What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-02-10 compared with 2020-11-12 · 473 added, 227 removed, 507 unchanged (58% of the section changed)

14 unchanged sentences

The extent to which this outbreak ultimately impacts our results of operations, cash flows and financial condition will depend on future developments, which are highly uncertain and unpredictable, including new information which may emerge concerning the severity and duration of this outbreak and the actions taken by governmental authorities and us to contain it or treat its impact.

This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements and notes contained elsewhere in this Form 10-Q.This discussion contains forward-looking statements that reflect our plans, estimates and beliefs.

Our actual results could differ materially from those discussed in these forward-looking statements.

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Included in our analysis is a discussion of five performance metrics:

(i) Ounces of gold and silver sold, (ii) Wholesale trading ticket volume, (iii) Direct Sales ticket volume, (iv) inventory turnover ratio and (v) number of secured loans at period-end.

(i) Ounces of gold and silver sold, (ii) Wholesale Sales ticket volume, (iii) Direct Sales ticket volume, (iv) inventory turnover ratio and (v) number of secured loans at period-end.

Segment results of operations .

This section provides an analysis of our results of operations presented for our three segments:

Wholesale Trading & Ancillary Services ,

Wholesales Sales & Ancillary Services ,

Secured Lending , and

1 unchanged sentence

Liquidity and financial condition .

This section provides an analysis of our cash flows, as well as a discussion of our outstanding debt as of September 30, 2020.

This section provides an analysis of our cash flows, as well as a discussion of our outstanding debt as of December 31, 2020.

Included in this section is a discussion of our:

1 unchanged sentence

Critical accounting policies .

This section discusses critical accounting policies that are considered both important to our financial condition and results of op erations, and require management to make significant judgment and estimates.

This section discusses critical accounting policies that are considered both important to our financial condition and results of operations, and require management to make significant judgment and estimates.

All of our significant accounting policies, including the critical accounting policies are also summarized in Note 2 of the notes to the condensed consolidated financial statements.

3 unchanged sentences

We conduct our operations in three reportable segments:

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

Wholesale Trading & Ancillary Services Segment

The Company operates its Wholesale Trading & Ancillary Services segment through A-Mark Precious Metals, Inc., and its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS" or “Storage”), and A-M Global Logistics, LLC.

(“AMGL” or "Logistics"), and its partially-owned subsidiary, AM&ST Associates, LLC.

(i) Wholesale Sales & Ancillary Services (formerly known as Wholesale Trading & Ancillary Service segment) (ii) Secured Lending and (iii) Direct Sales.

The Wholesale Sales & Ancillary Services segment name change was to the name only and had no impact on the Company's historical financial position, results of operations, cash flow or segment level results previously reported

Wholesale Sales & Ancillary Services Segment

The Company operates its Wholesale Sales & Ancillary Services segment through A-Mark Precious Metals, Inc., and its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS" or “Storage”), and A-M Global Logistics, LLC (“AMGL” or "Logistics"), and its partially-owned subsidiary, AM&ST Associates, LLC.

("AMST" or "SilverTowne" or the "Mint").

The Wholesale Trading & Ancillary Services segment operates as a full-service precious metals trading company.

The Wholesale Sales & Ancillary Services segment operates as a full-service precious metals company.

We offer gold, silver, platinum, and palladium in the form of bars, plates, powder, wafers, grain, ingots, and coins.

3 unchanged sentences

The trading center, for buying and selling precious metals, is available to receive orders 24 hours every day, even when many major world commodity markets are closed.

In addition to wholesale trading activity, A-Mark offers its customers a variety of services, including financing, storage, consignment, logistics, and various customized financial programs.

In addition to Wholesale Sales activity, A-Mark offers its customers a variety of services, including financing, storage, consignment, logistics, and various customized financial programs.

Mint-authorized purchaser of gold, silver, platinum, and palladium coins, A-Mark purchases product directly from the U.S.

10 unchanged sentences

AMST acquired the entire minting operations (referred to as SilverTowne Mint) of SilverTowne, L.P., with the goal of providing greater product selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to silver during volatile market environments, which have historically created higher demand for precious metals products.

Secured Lending Segment

Secured Lending

The Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation LLC.

2 unchanged sentences

CFC's customers include coin and precious metal dealers, investors, and collectors.

As of September 30, 2020, CFC and AMCF had, in aggregate, approximately $84.2 million in secured loans outstanding, of which approximately 61.5% were acquired from third-parties (some of which may be customers of A-Mark) and approximately 38.5% were originated by CFC.

As of December 31, 2020, CFC and AMCF had, in aggregate, approximately $95.8 million in secured loans outstanding, of which approximately 60.3% were acquired from third-parties (some of which may be customers of A-Mark) and approximately 39.7% were originated by CFC.

AMCF, a wholly-owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC.

AMCF is sued, administers, and owns Secured Senior Term Notes:

AMCF issued, administers, and owns 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 in the aggregate principal amount of $28.0 million .

1 unchanged sentence

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

For additional informa tion s ee Note 14 of the notes to condensed consolidated financial statements .

Direct Sales Segment

For additional information s ee Note 14 of the notes to condensed consolidated financial statements .

The Company operates its Direct Sales segment through its wholly-owned subsidiaries Goldline Inc.

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

In fiscal 2019, the Company formed and capitalized PMPP, a 50%-owned subsidiary of Goldline, pursuant to terms of a joint venture agreement, for the purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products to affiliates of the partners.

PMPP commenced its operations in fiscal 2020.

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This diverse base of customers purchases a variety of products from the Company in a multitude of grades, primarily in the form of coins and bars.

Factors Affecting Revenues, Gross Profits, Interest Income, and Interest Expen se

Factors Affecting Revenues, Gross Profit, Interest Income, and Interest Expense

The Company enters into transactions to sell and deliver gold, silver, platinum, and palladium to industrial and commercial users, coin and bullion dealers, mints, and financial institutions.

1 unchanged sentence

The Company also sells precious metals on forward contracts at a fixed price based on current prevailing precious metal spot prices with a certain delivery date in the future (up to six months from inception date of the forward contract).

The Company also uses other derivative products (primarily futures contracts) or a combinations thereof to hedge commodity risks.

The Company also uses other derivative products (primarily futures contracts) or combinations thereof to hedge commodity risks.

We enter into these forward and future contracts as part of our hedging strategy to mitigate our price risk of holding inventory;

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As a result, the Company excludes the ounces recorded on forward contracts from its performance metrics, as the Company does not enter into forward sales transactions for speculative purposes.

Wholesale Trading Ticket Volume and Direct Sales Ticket Volume .

Wholesale Sales Ticket Volume and Direct Sales Ticket Volume .

Another measure of our business that is unaffected by changes in commodity pricing, is ticket volume.

Ticket volume for the Wholesale Trading & Ancillary Services and Direct Sales segments measures the total number of orders processed by our trading desks.

Ticket volume for the Wholesale Sales & Ancillary Services and Direct Sales segments measures the total number of orders processed by our trading desks.

In periods of higher volatility, there is generally increased trading in the commodity markets, causing increased demand for our products, resulting in higher business volume.

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As a result, a decline of precious metal market prices may cause a decrease in the number of loans outstanding in a period.

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become pandemic, and on March 13, the U.S.

President declared a national emergency due to the spread of the disease in the United States.

On March 11, 2020, the World Health Organization announced that infections of COVID-19 had become pandemic, and on March 13, COVID-19 was declared a national emergency on account of the spread of the disease in the United States.

The COVID-19 outbreak has caused significant disruption in the financial markets both globally and in the United States, and has severely constricted the level of economic activity worldwide.

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While we did not experience any related losses, there is no assurance that this might not occur in the future.

In the two successive quarters, as silver prices rebounded, the Company has experienced growth in its loan portfolio.

In the t hree successive quarters, as silver prices rebounded , the Company has experienced growth in its loan portfolio.

Our fiscal year end is June 30 each year.

Unless otherwise stated, references to years in this report relate to fiscal years rather than to calendar years.

RESULTS OF OPERA TIONS

Overview of Results of Operations for the Three Months Ended September 30, 2020 and 2019

RESULTS OF OPERATIONS

Overview of Results of Operations for the Three Months Ended December 31, 2020 and 2019

Condensed Consolidated Results of Operations

The operating results of our business for the three months ended September 30, 2020 and 2019 are as follows:

The operating results of our business for the three months ended December 31, 2020 and 2019 are as follows:

in thousands, except per share data and performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Selling, general, and administrative expenses

1 unchanged sentence

Interest expense

Other income (expense), net

Unrealized losses on foreign exchange

Other income, net

Unrealized gains on foreign exchange

Net income before provision for income taxes

16 unchanged sentences

Number of outstanding secured loans to customers at the end of the period.

Overview of Results of Operations for the Six Months Ended December 31, 2020 and 2019

Condensed Consolidated Results of Operations

The operating results of our business for the six months ended December 31, 2020 and 2019 are as follows:

in thousands, except per share data and performance metrics

Six Months Ended December 31,

Selling, general, and administrative expenses

Interest income

Interest expense

Other income (expense), net

Unrealized (losses) gains on foreign exchange

Net income before provision for income taxes

Income tax expense

Net income attributable to non-controlling interests

Net income attributable to the Company

Basic and diluted net income per share attributable to

A-Mark Precious Metals, Inc.:

Per Share Data:

Performance Metrics:

Gold ounces sold (2)

Silver ounces sold (3)

Inventory turnover ratio (4)

Number of secured loans at period end (5)

See "Results of Segments" for ticket count volume by segment.

Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts.

Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts.

Inventory turnover ratio is the cost of sales divided by average inventory for the period presented above.

This calculation excludes precious metals held under financing arrangements, which are not classified as inventory on the consolidated balance sheets.

Number of outstanding secured loans to customers that are primarily collateralized by precious metals at the end of the period.

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Performance Metrics

1 unchanged sentence

Silver ounces sold

Revenues for the three months ended September 30, 2020 increased $385.1 million, or 26.0%, to $1.866 billion from $1.481 billion in 2019.

Excluding a decrease of $111.2 million of forward sales, our revenues increased $496.3 million or 40.5% attributable to an increase in the total amount of gold and silver ounces sold and higher selling prices of gold and silver.

Gold ounces sold for the three months ended September 30, 2020 increased 145,000 ounces, or 25.2%, to 721,000 ounces from 576,000 ounces in 2019.

Silver ounces sold for the three months ended September 30, 2020 increased 3,337,000 ounces, or 16.0%, to

24,248,000 ounces from 20,911,000 ounces in 2019 .

On average, selling prices for gold increased by 29.9% and selling prices for silver increased by 35.2% during the three months ended September 30, 2020 as compared to 2019 .

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the quarter.

Revenues for the three months ended December 31, 2020 increased $463.2 million, or 43.9%, to $1.519 billion from $1.056 billion in 2019.

Excluding a decrease in forward sales of $24.9 million, revenues increased $488.0 million or 55.3%, which was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gold ounces sold for the three months ended December 31, 2020 increased 51,000 ounces, or 11.9%, to 479,000 ounces from 428,000 ounces in 2019.

Silver ounces sold for the three months ended December 31, 2020 increased 7,143,000 ounces, or 50.7%, to 21,245,000 ounces from 14,102,000 ounces in 2019.

On average, the selling prices for gold increased by 28.3% and selling prices for silver increased by 40.8% during the three months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metrics

Six Months Ended December 31,

Performance Metrics

Gold ounces sold

Silver ounces sold

Revenues for the six months ended December 31, 2020 increased $848.3 million, or 33.4% to $3.385 billion from $2.537 billion in 2019.

Excluding a decrease in forward sales of $136.1 million, revenues increased $984.3 million, or 46.7%, which was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gold ounces sold for the six months ended December 31, 2020 increased 196,000 ounces, or 19.5%, to 1,200,000 ounces from 1,004,000 ounces in 2019.

Silver ounces sold for the six months ended December 31, 2020 increased 10,480,000 ounces, or 29.9%, to 45,493,000 ounces from 35,013,000 ounces in 2019.

On average, the selling prices for gold increased by 29.2% and selling prices for silver increased by 37.8% during the six months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metric

Three Months Ended September 30,

Three Months Ended December 31,

Performance Metric

Inventory turnover ratio

Gross profit for the three months ended September 30, 2020 increased by $27.8 million, or 333.4%, to $36.1 million from $8.3 million in 2019.

The overall gross profit increase was due to higher gross profits from the Wholesale Trading & Ancillary Services and Direct Sales segments.

Gross profit for the three months ended December 31, 2020 increased by $10.6 million, or 130.6%, to $18.8 million from $8.1 million in 2019.

The overall gross profit increase was due to higher gross profits earned by the Wholesale Sales & Ancillary Services and Direct Sales segments.

The Company’s overall gross margin percentage increased by 46.5 basis points, or 60.4% to 1.235% from 0.770% in 2019.

The increase in gross margin percentage was mainly attributable to significantly wider premium spreads due to increased demand, higher trading profits due to higher volatility, and lower forward sales.

The increase in gross margin percentage was mainly attributable to significantly wider premium spreads due to increased demand, higher trading profits primarily due to increased volatility, and lower forward sales

Forward sales increase revenues but are associated with negligible gross margins.

The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.

Our inventory turnover rate for the three months ended September 30, 2020 increased by 13.6%, to 5.0 from 4.4 in 2019.

The increase in our inventory turnover ratio was primarily due to higher volume of ounces sold of precious metals, partially offset by lower volume of ounces sold on forward contracts as well as higher average inventory balances during the three months ended September 30, 2020 as compared to 2019.

Our inventory turnover rate for the three months ended December 31, 2020 decreased by 3.0%, to 3.2 from 3.3 in 2019.

The decrease in our inventory turnover rate was primarily due to the higher average inventory balances related to products available for sale and product financing arrangements partially offset by higher cost of sales during the three months ended December 31, 2020 as compared to 2019.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metric

Six Months Ended December 31,

Performance Metric

Inventory turnover ratio

Gross profit for the six months ended December 31, 2020 increased by $38.4 million, or 233.3%, to $54.9 million from $16.5 million in 2019.

The overall gross profit increase was due to higher gross profits from the Wholesale Sales & Ancillary Services and Direct Sales segments.

The Company’s overall gross margin percentage increased by 97.3 basis points, or 149.9% to 1.622% from 0.649% in 2019.

Forward sales increase revenues but are associated with negligible gross margins.

The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.

Our inventory turnover rate for the six months ended December 31, 2020 decreased by 13.2%, to 7.9 from 9.1 in 2019.

The decrease in our inventory turnover rate was primarily due to the higher average inventory balances related to product financing arrangements partially offset by higher cost of sales during the six months ended December 31, 2020 as compared to 2019.

Selling, General and Administrative Expense

Three Months Ended September 30,

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the three months ended September 30, 2020 increased $1.7 million, or 21.0%, to $10.0 million from $8.3 million in 2019.

The change was primarily due to increases in compensation expense (including performance-based accruals) of $1.8 million and computer software expense of $0.2 million, which were partially offset by decreases in operating expenses of $0.2 million associated with our Direct Sales segment, and depreciation and amortization expense of $0.1 million.

Selling, general and administrative expenses for the three months ended December 31, 2020 increased $1.2 million, or 14.8%, to $9.0 million from $7.9 million in 2019.

The change was primarily due to increases in insurance costs of $0.5 million, financial and tax consulting costs of $0.4 million, compensation expense (including performance-based accruals) of $0.4 million and $0.1 million of advertising expense, which were partially offset by decreases in operating expenses of $0.1 million associated with our Direct Sales segment and depreciation and amortization expenses of $0.1 million.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the six months ended December 31, 2020 increased $2.9 million, or 18.0%, to $19.0 million from $16.1 million in 2019.

The change was primarily due to increases in compensation expense (including performance-based accruals) of $2.2 million, insurance costs of $0.4 million, financial and tax consulting costs of $0.4 million, computer software cost of $0.2 million and advertising cost of $0.2 million, which were partially offset by decreases in operating expenses of $0.3 million associated with our Direct Sales segment and $0.2 million of depreciation expense.

Interest Income

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metric

Three Months Ended September 30,

Three Months Ended December 31,

Interest income

1 unchanged sentence

Number of secured loans at period-end

Interest income for the three months ended September 30, 2020 decreased $1.8 millio n , or 30.9% , to $4.0 million from $5.8 million in 2019 .

The aggregate decrease in interest income was primarily due to low er interest income earned by our Secured Lending segment , partially offset by higher other finance product income.

The interest income from our Secured Lending segment decreased by $2.0 million or by 55.9%, which represents the majority of the aggregate decrease in interest income compared with the prior year.

Interest income for the three months ended December 31, 2020 decreased $1.7 million, or 27.3%, to $4.5 million from $6.2 million in 2019.

The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment, partially offset by higher other finance product income.

Interest income from our Secured Lending segment decreased by $2.0 million, or by 49.1% in comparison to the same year-ago period.

The decrease in interest income earned from the segment’s secured loan portfolio was primarily due to lower average monthly loan balances during the current period as compared to the average monthly loan balances for the comparable period.

The number of secured loans outstanding decreased by 64.5% to 1,324 from 3,725 in 2019.

Typically, the number of loans increases during periods of increasing precious metal prices and decreases during periods of declining precious metal prices.

Silver prices declined significantly in the quarter ended March 31, 2020, resulting in an increase in margin calls and borrower loan liquidations due to a decline in the value of the precious metals collateral.

The Company did not incur loan losses related to these margin calls or borrower loan liquidations.

In the two successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans in the portfolio.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during the three months ended September 30, 2020 or the comparable period.

The interest income from our finance products increased by $0.2 million in comparison to the same year-ago period.

Typically, the number of loans increases during periods of increasing precious metal prices and decrease during periods of declining precious metal prices.

Silver prices declined significantly in the quarter ended March 31, 2020, resulting in an increase in the margin calls and borrower loan liquidations due to a decline in the value of the precious metals collateral.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during this or the comparable period.

In the three successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans.

The interest income from our other finance product income increased by $0.3 million in comparison to the same year-ago period.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metric

Six Months Ended December 31,

Interest income

Performance Metric

Number of secured loans at period-end

Interest income for the six months ended December 31, 2020 decreased $3.5 million, or 29.0%, to $8.5 million from $12.0 million in 2019.

The aggregate decrease in interest income was primarily due to lower interest income earned by our Secured Lending segment, partially offset by higher other finance product income.

The interest income from our Secured Lending segment decreased by $3.9 million or by 52.3% in comparison to the same year-ago period.

The number of secured loans outstanding decreased by 64.5% to 1,324 from 3,725 in 2019.

Typically, the number of loans increases during periods of increasing precious metal prices and decrease during periods of declining precious metal prices.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during this or the comparable period.

In the three successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans.

The interest income from our other finance product income increased by $0.4 million in comparison to the same year-ago period.

Interest Expense

Three Months Ended September 30,

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Interest expense

Interest expense for the three months ended September 30, 2020 decreased $0.8 million, or 16.5% to $4.3 million from $5.1 million in 2019.

The decrease was primarily due to reductions in interest expense related to our Trading Credit Facility and loan servicing fees, partially offset by increases in interest expense related to our liabilities on borrowed metals, and product financing arrangements.

As compared to the same year-ago period, the interest expense decrease by component included:

(i) $0.8 million related to the Trading Credit Facility (including debt amortization costs), (ii) $0.3 million of loan servicing fees, which were offset by increases of (iii) $0.1 million of liabilities on borrowed metals, and (iv) $0.1 million of product financing arrangements.

Interest expense primarily decreased due to lower interest rates and lower loan servicing fees due to lower average monthly loan balances, as compared to the prior comparable period.

Other income (expense), net

Three Months Ended September 30,

Interest expense for the three months ended December 31, 2020 decreased $44.0 thousand, or 0.9% to $5.0 million from $5.1 million in 2019.

The decrease in interest expense was primarily due to a reduction in loan servicing fees, partially offset by an increase interest expense related to product financing arrangements.

As compared to the same year-ago period, interest expense related to loan servicing fees decreased by $0.4 million, which was offset by an increase of $0.4 million related to product financing arrangements.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Interest expense

Interest expense for the six months ended December 31, 2020 decreased $0.9 million, or 8.7% to $9.3 million from $10.2 million in 2019.

The decrease was primarily due to reductions in interest expense related to our Trading Credit Facility and loan servicing fees, partially offset by increases in interest expense related to product financing arrangements and liability on borrowed metals.

As compared to the same year-ago period, the amount of interest expense that decreased, by component, included:

(i) $0.9 million of Trading Credit Facility interest expense (including debt amortization costs), (ii) $0.6 million of loan servicing cost, offset by increased interest expense of (iii) $0.5 million related to product financing arrangements, and (iv) $0.1 million of liabilities on borrowed metals.

Other income, net

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Other income, net

Other income, net for the three months ended December 31, 2020 increased $2.4 million, or 1611.3% to $2.6 million from $0.2 million in 2019.

The aggregate increase was primarily due to an increase of $2.3 million in the Company’s proportionate share of our equity-method investees' earnings and an increase of $0.2 million in royalties earned compared to the prior comparable quarter.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Other income (expense), net

Other income (expense), net for the three months ended September 30, 2020 increased $4.7 million, or 2801.8% to $4.5 million from $(0.2) million in 2019.

The aggregate increase was primarily due to (i) an increase in the Company’s proportionate share of our equity-method investees' earnings by $4.1 million, (ii) an increase of $0.3 million in royalties earned, and (iii) a decrease of $0.2 million of costs associated with the settlement of the purchase price of Goldline, compared to the prior comparable period.

Other (expense) income, net for the six months ended December 31, 2020 increased $7.1 million, or 44,175.0% to $7.1 million from $16 thousand in 2019.

The aggregate increase was primarily due to an increase of $6.4 million in the Company’s proportionate share of our equity-method investees' earnings and an increase of $0.5 million in royalties earned compared to the prior comparable period.

Provision for Income Taxes

Three Months Ended September 30,

Three Months Ended December 31 , 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Income tax expense

Our income tax expense was $6.5 million and $0.1 million for the three months ended September 30, 2020 and 2019, respectively.

Our effective tax rate was approximately 21.5% and 25.7% for the three months ended September 30, 2020 and 2019, respectively.

For the three months ended September 30, 2020, our effective tax rate differs from the federal statutory rate primarily due to state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, offset by the exclusion of profits related to the Company's minority interests, special deduction relating to foreign-derived intangible income, and stock-based - compensation.

SEGMENT RESULTS OF OPERATIONS

Our income tax expense was $2.6 million and $0.4 million for the three months ended December 31, 2020 and 2019, respectively.

Our effective tax rate was approximately 21.9% and 25.6% for the three months ended December 31, 2020 and 2019, respectively.

For the three months ended December 31, 2020, our effective tax rate differs from the federal statutory rate primarily due to state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, offset by the exclusion of profits related to the Company's minority interests, special deduction related to foreign-derived intangible income, and share-based compensation.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Income tax expense

Our income tax expense was $9.1 million and $0.5 million for the six months ended December 31, 2020 and 2019, respectively.

Our effective tax rate was approximately 21.7% and 25.6% for the six months ended December 31, 2020 and 2019, respectively.

For the six months ended December 31, 2020, our effective tax rate differs from the federal statutory rate primarily due to state taxes (net of federal tax benefit), Section 162(m) executive compensation disallowance, offset by the exclusion of profits related to the Company's minority interests, special deduction related to foreign-derived intangible income, and share-based compensation.

S EGMENT RESULTS OF OPERATIONS

The Company conducts its operations in three reportable segments:

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

(i) Wholesale Sales & 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 FASB Accounting Standards Codification (“ASC”).

Results of Operations — Wholesale Trading & Ancillary Services Segment

The Company operates its Wholesale Trading & Ancillary Services segment through A-Mark Precious Metals, Inc., and its wholly owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS"), and A-M Global Logistics, LLC.

Results of Operations — Wholesale Sales & Ancillary Services Segment

("Logistics"), and its partially-owned subsidiary, AM&ST Associates, LLC.

("AMST" or "SilverTowne" or the "Mint").

Also, the Wholesale Trading & Ancillary Services segment includes the consolidating eliminations of inter-segment transactions.

Overview of Results of Operations for the Three Months Ended September 30, 2020 and 2019

— Wholesale Trading & Ancillary Services Segment

The operating results of our Wholesale Trading & Ancillary Services segment for the three months ended September 30, 2020 and 2019 are as follows:

Also, the Wholesale Sales & Ancillary Services segment includes the consolidating eliminations of inter-segment transactions.

Overview of Results of Operations for the Three Months Ended December 31, 2020 and 2019

— Wholesale Sales & Ancillary Services Segment

The operating results of our Wholesale Sales & Ancillary Services segment for the three months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Selling, general, and administrative expenses

2 unchanged sentences

Other income, net

Unrealized losses on foreign exchange

Unrealized gains on foreign exchange

Net income before provision for income taxes

2 unchanged sentences

Silver ounces sold (2)

Wholesale Trading ticket volume (3)

Wholesale Sales ticket volume (3)

Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts.

Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts.

Trading ticket volume represents the total number of product orders processed by A-Mark.

Revenues — Wholesale Trading & Ancillary Services

Wholesale Sales ticket volume represents the total number of product orders processed by A-Mark.

Overview of Results of Operations for the Six Months Ended December 31, 2020 and 2019

— Wholesale Sales & Ancillary Services Segment

The operating results of our Wholesale Sales & Ancillary Services segment for the six months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Three Months Ended September 30,

Six Months Ended December 31,

Selling, general, and administrative expenses

Interest income

Interest expense

Other income, net

Unrealized (losses) gains on foreign exchange

Net income before provision for income taxes

Performance Metrics:

1 unchanged sentence

Silver ounces sold (2)

Revenues for the three months ended September 30, 2020 increased $352.8 million, or 24.1%, to $1.814 billion from $1.461 billion in 2019.

Excluding a decrease of $111.2 million of forwards sales, our revenues increased $464.0 million or 38.5% due to an increase in the total amount of gold and silver ounces sold and higher selling prices of gold and silver.

Gold ounces sold for the three months ended September 30, 2020 increased 138,000 ounces, or 24.4%, to 704,000 ounces from 566,000 ounces in 2019.

Silver ounces sold for the three months ended September 30, 2020 increased 3,198,000 ounces, or 15.4%, to 23,918,000 ounces from 20,720,000 ounces in 2019.

On average, selling prices for gold increased by 29.5% and selling prices for silver increased by 34.9% during the three months ended September 30, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the quarter.

Wholesale Sales ticket volume (3)

Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forward contracts.

Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forward contracts.

Wholesale Sales ticket volume represents the total number of product orders processed by A-Mark.

Revenues — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metrics

Three Months Ended December 31,

Performance Metrics

Gold ounces sold

Silver ounces sold

Revenues for the three months ended December 31, 2020 increased $439.3 million, or 42.3%, to $1.477 billion from $1.038 billion in 2019.

Excluding the decrease in forward sales of $24.9 million, revenues increased $464.2 million or 53.7%, which was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gold ounces sold for the three months ended December 31, 2020 increased 45,000 ounces, or 10.7%, to 465,000 ounces from 420,000 ounces in 2019.

Silver ounces sold for the three months ended December 31, 2020 increased 6,996,000 ounces, or 50.1%, to 20,972,000 ounces from 13,976,000 ounces in 2019.

On average, the selling prices for gold increased by 27.7% and selling prices for silver increased by 40.5% during the three months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Gross Profit — Wholesale Trading & Ancillary Services

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metrics

Six Months Ended December 31,

Performance Metrics

Gold ounces sold

Silver ounces sold

Revenues for the six months ended December 31, 2020 increased $792.1 million, or 31.7%, to $3.291 billion from $2.499 billion in 2019.

Excluding the decrease in forward sales of $136.1 million, revenues increased $928.2 million or by 44.9%, which was primarily attributable to an increase in the total amount of gold and silver ounces sold and higher average selling prices of gold and silver.

Gold ounces sold for the six months ended December 31, 2020 increased 183,000 ounces, or 18.6%, to 1,169,000 ounces from 986,000 ounces in 2019.

Silver ounces sold for the six months ended December 31, 2020 increased 10,194,000 ounces, or 29.4%, to 44,890,000 ounces from 34,696,000 ounces in 2019.

On average, the selling prices for gold increased by 28.7% and selling prices for silver increased by 37.5% during the six months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Gross Profit — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metric

Three Months Ended September 30,

Three Months Ended December 31,

Performance Metric

Wholesale trading ticket volume

Gross profit for the three months ended September 30, 2020 increased by $23.9 million, or 353.0%, to $30.6 million from $6.8 million in 2019.

The o verall gross profit increase was primarily due to higher sales volumes and increased premium spreads.

Wholesale Sales ticket volume

Gross profit for the three months ended December 31, 2020 increased by $6.6 million, or 100.8%, to $13.2 million from $6.6 million in 2019.

The o verall gross profit increase was primarily due to higher sales volumes and increased spreads.

This segment’s profit margin percentage increased by 26.1 basis points, or 41.1% to 0.896% from 0.635% in 2019.

Forward sales increase revenues but are associated with negligible gross margins.

The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.

The wholesale trading ticket volume for the three months ended September 30, 2020 decreased by 907 tickets, or 2.5%, to 35,341 tickets from 36,248 tickets in 2019.

The decrease in our trading ticket volume was primarily due to fewer online sales orders, which are typically for smaller orders, as compared to 2019.

Selling, General and Administrative Expenses — Wholesale Trading & Ancillary Services

Three Months Ended September 30,

The Wholesale Sales ticket volume for the three months ended December 31, 2020 decreased by 757 tickets, or 2.5%, to 29,797 tickets from 30,554 tickets in 2019.

The decrease in our Wholesale Sales ticket volume reflects that more ounces were sold per ticket compared to 2019.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metric

Six Months Ended December 31,

Performance Metric

Wholesale Sales ticket volume

Gross profit for the six months ended December 31, 2020 increased by $30.5 million, or 228.4%, to $43.9 million from $13.4 million in 2019.

The overall gross profit increase was primarily due to higher sales volumes and increased spreads.

This segment’s profit margin percentage increased by 79.9 basis points, or 149.6% to 1.333% from 0.534% in 2019.

Forward sales increase revenues but are associated with negligible gross margins.

The Company enters into forward contracts to hedge its precious metals price risk exposure and not for speculative purposes.

The Wholesale Sales ticket volume for the six months ended December 31, 2020 decreased by 1,664 tickets, or 2.5%, to 65,138 tickets from 66,802 tickets in 2019.

The decrease in our Wholesale Sales ticket volume reflects that more ounces were sold per ticket compared to 2019.

Selling, General and Administrative Expenses — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the three months ended September 30, 2020 increased $1.8 million , or 31.1% , to $7.6 million from $5.8 million in 2019 .

The change was primarily due to increases in compensation accruals (including performanc e-based accruals) of $ 1 .

Interest Income — Wholesale Trading & Ancillary Services

Three Months Ended September 30,

Selling, general and administrative expenses for the three months ended December 31, 2020 increased $1.2 million, or 22.1%, to $6.7 million from $5.5 million in 2019.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the six months ended December 31, 2020 increased $3.0 million, or 26.7%, to $14.3 million from $11.3 million in 2019.

Interest Income — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Interest income

Interest income for the three months ended September 30, 2020 increased $0.2 million, or 7.8%, to $2.4 million from $2.3 million in 2019.

The overall increase is primarily due to $0.2 million of finance product income and $0.1 million of interest income earned from a note receivable, partially offset by a $0.1 million decrease in margin interest income.

Interest Expense — Wholesale Trading & Ancillary Services

Three Months Ended September 30,

Interest income for the three months ended December 31, 2020 increased $0.3 million, or 12.0%, to $2.5 million from $2.2 million in 2019.

The overall increase is primarily due to $0.4 million interest earned from repurchase agreements.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Interest income

Interest income for the six months ended December 31, 2020 increased $0.4 million, or 9.9%, to $4.9 million from $4.5 million in 2019.

The overall increase is primarily due to $0.6 million interest earned from repurchase agreements, partially offset by a reduction of $0.1 million of interest income earned from spot deferred trade orders.

Interest Expense — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Interest expense

Interest expense for the three months ended September 30, 2020 increased $0.1 million, or 4.3% to $2.9 million from $2.8 million in 2019.

The net increase of $0.1 million was primarily related to our liability on borrowed metals transactions.

Other income, net — Wholesale Trading & Ancillary Services

Three Months Ended September 30,

Interest expense for the three months ended December 31, 2020 increased $0.5 million, or 19.3% to $2.9 million from $2.4 million in 2019.

The increase was primarily due greater product financing arrangements activity, which increased $0.4 million against the comparable period.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Interest expense

Interest expense for the six months ended December 31, 2020 increased $0.6 million, or 11.3% to $5.9 million from $5.3 million in 2019.

The increase was primarily due to product financing arrangements, which increased $0.5 million, and liabilities on borrowed metals activity, which increased $0.1 million compared to the same year ago period.

Other Income, net — Wholesale Sales & Ancillary Services

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Other income, net

Other income, net for the three months ended September 30, 2020 increased $4.1 million or 34283.3% to $4.1 million from $0.0 million in 2019.

The aggregate increase was primarily due the Company’s proportionate share of our equity-method investees' earnings.

Results of Operations — Secured Lending Segment

Other income, net for the three months ended December 31, 2020 increased $2.3 million or 2215.7% to $2.4 million from $0.1 million in 2019.

The aggregate increase was primarily due to an increase in the Company’s proportionate share of our equity-method investees' earnings of $2.3 million compared to the prior comparable quarter.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Other income, net

Other income, net for the six months ended December 31, 2020 increased $6.4 million, or 5591.2% to $6.5 million from $0.1 million in 2019.

The aggregate increase was primarily related to an increase in the Company’s proportionate share of our equity-method investees' earnings of $6.4 million compared to the prior comparable period.

R esults of Operations — Secured Lending Segment

The Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation LLC.

1 unchanged sentence

AMCF was formed in September 2018, and its financial activity was incorporated into the Secured Lending segment's results thereafter.

Overview of Results of Operations for the Three Months Ended September 30, 2020 and 2019

Overview of Results of Operations for the Three Months Ended December 31, 2020 and 2019

— Secured Lending Segment

The operating results of our Secured Lending segment for the three months ended September 30, 2020 and 2019 are as follows:

The operating results of our Secured Lending segment for the three months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Interest income

2 unchanged sentences

Other income, net

Net income before provision for income taxes

Net (loss) income before provision for income taxes

Performance Metric:

1 unchanged sentence

Number of outstanding secured loans to customers at the end of the period.

Overview of Results of Operations for the Six Months Ended December 31, 2020 and 2019

— Secured Lending Segment

The operating results of our Secured Lending segment for the six months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Six Months Ended December 31,

Interest income

Interest expense

Selling, general and administrative expenses

Other income, net

Net (loss) income before provision for income taxes

Performance Metric:

Number of secured loans at period end (1)

Number of outstanding secured loans to customers at the end of the period.

Interest Income — Secured Lending

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metric

Three Months Ended September 30,

Three Months Ended December 31,

Interest income

1 unchanged sentence

Number of secured loans at period-end

Interest income for the three months ended September 30, 2020 decreased $2.0 million, or 55.9%, to $1.5 million from $3.5 million in 2019.

Interest income for the three months ended December 31, 2020 decreased $2.0 million, or 49.2%, to $2.0 million from $4.0 million in 2019.

The number of secured loans outstanding decreased by 64.5% to 1,324 from 3,725 in 2019.

Typically, the number of loans increases during periods of increasing precious metal prices and decreases during periods of declining precious metal prices.

Typically, the number of loans increases during periods of increasing precious metal prices and decrease during periods of declining precious metal prices.

The Company did not incur loan losses related to these margin calls or borrower loan liquidations.

In the two successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans in the portfolio.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during the three months ended September 30, 2020 or the comparable period.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during this or the comparable period.

In the three successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans in the portfolio.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metric

Six Months Ended December 31,

Interest income

Performance Metric

Number of secured loans at period-end

Interest income for the six months ended December 31, 2020 decreased $3.9 million, or 52.3%, to $3.6 million from $7.5 million in 2019.

The number of secured loans outstanding decreased by 64.5% to 1,324 from 3,725 in 2019.

Typically, the number of loans increases during periods of increasing precious metal prices and decrease during periods of declining precious metal prices.

The Company did not incur loan losses related to the margin calls or borrower loan liquidations during this or the comparable period.

In the three successive quarters, as silver prices rebounded, the Company experienced growth in the number of loans in the portfolio.

Interest Expense — Secured Lending

Three Months Ended September 30,

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Interest expense

Interest expense for the three months ended September 30, 2020 decreased $1.0 million, or 41.9% to $1.3 million from $2.3 million in 2019.

Interest expense for the three months ended December 31, 2020 decreased $0.5 million, or 19.5% to $2.1 million from $2.6 million in 2019.

The change in interest expense is driven by the value of our secured loan portfolio, which is primarily financed

through our notes paya ble and Trading Credit Facility.

As compared to the same year-ago p eriod, interest expense related to loan servicing costs de cr eased $0.4 million as fewer loans were outstanding.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Interest expense

Interest expense for the six months ended December 31, 2020 decreased $1.5 million, or 30.0% to $3.5 million from $5.0 million in 2019.

The change in interest expense is driven by the value of our secured loan portfolio, which is primarily financed through our notes payable and Trading Credit Facility.

As compared to the same year-ago period, interest expense related to notes payable and Trading Credit Facility decreased by $0.7 million and loan servicing costs decreased by $0.3 million.

As compared to the same year-ago period, interest expense related to loan servicing costs decreased $0.6 million and interest expense related to our notes payable and Trading Credit Facility decreased in aggregate, by $0.8 million.

Selling, General and Administrative Expenses — Secured Lending

Three Months Ended September 30,

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the three months ended September 30, 2020 increased $0.1 million, or 42.5%, to $0.5 million from $0.4 million in 2019.

The increase was primarily due to an increase in amortization and depreciation expense.

Other Income — Secured Lending

Three Months Ended September 30,

Selling, general and administrative expenses for the three months ended December 31, 2020 was comparable to the prior year period.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Selling, general, and administrative expenses

Selling, general and administrative expenses for the six months ended December 31, 2020 increased $0.3 million, or 37.0%, to $1.0 million from $0.7 million in 2019.

The increase was primarily due to an increase in depreciation and amortization expense.

Other Income, net — Secured Lending

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Other income, net

Other income, net for the three months ended September 30, 2020 increased $0.3 million, or 754.8%, to $0.4 million from $0.1 million in 2019.

The increase of $0.3 million was due to royalty income earned from a related party.

(See Note 13 of the notes to condensed consolidated financial statements.)

Other income, net for the three months ended December 31, 2020 increased $0.2 million, or 336.2%, to $0.2 million from $47 thousand in 2019.

The increase was primarily due to increase in royalty income.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Other income, net

Other income, net for the six months ended December 31, 2020 increased $0.5 million, or 533.7%, to $0.6 million from $0.1 million in 2019.

The increase was primarily due to increase in royalty income.

Results of Operations — Direct Sales Segment

4 unchanged sentences

In connection with our formation of AMIP in May 2018, the financial activity of AMIP was incorporated into the Direct Sales segment's fiscal 2019 results.

In connection with the commencement of PMPP’s operations in July 2019, the financial activity of PMPP was incorporated into the Direct Sales segment's results.

Overview of Results of Operations for the Three Months Ended September 30, 2020 and 2019

In connection with the commencement PMPP’s operation in July 2019, the financial activity of PMPP was incorporated into the fiscal 2020 Direct Sales segment's results.

Overview of Results of Operations for the Three Months Ended December 31, 2020 and 2019

— Direct Sales Segment

The operating results of our Direct Sales segment for the three months ended September 30, 2020 and 2019 are as follows:

The operating results of our Direct Sales segment for the three months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Selling, general and administrative expenses

Other expense

Other income, net

Net income (loss) before provision for income taxes

3 unchanged sentences

Direct Sales ticket volume⁽³⁾

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

Gross profit percentage realized from sales, excluding inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary services segment, is 11.563% for the period.

Includes $8.6 million of inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment.

Gross profit percentage realized from sales, excluding inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary services segment, is 11.460% for the period.

Includes $2.1 million of inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment.

Gross profit percentage realized from sales, excluding inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, is 14.082% for the period.

Includes $4.8 million of inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment.

Gross profit percentage realized from sales, excluding inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, is 11.025% for the period.

Gold ounces sold represents the ounces of gold product sold during the three-month period.

Silver ounces sold represents the ounces of silver product sold during the three-month period.

Direct Sales segment trading ticket volume represents the total number of product orders processed by Goldline and PMPP.

Segment Results — Direct Sales

Direct Sales segment ticket volume represents the total number of product orders processed by Goldline and PMPP.

Overview of Results of Operations for the Six Months Ended December 31, 2020 and 2019

— Direct Sales Segment

The operating results of our Direct Sales segment for the six months ended December 31, 2020 and 2019 are as follows:

in thousands, except performance metrics

Six Months Ended December 31,

Selling, general and administrative expenses

Other expense, net

Net income (loss) before provision for income taxes

Performance Metrics:

Gold ounces sold (1)

Silver ounces sold (2)

Direct Sales ticket volume⁽³⁾

Includes $6.9 million of inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment.

Gross profit percentage, excluding inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, is 12.801% for the period.

Includes $13.1 million of inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment.

Gross profit percentage, excluding inter-segment company sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, is 11.167% for the period.

Gold ounces sold represents the ounces of gold product sold during the period.

Silver ounces sold represents the ounces of silver product sold during the period.

Direct Sales segment ticket volume represents the total number of product orders processed by Goldline and PMPP.

Revenues — Direct Sales

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metrics

Three Months Ended September 30,

Three Months Ended December 31,

Performance Metrics:

1 unchanged sentence

Silver ounces sold

Revenues for the three months ended September 30, 2020 increased $32.3 million, or 161.0%, to $52.4 million from $20.1 million in 2019.

Excluding inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment, revenues were $47.7 million for the three months ended September 30, 2020 and $11.5 million for the three months ended September 30, 2019.

Gold ounces sold for the three months ended September 30, 2020 increased 7,000 ounces, or 70.0%, to 17,000 ounces from 10,000 ounces in 2019.

Silver ounces sold for the three months ended September 30, 2020 increased 139,000 ounces, or 72.8%, to 330,000 ounces from 191,000 ounces in 2019.

On average, the selling prices for gold increased by 44.1% and selling prices for silver increased by 46.1% during the three months ended September 30, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the last three successive quarters .

These factors were brought on by the recent volatility in precious metal prices caused by macroeconomic and other events.

Revenues for the three months ended December 31, 2020 increased $23.8 million, or 136.6%, to $41.3 million from $17.4 million in 2019.

Excluding inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, revenues for the three months ended December 31, 2020 increased $26.5 million or 210.3% to $39.1 million from $12.6 million as compared to 2019.

Gold ounces sold for the three months ended December 31, 2020 increased 6,000 ounces, or 75.0%, to 14,000 ounces from 8,000 ounces in 2019.

Silver ounces sold for the three months ended December 31, 2020 increased 147,000 ounces, or 116.7%, to 273,000 ounces from 126,000 ounces in 2019.

On average, the selling prices for gold increased by 39.8% and selling prices for silver increased by 47.7% during the three months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metrics

Six Months Ended December 31,

Performance Metrics:

Gold ounces sold

Silver ounces sold

Revenues for the six months ended December 31, 2020 increased $56.1 million, or 149.7%, to $93.7 million from $37.5 million in 2019.

Excluding inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, revenues for the six months ended December 31, 2020 increased $62.4 million or 255.7% to $86.8 million from $24.4 million in 2019.

Gold ounces sold for the six months ended December 31, 2020 increased 13,000 ounces, or 72.2%, to 31,000 ounces from 18,000 ounces in 2019.

Silver ounces sold for the six months ended December 31, 2020 increased 286,000 ounces, or 90.2%, to 603,000 ounces from 317,000 ounces in 2019.

On average, the selling prices for gold increased by 42.1% and selling prices for silver increased by 45.6% during the six months ended December 31, 2020 as compared to 2019.

A combination of price volatility, increased demand, and supply constraints led to a significant expansion in premium spreads in the precious metals market during the period.

These factors were brought on by the volatility in precious metal prices caused by macroeconomic and other events.

These conditions are not representative of normal market conditions, and we are uncertain of the duration of these conditions.

Gross Profit — Direct Sales

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

in thousands, except performance metric

Three Months Ended September 30,

Three Months Ended December 31,

Performance Metric:

Direct Sales ticket volume

Gross profit for the three months ended September 30, 2020 increased by $3.9 million, or 249.6%, to $5.5 million from $1.6 million in 2019.

The Company’s profit margin percentage increased by 267.0 basis points or by 33.9% to 10.538% from 7.868% in 2019.

Excluding the impact of inter-segment sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment, the Direct Sales segment's gross profit margin percentage increased by 10.3 basis points or by 0.9% to 11.563% from 11.460% in 2019.

The Direct Sales ticket volume for the three months ended September 30, 2020 increased by 1,131 tickets, or 32.5%, to 4,607 tickets from 3,476 tickets in 2019.

The increase in trading ticket volume was primarily due to higher demand as compared to 2019.

Gross profit for the three months ended December 31, 2020 increased by $4.0 million, or 258.9%, to $5.5 million from $1.5 million in 2019.

The Company’s profit margin percentage increased by 51.7% to 13.346% from 8.798% in 2019.

Excluding the impact of inter-segment sales from the Direct Sales segment to the Wholesale Sales & Ancillary Services segment, the Direct Sales segment's gross profit margin percentage increased by 27.7% to 14.082% from 11.025% in 2019.

The Direct Sales ticket volume for the three months ended December 31, 2020 increased by 2,049 tickets, or 41.8%, to 6,952 tickets from 4,903 tickets in 2019.

The increase in Direct Sales ticket volume was primarily due to higher demand as compared to 2019.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

in thousands, except performance metric

Six Months Ended December 31,

Performance Metric:

Direct Sales ticket volume

Gross profit for the six months ended December 31, 2020 increased by $7.9 million, or 254.2%, to $11.0 million from $3.1 million in 2019.

For the six months ended December 31, 2020, the Company’s profit margin percentage increased by 41.9% to 11.775% from 8.300% in 2019.

The Direct Sales ticket volume for the six months ended December 31, 2020 increased by 3,180 tickets, or 38.0%, to 11,559 tickets from 8,379 tickets in 2019.

The increase in Direct Sales ticket volume was primarily due to higher demand as compared to 2019.

Selling, General and Administrative Expense — Direct Sales

Three Months Ended September 30,

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

Three Months Ended December 31,

Selling, general and administrative

Selling, general and administrative expenses for the three months ended September 30, 2020 decreased $0.2 million, or 10.2%, to $1.9 million from $2.1 million in 2019.

The decrease in selling, general and administrative expenses was primarily due to cost reduction efforts implemented at Goldline, resulting in reductions of legal costs of $0.2 million, computer consulting costs of $0.1 million, and personnel costs of $0.1 million, which were partially offset by increases in advertising costs of $0.2 million.

Other expense — Direct Sales

Three Months Ended September 30,

Selling, general and administrative expenses for the three months ended December 31, 2020 decreased $0.2 million, or 8.4%, to $1.8 million from $2.0 million in 2019.

The decrease in selling, general and administrative expenses was primarily due to cost reduction efforts implemented at Goldline, resulting in reductions of personnel costs of $0.1 million, legal costs of $0.1 million, and computer consulting costs of $0.1 million, which were partially offset by increases in PMPP operating costs of $0.1 million and advertising costs of $0.1 million.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Selling, general and administrative

Selling, general and administrative expenses for the six months ended December 31, 2020 decreased $0.4 million, or 9.3%, to $3.7 million from $4.1 million in 2019.

The decrease in selling, general and administrative expenses was primarily due to cost reduction efforts implemented at Goldline, resulting in reductions of personnel costs of $0.2 million, legal costs of $0.3 million, and computer consulting costs of $0.2 million, which were partially offset by increases in PMPP operating costs of $0.1 million and advertising costs of $0.3 million.

Other income (expense) — Direct Sales

Three Months Ended December 31, 2020 Compared to Three Months Ended December 31, 2019

There was no significant activity for the current or comparable quarterly period.

Six Months Ended December 31, 2020 Compared to Six Months Ended December 31, 2019

Six Months Ended December 31,

Other expense, net

For the three months ended September 30, 2019, other expense of $0.2 million related to a one-time charge in connection with the settlement of the purchase price of Goldline.

There was no activity for the current comparable quarter.

LIQUIDITY AND FIN ANCIAL CONDITION

For the six months ended December 31, 2019, the other expense activity of $0.2 million was related to a one-time charge in connection with the settlement of the purchase price related to the acquisition of Goldline.

There was no activity for the current comparable period.

LIQUIDITY AND FINANCIAL CONDITION

Primary Sources and Uses of Cash

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A substantial portion of our assets are liquid.

As of September 30, 2020, approximately 94.5% of our assets consisted of cash, receivables, derivative assets, secured loans receivables, precious metals held under financing arrangements and inventories, measured at fair value.

As of December 31, 2020, approximately 94.2% of our assets consisted of cash, receivables, derivative assets, secured loans receivables, precious metals held under financing arrangements and inventories, measured at fair value.

Cash generated from the sales of our precious metals products is our primary source of operating liquidity.

Typically, the Company acquires its inventory by:

(i) purchasing inventory from our suppliers by utilizing its own capital and lines of credit;

(i) purchasing inventory from its suppliers by utilizing our own capital and lines of credit;

(ii) borrowing precious metals from its suppliers under short-term arrangements which may bear interest at a designated rate, and (iii) repurchasing inventory at an agreed-upon price based on the spot price on the specified repurchase date.

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Lines of Credit

September 30,

Lines of credit

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acts as joint lead lender and administrative agent and Natixis acts as joint lead arranger and syndication agent for the syndicate.

As of September 30, 2020, 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.

As of December 31, 2020, 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 maturity date of the credit facility is March 26, 2021.

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Our CFC subsidiary also uses the funds drawn under the Trading Credit Facility to finance its lending activities.

The cash generated from our operations typically increases during periods of high demand for our products, market supply constraints, and increased volatility of the price of precious metals.

Notes Payable

September 30,

Notes payable

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

As of September 30, 2020, the consolidated aggregate 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 December 31, 2020, the consolidated aggregate carrying balance of the Notes was $92.9 million (which excludes the $5.0 million Note that the Company retained), and the remaining unamortized loan cost balance was approximately $2.1 million, which is amortized using the effective interest method through the maturity date.

(See Note 14 of the notes to condensed consolidated financial statements.)

Liabilities on Borrowed Metals

September 30,

Liabilities on borrowed metals

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Product Financing Arrangements

September 30,

Product financing arrangements

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such monthly charges are classified as interest expense.

These transactions do not qualify as sales and therefore have been accounted for as financing arrangements and reflected in the condensed consolidated balance sheet as product financing arrangements.

These transactions do not qualify as sales and therefore have been accounted for as financing arrangements and reflected in the condensed consolidated balance sheets as product financing arrangements.

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

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Secured Loans Receivable

September 30,

Secured loans receivable

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(See Note 14 of the notes to condensed consolidated financial statements.) Most of the Company's secured loans are short-term in nature.

The renewal of these instruments is at the discretion of the Company and, as such, provides us with some flexibility in regard to our capital deployment strategies.

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.

The renewal of these instruments is at the discretion of the Company and, as such, provides us with some flexibility in regards to our capital deployment strategies.

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.

In the aggregate, the Company paid $21.2 million in dividends for the six months ended December 31, 2020 .

The majority of the Company’s trading activities involve two day value trades under which payment is received in advance of delivery or product is received in advance of payment.

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The Company uses various short-term financial instruments to manage the rapid cycle of our trading activities from customer purchase order to cash collections and product delivery, which can cause material changes in the amount of cash used in or provided by financing activities on a daily basis.

The following summarizes components of our condensed consolidated statements of cash flows for the three months ended September 30, 2020 and 2019:

September 30,

Net cash used in operating activities

The following summarizes components of our condensed consolidated statements of cash flows for the six months ended December 31, 2020 and 2019 :

Net cash (used in) provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Net cash provided by (used in) financing activities

Our principal capital requirements have been to fund (i) working capital and (ii) investing activity.

Our working capital requirements fluctuate with market conditions, the availability of precious metals and the volatility of precious metals commodity pricing.

Net cash used in operating activities

Operating activities used $98.1 million and $62.5 million in cash for the three months ended September 30, 2020 and 2019, respectively, representing a $35.6 million increase in the use of cash compared to the three months ended September 30, 2019.

This increase in cash used is mainly due to higher usage of working capital balances, offset by higher net income generated from increased demand for precious metal products.

The use of cash due to changes in working capital balances included:

derivative assets, receivables, inventories, and liabilities on borrowed metals, partially offset by an increase in cash due to changes in working capital balances of:

accounts payable and other current liabilities and precious metals held under financing arrangements.

Net cash (used in) provided by operating activities

Operating activities used $207.8 million and provided $43.4 million in cash for the six months ended December 31, 2020 and 2019, respectively, representing a $251.1 million decrease in the source of cash compared to the six months ended December 31, 2019.

This period over period decrease in the source of cash was primarily due to changes in the balances of:

inventories, receivables, liabilities on borrowed metals, derivative assets and income taxes payable;

offset by changes in the balances of:

derivative liabilities, precious metals held under financing arrangements, and secured loans.

Net cash used in investing activities

Investing activities used $25.3 million and $35.0 million in cash for the three months ended September 30, 2020 and 2019, respectively, representing a $9.7 million decrease in the use of cash compared to the three months ended September 30, 2019.

This period over period decrease was due to the change in the use of cash for secured loans and other notes receivables of $7.1 million and $3.0 million respectively.

Net cash provided by financing activities

Financing activities provided $95.4 million and $101.6 million in cash for the three months ended September 30, 2020 and 2019, respectively, representing a $6.2 million decrease in the source of cash compared to the three months ended September 30, 2019.

This period over period decrease was primarily due to a decrease in the source of cash from product financing arrangements of $37.7 million and dividends paid of $10.6 million;

offset by an increase in the source of cash from the Trading Credit Facility of $42.0 million.

Investing activities used $47.2 million and used $38.4 million in cash for the six months ended December 31, 2020 and 2019, respectively, representing a $8.8 million decrease in the source of cash compared to the six months ended December 31, 2019.

This period over period decrease was due to the change in the balance of long term investments of $6.8 million, as the Company acquired a 31.2% ownership interest in a supplier and counterparty, secured loans of $6.2 million, as a higher number of loans were acquired in the current period, partially offset by the change in the balance of other long term assets (long term loans to customers) of $4.5 million.

Net cash provided by (used in) financing activities

Financing activities provided $217.5 million and used $1.7 million in cash for the six months ended December 31, 2020 and 2019, respectively, representing a $219.3 million increase in the source of cash compared to the six months ended December 31, 2019.

This period over period increase was primarily due to changes in the balance of product financing arrangements of $212.6 million, the change in the balance of the Trading Credit Facility of $27.0 million, cash received from employee stock option exercises of $1.4 million;

offset by the payment of two non-recurring special dividends of $21.2 million, in aggregate, and the change in debt issuance costs of $0.6 million.

CAPITAL RESOURCES

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However, we also maintain relationships with major market makers in every major precious metals dealing center, which allows us to enter into contracts with market makers.

Our forwards contracts open at September 30, 2020 are scheduled to settle within 60 days.

Our forwards contracts open at December 31, 2020 are scheduled to settle within 60 days.

Futures positions do not have settlement dates.

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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.

The Company’s net gains on derivative instruments for the three months ended September 30, 2020 and 2019 , totaled $ 78 .

3 million and $2 5 .

1 million , respectively.

These net gains on derivative instruments were substantially offset by the changes in fair market value of the underlying precious metals inventory and open sale and purchase commitments, which is also recorded in cost of sales in the condensed conso lidated statements of income .

The Company’s net losses on derivative instruments for the three months ended December 31, 2020 and 2019, totaled $95.1 million and $11.0 million, respectively.

The Company’s net losses on derivative instruments for the six months ended December 31, 2020 and 2019, totaled $121.7 million and $2.4 million, respectively.

These net losses on derivative instruments were substantially offset by the changes in fair market value of the underlying precious metals inventory and open sale and purchase commitments, which is also recorded in cost of sales in the condensed consolidated statements of income.

The purpose of the Company's hedging policy is to substantially match the change in the value of the derivative financial instrument to the change in the value of the underlying hedged item.

The following table summarizes the results of our hedging activities, showing the precious metal commodity inventory position, net of open sale and purchase commitments, which is subject to price risk, compared to change in the value of the derivative instruments as of September 30, 2020 and June 30, 2020:

September 30,

Precious metals held under financing arrangements

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We regularly review the creditworthiness of our major counterparties and monitor our exposure to concentrations.

At September 30, 2020, we believe our risk of counterparty default is mitigated based on our evaluation of the creditworthiness of our major counterparties, the strong financial condition of our counterparties, and the short-term duration of these arrangements.

At December 31, 2020, we believe our risk of counterparty default is mitigated based on our evaluation of the creditworthiness of our major counterparties, the strong financial condition of our counterparties, and the short-term duration of these arrangements.

Commitments and Contingencies

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OFF-BALANCE SHEET ARRANGEMENTS

As of September 30, 2020 and June 30, 2020, we had the following outstanding sale and purchase commitments and open forward and future contracts, which are normal and recurring, in nature:

September 30,

As of December 31, 2020 and June 30, 2020, we had the following outstanding sale and purchase commitments and open forward and future contracts, which are normal and recurring, in nature:

Purchase commitments

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The Company records commodity forward and futures contracts at the fair value, which is the difference between the market price of the underlying metal or contract measured on the reporting date and the trade amount measured on the date the contract was transacted.

The fair value of the open derivative contracts are shown as a component of derivative assets or derivative liabilities in the accompanying condensed consolidated balance sheets.

The fair value of the open derivative contracts is shown as a component of derivative assets or derivative liabilities in the accompanying condensed consolidated balance sheets.

The Company enters into the derivative forward and future transactions solely for the purpose of hedging its inventory holding risk, and not for speculative market purposes.

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The Company records the derivatives at the trade date, and any corresponding unrealized gains or losses are shown as a component of cost of sales in the condensed consolidated statements of income.

We adjust the carrying value of the derivatives to fair value on a daily basis until the transactions are physically settled.

We adjust the carrying value of the derivatives to fair value daily until the transactions are physically settled.

(See Note 11 of the notes to condensed consolidated financial statements.)

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(iii) determine the transaction price;

(iv) allocate the transaction price to the perfor mance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

(iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

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.

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The daily changes in the fair market value of our inventory are offset by daily changes in the 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.

While the premium component included in inventory is marked-to-market, our commemorative coin inventory, including its premium component, is held at the lower of cost or net realizable value, because the value of commemorative coins is influenced more by supply and demand determinants than on the underlying spot price of the precious metal content of the commemorative coins.

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

Goodwill and Other P urchased Intangible Assets

Goodwill and Other Purchased Intangible Assets

We evaluate goodwill and other indefinite-lived intangibles for impairment annually 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.

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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 more likely than not that the fair value of the indefinite-lived intangible asset is less than its carrying amount.

If the Company determines that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company is not required to perform any additional tests in assessing the asset for impairment.

tests in assessing the asset for impairment.

However, if the Company concludes otherwise or elects not to perform the qualitative assessment, then it is required to perform a quantitative analysis to determine if the fair value of an indefinite-lived intangible asset is less than its carrying value.

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For a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, on our financial position or results of operations, see Note 2 of the notes to condensed consolidated financial statements.

QUANTITATIVE AND QUALITATI VE DI SCLOSURES ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable to smaller reporting companies.

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 2. Management’s Discussion and Analysis