred income taxes consequences that result from the Company's activities during the current and preceding periods, as if the Company were a separate taxpayer prior to the date of the spinoff of the Company when it was a member of the consolidated income tax return group of Spectrum Group International, Inc.

Following its spin-off, the Company separately files its federal and state income tax filings.

The Company recognizes current and deferred income taxes as a separate taxpayer for periods ending after the date of the spinoff.

The factors used to assess the likelihood of realization include the Company's forecast of the reversal of temporary differences, future taxable income, and available tax planning strategies that could be implemented to realize the net deferred tax assets.

Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate on future earnings.

Based on our assessment, it appears more likely than not that all of the net deferred tax assets will be realized through future taxable income.

Earnings per Share ("EPS")

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Diluted EPS reflects the total potential dilution that could occur from outstanding equity awards, including unexercised stock options, utilizing the treasury stock method.

A reconciliation of shares used in calculating basic and diluted earnings per common shares for the three and nine months ended March 31, 2020 and 2019, is presented below.

A reconciliation of shares used in calculating basic and diluted earnings per common shares for the three months ended September 30, 2020 and 2019 , is presented below.

Three Months Ended

Nine Months Ended

September 30,

Basic weighted average shares outstanding

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Dividends are recorded if and when they are declared by the Board of Directors.

On September 3, 2020, the Company's Board of Directors declared a non-recurring special dividend of $1.50 per share to common stock shareholders of record at the close of business on September 21, 2020, payable on or about September 25, 2020.

The dividends paid totaled $10.6 million.

See Note 19 for information about a non-recurring special dividend declared by the Board of Directors in the second quarter of fiscal 2021.

Recently Adopted Accounting Pronouncements

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Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).

We adopted ASU 2016-02, Leases (Topic 842) and relevant amendments, effective for the Company on July 1, 2019.

The standard represents a change to lease accounting and requires all leases, other than short-term leases, to be reported on the balance sheet through recognition of a right-of-use asset and a corresponding liability for future lease obligations.

The standard also requires incremental disclosures for assets, expenses, and cash flows associated with leases, as well as a maturity analysis of lease liabilities.

We adopted Topic 842 by applying the transition method whereby comparative periods have not been restated, and no adjustment to retained earnings was required.

Upon adoption of the standard, we recognized right-of-use assets of approximately $5.3 million and lease liabilities of approximately $6.3 million.

This increase largely relates to the present value of future minimum lease payments due under existing operating leases of office facilities and warehouse space.

No material changes are expected due to the recognition of lease expenses in the condensed consolidated statements of income as a result of the adoption of Topic 842.

For adoption, we elected Topic 842’s package of three practical expedients, and 1) did not reassess whether any expired or existing contracts are or contain leases, 2) did not reassess the lease classification for any expired or existing leases, and 3) did not reassess initial direct costs for any existing leases.

In addition, we made an accounting policy election not to apply the recognition requirements to short-term leases.

Recent Accounting Pronouncements Not Yet Ado pted

We adopted ASU No.

2018-15, Intangibles—Goodwill and Other:

Internal-Use Software (Subtopic 350-40), which provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement.

The adoption of this guidance did not have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04 (“ASU 2020-04”), Reference Rate Reform (Topic 848) Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

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however, it is only available through December 31, 2022.

We are currently evaluating the potential impact of this standard on our financial statements.

The Company will continue to evaluate the standard as well as additional changes, modifications, or interpretations which may impact the Company.

In December 2019, the FASB issued ASU 2019-12 (“ASU 2019-12”), Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes to simplify the accounting for income taxes.

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The standard will be effective for us beginning July 1, 2021, with early adoption permitted.

We are currently evaluating the impact of this standard in our consolidated financial statements, and do not expect it to be material.

We are currently evaluating the impact of this standard on our consolidated financial statements, and do not expect it to be material.

In June 2016, the FASB issued ASU No.

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This update is effective for the Company on July 1, 2023 (for fiscal years beginning after December 15, 2022 including interim periods within those fiscal years).

The Company is currently evaluating the potential impact of the adoption of the new standard on its consolidated statements of financial condition and results of operations.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles—Goodwill and Other:

Internal-Use Software (Subtopic 350-40), to provide additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement.

This update is effective for the Company on July 1, 2020 (for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years).

The adoption of this guidance is not expected to have a material impact on our financial statements.

ASSETS AND LIABILITIES, AT FAIR VALUE

We are currently evaluating the potential impact of this standard on our consolidated financial statements.

ASSETS AND LIABIL ITIES, AT FAIR VALUE

Fair Value of Financial Instruments

A financial instrument is defined as cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity.

The fair value of financial instruments represent amounts that would be received upon the sale of those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date.

The fair value of financial instruments represents amounts that would be received upon the sale of those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date.

Those fair value measurements maximize the use of observable inputs.

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For most of the Company's financial instruments, the carrying amount approximates fair value.

The carrying amounts of cash, secured loans receivable, receivables, income taxes receivable, accounts payable and other current liabilities , and accrued liabilities approximate fair value due to their short-term nature.

The carrying amounts of cash, receivables, secured loans receivable, accounts payable and other current liabilities , accrued liabilities, and income taxes payable approximate fair value due to their short-term nature.

The carrying amounts of derivative assets and derivative liabilities, liabilities on borrowed metals and product financing arrangements are marked-to-market on a daily basis to fair value.

The carrying amounts of lines of credit approximate fair value based on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities.

The carrying amounts of the Company's other long-term assets, which include a note receivable due from a customer, approximate fair value as of March 31, 2020.

The Company’s fi xed-rate notes payable is reported at its aggregate principal amount less unamortized original issue discount and deferred financing costs on the accompanying consolidated balance sheets.

The carrying amounts of the Company's other long-term assets, which include a note receivable due from a customer, approximate fair value as of September 30, 2020.

The Company’s fixed-rate notes payable is reported at its aggregate principal amount less unamortized original issue discount and deferred financing costs on the accompanying consolidated balance sheets.

The fair value of the notes payable is based on the present value of the expected coupon and principal payments using an estimated discount rate based on current market rates for debt with similar credit risk.

The following table presents the carrying amounts and estimated fair values of the Company’s fixed-rate notes pay able of March 31, 2020 and June 30, 2019 :

March 31, 2020

The following table presents the carrying amounts and estimated fair values of the Company’s fixed rate notes payable of September 30, 2020 and June 30, 2020:

September 30, 2020

June 30, 2020

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Inventories .

Inventories, which principally include bullion and bullion coins, are acquired and initially recorded at fair market value.

The Company's inventory primarily includes bullion and bullion coins, which is acquired and initially recorded at cost and then marked to fair market value.

The fair market value of the bullion and bullion coins comprises two components:

1) published market values attributable to the costs of the raw precious metal, and 2) a published premium paid at acquisition of the metal.

i) published market values attributable to the costs of the raw precious metal, and ii) a published premium paid at acquisition of the metal.

The premium is attributable to the additional value of the product in its finished goods form and the market value attributable solely to the premium is readily determined, as it is published by multiple reputable sources.

Except for commemorative coin inventory, which are included in inventory at the lower of cost or net realizable value, the Company’s inventory is subsequently recorded at their fair market values on a daily basis.

The fair value for commodities inventory (i.e., inventory excluding commemorative coins) is determined using pricing data derived from the markets on which the underlying commodities are traded.

Precious metals commodities inventory are classified in Level 1 of the valuation hierarchy.

The fair value for commodities inventory (i.e., inventory excluding

commemorative coins) is determined using pricing data derived from the mar kets on which the underlying commodities are traded.

Precious metals commodities inventory is classified in Level 1 of the valuation hierarchy.

Precious Metals held under Financing Arrangements .

In these repurchase arrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement.

The fair value for precious metals held under financing arrangements, (a commodity, like inventory above) is determined using pricing data derived from the markets on which the underlying commodities are traded.

Precious metals commodities inventory are classified in Level 1 of the valuation hierarchy.

Precious metals held under financing arrangements are classified in Level 1 of the valuation hierarchy.

Derivatives .

Futures contracts, forward contracts, option contracts, and open sale and purchase commitments are valued at their fair values, based on the difference between the quoted market price and the contractual price (i.e., intrinsic value,) and are included within Level 1 of the valuation hierarchy.

Futures contracts and forward contracts and open sale and purchase commitments are valued at their fair values, based on the difference between the quoted market price and the contractual price (i.e., intrinsic value,) and are included within Level 1 of the valuation hierarchy.

Margin and Borrowed Metals Liabilities .

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Product Financing Arrangements .

Product financing arrangements consist of financing agreements for the transfer and subsequent r e-acquisition of the sale of gold and silver at an agreed-upon price based on the spot price with a third party.

Product financing arrangements consist of financing agreements for the transfer and subsequent re-acquisition of the sale of gold and silver at an agreed-upon price based on the spot price with a third party.

Such transactions allow the Company to repurchase this inventory on the termination (repurchase) date.

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The obligation is stated at the amount required to repurchase the outstanding inventory.

Fair value is determined using quoted market pricing and data deriv ed from the markets on which the underlying commodities are traded.

Fair value is determined using quoted market pricing and data derived from the markets on which the underlying commodities are traded.

Product financing arrangements are classified in Level 1 of the valuation hierarchy.

Liability on Price Protection Programs .

The Company records an estimate of the fair value of the liability on the price protection programs based on the difference between the contractual price at trade date and the retail price at the remeasurement date (i.e., quarter-end) based on the expected redemption rate.

As of March 31, 2020, the Company used the quoted market price based on the current spot rate and used an expected redemption rate of 100%.

The use of a throughput rate ignores the future price volatility that would affect the timing and rate of redemption under the program, and, as a result, the liability on the price protection programs is classified in Level 3 of the valuation hierarchy.

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of March 31, 2020 and June 30, 2019, aggregated by the level in the fair value hierarchy within which the measurements fall:

March 31, 2020

The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and June 30, 2020, aggregated by the level in the fair value hierarchy within which the measurements fall:

September 30, 2020

Active Markets

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Product financing arrangements

Derivative liabilities — price protection programs

Derivative liabilities — margin accounts

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Derivative liabilities — futures contracts

Derivative liabilities — forward contracts

Total liabilities, valued at fair value

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Derivative assets — open sale and purchase commitments, net

Derivative assets — option contracts

Derivative assets — futures contracts

Derivative assets — forward contracts

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Product financing arrangements

Derivative liabilities — price protection programs

Derivative liabilities — margin accounts

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In assessing the reasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable transactions and comparable public company trading values.

Receivables consist of the following as of March 31, 2020 and June 30, 2019:

Receivables consist of the following as of September 30, 2020 and June 30, 2020:

September 30,

Customer trade receivables

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Due from brokers

Receivables, net

Customer Trade Receivables.

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SECURED LOANS RECEIVABLE

Below is a summary of the carrying value of our secured loans as of March 31, 2020 and June 30, 2019:

Below is a summary of the carrying value of our secured loans as of September 30, 2020 and June 30, 2020:

September 30,

Secured loans originated

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Secured loans acquired

Includes $7 thousand of loan premium as of March 31, 2020.

Includes $6 thousand of loan premium as of September 30, 2020.

Includes $6 thousand of loan premium as of June 30, 2020.

Secured Loans - Originated :

Secured loans include short-term loans, which include a combination of on-demand lines and short-term facilities, and long-term loans that are made to our customers.

Secured loans include short-term loans, which include a combination of on-demand lines and short-term facilities that are made to our customers.

These loans are fully secured by the customers' assets that include bullion, numismatic, and semi-numismatic material, which are typically held in safekeeping by the Company.

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Typically, the seller of the loan portfolio retains the responsibility for the servicing and administration of the loans.

As of March 31, 2020 and June 30, 2019, our secured loans carried weighted-average effective interest rates of 8.2% and 10.2%, respectively, and mature in periods ranging typically from on-demand to one year.

As of September 30, 2020 and June 30, 2020, our secured loans carried weighted-average effective interest rates of 8.9% and 8.9%, respectively, and mature in periods ranging typically from on-demand to one year.

The secured loans that the Company generates with active customers of A-Mark are reflected as an operating activity on the condensed consolidated statements of cash flows.

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The Company's secured loan receivables portfolio comprises loans with similar credit risk profiles, which enables the Company to apply a standard methodology to determine the credit quality for each loan and the allowance for credit losses, if any.

The credit quality of each loan is generally determined by the collateral value assessment, loan-to-value ratio (that is, the principal amount of the loan divided by the estimated value of the collateral) and t he type (or class) of secured material.

The credit quality of each loan is generally determined by the collateral value assessment, loan-to-value ratio (that is, the pr incipal amount of the loan divided by the estimated value of the collateral) and the type (or class) of secured material.

All loans are fully secured by precious metal bullion or numismatic collateral, which remains in the physical custody of the Company for the duration of the loan.

The term of the loans is generally 180 days.

Intere st earned on a loan is billed monthly and is typically due and payable within 20 days and, if not paid after all applicable grace periods, is added to the outstanding principal balance, and late fees and default interest rates are assessed.

The term of the loans is generally 180 days , however loans are typically renewed prior to maturity and therefore remain outstanding for a longer period of time.

Interest earned on a loan is billed monthly and is typically du e and payable within 20 days .

When an account is in default or if a margin call has not been met on a timely basis, the Company has the right to liquidate the borrower's collateral in order to satisfy the unpaid balance of the outstanding loans, including accrued and unpaid interest.

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The two classes of secured loan receivables are defined by collateral type:

1) bullion items, and 2) numismatic and semi-numismatic coins.

The loan-to-value ratio varies with the class of loans.

(i) bullion items, and (ii) numismatic and semi-numismatic coins.

The required loan-to-value ratio varies with the class of loans.

Typically, the Company requires a loan-to-value ratio of approximately 75% for bullion and 65% for numismatic collateral.

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The Company's secured loans by portfolio class, which align with internal management reporting, are as follows:

March 31, 2020

September 30, 2020

June 30, 2020

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Due to the nature of market fluctuations of precious metal commodity prices, the Company monitors the bullion collateral value of each loan on a daily basis, based on spot price of precious metals.

Numismatic collateral values are updated by numismatic specialists when loan term is renewed (typically in 180 days).

Numismatic collateral values are updated by numismatic specialists when loan terms are renewed (typically in 180 days).

Generally, we initiate the margin call process when the outstanding loan balance is in excess of 85% of the current value of the underlying collateral.

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Loans with loan-to-value ratios of less than 75% are generally considered to be higher quality loans.

Below is summary of aggregate outstanding secured loan balances bifurcated into 1) loans with a loan-to-value ratio of 75% or more and 2) loans with a loan-to-value ratio of less than 75%:

March 31, 2020

Below is summary of aggregate outstanding secured loan balances bifurcated into (i) loans with a loan-to-value ratio of 75% or more and (ii) loans with a loan-to-value ratio of less than 75%:

September 30, 2020

June 30, 2020

Loan-to-value of 75% or more

Loan-to-value of less than 75%

The Company had no loans with a loan-to-value ratio in excess of 100% as of March 31, 2020 or June 30, 2019.

Loan-to-value of 75% or more

The Company had no loans with a loan-to-value ratio in excess of 100% as of September 30, 2020 or June 30, 2020.

Non-Performing Loans/Impaired Loans

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Non-performing loans have the highest probability for credit loss.

The allowance for credit losses attributable to non-performing loans is based on the most probable source of repayment, which is normally the liquidation of collateral.

The allowance for secured loan losses attributable to non-performing loans is based on the most probable source of repayment, which is normally the liquidation of collateral.

Due to the accelerated liquidation terms of the Company's loan portfolio, past due loans are generally liquidated within 90 days of default before a loan becomes non-performing.

In the event a loan were to become non-performing, the Company would determine a reserve to reduce the carrying balance to its estimated net realizable value.

As of March 31, 2020 or June 30, 2019, the Company had no allowance for secured loan losses.

In the event a loan was to become non-performing, the Company would determine a reserve to reduce the carrying balance to its estimated net realizable value.

As of September 30, 2020, or June 30, 2020, the Company had no allowance for secured loan losses.

A loan is considered impaired if it is probable, based on current information and events, that the Company will be unable to collect all amounts due according to the contractual terms of the loan.

Customer lo ans are reviewed for impairment and include loans that are past due, non-performing, or in bankruptcy.

Customer loans are reviewed for impairment and include loan s that are past due, non-performing, or in bankruptcy.

In the event of an impairment, recognition of interest income would be suspended and the loan would be placed on non-accrual status at the time.

Accrual would be resumed, and previously suspended interest income would be recognized, when the loan becomes contractually current and/or collection doubts are removed.

Cash receipts on impaired loans are recorded first against the receivable and then to any unre cognized interest income.

For the three and nine months ended March 31, 2020 and 2019 , the Company incurred no loan impairment costs.

Our inventory consist of the precious metals that the Company has physically received, and inventory held by third-parties, which, at the Company's option, it may or may not receive.

Below, our inventory is summarized by classification at March 31, 2020 and June 30, 2019:

Accrual would be resumed, and previously suspended inter est income would be recognized, when the loan becomes contractually current and/or collection doubts are removed.

Cash receipts on impaired loans are recorded first against the receivable and then to any unrecognized interest income.

For the three months e nded September 30, 2020 and 2019 , the Company incurred no loan impairment costs.

Our inventory consists of the precious metals that the Company has physically received, and inventory held by third-parties, which, at the Company's option, it may or may not receive.

Below, our inventory is summarized by classification at September 30, 2020 and June 30, 2020:

September 30,

Inventory held for sale

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Inventory held for sale represents precious metals, excluding commemorative coin inventory, that have been received by the Company and are not subject to repurchase by or consignment arrangements with third parties, borrowed precious metals, and product financing arrangements.

As of March 31, 2020 and June 30, 2019, the inventory held for sale totaled $217.4 million and $106.2 million, respectively.

As of September 30, 2020 and June 30, 2020, the inventory held for sale totaled $211.2 million and $153.4 million, respectively.

Repurchase Arrangements with Customers .

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Upon termination, the customer’s rights to repurchase any remaining inventory is forfeited.

As of March 31, 2020 and June 30, 2019, included within inventories is $54.5 million and $65.5 million, respectively, of precious metals products subject to repurchase arrangements with customers.

As of September 30, 2020 and June 30, 2020, included within inventories is $80.8 million and $71.0 million, respectively, of precious metals products subject to repurchase arrangements with customers.

Consignment Arrangements with Customers .

The Company periodically loans metals to customers on a short-term consignment basis.

Inventory loaned under consignment arrangements to customers as of March 31, 2020 and June 30, 2019 totaled $0.2 million and $4.9 million, respectively.

Inventory loaned under consignment arrangements to customers as of September 30, 2020 and June 30, 2020 totaled $0.7 million and $2.8 million, respectively.

Such transactions are recorded as sales and are removed from the Company's inventory at the time the customer elects to price and purchase the precious metals.

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Unlike our bullion coins, the value of commemorative coins is not subject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metal price than bullion coins.

Our commemorative coins are not hedged, and are included in inventories at the lower of cost or net realizable value and totaled $80,000 and $17,000 as of March 31, 2020 and June 30, 2019, respectively.

Borrowed Precious Metals .

Borrowed precious metals inventory include:

1) metals held by suppliers as collateral on advanced pool metals, 2) metals due to suppliers for the use of their consigned inventory, 3) unallocated metal positions held by customers in the Company’s i nventory, and 4) shortages in unallocated metal positions held by the Company in the supplier’s inventory.

Unallocated or pool metal represents an unsegregated inventory position that is due on demand, in a specified physical form, based on the total ounc es of metal held in the position.

Our commemorative coins are not hedged, and are included in inventories at the lower of cost or net realizable value and totaled $9,000 and $17,000 as of September 30, 2020 and June 30, 2020, respectively.

B orrowed Precious Metals .

Borrowed prec ious metals inventory include:

(i ) metals held by suppliers as colla teral on advanced pool metals, (ii ) metals due to suppliers for the use of their consigned inventory, (iii ) unallocated metal positions held by custo mers i n the Company’s inventory, and (iv ) shortages in unallocated metal positions held by the Company in the supplier’s inventory.

Unallocated or pool metal represents an unsegregated inventory position that is due on demand, in a specified physical form , based on the total ounces of metal held in the position.

Amounts due under these arrangements require delivery either in the form of precious metals or cash.

The Company's inventory included borrowed precious metals with market values totaling $18.8 million and $21.8 million as of March 31, 2020 and June 30, 2019 , respectively, with a corresponding offsetting obligation reflected as liabilities on borrowed metals on the condensed consolidated balance sheets.

The Company's inventory included borrowed precious metals with market values totaling $18.8 mill ion and $19.3 million as of September 30, 2020 and June 30, 2020 , respectively, with a corresponding offsetting obligation included in liabilities on borrowed metals on the condensed consolidated balance sheets.

Product Financing Arrangements .

In substance, this inventory represent amounts held as security by lenders for obligations under product financing arrangements.

In substance, this inventory represents amounts held as security by lenders for obligations under product financing arrangements.

The Company enters into a product financing agreement for the transfer and subsequent re-acquisition of gold and silver at an agreed-upon price based on the spot price with a third-party finance company.

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The obligation is stated at the amount required to repurchase the outstanding inventory.

Both the product financing and the underlying inventory are carried at fair value, with changes in fair value included in cost of sales in the condensed consolidated statements of income.

Such obligations totaled $122.1 million and $94.5 million as of March 31, 2020 and June 30, 2019, respectively.

Both the product financing arrangements and the underlying inventory are carried at fair value, with changes in fair value included in cost of sales in the condensed consolidated statements of income.

Such obligations totaled $101.6 million and $74.7 million as of September 30, 2020 and June 30, 2020, respectively.

The Company mitigates market risk of its physical inventory and open commitments through commodity hedge transactions.

(See Note 11 .) As of March 31, 2020 and June 30, 2019, the unrealized gains resulting from the difference between market value and cost of physical inventory were $2 .4 million and $8.8 million, respectively.

(See Note 11 .) As of September 30, 2020 and June 30, 2020, the unrealized (losses) gains resulting from the difference between market value and cost of physical inventory were ($8.4) million and $6.5 million, respectively.

Premium component of inventory

The Company's inventory primarily include bullion and bullion coins and are acquired and initially recorded at fair market value.

The fair market value of the bullion and bullion coins is comprised of two components:

1) published market values attributable to the cost of the raw precious metal, and 2) a published premium paid at acquisition of the metal.

The premium is included in the cost of the inventory, paid at acquisition, and is a component of the total fair market value of the inventory.

The precious metal component of the inventory may be hedged through the use of precious metal commodity positions, while the premium component of our inventory is not a commodity that may be hedged.

The Company’s inventory is subsequently recorded at their fair market values, that is, marked-to-market, except for our commemorative coin inventory.

The daily changes in the fair market value of our inventory is offset by daily changes in fair market value of hedging derivatives that are taken with respect to our inventory positions;

both the change in the fair market value of the inventory and the change in the fair market value of these derivative instruments are recorded in cost of sales in the condensed consolidated statements of income.

The premium component, at market value, included in the inventory as of March 31, 2020 and June 30, 2019 totaled $6.9 million and $4.4 million, respectively.

PROPERTY, PLAN T, AND EQUIPMENT

Property, plant, and equipment consists of the following at March 31, 2020 and June 30, 2019:

The premium component, at market value, included in inventory as of September 30, 2020 and June 30, 2020 totaled $6.8 million and $3.7 million, respectively.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment consists of the following at September 30, 2020 and June 30, 2020:

September 30,

Office furniture, and fixtures

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Total depreciable assets

accumulated depreciation

Property and equipment not placed in service

Accumulated depreciation and amortization

Property, plant, and equipment, net

Depreciation expense for the three months ended March 31, 2020 and 2019 was $0.6 million and $0.4 million, respectively.

Depreciation expense for the nine months ended March 31, 2020 and 2019 was $1.4 million and $1.3 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

Depreciation and amortization expense for the three months ended September 30, 2020 and 2019 was $347,000 and $415,000, respectively.

For the periods presented, no depreciation or amortization expense was allocated to cost of sales.

GOODWILL AND I NTANGIBLE ASSETS

Goodwill is an intangible asset that arises when a company acquires an existing business or assets (net of assumed liabilities) which comprise a business.

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these values were based upon an independent appraisal and represent their fair values at the acquisition date.

The Company’s investment in AMST has resulted in synergies between the acquired minting operation and the Company’s established distribution network by providing a more steady and reliable fabricated source of silver during times of market volatility.

The Company’s investment in AMST has resulted in synergies between the acquired minting operation and the Company’s established distribution network by providing a steadier and more reliable fabricated source of silver during times of market volatility.

The Company considers that much of the acquired goodwill relates to the “ready state” of AMST's established minting operation with existing quality processes, procedures, and ability to scale production to meet market needs.

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Carrying Value

The carrying value of goodwill and other purchased intangibles as of March 31, 2020 and June 30, 2019 is as described below:

The carrying value of goodwill and other purchased intangibles as of September 30, 2020 and June 30, 2020 is as described below:

dollar amounts in thousands

March 31, 2020

September 30, 2020

June 30, 2020

Identifiable intangible assets:

Existing customer relationships

Existing customer

relationships

Non-compete and other

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Intangibles subject to amortization

Trade names and trademarks

Identifiable intangible assets

The Company's intangible assets are subject to amortization except for trade-names, which have an indefinite life.

The Company's intangible assets are subject to amortization except for trade names and trademarks, which have an indefinite life.

Intangible assets subject to amortization are amortized using the straight-line method over their useful lives, which are estimated to be three to fifteen years.

Amortization expense related to the Company's intangible assets for the three months ended March 31, 2020 and 2019 was $260,000 and $252,000, respectively.

Amortization expense related to the Company's intangible assets for the nine months ended March 31, 2020 and 2019 was $768,000 and $756,000, respectively.

Amortization expense related to the Company's intangible assets for the three months ended September 30, 2020 and 2019 was $154,000 and $253,000, respectively.

For the presented periods, no amortization expense was allocated to cost of sales.

The accumulated impairment charge of $2.7 million (goodwill and indefinite-lived intangible assets) was a non-recurring charge for fiscal 2018 related to the Direct Sales segment.

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The Company has three investments in privately-held entities, each of which is a precious metals retailer and customer of the Company.

For each of these entities, the Company has:

1) an exclusive supplier agreement, for which these entities have agreed to purchase all bullion products required for their businesses exclusively from A-Mark, subject to certain limitations;

2) a product fulfillment services and storage agreement;

and 3) the right to appoint a director to the entity's board of directors (which has been exercised in each case).

Depending on the entity, the Company may have one or more of the following in place:

(i) an exclusive supplier agreement, subject to certain limitations;

(ii) a product fulfillment services and storage agreement;

and (iii) the right to appoint a director to the entity's board of directors.

The Company has determined that it is appropriate to account for each of these investments under the equity method of accounting.

The following table shows the carrying value and ownership percentage of the Company's investment in each entity:

March 31, 2020

September 30, 2020

June 30, 2020

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Accounts payable and other current liabilities consist of the following:

September 30,

Trade payables to customers

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Deferred revenue

Due to brokers

Other accounts payable

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The value of these assets and liabilities are marked-to-market daily to the prevailing closing price of the underlying precious metals.

The Company's precio us metals inventory is subject to market value changes, created by changes in the underlying commodity market prices.

The Company's precious metals inventory is subject to market value changes, created by changes in the underlying commodity market prices.

Inventory purchased or borrowed by the Company is subject to price changes.

Inventory borrowed is considered a natural hedge, since change s in value of the metal held are offset by the obligation to return the metal to the supplier.

Inventory borrowed is considered a natural hedge, since changes in value of the metal held are offset by the obligation to return the metal to the supplier.

The Company’s open sale and purchase commitments typically settle within 2 business days, and for those commitments that do not have stated settlement dates, the Company has the right to settle the positions upon demand.

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Such derivative contracts include open sale and purchase commitments, futures, forwards and margin accounts.

In the table below, the aggregate gross and net derivative receivables and payables balances are presented by contract type and type of hedge, as of March 31, 2020 and June 30, 2019.

March 31, 2020

In the table below, the aggregate gross and net derivative receivables and payables balances are presented by contract type and type of hedge, as of September 30, 2020 and June 30, 2020 .

September 30, 2020

June 30, 2020

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Open sale and purchase commitments

Option contracts

Future contracts

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Margin accounts

Liability on price protection programs

Future contracts

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Gains or Losses on Derivative Instruments

The Company records the derivative at the trade date with a corresponding unrealized gain (loss), shown as a component of cost of sales in the condensed consolidated statements of income.

The Company records the derivative at the trade date with a corresponding unrealized gains (losses), shown as a component of cost of sales in the condensed consolidated statements of income.

The Company adjusts the derivatives to fair value on a daily basis until the transactions are settled.

When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded in revenue and cost of sales, and the net realized gains and losses for futures and option contracts are recorded in cost of sales.

Below is a summary of the net gains (losses) on derivative instruments for the three and nine months ended March 31, 2020 and 2019.

When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded in revenue and cost of sales, and the net realized gains and losses for futures are recorded in cost of sales.

Below is a summary of the net gains (losses) on derivative instruments for the three months ended September 30, 2020 and 2019.

Three Months Ended

Nine Months Ended

September 30,

Gains (losses) on derivative instruments:

Unrealized gains on open future commodity and forward contracts and open sale and purchase commitments, net

Realized (losses) gains on future commodity contracts, net

Realized losses on future commodity contracts, net

The Company’s net gains (losses) on derivative instruments, as shown in the table above, were substantially offset by the changes in fair market value of the underlying precious metals inventory and open sale and purchase commitments, which were also recorded in cost of sales in the condensed consolidated statements of income.

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In a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of the underlying hedged item.

The following table summarizes the results of our hedging activities, which shows the precious metal commodity inventory position, net of open sale and purchase commitments, that is subject to price risk as of March 31, 2020 and at June 30, 2019.

September 30,

Precious metals held under financing arrangements

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The notional balances of the Company's derivative instruments, consisting of contractual metal quantities, are expressed at current spot prices of the underlying precious metal commodity.

As of March 31, 2020 and June 30, 2019, the Company had the following outstanding commitments and open forward and future contracts:

As of September 30, 2020 and June 30, 2020, the Company had the following outstanding commitments and open forward and future contracts:

September 30,

Purchase commitments

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The Company regularly reviews the creditworthiness of its major counterparties and monitors its exposure to concentrations.

At March 31, 2020, the Company believes its risk of counterparty default is mitigated as a result of such evaluation and the short-term duration of these arrangements.

Foreign Currency Exchange Rate Management

At September 30, 2020, the Company believes its risk of counterparty default is mitigated as a result of such evaluation and the short-term duration of these arrangements.

Foreign Currency Exchange R ate Management

The Company utilizes foreign currency forward contracts to manage the effect of foreign currency exchange fluctuations on its sale and purchase transactions.

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The accounting treatment of our foreign currency exchange derivative instruments is similar to the accounting treatment of our commodity derivative instruments, that is, the change in the value in the financial instrument is immediately recognized as a component of cost of sales.

Unrealized losses on foreign exchange derivative instruments shown on the face of the condensed consolidated statements of income totaled $45,000 and $36,000 for the three months ended March 31, 2020 and 2019, respectively.

Unrealized losses on foreign exchange derivative instruments shown on the face of the condensed consolidated statements of income totaled $42,000 and $54,000 for the nine months ended March 31, 2020 and 2019, respectively.

Unrealized losses on foreign exchange derivative instruments related to our open trades are shown on the face of the condensed consolidated statements of income totaled $97,000 and $122,000 for the three months ended September 30, 2020 and 2019, respectively.

The market values (fair values) of the Company’s foreign exchange forward contracts and the net open sale and purchase commitment transactions, denominated in foreign currencies, outstanding are as follows:

September 30,

Foreign exchange forward contracts

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Three Months Ended

Nine Months Ended

The Company files a consolidated federal income tax return based on a June 30 tax year end.

The provision for income tax expense by jurisdiction and the effective tax rate for the three and nine months ended March 31, 2020 and 2019 are shown below:

September 30,

The provision for income tax expense by jurisdiction and the effective tax rate for the three months ended September 30, 2020 and 2019 are shown below:

Three Months Ended

Nine Months Ended

September 30,

State and local

1 unchanged sentence

Effective tax rate

Recent Developments

On March 27, 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act, referred to herein as the CARES Act, as a response to the economic uncertainty resulting from the COVID-19 pandemic.

Key business tax provisions in the CARES Act include modifications for net operating loss (“NOL”) carryovers and carrybacks, limitations of business interest expense deduction, as well as technical correction to the Tax Cuts and Jobs Act of 2017, providing the bonus depreciation eligibility of qualified improvement property, and a fiscal year company to carryback NOL arising in its 2018 tax year under the prior NOL carryback regime (allowing for a two-year carryback).

As of March 31, 2020, the Company considered the impact of the carryback utilization of net operating losses from its fiscal years 2019 and 2018 in the amount of $7.1 million and $2.7 million, respectively, as provided for in the CARES Act.

The income tax impact of the NOL carryback is further discussed below.

Tax Balances and Activity

Income Taxes Receivable and Payable

As of March 31, 2020 and June 30, 2019, income taxes receivable totaled $1.4 million and $1.5 million, respectively.

The net reduction in our income taxes receivable balance of $0.1 million is primarily comprised of accrued taxes payable of $3.5 million, offset by income taxes receivable from the carryback of fiscal 2019 and 2018 losses of $3.4 million.

As of September 30, 2020 and June 30, 2020, income taxes payable totaled $2.9 million and $2.1 million, respectively.

Deferred Tax Assets and Liabilities

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The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

As of March 31, 2020 and June 30, 2019, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S.

As of September 30, 2020 and June 30, 2020, management concluded that it was more likely than not that the Company would be able to realize the benefit of the U.S.

federal and state deferred tax assets.

We based this conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income in future periods to realize the tax benefits associated with the deferred tax assets.

Furthermore, the CARES Act allows NOLs originating after December 31, 2017 through January 1, 2021 to be carried back five years and enacts a technical correction to the Tax Cuts and Jobs Act of 2017 allowing non-calendar year filers with a taxable year that began in 2017 and ended during 2018 to carryback NOLs under the old tax laws, which enable the Company to fully utilize its NOLs.

A tax valuation allowance was considered unnecessary as of March 31, 2020 and June 30, 2019.

As of March 31, 2020, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.0 million and a federal deferred tax liability of $0.1 million, primarily comprised of California net operating loss carryforwards.

As of June 30, 2019, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.6 million and a federal deferred tax asset of $1.6 million primarily comprised of net operating loss carryforwards.

Deferred tax asset has been reduced by $2.1 million as a result of the carryback utilization of federal NOLs under the CARES Act.

A tax valuation allowance was considered unnecessary as of September 30, 2020 and June 30, 2020.

As of September 30, 2020 , the condensed consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.0 million and a federal deferred tax liability of $1.1 million .

As of June 30, 2020 , the conso lidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.0 million and a federal deferred tax liability of $1.1 million .

Net Operating Loss Carryforwards and Tax Credits

As of March 31, 2020 and June 30, 2019, the Company has approximately $0.0 million and $9.1 million of federal net operating loss carryforwards and approximately $11.6 million and $17.1 million, state and city net operating loss carryforwards, respectively.

The reduction in federal NOLs to zero is due to the Company’s ability to carryback its NOLs to offset prior year’s taxable income under the CARES Act.

The Company's combined federal, state and city tax-effected net operating loss carryforwards totaled, as of March 31, 2020 and June 30, 2019, $1.0 million and $3.1 million, respectively.

These state and city net operating loss carryforwards start to expire in the year ending June 30, 2022.

As of March 31, 2020 and June 30, 2019, the Company has approximately $53,000 and $53,000, respectively, of a California state tax credit that can be carried-over indefinitely to future tax years.

As of September 30, 2020 and June 30, 2020, the Company has approximately $12.6 million and 12.6 million of state net operating loss carryforwards, respectively.

As of September 30, 2020 and June 30, 2020, the Company’s tax-effected net operating loss carryforwards were $0.9 million and $0.9 million respectively.

The state net operating loss carryforwards start to expire in the fiscal year ending June 30, 2025.

Unrecognized Tax Benefits

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The Company's measurement of its uncertain tax positions is based on management's assessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations.

For the nine months ended March 31, 2020, there was no material movement in unrecognized tax benefits including interest and penalties.

Tax Examinations

Due to a statute of limitations lapse, the Utah State tax examination of our fiscal 2011 through 2013 tax years has closed as of March 31, 2020.

There has been no material change to our remaining open tax examinations.

Information related to open tax examinations is included in our 2019 Annual Report on Form10-K for fiscal year ended June 30, 2019.

For the three months ended September 30, 2020, there was no material movement in unrecognized tax benefits including interest and penalties.

RELATED PARTY TRANSACTIONS

Related parties are entities that the Company controls or has the ability to significantly influence.

Related parties also include persons who are affiliated with related entities or the Company that are in a position to influence corporate decisions (such as owners, executives, board members and their families).

Related parties also include persons who are affiliated with related entities or the Company who are in a position to influence corporate decisions (such as owners, executives, board members and their families).

In the normal course of business, we enter into transactions with our related parties.

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The Company has three investments in privately held entities, each of which is a precious metals retailer and customer of the Company.

For each of these entities, the Company has:

1) an exclusive supplier agreement, for which these entities have agreed to purchase all bullion products required for their businesses exclusively from A-Mark, subject to certain limitations;

2) a product fulfillment services and storage agreement;

and 3) the right to appoint a director to the entity's board of directors (which has been exercised in each case).

Goldline Lenders .

In connection with the acquisition of Goldline, the Company entered into a privately placed credit facility with various lenders, which included some members of the Company's board of directors.

Our related party transactions include (i) sales and purchases of precious metals (ii) financing activity (iii) repurchase arrangements, and (iv) hedging transactions.

Depending on the entity, the Company may have one or more of the following in place:

(i) an exclusive supplier agreement, subject to certain limitations;

(ii) a product fulfillment services and storage agreement;

and (iii) the right to appoint a director to the entity's board of directors.

Our related party transactions include (i) sales and purchases of precious metals (ii) financing activities (iii) repurchase arrangements, and (iv) hedging transactions.

Below is a summary of our related party transactions.

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Receivables and Payables, Net

As of March 31, 2020 and June 30, 2019, the Company had related party receivables and payables balances as set forth below:

March 31, 2020

As of September 30, 2020 and June 30, 2020, the Company had related party receivables and payables balances as set forth below:

September 30, 2020

June 30, 2020

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Balance principally includes two secured lines of credit with a balance of $3.4 million and $0.8 million (shown as a component of secured loans receivable);

offset by $4.7 million.

offset by $0.3 million of receivables, net (shown as components of receivables and derivative assets)).

See "Secured Lines of Credit", below.

Balance primarily represents trade receivables, net (shown as a component of receivables).

Balance primarily represents trade payables, net (shown as a component of accounts payable and other current liabilities ).

Balance primarily represents receivables, net (shown as components of receivables and derivative assets).

Balance primarily represents payables, net (shown as components of accounts payable and other current liabilities , and derivative liabilities).

Long-term Investments

As of March 31, 2020 and June 30, 2019, the aggregate carrying balance of the equity method investments was $12.3 million and $11.9 million, respectively (see Note 9 ).

As of September 30, 2020 and June 30, 2020, the aggregate carrying balance of the equity method investments was $20.9 million and $16.8 million, respectively (see Note 9 ).

Secured Lines of Credit

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The loan is secured by precious metals and numismatic products.

As of March 31, 2020 and June 30, 2019, the outstanding principal balance of this loan was $1.7 million and $6.4 million, respectively.

As of September 30, 2020 and June 30, 2020, the outstanding principal balance of this loan was $0.8 million and $0.7 million, respectively.

On March 1, 2018, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit on the wholesale value (i.e., the excess over the spot value of the metal), of numismatic products bearing interest at a competitive rate per annum, with a maximum borrowing line (subject to temporary increases) of $10.0 million.

In addition to the annual rate of interest, the Company is entitled to receive a participation interest equal to 10% of the net profits realized by Stack's Bowers Galleries on the ultimate sale of the products.

As of March 31, 2020 and June 30, 2019, the outstanding principal balance of this loan was $10.0 million and $7.5 million, respectively.

Long Term Debt Obligation

On December 7, 2018, the Company repaid the $7.5 million principal amount outstanding under the Goldline Credit Facility to the Goldline Lenders in full.

Under the terms of the principal repayment, the applicable credit and related agreements have been terminated and none of the parties thereto has any further rights or obligations thereunder.

(See Note 14 .)

As of September 30, 2020 and June 30, 2020, the outstanding principal balance of this loan was $3.4 million and $8.0 million, respectively.

Activity with Related Parties

Sales and Purchases

During the three and nine months ended March 31, 2020 and 2019, the Company made sales and purchases to various companies, which have been deemed to be related parties, as follows:

During the three months ended September 30, 2020 and 2019, the Company made sales and purchases to various companies, which have been deemed to be related parties, as follows:

Three Months Ended

Nine Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

September 30, 2020

September 30, 2019

Stack's Bowers Galleries

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Interest Income

During the three and nine months ended March 31, 2020 and 2019, the Company earned interest income related to loans made to Stack's Bowers Galleries and to financing arrangements (including repurchase agreements) with affiliated companies, as set forth below:

During the three months ended September 30, 2020 and 2019, the Company earned interest income related to loans made to Stack's Bowers Galleries and to financing arrangements (including repurchase agreements) with affiliated companies, as set forth below:

Three Months Ended

Nine Months Ended

September 30,

Interest income from secured loans receivables

Interest income from finance products and

repurchase arrangements

Interest Expense

During the three months ended March 31, 2020 and 2019, the Company incurred interest expense (including debt amortization costs) related to the debt payable to the Goldline Lenders that totaled $0 and $0, respectively.

During the nine months ended March 31, 2020 and 2019, the Company incurred interest expense (including debt amortization costs) related to the debt payable to the Goldline Lenders that totaled $0 and $342,000, respectively.

During the three months ended March 31, 2020 and 2019, the Company recorded its proportional share of its equity method investee's net income as other income that totaled $278,000 and $374,000, respectively.

During the nine months ended March 31, 2020 and 2019, the Company recorded its proportional share of its equity method investee's net income as other income that totaled $392,000 and $934,000, respectively.

During the three months ended March 31, 2020 and 2019, the Company earned participation interest income related to one of CFC's secured lending agreements with Stack's Bowers Galleries that totaled $186,000 and $0, respectively.

During the nine months ended March 31, 2020 and 2019, the Company earned participation interest income related to one of CFC's secured lending agreements with Stack's Bowers Galleries that totaled $275,000 and $24,000, respectively.

During the three and nine months ended March 31, 2019 the Company recorded an earn-out revaluation adjustment of $0 and $504,000, respectively, that was related to a contingent payable due to SilverTowne L.P.

Other Expense

During the three and nine months ended March 31, 2019 , the Company incurred $0 and $157,000, respectively, of fees related to the payoff of the Goldline Credit Facility that was payable to the Goldline Lenders.

Interest income from finance products and repurchase arrangements

During the three months ended September 30, 2020 and 2019, the Company recorded its proportional share of its equity method investee's net income as other income which totaled $4.1 million and $11,000, respectively.

During the three months ended September 30, 2020 and 2019, the Company earned royalty income related to one of CFC's secured lending agreements with Stack's Bowers Galleries which totaled $359,000 and $42,000, respectively.

FINANCING AGREEMENTS

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The Trading Credit Facility is secured by substantially all of the Company’s assets on a first priority basis.

As of March 31, 2020, the Trading Credit Facility provided the Company with access up to $270.0 million, featuring a $220.0 million base, with a $50.0 million accordion option.

As of September 30, 2020, and as a result of various amendments, the Trading Credit Facility provided the Company with access up to $270.0 million, featuring a $257.5 million base, with a $12.5 million accordion option.

The Trading Credit Facility is scheduled to terminate on March 26, 2021.

From commencement of the Trading Credit Facility (i.e., March 31, 2016), the Company has incurred $4.1 million of accumulated loan costs.

Since commencement of the Trading Credit Facility (i.e., March 31, 2016), the Company has incurred $4.5 million of accumulated loan costs.

These loan costs have been capitalized when incurred and are amortized over the term of the Trading Credit Facility.

As of March 31, 2020 and June 30, 2019, the remaining unamortized balance was approximately $0.7 million and $0.6 million, respectively.

As of September 30, 2020 and June 30, 2020, the remaining unamortized balance was approximately $0.7 million and $0.5 million, respectively.

The Company routinely uses the Trading Credit Facility to purchase and finance precious metals and for operating cash flow purposes.

Amounts under the Trading Credit Facility bear interest based on London Interbank Offered Rate (“LIBOR”) plus a 2.50% margi n for revolving credit line loans and a 4.50% margin for bridge loans (that is, for loans that exceed the available revolving credit line).

The one-month LIBOR rate was approximately 0.99% and 2.40% as of March 31, 2020 and June 30, 2019 , respectively.

Bo rrowings are due on demand and totaled $175.0 million and $167.0 million at March 31, 2020 and June 30, 2019 , respectively.

The amounts available under the respective borrowing facilities are determined at the end of each week following a specified borrowi ng base formula.

The Company is able to access additional credit as needed to finance operations, subject to the overall limits of the borrowing facilities and lender approval of the revised borrowing base calculation.

Based on the latest approved borrowi ng bases in effect, the amounts available under the Trading Credit Facility, after taking into account current borrowings, totaled $91.7 million and $11.6 million as determined on March 31, 2020 and June 30, 2019 , respectively.

Amounts under the Trading Credit Facility bear interest based on London Interbank Offered Rate (“LIBOR”) plus a 2.50% margin for revolving credit line loans and a 4.50% margin for bridge loans (that is, for loans that exceed the available revolving credit line).

The one-month LIBOR rate was approximately 0.15% and 0.16% as of September 30, 2020 and June 30, 2020, respectively.

Borrowings are due on demand and totaled $214.0 million and $135.0 million at September 30, 2020 and June 30, 2020, respectively.

The amounts available under the respective borrowing facilities are determined at the end of each week and at each month end following a specified borrowing base formula.

The Company is able to access additional credit as needed to finance operations, subject to the overall limits of the borrowing facilities and lender approval of the borrowing base calculation.

Based on the month end borrowing bases in effect, the availability under the Trading Credit Facility, after taking into account current borrowings, totaled $86.1 million and $76.3 million as determined on September 30, 2020 and June 30, 2020, respectively.

The Trading Credit Facility has certain restrictive financial covenants, including one requiring the Company to maintain a minimum tangible net worth.

As of March 31, 2020 the minimum tangible net worth financial covenant under the Trading Credit Facility was $48.1 million.

The Company is in compliance with all restrictive financial covenants as of March 31, 2020.

Interest expense related to the Company’s lines of credit totaled $1.9 million and $2.0 million, which represents 38.3% and 47.6% of the total interest expense recognized, for the three months ended March 31, 2020 and 2019, respectively.

Our lines of credit carried a daily weighted average effective interest rate of 4.15% and 4.89%, respectively, for the three months ended March 31, 2020 and 2019.

Interest expense related to the Company’s lines of credit totaled $6.0 million and $5.9 million, which represents 39.2% and 47.5% of the total interest expense recognized, for the nine months ended March 31, 2020 and 2019, respectively.

Our lines of credit carried a daily weighted average effective interest rate of 4.37% and 4.73%, respectively, for the nine months ended March 31, 2020 and 2019.

Debt Obligation with Goldline Lenders

On August 28, 2017, in connection with the closing of the Goldline acquisition, Goldline, then known as Goldline Acquisition Corp., entered into a privately placed credit facility in the amount of $7.5 million (the “Goldline Credit Facility”) with various lenders (the "Goldline Lenders").

Borrowings under the Goldline Credit Facility were used to finance a portion of the consideration payable pursuant to the Goldline acquisition.

The Goldline Credit Facility was secured by a first priority lien on substantially all of the assets of Goldline, and was guaranteed by the Company.

Interest on the Goldline Credit Facility was payable quarterly in arrears at the rate of 8.5% per annum, and the Goldline Lenders under the Goldline Credit Facility were entitled to an additional funding fee payment at maturity equal to the greater of 3.0% of the principal amount of the Goldline Credit Facility and 10.0% of cumulative EBITDA (for the periods ending June 30, 2018, 2019 and 2020) of Goldline in excess of $10.0 million, on a pro rata basis.

The Goldline Credit Facility had a three-year maturity.

On December 7, 2018, the Company prepaid the $7.5 million principal amount outstanding under the Goldline Credit Facility.

As such, there was no interest expense incurred for the three and nine months ended March 31, 2020 related to this facility.

Interest expense related to the Goldline Credit Facility (including debt loan amortization costs) totaled $342,000 which represents 2.7% of the total interest expense recognized, for the nine months ended March 31, 2019.

The Goldline Credit Facility's weighted average effective interest rate was 8.84% for the nine months ended March 31, 2019.

As of September 30, 2020 the minimum tangible net worth financial covenant under the Trading Credit Facility was $55.7 million.

The Company is in compliance with all restrictive financial covenants as of September 30, 2020.

For the three months ended September 30, 2020 and 2019 interest expense related to the Company’s lines of credit totaled $1.4 million and $2.1 million, which represents 31.8% and 41.6% of the total interest expense recognized, respectively.

For the three months ended September 30, 2020 and 2019, our lines of credit carried a daily weighted average effective interest rate of 2.95% and 4.75%, respectively.

Notes Payable

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In addition, AMCF may from time to time sell precious metals to A-Mark for cash.

As of March 31, 2020, the consolidated carrying balance of the Notes was $92.3 million (which excludes the $5.0 million note that the Company retained), and the remaining unamortized loan cost balance was approximately $2.7 million, which is amortized using the effective interest method through the maturity date.

As of March 31, 2020, the balance of the interest payable was $234,000.

As of September 30, 2020, the consolidated carrying balance of the Notes was $92.7 million (which excludes the $5.0 million note that the Company retained), and the remaining unamortized loan cost balance was approximately $2.3 million, which is amortized using the effective interest method through the maturity date.

As of September 30, 2020, the balance of the interest payable was $234,000.

Interest on the Notes is payable monthly in arrears at the aggregate rate of 5.26% per annum.

For the three months ended March 31, 2020 and 2019, the interest expense related to the Notes (including loan amortization costs) totaled $1.4 million and $1.4 million, which represents 27.9% and 33.8% of the total interest expense recognized by the Company.

For the three months ended March 31, 2020 and 2019, the Notes' weighted average effective interest rate was 5.88% and 5.88%, respectively.

For the nine months ended March 31, 2020 and 2019, the interest expense related to the Notes (including loan amortization costs) totaled $4.2 million and $3.1 million, which represents 27.6% and 25.2% of the total interest expense recognized by the Company, respectively.

For the nine months ended March 31, 2020 and 2019, the Notes' weighted average effective interest rate was 5.88% and 5.88%, respectively.

For the three months ended September 30, 2020 and 2019, the interest expense related to the Notes (including loan amortization costs) totaled $1.4 million and $1.5 million, which represents 33.0% and 28.6% of the total interest expense recognized by the Company, respectively.

For the three months ended September 30, 2020 and 2019, the Notes' weighted average effective interest rate was 5.88% and 5.88%, respectively.

Liabilities on Borrowed Metals

The Company recorded liabilities on borrowed precious metals with market values totaling $178.6 million as of March 31, 2020, with corresponding metals totaling $159.8 million and $18.8 million included in precious metals held under financing arrangements and inventories, respectively, on the condensed consolidated March 31, 2020 balance sheet.

The Company recorded liabilities on borrowed precious metals with market values totaling $153.8 million as of September 30, 2020, with corresponding metals totaling $135.0 million and $18.8 million included in precious metals held under financing arrangements and inventories, respectively, on the condensed consolidated September 30, 2020 balance sheet.

The Company recorded liabilities on borrowed metals with market values totaling $168.2 million as of June 30, 2020 with corresponding metals totaling $148.9 million and $19.3 million included in precious metals held under financing arrangements and inventories, respectively, on the condensed consolidated June 30, 2020 balance sheet.

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Liabilities may also arise from:

(1) unallocated metal positions held by customers in the Company’s inventory, (2) amounts due to suppliers for the use of their consigned inventory, and (3) shortages in unallocated metal positions held by the Company in the supplier’s inventory.

(i) unallocated metal positions held by customers in the Company’s inventory, (ii) amounts due to suppliers for the use of their consigned inventory, and (iii) shortages in unallocated metal positions held by the Company in the supplier’s inventory.

Unallocated or pool metal represent an unsegregated inventory position that is due on demand, is a specified physical form, based on the total ounces of metal held in the position.

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Product Financing Arrangements

The Company has agreements with financial institutions (third parties) that allow the Company to transfer its gold and silver inventory at an agreed-upon price based on the spot price with these third parties.

The Company has agreements with third party financial institutions which allow the Company to transfer its gold and silver inventory at an agreed-upon price, which is based on the spot price.

Such agreements allow the Company to repurchase this inventory at an agreed-upon price based on the spot price on the repurchase date.

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Both the product financing obligation and the underlying inventory (which is entirely restricted) are carried at fair value, with changes in fair value recorded as a component of cost of sales in the condensed consolidated statements of income.

Such obligation totaled $122.1 million and $94.5 million as of March 31, 2020 and June 30, 2019, respectively.

Such obligation totaled $101.6 million and $74.7 million as of September 30, 2020 and June 30, 2020, respectively.

COMMITMENTS A ND CONTINGENCIES

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Refer to Note 15 of the Notes to Consolidated Financial Statements in the 2020 Annual Report for information relating to consulting and employment contracts, and other commitments.

The Company is not aware of any material changes to commitments as summarized the 2019 Annual Report, other than as summarized below.

Contingencies related to Purchase of Goldline

In connection with the acquisition of assets of Goldline LLC, the Company held back and deposited a portion of the original purchase price into escrow to serve as security for the seller’s indemnification obligations.

At June 30, 2019, $750,000 remained in escrow.

In October 2019, the Company entered into a settlement agreement and mutual release with Goldline LLC, pursuant to which the Company received $460,000 from the escrow account and released Goldline from any further obligations relating to the acquisition.

The costs associated with the settlement of our purchase of Goldline were recorded as other income (loss), net in the condensed consolidated statements of income.

The Company is not aware of any material changes to commitments as summarized in the 2020 Annual Report.

The Company is exposed to the effects of the COVID-19 pandemic.

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The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors.

As of March 31, 2020, no shares had been repurchased under the program.

As of September 30, 2020, no shares had been repurchased under the program.

2014 Stock Award and Incentive Plan

The Company's amended and restated 2014 Stock Award and Incentive Plan (the "2014 Plan") was approved by the Company's stockholders on November 2, 2017.

As of March 31, 2020, 243,664 shares were authorized for issuance under the 2014 Plan, which terminates in 2027.

As of September 30, 2020, 203,664 shares were authorized for issuance under the 2014 Plan, which terminates in 2027.

Under the 2014 Plan, the Company may grant options and other equity awards as a means of attracting and retaining officers, employees, non-employee directors and consultants, to provide incentives to such persons, and to align the interests of such persons with the interests of stockholders by providing compensation based on the value of the Company's stock.

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Stock Options

During the three months ended March 31, 2020 and 2019, the Company incurred $215,733 and $289,251 of compensation expense related to stock options, respectively.

During the nine months ended March 31, 2020 and 2019, the Company incurred $619,702 and $842,427 of compensation expense related to stock options, respectively.

As of March 31, 2020, there was total remaining compensation expense of $1,616,565 related to employee stock options, which will be recorded over a weighted average period of approximately 2.7 years.

The following table summarizes the stock option activity for the nine months ended March 31, 2020.

During the three months ended September 30, 2020 and 2019, the Company incurred $178,428 and $166,304 of compensation expense related to stock options, respectively.

As of September 30, 2020, there remained a total of $1,587,316 in compensation expense related to employee stock options, to be recorded over the remaining vesting period of such options.

The weighted average period remaining vesting period of the outstanding options is approximately 2.6 years.

An obligatory event was triggered as a result of the non-recurring special dividend declared on September 3, 2020.

In accordance with the terms of the Company’s equity award plans under which the options were issued, an adjustment was required to protect the holders of such stock options from decreases in the value of the stock options due to payment of the non-recurring special dividend.

The event decreased the exercise price of each stock option by $1.50.

This was effective on the date of record which was September 21, 2020.

The fair value of the options before and after the event was unchanged and therefore no incremental stock-based compensation was recorded.

The following table summarizes the stock option activity for the three months ended September 30, 2020 .

Intrinsic Value

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Cancellations, expirations and forfeitures

Outstanding at March 31, 2020

Exercisable at March 31, 2020

Following is a summary of the status of stock options outstanding at March 31, 2020.

Outstanding at September 30, 2020

Exercisable at September 30, 2020

Following is a summary of the status of stock options outstanding at September 30, 2020, and accordingly reflects the adjusted stock option exercise prices:

Exercise Price Ranges

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Exercise Price

Restricted Stock Units

The RSUs are not transferable and automatically convert to shares of common stock on a one -for-one basis as the awards vest.

Additionally, the RSUs were issued with a market-based condition and provide for accelerated vesting under certain conditions.

During the three months ended March 31, 2020 and 2019, the Company incurred $9,401 and $0 of compensation expense related to RSUs, respectively.

During the nine months ended March 31, 2020 and 2019, the Company incurred $15,668 and $0 of compensation expense related to RSUs, respectively.

The remaining compensation expense that will be recorded under restricted stock unit ("RSU") grants totals $31,302, which will be recorded over a weighted average period of approximately 3.2 years.

The following table summarizes the RSU activity for the nine months ended March 31, 2020:

at Grant Date

Outstanding at June 30, 2019

Shares granted

Outstanding at March 31, 2020

Exercisable at March 31, 2020

The following table summarizes the nonvested stock option activity three months ended September 30, 2020.

Nonvested Outstanding at June 30, 2020

Nonvested Outstanding at September 30, 2020

Valuation and Other Significant Assumptions of Equity Awards Issued

The Company used the Black-Scholes pricing model, which used various inputs such as the estimated common share price, the risk-free interest rate, volatility, expected life and dividend yield, all of which are estimates, to determine the estimated grant-date fair value of its stock options issued.

To value the Company's market-based RSUs issued, the Company utilized the Monte Carlo simulation model to arrive at a grant-date fair value.

Our valuation accounted for market-based vesting conditions that requires the Company's stock price to equal or exceed $15.00 per share for a 30-day calendar period prior to the end of the performance period (that is, from November 22, 2019 to June 30, 2023).

Our fair value estimate does not reflect the acceleration of the market-based RSUs upon a change-in-control of the Company;

the effects of change-in-control are only considered when a change-in-control is probable.

No tax benefit was recognized in the condensed consolidated statements of income related to share-based compensation for the three and nine months ended March 31, 2020 and 2019.

No share-based compensation was capitalized for the three and nine months ended March 31, 2020 and 2019.

Certain Anti-Takeover Provisions

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Certain of such provisions allow the Company to issue preferred stock with rights senior to those of the common stock or impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions.

CUSTOMER AND SUPPLIER CONCENTRATIONS

CUSTOMER AND SUP PLIER CONCENTRATIONS

Customer Concentration

Customers providing 10 percent or more of the Company's revenues for the three and nine months ended March 31, 2020 are presented on a comparative basis, with their corresponding balances for the three and nine months ended March 31, 2019 in the table below:

Customers providing 10 percent or more of the Company's revenues for the three months ended September 30, 2020 are presented on a comparative basis, with their corresponding balances for the three months ended September 30, 2019 in the table below:

Three Months Ended

Nine Months Ended

March 31, 2020

March 31, 2019

March 31, 2020

March 31, 2019

September 30, 2020

September 30, 2019

Total revenue

Customer concentrations

HSBC Bank USA (1)

TD Securities

Sales with these trading partners are primarily comprised of sales on forward contracts that are entered into for hedging purposes rather than sales characterized with the physical delivery of precious metal product.

Customers providing 10 percent or more of the Company's accounts receivable as of March 31, 2020 and June 30, 2019 are presented on a comparative basis in the table below.

March 31, 2020

June 30, 2019

Total accounts receivable, net

Customer concentrations

No single customer provided 10 percent or more of the Company's accounts receivable or our secured loans receivable as of September 30, 2020.

Supplier Concentration

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The Company believes that no one or small group of suppliers is critical to its business, since other sources of supply are available that provide similar products on comparable terms.

SEGMENTS AND GEO GRAPHIC INFORMATION

SEGMENTS AND GEOGRAPHIC INFORMATION

The Company evaluates segment reporting in accordance with FASB ASC 280, Segment Reporting , each reporting period, including evaluating the organizational structure and the reporting package that is reviewed by the chief operating decision makers.

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Three Months Ended

Nine Months Ended

September 30,

Revenue by segment (1)(2)

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Therefore, no amounts are shown for the Secured Lending segment in the above table.

The elimination of inter-segment sales are reflected in the Wholesale Trading & Ancillary Services segment.

Includes $9.7 million of inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment.

Includes $0.3 million of inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment.

The elimination of inter-segment sales is reflected in the Wholesale Trading & Ancillary Services segment.

Includes $4.7 million of inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment.

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Three Months Ended

Nine Months Ended

Revenue by geographic region (as determined by the shipping

address or where the services were performed):

September 30,

Revenue by geographic region (as determined by the shipping or billing address or where the services were performed):

United States

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Three Months Ended

Nine Months Ended

September 30,

Gross profit by segment (1)

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Three Months Ended

Nine Months Ended

September 30,

Operating income (expense) by segment

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Other income, net

Unrealized income (loss) on foreign exchange

Unrealized losses on foreign exchange

Secured Lending

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Selling, general and administrative expenses

Interest expense

Other income (expense), net

Other expense, net

Net income (loss) before provision for income taxes

Three Months Ended

Nine Months Ended

September 30,

Net income (loss) before provision for income taxes by segment

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Three Months Ended

Nine Months Ended

September 30,

Depreciation and amortization by segment

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Three Months Ended

Nine Months Ended

September 30,

Advertising expense by segment

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Precious metals held under financing arrangements

September 30,

Precious metals held under financing arrangements by segment

Wholesale Trading & Ancillary Services

Secured Lending

September 30,

Inventories by segment

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Secured Lending

September 30,

Inventories by geographic region

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North America, excluding United States

September 30,

Assets by segment

1 unchanged sentence

Secured Lending

September 30,

Assets by geographic region

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Long-term Assets

September 30,

Long-term assets by segment

1 unchanged sentence

Secured Lending

September 30,

Long-term assets by geographic region

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Three Months Ended

Nine Months Ended

September 30,

Capital expenditures on property, plant, and equipment by segment

1 unchanged sentence

Secured Lending

Goodwill and Intangible Assets

Goodwill and Intangibles by segment

September 30,

Goodwill by segment

Wholesale Trading & Ancillary Services

Direct Sales (1)

Direct Sales goodwill balance is net of $1.4 million accumulated impairment losses.

Intangible Assets

September 30,

Intangibles by segment

Wholesale Trading & Ancillary Services

SUBSEQUENT EVENTS

Dividend Declaration

On October 29, 2020 the Company's Board of Directors declared a non-recurring special dividend of $1.50 per share to common stock shareholders of record at the close of business on November 23, 2020, payable on or about November 30, 2020.

The estimated dividends to be paid total $10.6 million.

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.

What changed 10-Q

Item 1. Financial Statements