A-Mark Precious Metals
Annual Report 2019

Plain-text annual report

Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549__________________________________________________ FORM 10-K__________________________________________________ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934For the Fiscal Year Ended June 30, 2019Commission File Number: 001-36347__________________________________________________ A-MARK PRECIOUS METALS, INC.(Exact name of registrant as specified in its charter)__________________________________________________Delaware(State of Incorporation) 11-2464169(IRS Employer I.D. No.)2121 Rosecrans Ave. Suite 6300El Segundo, CA 90245(Address of principal executive offices)(Zip Code)(310) 587-1477(Registrant’s Telephone Number, Including Area Code)__________________________________________________ Securities registered under Section 12(b) of the Exchange Act:Title of each classCommon Stock, $0.01 par value Name of each exchange on which registeredNASDAQ Global Select MarketSecurities registered under Section 12 (g) of the Exchange Act: None__________________________________________________ Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes. o No. þ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes. o No. þ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes. þ No. o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File requiredto be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorterperiod that the registrant was required to submit and post such files). Yes. þ No. o Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to thebest of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendmentto this Form 10-K. o Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth companyin Rule 12b-2 of the Exchange Act.Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þEmerging growth company oIf an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any newor revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes. o No. þ Aggregate market value of registrant’s common stock held by non-affiliates of the registrant on December 31, 2018, based upon the closing price of Common Stock on suchdate as reported by NASDAQ Global Select Market, was approximately $53,900,591. Shares of common stock known to be owned by directors and executive officers of theRegistrant subject to Section 16 of the Securities Exchange Act of 1934 are not included in the computation. No determination has been made that such persons are “affiliates”within the meaning of Rule 12b-2 under the Exchange Act. As of September 6, 2019, the registrant had 7,031,450 shares of common stock outstanding, par value $0.01 per share. A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESANNUAL REPORT ON FORM 10-KFor the Year Ended June 30, 2019TABLE OF CONTENTS PagePART I Item 1.Description of Business 3 Item 1A.Risk Factors 10 Item 1B.Unresolved Staff Comments 18 Item 2.Properties 18 Item 3.Legal Proceedings 19 Item 4.Mine Safety Disclosures 19PART II Item 5.Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 20 Item 6.Selected Financial Data 21 Item 7.Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 7A.Quantitative and Qualitative Disclosures About Market Risk 46 Item 8.Consolidated Financial Statements and Supplementary Data 47 Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 95 Item 9A.Controls and Procedures 95 Item 9B.Other Information 96PART III Item 10.Directors, Executive Officers and Corporate Governance 96 Item 11.Executive Compensation 96 Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 96 Item 13.Certain Relationships and Related Transactions, and Director Independence 96 Item 14.Principal Accountant Fees and Services 96PART IV Item 15.Exhibits and Financial Statement Schedules 96 Signatures 97Exhibit Index 982Table of Contents PART I — FINANCIAL INFORMATIONITEM 1. DESCRIPTION OF BUSINESSOverviewA-Mark, also referred to (together with its subsidiaries) as "we", "us" and the "Company", is a full-service precious metals trading company. It is awholesaler of gold, silver, platinum, and palladium bullion and related products, including bars, wafers, grain, and coins. A-Mark also:• distributes gold and silver coins and bars from sovereign and private mints; • provides financing and other services relating to the purchase and sale of bullion and numismatics; • offers secure storage for precious metal products; • provides our customers a platform of turn-key logistics services; • provides a variety of custom fabricated gold and silver bullion and other specialty products through sovereign and private mintsuppliers and its mint operations; and • sells directly to the retail community through its Goldline subsidiary.A-Mark believes it has one of the largest customer bases in each of its markets and provides one of the most comprehensive offerings of products andservices in the precious metals trading industry. Our customers include mints, manufacturers and fabricators, refiners, coin and bullion dealers, e-commerceretailers, banks and other financial institutions, commodity brokerage houses, industrial users of precious metals, investors, collectors, and retail customers.We serve customers on five continents, with over 10% of our customers located outside the United States.A-Mark believes its businesses largely function independently of the price movement of the underlying commodities. However, factors such asglobal economic activity or uncertainty and inflationary trends, which affect market volatility, have the potential to impact demand, volumes, and margins.HistoryA-Mark was founded in 1965 and has grown into a significant participant in the bullion and coin market. A-Mark became a wholly-ownedsubsidiary of Spectrum Group International, Inc. ("SGI") in 2005. In March 2014, SGI distributed all of the shares of common stock of A-Mark to itsstockholders, effecting a spinoff of A-Mark from SGI. As a result of this distribution, which we refer to as the spinoff, the Company became a publicly tradedcompany independent from SGI. Over the years, A-Mark has been steadily expanding its products and services. In 1986, A-Mark became an authorized purchaser of gold and silverbullion coins struck by the United States Mint. Similar arrangements with other sovereign mints followed, so that by the early 1990s, A-Mark had (andcontinues to have) relationships with all major sovereign mints offering bullion coins and bars internationally.In 2005, the Company launched Collateral Finance Corporation ("CFC"), a wholly-owned subsidiary, for the purpose of making secured loansprimarily collateralized by bullion and numismatic material. CFC has been steadily expanding the value of its aggregate loan portfolio and number of itscustomers. CFC has achieved its growth through both loan origination and acquisitions of loan portfolios purchased from wholesale customers of A-Mark.The Company opened an overseas office in Vienna, Austria in 2009, for the purpose of marketing A-Mark's goods and services in the internationalmarkets. The office operates through A-Mark Trading AG ("AMTAG"), a wholly-owned subsidiary of the Company. In 2012, the Company formedTranscontinental Depository Services, LLC. ("TDS"), a wholly-owned subsidiary, for the purpose of providing customers with turn-key global storagesolutions for their precious metals and precious metal products.In July 2015, the Company launched its Las Vegas-based logistics fulfillment center, A-M Global Logistics, LLC. ("AMGL" or "Logistics"), awholly-owned subsidiary, for the purpose of providing our customers a platform of complementary services, including packaging, shipping, handling,receiving, processing, and inventorying of precious metals and custom coins on a secure basis.In August 2016, the Company formed a joint venture, AM&ST Associates, LLC. ("AMST"), with SilverTowne, L.P., an Indiana-based fabricator ofsilver bullion products, for the purpose of acquiring and operating SilverTowne, L.P.'s minting business unit ("SilverTowne Mint" or the "Mint"). We own amajority interest in AMST. Since the formation of AMST, the Company has invested in minting equipment and fabrication tools to expand outputcapabilities, increase production efficiencies and improve product quality, and has leveraged the Mint’s fabrication capabilities and coin die portfolio toexpand our custom coin programs, as well as to introduce new custom products for individual customers.3Table of Contents In August 2017, the Company acquired substantially all of the assets of Goldline, LLC, a direct retailer of precious metals to the investorcommunity, and now conducts those operations through its subsidiary Goldline, Inc. ("Goldline"). Goldline LLC. was formed in 1960 and became well-known to collectors and investors for its world-wide distribution of gold, silver, and platinum bullion coins and bars, in part, due to its radio, internet, andtelevision marketing and customer service outreach programs which have historically led to a significant base of repeat customers. Since our acquisition,Goldline has expanded its product offerings, improved its delivery times, and provided additional financing options to its customers Also, Goldline hasinitiated a customer service program to re-engage with Goldline LLC's inactive customers and has invested in technological solutions to reduce the cost of itscustomer service outreach programs. Furthermore, Goldline has implemented a scaled marketing approach to better align with varying levels of marketdemands, and has consolidated the predecessor-company's trading, hedging, distribution, and customer service functions within A-Mark.In May 2018, the Company formed AM IP LLC. ("AMIP"), a wholly owned subsidiary of Goldline, for the purpose of managing certain intellectualproperty (“IP”). The IP assets managed by AMIP include a customer list and a sales lead data base that was contributed by Goldline. AMIP monetizes its IPrights through royalty agreements that license its IP rights to counterparties.In September 2018, the Company formed AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, for the purpose of issuing andadministering privately placed notes, which are collateralized by secured loans (contributed from CFC) and bullion product (purchased from A-Mark). Thenotes were Secured Senior Term Notes (collectively, the "Notes"): Series 2018-1, Class A in the aggregate principal amount of $72.0 million and SecuredSubordinated Term Notes, Series 2018-1, Class B in the aggregate principal amount of $28.0 million. The Class A Notes bear interest at a rate of 4.98% andthe Class B Notes bear interest at a rate of 5.98%. The Notes have a maturity date of December 15, 2023.In the fourth quarter of 2019, Goldline entered into a joint venture agreement with one of the Company's related parties to form Precious MetalsPurchasing Partners, LLC, ("PMPP"), a 50% owned subsidiary, primarily for the purpose of purchasing precious metals from the partners' retail customers forresale back into the market place. PMPP was capitalized in fiscal 2019, but did not commence operations until fiscal 2020. Metals purchased by the jointventure will be sold to the partners or their affiliates per terms of the joint venture agreement.Business StrategyThrough strategic relationships with its customers and suppliers and vertical integration across its markets, A-Mark seeks to grow its businessvolume, expand its presence in non-U.S. markets around the globe, and enlarge its offering of complementary products and services. A-Mark seeks tocontinue its expansion by building on its strengths and what it perceives to be its competitive advantages. These include:• integrated operations that span trading, distribution, logistics, minting, storage, hedging, financing, and consignment products andservices; • an extensive and varied customer base that includes banks and other financial institutions, coin dealers, collectors, private investors,retail customers, investment advisors, industrial manufacturers, refiners, sovereign and private mints, and mines; • ability to offer secured financing to customers; • secure storage and turn-key logistic services for precious metals products; • access to primary market makers, suppliers, refiners and government mints that provide a dependable supply of precious metals andprecious metal products; • minting operations which produce bullion and custom coins, allowing for a ready response to changing market demands; • ability to design and fabricate proprietary silver products for customers ; • the largest precious metals dealer network in North America; • depository relationships in major financial centers around the world; • experienced traders who effectively manage A-Mark's exposure to commodity price risk; and • a strong management team, with over 100 years of collective industry experience.4Table of Contents Business SegmentsThe Company conducts its operations through three reportable segments: (1) Wholesale Trading & Ancillary Services, (2) Secured Lending and (3)Direct Sales. Each of these reportable segments represents an aggregation of operating segments that meets the aggregation criteria set forth in the SegmentReporting Topic 280 of the FASB Accounting Standards Codification (“ASC”). (See Note 18 of the Notes to Consolidated Financial Statements.)Prior to the fiscal quarter ended June 30, 2018, the operations of CFC, which now comprise our Secured Lending segment, had been considered partof the Wholesale Trading and & Ancillary Services segment.Wholesale Trading & Ancillary ServicesA-Mark operates through several business units that comprise the Wholesale Trading & Ancillary Services segment, including Industrial, Coin andBar, Trading and Finance, TDS, Logistics, and Mint.Industrial. Our Industrial unit sells gold, silver, platinum, and palladium to industrial and commercial users. Customers include coin fabricators suchas mints and industrial manufacturers, encompassing electronics and component parts companies and refiners. Depending on the intended usage, the metalsare either investment or industrial grade and are generally in the form of bars or grains.Coin and Bar. Our Coin and Bar unit deals in over 200 different products, including gold and silver coins from around the world and gold, silver,platinum and palladium bars and ingots in a variety of weights, shapes and sizes. Our customers include coin and bullion dealers, banks and other financialinstitutions, commodity brokerage houses, manufacturers, investors, investment advisors, and collectors who qualify as “eligible commercial entities” and“eligible contract participants,” as those terms are defined in the Commodity Exchange Act.We are an authorized distributor (and, in the case of the United States Mint, an authorized purchaser) of gold and silver coins for all of the majorsovereign mints and various private mints. The sovereign mints include the United States Mint, the Australian (Perth) Mint, the Austrian Mint, the RoyalCanadian Mint, the China Mint, Banco de Mexico, the South African Mint (Rand Refinery) and the Royal Mint (United Kingdom). We purchase and takedelivery of coins from the mints for resale to coin dealers, financial institutions, and other qualified purchasers.Our distribution and purchase agreements with the mints are non-exclusive, and may be terminated by the mints at any time, although in practice ourrelationship with the mints are long-standing, in some cases, as with the U.S. Mint, extending back for over 20 years. In some cases, we have developedexclusive products with sovereign and private mints for distribution through our dealer network.In our Industrial and Coin and Bar units, orders are taken telephonically and on an electronic trading platform that can be accessed by qualifiedwholesale customers at www.amark.com. Pricing is generally based on screen quotes for bullion transactions in the spot market, with two-day settlement,although special pricing and extended settlement terms are also available. For example, a customer can leave an order with A-Mark to purchase at a specifiedprice below the current market price or an order to sell at a specified price above the current market price. Almost all customers in these units take physicaldelivery of the precious metal. Product is shipped upon receipt of payment, except where the purchase is financed under credit arrangements between A-Markand the customer. We have relationships with precious metal depositories around the world to facilitate shipment of product from our inventory to thesecustomers, in many cases for next day delivery. Product may either be shipped to the customer's location or delivered to a depository or other storage facilitydesignated by the customer. The Company also periodically loans metals to customers on a short-term consignment basis, and may charge interest fees basedon the value of the metals loaned. Such metal inventories are removed at the time the customers elect to price and purchase the metals, and the Companyrecords a corresponding sale and receivable.Trading and Finance. Our Trading and Finance units engage in commodity hedging as well as borrowing and lending transactions in support of ourIndustrial and Coin and Bar units.The Trading unit hedges the commodity risk on A-Mark's inventory in order to protect A-Mark from market price fluctuations. A-Mark maintainsrelationships with major market-makers and multiple futures brokers in order to provide a variety of alternatives for its hedging needs. Our traders employ acombination of future and forward contracts to hedge our market exposure. Because it seeks to substantially hedge its market exposure, A-Mark believes thatits business largely functions independently of the price movements of the underlying commodities. Through its hedging activities, A-Mark may also earncontango yields, in which futures price are higher than the current spot prices, or backwardation yields, in which futures prices are lower than the spot prices.A-Mark also offers precious metals price quotes in a number of foreign currencies.Our Finance unit engages in precious metals borrowing and lending transactions and other customized financial transactions with or on behalf of ourcustomers and other counterparties. These arrangements range from simple hedging structures to complex inventory finance arrangements and forwardpurchase and sale structures, tailored to the needs of our customers.5Table of Contents TDS. Our Transcontinental Depository Services LLC. ("TDS") subsidiary provides storage solutions for precious metals and numismatic coins forfinancial institutions, dealers, investors and collectors worldwide. TDS contracts on behalf of our clients with independent secure storage facilities in theUnited States, Canada, Europe, Singapore and Hong Kong, for either fully segregated or allocated storage. We assist our clients in developing appropriatestorage options for their particular requirements, and we manage the operational aspects of the storage with the third party facilities on our clients' behalf.TDS’s marketing efforts are conducted both in partnership with A-Mark, including though its dedicated website www.tdsvaults.com.Logistics. Our A-M Global Logistics LLC. ("Logistics") subsidiary, located in Las Vegas, Nevada, supports our wholesale trading business byproviding a significant amount of the secured storage and shipping and delivery services that had historically been outsourced to third-party depositories intheir various locations. By consolidating those operations into one central location under our control, we have reduced our dependence on third-party serviceproviders while enhancing quality control and reducing operating costs. Logistics also provides turn-key logistics services to our customers engaged in theretail business. We provide these customers hedging, inventory handling, packaging, storage, and drop-shipping services.AMTAG. Our A-Mark Trading AG. ("AMTAG") subsidiary promotes the Company's products and services to international markets.Mint. In August 2016, the Company formed AMST, a joint venture with SilverTowne, L.P., an Indiana-based producer of minted silver. AMSTacquired the entire minting operations (referred to as SilverTowne Mint or the "Mint" business unit) of SilverTowne, L.P., with the goal of providing greaterproduct selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to fabricated silver productsduring volatile market environments. Since the acquisition, A-Mark has leveraged SilverTowne Mint’s fabrication capabilities and coin-die portfolio toexpand its custom coin programs, as well as to introduce new custom products for individual customers. As of June 30, 2019, the Company and SilverTowne,L.P. owned 69% and 31%, respectively, of AMST. (See Note 19 of the Notes to Consolidated Financial Statements.) The Mint markets the products itproduces at www.silvertowne.com.Secured LendingThe Company operates its Secured Lending segment through its wholly-owned subsidiary, CFC who in turn owns AMCF. CFC and AMCF havebeen operating since fiscal years 2005 and 2019, respectively.CFC is a California licensed finance lender that originates and acquires commercial loans secured by bullion and numismatic coins. CFC's customersinclude coin and precious metal dealers, investors, and collectors. As of June 30, 2019, the aggregate balance of CFC's secured loans was approximately$125.3 million. The balance is comprised of approximately 59.5% of loans acquired from third-parties and approximately 40.5% of loans originated by CFC.AMCF is a special purpose entity whose sole activity consists of operating, owning, and financing indenture assets. The Notes are primarily payablefrom, and secured by, (i) precious metals obtained by AMCF, and (ii) a portfolio of loans collateralized by precious metals, which loans were originated byeither CFC or acquired by CFC from third parties and conveyed by CFC to AMCF. The indenture requires AMCF to maintain a specified level of collateral.The indenture also provides that AMCF’s assets are not to be commingled with those of CFC or A-Mark (or any affiliate), and that AMCF is to maintainseparate books and records.General. The secured loans that CFC issues consist of on-demand loans and loans with a term of three months to 364 days, with a typical term ofapproximately six months. Repayment of the loans can be made at any time without penalty. Because the loans are of relatively short duration, CFC does nothave significant exposure to interest rate fluctuations, even in a rising interest rate environment. Loans carried by CFC range in size from $15,000 to $10.0million.All loans are fully secured by bullion or numismatics coins (or in rare cases, by other acceptable collateral.) TDS, on behalf of CFC, takes physicalcustody of the coins or bullion collateralizing the loans. CFC requires loan-to-value ("LTV") ratios of between 50% and 85%. LTV ratio refers to the principalamount of the loan divided by the liquidation value of the collateral, as conservatively estimated by CFC for numismatic loans and based on daily spotmarket prices for bullion loans. The LTV ratio varies with the nature of the collateral, with CFC requiring, for example, a higher LTV ratio for bullion than forrare coins. If, because of fluctuations in the market price of the pledged collateral, the LTV ratio on a loan increases above a prescribed maximum ratio,typically 85%, CFC can make a margin call on the loan. If the borrower does not meet the margin call, either by wiring payment or supplying additionalcollateral, CFC is authorized to sell the collateral, which it does through its A-Mark affiliates. Because of its conservative lending practices, CFC has neverexperienced losses of principal on its loans.Origination Activity. CFC's origination activities are complementary to the Company’s coin and bullion businesses, and afford our customers aconvenient means of financing their inventory or collections. CFC also attempts to leverage the worldwide storage capabilities of its TDS affiliate by offeringclients TDS’s asset protection services in connection with the loans. CFC’s marketing efforts for its origination activity are conducted both in partnershipwith A-Mark, particularly with respect to dealers, and independently, including though its dedicated website www.cfcgoldloans.com. Interest rates on loansoriginated by CFC are determined based on current market conditions, borrower profile and type or mix of collateral. CFC also offers a variety of custom6Table of Contents loan services to its origination clients, including renewal options, options to increase loan size, financing arrangements tailored to facilitate participation innumismatic auctions, and revolving loan arrangements. CFC services the loans that it originates.Acquisition Activity. CFC also acquires portfolios of loans secured by bullion and numismatics coins from third party originators. The loansacquired by CFC are sold subject to customary representations and warranties for loan portfolios of this type, and must comply with CFC’s criteria for qualityof collateral, LTV ratio, term and interest rate. Upon acquisition of a loan portfolio, CFC takes physical possession of the collateral securing the loans. In theevent that a loan is non-performing, the collateral will typically be liquidated by A-Mark on behalf of the originator in order to retire the loan. Typically,loan portfolios acquired by CFC are serviced by the originator for a fee.Financing Activity. CFC has historically financed its loan origination and acquisition activity primarily through A-Mark's demand line of creditwith a syndicate of several financial institutions. The Notes, issued by AMCF in September 2018, have provided an additional source of funding for CFC'sloan originations and acquisitions of loan portfolios from third parties.Direct SalesThe Company operates its Direct Sales segment through its wholly-owned subsidiary Goldline Inc. (“Goldline”). The Company acquired thebusiness in August 2017 through an asset purchase transaction with Goldline LLC. Goldline LLC. had been in operation since 1960.Direct-to-Client Sales. Goldline is a direct retailer of precious metals to the investor community. Goldline markets its precious metal productsprimarily on radio and the internet, as well as through telephonic sales efforts, particularly to Goldline’s repeat customers. Online orders are taken on anelectronic trading platform that can be accessed by qualified retail customers at www.goldline.com.The Company acquired the Goldline business with the objective of enhancing the Company’s distribution capabilities by adding a direct-to-clientdistribution channel. The acquisition has diversified the product and services offered to Goldline customers by providing them access to the Company’swider assortment of precious metal coins and bars, and TDS’s storage and asset protection services. Furthermore, since the acquisition, the Companyrealigned the cost structure of the Goldline's business and has implemented a new customer-facing website to promote sales and enhance profitability.Goldline customers are required to open an account with Goldline and enter into an account agreement. The agreement specifies the terms andconditions of purchase and explains the availability of certain programs and services offered by Goldline to its customers.Intellectual Property Licensing. Goldline, through its wholly-owned subsidiary AMIP, licenses IP rights through royalty agreements to increase theutilization of its sales leads and customer lists.Buy-Back Purchases. Goldline, through its 50%-owned subsidiary PMPP, acquires precious metals from retail customers (known as "buy-backpurchases") in order to diversify its supply chain of product offerings and prices for its affiliates.LiquidityOur business depends substantially on our ability to obtain financing for our operations. Sources of cash generated from operating activities includereceipts upon the sales of precious metals, and cash collected from interest payments on secured loans.Sources of cash provided by financing activities are our uncommitted line of credit, fixed interest rate notes, and other structured financing products.The Company’s line of credit provides it with the liquidity to buy and sell billions of dollars of precious metals annually. As of June 30, 2019, A-Mark'suncommitted line of credit that provides access up to $260.0 million, featuring a $210.0 million base with a $50.0 million accordion option, is used to fund asubstantial portion of the operations of the Company. In addition, the Company issued fixed rate notes in September 2018 with an aggregate principalamount of $100.0 million, having a maturity of December 2023. The proceeds upon issuance of the notes were used to fund the acquisition of CFC's securedloans and other operating activities. The Company also generates funds from other finance products that include product financing arrangements withcustomers, whereby the Company sells its inventory with an option to repurchase, and through precious metal borrowing and leasing arrangements with itssuppliers.Market Making ActivityWe act as a principal market maker, maintaining a two-way market for buying and selling precious metals. This means we both sell product to andpurchase product from our customers.InventoryWe maintain a substantial inventory of bullion and coins in order to provide our customers with selection and prompt delivery. We acquire productfor our inventory in the course of our trading activities with our customers, directly from government and private mints, mines, and refiners and fromcommodities brokers and dealers, privately and in transactions on established commodity exchanges. In the fourth quarter of 2019, the Company formed itsPMPP joint venture to conduct precious metal7Table of Contents purchases in order to diversify its supply chain of product offerings and prices for its affiliates.A-Mark’s precious metals inventories are subject to market value changes created by change in the underlying commodity price, as well as supplyand demand of the individual products the Company trades. Except for certain lower of cost or net realizable value products, our inventory is marked-to-market daily for accounting and financial reporting purposes. A-Mark’s policy is to remain substantially hedged as to its inventory position and itsindividual sale and purchase commitments. A-Mark seeks to minimize the effect of price changes of the underlying commodity through the use of financialderivative instruments, such as forward and futures contracts.Sales and MarketingWe market to our products and services to our wholesale customers primarily through our offices in El Segundo and Los Angeles, California, andVienna, Austria, our websites, and our dealer network, which we believe is the largest of its kind in North America. The dealer network consists of over 700independent precious metal and coin companies, with whom we transact on a non-exclusive basis. The arrangements with the dealers vary, but generally thedealers acquire product from us for resale to their customers. In some instances, we deliver bullion to the dealers on a consignment basis. We also participatefrom time to time in trade shows and conventions, at which we promote our products and services. As a vertically integrated precious metals concern, a keyelement of our marketing strategy is being able to cross-sell our products and services to customers within our various business units.Consistent with the marketing strategy for our wholesale customers, we market our secured loan products and services to customers primarilythrough our dealer network and by participating in trade shows and conventions.We market our products and services to our retail customers primarily through our office in Los Angeles, California. The Company reaches its retailinvestor customer base primarily on radio and the internet, as well as through telephonic sales efforts.Operational SupportThe Wholesale Trading & Ancillary Services segment maintains administrative and operational support related to its trading, hedging, and financeproduct operations at its headquarters in El Segundo, California. We believe that our existing administrative and operational support infrastructure has thecapacity to scale up with our business activities. We store our inventories of bullion and numismatics at third party depositories in major financial centersaround the world and at our facility in Las Vegas, Nevada.The Secured Lending segment also maintains administrative support at its headquarters in El Segundo, California for the processing of its originatedloans, including billing of interest, managing margin calls, and tracking of precious metal collateral. However, for the processing administration of loans thatare acquired from a third-party (usually a customer of A-Mark), customer invoices are typically processed by the originating dealer of the loan portfolio,through a servicing arrangement, for a fee based on the interest rate charged to the end-consumer. The operational support (specifically, the collateral custodyand security) is managed by our logistics business unit. Additionally, A-Mark provides funds to CFC to purchase additional bullion and numismatic securedloans.The Direct Sales segment maintains administrative and operational support at its office in Los Angeles, California for soliciting and processing itretail orders. The Company's Trading, Finance, and Logistics business units provide supporting services such as hedging and order fulfillment.With a third party software developer, we have created a proprietary trading program, referred to as the Metals Trading System ("MTS"). ThroughMTS we are able to input, process, track and document our trading activity, including complex hedging and similar transactions. Additionally, with theobjective of improving transactional ease and efficiency, we have developed and implemented web-portal processing ordering systems that operate 24-hours,7-days per week. A-Mark's web-portal processes orders from pre-approved wholesale customers; Goldline's web-portal processes retail customer orders that arebelow a certain dollar amount; and CFC's web-portal processes secured loan applications.Supplier and Customer ConcentrationsA-Mark buys a majority of its precious metals from a limited number of suppliers. The Company believes that numerous other suppliers are availableand would provide similar products on comparable terms. In addition, through the Company's Mint business unit, it has the capabilities to design and mintsilver custom bullion-coins to respond to changing market demands.For the year ended June 30, 2019, the Company had one customer, HSBC Bank USA, comprising more than 10% of our revenues. (See Note 17 ofthe Notes to Consolidated Financial Statements.) The Company's largest customers generally have significant forward contract sales activity (as opposed tothose customers with whom we principally have physical trading activity), which are entered to hedge the Company's commodity holding risks, and not forspeculative purposes.8Table of Contents CompetitionA-Mark's activities cover a broad spectrum of the precious metals industry, with a concentration on the physical market. We service public,industrial, and private sector consumers of precious metals which include industrial manufacturers, refiners, minting facilities, banks, brokerage houses, andprivate investors. We frequently face different competitors in each area, and it is not uncommon for a customer and/or a supplier in one market segment to bea competitor in another. Our competitors may offer more favorable pricing or services considered to be superior to ours.Our Secured Lending segment's market is believed to have limited direct competition. We believe factors, including access to capital, secure storagefacilities, bullion and numismatic expertise, and other related services and offerings, provide us a competitive advantage in the marketplace.Our Direct Sales' market environment is highly competitive and highly concentrated with a significant number of active loyal customers, from whomwe seek to expand product and service offerings and generate new customers.Our competitors may offer more favorable pricing or services considered to be superior to ours.Trading SeasonalityWhile our precious metals trading business is not seasonal, we believe it is directly impacted by the perception of market trends and globaleconomic activity. Historically, anticipation of increases in the rate of inflation, interest rates as well as anticipated devaluation of the U.S. dollar, haveresulted in higher levels of interest in precious metals as well as higher prices for such metals.EmployeesAs of June 30, 2019, we had 186 employees, with 184 located in North America, and two located in Europe; all except seven of these employeeswere considered full-time employees. We regard our relations with our employees as good.Corporate InformationA-Mark was founded in 1965 as a New York corporation. In January 2014, the Company was reincorporated in Delaware. Our executive offices arelocated at 2121 Rosecrans Avenue, Suite 6300, El Segundo CA 90245. Our telephone number is (310) 587-1477, and our website is www.amark.com.Through this website, we make available, free of charge, all of our filings with the Securities and Exchange Commission ("SEC"), including those under theExchange Act of 1934, as amended ("Exchange Act"). Such reports are made available on the same day that they are electronically filed with, or furnished to,the SEC. In addition, copies of our Code of Business Conduct and Ethics for Employees, Code of Business Conduct and Ethics for Senior Financial and OtherOfficers, and Code of Business Conduct and Ethics for Directors are available through this website, along with other information regarding our corporategovernance policies.Geographic InformationSee Note 18 of the Notes to Consolidated Financial Statements for information about Company's geographic operations.9Table of Contents ITEM 1A. RISK FACTORSRisks Relating to Our Business GenerallyOur business is heavily dependent on our credit facility.Our business depends substantially on our ability to obtain financing for our operations. The Trading Credit Facility (as further described anddefined below) provides the Company with the liquidity to buy and sell billions of dollars of precious metals annually. The Trading Credit Facility is anuncommitted demand facility provided by a syndicate of financial institutions (the “Trading Credit Lenders”), and is currently scheduled to mature onMarch 27, 2020. A-Mark routinely uses funds drawn under the Trading Credit Facility to purchase metals from its suppliers and for operating cash flowpurposes. Our CFC subsidiary also uses the funds drawn under the Trading Credit Facility to finance its lending activities.Pursuant to the terms of the Trading Credit Facility, each Trading Credit Lender may, at any time in its sole discretion (subject to certain noticerequirements), decline to make loans to us. If we are unable to access funds under the Trading Credit Facility, we may be limited in the manner in which weconduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs.The Trading Credit Facility requires us to maintain certain financial ratios and to comply with various operational and other covenants. Upon theoccurrence of an event of default under the Trading Credit Facility that was not cured or waived pursuant to the terms of the Trading Credit Facility, theTrading Credit Lenders could elect to declare all amounts outstanding under the Trading Credit Facility to be due and payable immediately. Further, TradingCredit Lenders holding 50% or more of the indebtedness under the Trading Credit Facility may require us to repay all outstanding indebtedness under theTrading Credit Facility at any time, even if we are in compliance with the financial and other covenants under the Trading Credit Facility. We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments, includingthe Trading Credit Facility, upon demand or acceleration, or at maturity, or that we would be able to refinance or restructure the payments under the TradingCredit Facility. The failure of A-Mark to renew or replace the Trading Credit Facility under such circumstances would reduce the financing available to usand could limit our ability to conduct our business, including the lending activity of our CFC subsidiary. There can be no assurance that we could procurereplacement financing on commercially acceptable terms on a timely basis, or at all. We have pledged a significant portion of our assets as collateral underthe Trading Credit Facility, and if we were unable to repay the amounts outstanding thereunder, the administrative agent under the Trading Credit Facilitycould proceed against the collateral granted to secure such indebtedness.We are subject to fluctuations in interest rates based on the variable interest terms of the Trading Credit Facility and we may not be able to passalong to our customers and borrowers some or any part of an increase in the interest that we are required to pay under the Trading Credit Facility. Amountsunder the Trading Credit Facility bear interest based on one month LIBOR plus (i) 2.50% for revolving credit line loans and (ii) 4.50% for loans extended inexcess of the then-available revolving credit line. The LIBOR was approximately 2.40% as of June 30, 2019.Uncertainty about the future of LIBOR may adversely affect our business.Borrowings under our revolving credit agreement bear interest at rates that are calculated based on LIBOR. On July 27, 2017, the Chief Executive ofthe United Kingdom Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit ratesfor the calibration of LIBOR to the administrator of LIBOR after 2021. The announcement indicates that the continuation of LIBOR in its current form cannotbe assured after 2021. It is impossible to predict whether and to what extent banks will continue to provide LIBOR submissions to the administrator ofLIBOR or whether any additional reforms to LIBOR may be enacted in the United Kingdom or elsewhere. Although alternative reference rates have beenproposed, it is unknown whether these alternative reference rates will attain market acceptance as replacements of LIBOR.If LIBOR ceases to exist, the method and rate used to calculate our variable-rate debt in the future may result in interest rates and/or payments thatare higher than, lower than, or that do not otherwise correlate over time with the interest rates and/or payments that would have been made on our obligationsif LIBOR was available in its current form. There is currently no definitive information regarding the future utilization of LIBOR or of any particularreplacement rate. As such, the potential effect of any such event on our cost of capital, financial results, and cash flows cannot yet be determined.We could suffer losses with our financing operations.We engage in a variety of financing activities with our customers:•Receivables from our customers with whom we trade in precious metal products are effectively short-term, non-interest bearing extensionsof credit that are, in certain cases, secured by the related products maintained in the Company’s possession or by a letter of credit issued onbehalf of the customer. On average, these receivables are outstanding for periods of between 8 and 9 days.10Table of Contents •The Company operates a financing business through CFC that makes secured loans at loan-to-value ratios—principal loan amountdivided by the liquidation value, as conservatively estimated by management, of the collateral—of, in most cases, 50% to 85%. Theseloans are both variable and fixed interest rate loans, with some maturities on-demand and others from three to twelve months.•We make advances to our customers on unrefined metals secured by materials received from the customer. These advances are limited to aportion of the materials received.•The Company makes unsecured, short-term, non-interest bearing advances to wholesale metals dealers and government mints.•The Company periodically extends short-term credit through the issuance of notes receivable to approved customers at interest ratesdetermined on a customer-by-customer basis.Our ability to minimize losses on the credit that we extend to our customers depends on a variety of factors, including:•our loan underwriting and other credit policies and controls designed to assure repayment, which may prove inadequate to prevent losses;•our ability to sell collateral upon customer defaults for amounts sufficient to offset credit losses, which can be affected by a number offactors outside of our control, including (i) changes in economic conditions, (ii) increases in market rates of interest and (iii) changes in thecondition or value of the collateral; and•the reserves we establish for loan losses, which may prove inadequate.CFC May in Certain Circumstances Be Required to Repurchase Loans that It Has Securitized.CFC has entered into a securitization financing whereby it has transferred, and may continue from time to time to transfer, to its subsidiary AMCFloans secured by precious metal coins or bullion. AMCF has issued 4.98% Class A Notes due 2023 and 5.98% Class B Notes due 2023 which are secured bythese loans and related assets. While the notes are not recourse to the Company or CFC, CFC is required to provide certain warranties concerning the loansand the security interest in the metals collateral securing the loans. In the event the warranties made with respect to any loan are breached and the breachmaterially and adversely affects the interests of the noteholders, CFC is required to either cure the breach or repurchase the loan within specified a timeframe.If CFC were to default on its repurchase obligations, this could materially adversely affect the business of CFC, and could adversely affect the Company’sfuture ability to access the credit markets.CFC and the Company have exposure to the performance of AM Capital Funding.Regulation RR of the SEC requires the sponsor of an asset-backed securitization transaction, or certain of its affiliates, to retain an economic interestin the transaction. In compliance with this rule, CFC retained the equity interest in AMCF and the Company currently holds $5.0 million of Class B Notes,which are subordinated to the Class A Notes. In addition, CFC and the Company may, from time to time, also contribute cash or sell precious metals to AMCFin exchange for subordinated, deferred payment obligations from AMCF. If the performance of AMCF were to suffer such that AMCF were unable to serviceits notes, CFC and the Company could lose part or all of their investments in AMCF.Under the terms of the servicing arrangements for the precious metals loan securitization, CFC may be required to liquidate the collateral securingsecuritized loans, even if this would impair relationships with its customers.CFC is the servicer for the loans transferred to AMCF in the securitization transaction. If, under certain circumstances, the equity levels of theobligors on particular loans falls below a specified level and those obligors fail to pay in additional equity, CFC is required to liquidate the metals collateralsecuring those loans within a specified time period. CFC does not have the flexibility to defer or refrain from the liquidation, even if CFC were to determinethat it would be in its best interests to do so. This requirement could impair valuable relationships that the Company may otherwise have with its customerswhose loans have been securitized.Our business is dependent on a concentrated customer base.One of A-Mark's key assets is its customer base. This customer base provides deep distribution of product and makes A-Mark a desirable tradingpartner for precious metals product manufacturers, including sovereign mints seeking to distribute precious metals coinage or large refiners seeking to selllarge volumes of physical precious metals. One customer represented 26.0% of A-Mark's revenues for the year ended June 30, 2019. The same customerrepresented 26.8% of A-Mark's revenues for the year ended June 30, 2018. If our relationship with this customer deteriorated, or if we were to lose thiscustomer, our business would be materially adversely affected.11Table of Contents The loss of a government purchaser/distributorship arrangement could materially adversely affect our business.A-Mark’s business is heavily dependent on its purchaser/distributorship arrangements with various governmental mints. Our ability to offernumismatic coins and bars to our customers on a competitive basis is based on the ability to purchase products directly from a government source. Thearrangements with the governmental mints may be discontinued by them at any time. The loss of an authorized purchaser/distributor relationship, includingwith the U.S. Mint could have a material adverse effect on our business.The materials held by A-Mark are subject to loss, damage, theft or restriction on access.A-Mark has significant quantities of high-value precious metals on site, at third-party depositories and in transit. There is a risk that part or all of thegold and other precious metals held by A-Mark, whether on its own behalf or on behalf of its customers, could be lost, damaged or stolen. In addition, accessto A-Mark’s precious metals could be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). Although we maintaininsurance on terms and conditions that we consider appropriate, we may not have adequate sources of recovery if our precious metals inventory is lost,damaged, stolen or destroyed, and recovery may be limited. Among other things, our insurance policies exclude coverage in the event of loss as a result ofterrorist attacks or civil unrest.In addition, with the establishment of our Logistics facility and the transfer of our wholesale storage operations from third party depositories to thatfacility, we are assuming greater potential liability for any loss suffered in connection with the stored inventory. Among other things, our insurance, ratherthan the third-party depository’s, is now the primary risk policy. While we believe we have adequate insurance coverage covering these operations, in theevent of any loss in excess of our coverage, we may be held liable for that excess.Our business is subject to the risk of fraud and counterfeiting.The precious metals (particularly bullion) business is exposed to the risk of loss as a result of “materials fraud” in its various forms. We seek tominimize our exposure to this type of fraud through a number of means, including third-party authentication and verification, reliance on our internal expertsand the establishment of procedures designed to detect fraud. However, there can be no assurance that we will be successful in preventing or identifying thistype of fraud, or in obtaining redress in the event such fraud is detected.Our business is influenced by political conditions and world events.The precious metals business is especially subject to global political conditions and world events. Precious metals are viewed by some as a securefinancial investment in times of political upheaval or unrest, particularly in developing economies, which may drive up pricing. The volatility of thecommodity prices for precious metals is also likely to increase in politically uncertain times. Conversely, during periods of relative international calmprecious metal volatility is likely to decrease, along with demand, and the prices of precious metals may retreat. Because our business is dependent on thevolatility and pricing of precious metals, we are likely to be influenced by world events more than businesses in other economic sectors.We have significant operations outside the United States.We derive about 5% to 15% of our revenues from business outside the United States, including from customers in developing countries. Businessoperations outside the U.S. are subject to political, economic and other risks inherent in operating in foreign countries. These include risks of generalapplicability, such as the need to comply with multiple regulatory regimes; trade protection measures and import or export licensing requirements; andfluctuations in equity, revenues and profits due to changes in foreign currency exchange rates. Currently, we do not conduct substantial business withcustomers in developing countries. However, if our business in these areas of the world were to increase, we would also face risks that are particular todeveloping countries, including the difficulty of enforcing agreements, collecting receivables, protecting inventory and other assets through foreign legalsystems, limitations on the repatriation of earnings, currency devaluation and manipulation of exchange rates, and high levels of inflation.We try to manage these risks by monitoring current and anticipated political, economic, legal and regulatory developments in the countries outsidethe United States in which we operate or have customers and adjusting operations as appropriate, but there can be no assurance that the measures we adoptwill be successful in protecting the Company’s business interests.12Table of Contents We are dependent on our key management personnel and our trading experts.Our performance is dependent on our senior management and certain other key employees. We have employment agreements with Greg Roberts, ourCEO, and Thor Gjerdrum, our President, which expire on June 30, 2020 and June 30, 2022, respectively. These and other employees have expertise in thetrading markets, have industry-wide reputations, and perform critical functions for our business. We cannot offer assurance that we will be able to negotiateacceptable terms for the renewal of the employment agreements or otherwise retain our key employees. Also, there is significant competition for skilledprecious metals traders and other industry professionals. The loss of our current key officers and employees, without the ability to replace them, would have amaterially adverse effect on our business.We are focused on growing our business, but there is no assurance that we will be successful.We expect to grow both organically and through opportunistic acquisitions. We have devoted considerable time, resources and efforts over the pastfew years to our growth strategy. We may not be successful in implementing our growth initiatives, which could adversely affect our business.Liquidity constraints may limit our ability to grow our business.To accomplish our growth strategy, we will require adequate sources of liquidity to fund both our existing business and our expansion activity.Currently, our main sources of liquidity are the cash that we generate from operations, our borrowing availability under the Trading Credit Facility and theproceeds from our securitization transaction through AMCF. There can be no assurance that these sources will be adequate to support the growth that we arehoping to achieve or that additional sources of financing for this purpose, in the form of additional debt or equity financing, will be available to us, onsatisfactory terms or at all. Also, the Trading Credit Facility contains, and any future debt financing is likely to contain, various financial and other restrictivecovenants. The need to comply with these covenants may limit our ability to implement our growth initiatives.We expect to grow in part through acquisitions, but an acquisition strategy entails risks.We expect to grow in part through acquisitions. We will consider potential acquisitions of varying sizes and may, on a selective basis, pursueacquisitions or consolidation opportunities involving other public companies or privately held companies. However, it is possible that we will not realize theexpected benefits from our acquisitions or that our existing operations will be adversely affected as a result of acquisitions. Acquisitions entail certain risks,including: unrecorded liabilities of acquired companies that we fail to discover during our due diligence investigations; difficulty in assimilating theoperations and personnel of the acquired company within our existing operations or in maintaining uniform standards; loss of key employees of the acquiredcompany; and strains on management and other personnel time and resources both to research and integrate acquisitions.We expect to pay for future acquisitions using cash, capital stock, notes and/or assumption of indebtedness. To the extent that our existing sourcesof cash are not sufficient to fund future acquisitions, we will require additional debt or equity financing and, consequently, our indebtedness may increase orshareholders may be diluted as we implement our growth strategy.Our Logistics depository is subject to authorization.Our Trading Credit Lenders have approved our Logistics facility as an authorized depository. If that approval were to be withdrawn for any reason,we would no longer be able to keep inventory at that location, which would substantially limit our ability to conduct business from that facility.We are subject to laws and regulations.We are subject to various laws, litigation, regulatory matters and ethical standards, and our failure to comply with or adequately addressdevelopments as they arise could adversely affect our reputation and operations. Our policies, procedures and practices and the technology we implement aredesigned to comply with federal, state, local and foreign laws, rules and regulations, including those imposed by the SEC and other regulatory agencies, themarketplace, the banking industry and foreign countries, as well as responsible business, social and environmental practices, all of which may change fromtime to time. Significant legislative changes, including those that relate to employment matters and health care reform, could impact our relationship with ourworkforce, which could increase our expenses and adversely affect our operations. In addition, if we fail to comply with applicable laws and regulations orimplement responsible business, social and environmental practices, we could be subject to damage to our reputation, class action lawsuits, legal andsettlement costs, civil and criminal liability, increased cost of regulatory compliance, restatements of our financial statements, disruption of our business andloss of customers. Any required changes to our employment practices could result in the loss of employees, reduced sales, increased employment costs, lowemployee morale and harm to our business and results of operations. In addition, political and economic factors could lead to unfavorable changes in federaland state tax laws, which may increase our tax liabilities. An increase in our tax liabilities could adversely affect our results of operations. We are alsoregularly involved in various litigation matters that arise in the ordinary course of business. Litigation or regulatory developments could adversely affect ourbusiness and financial condition.13Table of Contents There are various federal, state, local and foreign laws, ordinances and regulations that affect our trading business. For example, we are required tocomply with the Foreign Corrupt Practices Act and a variety of anti-money laundering and know-your-customer rules in response to the USA Patriot Act.The SEC has promulgated rules mandated by the Dodd-Frank Act regarding disclosure, on an annual basis, of the use of tin, tantalum, tungsten andgold, known as conflict minerals, in products manufactured by public companies. These rules require due diligence to determine whether such mineralsoriginated from the Democratic Republic of Congo (the "DRC") or an adjoining country and whether such minerals helped finance the armed conflict in theDRC.The Company has concluded that it is not currently subject to the conflict minerals rules because it is not a manufacturer of conflict minerals underthe definitions set forth in the rules. Depending on developments in the Company’s business, it could become subject to the rules at some point in the future.In that event, there will be costs associated with complying with these disclosure requirements, including costs to determine the origin of gold used in ourproducts. In addition, the implementation of these rules could adversely affect the sourcing, supply and pricing of gold used in our products. Also, we mayface disqualification as a supplier for customers and reputational challenges if the due diligence procedures we implement do not enable us to verify theorigins for the gold used in our products or to determine that the gold is conflict free.CFC operates under a California Finance Lenders License issued by the California Department of Corporations. CFC is required to submit a financelender law annual report to the state which summarizes certain loan portfolio and financial information regarding CFC. The Department of Corporations mayaudit the books and records of CFC to determine whether CFC is in compliance with the terms of its lending license. In addition, the Commodity FuturesTrading Commission and other federal and state agencies may assert oversight over aspects of CFC's operations.There can be no assurance that the regulation of our trading and lending businesses will not increase or that compliance with the applicableregulations will not become more costly or require us to modify our business practices.The Company faces uncertainty associated with the Tax Cuts and Jobs Act.The Company has adopted the applicable provisions of the Tax Cuts and Jobs Act which have had a significant impact to date. In particular, theCompany is now experiencing a substantially lower federal corporate tax rate and has predominately incurred all required adjustments related to its deferredtax assets. The U.S. Department of the Treasury, the Internal Revenue Service and other standard-setting bodies will continue to issue proposed regulationsand interpretive guidance on how the provisions of the Tax Cuts and Jobs Act will be applied or otherwise administered, and final regulations or interpretiveguidance may be issued in the future that are different from our current interpretation and application thereof.One or more states could assert that the Company is liable for sales and use or similar taxes, which could adversely affect our business.In South Dakota v. Wayfair, Inc. et al ("Wayfair"), the U.S. Supreme Court recently ruled that states may charge tax on purchases made from out-of-state sellers, even if the seller does not have a physical presence in the taxing state. The effect of Wayfair was to uphold economic nexus principles indetermining sales and use tax nexus. As a result of the decision, an increasing number of states have adopted (or are expected to adopt) laws that require anout-of-state retailer to register and collect sales and use taxes upon meeting certain economic nexus standards regardless of whether the company has physicalpresence in the state.The Company has gradually expanded (and continues to expand) its sales and use tax registration and compliance process (including software andrelated programming accommodations) in applicable states to conform with these new requirements, though many uncertainties and ambiguities remain.Although the Company believes it is complying with these new requirements as they evolve, our interpretation and application of the newly enactedlegislation may differ from the states, which could result in the states' attempt to impose additional tax liabilities, including potential penalties and interest.Such amounts could be significant. Furthermore, the requirements by state or local governments on out-of-state sellers to collect sales and use taxes coulddeter futures sales, which could have an impact on our business, financial condition, and results of operations.We operate in a highly competitive industry.The business of buying and selling precious metals is global and highly competitive. The Company competes with precious metals trading firms andbanks throughout North America, Europe and elsewhere in the world, some of whom have greater financial and other resources, and greater name recognition,than the Company. We believe that, as a full service firm devoted exclusively to precious metals trading, we offer pricing, product availability, execution,financing alternatives and storage options that are attractive to our customers and allow us to compete effectively. We also believe that ourpurchaser/distributorship arrangements with various governmental mints give us a competitive advantage in our coin distribution business. However, giventhe global reach of the precious metals trading business, the absence of intellectual property protections and the availability of numerous, evolving platformsfor trading in precious metals, we cannot assure you that A-Mark will be able to continue to compete successfully or that future developments in the industrywill not create additional competitive challenges.14Table of Contents We rely extensively on computer systems to execute trades and process transactions, and we could suffer substantial damages if the operation of thesesystems were interrupted.We rely on our computer and communications hardware and software systems to execute a large volume of trading transactions each year. It istherefore critical that we maintain uninterrupted operation of these systems, and we have invested considerable resources to protect our systems from physicalcompromise and security breaches and to maintain backup and redundancy. Nevertheless, our systems are subject to damage or interruption from poweroutages, computer and telecommunications failures, computer viruses, security breaches, including breaches of our transaction processing or other systems,catastrophic events such as fires, tornadoes and hurricanes, and usage errors by our employees. If our systems are breached, damaged or cease to functionproperly, we may have to make a significant investment to fix or replace them, we may suffer interruptions in our ability to provide quotations or tradingservices in the interim, and we may face costly litigation.If our customer data were breached, we could suffer damages and loss of reputation.By the nature of our business, we maintain significant amounts of customer data on our systems. Moreover, certain third party providers have accessto confidential data concerning the Company in the ordinary course of their business relationships with the Company. In recent years, various companies,including companies that are significantly larger than us, have reported breaches of their computer systems that have resulted in the compromise of customerdata. Any compromise or breach of customer or company data held or maintained by either the Company or our third party providers could significantlydamage our reputation and result in costs, lost trades, fines and lawsuits. The regulatory environment related to information security and privacy isincreasingly rigorous, with new and constantly changing requirements applicable to our business, and compliance with those requirements could result inadditional costs. There is no guarantee that the procedures that we have implemented to protect against unauthorized access to secured data are adequate tosafeguard against all data security breaches.Compliance with new data protection/privacy statutes could increase our costs and expose the Company to possible sanctions for violation.In 2016, the European Union ("EU") adopted a comprehensive overhaul of its data protection regime from the current national legislative approachto a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018. The EUdata protection regime expands the scope of the EU data protection law to all foreign companies processing personal data of EU residents, imposes a strictdata protection compliance regime with severe penalties of up to the greater of 4% of worldwide turnover or €20 million, and includes new rights such as the“portability” of personal data. Although the GDPR will apply across the EU without a need for local implementing legislation, EU member states have theability to interpret the GDPR opening clauses, which permit region-specific data protection legislation and have the potential to create inconsistencies on acountry-by-country basis.The Company has an office in Vienna, Austria that markets to international (including EU) customers. Although our international operations arecurrently modest compared to our business in the United States, our international business could grow over time. We have evaluated the new regulation andits requirements, and believe we are currently in compliance with the GDPR in all material respects. Going forward, however, the expansion of ourinternational operations could require us to change our business practices and may increase the costs and complexity of compliance. Also, a violation by theCompany of the new regulation could expose us to penalties and sanctions under the regulation.On June 28, 2018, California passed the California Consumer Privacy Act of 2018 (“CCPA”), to be effective on January 1, 2020. The new lawprovides California consumers with a greater level of transparency and broader rights and choices with respect to their personal information than thosecontained in any existing state and federal laws in the U.S. The “personal information” regulated by CCPA is broadly defined to include identification orassociation with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create aprofile about a consumer, and education information. Compliance with CCPA requires the implementation of a series of operational measures such aspreparing data maps, inventories, or other records of all personal information pertaining to California residents, households and devices, as well asinformation sources, usage, storage, and sharing, maintaining and updating detailed disclosures in privacy policies, establishing mechanisms (including, at aminimum, a toll-free telephone number and an online channel) to respond to consumers’ data access, deletion, portability, and opt-out requests, providing aclear and conspicuous “Do Not Sell My Personal Information” link on the home page of the business’ website, etc. CCPA prohibits businesses fromdiscriminating against consumers who have opted out of the sale of their personal information, subject to a narrow exception. It allows companies to providefinancial incentives to California consumers in order to obtain their consent to the collection and use of their personal information. Violations of CCPA willresult in civil penalties up to $7,500 per violation. CCPA further allows consumers to file lawsuits against a business if a data breach has occurred and theCalifornia Attorney General does not prosecute the business.In addition, on May 29, 2019, Nevada’s governor approved a bill (the “Amendment Bill”), to be effective on October 1, 2019. The Amendment Billprovides amendments to an existing law that requires operators of websites and online services to post a notice on their websites regarding their privacypractices. The Amendment Bill requires operators of internet websites or online15Table of Contents services to establish a designated request address through which a consumer may submit a verified request directing such operators not to make any sale ofcovered information collected about the consumer. The “covered information” regulated by the Amendment Bill is defined to include an enumerated list ofitems of personally identifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow aspecific person to be contacted).The changes introduced by the CCPA and the Amendment Bill, and any similar regulations enacted by other jurisdictions, will subject the Companyto additional costs and complexity of compliance, by requiring, among other things, changes to the Company’s security systems, policies, procedures andpractices. In addition, a violation by the Company of the new regulations could expose us to penalties and sanctions.Our implementation of a new enterprise resource planning (“ERP”) system may adversely affect our business and results of operations or the effectivenessof internal controls over financial reporting.We are currently implementing a new ERP system. ERP implementations are complex and time-consuming projects that involve substantialexpenditures on system software and implementation activities over a significant period of time. If we do not effectively implement the ERP system or if thesystem does not operate as intended, it could adversely affect our financial reporting systems and our ability to produce financial reports, the effectiveness ofinternal controls over financial reporting, and our business, financial condition, results of operations and cash flows.We have in the past engaged, and continue to engage, in transactions with Stack’s Bowers, an affiliate of the Company, which could be perceived as notbeing made at arms-length.Stack’s-Bowers Numismatics LLC. ("Stack's Bowers Galleries"), which is primarily engaged in the business of auctions of high-value and rare coinsand in coin retailing, is a wholly-owned subsidiary of SGI, our former parent and a related party. We have engaged in the past, and continue to engage, intransactions with Stack’s Bowers, some of which are presently on-going. These transactions include secured lending transactions in which Stack’s Bowers isthe borrower, and other transactions involving the purchase and sale of rare coins. The Company and SGI have two officers and a director in common. Inaddition, a majority of the board of directors of the Company has retained an ownership interest in SGI that in the aggregate represents a controlling interestin SGI. All transactions between the Company and Stack’s Bowers are approved by our Audit Committee, and we believe that all such transactions are onterms no less favorable to the Company than would be obtained from an unaffiliated third party. Nonetheless, these transactions could be perceived as beingconflicted.Risks Relating to CommoditiesA-Mark’s business is heavily influenced by volatility in commodities prices.A primary driver of A-Mark’s profitability is volatility in commodities prices, which leads to wider bid and ask spreads. Among the factors that canimpact the price of precious metals are supply and demand of precious metals; political, economic, and global financial events; movement of the U.S. dollarversus other currencies; and the activity of large speculators such as hedge funds. If commodity prices were to stagnate, there would likely be a reduction intrading activity, resulting in less demand for the services A-Mark provides, which could materially adversely affect our business, liquidity and results ofoperations.This volatility may drive fluctuation of our revenues, as a consequence of which our results for any one period may not be indicative of the results tobe expected for any other period. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”Our business is exposed to commodity price risks, and our hedging activity to protect our inventory is subject to risks of default by our counterparties.A-Mark’s precious metals inventories are subject to market value changes created by change in the underlying commodity price, as well as supplyand demand of the individual products the Company trades. In addition, open sale and purchase commitments are subject to changes in value between thedate the purchase or sale is fixed (the trade date) and the date metal is delivered or received (the settlement date). A-Mark seeks to minimize the effect of pricechanges of the underlying commodity through the use of financial derivative instruments, such as forward and futures contracts. A-Mark’s policy is to remainsubstantially hedged as to its inventory position and its individual sale and purchase commitments. A-Mark’s management monitors its hedged exposuredaily. However, there can be no assurance that these hedging activities will be adequate to protect the Company against commodity price risks associatedwith A-Mark’s business activities.Furthermore, even if we are fully hedged as to any given position, there is the risk of default by our counterparties to the hedge. Any such defaultcould have a material adverse effect on our financial position and results of operations.16Table of Contents Increased commodity pricing could limit the inventory that we are able to carry.We maintain a large and varied inventory of precious metal products, including bullion and coins, in order to support our trading activities andprovide our customers with superior service. The amount of inventory that we are able to carry is constrained by the borrowing limitations and workingcapital covenants under the Trading Credit Facility. If commodity prices were to rise substantially, and we were unable to modify the terms of the TradingCredit Facility to compensate for the increase, the quantity of product that we could finance, and hence maintain in our inventory, would fall. This wouldlikely have a material adverse effect on our operations.We rely on the efficient functioning of commodity exchanges around the world, and disruptions on these exchanges could adversely affect our business.The Company buys and sells precious metals contracts on commodity exchanges around the world, both in support of its customer operations and tohedge its inventory and transactional exposure against fluctuations in commodity prices. The Company’s ability to engage in these activities would becompromised if the exchanges on which the Company trades or any of their clearinghouses were to discontinue operations or to experience disruptions intrading, due to computer problems, unsettled markets or other factors. The Company may also experience risk of loss if futures commission merchants orcommodity brokers with whom the Company deals were to become insolvent or bankrupt.Risks Relating to Our Common StockFailure to achieve and maintain effective internal controls in accordance with Section 404 of Sarbanes-Oxley could have a material adverse effect on ourbusiness.As a public company, we are required to document and test our internal control over financial reporting in order to satisfy the requirements ofSection 404 of Sarbanes-Oxley, which requires annual management assessments of the effectiveness of our internal control over financial reporting.We are required to implement standalone policies and procedures to comply with the requirements of Section 404. During the course of our testingof our internal controls and procedures, we may identify deficiencies which we may not be able to remediate in time to comply with Section 404. Testing andmaintaining internal controls can divert our management’s attention from other matters that are also important to the operation of our business. We may notbe able to conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404. If we are unable toconclude that we have effective internal controls over financial reporting, then investors could lose confidence in our reported financial information, whichwould likely have a negative effect on the trading price of our common stock. In addition, if we do not maintain effective internal controls, we may not beable to accurately report our financial information on a timely basis, which could harm the trading price of our common stock, impair our ability to raiseadditional capital, or jeopardize our continued listing on the NASDAQ Global Select Market or any other stock exchange on which common stock may belisted.We are not currently paying dividends and may not pay dividends in the future.The Company has not made a dividend payment since January 2018. The declaration of cash dividends is subject to the determination each quarterby the Board of Directors, based on its assessment of a number of factors, including the Company’s financial performance, available cash resources, cashrequirements, bank covenants, and alternative uses of cash that the Board of Directors may conclude would represent an opportunity to generate a greaterreturn on investment for the Company.There can be no assurance that the Company will resume paying dividends on a regular basis. If the Board of Directors were to determine not to paydividends in the future, shareholders would not receive any further return on an investment in our capital stock in the form of dividends, and may obtain aneconomic benefit from the common stock only after an increase in its trading price and only by selling the common stock.Provisions in our Certificate of Incorporation and Bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decreasethe trading price of our common stock.Our amended and restated certificate of incorporation and amended and restated bylaws and Delaware law contain certain anti-takeover provisionsthat could have the effect of making it more difficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of theCompany without negotiating with our board of directors. Such provisions could limit the price that certain investors might be willing to pay in the future forthe Company’s securities. Certain of such provisions allow the Company to issue preferred stock with rights senior to those of the common stock, imposevarious procedural and other requirements which could make it more difficult for Shareholders to effect certain corporate actions and set forth rules regardinghow shareholders may present proposals or nominate directors for election at shareholder meetings.We believe these provisions protect our shareholders from coercive or otherwise unfair takeover tactics by requiring potential acquirors to negotiatewith our Board of Directors and by providing our Board of Directors with more time to assess any17Table of Contents acquisition proposal. However, these provisions apply even if an acquisition offer may be considered beneficial by some shareholders and could delay orprevent an acquisition that our Board of Directors determines is not in the best interests of our Company and our Shareholders. Accordingly, in the event thatour board determines that a potential business combination transaction is not in the best interests of our Company and our Shareholders, but certainshareholders believe that such a transaction would be beneficial to the Company and its Shareholders, such Shareholders may elect to sell their shares in theCompany and the trading price of our common stock could decrease.Your percentage ownership in the Company could be diluted in the future.Your percentage ownership in A-Mark potentially could be diluted in the future because of additional equity awards that we expect will be grantedto our directors, officers and employees. We have established an equity incentive plan that provides for the grant of common stock-based equity awards toour directors, officers and other employees. In addition, we may issue equity in order to raise capital or in connection with future acquisitions and strategicinvestments, which could dilute your percentage ownership.Our board and management beneficially own a sizeable percentage of our common stock and therefore have the ability to exert substantial influence asshareholders.Members of our board and management beneficially own approximately 40% of our outstanding common stock. Acting together in their capacity asshareholders, the board members and management could exert substantial influence over matters on which a shareholder vote is required, such as theapproval of business combination transactions. Also because of the size of their beneficial ownership, the board members and management may be in aposition effectively to determine the outcome of the election of directors and the vote on shareholder proposals. The concentration of beneficial ownership inthe hands of our board and management may therefore limit the ability of our public shareholders to influence the affairs of the Company.If the Company's spinoff from SGI is determined to be taxable for U.S. federal income tax purposes, our shareholders could incur significant U.S. federalincome tax liabilities.In connection with the spinoff, SGI received the written opinion of Kramer Levin Naftalis & Frankel LLP. ("Kramer Levin") to the effect that thespinoff qualified as a tax-free transaction under Section 355 of the Internal Revenue Code, and that for U.S. federal income tax purposes (i) no gain or losswas recognized by SGI upon the distribution of our common stock in the spinoff, and (ii) no gain or loss was recognized by, and no amount was included inthe income of, holders of SGI common stock upon the receipt of shares of our common stock in the spinoff. The opinion of tax counsel is not binding on theInternal Revenue Service or the courts, and there is no assurance that the IRS or a court will not take a contrary position. In addition, the opinion of KramerLevin relied on certain representations and covenants delivered by SGI and us. If, notwithstanding the conclusions included in the opinion, it is ultimatelydetermined that the distribution does not qualify as tax-free for U.S. federal income tax purposes, each SGI shareholder that is subject to U.S. federal incometax and that received shares of our common stock in the distribution could be treated as receiving a taxable distribution in an amount equal to the fair marketvalue of such shares. In addition, if the distribution were not to qualify as tax-free for U.S. federal income tax purposes, then SGI would recognize a gain in anamount equal to the excess of the fair market value of our common stock distributed to SGI shareholders on the date of the distribution over SGI’s tax basis insuch shares. Also, we could have an indemnification obligation to SGI related to its tax liability.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESAs of June 30, 2019, the Company owned or leased properties in El Segundo, California; Los Angeles, California; Las Vegas, Nevada; Winchester,Indiana; and Vienna, Austria; as described below:Location General Use of Facility SquareFootage Ownership Lease Term/ExpirationEl Segundo, California Corporate headquarters, trading desk, secured lending,marketing, and back-office operations 9,000 Leased March 2026Los Angeles, California Direct Sales operations 21,500 Leased(1) February 2022Las Vegas, Nevada Storage and fulfillment logistics operations 17,600 Leased April 2025Winchester, Indiana Minting operations 11,400(2) Owned —Vienna, Austria International marketing support operations 248 Leased every three months (1) We sublease a portion of the space to a third party.(2) This facility is located on 2.9 acres of land that is jointly owned by the Company and SilverTowne LP (our minority interest partner.)18Table of Contents ITEM 3. LEGAL PROCEEDINGSWe are from time to time involved in legal proceedings, claims, or investigations that are incidental to the conduct of our business.Although the ultimate outcome of any legal matter cannot be predicted with certainty, based on current information, including our assessment of themerits of the particular claim, we do not expect that these legal proceedings or claims will have any material adverse impact on our future consolidatedfinancial position, results of operations, or cash flows.ITEM 4. MINE SAFETY DISCLOSURESNone.19Table of Contents PART II — OTHER INFORMATIONITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITYSECURITIESMarket InformationSGI effected the spinoff of A-Mark on March 14, 2014. On March 17, 2014, A-Mark’s shares of common stock commenced trading on the NASDAQGlobal Select Market under the symbol "AMRK."As of September 6, 2019, there were 165 registered stockholders of record of our common stock, and the last reported sale price of our stock asreported by the NASDAQ Global Select Market was $13.98.The following table sets forth the range of high and low closing prices for our common stock for each full quarterly period during fiscal 2019 and2018, as reported by the NASDAQ Global Select Market. These quotations below reflect inter-dealer closing prices, without retail mark-up, mark-down, orcommission and may not necessarily represent actual transactions. 2019 2018QuarterHigh Low High LowFirst$13.80 $12.05 $18.82 $14.76Second$13.89 $10.99 $16.96 $12.56Third$13.35 $11.43 $14.65 $10.78Fourth$13.60 $10.90 $14.06 $12.00 Issuer Purchases of Equity SecuritiesOn April 26, 2018, the Company’s Board of Directors authorized a stock repurchase program for up to 500,000 shares of the Company’s stock. Theactual number of shares repurchased and the timing of repurchases will be determined by the Board of Directors and will depend on a number of factors,including stock price, trading volume, general market conditions, working capital requirements, general business conditions, and other factors. The stockrepurchase program has no time limit and may be modified, suspended, or terminated at any time.As of September 6, 2019, there have been no repurchases of equity securities under the above-referenced stock repurchase program.20Table of Contents Dividend Policy The Board of Directors assesses the Company's capital resources on a quarterly basis and makes a determination whether to declare a dividend basedon that assessment. The assessment addresses a number of factors, including the Company’s financial performance, available cash resources, cashrequirements, bank restrictive covenants, alternative uses of cash and such other factors as the Board of Directors deems relevant.Based on the above factors, the Company has not made a dividend payment since January 2018.Equity Compensation Plan InformationThe following table provides information as of June 30, 2019, with respect to the shares of our common stock that may be issued under existingequity compensation plans.Plan category (a) Number ofsecurities to beissued upon exerciseof outstandingoptions, warrants,and rights (b)Weighted averageexercise price ofoutstandingoptions, warrants,and rights (c)Number of securities remainingavailable for future issuance underequity compensation plans(excluding securities reflected incolumn (a)) Equity compensation plans approved by security holders 956,998 $17.08 408,395(1) Equity compensation plans not approved by security holders — — — Total 956,998 $17.08 408,395 _________________________________(1) Represents shares that are available for future issuance under A-Mark's amended and restated 2014 Stock Award and Incentive Plan ("2014 Plan"). All of the 2014 Planshares that are available for future issuance include the following award types: stock options, stock appreciation rights, restricted stock units, restricted stock, and other"full-value" awards. ITEM 6. SELECTED FINANCIAL DATANot applicable for a smaller reporting company.ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995This Annual Report on Form 10-K ("Form 10-K") contains statements that are considered forward-looking statements. Forward-looking statementsgive the Company's current expectations and forecasts of future events. All statements other than statements of current or historical fact contained in thisAnnual Report, including statements regarding the Company's future financial position, business strategy, budgets, projected costs and plans, and objectivesof management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,”“plan,” and similar expressions, as they relate to the Company, are intended to identify forward-looking statements. These statements are based on theCompany's current plans, and the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from thestatements made. Any or all of the forward-looking statements in this Annual Report may turn out to be inaccurate. The Company has based these forward-looking statements largely on its current expectations and projections about future events and financial trends that it believes may affect its financialcondition, results of operations, business strategy, and financial needs. The forward-looking statements can be affected by inaccurate assumptions or byknown or unknown risks, uncertainties and assumptions. The Company undertakes no obligation to publicly revise these forward-looking statements toreflect events occurring after the date hereof. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on itsbehalf are expressly qualified in their entirety by the cautionary statements contained in this Form 10-K.The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidatedfinancial statements and notes contained elsewhere in this Form 10-K. This discussion contains forward-looking statements that reflect our plans, estimatesand beliefs. Our actual results could differ materially from those discussed in21Table of Contents these forward-looking statements. Factors that could cause or contribute to these differences include those factors discussed below and elsewhere in thisAnnual Report, particularly in “Risk Factors.”INTRODUCTIONManagement's discussion and analysis of financial condition and results of operations is provided as a supplement to the accompanyingconsolidated financial statements and related notes to aid in the understanding of our results of operations and financial condition. Our discussion isorganized as follows:•Executive overview. This section provides a general description of our business, as well as significant transactions and events that we believe areimportant in understanding the results of operations.•Results of operations. This section provides an analysis of our results of operations presented in the accompanying consolidated statements ofoperations by comparing the results for the respective years. Included in our analysis is a discussion of five performance metrics: (i) ounces ofgold and silver sold, (ii) Wholesale trading ticket volume, (iii) Direct Sales ticket volume, (iv) inventory turnover ratio and (v) number ofsecured 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,◦Secured Lending, and◦Direct Salesfor the comparable periods.•Liquidity and financial condition. This section provides an analysis of our cash flows, as well as a discussion of our outstanding debt as ofJune 30, 2019. Included in this section is a discussion of our: outstanding debt, the amount of financial capacity available to fund our futurecommitments and other financing arrangements.•Critical accounting policies. This section discusses critical accounting policies that are considered both important to our financial conditionand results of operations, and requires management to make significant judgment and estimates. All of our significant accounting policies,including the critical accounting policies, are summarized in Note 2, as well.•Recent accounting pronouncements. This section discusses new accounting pronouncements, dates of implementation and their expectedimpact on our accompanying consolidated financial statements.22Table of Contents EXECUTIVE OVERVIEWOur BusinessWe conduct our operations in three reportable segments: (1) Wholesale Trading & Ancillary Services, (2) Secured Lending and (3) Direct Sales.Wholesale Trading & Ancillary Services SegmentThe Company operates its Wholesale Trading & Ancillary Services segment through A-Mark Precious Metals Inc., and its wholly-ownedsubsidiaries, Transcontinental Depository Services ("TDS"), A-M Global Logistics, LLC. ("Logistics'), and 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. We offer gold, silver, platinum,and palladium in the form of bars, plates, powder, wafers, grain, ingots, and coins. Our Industrial unit services manufacturers and fabricators of productsutilizing or incorporating precious metals. Our Coin and Bar unit deals in over 200 coin and bar products in a variety of weights, shapes, and sizes fordistribution to dealers and other qualified purchasers. We have a marketing support office in Vienna, Austria, and a trading center in El Segundo, California.The trading center, for buying and selling precious metals, is available to receive orders from approved customers 24 hours every day, even when many majorworld 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. As a U.S. Mint-authorized purchaser of gold, silver, platinum, and palladium coins, A-Mark purchases product directly from the U.S. Mint and other sovereign mints for sale to its customers.Through our wholly-owned subsidiary TDS, we offer a variety of managed storage options for precious metals products to financial institutions,dealers, investors, and collectors around the world. Our storage business generated less than 1% of total revenues for each of the periods presented.The Company's wholly-owned subsidiary, A-M Global Logistics, LLC, referred to as Logistics, is based in Las Vegas, Nevada, and provides ourcustomers an array of complementary services, including receiving, handling, inventorying, processing, packing, and shipping of precious metals and customcoins on a secure basis. Our logistics business generated less than 1% of the total revenues for each of the periods presented.Through our partially-owned subsidiary, AMST, the Company designs and produces minted silver products. The Company operates the Mintpursuant to a joint venture agreement with SilverTowne, L.P. The Company and SilverTowne L.P. own 69% and 31%, respectively, of AMST. AMSTacquired the entire minting operations (referred to as SilverTowne Mint) of SilverTowne, L.P., with the goal of providing greater product selection to ourcustomers and greater pricing stability within the supply chain, as well as to gain increased access to silver during volatile market environments, which havehistorically resulted in higher demand for precious metals products.Secured Lending SegmentThe Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation LLC. ("CFC") and AMCapital Funding, LLC. (“AMCF”).CFC is a California licensed finance lender that originates and acquires commercial loans secured by bullion and numismatic coins. CFC's customersinclude coin and precious metal dealers, investors, and collectors. As of June 30, 2019, CFC and AMCF had, in aggregate, approximately $125.3 million insecured loans outstanding, of which approximately 59.5% were acquired from third-parties (some of which may be customers of A-Mark) and approximately40.5% were originated by CFC.AMCF, a wholly-owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC. AMCF issued, administers, andowns Secured Senior Term Notes: Series 2018-1, Class A, with an aggregate principal amount of$72.0 million and Secured Subordinated Term Notes, Series2018-1, Class B in the aggregate principal amount of $28.0 million. The Class A Notes bear interest at a rate of 4.98%, and the Class B Notes bear interest ata rate of 5.98% (collectively referred to as the "Notes"). The Notes have a maturity date of December 15, 2023. For additional information regarding thissecuritization. (See Note 14 of the Notes to Consolidated Financial Statements.)Direct Sales SegmentThe Company operates its Direct Sales segment through its wholly-owned subsidiaries Goldline Inc. (“Goldline”) and AM IP LLC. ("AMIP"), andthrough its 50%-owned subsidiary Precious Metals Purchasing Partners, LLC, ("PMPP").The Company acquired Goldline in August 2017 through an asset purchase transaction with Goldline LLC. Goldline LLC. had been in operationsince 1960. Goldline is a direct retailer of precious metals to the investor community. Goldline markets its precious metal products primarily on radio and theinternet, as well as through telephonic sales efforts, particularly to Goldline’s23Table of Contents repeat customers. Goldline's business has enhanced the Company’s distribution capabilities by adding a direct-to-client distribution channel that hasdiversified the product and services offered to Goldline's customers, through access to the Company’s wider assortment of precious metal coins and bars,including TDS’s storage and asset protection services.AMIP, a wholly owned subsidiary of Goldline, manages intellectual property (“IP”) that includes lists of customers and sales lead information that islicensed to third parties in the industry who can further exploit such assets and provide the Company with ancillary income.In fiscal 2019, the Company formed and capitalized PMPP, a 50%-owned subsidiary of Goldline, pursuant to terms of a joint venture agreement, forthe purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products back to affiliates of the partners. Infiscal 2020, PMPP commenced its operations.Our StrategyThe Company was formed in 1965 and has grown into a significant participant in the bullion and coin markets, with approximately $4.8 billion inrevenues for fiscal year 2019. Our strategy continues to focus on growth, including the volume of our business, our geographic presence, and the scope ofcomplementary products, services, and technological tools that we offer to our customers. We intend to promote our growth by leveraging off the strengths ofour existing integrated operations:•the depth of our customer relationships;•our access to market makers, suppliers and government mints and other mints;•our trading systems in the U.S. and Europe;•our expansive precious metals dealer network;•our depository relationships around the world;•our knowledge of secured lending;•our logistics capabilities;•our trading expertise; and•the quality and experience of our management team.Our CustomersOur customers include financial institutions, bullion retailers, industrial manufacturers and fabricators, sovereign mints, refiners, coin and metaldealers, investors, and collectors. The Company makes a two way market, which results in many customers also operating as our suppliers. This diverse baseof 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 ExpenseRevenues. The Company enters into transactions to sell and deliver gold, silver, platinum and palladium to industrial and commercial users, coinand bullion dealers, mints, and financial institutions. The metals are investment or industrial grade and are sold in a variety of shapes and sizes.The Company also sells precious metals on forward contracts at a fixed price based on current prevailing precious metal spot prices with a certaindelivery date in the future (up to six months from inception date of the forward contract). The Company also uses other derivative products (primarily futurescontracts) or a combinations thereof to hedge commodity risks. We enter into these forward contracts as part of our hedging strategy to mitigate our price riskof holding inventory; they are not entered into for speculative purposes.However, unlike futures contracts which do not impact the Company’s revenue, forward sales contracts by their nature are required to be included inrevenues. The decision to use a forward contract verses another derivative type product (e.g., a futures contract) for hedging purposes is based on theeconomics of the transaction. Since the volume of hedging can be significant, the movement in and out of forwards can substantially impact revenues, bothpositively or negatively, from period to period. For this reason, the Company believes ounces sold (excluding ounces sold on forward sales contracts) is ameaningful metric to assess our top line performance. In addition, the Company earns revenue by providing storage solutions for precious metals and numismatic coins for financial institutions, dealers,investors and collectors worldwide and by providing storage and order-fulfillment services to our retail customers. These revenue streams are complementaryto our trading activity, and represent less than 1% of our revenues.24Table of Contents The Company operates in a high volume/low margin industry. Revenues are impacted by three primary factors: product volume, market prices andmarket volatility. A material change in any one or more of these factors may result in a significant change in the Company’s revenues. A significant increaseor decrease in revenues can occur simply based on changes in the underlying commodity prices and may not be reflective of an increase or decrease in thevolume of products sold. Gross Profits. Gross profit is the difference between our revenues and the cost of our products sold. Since we quote prices based on the currentcommodity market prices for precious metals, we enter into a combination of forward and futures contracts to effect a hedge position equal to the underlyingprecious metal commodity value, which substantially represents inventory subject to price risk. We enter into these derivative transactions solely for thepurpose of hedging our inventory, and not for speculative purposes. Our gross profit includes the gains and losses resulting from these derivative instruments.However, the gains and losses on the derivative instruments are substantially offset by the gains and losses on the corresponding changes in the market valueof our precious metals inventory. As a result, our results of operations generally are not materially impacted by changes in commodity prices.Volatility also affects our gross profits. Greater volatility typically causes the trading spreads to widen resulting in an increase in the gross profit.Product supply constraints during extended periods of higher volatility have historically resulted in a heightening of wider trading spreads resulting infurther improvement in the gross profit.Interest Income. The Company enters into secured loans and secured financing structures with its customers under which it charges interest. CFCacquires loan portfolios and originates loans that are secured by precious metal bullion and numismatic material owned by the borrowers and held by theCompany for the term of the loan. Additionally, AMCF acquires certain loans from CFC that are secured by precious metal bullion to meet the collateralrequirements of the Notes. Also, the Company offers a number of secured financing options to its customers to finance their precious metals purchasesincluding consignments and other structured inventory finance products whereby the Company earns a fee based on the underlying value of the preciousmetal ("repurchase arrangements with customers"). Interest Expense. The Company incurs interest expense associated with its: lines of credit, notes, related-party debt, product financing agreements for thetransfer and subsequent re-acquisition of gold and silver at a fixed price with a third-party finance company ("product financing arrangements"), and short-term precious metal borrowing arrangements with our suppliers ("liability on borrowed metals").Performance Metrics In addition to financial statement indicators, management also utilizes certain key operational metrics to assess the performance of our business.Gold and Silver Ounces Sold and Delivered to Customers. We look at the number of ounces of gold and silver sold and delivered to our customers(excluding ounces recorded on forward contracts). These metrics reflect our business volume without regard to changes in commodity pricing, which alsoimpacts revenue and can mask actual business trends.The primary purpose of entering into forward sales transactions is to hedge commodity price risk. Although the revenues realized from these forwardsales transactions are often significant, they generally have negligible impact to gross margins. As a result, the Company excludes the ounces recorded onforward 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. Another measure of our business that is unaffected by changes in commoditypricing, is ticket volume. Ticket volume for the Wholesale Trading & Ancillary Services and Direct Sales segments measures the total number of ordersprocessed by our trading desks in El Segundo, California and Los Angeles, California. In periods of higher volatility, there is generally increased trading inthe commodity markets, causing increased demand for our products, resulting in higher business volume. Generally, the ounces sold on a per-trading-ticketbasis is substantially higher for orders placed telephonically compared to those placed on our online portal platform.Inventory Turnover. Inventory turnover is another performance measure on which we are focused, and is calculated as the cost of sales divided by theaverage inventory during the relevant period. Inventory turnover is a measure of how quickly inventory has moved during the period. A higher inventoryturnover ratio, which we typically experience during periods of higher volatility when trading is more robust, typically reflects a more efficient use of ourcapital.The period of time that inventory is held by the Company varies depending upon the nature of our inventory commitments with customers andsuppliers. (See Note 6 of the Notes to Consolidated Financial Statements, for a description of our classifications of inventory by type.) When managementanalyzes inventory turnover on a period over period basis, consideration is given to each inventory type and its corresponding impact on the inventoryturnover calculation. Management's analysis includes the following:25Table of Contents •The Company enters into various structured borrowing arrangements that commit the Company's inventory (such as; product financingarrangements or liability on borrowed metals) for an unspecified period of time. While the Company is able to obtain access to this inventory ondemand, there is a tendency that this type of inventory does not turn over as quickly as other types of inventory.•The Company enters into repurchase arrangements with customers under which A-Mark holds precious metals which are subject to repurchasefor an unspecified period of time. While the Company retains legal title to this inventory, the Company is required to hold this inventory (orlike-kind inventory) for the customer until the arrangement is terminated or the material is repurchased by the customer. As a result, there is atendency that this type of inventory does not turn over as quickly as other types of inventory.Additionally, our inventory turnover ratio can be affected by hedging activity, as the period over period change of the inventory turnover ratio maybe significantly impacted by a period over period change in hedging volume. For example, if trading activity were to remain constant over two periods, butthere were significantly higher forward sales in the current period compared to a prior period, the calculated inventory turnover ratio would indicate anincrease in the ratio rather than remaining constant.Number of Secured Loans. Finally, as a measure of the size of our secured lending segment, we look at the number of outstanding secured loans tocustomers at the end of the fiscal quarter. Typically, the number of loans increase during periods of increasing precious metal pricing and decrease duringperiods of declining precious metal prices.The Company calculates its loan-to-value ("LTV") ratio as the principal amount of the loan divided by the liquidation value of the collateral, whichis based on daily spot market prices of precious metal bullion. When the market price of the pledged collateral decreases and thereby increases the LTV ratioof a loan above a prescribed maximum ratio, usually 85%, the Company has the option to make a margin call on the loan. As a result, a decline of preciousmetal market prices may cause a decrease in the number of loans outstanding in a period.Fiscal YearOur 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.26Table of Contents RESULTS OF OPERATIONSOverview of Results of Operations for the Years Ended June 30, 2019 and 2018Consolidated Results of OperationsThe operating results of our business for the years ended June 30, 2019 and 2018 are as follows:in thousands, except per share data and performance metrics Years Ended June 30,2019 2018 $ % $ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Revenues$4,783,157 100.000 % $7,606,248 100.000 % $(2,823,091) (37.1)%Gross profit31,958 0.668 % 29,443 0.387 % $2,515 8.5 %Selling, general and administrative expenses(32,502) (0.680)% (33,398) (0.439)% $(896) (2.7)%Goodwill and intangible asset impairment— — % (2,654) (0.035)% $(2,654) (100.0)%Interest income19,270 0.403 % 16,105 0.212 % $3,165 19.7 %Interest expense(17,146) (0.358)% (13,891) (0.183)% $3,255 23.4 %Other income, net1,697 0.035 % 954 0.013 % $743 77.9 %Unrealized gain on foreign exchange— — % 30 — % $(30) (100.0)%Net income (loss) before provision for income taxes3,277 0.069 % (3,411) (0.045)% $6,688 196.1 %Income tax expense(1,015) (0.021)% (8) — % $1,007 NMNet income (loss)2,262 0.047 % (3,419) (0.045)% $5,681 166.2 % Net income (loss) attributable to non-controllinginterest37 0.001 % (22) — % $59 268.2 %Net income (loss) attributable to the Company$2,225 0.047 % $(3,397) (0.045)% $5,622 165.5 % Basic and diluted net income (loss) per share attributable to A-Mark Precious Metals, Inc.:Per Share Data: Basic$0.32 $(0.48) $0.80 166.7 %Diluted$0.31 $(0.48) $0.79 164.6 % Performance Metrics:(1) Gold ounces sold(2)1,799,000 1,912,000 (113,000) (5.9)%Silver ounces sold(3)67,620,000 46,466,000 21,154,000 45.5 %Inventory turnover ratio(4)16.6 26.8 (10.2) (38.1)%Number of secured loans at period end(5)2,806 3,507 (701) (20.0)% _________________________________ NM Not meaningful. (1) See "Results of Segments" for ticket count volume by segment. (2) Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forwardcontracts. (3) Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forwardcontracts. (4) Inventory turnover ratio is the cost of sales divided by average inventory. This calculation excludes precious metals held under financing arrangements, which are notclassified as inventory on the consolidated balance sheets. (5) Number of outstanding secured loans to customers at the end of the period. 27Table of Contents RevenuesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metrics$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Revenues$4,783,157 100.000% $7,606,248 100.000% $(2,823,091) (37.1)%Performance Metrics Gold ounces sold1,799,000 1,912,000 (113,000) (5.9)%Silver ounces sold67,620,000 46,466,000 21,154,000 45.5 % Revenues for the year ended June 30, 2019 decreased $2.823 billion, or 37.1%, to $4.783 billion from $7.606 billion in 2018. Our revenuesdecreased primarily due to lower forward sales (representing approximately $2.8 billion of the aggregate change), lower gold and silver prices and lower goldounces sold, offset by an increase in the total amount of silver ounces sold.Gold ounces sold for the year ended June 30, 2019 decreased 113,000 ounces, or 5.9%, to 1,799,000 ounces from 1,912,000 ounces in 2018. Silverounces sold for the year ended June 30, 2019 increased 21,154,000 ounces, or 45.5%, to 67,620,000 ounces from 46,466,000 ounces in 2018. On average, theselling prices for gold decreased by 2.7% and selling prices for silver decreased by 10.0% during the year ended June 30, 2019 as compared to 2018. Gross ProfitYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metric$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Gross profit$31,958 0.668% $29,443 0.387% $2,515 8.5 %Performance Metric Inventory turnover ratio16.6 26.8 (10.2) (38.1)% Gross profit for the year ended June 30, 2019 increased by $2.5 million, or 8.5%, to $32.0 million from $29.4 million in 2018. Overall gross profitincreased due to improved gross profits of the Wholesale Trading & Ancillary segment and Direct Sales segment (e.g., Goldline), offset by lower tradingprofits.The Company’s gross margin percentage increased by 72.6% to 0.668% from 0.387% in 2018. The increase in gross margin percentage wasprimarily due to lower forward sales ($2.8 billion), which increase revenues but have negligible impact to gross margins. Secondarily, wider spreads earnedby the Wholesale Trading & Ancillary segment and Direct Sales segment contributed to the higher gross margin percentage. The Company enters intoforward contracts to hedge its precious metals price risk exposure and not for speculative purposes.Our inventory turnover rate for the year ended June 30, 2019 decreased by 38.1%, to 16.6 from 26.8 in 2018. The decrease in our inventory turnoverrate was primarily due to the lower volume of ounces sold on forward contracts and by higher average borrowed metal inventory balances, partially offset bylower average product financing arrangements during the year ended June 30, 2019 as compared to 2018.Selling, General and Administrative ExpenseYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Selling, general and administrative expenses$(32,502) (0.680)% $(33,398) (0.439)% $(896) (2.7)% Selling, general and administrative expenses for the year ended June 30, 2019 decreased $0.9 million, or 2.7%, to $32.5 million from $33.4 millionin 2018. The change was primarily due to a decrease in IT consulting costs of $0.8 million, lower investigatory acquisition costs of $0.6 million, loweradvertising costs of $0.8 million, and lower legal costs of $0.4 million, which were partially offset by an increased overall compensation costs of $1.3million. Our Direct Sales Segment reported a decrease in selling, general, and administrative expense even though the Direct Sales segment was only ownedfor ten months in the prior comparable period.28Table of Contents Goodwill and intangible asset impairmentYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Goodwill and intangible asset impairment$— —% $(2,654) (0.035)% $(2,654) (100.0)% Goodwill and intangible asset impairment for the year ended June 30, 2019 decreased $2.7 million to $0 from $2.7 million in 2018. The change wasdue to an impairment charge booked as a result of our annual impairment assessment we conducted in the fourth quarter of fiscal year 2018, which was relatedto our Direct Sales segment (Goldline).Interest Income Year Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metric$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Interest income$19,270 0.403% $16,105 0.212% $3,165 19.7 %Performance Metric Number of secured loans at period-end2,806 3,507 (701) (20.0)% Interest income for the year ended June 30, 2019 increased $3.2 million, or 19.7%, to $19.3 million from $16.1 million in 2018. The aggregateincrease in interest income was primarily due to interest income earned by our Secured Lending Segment and other finance product income by our WholesaleTrading & Ancillary Services segment.The increase in interest income from our Secured Lending segment increased by $1.0 million or by 10.6% in comparison to the same year-agoperiod, which represents approximately 32.4% of the aggregate increase. This increase was primarily due to increases in interest rates (a weighted averageinterest rate of 10.2% for fiscal 2019, compared to a weighted average interest rate of 9.6% for fiscal 2018) and an increase in the value of the secured loanportfolio ($125.3 million as of June 30, 2019 compared to $110.4 million as of June 30, 2018). Despite the increase in value of the loan portfolio, the numberof secured loans outstanding decreased by 20.0% to 2,806 from 3,507 in 2018. This decrease was due to lower metal prices in the first quarter of fiscal 2019that lowered the customer's collateral value, which lead to loans being liquidated. The Company did not incur any loan losses from the liquidations.The aggregate increase in interest income from our Wholesale Trading & Ancillary Services segment increased by $2.1 million or 32.8% incomparison to the same year-ago period, which represents approximately 67.2% of the aggregate increase. Our finance fees earned related to repurchasearrangements with customers increased by 30.1% or by $1.7 million in comparison to the same year-ago period, which represent approximately 54.4% of theaggregate increase.Interest ExpenseYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Interest expense$(17,146) (0.358)% $(13,891) (0.183)% $3,255 23.4% Interest expense for the year ended June 30, 2019 increased $3.3 million, or 23.4% to $17.1 million from $13.9 million in 2018. The increase wasprimarily due to higher overall average debt levels and interest rates, mainly associated with our two principal financing vehicles (e.g. the Trading CreditFacility and AMCF's recently issued Notes) in fiscal 2019 compared to the prior fiscal year.As compared to the same year-ago period, the following interest expense components increased: (i) $4.3 million related to our Notes (including debtamortization costs), and (ii) $1.0 million related to our liability on borrowed metals, partially offset by a reduction of (iii) $(1.1) million related to productfinancing arrangements and (iv) $(0.4) million associated with our Trading Credit Facility (including debt amortization costs), and (v) $(0.3) million relatedto the Goldline Credit Facility (including debt amortization costs). The Goldline Credit Facility was paid off in full during second quarter of fiscal year 2019.29Table of Contents Provision for Income TaxesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Income tax expense$(1,015) (0.021)% $(8) — % $1,007 NM Our income tax expense was $1.0 million and $0.0 million for the years ended June 30, 2019 and 2018, respectively. Our effective tax rate wasapproximately 31.0% and 0.2% for the years ended June 30, 2019 and 2018, respectively. For the year ended June 30, 2019, our effective tax rate differedfrom the federal statutory rate primarily due to state taxes (including state minimum taxes and net of federal tax benefit) and non-deductible Companyprovided transportation benefits. For the year ended June 30, 2018, our effective tax rate differed from the federal statutory rate primarily due the impact of aone-time revaluation tax charge related to the Tax Cuts and Job Act, offsetting the tax benefit from operating losses.30Table of Contents Segment Results of OperationsThe Company conducts its operations in three reportable segments: (1) Wholesale Trading & Ancillary Services, (2) Secured Lending and (3) DirectSales. Each of these reportable segments represents an aggregation of operating segments that meets the aggregation criteria set forth in the SegmentReporting Topic 280 of the FASB Accounting Standards Codification (“ASC”).Results of Operations — Wholesale Trading & Ancillary Services SegmentOverview of Results of Operations for the Years Ended June 30, 2019 and 2018The operating results of our Wholesale Trading & Ancillary Services segment for the years ended June 30, 2019 and 2018 are as follows:in thousands, except performance metrics Years Ended June 30,2019 2018 $ % $ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Revenues$4,733,800 100.000 % $7,538,856 100.000 % $(2,805,056) (37.2)%Gross profit26,270 0.555 % 24,109 0.320 % $2,161 9.0 %Selling, general and administrative expenses(22,274) (0.471)% (21,096) (0.280)% $1,178 5.6 %Interest income8,601 0.182 % 6,473 0.086 % $2,128 32.9 %Interest expense(9,626) (0.203)% (7,778) (0.103)% $1,848 23.8 %Other income, net1,749 0.037 % 954 0.013 % $795 83.3 %Unrealized gain on foreign exchange— — % 30 — % $(30) NMNet income before provision for income taxes$4,720 0.100 % $2,692 0.036 % $2,028 75.3 % Performance Metrics: Gold ounces sold(1)1,783,000 1,895,000 (112,000) (5.9)%Silver ounces sold(2)66,553,000 46,045,000 20,508,000 44.5 %Wholesale Trading ticket volume(3)120,257 114,935 5,322 4.6 % _________________________________ NM Not meaningful. (1) Gold ounces sold represents the ounces of gold product sold and delivered to the customer during the period, excluding ounces of gold recorded on forwardcontracts. (2) Silver ounces sold represents the ounces of silver product sold and delivered to the customer during the period, excluding ounces of silver recorded on forwardcontracts. (3) Trading ticket volume represents the total number of product orders processed by our trading desks in El Segundo, California for the Wholesale Trading & AncillaryServices segment. 31Table of Contents Revenues — Wholesale Trading & Ancillary ServicesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metrics$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Revenues$4,733,800 100.000% $7,538,856 100.000% $(2,805,056) (37.2)%Performance Metrics Gold ounces sold1,783,000 1,895,000 (112,000) (5.9)%Silver ounces sold66,553,000 46,045,000 20,508,000 44.5 % Revenues for the year ended June 30, 2019 decreased $2.805 billion, or 37.2%, to $4.734 billion from $7.539 billion in 2018. Our revenuesdecreased primarily due to lower forward sales (about $2.8 billion of the aggregate change), lower gold and silver prices, and lower gold ounces sold, offsetby an increase in the total amount of silver ounces sold.Gold ounces sold for the year ended June 30, 2019 decreased 112,000 ounces, or 5.9%, to 1,783,000 ounces from 1,895,000 ounces in 2018. Silverounces sold for the year ended June 30, 2019 increased 20,508,000 ounces, or 44.5%, to 66,553,000 ounces from 46,045,000 ounces in 2018. On average, theselling prices for gold decreased by 2.7% and selling prices for silver decreased by 10.1% during the year ended June 30, 2019 as compared to 2018. Gross Profit — Wholesale Trading & Ancillary ServicesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metric$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Gross profit$26,270 0.555% $24,109 0.320% $2,161 9.0%Performance Metric Wholesale trading ticket volume120,257 114,935 5,322 4.6% Gross profit for the year ended June 30, 2019 increased by $2.2 million, or 9.0%, to $26.3 million from $24.1 million in 2018. Overall gross profitincreased primarily due to improved overall product margins, offset by lower trading profits.The Company’s profit margin percentage increased by 73.4% to 0.555% from 0.320% in 2018. The increase in gross margin percentage was largelyattributable to lower forward sales ($2.8 billion), which increase revenues but are associated with negligible gross margin percentages, and by wider spreadsearned on products sold. 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 year ended June 30, 2019 increased by 5,322 tickets, or 4.6%, to 120,257 tickets from 114,935 tickets in2018. The increase in our trading ticket volume is indicative of higher trading activity as compared to 2018.Selling, General and Administrative Expenses — Wholesale Trading & Ancillary ServicesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Selling, general and administrative expenses$(22,274) (0.471)% $(21,096) (0.280)% $1,178 5.6% Selling, general and administrative expenses for the year ended June 30, 2019 increased $1.2 million, or 5.6%, to $22.3 million from $21.1 millionin 2018. The increase is mainly driven by higher overall compensation costs of $2.6 million, partially offset by a decrease in IT consulting costs of $0.8million, lower investigatory acquisition costs of $0.6 million, and lower legal costs of $0.4 million, 32Table of Contents Interest Income — Wholesale Trading & Ancillary ServicesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Interest income$8,601 0.182% $6,473 0.086% $2,128 32.9% Interest income for the year ended June 30, 2019 increased $2.1 million, or 32.9%, to $8.6 million from $6.5 million in 2018. The aggregate increasein interest income increased primarily due to other finance product income. Our finance fees earned from repurchase arrangements with customers increasedby 30.1% or by $1.7 million in comparison to the same year-ago period.Interest Expense — Wholesale Trading & Ancillary ServicesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Interest expense$(9,626) (0.203)% $(7,778) (0.103)% $1,848 23.8% Interest expense for the year ended June 30, 2019 increased $1.8 million, or 23.8% to $9.6 million from $7.8 million in 2018. The increase wasrelated primarily to interest expense on this segment's source of financing provided by the Trading Credit Facility and the recently issued Notes (both ofwhich carried a higher interest rate than the prior year), as well as higher interest related to liabilities on borrowed metal, partially offset by a reduction ininterest expense on our product financing arrangements. As compared to the same year-ago period, the following interest expense components increased: (i)$1.4 million related to our Notes, (ii) $0.6 million, related to our Trading Credit Facility, (iii) $1.0 million, related to our liability on borrowed metals, whichwas partially offset by a decrease of (iv) $(1.1) million related to product financing arrangements.33Table of Contents Results of Operations — Secured Lending SegmentOverview of Results of Operations for the Years Ended June 30, 2019 and 2018The operating results of our Secured Lending segment for the years ended June 30, 2019 and 2018 are as follows:in thousands, except performance metricsYears Ended June 30,2019 2018 $ % $ % of interestincome $ % of interestincome Increase/(decrease) Increase/(decrease)Interest income$10,657 100.000 % $9,632 100.000 % $1,025 10.6 %Interest expense(7,178) (67.355)% (5,465) (56.738)% $1,713 31.3 %Selling, general and administrative expenses(1,456) (13.662)% (1,689) (17.535)% $(233) (13.8)%Other income, net105 0.985 % — — % $105 NMNet income before provision for income taxes$2,128 19.968 % $2,478 25.727 % $(350) (14.1)% Performance Metrics: Number of secured loans at period end (1)2,806 3,507 (701) (20.0)% _________________________________ NM Not meaningful. (1) Number of outstanding secured loans to customers at the end of the period. 34Table of Contents Interest Income — Secured LendingYear Ended June 30, 2019 Compared to Year Ended June 30, 2018 Years Ended June 30,2019 2018 $ %in thousands, except performance metric$ % of interestincome $ % of interestincome Increase/(decrease) Increase/(decrease)Interest income$10,657 100.000% $9,632 100.000% $1,025 10.6 %Performance Metric Number of secured loans at period-end2,806 3,507 (701) (20.0)% Interest income for the year ended June 30, 2019 increased $1.0 million, or 10.6%, to $10.7 million from $9.6 million in 2018. This increase wasprimarily due to increases in interest rates (a weighted average interest rate of 10.2% for fiscal 2019, compared to a weighted average interest rate of 9.6% forfiscal 2018) and an increase in the value of the secured loan portfolio ($125.3 million as of June 30, 2019 compared to $110.4 million as of June 30, 2018).Despite the increase in value of the loan portfolio, the number of secured loans outstanding decreased by 20.0% to 2,806 from 3,507 in 2018. This decreasewas due to lower metal prices in the first quarter of fiscal 2019 that lowered the customer's collateral value, which lead to loans being liquidated. TheCompany did not incur any loan losses from the liquidations.Interest Expense — Secured LendingYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of interestincome $ % of interestincome Increase/(decrease) Increase/(decrease)Interest expense$(7,178) (67.355)% $(5,465) (56.738)% $1,713 31.3% Interest expense for the year ended June 30, 2019 increased $1.7 million, or 31.3% to $7.2 million from $5.5 million in 2018. The increase wasrelated primarily to our issuance of Notes (with an aggregate principal value and aggregate stated interest rate of $100.0 million and 5.3%, respectively, inthe first quarter of fiscal 2019 and a shift in the source of financing (for originating and acquiring secured loans by the Secured Lending segment) from theTrading Credit Facility to the newly issued Notes (which carry a higher overall interest rate). As compared to the same year-ago period, interest expenseincreased by $2.9 million as a result of our recently issued Notes partially offset by $(0.9) million associated with our Trading Credit Facility.Selling, General and Administrative Expenses — Secured LendingYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of interestincome $ % of interestincome Increase/(decrease) Increase/(decrease)Selling, general and administrative expenses$(1,456) (13.662)% $(1,689) (17.535)% $(233) (13.8)% Selling, general and administrative expenses for the year ended June 30, 2019 decreased $233,000, or 13.8%, to $1.5 million from $1.7 million in2018.35Table of Contents Results of Operations — Direct Sales SegmentOverview of Results of Operations for the Years Ended June 30, 2019 and 2018The Direct Sales segment was formed on August 28, 2017 as a result of the Goldline acquisition. Accordingly, comparative prior period data onlycontains approximately ten months of activity. The operating results of our Direct Sales segment for the years ended June 30, 2019 and 2018 are as follows:in thousands, except performance metrics Years Ended June 30,2019 2018 $ % $ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease) Revenues$49,357(a) 100.000 % $67,392(c) 100.000 % $(18,035) (26.8)% Gross profit5,688 11.524 %(b) 5,334 7.915 %(d) $354 6.6 % Selling, general and administrative expenses(8,772) (17.773)% (10,613) (15.748)% $(1,841) (17.3)% Goodwill and intangible asset impairment— — % (2,654) (3.938)% $(2,654) (100.0)% Interest income12 0.024 % — — % $12 — % Interest expense(342) (0.693)% (648) (0.962)% $(306) (47.2)% Other expense(157) (0.318)% — — % $157 NM Net loss before provision for income taxes$(3,571) (7.235)% $(8,581) (12.733)% $(5,010) (58.4)% Performance Metrics: Gold ounces sold(1)16,000 17,000 (1,000) (5.9)% Silver ounces sold(2)1,067,000 421,000 646,000 153.4 % Direct Sales ticket volume(3)16,828 15,654 1,174 7.5 % _________________________________ NM Not meaningful. (a) Includes $0.9 million of intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment. (b) Gross profit percentage, excluding intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment, is 11.773% for theperiod. (c) Includes $22.5 million of intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment. (d) Gross profit percentage, excluding intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment, is 15.260% for theperiod. (1) Gold ounces sold represents the ounces of gold product sold to third-party customers during the period. (2) Silver ounces sold represents the ounces of silver product sold to third-party customer during the period. (3) Direct Sales segment trading ticket volume represents the total number of product orders processed. 36Table of Contents Segment Results — Direct SalesRevenuesYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ % in thousands, except performance metrics$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease) Revenues$49,357 100.000% $67,392 100.000% $(18,035) (26.8)% Performance Metrics: Gold ounces sold16,000 17,000 (1,000) (5.9)% Silver ounces sold1,067,000 421,000 646,000 153.4 % Revenues for the year ended June 30, 2019 decreased $18.0 million, or 26.8%, to $49.4 million from $67.4 million in 2018. Excludingintercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment, revenues for the year ended June 30, 2019increased $3.5 million or 7.9% to $48.4 million from $44.9 million in 2018.Gold ounces sold for the year ended June 30, 2019 decreased 1,000 ounces, or 5.9%, to 16,000 ounces from 17,000 ounces in 2018. Silver ouncessold for the year ended June 30, 2019 increased 646,000 ounces, or 153.4%, to 1,067,000 ounces from 421,000 ounces in 2018. On average, the selling pricesfor gold decreased by 9.2% and selling prices for silver decreased by 12.1% during the year ended June 30, 2019 as compared to 2018.Gross ProfitYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands, except performance metric$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Gross profit$5,688 11.524% $5,334 7.915% $354 6.6%Performance Metric: Direct Sales ticket volume16,828 15,654 1,174 7.5%Gross profit for the year ended June 30, 2019 increased by $0.4 million, or 6.6%, to $5.7 million from $5.3 million in 2018. For the year ended June30, 2019, the Company’s profit margin percentage increased by 45.6% to 11.5% from 7.9% in 2018. Excluding the impact of intercompany sales from theDirect Sales segment to the Wholesale Trading & Ancillary Services segment, the Direct Sales segment's gross profit margin percentage decreased by 22.9%to 11.773% from 15.260% in 2018.The Direct Sales ticket volume for the year ended June 30, 2019 increased by 1,174 tickets, or 7.5%, to 16,828 tickets from 15,654 tickets in 2018.The increase in our trading ticket volume is indicative of higher trading activity as compared to 2018.Selling, General and Administrative ExpenseYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Selling, general and administrative expenses$(8,772) (17.773)% $(10,613) (15.748)% $(1,841) (17.3)% Selling, general and administrative expenses for the year ended June 30, 2019 decreased $1.8 million, or 17.3%, to $8.8 million from $10.6 millionin 2018. The decrease in selling, general and administrative expenses was primarily due to lower overall compensation (including severance) costs of $1.2million and advertising costs of $0.7 million. Our Direct Sales Segment reported a decrease in selling, general, and administrative expense even though theDirect Sales segment was only owned for ten months in the prior comparable period.37Table of Contents Goodwill and intangible asset impairmentYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Goodwill and intangible asset impairment$— —% $(2,654) (3.938)% $(2,654) (100.0)% Goodwill and intangible asset impairment for the year ended June 30, 2019 decreased $2.7 million to $0 from $2.7 million in 2018. The change wasdue to an impairment charge booked as a result of our annual impairment assessment we conducted in the fourth quarter of fiscal year 2018.Interest expenseYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Interest expense$(342) (0.693)% $(648) (0.962)% $(306) (47.2)% Interest expense for the year ended June 30, 2019 decreased $306,000, or 47.2% to $342,000 from $648,000 in 2018. The decrease primarily relatesto the extinguishment of the Goldline Credit Facility in the second quarter of fiscal 2019.Other expenseYear Ended June 30, 2019 Compared to Year Ended June 30, 2018Years Ended June 30,2019 2018 $ %in thousands$ % of revenue $ % of revenue Increase/(decrease) Increase/(decrease)Other expense$(157) (0.318)% $— —% $157 NM Other expense for the year ended June 30, 2019 increased $157,000, to $157,000 from $0.0 in 2018, which was primarily related to prepayment costassociated with the extinguishment Goldline Credit Facility before its maturity date.38Table of Contents LIQUIDITY AND FINANCIAL CONDITIONPrimary Sources and Uses of CashOverviewLiquidity is defined as our ability to generate sufficient amounts of cash to meet all of our cash needs. Liquidity is of critical importance to us andimperative to maintain our operations on a daily basis.A substantial portion of our assets are liquid. As of June 30, 2019, approximately 94% of our assets consisted of cash, customer receivables,derivative assets, secured loans receivables, precious metals held under financing arrangements and inventory, measured at fair value. Cash generated fromthe sales of our precious metals products is our primary source of operating liquidity.Typically, the Company acquires its inventory by: (1) purchasing inventory from our suppliers by utilizing our own capital and lines of credit; (2)borrowing precious metals from our suppliers under short-term arrangements which may bear interest at a designated rate, and (3) repurchasing inventory atan agreed-upon price based on the spot price on the specified repurchase date.In addition to selling inventory, the Company generates cash from earning interest income. Through CFC, the Company enters into secured loansand secured financing structures with its customers under which it charges interest. The Company offers a number of secured financing options to itscustomers to finance their precious metals purchases including consignments and other structured inventory finance products. The loans are secured byprecious metals and numismatic material owned by the borrowers and held by the Company as security for the term of the loan. Furthermore, our customersmay enter into agreements whereby the customer agrees to repurchase our precious metals at the prevailing spot price for delivery of the product at a specificpoint in time in the future; interest income is earned from the contract date until the material is delivered and paid for in full.We continually review our overall credit and capital needs to ensure that our capital base, both stockholders’ equity and available credit facilities,can appropriately support our anticipated financing needs. The Company also continually monitors its current and forecasted cash requirements, and drawsupon and pays down its lines of credit so as to minimize interest expense.The Company believes that the Trading Credit Facility (as defined below) the notes payable, liability on borrowed metals, and product financingarrangements provides adequate means to capital for its operations. (See Note 14 of the Notes to Consolidated Financial Statements.)Lines of Creditin thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018 Lines of credit $167,000 $200,000 $(33,000) Effective March 29, 2019, through an amendment and restatement of the applicable credit documents, A-Mark renewed its uncommitted demandborrowing facility ("Trading Credit Facility") with a syndicate of banks. Under the agreements, Coöperatieve Rabobank U.A. acts as joint lead lender andadministrative agent/bookrunner and Natixis acts as joint lead arranger and syndication agent for the syndicate. As of June 30, 2019, the Trading CreditFacility provided the Company with access up to $260.0 million, featuring a $210.0 million base, with a $50.0 million accordion option. The maturity dateof the new credit facility is March 27, 2020.Debt Obligation (Related Party)in thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018 Debt Obligation - related party $— $7,226 $(7,226) On August 28, 2017, the Company entered into a privately placed credit facility in the amount of $7.5 million (the “Goldline Credit Facility”) withvarious lenders. The outstanding principal and unpaid interest was due upon maturity (August 28, 2020), but was paid off in full on December 7, 2018 (see Note 14), as the Company secured a more favorable source of funding. (See Notes Payable below.)39Table of Contents Notes Payablein thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018Notes payable $91,859 $— $91,859On September 14, 2018, AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, completed an issuance of Secured Senior TermNotes, Series 2018-1, Class A in the aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B in theaggregate principal amount of $28.0 million. The Class A Notes bear interest at a rate of 4.98% and the Class B Notes bear interest at a rate of 5.98%. TheNotes have a maturity date of December 15, 2023.As of June 30, 2019, the consolidated aggregate carrying balance of the Notes were $91.9 million (which excludes the $5.0 million Note that theCompany retained), and the remaining unamortized loan cost balance was approximately $3.1 million, which is amortized ratably through the maturity date.(See Note 14 of the Notes to Consolidated Financial Statements.)Liability on Borrowed Metalsin thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018 Liability on borrowed metals $201,144 $280,346 $(79,202) We borrow precious metals from our suppliers and customers under short-term arrangements using other precious metal from our inventory orprecious metals held under financing arrangements as collateral. Amounts under these arrangements require repayment either in the form of precious metals orcash. Liabilities also arise from unallocated metal positions held by customers in our inventory. Typically, these positions are due on demand, in a specifiedphysical form, based on the total ounces of metal held in the position.Product Financing Arrangementsin thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018 Product financing arrangements $94,505 $113,940 $(19,435) The Company has agreements with financial institutions and other third parties that allow the Company to transfer its gold and silver inventory tothe third party at an agreed-upon price based on the spot price, which provides alternative sources of liquidity. During the term of the agreement both partiesintend for inventory to be returned at an agreed-upon price based on the spot price on the termination (repurchase) date. The third parties charge monthlyinterest as a percentage of the market value of the outstanding obligation; such monthly charges are classified in interest expense. These transactions do notqualify as sales and therefore have been accounted for as financing arrangements and reflected in the consolidated balance sheet as product financingarrangements. The obligation is stated at the amount required to repurchase the outstanding inventory. Both the product financing arrangements and theunderlying inventory (which is entirely restricted) are carried at fair value, with changes in fair value included as a component of cost of sales.Secured Loans Receivablein thousands June 30, 2019 June 30, 2018 June 30, 2019 Compared toJune 30, 2018Secured loans receivable $125,298 $110,424 $14,874CFC is a California licensed finance lender that makes and acquires commercial loans secured by bullion and numismatic coins that affords ourcustomers a convenient means of financing their inventory or collections. (See Note 5 of the Notes to Consolidated Financial Statements.) AMCF alsopurchases and holds secured loans from CFC to meet its collateral requirements related to the Notes. (See Note 14 of the Notes to Consolidated FinancialStatements.) 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 regards to our capital deployment strategies.40Table of Contents DividendsIn fiscal 2018, the Company made three quarterly dividend payments of $0.08 per common share, pursuant to a previously approved dividendpolicy. The Company has not made a dividend payment since then. The declaration of cash dividends is subject to the determination each quarter by theBoard of Directors, based on its assessment of a number of factors, including the Company’s financial performance, available cash resources, cashrequirements, bank covenants, and alternative uses of cash that the Board of Directors may conclude would represent an opportunity to generate a greaterreturn on investment for the Company.Cash FlowsThe majority of the Company’s trading activities involve two day value trades under which payment is received in advance of delivery or product isreceived in advance of payment. The high volume, rapid rate of inventory turnover, and high average value per trade can cause material changes in thesources of cash used in or provided by operating activities on a daily basis. The Company manages these variances through its liquidity forecasts andcounterparty limits by maintaining a liquidity reserve to meet the Company’s cash needs. The Company uses various short-term financial instruments tomanage the rapid cycle of our trading activities from customer purchase order to cash collections and product delivery, which can cause material changes inthe amount of cash used in or provided by financing activities on a daily basis.The following summarizes components of our consolidated statements of cash flows for the years ended June 30, 2019 and 2018:in thousands Year ended June 30, 2019 June 30, 2018 June 30, 2019Compared toJune 30, 2018 Net cash (used in) provided by operating activities $(14,533) $7,646 $(22,179) Net cash used in investing activities $(14,805) $(17,832) $3,027 Net cash provided by financing activities $31,367 $3,418 $27,949 Our principal capital requirements have been to fund (i) working capital and (ii) capital expenditures. Our working capital requirements fluctuatewith market conditions, the availability of precious metals and the volatility of precious metals commodity pricing.Net cash (used in) provided by operating activitiesOperating activities used $14.5 million and provided $7.6 million in cash for the years ended June 30, 2019 and 2018, respectively, representing a$22.2 million decrease in the use of cash compared to the year ended June 30, 2018. This period over period decrease was primarily due to changes in thebalances of: secured loans, liability on borrowed metals, impairment charges, derivative assets, and earnings from equity method investments; offset bychanges in the balances of: inventories, receivables, precious metals held under financing arrangements, secured loans to affiliates, derivative liability,accounts payable, accrued liabilities, income tax payables, prepaid expenses and other assets, income tax receivable, and net income.Net cash used in investing activitiesInvesting activities used $14.8 million and used $17.8 million in cash for the years ended June 30, 2019 and 2018, respectively, representing a $3.0million increase in the source of cash compared to the year ended June 30, 2018. This period over period increase was due to the prior fiscal year's Goldlineacquisition activity of $9.5 million; offset by the change in balance of secured loans of $5.0 million compared to the comparable prior period, and theacquisition of shares related to two of our equity-method investments for $2.3 million.Net cash provided by financing activitiesFinancing activities provided $31.4 million and provided $3.4 million in cash for the years ended June 30, 2019 and 2018, respectively,representing an increase of $27.9 million in the source of cash compared to the year ended June 30, 2018. This period over period increase was primarily dueto the issuance of notes payable of $95.0 million, changes in the balance of product financing arrangements of $2.0 million; offset by the change inrepayment of related party debt of $7.0 million, and the proceeds received in the prior fiscal year from the issuance of related party debt of $7.5 million, andthe change in the balance in the Trading Credit Facility of $53.0 million.41Table of Contents CAPITAL RESOURCESWe believe that our current cash availability under the Trading Credit Facility, product financing arrangements, financing derived from borrowedmetals and the cash we anticipate to generate from operating activities will provide us with sufficient liquidity to satisfy our working capital needs, capitalexpenditures, investment requirements and commitments through at least the next twelve months.CONTRACTUAL OBLIGATIONS, CONTINGENT LIABILITIES AND COMMITMENTSCounterparty RiskWe manage our counterparty risk by setting credit and position risk limits with our trading counterparties. These limits include gross position limitsfor counterparties engaged in sales and purchase transactions and inventory consignment transactions with us. They also include collateral limits for differenttypes of sale and purchase transactions that counterparties may engage in from time to time.Commodities Risk and DerivativesWe use a variety of strategies to manage our risk including fluctuations in commodity prices for precious metals. Our inventories consist of, and ourtrading activities involve, precious metals and precious metal products, whose prices are linked to the corresponding precious metal commodity prices.Inventories purchased or borrowed by us are subject to price changes. Inventories borrowed are considered natural hedges, since changes in value of the metalheld are offset by the obligation to return the metal to the supplier or deliver metals to the customer.Open sale and purchase commitments in our trading activities are subject to changes in value between the date the purchase or sale price is fixed (thetrade date) and the date the metal is received or delivered (the settlement date). We seek to minimize the effect of price changes of the underlying commoditythrough the use of forward and futures contracts. Our open sale and purchase commitments generally settle within 2 business days, and for those commitmentsthat do not have stated settlement dates, we have the right to settle the positions upon demand.Our policy is to substantially hedge our underlying precious metal commodity inventory position. We regularly enter into metals commodityforward and futures contracts with financial institutions to hedge price changes that would cause changes in the value of our physical metals positions andpurchase commitments and sale commitments. We have access to all of the precious metals markets, allowing us to place hedges. However, we also maintainrelationships with major market makers in every major precious metals dealing center, which allows us to enter into contracts with market makers. Ourforwards contracts open at June 30, 2019 are scheduled to settle within 60 days. Futures positions do not have settlement dates, although the Companytypically closes its future positions within a week.The Company enters into these derivative transactions solely for the purpose of hedging our inventory holding risk, and not for speculative marketpurposes. Due to the nature of our hedging strategy, we are not using hedge accounting as defined under, Derivatives and Hedging Topic 815 of theAccounting Standards Codification ("ASC".) Unrealized gains or losses resulting from our futures and forward contracts are reported as cost of sales with therelated amounts due from or to counterparties reflected as a derivative asset or liability. The Company adjusts the derivatives to fair value on a daily basisuntil the transactions are settled. When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses forforward contracts are recorded in revenue and cost of sales and the net realized gains and losses for futures and option contracts are recorded in cost of sales.The Company’s net (losses) gains on derivative instruments for the years ended June 30, 2019 and 2018, totaled $(1.1) million and $15.6 million,respectively. These net (losses) gains on derivative instruments were substantially offset by the changes in fair market value of the underlying precious metalsinventory and open sale and purchase commitments, which is also recorded in cost of sales in the consolidated statements of operations.42Table of Contents The purpose of the Company's hedging policy is to substantially match the change in the value of the derivative financial instrument to the changein the value of the underlying hedged item. The following table summarizes the results of our hedging activities, showing the precious metal commodityinventory position, net of open sale and purchase commitments, which is subject to price risk, compared to change in the value of the derivative instrumentsas of June 30, 2019 and at June 30, 2018:in thousands June 30, 2019 June 30, 2018Inventory $292,861 $280,116Precious metals held under financing arrangements 208,792 262,566 501,653 542,682 Less unhedgeable inventory: Commemorative coin inventory, held at lower of cost or net realizable value (17) (99)Premium on metals position (4,424) (3,530)Precious metal value not hedged (4,441) (3,629) 497,212 539,053 Commitments at market: Open inventory purchase commitments 166,600 342,287Open inventory sales commitments (158,870) (138,022)Margin sale commitments (11,652) (5,988)In-transit inventory no longer subject to market risk (809) (1,060)Unhedgeable premiums on open commitment positions 838 541Borrowed precious metals (201,144) (280,346)Product financing arrangements (94,505) (113,940)Advances on industrial metals 8,644 6,044 (290,898) (190,484) Precious metal subject to price risk 206,314 348,569 Precious metal subject to derivative financial instruments: Precious metals forward contracts at market values 133,612 274,994Precious metals futures contracts at market values 72,218 72,421Total market value of derivative financial instruments 205,830 347,415 Net precious metals subject to commodity price risk $484 $1,154We are exposed to the risk of default of the counterparties to our derivative contracts. Significant judgment is applied by us when evaluating the fairvalue implications. We regularly review the creditworthiness of our major counterparties and monitor our exposure to concentrations. At June 30, 2019, webelieve our risk of counterparty default is mitigated based on our evaluation of the creditworthiness of our major counterparties, the strong financialcondition of our counterparties, and the short-term duration of these arrangements.Commitments and ContingenciesRefer to Note 15 for information relating Company's commitments and contingencies.43Table of Contents OFF-BALANCE SHEET ARRANGEMENTSAs of June 30, 2019 and June 30, 2018, we had the following outstanding sale and purchase commitments and open forward and future contracts,which are normal and recurring, in nature:in thousands June 30, 2019 June 30, 2018Purchase commitments $166,600 $342,287Sales commitments $(158,870) $(138,022)Margin sale commitments $(11,652) $(5,988)Open forward contracts $133,612 $274,994Open futures contracts $72,218 $72,421Foreign exchange forward contracts $5,934 $4,130The notional amounts of the commodity forward and futures contracts and the open sales and purchase orders, as shown in the table above, are notreflected at the notional amounts in the consolidated balance sheets. The Company records commodity forward and futures contracts at the fair value, whichis 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 thecontract was transacted. The fair value of the open derivative contracts are shown as a component of derivative assets or derivative liabilities in theaccompanying 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 forspeculative market purposes. The Company’s gains (losses) on derivative instruments are substantially offset by the changes in fair market value of theunderlying precious metals inventory position, including our open sale and purchase commitments. 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 consolidated statements of operations. We adjust thecarrying value of the derivatives to fair value on a daily basis until the transactions are physically settled. (See Note 11 of the Notes to ConsolidatedFinancial Statements.)CRITICAL ACCOUNTING POLICIESOur consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).In connection with the preparation of our financial statements, we are required to make estimates and assumptions about future events and apply judgmentsthat affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We base our assumptions, estimates and judgments onhistorical experience, current trends and other factors that we believe to be relevant at the time our consolidated financial statements are prepared. On aregular basis, we review our accounting policies, assumptions, estimates and judgments to ensure that our consolidated financial statements are presentedfairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results couldmaterially differ from our estimates.Our significant accounting policies are discussed in Note 2 of the Notes to consolidated financial statements. We believe that the followingaccounting policies are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult,subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. We have reviewed thesecritical accounting estimates and related disclosures with the Audit Committee of our Board of Directors.Revenue RecognitionThe Company accounts for its metals and sales contracts using settlement date accounting. Pursuant to such accounting, the Company recognizesthe sale or purchase of the metals at settlement date. During the period between the trade and settlement dates, the Company has entered into a forwardcontract that meets the definition of a derivative in accordance with the Derivatives and Hedging Topic 815 of the ASC. The Company records the derivativeat the trade date with any corresponding unrealized gain (loss), shown as component of cost of sales in the consolidated statements of operations. TheCompany adjusts the derivatives to fair value on a daily basis until the transactions are settled. When these contracts are settled, the unrealized gains andlosses are reversed, and revenue is recognized for contracts that are physically settled. For contracts that are net settled, the realized gains and losses arerecorded in cost of sales, with the exception of forward contracts, where their associated realized gain and losses are recorded in revenue and cost of sales,respectively.Also, the Company recognizes its storage, logistics, licensing, and other services revenues in accordance with the FASB's release ASU 2014-09Revenue From Contracts With Customers Topic 606 ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized: (i)identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate thetransaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.44Table of Contents InventoriesThe Company's inventories primarily include bullion and bullion coins, which are initially recorded at fair market value. The fair market value ofthe bullion and bullion coins is comprised of two components: (1) published market values attributable to the cost of the raw precious metal, and (2) apublished premium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form and themarket value attributable solely to the premium may be readily determined, as it is published by multiple reputable sources. The premium is included in thecost of the inventory, paid at acquisition, and is a component of the total fair market value of the inventory. The precious metal component of the inventorymay be hedged through the use of precious metal commodity positions, while the premium component of our inventory is not a commodity that may behedged.The Company’s inventories, except for certain lower of cost or net realizable value basis products (as described below), are subsequently recorded attheir fair market values. The daily changes in the fair market value of our inventory are offset by daily changes in the fair market value of hedging derivativesthat 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 ofthese derivative instruments are recorded in cost of sales in the consolidated statements of operations.While the premium component included in inventories 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 onthe underlying spot price of the precious metal content of the commemorative coins. Unlike our bullion coins, the value of commemorative coins is notsubject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metalprice than bullion coins. Additionally, neither the commemorative coin inventory nor the premium component of our inventory is hedged.Inventories include amounts borrowed from suppliers and customers arising from various arrangements including unallocated metal positions heldby customers in the Company’s inventory, amounts due to suppliers for the use of consigned inventory, metals held by suppliers as collateral on advancedpool metals, as well as shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metal represents anunsegregated inventory position that is due on demand, in a specified physical form, based on the total ounces of metal held in the position. Amounts underthese arrangements require delivery either in the form of precious metals or cash. The Company mitigates market risk of its physical inventories and opencommitments through commodity hedge transactions. (See Note 11 of the Notes to Consolidated Financial Statements.)The Company enters into product financing agreements for the transfer and subsequent option to reacquire its gold and silver inventory at anagreed-upon price based on the spot price with a third party finance company. This inventory is restricted and is held at a custodial storage facility inexchange for a financing fee, charged by the third party finance company. During the term of the financing agreement, the third party company holds theinventory as collateral, and both parties intend for the inventory to be returned to the Company at an agreed-upon price based on the spot price on thetermination (repurchase) date. The third party charges a monthly fee as percentage of the market value of the outstanding obligation; such monthly charge isclassified as interest expense. These transactions do not qualify as sales and have been accounted for as financing arrangements in accordance with ASC 470-40 Product Financing Arrangements, and are reflected in the consolidated balance sheets as product financing arrangements. The obligation is stated at theamount required to repurchase the outstanding inventory. Both the product financing and the underlying inventory (which is restricted) are carried at fairvalue, with changes in fair value included in cost of sales in the consolidated statements of operations.The Company periodically loans metals to customers on a short-term consignment basis. Such inventories are removed at the time the customerelects to price and purchase the metals, and the Company records a corresponding sale and receivable.The Company enters into financing arrangements with certain customers under which A-Mark purchases precious metals products that are subject torepurchase by the customer at the fair value of the product on the repurchase date. The Company or the counterparty may typically terminate any sucharrangement with 14 days' notice. Upon termination the customer’s rights to repurchase any remaining inventory is forfeited.Goodwill and Other Purchased Intangible AssetsWe evaluate goodwill and other indefinite-lived intangibles for impairment annually in the fourth quarter of the fiscal year (or more frequently ifindicators of potential impairment exist) in accordance with the Intangibles - Goodwill and Other Topic 350 of the ASC. Other finite-lived intangible assetsare evaluated for impairment when events or changes in business circumstances indicate that the carrying amount of the assets may not be recoverable. Wemay first qualitatively assess whether relevant events and circumstances make it more likely than not that the fair value of the reporting unit's goodwill is lessthan its carrying value. If, based on this qualitative assessment, we determine that goodwill is more likely than not to be impaired, a quantitative impairmenttest is performed. This step requires us to determine the fair value of the business, and compare the calculated fair value of a reporting unit with its carryingamount, including goodwill. If through this quantitative analysis the Company determines the fair value of a reporting unit exceeds its carrying amount, thegoodwill of the reporting unit is considered not to be impaired. If the Company concludes that the fair value of the reporting unit is less than its carryingvalue, a goodwill impairment will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value.The Company also performs impairment reviews on its indefinite-lived intangible assets (i.e., trademarks and trade-names). In assessing itsindefinite-lived intangible assets for impairment, the Company has the option to first perform a qualitative45Table of Contents 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-livedintangible asset is less than its carrying amount, the Company is not required to perform any additional tests in assessing the asset for impairment. However, ifthe Company concludes otherwise or elects not to perform the qualitative assessment, then it is required to perform a quantitative analysis to determine if thefair value of an indefinite-lived intangible asset is less than its carrying value. If through a quantitative analysis the Company determines the fair value of anindefinite-lived intangible asset exceeds its carrying amount, the indefinite-lived intangible asset is considered not to be impaired. If the Company concludesthat the fair value of an indefinite-lived intangible asset is less than its carrying value, an impairment will be recognized for the amount by which the carryingamount exceeds the indefinite-lived intangible asset’s fair value.Income TaxesAs part of the process of preparing its consolidated financial statements, the Company is required to estimate its provision for income taxes in eachof the tax jurisdictions in which it conducts business, in accordance with the Income Taxes Topic 740 of the ASC ("ASC 740"). The Company computes itsannual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Significantjudgment is required in determining the Company's annual tax rate and in evaluating uncertainty in its tax positions. The Company recognizes a benefit fortax positions that it believes will more likely than not be sustained upon examination. The amount of benefit recognized is the largest amount of benefit thatthe Company believes has more than a 50% probability of being realized upon settlement. The Company regularly monitors its tax positions and adjusts theamount of recognized tax benefit based on its evaluation of information that has become available since the end of its last financial reporting period. Theannual tax rate includes the impact of these changes in recognized tax benefits. When adjusting the amount of recognized tax benefits, the Company doesnot consider information that has become available after the balance sheet date, but does disclose the effects of new information whenever those effectswould be material to the Company's consolidated financial statements. The difference between the amount of benefit taken or expected to be taken in a taxreturn and the amount of benefit recognized for financial reporting represents unrecognized tax benefits. These unrecognized tax benefits are presented in theconsolidated balance sheets principally within accrued liabilities.The Company accounts for uncertainty in income taxes under the provisions of ASC 740. These provisions clarify the accounting for uncertainty inincome taxes recognized in an enterprise's financial statements, and prescribe a recognition threshold and measurement criteria for the financial statementrecognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions also provide guidance on de-recognition,classification, interest, and penalties, accounting in interim periods, disclosure, and transition. The potential interest and/or penalties associated with anuncertain tax position are recorded in provision for income taxes on the consolidated statements of operations. Please refer to Note 12 for further discussionregarding these provisions.Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities aredetermined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year inwhich the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the periodthat includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets willnot be realized. The factors used to assess the likelihood of realization include the Company's forecast of the reversal of temporary differences, future taxableincome and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income inapplicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate onfuture earnings. Based on our assessment it is more likely than not that all of the net deferred tax assets will be realized through future taxable income.The Company's consolidated financial statements recognized the current and deferred income tax consequences that result from the Company'sactivities during the current and preceding periods, as if the Company were a separate taxpayer prior to the date of the spinoff of the Company when it was amember of the consolidated income tax return group of Spectrum Group International, Inc. ("SGI") Following its spin-off, the Company separately files itsfederal and state income tax filings. The Company recognizes current and deferred income taxes as a separate taxpayer for periods ending after the date of thespinoff.RECENT ACCOUNTING PRONOUNCEMENTSFor a description of accounting changes and recent accounting standards, including the expected dates of adoption and estimated effects, if any, onour financial position or results of operations, see Note 2 of the Notes to Consolidated Financial Statements.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKNot applicable to smaller reporting companies.46ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATAIndex to the Consolidated Financial Statements and Notes thereof PageReport of Independent Registered Public Accounting Firm 48Consolidated Balance Sheets as of June 30, 2019 and June 30, 2018 49Consolidated Statements of Operations for the Years Ended June 30, 2019 and 2018 51Consolidated Statements of Stockholders' Equity for the Years Ended June 30, 2019 and 2018 52Consolidated Statements of Cash Flows for the Years Ended June 30, 2019 and 2018 53Notes to Consolidated Financial Statements 55Note 1. Description of Business 55Note 2. Summary of Significant Accounting Policies 56Note 3. Assets and Liabilities, at Fair Value 65Note 4. Receivables 69Note 5. Secured Loans Receivable 69Note 6. Inventories 71Note 7. Plant, Property and Equipment 73Note 8. Goodwill and Intangible Assets 73Note 9. Long-Term Investments 74Note 10. Accounts Payable 75Note 11. Derivative Instruments and Hedging Transactions 75Note 12. Income Taxes 80Note 13. Related Party Transactions 82Note 14. Financing Agreements 84Note 15. Commitments and Contingencies 86Note 16. Stockholders' Equity 88Note 17. Customer and Supplier Concentrations 89Note 18. Segments and Geographic Information 91Note 19. Subsequent Events 94 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersA-Mark Precious Metals, Inc.Opinion on the financial statementsWe have audited the accompanying consolidated balance sheets of A-Mark Precious Metals, Inc. (a Delaware corporation) andsubsidiaries (the “Company”) as of June 30, 2019 and 2018, the related consolidated statements of operations, changes in stockholders’equity, and cash flows for each of the two years in the period ended June 30, 2019, and the related notes (collectively referred to as the“financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of theCompany as of June 30, 2019 and 2018, and the results of its operations and its cash flows for each of the two years in the periodended June 30, 2019, in conformity with accounting principles generally accepted in the United States of America.Basis for opinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s financial statements based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with theU.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part ofour audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressingan opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to erroror fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles usedand significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believethat our audits provide a reasonable basis for our opinion./s/ GRANT THORNTON LLPWe have served as the Company’s auditor since 2015.Newport Beach, CaliforniaSeptember 13, 2019Table of Contents A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(amounts in thousands, except for share data) June 30, 2019 June 30, 2018 ASSETS Current assets: Cash (1)$8,320 $6,291Receivables, net (1)26,895 35,856Derivative assets (1)2,428 7,395Secured loans receivable (1)125,298 110,424Precious metals held under financing arrangements208,792 262,566Inventories: Inventories (1)198,356 166,176 Restricted inventories94,505 113,940 292,861 280,116 Income taxes receivable1,473 1,553Prepaid expenses and other assets (1)2,783 2,782Total current assets668,850 706,983 Plant, property and equipment, net6,731 8,018Goodwill8,881 8,881Intangibles, net5,852 6,861Long-term investments11,885 8,388Deferred tax assets - non-current3,163 3,870Total assets$705,362 $743,001LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Lines of credit$167,000 $200,000Liability on borrowed metals201,144 280,346Product financing arrangements94,505 113,940Accounts payable62,180 45,997Derivative liabilities 9,971 20,457Accrued liabilities (1)6,137 5,129Total current liabilities540,937 665,869Debt obligation (related party)— 7,226Notes payable (1)91,859 —Other long-term liabilities (related party)— 798Total liabilities632,796 673,893 Commitments and contingencies Stockholders’ equity: Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of June 30, 2019 andJune 30, 2018— —Common stock, par value $0.01; 40,000,000 shares authorized; 7,031,450 shares issued and outstanding as of June 30,2019 and June 30, 201871 71Additional paid-in capital26,452 24,717Retained earnings43,135 40,910Total A-Mark Precious Metals, Inc. stockholders’ equity69,658 65,698Non-controlling interest2,908 3,410Total stockholders’ equity72,566 69,108Total liabilities, non-controlling interest and stockholders’ equity$705,362 $743,001 (1) Includes amounts of the consolidated variable interest entity, which is presented separately in the table below.See accompanying Notes to Consolidated Financial Statements49Table of Contents A-MARK PRECIOUS METALS, INC.CONSOLIDATED BALANCE SHEETS(amounts in thousands)In September 2018, AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, completed an issuance of Secured Senior Term Notes,Series 2018-1, Class A in the aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B in the aggregateprincipal amount of $28.0 million (collectively, the "Notes"). The Class A Notes bear interest at a rate of 4.98% and the Class B Notes bear interest at a rate of5.98%. The Notes have a maturity date of December 15, 2023.The Company consolidates a variable interest entity ("VIE") if it is considered to be the primary beneficiary. AMCF is a VIE because the Company'sinitial equity investment may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company. Thesecuritization is primarily secured by bullion loans and precious metals, and the Company is required to continuously hedge the value of certain collateraland make future contributions as necessary. The Company is the primary beneficiary of this VIE because the Company has the right to determine the type ofcollateral (i.e., secured loans or precious metals), has the right to receive (and has received) the proceeds from the securitization transaction, earns on-goinginterest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and othercosts exceed its interest income.The following table presents the assets and liabilities of this VIE, which is included in the consolidated balance sheets above. The holders of theNotes have a first priority security interest in the assets as shown in the table below, which are in excess of the Notes' aggregate principal amount.Additionally, the liabilities of the VIE include intercompany balances, which are eliminated in consolidation. See Note 14 for additional information. June 30, 2019 June 30, 2018 ASSETS OF THE CONSOLIDATED VIE Cash$2,390 $—Receivables, net1,664 —Secured loans receivable82,544 —Inventories16,867 —Prepaid expenses and other assets31 —Total assets of consolidated variable interest entities$103,496 $—LIABILITIES OF THE CONSOLIDATED VIE Deferred payment obligations (1)$5,213 $—Derivative liabilities1,241 Accrued liabilities811 —Notes payable (2)96,859 —Total liabilities of consolidated variable interest entities$104,124 $— (1) This is an intercompany balance, which is eliminated in consolidation and hence not shown on the consolidated balance sheets.(2) $5.0 million of the Notes are held by A-Mark, which is eliminated in consolidation and hence not shown on the consolidated balance sheets. See accompanying Notes to Consolidated Financial Statements50Table of Contents A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except for share and per share data) Years Ended June 30, 2019 2018 Revenues $4,783,157 $7,606,248 Cost of sales 4,751,199 7,576,805 Gross profit 31,958 29,443 Selling, general and administrative expenses (32,502) (33,398) Goodwill and intangible asset impairment — (2,654) Interest income 19,270 16,105 Interest expense (17,146) (13,891) Other income, net 1,697 954 Unrealized gain on foreign exchange — 30 Net income (loss) before provision for income taxes 3,277 (3,411) Income tax expense (1,015) (8) Net income (loss) 2,262 (3,419) Net income (loss) attributable to non-controlling interest 37 (22) Net income (loss) attributable to the Company $2,225 $(3,397) Basic and diluted net income (loss) per share attributable to A-Mark Precious Metals, Inc.: Basic $0.32 $(0.48) Diluted $0.31 $(0.48) Dividends per share $— $0.24 Weighted average shares outstanding: Basic 7,031,400 7,031,400 Diluted 7,085,300 7,031,400 See accompanying Notes to Consolidated Financial Statements51Table of Contents A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY(in thousands, except for share data) CommonStock(Shares) CommonStock AdditionalPaid-inCapital RetainedEarnings Total A-Mark PreciousMetals, Inc.Stockholders'Equity Non-ControllingInterest TotalStockholders’Equity Balance, June 30, 2017 7,031,450 $71 $23,526 $45,994 $69,591 $3,432 $73,023 Net loss — — — (3,397) (3,397) (22) (3,419) Share-based compensation — — 1,191 — 1,191 — 1,191 Dividends declared — — — (1,687) (1,687) — (1,687) Balance, June 30, 2018 7,031,450 $71 $24,717 $40,910 $65,698 $3,410 $69,108 Net income — — — 2,225 2,225 37 2,262 Share-based compensation — — 1,096 — 1,096 — 1,096 Non-controlling ownership interestcontribution — — — — — 100 100 Transactions with non-controllinginterest — — 639 — 639 (639) — Balance, June 30, 2019 7,031,450 $71 $26,452 $43,135 $69,658 $2,908 $72,566 See accompanying Notes to Consolidated Financial Statements52Table of ContentsA-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands)Years Ended June 30, 2019 2018 Cash flows from operating activities: Net income (loss) $2,262 $(3,419) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Provision (reversal) for doubtful accounts (30) — Depreciation and amortization 2,807 2,626 Impairment of intangible assets — 2,654 Amortization of loan cost 1,192 1,463 Deferred income taxes 707 89 Interest added to principal of secured loans (19) (48) Change in accrued earn-out (non-cash) (588) (529) Debt extinguishment costs 45 — Share-based compensation 1,096 1,191 Earnings from equity method investments (1,198) (421) Changes in assets and liabilities: Receivables 8,992 4,044 Secured loans receivables (1,304) 385 Secured loans made to affiliates (1,535) (12,523) Derivative assets 4,967 11,017 Income tax receivable 80 (1,553) Precious metals held under financing arrangements 53,774 (262,566) Inventories (12,745) 16,946 Prepaid expenses and other assets (668) (1,779) Accounts payable 16,183 2,221 Derivative liabilities (10,486) (14,125) Liabilities on borrowed metals (79,202) 265,772 Accrued liabilities 1,137 (2,381) Income taxes payable — (1,418) Net cash (used in) provided by operating activities (14,533) 7,646 Cash flows from investing activities: Capital expenditures for plant, property, and equipment (490) (1,317) Purchase of long-term investments (2,300) — Secured loans receivables, net (12,015) (7,000) Acquisition of subsidiary, net of cash — (9,515) Net cash used in investing activities (14,805) (17,832) Cash flows from financing activities: Product financing arrangements, net (19,435) (21,403) Dividends — (1,687) Borrowings and repayments under lines of credit, net (33,000) 20,000 Proceeds from issuance of debt obligation payable to related party — 7,500 Repayments on notes payable to related party (7,500) (500) Proceeds from issuance of notes payable 95,000 — Debt funding issuance costs (3,798) (492) Non-controlling ownership interest contribution 100 — Net cash provided by financing activities 31,367 3,418 Net increase (decrease) in cash, cash equivalents, and restricted cash 2,029 (6,768) Cash, cash equivalents, and restricted cash, beginning of period 6,291 13,059 Cash, cash equivalents, and restricted cash, end of period $8,320 $6,291 53Table of ContentsA-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS(amounts in thousands)Years Ended June 30, 2019 2018 ( - Continued from preceding page - ) Supplemental disclosures of cash flow information: Cash paid during the period for: Interest $15,509 $12,251 Income taxes paid $177 $3,038 Income taxes refunds $47 $— Non-cash investing and financing activities: Interest added to principal of secured loans $19 $48 Debt funding issuance costs $— $534 Investment transactions with non-controlling interest $639 $— See accompanying Notes to Consolidated Financial Statements54Table of Contents A-MARK PRECIOUS METALS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS1. DESCRIPTION OF BUSINESSBasis of PresentationThe consolidated financial statements comprise those of A-Mark Precious Metals, Inc. ("A-Mark" or the "Company") and its consolidatedsubsidiaries.Business SegmentsThe Company conducts its operations in three reportable segments: (1) Wholesale Trading & Ancillary Services, (2) Secured Lending, and (3) DirectSales. Each of these reportable segments represents an aggregation of operating segments that meets the aggregation criteria set forth in the SegmentReporting Topic 280 of the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification (“ASC”). (See Note 18.)Wholesale Trading & Ancillary ServicesThe Wholesale Trading & Ancillary Services segment operates as a full-service precious metals trading company. The products that this segmentsells include: gold, silver, platinum, and palladium primarily in the form of coins, rounds, bars, wafers, and grain. This segment's trading-related servicesinclude: consignment, storage, logistics, hedging, and various customized financial programs.Through its wholly owned subsidiary, A-Mark Trading AG (“AMTAG”), the Company promotes A-Mark's products and services throughout theEuropean continent. Transcontinental Depository Services (“TDS”), also a wholly owned subsidiary of the Company, offers worldwide storage solutions toinstitutions, dealers, and consumers.The Company's wholly-owned subsidiary, A-M Global Logistics, LLC. ("Logistics"), operates the Company's logistics fulfillment center. Logisticsprovides customers an array of complementary services, including packaging, shipping, handling, receiving, processing, and inventorying of precious metalsand custom coins on a secure basis.Through our partially-owned subsidiary, AM&ST Associates, LLC. ("AMST" or "SilverTowne" or the "Mint"), the Company designs and producesminted silver products. The Company operates the Mint pursuant to a joint venture agreement with SilverTowne, L.P. The Company and SilverTowne L.P.own 69% and 31%, respectively, of AMST. The Company acquired its interest in AMST from SilverTowne L.P. to provide greater product selection to ourcustomers and greater pricing stability within the supply chain, as well as to gain increased access to silver products during volatile market environments.Secured LendingThe Company operates its Secured Lending segment through its wholly-owned subsidiary, Collateral Finance Corporation LLC. ("CFC".) CFC is aCalifornia licensed finance lender that originates and acquires commercial loans secured by bullion and numismatic coins. CFC's customers include coin andprecious metal dealers, investors, and collectors.AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC.AMCF issued, administers, and owns Secured Senior Term Notes: Series 2018-1, Class A, with an aggregate principal amount of $72.0 million and SecuredSubordinated Term Notes: Series 2018-1, Class B with an aggregate principal amount of $28.0 million (collectively, the "Notes".) The Class A Notes bearinterest at a rate of 4.98% and the Class B Notes bear interest at a rate of 5.98%. The Notes have a maturity date of December 15, 2023. For additionalinformation regarding this securitization, see Note 14.Direct SalesThe Company's wholly-owned subsidiary, Goldline, Inc. ("Goldline"), is a direct retailer of precious metals to the investor community. Goldlinemarkets its precious metal products primarily on radio and the internet. Goldline sells gold and silver bullion in the form of coins, rounds, and bars.AM IP LLC. ("AMIP"), a wholly owned subsidiary of Goldline, manages intellectual property (“IP”) that includes lists of customers and sales leadinformation that is licensed to third parties in the industry who can further exploit such assets and provide the Company with ancillary income.In the fourth quarter of 2019, Goldline entered into a joint venture agreement with one of the Company's related parties to form Precious MetalsPurchasing Partners, LLC, ("PMPP"), a 50% owned subsidiary, primarily for the purpose of purchasing precious metals from the partners' retail customers forresale back into the market place. PMPP was capitalized in fiscal 2019, but did not commence operations until fiscal 2020. Metals purchased by the jointventure will be sold to the partners or their affiliates per terms of the joint venture agreement.55Table of Contents 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESPrinciples of ConsolidationThe consolidated financial statements reflect the financial condition, results of operations, statement of stockholder equity, and cash flows of theCompany, and were prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). The Company consolidates its subsidiariesthat are wholly-owned, majority owned, and entities that are variable interest entities where the Company is determined to be the primary beneficiary. Ourconsolidated financial statements include the accounts of: A-Mark, CFC, AMTAG, TDS, Logistics, Goldline, AMIP, AMST, AMCF, and PMPP (collectivelythe “Company”). Intercompany accounts and transactions are eliminated.Comprehensive IncomeFor the years ended June 30, 2019 and 2018, there were no items that gave rise to other comprehensive income or loss, and, as a result net incomeequaled comprehensive income.Use of EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, andthe reported amounts of revenue and expenses during the reporting periods. These estimates include, among others, determination of fair value, allowancesfor doubtful accounts, impairment assessments of plant, property and equipment and intangible assets, valuation allowance determination on deferred taxassets, contingent earn-out liabilities, and revenue recognition judgments. Significant estimates also include the Company's fair value determination withrespect to its financial instruments and precious metals inventory. Actual results could materially differ from these estimates.Concentration of Credit RiskCash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has not experienced anylosses related to these balances.Assets that potentially subject the Company to concentrations of credit risk consist principally of receivables, loans of inventory to customers, andinventory hedging transactions. Concentration of credit risk with respect to receivables is limited due to the large number of customers composing theCompany's customer base, the geographic dispersion of the customers, and the collateralization of substantially all receivable balances. Based on anassessment of credit risk, the Company typically grants collateralized credit to its customers. The Company enters into inventory hedging transactions,principally utilizing metals commodity futures contracts traded on national futures exchanges or forward contracts with credit worthy financial institutions.Credit risk with respect to loans of inventory to customers is minimal. All of our commodity derivative contracts are under master netting arrangements andinclude both asset and liability positions. Substantially all of these transactions are secured by the underlying metals positions.Foreign CurrencyThe functional currency of the Company is the United States dollar ("USD"). Also, the functional currency of the Company's wholly-owned foreignsubsidiary, AMTAG, is USD, but it maintains its books of record in the European Union Euro. The Company remeasures the financial statements of AMTAGinto USD. The remeasurement of local currency amounts into USD creates remeasurement gains and losses, which are included in the consolidated statementsof operations.To manage the effect of foreign currency exchange fluctuations, the Company utilizes foreign currency forward contracts. These derivatives generategains and losses when settled and/or marked-to-market.Business CombinationsThe Company accounts for business combinations by applying the acquisition method in accordance with Accounting Standards Codification(“ASC”) 805, Business Combinations. The Company evaluates each purchase transaction to determine whether the acquired assets meet the definition of abusiness. Transaction costs related to the acquisition of a business are expensed as incurred and excluded from the fair value of consideration transferred. Theidentifiable assets acquired, liabilities assumed, and non-controlling interests, if any, in an acquired entity are recognized and measured at their estimated fairvalues. The excess of the fair value of consideration transferred over the fair values of identifiable assets acquired, liabilities assumed, and non-controllinginterests, if any, in an acquired entity is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especiallywith respect to intangible assets and liabilities.Contingent consideration is classified as a liability or equity, as applicable. Contingent consideration in connection with the acquisition of abusiness is measured at fair value on the acquisition date, and unless classified as equity, is remeasured at fair value each reporting period thereafter until theconsideration is settled, with changes in fair value included in net income.56Table of Contents Net cash paid to acquire a business is classified as investing activities on the accompanying consolidated statements of cash flow.Variable Interest EntitiesA variable interest entity ("VIE") is a legal entity that has either i) a total equity investment that is insufficient to finance its activities withoutadditional subordinated financial support or ii) whose equity investors lack the ability to control the entity’s activities or lack the ability to receive expectedbenefits or absorb obligations in a manner that is consistent with their investment in the entity.A VIE is consolidated for accounting purposes by its primary beneficiary, which is the party that has both the power to direct the activities that mostsignificantly impact the VIE's economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially besignificant to the VIE. The Company consolidates VIE's when it is deemed to be the primary beneficiary. Management regularly reviews and reconsiders itsprevious conclusions regarding whether it holds a variable interest in potential VIE's, the status of an entity as a VIE, and whether the Company is required toconsolidate such VIE's in the consolidated financial statements.AMCF, a wholly owned subsidiary of CFC, is a special purpose entity ("SPE") formed as part of a securitization transaction in order to isolate certainassets and distribute the cash flows from those assets to investors. AMCF was structured to insulate investors from claims on AMCF’s assets by creditors ofother entities. The Company has various forms of ongoing involvement with AMCF, which may include (i) holding senior or subordinated interests inAMCF; (ii) acting as loan servicer for a portfolio of loans held by AMCF; and (iii) providing administrative services to AMCF.AMCF is a VIE because the Company's initial equity investment may be insufficient to maintain its ongoing collateral requirements withoutadditional financial support from the Company. The securitization is primarily secured by bullion loans and precious metals, and the Company is required tocontinuously hedge the value of certain collateral and make future contributions as necessary. The Company is the primary beneficiary of this VIE becausethe Company has the right to determine the type of collateral (i.e., secured loans or precious metals), has the right to receive (and has received) the proceedsfrom the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation toabsorb losses should AMCF's interest expense and other costs exceed its interest income. (See Note 14.)Cash and Cash EquivalentsThe Company considers all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. TheCompany does not have any cash equivalents as of June 30, 2019 and June 30, 2018.As of June 30, 2019 and June 30, 2018, the Company has $0.3 million and $0.4 million, respectively, in a bank account that is restricted and servesas collateral against a standby letter of credit issued by the bank in favor of the landlord for our office space in Los Angeles, California.Precious Metals held under Financing Arrangements The Company enters into arrangements with certain customers under which A-Mark purchases precious metals from the customers which are subject torepurchase by the customer at the spot value of the product on the repurchase date. The precious metals purchased under these arrangements consist of rareand unique items, and therefore the Company accounts for these transactions as precious metals held under financing arrangements, which generate financingincome rather than revenue earned from precious metals inventory sales. In these repurchase arrangements, the Company holds legal title to the metals andearns financing income for the duration of the agreement. These arrangements are typically terminable by either party upon 14 days' notice. Upon termination, the customer’s right to repurchase anyremaining precious metal is forfeited, and the related precious metals are reclassified as inventory held for sale. As of June 30, 2019 and June 30, 2018,precious metals held under financing arrangements totaled $208.8 million and $262.6 million respectively.The Company’s precious metals held under financing arrangements are marked-to-market.InventoriesInventories principally include bullion and bullion coins that are acquired and initially recorded at fair market value. The fair market value of thebullion and bullion coins is comprised of two components: (1) published market values attributable to the costs of the raw precious metal, and (2) a publishedpremium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form, and the market valueattributable solely to the premium may be readily determined, as it is published by multiple reputable sources.57Table of Contents The Company’s inventories, except for certain lower of cost or net realizable value basis products (as discussed below), are subsequently recorded attheir fair market values, that is, "marked-to-market." The daily changes in the fair market value of our inventory are offset by daily changes in the fair marketvalue 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 changein the fair market value of these derivative instruments are recorded in cost of sales in the consolidated statements of operations.While the premium component included in inventories 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 onthe underlying spot price of the precious metal content of the commemorative coins. Unlike our bullion coins, the value of commemorative coins is notsubject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metalprice than bullion coins. Neither the commemorative coin inventory nor the premium component of our inventory is hedged. (See Note 6.)Plant, Property and EquipmentPlant, property and equipment is stated at cost less accumulated depreciation. Depreciation is calculated using a straight line method based on theestimated useful lives of the related assets, ranging from three years to twenty-five years. Depreciation commences when the related assets are placed intoservice. Internal-use software development costs are capitalized during the application development stage. Internal-use software costs incurred during thepreliminary project stage are expensed as incurred. Land is recorded at historical cost and is not depreciated. Repair and maintenance costs are expensed asincurred. We have no major planned maintenance activities related to our plant assets associated with our minting operations.The Company reviews the carrying value of these assets for impairment whenever events and circumstances indicate that the carrying value of theasset may not be recoverable. In evaluating for impairment, the carrying value of each asset or group of assets is compared to the undiscounted estimatedfuture cash flows expected to result from its use and eventual disposition. An impairment loss is recognized for the difference when the carrying valueexceeds the discounted estimated future cash flows. The factors considered by the Company in performing this assessment include current and projectedoperating results, trends and prospects, the manner in which these assets are used, and the effects of obsolescence, demand and competition, as well as othereconomic factors.Finite-lived Intangible AssetsFinite-lived intangible assets consist primarily of customer relationships, non-compete agreements, and employment contracts which are amortizedon a straight-line basis over their economic useful lives ranging from three years to fifteen years. We review our finite-lived intangible assets for impairmentunder the same policy described above for plant, property, and equipment; that is, whenever events or changes in circumstances indicate that the carryingamount may not be recoverable.Goodwill and Indefinite-lived Intangible AssetsGoodwill is recorded when the purchase price paid for an acquisition exceeds the estimated fair value of the net identified tangible and intangibleassets acquired. Goodwill and other indefinite-lived intangibles (such as trade names) are not subject to amortization, but are evaluated for impairment atleast annually. However, for tax purposes, goodwill acquired in connection with a taxable asset acquisition is generally deductible.The Company evaluates its goodwill and other indefinite-lived intangibles for impairment in the fourth quarter of the fiscal year (or more frequentlyif indicators of potential impairment exist) in accordance with the Intangibles - Goodwill and Other Topic 350 of the ASC. Goodwill is reviewed forimpairment at a reporting unit level, which in our case, corresponds to the Company’s reportable operating segments.Evaluation of goodwill for impairmentThe Company has the option to first qualitatively assess whether relevant events and circumstances make it more likely than not that the fair valueof the reporting unit's goodwill is less than its carrying value. A qualitative assessment includes analyzing current economic indicators associated with aparticular reporting unit such as changes in economic, market and industry conditions, business strategy, cost factors, and financial performance, amongothers, to determine if there would be a significant decline to the fair value of a particular reporting unit. If the qualitative assessment indicates a stable orimproved fair value, no further testing is required.If, based on this qualitative assessment, management concludes that goodwill is more likely than not to be impaired, or elects not to perform thequalitative assessment, then it is required to perform a quantitative analysis to determine the fair value of the business, and compare the calculated fair valueof the reporting unit with its carrying amount, including goodwill. If through this quantitative analysis the Company determines the fair value of a reportingunit exceeds its carrying amount, the goodwill of the reporting unit is considered not to be impaired. If the Company concludes that the fair value of thereporting unit is less than58Table of Contents its carrying value, a goodwill impairment loss will be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value. (See Note 8.)Evaluation of indefinite-lived intangible assets for impairmentThe Company evaluates its indefinite-lived intangible assets (i.e., trademarks and trade-names) for impairment. In assessing its indefinite-livedintangible assets for impairment, the Company has the option to first perform a qualitative assessment to determine whether events or circumstances exist thatlead to a determination that it is unlikely that the fair value of the indefinite-lived intangible asset is less than its carrying amount. If the Companydetermines that it is unlikely that the fair value of an indefinite-lived intangible asset is less than its carrying amount, the Company is not required to performany additional 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. Ifthrough this quantitative analysis the Company determines the fair value of an indefinite-lived intangible asset exceeds its carrying amount, the indefinite-lived intangible asset is considered not to be impaired. If the Company concludes that the fair value of an indefinite-lived intangible asset is less than itscarrying value, an impairment loss will be recognized for the amount by which the carrying amount exceeds the indefinite-lived intangible asset’s fair value.The methods used to estimate the fair value measurements of the Company’s reporting units and indefinite-lived intangible assets include thosebased on the income approach (including the discounted cash flow and relief-from-royalty methods) and those based on the market approach (primarily theguideline transaction and guideline public company methods). (See Note 8.)Long-Term InvestmentsInvestments in privately-held entities that are at least 20% but less than 50% owned by the Company are accounted for using the equity method.Under the equity method, the carrying value of the investment is adjusted for the Company’s proportionate share of the investee’s earnings or losses, with thecorresponding share of earnings or losses reported in other income (expense). The carrying value of the investment is reduced by the amount of the dividendsreceived from the equity-method investee, as they are considered a return of capital.Investments in privately-held entities that are less than 20% owned by the Company are accounted for using the cost method, unless the Companycan exercise significant influence or the investee is economically dependent upon the Company, in which case the equity method is used. Under the costmethod, investments are carried at cost and other income is recorded when dividends are received from the cost-method investee.We evaluate our long-term investments for impairment quarterly or whenever events or changes in circumstances indicate that the carrying value ofthese assets may not be recoverable.Fair Value MeasurementThe Fair Value Measurements and Disclosures Topic 820 of the ASC ("ASC 820"), creates a single definition of fair value for financial reporting.The rules associated with ASC 820 state that valuation techniques consistent with the market approach, income approach, and/or cost approach should beused to estimate fair value. Selection of a valuation technique, or multiple valuation techniques, depends on the nature of the asset or liability being valued,as well as the availability of data. (See Note 3.)Revenue RecognitionSettlement Date AccountingSubstantially all of the Company’s sales of precious metals are conducted using sales contracts that meet the definition of derivative instruments inaccordance with the Derivatives and Hedging Topic 815 of the ASC ("ASC 815"). The contract underlying A-Mark’s commitment to deliver precious metalsis referred to as a “fixed-price forward commodity contract” because the price of the commodity is fixed at the time the order is placed. Revenue is recognizedon the settlement date, which is defined as the date on which: (1) the quantity, price, and specific items being purchased have been established, (2) metalshave been delivered to the customer, and (3) payment has been received or is covered by the customer’s established credit limit with the Company.All derivative instruments are marked-to-market during the interval between the trade date and the settlement date, with the changes in the fair valuecharged to cost of sales. The Company’s hedging strategy to mitigate the market risk associated with its sales commitments is described separately belowunder the caption “Hedging Activities.”Types of Trades Orders that are Physically DeliveredThe Company’s contracts to sell precious metals to customers are usually settled with the physical delivery of metals to the customer, although netsettlement (i.e., settlement at an amount equal to the difference between the contract value and the59Table of Contents market price of the metal on the settlement date) is permitted. Below is a summary of the Company’s major trade order types and the key factors thatdetermine when settlement occurs and when revenue is recognized for each type:•Traditional physical trade orders — The quantity, specific product, and price are determined on the trade date. Payment or sufficient credit isverified prior to delivery of the metals on the settlement date.•Consignment trade orders — The Company delivers the items requested by the customer prior to establishing a firm trade order with a price.Settlement occurs and revenue is recognized once the customer confirms its order (quantity, specific product, and price) and remits full payment forthe sale.•Provisional trade orders — The quantity and type of metal is established at the trade date, but the price is not set. The customer commits topurchasing the metals within a specified time period, usually within one year, at the then-current market price. The Company delivers the metal tothe customer after receiving the customer’s deposit, which is typically based on 110% of the prevailing current spot price. The unpriced metal issubject to a margin call if the deposit falls below 105% of the value of the unpriced metal. The purchase price is established and revenue isrecognized at the time the customer notifies the Company that it desires to purchase the metal.•Margin trade orders — The quantity, specific product, and price are determined at trade date; however, the customer is allowed to finance thetransaction through the Company and to defer delivery by committing to remit a partial payment (approximately 20%) of the total order price. Withthe remittance of the partial payment, the customer locks in the purchase price for a specified time period (usually up to two years from the tradedate). Revenue on margin trade orders is recognized when the order is paid in full and delivered to the customer.•Borrowed precious metals trade orders for unallocated positions — Customers may purchase unallocated metal positions in the Company'sinventory. The quantity and type of metal is established at the trade date, but the specific product is not yet determined. Revenue is not recognizeduntil the customer selects the specific precious metal product it wishes to purchase, full payment is received, and the product is delivered to thecustomer.Hedging ActivitiesThe value of our inventory and our purchase and sale commitments are linked to the prevailing price of the underlying precious metal commodity.The Company seeks to minimize the effect of price changes of the underlying commodity and enters into inventory hedging transactions, principallyutilizing metals commodity futures contracts traded on national futures exchanges or forward contracts with credit worthy financial institutions. TheCompany hedges by each commodity type (gold, silver, platinum, and palladium). All of our commodity derivative contracts are under master nettingarrangements and include both asset and liability positions.Commodity forward, futures, and option contracts entered into for hedging purposes are recorded at fair value on the trade date and are marked-to-market each period. The difference between the original contract values and the market values of these contracts are reflected as derivative assets orderivative liabilities in the consolidated balance sheets at fair value, with the corresponding unrealized gain or losses included as a component of cost ofsales. When these contracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded inrevenue and cost of sales and the net realized gains and losses for futures and option contracts are recorded in cost of sales.The Company enters into futures, forward, and option contracts solely for the purpose of hedging our inventory holding risk and our liability onprice protection programs, and not for speculative market purposes. The Company’s gains (losses) on derivative instruments are substantially offset by thechanges in the fair market value of the underlying precious metals inventory, which is also recorded in cost of sales in the consolidated statements ofoperations. (See Note 11.)Other Sources of RevenueThe Company recognizes its storage, logistics, licensing, and other services revenues in accordance with the FASB's release ASU 2014-09 RevenueFrom Contracts With Customers Topic 606 ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized: (i) identify thecontract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price tothe performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.The Company recognizes revenue when it satisfies its obligation by transferring control of the good or service to the customer. This is eithersatisfied over time or at a point in time. A performance obligation is satisfied over time if one of the following criteria are met: (1) the customersimultaneously receives and consumes the benefits as the Company performs, (2) the Company's performance creates or enhances an asset that the customercontrols as the asset is created or enhanced, or (3) the Company's performance does not create an asset with an alternative use to the Company, and theCompany has an enforceable right for payment of performance completed-to-date. When none of those are met, a performance obligation is satisfied at apoint-in-time.60Table of Contents The Company recognizes storage revenue over time, as the customer simultaneously receives and consumes the storage services (e.g., fixed storagefees based on the passage of time). The Company recognizes logistics (i.e., fulfillment) revenue at a point-in-time, when the customer receives the benefit ofthe services (e.g., stated number of packages are shipped on behalf of the customer during a month). The Company recognizes revenue from the licensing ofits functional intellectual property ("IP"), which include customer lists and sales lead information, at the point in time when the right to use the IP istransferred to the licensee. Any revenue generated from usage-based royalties associated with the licensing of the IP is recognized at the point in time whenthe licensee converts and actualizes customers from the IP. In aggregate, these types of service revenues account for less than 1% of the Company's combinedrevenue from all revenue streams.Interest IncomeIn accordance with the Interest Topic 835 of the ASC ("ASC 835") following are interest income generating activities of the Company:•Secured Loans — The Company uses the effective interest method to recognize interest income on its secured loans transactions. The Companymaintains a security interest in the precious metals and records interest income over the terms of the secured loan receivable. Recognition of interestincome is suspended and the loan is placed on non-accrual status when management determines that collection of future interest income is notprobable. The interest income accrual is resumed, and previously suspended interest income is recognized, when the loan becomes contractuallycurrent and/or collection doubts are resolved. Cash receipts on impaired loans are recorded first against the principal and then to any unrecognizedinterest income. (See Note 5.)•Margin accounts — The Company earns a fee (interest income) under financing arrangements related to margin trade orders over the period duringwhich customers have opted to defer making full payment on the purchase of metals.•Repurchase agreements — Repurchase agreements represent a form of secured financing whereby the Company sets aside specific metals for acustomer and charges a fee on the outstanding value of these metals. The customer is granted the option (but not the obligation) to repurchase thesemetals at any time during the open reacquisition period. This fee is earned over the duration of the open reacquisition period and is classified asinterest income.•Spot deferred trade orders — Spot deferred trade orders are a special type of forward delivery trade that enable customers to purchase or sell certainprecious metals from/to the Company at an agreed upon price but, are allowed to delay remitting or taking delivery up to a maximum of two yearsfrom the date of trade. Even though the contract allows for physical delivery, it rarely occurs for this type of trade. As a result, revenue is notrecorded from these transactions, because no product is delivered to the customer. Spot deferred trades are considered a type of financing transaction,where the Company earns a fee (interest income) under spot deferred arrangements over the period in which the trade is open.Interest ExpenseThe Company accounts for interest expense on the following arrangements in accordance with Interest Topic 835 of the ASC ("ASC 835"):•Borrowings — The Company incurs interest expense from its lines of credit, its debt obligations, and notes payable using the effective interestmethod. (See Note 14.) Additionally, the Company amortizes capitalized loan costs to interest expense over the period of the loan agreement.•Loan servicing fees — When the Company purchases loan portfolios, the Company may have the seller service the loans that were purchased. TheCompany incurs a fee based on total interest charged to borrowers over the period the loans are outstanding. The servicing fee incurred by theCompany is charged to interest expense.•Product financing arrangements — The Company incurs financing fees (classified as interest expense) from its product financing arrangements(also referred to as reverse-repurchase arrangements) with third party finance companies for the transfer and subsequent option to reacquire itsprecious metal inventory at a later date. These arrangements are accounted for as secured borrowings. During the term of this type of agreement, thethird party charges a monthly fee as a percentage of the market value of the designated inventory, which the Company intends to reacquire in thefuture. No revenue is generated from these trades. The Company enters this type of transaction for additional liquidity.•Borrowed and leased metals fees — The Company may incur financing costs from its borrowed metal arrangements. The Company borrows preciousmetals (usually in the form of pool metals) from its suppliers and customers under short-term arrangements using other precious metals as collateral.Typically, during the term of these arrangements, the third party charges a monthly fee as a percentage of the market value of the metals borrowed(determined at the spot price) plus certain processing and other fees.61Table of Contents Leased metal transactions are a similar type of transaction, except the Company is not required to pledge other precious metal as collateral for theprecious metal received. The fees charged by the third party are based on the spot value of the pool metal received.Both borrowed and leased metal transactions provide an additional source of liquidity, as the Company usually monetizes the metals received undersuch arrangements. Repayment is usually in the same form as the metals advanced, but may be settled in cash.Other Income and Expense The Company's other income and expense is derived from the Company's proportional interest in the reported net income or loss of our investeesthat are accounted for under the equity method of accounting (see Note 9), the gains or losses associated with revaluation adjustments to the contingent earn-out liability associated with our joint venture (AMST), gains or losses associated with the sale of notes (see Note 14), and fees associated with earlyliquidation of loans (see Note 14).Contingent Earn-out LiabilityWe record an estimate of the fair value of contingent consideration related to the earn-out obligation to SilverTowne LP. related to the SilverTowneMint acquisition. On a quarterly basis, we revalue the liability and record increases or decreases in the fair value as an adjustment to earnings. Changes to thecontingent consideration liability can result from adjustments to the discount rate, or from changes to the estimates of future throughput activity of AMST,which are considered Level 3 inputs. (See Note 3.) Consequentially, the assumptions used in estimating fair value require significant judgment. The use ofdifferent assumptions and judgments could result in a materially different estimate of fair value. As of June 30, 2019 and June 30, 2018 the balance of thecontingent liability was $0 and $588,000 respectively. The Company believes ASMT will not achieve its targets that would trigger the contingent payoutobligations.AdvertisingAdvertising expense was $2,461,000 and $3,234,000, respectively, for the years ended June 30, 2019 and 2018.Shipping and Handling CostsShipping and handling costs represent costs associated with shipping product to customers, and receiving product from vendors and are included incost of sales in the consolidated statements of operations. Shipping and handling costs incurred totaled $6,498,000 and $4,643,000, respectively, for theyears ended June 30, 2019 and 2018.Share-Based CompensationThe Company accounts for equity awards under the provisions of the Compensation - Stock Compensation Topic 718 of the ASC ("ASC 718"),which establishes fair value-based accounting requirements for share-based compensation to employees. ASC 718 requires the Company to recognize thegrant-date fair value of stock options and other equity-based compensation issued to employees as expense over the service period in the Company'sconsolidated financial statements. The expense is adjusted for actual forfeitures of unvested awards as they occur.Income TaxesAs part of the process of preparing its consolidated financial statements, the Company is required to estimate its provision for income taxes in eachof the tax jurisdictions in which it conducts business, in accordance with the Income Taxes Topic 740 of the ASC ("ASC 740"). The Company computes itsannual tax rate based on the statutory tax rates and tax planning opportunities available to it in the various jurisdictions in which it earns income. Significantjudgment is required in determining the Company's annual tax rate and in evaluating uncertainty in its tax positions. The Company recognizes a benefit fortax positions that it believes will more likely than not be sustained upon examination. The amount of benefit recognized is the largest amount of benefit thatthe Company believes has more than a 50% probability of being realized upon settlement. The Company regularly monitors its tax positions and adjusts theamount of recognized tax benefit based on its evaluation of information that has become available since the end of its last financial reporting period. Theannual tax rate includes the impact of these changes in recognized tax benefits. When adjusting the amount of recognized tax benefits, the Company doesnot consider new information that has become available after the balance sheet date, but does disclose the effects of new information whenever those effectswould be material to the Company's consolidated financial statements. The difference between the amount of benefit taken or expected to be taken in a taxreturn and the amount of benefit recognized for financial reporting represents unrecognized tax benefits. These unrecognized tax benefits are presented in theconsolidated balance sheets principally within accrued liabilities.The Company accounts for uncertainty in income taxes under the provisions of ASC 740. These provisions clarify the accounting for uncertainty inincome taxes recognized in an enterprise's financial statements, and prescribe a recognition threshold and measurement criteria for the financial statementrecognition and measurement of a tax position taken or expected to be taken in a tax return. The provisions also provide guidance on de-recognition,classification, interest, and penalties, accounting in interim periods, disclosure, and transition. The potential interest and/or penalties associated with anuncertain tax position are recorded in62Table of Contents provision for income taxes on the consolidated statements of operations. Please refer to Note 12 for further discussion regarding these provisions.Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for theexpected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities aredetermined based on the differences between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year inwhich the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the periodthat includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of the net deferred tax assets willnot be realized. The factors used to assess the likelihood of realization include the Company's forecast of the reversal of temporary differences, future taxableincome, and available tax planning strategies that could be implemented to realize the net deferred tax assets. Failure to achieve forecasted taxable income inapplicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate onfuture earnings. Based on our assessment, it appears more likely than not that all of the net deferred tax assets will be realized through future taxable income.The Company's consolidated financial statements recognized the current and deferred income tax consequences that result from the Company'sactivities during the current and preceding periods, as if the Company were a separate taxpayer prior to the date of the spinoff of the Company when it was amember of the consolidated income tax return group of Spectrum Group International, Inc. ("SGI"). Following its spin-off, the Company separately files itsfederal and state income tax filings. The Company recognizes current and deferred income taxes as a separate taxpayer for periods ending after the date of thespinoff.Earnings per Share ("EPS")The Company computes and reports both basic EPS and diluted EPS. Basic EPS is computed by dividing net earnings (losses) by the weightedaverage number of common shares outstanding for the period. Diluted EPS is computed by dividing net earnings (losses) by the sum of the weighted averagenumber of common shares and dilutive common stock equivalents outstanding during the period. Diluted EPS reflects the total potential dilution that couldoccur from outstanding equity awards, including unexercised stock options, utilizing the treasury stock method.A reconciliation of shares used in calculating basic and diluted earnings per common shares for the years ended June 30, 2019 and 2018, ispresented below.in thousands Years Ended June 30, 2019 2018 Basic weighted average shares outstanding 7,031 7,031 Effect of common stock equivalents — stock issuable under outstanding equity awards 54 —(1) Diluted weighted average shares outstanding 7,085 7,031 _________________________________ (1) The Company incurred a net loss for the year ended June 30, 2018, and hence the basic and diluted EPS were the same. The inclusion of 842,515 potentialcommon shares (outstanding stock options) in the computation of net loss per share would have been anti-dilutive. DividendsDividends are recorded if and when they are declared by the Board of Directors.Recently Adopted Accounting PronouncementsFrom time to time, the Financial Accounting Standards Board ("FASB") or other standards setting bodies issue new accounting pronouncements.Updates to the FASB Accounting Standards Codification (“ASC”) are communicated through issuance of an Accounting Standards Update (“ASU”).In May 2014, the FASB ASU No. 2014-09 (“ASU 2014-09”) – Revenue from Contracts with Customers (Topic 606). Topic 606 supersedes therevenue recognition requirements in Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods orservices is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods orservices. The Company implemented this pronouncement in the first quarter of fiscal 2019, which did not have a significant effect on the financial results ofthe Company since substantially all of the Company's revenue in fiscal year 2018 fell under the authoritative guidance of ASC 815, which is outside thescope of ASC 606.63Table of Contents Recent Accounting Pronouncements Not Yet AdoptedIn February 2016, FASB issued ASU No. 2016-02, (“ASU 2016-02”), Leases (Topic 842). The amendments in this update require lessees to recognizea lease liability measured on a discounted basis and a right-of-use ("ROU") asset for all leases at the commencement date. This update is effective for theCompany, on July 1, 2019 (for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years), and is to be applied using amodified retrospective transition approach for leases existing at, or entered into after, the beginning of the earliest comparative period presented in thefinancial statements. We are evaluating the new guidelines, but believe that adoption will not have a material impact on our consolidated financial position,results of operations or cash flows and related disclosures, as the Company has minimal lease commitments. Based on the Company's preliminary assessment,upon the adoption of the new standard, we expect to record approximately $5.3 million (or about 1% of the Company's total assets) of ROU assets andapproximately $6.3 million of corresponding lease liabilities for leases classified as operating leases on our consolidated balance sheets. The Company’saccounting for finance leases will remain substantially unchanged with minimal impact to the consolidated statements of income.In June 2016, the FASB issued ASU No. 2016-13, (“ASU 2016-13”), Financial Instruments - Credit Loss (Topic 326), which updates the guidance onrecognition and measurement of credit losses for financial assets. The new requirements, known as the current expected credit loss model ("CECL") willrequire entities to adopt an impairment model based on expected losses rather than incurred losses. This update is effective for the Company on July 1, 2020(for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years). The Company is currently evaluating the potentialimpact of the adoption of the new standard on its consolidated statements of financial condition and results of operations.In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other: Internal-Use Software (Subtopic 350-40), to provideadditional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement. This update is effective for theCompany on July 1, 2020 (for fiscal years beginning after December 15, 2019 including interim periods within those fiscal years). The adoption of thisguidance is not expected to have a material impact on our financial statements.64Table of Contents 3. ASSETS AND LIABILITIES, AT FAIR VALUEFair Value of Financial InstrumentsThe following table presents the carrying amounts and estimated fair values of the Company’s financial instruments as of June 30, 2019 and June 30,2018.in thousands June 30, 2019 June 30, 2018 CarryingAmount Fair value CarryingAmount Fair value Financial assets: Cash $8,320 $8,320 $6,291 $6,291Receivables, net 26,895 26,895 35,856 35,856Secured loans receivable 125,298 125,298 110,424 110,424Derivative asset on open sale and purchase commitments, net 2,322 2,322 2,274 2,274Derivative asset on option contracts 61 61 390 390Derivative asset on futures contracts 2 2 238 238Derivative asset on forward contracts 43 43 4,493 4,493Income taxes receivable 1,473 1,473 1,553 1,553Financial liabilities: Lines of credit $167,000 $167,000 $200,000 $200,000Debt obligation (related party) — — 7,226 7,226Liability on borrowed metals 201,144 201,144 280,346 280,346Product financing arrangements 94,505 94,505 113,940 113,940Derivative liability on margin accounts 2,981 2,981 3,804 3,804Derivative liability on price protection programs 22 22 168 168Derivative liability on open sale and purchase commitments, net 3,822 3,822 16,485 16,485Derivative liability on futures contracts 1,241 1,241 — —Derivative liability on forward contracts 1,905 1,905 — —Accounts payable 62,180 62,180 45,997 45,997Accrued liabilities 6,137 6,137 5,129 5,129Other long-term liabilities (related party) — — 798 798Notes payable 91,859 98,609 — — The fair values of the financial instruments shown in the above table as of June 30, 2019 and June 30, 2018 represent the amounts that would bereceived upon the sale of those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date.Those fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset orliability at the measurement date, the fair value measurement reflects the Company’s own judgments about the assumptions that market participants woulduse in pricing the asset or liability. Those judgments are developed by the Company based on the best information available in the circumstances, includingexpected cash flows and appropriately risk adjusted discount rates, and available observable and unobservable inputs.The carrying amounts of cash, secured loans receivable, receivables, income taxes receivable, accounts payable, and accrued liabilities approximatefair value due to their short-term nature. The carrying amounts of derivative assets and derivative liabilities, liability on borrowed metals and productfinancing arrangements are marked-to-market on a daily basis to fair value. The carrying amounts of lines of credit and debt obligation approximate fair valuebased on the borrowing rates currently available to the Company for bank loans with similar terms and average maturities. The carrying value of other long-term liabilities represents the long-term portion of contingent earn-out liabilities that are remeasured on a quarterly basis. The Company’s notes payable arereported at their aggregate principal amount less unamortized original issue discount and deferred financing costs on the accompanying consolidatedbalance sheets. The fair value of the notes payable is based on the present value of the expected coupon and principal payments using an estimated discountrate based on current market rates for debt with similar credit risk.65Table of Contents Valuation HierarchyTopic 820 of the ASC established a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based uponthe transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:•Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.•Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that areobservable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.•Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement.Assets and Liabilities Measured at Fair Value on a Recurring BasisThe significant assumptions used to determine the carrying value and the related fair value of the assets and liabilities measured at fair value on arecurring basis are described below:Inventory. Inventories, which principally include bullion and bullion coins, are acquired and initially recorded at fair market value. The fair marketvalue of the bullion and bullion coins are comprised of two components: 1) published market values attributable to the costs of the raw precious metal, and 2)a published premium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form and themarket value attributable solely to the premium is readily determined, as it is published by multiple reputable sources. Except for commemorative coininventory, which are included in inventory at the lower of cost or net realizable value, the Company’s inventories are subsequently recorded at their fairmarket values on a daily basis. The fair value for commodities inventory (i.e., inventory excluding commemorative coins) is determined using pricing dataderived from the markets on which the underlying commodities are traded. Precious metals commodities inventory are classified in Level 1 of the valuationhierarchy.Precious Metals held under Financing Arrangements. The Company enters into arrangements with certain customers under which A-Mark purchasesprecious metals from the customers which are subject to repurchase by the customer at the spot value of the product on the repurchase date. The preciousmetals purchased under these arrangements consist of rare and unique items, and therefore the Company accounts for these transactions as precious metalsheld under financing arrangements, which generate financing income rather than revenue earned from precious metals inventory sales. In these repurchasearrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement. The fair value for precious metalsheld under financing arrangements, (a commodity, like inventory above) is determined using pricing data derived from the markets on which the underlyingcommodities are traded. Precious metals commodities inventory are classified in Level 1 of the valuation hierarchy.Derivatives. Futures contracts, forward contracts, option contracts, and open sale and purchase commitments are valued at their fair values, based onthe difference between the quoted market price and the contractual price (i.e., intrinsic value,) and are included within Level 1 of the valuation hierarchy.Margin and Borrowed Metals Liabilities. Margin and borrowed metals liabilities consist of the Company's commodity obligations to margincustomers and suppliers, respectively. Margin liabilities and borrowed metals liabilities are carried at fair value, which is determined using quoted marketpricing and data derived from the markets on which the underlying commodities are traded. Margin and borrowed metals liabilities are classified in Level 1of the valuation hierarchy.Product Financing Arrangements. Product financing arrangements consist of financing agreements for the transfer and subsequent re-acquisition ofthe sale of gold and silver at an agreed-upon price based on the spot price with a third party. Such transactions allow the Company to repurchase thisinventory on the termination (repurchase) date. The third party charges monthly interest as a percentage of the market value of the outstanding obligation,which is carried at fair value. The obligation is stated at the amount required to repurchase the outstanding inventory. Fair value is determined using quotedmarket pricing and data derived from the markets on which the underlying commodities are traded. Product financing arrangements are classified in Level 1of the valuation hierarchy.Liability on Price Protection Programs. The Company records an estimate of the fair value of the liability on the price protection programs based onthe difference between the contractual price at trade date and the retail price at the remeasurement date (i.e., quarter-end) based on the expected redemptionrate. As of June 30, 2019, the Company used the quoted market price based on the current spot rate and used an expected redemption rate of 100%. The use ofa throughput rate ignores the future price volatility that would affect the timing and rate of redemption under the program, and, as a result, the liability on theprice protection programs is classified in Level 3 of the valuation hierarchy.Contingent Earn-out Liability. The Company records an estimate of the fair value of contingent consideration related to the earn-out obligation toSilverTowne LP related to the SilverTowne Mint transaction. On a quarterly basis, the liability is66Table of Contents remeasured and increases or decreases in the fair value are recorded as an adjustment to other income on the consolidated statements of operations. Changesto the contingent consideration liability can result from adjustments to the discount rate, or from changes to the estimates of future throughput activity ofAMST. The assumptions used in estimating fair value require significant judgment. The use of different assumptions and judgments could result in amaterially different estimate of fair value. The key inputs in determining fair value of our contingent consideration obligations include the changes in theassumed timing and amounts of future throughputs (i.e., operating income, operating cost per unit, and production volume) which affects the timing andamount of future earn-out payments. Contingent earn-out liability is classified in Level 3 of the valuation hierarchy.The Company values the contingent obligation by determining the likelihood that the Company has achieved the following targeted amount ofperformance thresholds for each annual earn-out period. Such thresholds include (1) Producing a targeted amount of silver ounces, (2) Earning a targetedamount of operating income, and (3) Generating an operating cost per ounce that is less than a targeted level. Each category triggers a different annual payoutobligation if achieved over a 3 year period, and as of June 30, 2019, the remaining annual contingent payout obligations, if achieved, would become due onOctober 30, 2019. The Company re-assesses this contingent obligation each quarter based on the most current facts and market conditions. The obligationcontinues to remain as a liability at its original recorded value unless, based on each quarterly evaluation, it becomes evident the Company will not achieveall or part of the threshold performance targets. In such case, the obligation is adjusted to its more current estimated value. The following tables present information about the Company's assets and liabilities measured at fair value on a recurring basis as of June 30, 2019and June 30, 2018, aggregated by the level in the fair value hierarchy within which the measurements fall: June 30, 2019 Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Instruments Inputs Inputs in thousands (Level 1) (Level 2) (Level 3) TotalAssets: Inventory (1) $292,844 $— $— $292,844Precious metals held under financing arrangements 208,792 — — 208,792Derivative assets — open sale and purchasecommitments, net 2,322 — — 2,322Derivative assets — option contracts 61 — — 61Derivative assets — futures contracts 2 — — 2Derivative assets — forward contracts 43 — — 43Total assets, valued at fair value $504,064 $— $— $504,064 Liabilities: Liability on borrowed metals $201,144 $— $— $201,144Product financing arrangements 94,505 — — 94,505Derivative liabilities — price protection programs — — 22 22Derivative liabilities — liability on margin accounts 2,981 — — 2,981Derivative liabilities — open sale and purchasecommitments, net 3,822 — — 3,822Derivative liabilities — future contracts 1,241 — — 1,241Derivative liabilities — forward contracts 1,905 — — 1,905Contingent earn-out liability — — — —Total liabilities, valued at fair value $305,598 $— $22 $305,620____________________(1) Commemorative coin inventory totaling $17 thousand is held at lower of cost or net realizable value and is thus excluded from this table.67Table of Contents June 30, 2018 Quoted Price in Active Markets Significant Other Significant for Identical Observable Unobservable Instruments Inputs Inputs in thousands (Level 1) (Level 2) (Level 3) TotalAssets: Inventory (1) $280,017 $— $— $280,017Precious metals held under financing arrangements 262,566 — — 262,566Derivative assets — open sale and purchasecommitments, net 2,274 — — 2,274Derivative assets — option contracts 390 — — 390Derivative assets — futures contracts 238 — — 238Derivative assets — forward contracts 4,493 — — 4,493Total assets, valued at fair value $549,978 $— $— $549,978Liabilities: Liability on borrowed metals $280,346 $— $— $280,346Product financing arrangements 113,940 — — 113,940Derivative liabilities — price protection programs — — 168 168Derivative liabilities — liability on margin accounts 3,804 — — 3,804Derivative liabilities — open sale and purchasecommitments, net 16,485 — — 16,485Contingent earn-out liability — — 588 588Total liabilities, valued at fair value $414,575 $— $756 $415,331____________________(1) Commemorative coin inventory totaling $99 thousand is held at lower of cost or net realizable value and is thus excluded from this table.There were no transfers in or out of Level 2 or 3 from other levels within the fair value hierarchy during the reported periods.Assets Measured at Fair Value on a Non-Recurring BasisCertain assets are measured at fair value on a nonrecurring basis. These assets are not measured at fair value on an ongoing basis but are subject tofair value adjustments only under certain circumstances. These include: i) equity method investments that are written down to fair value when a decline in thefair value is determined to be other-than-temporary, ii) plant, property and equipment and definite-lived intangibles, or iii) goodwill and indefinite-livedintangibles, all of which are written down to fair value when they are held for sale or determined to be impaired. The resulting fair value measurements of theassets are considered to be Level 3 measurements. Determining fair value requires the exercise of significant judgments, including judgments aboutappropriate discount rates, long-term growth rates, relevant comparable company earnings multiples, and the amount and timing of expected future cashflows. The cash flows employed in the analyses are based on the Company’s estimated outlook and various growth rates. Discount rate assumptions are basedon an assessment of the risk inherent in the future cash flows of the respective equity method investment, asset group, or reporting unit. In assessing thereasonableness of its determined fair values, the Company evaluates its results against other value indicators, such as comparable transactions andcomparable public company trading values.In the fourth quarter of fiscal 2018, the carrying value of goodwill and indefinite-lived intangibles of Direct Sales segment (i.e., reporting unit) wasadjusted downward to its fair value. (See Note 8.)68Table of Contents 4.RECEIVABLESReceivables consist of the following as of June 30, 2019 and June 30, 2018:in thousands June 30, 2019 June 30, 2018 Customer trade receivables $13,050 $22,813 Wholesale trade advances 9,704 10,722 Due from brokers 4,141 2,351 Subtotal 26,895 35,886 Less: allowance for doubtful accounts — (30) Receivables, net $26,895 $35,856 Customer Trade Receivables. Customer trade receivables represent short-term, non-interest bearing amounts due from precious metal sales, advancesrelated to financing products, and other secured interests in assets of the customer.Wholesale Trade Advances. Wholesale trade advances represent advances of various bullion products and cash advances for purchase commitmentsof precious metal inventory. Typically, these advances are unsecured, short-term, and non-interest bearing, and are made to wholesale metals dealers andgovernment mints.Due from Brokers. Due from brokers principally consists of the margin requirements held at brokers related to open futures contracts. (See Note 11.)Allowance for Doubtful AccountsAn allowance for doubtful accounts is a reduction of the total amount of receivables appearing on the Company’s consolidated balance sheets. Theallowance for doubtful accounts represents our estimate of the amount of accounts receivable that may not be paid by customers. A summary of the activity inthe allowance for doubtful accounts is as follows: in thousands Period ended: Beginning Balance Provision Charge-off Ending Balance Year ended June 30, 2019 $30 $(30)(1) $— $— Year Ended June 30, 2018 $30 $— $— $30 _________________________________1)Represents $30 thousand reversal of a provision for doubtful accounts. 5.SECURED LOANS RECEIVABLEBelow is a summary of the carrying value of our secured loans as of June 30, 2019 and June 30, 2018:in thousands June 30, 2019 June 30, 2018 Secured loans originated $36,714 $23,300 Secured loans originated - with a related party 14,058 12,523 50,772 35,823 Secured loans acquired 74,526(1) 74,601(2) Secured loans $125,298 $110,424 _________________________________(1) Includes $29 thousand of loan premium as of June 30, 2019.(2) Includes $54 thousand of loan premium as of June 30, 2018. Secured Loans - Originated: Secured loans include short-term loans, which include a combination of on-demand lines and short-term facilities, andlong-term loans that are made to our customers. These loans are fully secured by the customers' assets that include bullion, numismatic, and semi-numismaticmaterial, which are typically held in safekeeping by the Company. (See Note 13 for further information regarding our secured loans made to related parties.)69Table of Contents Secured Loans - Acquired: Secured loans also include short-term loans, which include a combination of on-demand lines and short term facilitiesthat are purchased from our customers. The Company acquires a portfolio of their loan receivables at a price that approximates the aggregate carrying valueof each loan in the portfolio, as determined on the effective transaction date. Each loan in the portfolio is fully secured by the borrowers' assets, which includebullion, numismatic, and semi-numismatic material that are held in safekeeping by the Company. Typically, the seller of the loan portfolio retains theresponsibility for the servicing and administration of the loans. As of June 30, 2019 and June 30, 2018, our secured loans carried weighted-average effective interest rates of 10.2% and 9.6%, respectively, and mature inperiods ranging typically from on-demand to one year.The secured loans that the Company generates with active customers of A-Mark are reflected as an operating activity on the consolidated statementsof cash flows. The secured loans that the Company generates with borrowers who are not active customers of A-Mark are reflected as an investing activity onthe consolidated statements of cash flows as secured loans, net. For the secured loans that (i) are reflected as an investing activity and have terms that allowthe borrowers to increase their loan balance (at the discretion of the Company) based on the excess value of their collateral compared to their aggregateprincipal balance of loan, and (ii) are repayable on demand or in the short-term, the borrowings and repayments are netted on the consolidated statements ofcash flows.Credit Quality of Secured Loans Receivables and Allowance for Credit LossesThe Company's secured loan receivables portfolio is comprised of secured loans with similar credit risk profiles and methods for assessing andmonitoring credit risk. This similarity allows the Company to apply a standard methodology to determine the credit quality for each loan and the allowance,if any, for credit losses. The credit quality of each loan is generally determined by the type (or class) of secured material, the initial and ongoing collateralvalue determination, and the assessment of loan-to-value ratio. Historically, the Company has not established an allowance for any credit losses because eachof its loans is fully secured by the underlying collateral.The Company evaluates its loan portfolio in one of two classes of secured loan receivables: those loans secured by: 1) bullion items, and 2)numismatic and semi-numismatic coins. The Company's secured loans by portfolio class, which align with management reporting, are as follows:in thousands June 30, 2019 June 30, 2018 Bullion $92,899 74.1% $72,128 65.3% Numismatic and semi-numismatic 32,399 25.9 38,296 34.7 $125,298 100.0% $110,424 100.0% Each of the two classes of secured loans receivables have the same initial measurement attribute and a similar method for assessing and monitoringcredit risk. The methodology of assessing the credit quality of the secured loans acquired by the Company is similar to the secured loans originated by theCompany; they are administered using the same internal reporting system, collateralized by precious metals, for which loan-to-value determinationprocedures are applied.Credit Quality of Loans and Non-Performing StatusGenerally, interest is due and payable within 30 days. A loan is considered past due if interest is not paid in 30 days or collateral calls are not mettimely. Typically, loans do not achieve the threshold of non-performing status due to the fact that customers are generally put into default for any interestpast due over 30 days and for unsatisfied collateral calls. When this occurs the loan collateral is typically liquidated within 90 days.For certain secured loans, interest is billed monthly and, if not paid, is added to the outstanding loan balance. These secured loans are consideredpast due if their current loan-to-value ratio fails to meet established minimum equity levels, and the borrower fails to meet the collateral call required toreestablish the appropriate loan-to-value ratio. Non-performing loans have the highest probability for credit loss. The allowance for credit losses attributable to non-performing loans is based onthe most probable source of repayment, which is normally the liquidation of collateral. In determining collateral value, the Company estimates the currentmarket value of the collateral and considers credit enhancements such as additional collateral and third-party guarantees. Due to the accelerated liquidationterms of the Company's loan portfolio, all past due loans are generally liquidated within 90 days of default.70Table of Contents Further information about the Company's credit quality indicators includes differentiating by categories of current loan-to-value ratios. TheCompany desegregates its secured loans that are collateralized by precious metal products, as follows:in thousands June 30, 2019 June 30, 2018Loan-to-value of 75% or more $59,258 47.3% $69,629 63.1%Loan-to-value of less than 75% 66,040 52.7 40,795 36.9Secured loans collateralized by precious metal products $125,298 100.0% $110,424 100.0% The Company had no loans with a loan-to-value ratio in excess of 100% at June 30, 2019 or June 30, 2018.Impaired LoansA loan is considered impaired if it is probable, based on current information and events, that the Company will be unable to collect all amounts dueaccording to the contractual terms of the loan. Customer loans are reviewed for impairment and include loans that are past due, non-performing, or inbankruptcy. Recognition of interest income is suspended and the loan is placed on non-accrual status when management determines that collection of futureinterest income is not probable. Accrual is resumed, and previously suspended interest income is recognized, when the loan becomes contractually currentand/or collection doubts are removed. Cash receipts on impaired loans are recorded first against the receivable and then to any unrecognized interest income.All loans are contractually subject to margin calls. As a result, loans typically do not become impaired due to the fact the Company has the ability torequire margin calls which are due upon receipt. Per the terms of the loan agreement, the Company has the right to liquidate the loan collateral in the event ofa default. The collateral material is highly liquid and can easily be sold by the Company to pay off the loan. In such circumstances, this would result in ashort term impairment that would typically result in full repayment of the loan and fees due to the Company.For the years ended June 30, 2019 and 2018, the Company incurred no loan impairment costs.6.INVENTORIESOur inventory consists of the precious metals that the Company has physically received, and inventory held by third-parties, which, at theCompany's option, it may or may not receive. Below, our inventory is summarized by classification at June 30, 2019 and June 30, 2018:in thousands June 30, 2019 June 30, 2018Inventory held for sale $106,165 $32,605Repurchase arrangements with customers 65,516 104,907Consignment arrangements with customers 4,896 10,785Commemorative coins, held at lower of cost or net realizable value 17 99Borrowed precious metals 21,762 17,780Product financing arrangements, restricted 94,505 113,940 $292,861 $280,116Inventory Held for Sale. Inventory held for sale represents precious metals, excluding commemorative coin inventory, that have been received bythe Company and are not subject to repurchase by or consignment arrangements with third parties. As of June 30, 2019 and June 30, 2018, the inventory heldfor sale totaled $106.2 million and $32.6 million, respectively.Repurchase Arrangements with Customers. The Company enters into arrangements with certain customers under which A-Mark purchases preciousmetals from the customers which are subject to repurchase by the customer at the fair value of the product on the repurchase date. Under these arrangements,the Company, which holds legal title to the metals, earns financing income until the time the arrangement is terminated or the material is repurchased by thecustomer. In the event of a repurchase by the customer, the Company records a sale.These arrangements are typically terminable by either party upon 14 days' notice. Upon termination, the customer’s rights to repurchase anyremaining inventory is forfeited. As of June 30, 2019 and June 30, 2018, included within inventory is $65.5 million and $104.9 million, respectively, ofprecious metals products subject to repurchase arrangements with customers.Consignment Arrangements with Customers. The Company periodically loans metals to customers on a short-term consignment basis. Inventoriesloaned under consignment arrangements to customers as of June 30, 2019 and June 30, 2018 totaled71Table of Contents $4.9 million and $10.8 million, respectively. Such transactions are recorded as sales and are removed from the Company's inventory at the time the customerelects to price and purchase the precious metals.Commemorative Coins. 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 metalcontent of the commemorative coins. Unlike our bullion coins, the value of commemorative coins is not subject to the same level of volatility as bullioncoins because our commemorative coins typically carry a substantially higher premium over the spot metal price than bullion coins. Our commemorativecoins are not hedged, and are included in inventory at the lower of cost or net realizable value and totaled $17,000 and $99,000 as of June 30, 2019 andJune 30, 2018, respectively.Borrowed Precious Metals. Borrowed precious metals inventories include: (1) metals held by suppliers as collateral on advanced pool metals, (2)amounts due to suppliers for the use of consigned inventory, (3) unallocated metal positions held by customers in the Company’s inventory, and (4)shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metal represents an unsegregated inventoryposition that is due on demand, in a specified physical form, based on the total ounces of metal held in the position. Amounts due under these arrangementsrequire delivery either in the form of precious metals or cash. The Company's inventories included borrowed precious metals with market values totaling$21.8 million and $17.8 million as of June 30, 2019 and June 30, 2018, respectively, with a corresponding offsetting obligation reflected as liabilities onborrowed metals on the consolidated balance sheets.Product Financing Arrangements. In substance, these inventories represent amounts held as security by lenders for obligations under productfinancing arrangements. The Company enters into a product financing agreement for the transfer and subsequent re-acquisition of gold and silver at anagreed-upon price based on the spot price with a third party finance company. This inventory is restricted and is held at a custodial storage facility inexchange for a financing fee, paid to the third party finance company. During the term of the financing, the third party finance company holds the inventoryas collateral, and both parties intend for the inventory to be returned to the Company at an agreed-upon price based on the spot price on the financearrangement termination date. These transactions do not qualify as sales and have been accounted for as financing arrangements in accordance with ASC470-40 Product Financing Arrangements. The obligation is stated at the amount required to repurchase the outstanding inventory. Both the productfinancing and the underlying inventory are carried at fair value, with changes in fair value included in cost of sales in the consolidated statements ofoperations. Such obligations totaled $94.5 million and $113.9 million as of June 30, 2019 and June 30, 2018, respectively.The Company mitigates market risk of its physical inventories and open commitments through commodity hedge transactions. (See Note 11.) As ofJune 30, 2019 and June 30, 2018, the unrealized gains (losses) resulting from the difference between market value and cost of physical inventories were $8.8million and $(5.4) million, respectively.Premium component of inventoryThe Company's inventories primarily include bullion and bullion coins and are acquired and initially recorded at fair market value. The fair marketvalue of the bullion and bullion coins is comprised of two components: (1) published market values attributable to the cost of the raw precious metal, and (2)a published premium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form and themarket value attributable solely to the premium is readily determined, as it is published by multiple reputable sources. The premium is included in the cost ofthe inventory, paid at acquisition, and is a component of the total fair market value of the inventory. The precious metal component of the inventory may behedged through the use of precious metal commodity positions, while the premium component of our inventory is not a commodity that may be hedged.The Company’s inventories are subsequently recorded at their fair market values, that is, marked-to-market, except for our commemorative coininventory. The daily changes in the fair market value of our inventory are offset by daily changes in fair market value of hedging derivatives that are takenwith respects 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 derivativeinstruments are recorded in cost of sales in the consolidated statements of operations.The premium component, at market value, included in the inventories as of June 30, 2019 and June 30, 2018 totaled $4.4 million and $3.5 million,respectively.72Table of Contents 7. PLANT, PROPERTY AND EQUIPMENTPlant, property and equipment consists of the following at June 30, 2019 and June 30, 2018:in thousands June 30, 2019 June 30, 2018 Office furniture, and fixtures $2,080 $2,056 Computer equipment 798 757 Computer software 4,111 3,471 Plant equipment 2,872 2,701 Building 319 315 Leasehold improvements 2,804 2,796 Total depreciable assets 12,984 12,096 Less: accumulated depreciation (7,395) (5,597) Property and equipment not placed in service 1,106 1,483 Land 36 36 Plant, property and equipment, net $6,731 $8,018 Depreciation expense for the years ended June 30, 2019 and 2018 was $1,798,000 and $1,712,000, respectively.8. GOODWILL AND INTANGIBLE ASSETSGoodwill is an intangible asset that arises when a company acquires an existing business or assets (net of assumed liabilities) which comprise abusiness. In general, the amount of goodwill recorded in an acquisition is calculated as the purchase price of the business minus the fair market value of thetangible assets and the identifiable intangible assets, net of the assumed liabilities. Goodwill and intangibles can also be established by push-downaccounting. Below is a summary of the significant transactions that generated goodwill and intangible assets of the Company:•In connection with the acquisition of A-Mark by SGI in July 2005, the accounts of the Company were adjusted using the push down basis ofaccounting to recognize the allocation of the consideration paid to the respective net assets acquired. In accordance with the push down basis ofaccounting, the Company's net assets were adjusted to their fair values as of the date of the acquisition based upon an independent appraisal.•In connection with the Company's business combination with AMST in August 2016, the Company recorded an additional $2.5 million and$4.3 million of identifiable intangible assets and goodwill, respectively; these values were based upon an independent appraisal and representtheir fair values at the acquisition date. The Company’s investment in AMST has resulted in synergies between the acquired minting operationand the Company’s established distribution network by providing a more steady and reliable fabricated source of silver during times of marketvolatility. The Company considers that much of the acquired goodwill relates to the “ready state” of AMST's established minting operation withexisting quality processes, procedures, and ability to scale production to meet market needs. •In connection with the Company's acquisition of Goldline in August 2017, the Company recorded $5.0 million and $1.4 million of additionalidentifiable intangible assets and goodwill, respectively; these values were based upon an independent appraisal and represent their fair valuesat the acquisition date. The Company’s investment in Goldline created synergies between Goldline's direct marketing operation and theCompany’s established distribution network, secured storage and lending operations that has led to increased product margin spreads, lowerdistribution and storage costs for Goldline.73Table of Contents Carrying ValueThe carrying value of goodwill and other purchased intangibles as of June 30, 2019 and June 30, 2018 is as described below:dollar amounts in thousands June 30, 2019 June 30, 2018EstimatedUseful Lives(Years) GrossCarryingAmount AccumulatedAmortization AccumulatedImpairment Net BookValue GrossCarryingAmount AccumulatedAmortization AccumulatedImpairment Net BookValueIdentifiable intangible assets: Existing customerrelationships5 - 15 $8,848 $(6,376) $— $2,472 $8,848 $(5,467) $— $3,381Non-compete andother3 - 5 2,300 (2,122) — 178 2,300 (2,056) — 244Employmentagreement3 295 (256) — 39 295 (222) — 73Intangibles subject to amortization 11,443 (8,754) — 2,689 11,443 (7,745) — 3,698 Trade nameIndefinite $4,454 $— $(1,291) $3,163 $4,454 $— $(1,291) $3,163 Identifiable intangible assets $15,897 $(8,754) $(1,291) $5,852 $15,897 $(7,745) $(1,291) $6,861 GoodwillIndefinite $10,245$— $(1,364) $8,881 $10,245 $— $(1,364) $8,881 The Company's intangible assets are subject to amortization except for trade-names, which have an indefinite life. Intangible assets subject toamortization are amortized using the straight-line method over their useful lives, which are estimated to be three to fifteen years. Amortization expenserelated to the Company's intangible assets for the years ended June 30, 2019 and 2018 was $1,009,000 and $914,000, respectively.Impairment The accumulated impairment charge of $2.7 million (goodwill and indefinite-lived intangible assets) was a non-recurring charge for fiscal 2018 related toDirect Sales segment. No further impairment of goodwill or indefinite-lived intangible assets has occurred for the year ended June 30, 2019.Estimated AmortizationEstimated annual amortization expense related to definite-lived intangible assets for the succeeding five years is as follows (in thousands):Fiscal Year Ending June 30, Amount2020 $1,0112021 5992022 5712023 1282024 47Thereafter 333Total $2,6899.LONG-TERM INVESTMENTSThe Company has three investments in privately-held entities, each of which is a precious metals retailer and customer of the Company. For each ofthese entities, the Company has: 1) an exclusive supplier agreement, for which these entities have agreed to purchase all bullion products required for theirbusinesses exclusively from A-Mark, subject to certain limitations; 2) a product fulfillment services and storage agreement; and 3) the right to appoint adirector to the entity's board of directors (which has been exercised in each case). The Company has determined that it is appropriate to account for each ofthese investments under74Table of Contents the equity method of accounting. The following table shows the carrying value and ownership percentage of the Company's investment in each entity: June 30, 2019 June 30, 2018Entity Carrying Value OwnershipPercentage Carrying Value OwnershipPercentage (in thousands) (in thousands) Company A (1) $2,000 7.4% $500 2.50%Company B 9,059 20.6% 7,888 20.6%Company C (2) 826 10.0% — —% $11,885 $8,388 _________________________________1)In December 2018, the Company purchased additional shares of Company A's common stock for $1.5 million, thereby increasing the Company’s aggregate ownershipinterest from 2.5% to 7.4%. In January 2019, the Company obtained a voting seat on Company A's board of directors. Effective with the third quarter of fiscal 2019, theCompany changed the accounting of this investment from the cost method to the equity method.2) On January 9, 2019, the Company made an $800,000 investment in Company's C's common stock, representing 10% of its equity and obtained a voting seat on Company'sC's board of directors. The Company considers these equity method investees to be related parties. See Note 13 for a summary of the Company's aggregate balances andactivity with these related party entities.10. ACCOUNTS PAYABLEAccounts payable consists of the following: in thousands June 30, 2019 June 30, 2018 Trade payables to customers $1,246 $175 Advances from customers 57,643 42,615 Deferred revenue 1,592 2,107 Other accounts payable 1,699 1,100 $62,180 $45,997 11.DERIVATIVE INSTRUMENTS AND HEDGING TRANSACTIONSThe Company is exposed to market risk, such as changes in commodity prices and foreign exchange rates. To manage the volatility related to theseexposures, the Company enters into various derivative products, such as forwards and futures contracts. By policy, the Company historically has entered intoderivative financial instruments for the purpose of hedging substantially all of Company's market exposure to precious metals prices, and not for speculativepurposes. The Company’s gains (losses) on derivative instruments are substantially offset by the changes in the fair market value of the underlying preciousmetals inventory, both of which are recorded in cost of sales in the consolidated statements of operations.Commodity Price ManagementThe Company manages the value of certain assets and liabilities of its trading business, including trading inventories, by employing a variety ofhedging strategies. These strategies include the management of exposure to changes in the market values of the Company's trading inventories through thepurchase and sale of a variety of derivative instruments, such as forwards and futures contracts.The Company enters into derivative transactions solely for the purpose of hedging its inventory subject to price risk, and not for speculative marketpurposes. Due to the nature of the Company's global hedging strategy, the Company is not using hedge accounting as defined under Topic 815 of the ASC,whereby the gains or losses would be deferred and included as a component of other comprehensive income. Instead, gains or losses resulting from theCompany's futures and forward contracts and open sale and purchase commitments are reported in the consolidated statement of operations as unrealizedgains or losses on commodity contracts (a component of cost of sales) with the related unrealized amounts due from or to counterparties reflected as aderivative asset or liability on the consolidated balance sheets.The Company's trading inventories and purchase and sale transactions consist primarily of precious metal products. The value of these assets andliabilities are marked-to-market daily to the prevailing closing price of the underlying precious metals. The Company's precious metals inventories aresubject to market value changes, created by changes in the underlying commodity75Table of Contents market prices. Inventories purchased or borrowed by the Company are subject to price changes. Inventories borrowed are considered natural hedges, sincechanges in value of the metal held are offset by the obligation to return the metal to the supplier. The Company’s open sale and purchase commitments typically settle within 2 business days, and for those commitments that do not have stated settlementdates, the Company has the right to settle the positions upon demand. Futures and forwards contracts open at end of any period typically settle within30 days. Open sale and purchase commitments are subject to changes in value between the date the purchase or sale price is fixed (the trade date) and the datethe metal is received or delivered (the settlement date). The Company seeks to minimize the effect of price changes of the underlying commodity through theuse of forward and futures contracts.The Company's policy is to substantially hedge its inventory position, net of open sale and purchase commitments that are subject to price risk. TheCompany regularly enters into precious metals commodity forward and futures contracts with financial institutions to hedge price changes that would causechanges in the value of its physical metals positions and purchase commitments and sale commitments. The Company has access to all of the precious metalsmarkets, allowing it to place hedges. The Company also maintains relationships with major market makers in every major precious metals dealing center.The Company’s management sets credit and position risk limits. These limits include gross position limits for counterparties engaged in sales andpurchase transactions with the Company. They also include collateral limits for different types of sale and purchase transactions that counterparties mayengage in from time to time.Derivative Assets and LiabilitiesThe Company's derivative assets and liabilities represent the net fair value of the difference (or intrinsic value) between market values and tradevalues at the trade date for open precious metals sale and purchase contracts, as adjusted on a daily basis for changes in market values of the underlyingmetals, until settled. The Company's derivative assets and liabilities represent the net fair value of open precious metals forwards and futures contracts. Theprecious metals forwards and futures contracts are settled at the contract settlement date.All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions (i.e., offsettingderivative instruments). As such, for the Company's derivative contracts with the same counterparty, the receivables and payables have been netted on theconsolidated balance sheets. Such derivative contracts include open sale and purchase commitments, futures, forwards and margin accounts. In the tablebelow, the aggregate gross and net derivative receivables and payables balances are presented by contract type and type of hedge, as of June 30, 2019 andJune 30, 2018. June 30, 2019 June 30, 2018 in thousands GrossDerivative AmountsNetted CashCollateralPledge Net Derivative GrossDerivative AmountsNetted CashCollateralPledge Net DerivativeNettable derivative assets:Open sale and purchasecommitments $2,874 $(552) $— $2,322 $2,602 $(328) $— $2,274Option contracts 61 — — 61 390 — — 390Future contracts 2 — — 2 238 — — 238Forward contracts 43 — — 43 4,577 (84) — 4,493 $2,980 $(552) $— $2,428 $7,807 $(412) $— $7,395Nettable derivative liabilities:Open sale and purchasecommitments $4,093 $(271) $— $3,822 $17,132 $(647) $— $16,485Margin accounts 11,652 — (8,671) 2,981 5,988 — (2,184) 3,804Liability of price protectionprograms 22 — — 22 168 — — 168Future contracts 1,241 — — 1,241 — — — —Forward contracts 2,044 (139) — 1,905 — — — — $19,052 $(410) $(8,671) $9,971 $23,288 $(647) $(2,184) $20,457Gains or Losses on Derivative InstrumentsThe Company records the derivative at the trade date with a corresponding unrealized gain (loss), shown as a component of cost of sales inthe consolidated statements of operations. The Company adjusts the derivatives to fair value on a daily basis until the transactions are settled. When thesecontracts are net settled, the unrealized gains and losses are reversed and the realized gains and losses for forward contracts are recorded in revenue and costof sales, and the net realized gains and losses for futures76Table of Contents and option contracts are recorded in cost of sales.Below is a summary of the net gains (losses) on derivative instruments for the years ended June 30, 2019 and 2018.in thousands Years Ended June 30, 2019 2018 Gains (losses) on derivative instruments: Unrealized (losses) gains on open future commodity and forward contracts and open sale and purchase commitments, net $(126) $2,351 Realized (losses) gains on future commodity contracts, net (942) 13,271 $(1,068) $15,622 The Company’s net gains on derivative instruments, as shown in the table above, were substantially offset by the changes in fair market value of theunderlying precious metals inventory and open sale and purchase commitments, which were also recorded in cost of sales in the consolidated statements ofoperations.77Table of Contents Summary of Hedging PositionsIn a hedging relationship, the change in the value of the derivative financial instrument is offset to a great extent by the change in the value of theunderlying hedged item. The following table summarizes the results of our hedging activities, which shows the precious metal commodity inventoryposition, net of open sale and purchase commitments, that is subject to price risk as of June 30, 2019 and at June 30, 2018.in thousands June 30, 2019 June 30, 2018 Inventory $292,861 $280,116 Precious metals held under financing arrangements 208,792 262,566 501,653 542,682 Less unhedgeable inventory: Commemorative coin inventory, held at lower of cost or net realizable value (17) (99) Premium on metals position (4,424) (3,530) Precious metal value not hedged (4,441) (3,629) 497,212 539,053 Commitments at market: Open inventory purchase commitments 166,600 342,287 Open inventory sales commitments (158,870) (138,022) Margin sale commitments (11,652) (5,988) In-transit inventory no longer subject to market risk (809) (1,060) Unhedgeable premiums on open commitment positions 838 541 Borrowed precious metals (201,144) (280,346) Product financing arrangements (94,505) (113,940) Advances on industrial metals 8,644 6,044 (290,898) (190,484) Precious metal subject to price risk 206,314 348,569 Precious metal subject to derivative financial instruments: Precious metals forward contracts at market values 133,612 274,994 Precious metals futures contracts at market values 72,218 72,421 Total market value of derivative financial instruments 205,830 347,415 Net precious metals subject to commodity price risk $484 $1,154 78Table of Contents Notional Balances of DerivativesThe notional balances of the Company's derivative instruments, consisting of contractual metal quantities, are expressed at current spot prices of theunderlying precious metal commodity. As of June 30, 2019 and June 30, 2018, the Company had the following outstanding commitments and open forwardand future contracts:in thousands June 30, 2019 June 30, 2018 Purchase commitments $166,600 $342,287 Sales commitments $(158,870) $(138,022) Margin sales commitments $(11,652) $(5,988) Open forward contracts $133,612 $274,994 Open futures contracts $72,218 $72,421 The contract amounts (i.e., notional balances) of the Company's forward and futures contracts and the open sales and purchase commitments are notreflected in the accompanying consolidated balance sheet. The Company records the difference between the market price of the underlying metal or contractand the trade amount at fair value.The Company is exposed to the risk of failure of the counterparties to its derivative contracts. Significant judgment is applied by the Company whenevaluating the fair value implications. The Company regularly reviews the creditworthiness of its major counterparties and monitors its exposure toconcentrations. At June 30, 2019, the Company believes its risk of counterparty default is mitigated as a result of such evaluation and the short-term durationof these arrangements.Foreign Currency Exchange Rate ManagementThe Company utilizes foreign currency forward contracts to manage the effect of foreign currency exchange fluctuations on its sale and purchasetransactions. These contracts generally have maturities of less than one week. The accounting treatment of our foreign currency exchange derivativeinstruments is similar to the accounting treatment of our commodity derivative instruments, that is, the change in the value in the financial instrument isimmediately recognized as a component of cost of sales. Unrealized gains on foreign exchange derivative instruments shown on the face of the consolidatedstatements of operations totaled $0 and $30,000 for the years ended June 30, 2019 and 2018, respectively. The market values (fair values) of the Company’sforeign exchange forward contracts and the net open sale and purchase commitment transactions, denominated in foreign currencies, outstanding are asfollows:in thousands June 30, 2019 June 30, 2018Foreign exchange forward contracts $5,934 $4,130Open sale and purchase commitment transactions, net $4,667 $3,026 79Table of Contents 12. INCOME TAXESIncome (loss) from operations before provision for income taxes is shown below:in thousands Years Ended June 30, 2019 2018 U.S. $3,251 $(3,446) Foreign 26 35 Net income (loss) before provision for income taxes $3,277 $(3,411) The Company files a consolidated federal income tax return based on a June 30 tax year end. The provision for income tax expense for the yearsended June 30, 2019 and 2018 consists of the following:in thousands Years Ended June 30, 2019 2018 Current: Federal (4) 42 State and local 304 (96) Foreign 6 (27) 306 (81) Deferred: Federal 668 361 State and local 41 (272) Foreign — — 709 89 Provision for income tax expense $1,015 $8 For the years ended June 30, 2019 and 2018, the effective tax rate was 31.0% and 0.2%, respectively. This increase in tax expense of $1.0million was primarily due to a shift to operating income in year ended June 30, 2019, compared to an operating loss, the application of a lower federalstatutory tax rate (e.g., 21.0% for fiscal 2019 compared to 28.06% for fiscal 2018) and an one-time revaluation charge related to deferred taxes required fromthe Tax Cuts & Jobs Act ("Tax Act") in the same year ago period. For the year ended June 30, 2019, the Company recorded tax expense which differed fromthe statutory rates primarily due to state taxes (including state minimum franchise taxes net of federal tax benefit), and non-deductible Company providedtransportation benefits. For the year ended June 30, 2018, the Company recorded a tax expense that differed from statutory rate primarily due to the impact ofthe Tax Act discussed above. The remainder of the difference was due to normal course movements and non-material items.A reconciliation of the income tax provisions to the amounts computed by applying the statutory federal income tax rate (21.00% for 2019, and28.06% for 2018) to income before income tax provisions for the years ended June 30, 2019 and 2018, are set forth below:in thousands Years Ended June 30, 2019 2018 Federal income tax $688 $(957) State tax, net of federal benefit 291 (98) Uncertain tax positions 69 (50) Change in valuation allowance — (56) Tax Act (1) — 1,244 Other (33) (75) Provision for income taxes $1,015 $8 _________________________________ (1)During the year ended June 30, 2018, our Federal income tax statutory rate decreased from 35.00% to 28.06% as a result of the "Tax Act", which became effective for theCompany starting in our second quarter of fiscal 2018. The Tax Act required the Company to record an one-time revaluation tax charge to reduce our net deferred tax assetsbased on the newly enacted corporate tax rate of 21.00%. The 28.06% tax rate was a blended rate based on the Company's fiscal year applied pursuant to IRS guidance. 80Table of Contents Tax Balances and ActivityIncome Taxes Receivable and PayableAs of June 30, 2019 and June 30, 2018, income taxes receivable totaled $1.5 million and $1.6 million, respectively.Deferred Tax Assets and LiabilitiesIn assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferredtax assets will be realized by evaluating both positive and negative evidence. The ultimate realization of deferred tax assets is dependent upon the generationof future taxable income during the periods in which those temporary differences become deductible. As of June 30, 2019 and June 30, 2018, managementconcluded that it was more likely than not that the Company would be able to realize the benefit of the U.S. federal and state deferred tax assets. We basedthis conclusion on historical and projected operating performance, as well as our expectation that our operations will generate sufficient taxable income infuture periods to realize the tax benefits associated with the deferred tax assets. A tax valuation was considered unnecessary for years ended June 30, 2019and 2018.As of June 30, 2019, the consolidated balance sheet reflects the deferred tax items for each tax-paying component (i.e., federal and state), resulting ina state deferred tax asset of $1.6 million and a federal deferred tax asset of $1.6 million. As of June 30, 2018, the consolidated balance sheet reflects thedeferred tax items for each tax-paying component (i.e., federal and state), resulting in a state deferred tax asset of $1.7 million and a federal deferred tax assetof $2.2 million.The schedule of deferred taxes presented below summarizes the components of deferred taxes that have been classified as deferred tax assets anddeferred tax liabilities related to taxable temporary differences as of June 30, 2019 and June 30, 2018:in thousands June 30, 2019 June 30, 2018Accrued compensation $108 $86Deferred rent 230 236Unrealized loss on open purchase and sale commitments — 2,351Stock-based compensation 902 635State tax accrual 1 37Net operating loss carry forwards 3,077 1,657Fixed assets 23 —Other 109 141Deferred tax assets 4,450 5,143 Intangible assets (324) (206)Unrealized gain on futures and forward contracts — (146)Fixed assets — (5)Inventories — (319)Earnings from equity method investment (569) (283)Investment in LLC. taxed as a partnership (387) (287)Other (7) (27)Deferred tax liabilities (1,287) (1,273) Net deferred tax asset $3,163 $3,870 Net Operating Loss Carryforwards and Tax CreditsAs of June 30, 2019 and June 30, 2018, the Company has approximately $9.1 million and $2.9 million of federal net operating loss carryforwardsand approximately $17.1 million and $15.5 million, state and city net operating loss carryforwards, respectively. The Company's combined federal, state andcity tax-effected net operating loss carryforwards totaled, as of June 30, 2019 and June 30, 2018, $3.1 million and $1.7 million, respectively. These netoperating loss carryforwards start to expire in the year ending June 30, 2022.As of June 30, 2019 and June 30, 2018, the Company has approximately $53,000 and $53,000, respectively, of a California state tax credit that canbe carried-over indefinitely to future tax years.81Table of Contents Unrecognized Tax BenefitsThe Company has taken or expects to take certain tax benefits on its income tax return filings that it has not recognized a tax benefit (i.e., anunrecognized tax benefit) on its consolidated statements of operations. The Company's measurement of its uncertain tax positions is based on management'sassessment of all relevant information, including, but not limited to prior audit experience, audit settlement, or lapse of the applicable statute of limitations.Below is a reconciliation of the net unrecognized tax benefits for the years ended June 30, 2019 and June 30, 2018:in thousands Years Ended June 30, 2019 2018 Beginning balance $147 $197Reductions due to lapse of statute of limitations (12) (2)Additions (reductions) as a results of tax positions of prior years 81 (48)Ending balance $216 $147 In addition to the $216,000 of accrued tax expense related to unrecognized tax positions, as shown in the table above, the Company has $50,000 of interestand $56,000 of penalties accrued to date related to its uncertain tax positions. As of June 30, 2019, the amount of this accrued liability (inclusive of theuncertain tax deductions and the associated interest and penalty accrual) totaled $322,000, and, if recognized, would reduce the Company's effective tax rate.Tax ExaminationsWith exception of the open examinations noted below, either prior federal, state or local examinations have been completed by the tax authorities orthe statute of limitations have expired for U.S. federal, state and local income tax returns filed for the years through June 30, 2014.Open Tax examinations•Utah State — for Years Ended: June 30, 2011 through June 30, 2013. SGI and the Company filed consolidated tax returns when the Companywas a subsidiary of SGI, and SGI's consolidated tax returns remain under exam with the State of Utah. We are unable to determine the outcome ofthis exam at this time.•Utah State — for Years Ended: June 30, 2014 through June 30, 2017. The Company's separately filed Utah State tax returns remain under exam.The Company is unable to determine the outcome at this time.Tax examination that Closed during Fiscal Year 2019•Internal Revenue Service — for Year Ended: June 30, 2015. In fiscal 2019, the Internal Revenue Service ("IRS") closed its examination of ourtax filing. The impact of the IRS examination was immaterial to the financial statements.•New York State — for Years Ended: June 30, 2014 through June 30, 2016. In fiscal 2019, the New York Department of Taxation and Financeclosed its examination of our New York State tax returns. The impact of this examination was immaterial to the financial statements.13. RELATED PARTY TRANSACTIONSRelated parties are entities that the Company controls or has the ability to significantly influence. Related parties also include persons who areaffiliated with related entities or the Company that are in a position to influence corporate decisions (such as owners, executives, board members and theirfamilies). In the normal course of business, we enter into transactions with our related parties. Below is a list of related parties with whom we have significanttransactions:1)Stack’s Bowers Numismatics LLC. ("Stack's Bowers Galleries"). Stack's Bowers Galleries is a wholly-owned subsidiary of Spectrum GroupInternational, Inc. ("SGI"). In March 2014, SGI distributed all of the shares of common stock of A-Mark to its stockholders, effecting a spinoff ofA-Mark from SGI. As a result of this distribution the Company became a publicly traded company independent from SGI. Also, SGI and theCompany have a common chief executive officer.2)SilverTowne, L.P. SilverTowne L.P. is a non-controlling owner of AMST (i.e., the Company's minting operations).3)Equity method investees. The Company has three investments in privately-held entities, each of which is a precious metals retailer and customerof the Company. For each of these entities, the Company has: 1) an exclusive supplier agreement, for which these entities have agreed topurchase all bullion products required for their businesses exclusively from A-Mark, subject to certain limitations; 2) a product fulfillmentservices and storage agreement; and 3) the right to appoint a director to the entity's board of directors (which has been exercised in each case).82Table of Contents 4)Goldline Lenders . In connection with the acquisition of Goldline, the Company entered into a privately placed credit facility with variouslenders, which included some members of the Company's board of directors.Our related party transactions include (i) sales and purchases of precious metals (ii) financing activity (iii) repurchase arrangements, and (iv) hedgingtransactions. Below is a summary of our related party transactions.Balances with Related PartiesAs of June 30, 2019 and June 30, 2018, the Company had related party receivables and payables balances as set forth below: in thousands June 30, 2019 June 30, 2018 Receivables Payables Receivables Payables Stack's Bowers Galleries $17,630(1) $— $13,240 $— Equity method investees 4,978(2) 163 899 920 SilverTowne 241(3) — — 242 Goldline Lenders(4) — — — 7,710 $22,849 $163 14,139 $8,872 _________________________________ (1) Balance principally includes two secured lines of credit with a balance of $7.5 million and $6.4 million (shown as a component of secured loans receivables) and tradereceivables of $3.6 million. See "Secured Lines of Credit with Stack's Bowers Galleries", below. (2) Balance primarily represents trade receivables, net (shown as a component of receivables). (3) Balance primarily represents trade receivables, net (shown as a component of receivables). (4) Principal balance of the Goldline Credit Facility of $7.5 million was repaid in full on December 7, 2018 before the August 2020 maturity date. The principal payment includeda 2% premium of $150,000. (See Note 14 for further details.) Secured Lines of CreditOn September 19, 2017, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit, bearing interest at acompetitive rate per annum, with a maximum borrowing line (subject to temporary increases) of $5.3 million. The loan is secured by precious metals andnumismatic products. As of June 30, 2019 and June 30, 2018, the outstanding principal balance of this loan was $6.4 million and $3.0 million, respectively.On March 1, 2018, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit on the wholesale value (i.e.,the excess over the spot value of the metal), of numismatic products bearing interest at a competitive rate per annum, with a maximum borrowing line (subjectto temporary increases) of $10.0 million. In addition to the annual rate of interest, the Company is entitled to receive a participation interest equal to 10% ofthe net profits realized by Stack's Bowers Galleries on the ultimate sale of the products. As of June 30, 2019 and June 30, 2018, the outstanding principalbalance this loan was $7.5 million and $9.5 million, respectively.Long Term Debt ObligationOn December 7, 2018, the Company repaid the $7.5 million principal amount outstanding under the Goldline Credit Facility to the GoldlineLenders in full. Under the terms of the principal repayment, the applicable credit and related agreements have been terminated and none of the parties theretohas any further rights or obligations thereunder. (See Note 14.)Activity with Related PartiesSales and PurchasesDuring the years ended June 30, 2019 and 2018, the Company made sales and purchases to various companies, which have been deemed to berelated parties, as follows:in thousands Years Ended June 30, 2019 2018 Sales Purchases Sales Purchases Stack's Bowers Galleries $30,418 $36,946 $50,512 $344,348 Equity method investees 508,552 16,679 468,200 10,790 SilverTowne 12,914 1,611 14,921 7,696 $551,884 $55,236 $533,633 $362,834 83Table of Contents Interest IncomeDuring the years ended June 30, 2019 and 2018, the Company earned interest income related to loans made to Stack's Bowers Galleries and tofinancing arrangements (including repurchase agreements) with affiliated companies, as set forth below:in thousands Years Ended June 30, 2019 2018 Interest income from secured loans receivables $1,058 $290 Interest income from finance products and repurchase arrangements 6,275 4,246 $7,333 $4,536 Interest ExpenseDuring the years ended June 30, 2019 and 2018, the Company incurred interest expense (including debt amortization costs) related to the debtpayable to the Goldline Lenders that totaled $0.3 million and $0.6 million, respectively.Other IncomeDuring the years ended June 30, 2019 and 2018, the Company recorded its proportional share of its equity method investee's net income as otherincome that totaled $1,198,000 and $421,000, respectively. As of June 30, 2019 and June 30, 2018, the aggregate carrying balance of the equity methodinvestments was $11.9 million and $8.4 million, respectively.During the years ended June 30, 2019 and 2018, the Company earned profit sharing income related to one of CFC's secured lending agreements withStack's Bowers Galleries that totaled $105,000 and $0, respectively.Other ExpenseOn December 7, 2018, in connection with the $7.5 million payoff of the outstanding principal under the Goldline Credit Facility, the GoldlineLenders received a 2% (i.e.$150,000) premium. (See Note 14.)14.FINANCING AGREEMENTSLines of CreditEffective March 29, 2019, through an amendment and restatement of the applicable credit documents, A-Mark renewed its uncommitted demandborrowing facility ("Trading Credit Facility") with a syndicate of banks. Under the agreements, Coöperatieve Rabobank U.A. acts as joint lead lender andadministrative agent/bookrunner and Natixis acts as joint lead arranger and syndication agent for the syndicate. The Trading Credit Facility is secured bysubstantially all of the Company’s assets on a first priority basis. As of June 30, 2019, the Trading Credit Facility provided the Company with access up to $260.0 million, featuring a $210.0 million base, with a$50.0 million accordion option. The Trading Credit Facility is scheduled to mature on March 27, 2020. From commencement of the Trading Credit Facility(i.e., March 31, 2016), the Company has incurred $3.4 million of accumulated loan costs. These loan costs have been capitalized when incurred and areamortized over the term of the Trading Credit Facility. As of June 30, 2019 and June 30, 2018, the remaining unamortized balance was approximately $0.6million and $0.5 million, respectively.The Company routinely uses the Trading Credit Facility to purchase and finance precious metals and for operating cash flow purposes. Amountsunder the Trading Credit Facility bear interest based on London Interbank Offered Rate (“LIBOR”) plus a 2.50% margin for revolving credit line loans and a4.50% margin for bridge loans (that is, for loans that exceed the available revolving credit line). The one-month LIBOR rate was approximately 2.40% and2.09% as of June 30, 2019 and June 30, 2018, respectively. Borrowings are due on demand and totaled $167.0 million and $200.0 million at June 30, 2019and at June 30, 2018, respectively. The amounts available under the respective borrowing facilities are determined at the end of each week following aspecified borrowing base formula. The Company is able to access additional credit as needed to finance operations, subject to the overall limits of theborrowing facilities and lender approval of the revised borrowing base calculation. Based on the latest approved borrowing bases in effect, the amountsavailable under the Trading Credit Facility, after taking into account current borrowings, totaled $11.6 million and $22.1 million as determined on June 30,2019 and on June 30, 2018, respectively.The Trading Credit Facility has certain restrictive financial covenants, including one requiring the Company to maintain a minimum tangible networth. As of June 30, 2019 the minimum tangible net worth financial covenant under the Trading Credit Facility was $47.5 million. The Company is incompliance with all restrictive financial covenants as of June 30, 2019.Interest expense related to the Company’s lines of credit totaled $7.8 million and $7.9 million, which represents 45.3% and 57.0% of the totalinterest expense recognized, for the years ended June 30, 2019 and 2018, respectively. Our lines of credit carried a daily weighted average effective interestrate of 4.78% and 3.96%, respectively, for the years ended June 30, 2019 and 2018.84Table of Contents Debt Obligation with Goldline LendersOn August 28, 2017, in connection with the closing of the Goldline acquisition, Goldline, then known as Goldline Acquisition Corp., entered into aprivately placed credit facility in the amount of $7.5 million (the “Goldline Credit Facility”) with various lenders (the "Goldline Lenders"). Borrowings underthe Goldline Credit Facility were used to finance a portion of the consideration payable pursuant to the Goldline acquisition.The Goldline Credit Facility was secured by a first priority lien on substantially all of the assets of Goldline, and was guaranteed by the Company.Interest on the Goldline Credit Facility was payable quarterly in arrears at the rate of 8.5% per annum, and the Goldline Lenders under the Goldline CreditFacility were entitled to an additional funding fee payment at maturity equal to the greater of 3.0% of the principal amount of the Goldline Credit Facilityand 10.0% of cumulative EBITDA (for the periods ending June 30, 2018, 2019 and 2020) of Goldline in excess of $10.0 million, on a pro rata basis. TheGoldline Credit Facility had a three-year maturity, and all outstanding principal and unpaid interest was due upon maturity (August 28, 2020).On December 7, 2018, the Company repaid the $7.5 million principal amount outstanding under the Goldline Credit Facility to the GoldlineLenders, together with a 2% ($150,000) premium (shown as a component of other expense) and unpaid interest through the date of repayment (shown as acomponent of interest expense). Under the terms of the repayment, the applicable credit and related agreements have been terminated and none of the partiesthereto has any further rights or obligations thereunder.As of June 30, 2019 and June 30, 2018, the carrying balance of the Goldline Credit facility was $0.0 million and $7.2 million, respectively, and theremaining unamortized loan cost balance was approximately $0.0 million and $0.3 million, respectively, which is amortized ratably through the maturitydate. As of June 30, 2019, the balance of the loan fee payable was $0.0 million.Interest expense related to the Goldline Credit Facility (including debt loan amortization costs) totaled $342,000 which represents 2.0% of the totalinterest expense recognized, for the year ended June 30, 2019. The Goldline Credit Facility's weighted average effective interest rate was 9.25% for the yearended June 30, 2019. Interest expense related to the Goldline Credit Facility (including debt loan amortization costs) totaled $648,000 which represents4.7% of the total interest expense recognized, for the year ended June 30, 2018. The Goldline Credit Facility's weighted average effective interest rate was9.25% for the year ended June 30, 2018.The obligations of Goldline and the Company under the Goldline Credit Facility had been subordinated to the Company’s obligations under theTrading Credit Facility. (See Lines of Credit, above in Note 14.)Notes PayableSecuritizationIn September 2018, AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, completed an issuance of Secured Senior Term Notes(collectively, the "Notes"): Series 2018-1, Class A (the “Class A Notes”) in the aggregate principal amount of $72.0 million and Secured Subordinated TermNotes, Series 2018-1, Class B (the “Class B Notes” and together with the Class A Notes, the “Notes”) in the aggregate principal amount of $28.0 million. TheClass A Notes bear interest at a rate of 4.98% and the Class B Notes bear interest at a rate of 5.98%. The Notes have a maturity date of December 15, 2023.The Notes were issued under a Master Indenture and the Series 2018-1 Supplement thereto between AMCF and Citibank, N.A., as trustee. At issuance, theCompany held $10.0 million of the Class B Notes. The Notes are not insured or guaranteed by A-Mark or CFC. CFC acts as servicer with respect to the Notes.In April 2019, A-Mark sold $5.0 million of the $10.0 million in Class B Notes that it initially held at issuance. The Company incurred $38,000 oftransaction costs related to the sale, which is reported in Other Income, net of the consolidated statements of operations. A-Mark continues to retain $5.0million of the Notes in order to comply with the Credit Risk Retention Rules of Section 15G of the Exchange Act. The $5.0 million portion of the Class BNotes retained by the Company is eliminated in consolidation. AMCF applied the net proceeds from the sale of the Notes to purchase loans and precious metals inventory, and to pay certain costs and expenses.CFC and A-Mark may from time to time also contribute cash or sell precious metals to AMCF in exchange for cash or subordinated, deferredpayment obligations from AMCF. In addition, AMCF may from time to time sell precious metals to A-Mark for cash.As of June 30, 2019, the consolidated carrying balance of the Notes was $91.9 million (which excludes the $5.0 million note that the Companyretained), and the remaining unamortized loan cost balance was approximately $3.1 million, which is amortized using the effective interest method throughthe maturity date. As of June 30, 2019, the balance of the interest payable was $234,000.85Table of Contents Interest on the Notes is payable monthly in arrears at the aggregate rate of 5.26% per annum. For the year ended June 30, 2019, the interest expenserelated to the Notes (including loan amortization costs) totaled $4.7 million which represents 27.2% of the total interest expense recognized by theCompany. For the year ended June 30, 2019, the Notes' weighted average effective interest rate was 5.88%.Variable Interest EntityAMCF is a special purpose entity whose sole activity consists of operating, owning, and financing indenture assets. The Notes are primarily payablefrom, and secured by, (i) precious metals obtained by AMCF from third-parties or A-Mark, and (ii) a portfolio of loans collateralized by precious metals,which were originated by either CFC or acquired by CFC from third parties and conveyed by CFC to AMCF. The indenture requires AMCF to maintain aspecified level of collateral. The indenture also provides that AMCF’s assets are not to be commingled with those of CFC or A-Mark (or any affiliate), andthat AMCF is to maintain separate books and records.AMCF is a VIE because the Company's initial equity investment may be insufficient to maintain its ongoing collateral requirements withoutadditional financial support from the Company. The securitization is primarily secured by bullion loans and precious metals, and the Company is required tocontinuously hedge the value of the collateral and make future contributions as necessary. The Company is the primary beneficiary of this VIE because theCompany has the right to determine the type of collateral (i.e., secured loans or precious metals), has the right to receive (and has received) the proceeds fromthe securitization transaction, and earns on-going interest income from the secured loans (subject to collateral requirements) held by AMCF.The assets and liabilities of the VIE are shown on the face of the consolidated balance sheets of the Company at June 30, 2019 and June 30, 2018.Liability on Borrowed MetalsThe Company recorded liabilities on borrowed precious metals with market values totaling $201.1 million and $280.3 million as of June 30, 2019and June 30, 2018, respectively, with the corresponding metals reflected on the consolidated balance sheets.Advanced pool metalsThe Company borrows precious metals from its suppliers and customers under short-term agreements using other precious metals from its inventoryas collateral. The Company has the ability to sell the metals advanced. These arrangements can be settled by repayment in similar metals or in cash. Once theobligation is settled, the metals held as collateral are released back to the Company.Liability on borrowed metals — OtherLiabilities may also arise from: (1) unallocated metal positions held by customers in the Company’s inventory, (2) amounts due to suppliers for theuse of consigned inventory, and (3) shortages in unallocated metal positions held by the Company in the supplier’s inventory. Unallocated or pool metalrepresent an unsegregated inventory position that is due on demand, is a specified physical form, based on the total ounces of metal held in the position.Amounts due under these arrangements require delivery either in the form of precious metals, or in cash.Product Financing ArrangementsThe Company has agreements with financial institutions (third parties) that allow the Company to transfer its gold and silver inventory at an agreed-upon price based on the spot price with these third parties. Such agreements allow the Company to repurchase this inventory at an agreed-upon price basedon the spot price on the repurchase date. The third party charges a monthly fee as a percentage of the market value of the outstanding obligation; suchmonthly charges are classified in interest expense. These transactions do not qualify as sales, and therefore have been accounted for as financingarrangements and are reflected in the consolidated balance sheet as product financing arrangements. The obligation is stated at the amount required torepurchase the outstanding inventory. Both the product financing obligation and the underlying inventory (which is entirely restricted) are carried at fairvalue, with changes in fair value recorded as a component of cost of sales in the consolidated statements of operations. Such obligation totaled $94.5 millionand $113.9 million as of June 30, 2019 and June 30, 2018, respectively.15. COMMITMENTS AND CONTINGENCIESLeasesThe Company leases approximately 9,000 square feet of office space in El Segundo, California at a cost of $3.82 per square foot per month. The termof this lease expires on March 31, 2026 and contains annual base rent increases of 3%.86Table of Contents The Company leases approximately 17,600 square feet of warehouse space in Las Vegas, Nevada at a cost of approximately $1.69 per square foot permonth. The term of this lease expires on April 30, 2025 and contains annual base rent increases of 3%.The Company leases approximately 21,500 square feet of office space in Los Angeles, California at a cost of $2.76 per square foot per month. Theterm of this lease expires on February 28, 2022 with annual base rent increases of 3% and the Company has the option to renew the lease term for anadditional five years at the then current market rate. The lease requires the payment of related property taxes, insurance, maintenance and other cost related tothe leased property. In addition, the Company provided the landlord of the office space in Los Angeles, California a standby letter of credit for $300,000 invalue in lieu of a security deposit. This letter of credit is renewed annually and reduces each lease anniversary date as provided in the lease agreement.Expenses related to operating leases (including lease expense for the common space rental) were $1.6 million, and $1.3 million, respectively, for theyears ended June 30, 2019 and 2018. Future minimum lease payments under the Company's lease arrangements with noncancellable lease terms in excess ofone year as of June 30, 2019 are as follows:(in thousands)Years ending June 30, Operating Capital 2020 1,488 22 2021 1,526 22 2022 1,313 12 2023 834 — 2024 860 Thereafter 1,184 — $7,205 56 Less amounts representing interest (3) $53 Employment and Non-Compete AgreementsAt June 30, 2019, the Company was a party to various employment agreements and non-compete and/or non-solicitation agreements with itsemployees, including an employment agreement with Greg Roberts, its CEO, which expires on June 30, 2020, and an employment agreement with ThorGjerdrum, its President, which expired on June 30, 2019. (See Note 19.) The employment agreements provide for minimum salary levels, incentivecompensation and severance benefits, among other items.Employee Benefit PlanThe Company maintains an employee savings plan for United States employees under the Internal Revenue Code section 401(k). Employees areeligible to participate in the plan after three complete calendar months of service and all contributions are immediately vested. Employees' contributions arediscretionary to a maximum of 90% of compensation. For all plan members, the Company contributes 30% of the eligible employees' contributions on thefirst 60% of the participants' compensation to the IRS maximum annual contribution. The Company's matching 401(k) contributions totaled $263,000 and$180,000 for the years ended June 30, 2019 and 2018, respectively.Litigation, Claims and ContingenciesIn the ordinary course of our business, we are party to various legal actions, which we believe are incidental to the operation of our business. Theoutcome of such legal actions and the timing of ultimate resolution are inherently difficult to predict. In the opinion of management, based upon informationcurrently available to us, any resulting liability, would not have a material adverse effect on the Company's financial position, cash flows, or operations.SGI IRS and State Tax AuditsSGI and the Company filed consolidated tax returns when the Company was a subsidiary of SGI and SGI's consolidated tax returns remain underexam with the State of Utah for the years ended June 30, 2011 through 2013. Additionally, the Company's separately filed Utah State Franchise and Incometax return remain under exam for the period ended June 30, 2014 through 2017. We are unable to determine the outcome of this exam at this time.In general, the U.S Federal and the majority of state and local examinations have been completed by the tax authorities for the respectivejurisdictions or the statute of limitations have expired through the year ended June 30, 2014.87Table of Contents Operational ContingenciesIn connection with the closing of the SilverTowne transaction, AMST entered into an exclusive distribution agreement with the Company withrespect to the silver products produced by AMST which, among other things, set weekly minimum order quantities by A-Mark. The agreement has a three-year term, with two automatic two-year renewals (unless terminated prior thereto.) The Company was initially required to order no less than 300,000 ouncesof silver products per week on average during any consecutive four week period during the term of the agreement. This initial commitment has beenperiodically reduced, and as of June 30, 2019, per mutual agreement of the parties, the Company is required to order no less than 175,000 ounces of silverproducts per week. The parties will re-evaluate production needs every 60 days. The price paid per ounce is mutually determined by both parties, and issubject to adjustments every six months during the term.Additionally, in connection with the SilverTowne transaction, AMST entered into an exclusive supplier agreement, dated August 31, 2016, withAsahi, whereby Asahi agreed to supply all of AMST's requirements for refined silver used for producing the silver products as to which A-Mark has theexclusive right to distribute. The term of the agreement was initially for three years, with two automatic two-year term renewals (unless terminated priorthereto). Pricing under the agreement is subject to adjustments every six months.A-Mark has also guaranteed AMST's obligations under its agreement with Asahi to lease 100,000 ounces of refined silver. The lease term is for oneyear with an automatic one year renewal (unless terminated prior thereto), and the lease fees are subject to adjustments every six months.Escrow Balance related to Purchase of GoldlineIn connection with the acquisition of assets of Goldline LLC, the Company held back and deposited a portion of the original purchase price intoescrow to serve as security for the seller’s indemnification obligations. At June 30, 2019, $750,000 remained in escrow. In addition, the parties are stillnegotiating certain post-closing adjustments to the original purchase price.16. STOCKHOLDERS’ EQUITYShare Repurchase ProgramIn April 2018, the Company's Board of Directors approved a share repurchase program which authorized the Company to purchase up to 500,000shares of its common stock from time to time, either in the open market or in block purchase transactions. The amount and timing of specific repurchases aresubject to market conditions, applicable legal requirements and other factors. As of June 30, 2019, no shares had been repurchased under the program.2014 Stock Award and Incentive PlanPrior to the spinoff, the Company’s Board of Directors ("Board") adopted and the Company's then sole stockholder approved the 2014 Stock Awardand Incentive Plan, which was approved by the Company's stockholders in February 2015. On November 2, 2017, the Company's stockholders approved theamended and restated 2014 Stock Award and Incentive Plan (the "2014 Plan"), to (i) increase the available shares authorized for issuance under the plan by525,000 shares, (ii) extend the term of the 2014 Plan until 2027, an additional five years, and (iii) eliminate provisions that add back to the share reserveshares surrendered or withheld to pay the exercise price of an option or withheld to cover tax withholding obligations for any type of award, and shares as towhich a stock appreciation right is exercised that exceed the number of shares actually delivered.Under the 2014 Plan, the Company may grant options and other equity awards as a means of attracting and retaining officers, employees, non-employee directors and consultants, to provide incentives to such persons, and to align the interests of such persons with the interests of stockholders byproviding compensation based on the value of the Company's stock. Awards under the 2014 Plan may be granted in the form of incentive or non-qualifiedstock options, stock appreciation rights ("SARs"), restricted stock, restricted stock units, dividend equivalent rights and other stock-based awards (which mayinclude outright grants of shares). The 2014 Plan also authorizes grants of performance-based cash incentive awards. The 2014 Plan is administered by theCompensation Committee of the Board of Directors, which, in its discretion, may select officers and other employees, directors (including non-employeedirectors) and consultants to the Company and its subsidiaries to receive grants of awards. The Board of Directors itself may perform any of the functions ofthe Compensation Committee under the 2014 Plan.Under the 2014 Plan, the exercise price of options and base price of SARs, as set by the Compensation Committee, generally may not be less thanthe fair market value of the shares on the date of grant, and the maximum term of stock options and SARs is 10 years. The 2014 Plan limits the number ofshare-denominated awards that may be granted to any one eligible person to 250,000 shares in any fiscal year. Also, in the case of non-employee directors,the 2014 Plan limits the maximum grant-date fair value at $300,000 of stock-denominated awards granted to a director in a given fiscal year, except for anon-employee Chairman of the Board whose grant-date fair value maximum is $600,000 per fiscal year. The 2014 Plan will terminate when no shares remainavailable for issuance and no awards remain outstanding; however, the authority to grant new awards will terminate on December 13, 2022.As of June 30, 2019, 408,395 shares were available for grant under the 2014 Plan.88Table of Contents Valuation and Significant Assumptions of Equity Awards IssuedThe Company uses the Black-Scholes option pricing model, which uses various inputs such as the estimated common share price, the risk-freeinterest rate, volatility, expected life and dividend yield, all of which are estimates. The weighted-averages for key assumptions used in determining the fairvalue of options granted during the years ended June 30, 2019 and 2018 follows:Years Ended June 30, 2019 2018 Average volatility 35.8%36.0% Risk-free interest rate 2.8%1.8% Weighted-average expected life in years 6.055.74 Estimated dividend annual yield rate —%2.5% There are no awards with performance conditions nor awards with market conditions.Stock OptionsDuring the years ended June 30, 2019 and 2018, the Company incurred $1,096,539 and $1,191,106 of compensation expense related to stockoptions, respectively. As of June 30, 2019, there was total remaining compensation expense of $1.0 million related to employee stock options, which will berecorded over a weighted average period of approximately 1.8 years.The following table summarizes the stock option activity for the year ended June 30, 2019. Options WeightedAverage ExercisePrice Per Share Aggregate IntrinsicValue(in thousands) WeightedAverage GrantDate Fair ValuePer AwardOutstanding at June 30, 2018 842,515 $17.59 $821 $5.99Granted 115,050 $13.38 Cancellations, expirations and forfeitures (567) $15.93 Outstanding at June 30, 2019 956,998 $17.08 $787 $5.88 Exercisable at June 30, 2019 718,281 $17.26 $773 $6.08 Following is a summary of the status of stock options outstanding at June 30, 2019 Options Outstanding Options ExercisableExercise Price Ranges Number of SharesOutstanding Weighted AverageRemainingContractual Life(Years) Weighted AverageExercise Price Number of SharesExercisable Weighted AverageRemainingContractual Life(Years) Weighted AverageExercise PriceFrom To $— $10.00 134,239 3.35 $8.39 134,239 3.35 $8.39$10.01 $15.00 253,838 6.83 $12.75 115,555 4.08 $12.20$15.01 $25.00 468,921 7.15 $20.12 393,487 7.05 $20.20$25.01 $60.00 100,000 6.65 $25.50 75,000 6.65 $25.50 956,998 6.48 $17.08 718,281 5.84 $17.26Certain Anti-Takeover ProvisionsThe Company’s certificate of incorporation and by-laws contain certain anti-takeover provisions that could have the effect of making it moredifficult for a third party to acquire, or of discouraging a third party from attempting to acquire, control of the Company without negotiating with its Board.Such provisions could limit the price that certain investors might be willing to pay in the future for the Company’s securities. Certain of such provisionsprovide for a Board with staggered terms, allow the Company to issue preferred stock with rights senior to those of the common stock, or impose variousprocedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions.17. CUSTOMER AND SUPPLIER CONCENTRATIONSCustomer ConcentrationCustomers providing 10 percent or more of the Company's revenues for the years ended June 30, 2019 and 2018 are presented on a comparativebasis in the table below:89Table of Contents in thousands Years Ended June 30, 2019 2018 Amount Percent Amount Percent Total revenue $4,783,157 100.0% $7,606,248 100.0% Customer concentrations HSBC Bank USA (1) $1,243,733 26.0% $2,039,134 26.8% ________________________________ (1)Sales with this trading partner are primarily comprised of sales on forward contracts that are entered into for hedging purposes rather than sales characterized with thephysical delivery of precious metal product. Customers providing 10 percent or more of the Company's accounts receivable as of June 30, 2019 are presented on a comparative basis, with theircorresponding balances as of June 30, 2018, in the table below:in thousands June 30, 2019 June 30, 2018 Amount Percent Amount PercentTotal accounts receivable, net $26,895 100.0% $35,856 100.0%Customer concentrations Customer A $6,506 24.1% $7,468 20.8%Customer B 2,757 10.3 — —Customer C 3,752 14.0 425 1.2 $13,015 48.4% $7,893 22.0%The loss of any of the above listed customers could have a material adverse effect on the operations of the Company.Supplier ConcentrationThe Company buys precious metals from a variety of sources, including through brokers and dealers, from sovereign and private mints, from refinersand directly from customers. The Company believes that no one or small group of suppliers is critical to its business, since other sources of supply areavailable that provide similar products on comparable terms.90Table of Contents 18.SEGMENTS AND GEOGRAPHIC INFORMATIONThe Company evaluates segment reporting in accordance with FASB ASC 280, Segment Reporting, each reporting period, including evaluating theorganizational structure and the reporting package that is reviewed by the chief operating decision makers. The Company's operations are organized underthree business segments — Wholesale Trading & Ancillary Services, Secured Lending, and Direct Sales. (See Note 1 for a description of the types of productsand services from which each reportable segment derives its revenues.)Revenuein thousands Years Ended June 30, 2019 2018 Revenue by segment (1)(2) Wholesale Trading & Ancillary Services (3) $4,733,800 $7,538,856 Direct Sales 49,357(a) 67,392(b) Total revenue $4,783,157 $7,606,248 _________________________________ (1) Intercompany purchases from and sales to the Direct Sales segment are transacted at Wholesale Trading & Ancillary Services segment's prices, which is consistent witharms-length transactions with third-parties. (2) The Secured Lending segment earns interest income from its lending activity and earns no revenue from the sales of precious metals. Therefore, no amounts are shown forthe Secured Lending segment in the above table. (3) The elimination of intercompany sales are reflected in the Wholesale Trading & Ancillary Services segment. (a) Includes $0.9 million of intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment. (b) Includes $22.5 million of intercompany sales from the Direct Sales segment to the Wholesale Trading & Ancillary Services segment. in thousands Years Ended June 30, 2019 2018 Revenue by geographic region(as determined by the shipping address or where the services were performed): United States $4,234,921 $7,081,161 Europe 224,894 303,514 North America, excluding United States 314,592 214,895 Asia Pacific 6,116 3,554 Africa 10 1 Australia 2,624 3,123 Total revenue $4,783,157 $7,606,248 Gross Profit and Gross Margin Percentagein thousands Years Ended June 30, 2019 2018 Gross profit by segment(1) Wholesale Trading & Ancillary Services $26,270 $24,109 Direct Sales 5,688 5,334 Total gross profit $31,958 $29,443 Gross margin percentage by segment(1) Wholesale Trading & Ancillary Services 0.555% 0.320% Direct Sales 11.524% 7.915% Weighted average gross margin percentage 0.668% 0.387% _________________________________ (1) The Secured Lending segment earns interest income from its lending activity and earns no gross profit from the sales of precious metals. Therefore, no amounts are shown forthe Secured Lending segment in the above table. 91Table of Contents Operating income and (expenses)in thousands Years Ended June 30, 2019 2018 Operating income and (expenses) by segment Wholesale Trading & Ancillary Services Selling, general and administrative expenses $(22,274) $(21,096) Interest income $8,601 $6,473 Interest expense $(9,626) $(7,778) Other income, net $1,749 $984 Secured Lending Selling, general and administrative expenses $(1,456) $(1,689) Interest income $10,657 $9,632 Interest expense $(7,178) $(5,465) Other income, net $105 $— Direct Sales Selling, general and administrative expenses $(8,772) $(10,613) Goodwill and intangible asset impairment $— $(2,654) Interest income $12 $— Interest expense $(342) $(648) Other expense, net $(157) $— Net (loss) income before provision for income taxesin thousands Years Ended June 30, 2019 2018 Net (loss) income before provision for income taxes by segment Wholesale Trading & Ancillary Services $4,720 $2,692 Secured Lending 2,128 2,478 Direct Sales (3,571) (8,581) Total net income (loss) before provision for income taxes $3,277 $(3,411) Depreciation and Amortizationin thousands Years Ended June 30, 2019 2018 Depreciation and amortization by segment Wholesale Trading & Ancillary Services $(1,576) $(1,560) Secured Lending (18) (3) Direct Sales (1,213) (1,063) Total depreciation and amortization $(2,807) $(2,626) Advertising expensein thousands Years Ended June 30, 2019 2018 Advertising expense by segment Wholesale Trading & Ancillary Services $(515) $(553) Secured Lending (13) (28) Direct Sales (1,933) (2,653) Total advertising expense $(2,461) $(3,234) 92Table of Contents Precious metals held under financing arrangementsin thousands June 30, 2019 June 30, 2018 Precious metals held under financing arrangements by segment Wholesale Trading & Ancillary Services $208,792 $262,566 Total precious metals held under financing arrangements $208,792 $262,566 Inventoryin thousands June 30, 2019 June 30, 2018 Inventories by segment Wholesale Trading & Ancillary Services $285,250 $272,034 Direct Sales 7,611 8,082 Total inventories $292,861 $280,116 in thousands June 30, 2019 June 30, 2018 Inventories by geographic region United States $280,924 $273,008 Europe 3,944 1,965 North America, excluding United States 7,452 4,976 Asia 541 167 Total inventories $292,861 $280,116 Assetsin thousands June 30, 2019 June 30, 2018 Assets by segment Wholesale Trading & Ancillary Services $561,902 $616,522 Secured Lending 130,143 111,304 Direct Sales 13,317 15,175 Total assets $705,362 $743,001 in thousands June 30, 2019 June 30, 2018 Assets by geographic region United States $689,287 $733,131 Europe 8,082 4,727 North America, excluding United States 7,452 4,976 Asia 541 167 Total assets $705,362 $743,001 93Table of Contents Long-term Assetsin thousands June 30, 2019 June 30, 2018 Long-term assets by segment Wholesale Trading & Ancillary Services $32,816 $31,328 Secured Lending 280 102 Direct Sales 3,416 4,588 Total long-term assets $36,512 $36,018 in thousands June 30, 2019 June 30, 2018 Long-term assets by geographic region United States $36,459 $35,965 Europe 53 53 Total long-term assets $36,512 $36,018 Capital Expenditures for Property and Equipmentin thousands Years Ended June 30, 2019 2018 Capital expenditures on plant, property and equipment by segment Wholesale Trading & Ancillary Services $258 $1,104 Secured Lending 196 102 Direct Sales 36 111 Total capital expenditures on property and equipment $490 $1,317 Goodwill and Intangible Assetsin thousands June 30, 2019 June 30, 2018 Goodwill and Intangibles by segment Wholesale Trading & Ancillary Services $12,087 $12,516 Direct Sales 2,646 3,226 Total goodwill and intangible assets $14,733 $15,742 19.SUBSEQUENT EVENTSEmployment ContractOn August 1, 2019, the Company entered into a new employment agreement with Thor Gjerdrum, President of A-Mark. Mr. Gjerdrum’sprevious employment agreement expired on June 30, 2019. The new employment agreement is effective as of July 1, 2019 and extends through June 30,2022.Changes in Executive OfficersOn September 10, 2019, Cary Dickson gave notice of his resignation as Chief Financial Officer and Executive Vice President of theCompany, effective September 30, 2019. The Board of Directors has appointed Kathleen Simpson-Taylor, the Company's current Controller, as ChiefFinancial Officer and Executive Vice President, effective September 30, 2019.94Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESDisclosure Controls and ProceduresUnder the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we carriedout an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e)under the Exchange Act. Based on the foregoing, our Certifying Officers concluded that our disclosure controls and procedures were effective as of the end ofthe period covered by this Annual Report.Disclosure controls and procedures are controls and other procedures designed to ensure that information required to be disclosed in our reports filedor submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules andforms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosedin our reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Certifying Officers, or personsperforming similar functions, as appropriate, to allow timely decisions regarding required disclosure.Management’s Annual Report on Internal Control Over Financial ReportingThe financial statements were prepared by management, which is responsible for their integrity and objectivity and for establishing and maintainingadequate internal controls over financial reporting.The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Company’s internalcontrol over financial reporting includes those policies and procedures that: i.pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; ii.provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordancewith generally accepted accounting principles, and that receipts and expenditures of the Company are being made only inaccordance with authorizations of management and directors of the Company; and iii.provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of theCompany’s assets that could have a material effect on the financial statements.There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and the circumvention oroverriding of controls. Accordingly, even effective internal controls can provide only reasonable assurances with respect to financial statement preparation.Further, because of changes in conditions, the effectiveness of internal controls may vary over time.Management assessed the design and effectiveness of the Company’s internal control over financial reporting as of June 30, 2019. In making thisassessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in InternalControl—Integrated Framework ("2013 framework"). Based on this evaluation, management concluded that our internal control over financial reporting waseffective as of June 30, 2019 based on criteria in Internal Control –Integrated Framework issued by the COSO.Grant Thornton LLP, an independently registered public accounting firm, has audited the financial statements of the Company as of June 30, 2019and June 30, 2018. Under Rule 12b-2 and Section 404 of the Sarbanes-Oxley Act, the Company is not required to provide an attestation report from aregistered public accounting firm of its internal control over financial reporting as of June 30, 2019 and June 30, 2018.Changes in Internal Control over Financial ReportingThere were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act)during the most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, otherthan as noted below.In the fourth quarter of fiscal 2019, the Company implemented a new financial accounting system for our Secured Lending segment to improveoperational oversight and efficiency. The system implementation was not made in response to any prior significant deficiency or material weakness in ourinternal controls. The new financial accounting system affected our processes95Table of Contents and therefore constitutes a change in our internal control over financial reporting. We performed tests, as of June 30, 2019, on the internal controls overfinancial reporting applicable to the new financial accounting system in accordance with the requirements of Section 404(a) of Sarbanes-Oxley, whichresulted in no findings that would be considered a significant deficiency or material weakness in our internal controls.ITEM 9B. OTHER INFORMATIONNone.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEIncorporated by reference to the Company’s Proxy Statement, to be filed within 120 days following June 30, 2019.ITEM 11. EXECUTIVE COMPENSATIONIncorporated by reference to the Company’s Proxy Statement, to be filed within 120 days following June 30, 2019.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERSIncorporated by reference to the Company’s Proxy Statement, to be filed within 120 days following June 30, 2019.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCEIncorporated by reference to the Company’s Proxy Statement, to be filed within 120 days following June 30, 2019.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESIncorporated by reference to the Company’s Proxy Statement, to be filed within 120 days following June 30, 2019.PART IVITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES(a)The following documents are filed as part of this report:1.Financial StatementsIndex to Consolidated Financial Statements PageReport of Independent Registered Public Accounting Firm 48Consolidated Balance Sheets 49Consolidated Statements of Operations 51Consolidated Statements of Stockholders' Equity 52Consolidated Statements of Cash Flows 53Notes to Consolidated Financial Statements 552.Financial Statements SchedulesNone.3.Exhibits required to be filed by Item 601 of Regulation S-KThe information called for by this item is incorporated herein by reference to the Exhibit Index in this report.96Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized. A-MARK PRECIOUS METALS, INC. Date:September 13, 2019By: /s/ Gregory N. Roberts Name: Gregory N. Roberts Title: Chief Executive Officer (Principal Executive Officer) A-MARK PRECIOUS METALS, INC. Date:September 13, 2019By: /s/ Cary Dickson Name: Cary Dickson Title: Chief Financial Officer (Principal Financial Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant and in the capacities and on the dates indicated. Signatures Title(s) Date /s/ Jeffrey D. Benjamin Chairman of the Board September 13, 2019Jeffrey D. Benjamin /s/ Gregory N. Roberts Chief Executive Officer and Director September 13, 2019Gregory N. Roberts (Principal Executive Officer) /s/ Cary Dickson Chief Financial Officer September 13, 2019Cary Dickson (Principal Financial Officer) /s/ Ellis Landau Director September 13, 2019Ellis Landau /s/ Beverley Lepine Director September 13, 2019Beverley Lepine /s/ William Montgomery Director September 13, 2019William Montgomery /s/ John U. Moorhead Director September 13, 2019John U. Moorhead /s/ Jess M. Ravich Director September 13, 2019Jess M. Ravich 97Table of Contents EXHIBIT INDEXRegulation S-KExhibit TableItem No. Description of Exhibit2.1** Separation and Distribution Agreement between Spectrum Group International, Inc. and A-Mark Precious Metals, Inc. Incorporated by reference toExhibit 2.1 to the Registration Statement on Form S-1; Registration No. 333-192260.3.1** Amended and Restated Certificate of Incorporation of A-Mark Precious Metals, Inc. Incorporated by reference to Exhibit 3.2 to the Registration Statementon Form S-1/A; Registration No. 333-192260.3.2** Amended and Restated Bylaws of A-Mark Precious Metals, Inc. Incorporated by reference to Exhibit 3.4 to the Registration Statement on Form S-1/A;Registration No. 333-192260.10.1** Master Indenture, dated as of September 14, 2018, between AM Capital Funding, LLC, a limited liability company organized under the laws of the Stateof Delaware, and Citibank, N.A., a national banking association, as indenture trustee. Incorporated by reference to Exhibit 10.1 to the Report on Form 8-K/A as filed with the Securities and Exchange Commission on September 17, 2018.10.2** Series 2018-1 Supplement, dated as of September 14, 2018, between AM Capital Funding, LLC, a limited liability company organized under the laws ofthe State of Delaware, and Citibank, N.A., as indenture trustee. Incorporated by reference to Exhibit 10.2 to the Report on Form 8-K/A as filed with theSecurities and Exchange Commission on September 17, 2018.10.3** Transfer and Sale Agreement, dated as of September 14, 2018, by and between Collateral Finance Corporation, a Delaware corporation, and AM CapitalFunding, LLC, a Delaware limited liability company. Incorporated by reference to Exhibit 10.3 to the Report on Form 8-K/A as filed with the Securitiesand Exchange Commission on September 17, 2018.10.4** Security Agreement, dated March 31, 2016, between Coöperatieve Rabobank U.A., New York Branch, and A-Mark Precious Metals, Inc. Incorporatedby reference to Exhibit 10.2 to the Report on Form 8-K filed with the Securities and Exchange Commission on April 5, 2016.10.5** Employment Agreement, executed February 19, 2016, between A-Mark Precious Metals, Inc. and Gregory N. Roberts. Incorporated by reference toExhibit 10.1 to the Report on Form 8-K dated February 19, 2016.10.6** Lease Agreement, dated as of July 7, 2016, between The Plaza CP LLP and A-Mark Precious Metals, Inc. Incorporated by reference to Exhibit 10.6 tothe Report on Form 10-K for the year ended June 30, 2016.10.7** Limited Liability Company Agreement of AM&ST Associates, LLC, effective as of August 31, 2016, between A-Mark Precious Metals, Inc. and SilverTowne, L.P. Incorporated by reference to Exhibit 10.7 to the Report on Form 10-K for the year ended June 30, 2016.10.8** Asset Purchase Agreement, dated as of August 31, 2016, between SilverTowne, L.P. and AM&ST Associates, LLC. Incorporated by reference to Exhibit10.8 to the Report on Form 10-K for the year ended June 30, 2016.10.9** Memorandum of Tax Sharing Agreement, dated as of June 23, 2011, between Spectrum Group International, Inc. and A-Mark Precious Metals, Inc.Incorporated by reference to Exhibit 10.2 to the Registration Statement on Form S-1; Registration No. 333-192260.10.10** Tax Separation Agreement between Spectrum Group International, Inc. and A-Marl Precious Metals, Inc. Incorporated by reference to Exhibit 10.3 to theRegistration Statement on Form S-1; Registration Statement No. 333-192260.10.11** Non-Employee Director Compensation Policy of A-Mark Precious Metals, Inc. Incorporated by reference to Exhibit 10.36 of the Registration Statementon Form S-1; Registration No. 333-192260.10.12** Form of 2014 Stock Award and Incentive Plan of A-Mark Precious Metals, Inc. Incorporated by reference to Exhibit 10.40 of the Registration Statementon Form S-1; Registration No. 333-192260.10.13** Air Cargo Lease between MCP CARGO, LLC as Landlord, and A-M Global Logistics, LLC as tenant, dated as of November 21, 2014. Incorporated byreference to Exhibit 10.23 to the Report on Form 10-K for the year ended June 30, 2015.10.14** First Amendment to Air Cargo Lease between MCP CARGO, LLC as Landlord, and A-M Global Logistics, LLC as tenant, dated as of August 28, 2015.Incorporated by reference to Exhibit 10.24 to the Report on Form 10-K for the year ended June 30, 2015.10.15** Asset Purchase Agreement, dated as of August 14, 2017, by and between Goldline Acquisition Corp. and Goldline, LLC. Incorporated by reference toExhibit 10.1 filed with the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 18, 2017.10.16** Amended and Restated Uncommitted Credit Agreement, dated as of March 29, 2019, by and among A-Mark Precious Metals, Inc., as Borrower,Cooperatieve Rabobank U.A. as Administrative Agent and Joint Lead Arranger/Bookrunner, Natixis as Syndication Agent and Joint Lead Arranger, andthe Lenders named therein. Incorporated by reference to Exhibit 10.1 to the Report on Form 8-K dated February 28, 2019. 10.17** Employment Agreement, executed August 1, 2019, between A-Mark Precious Metals, Inc. and Thor Gjerdrum. Incorporated by reference to Exhibit 10.1to the Report on Form 8-K dated August 1, 2019. 21 * List of Subsidiaries of A-Mark Precious Metals, Inc.31.1 * Certification Under Section 302 of the Sarbanes-Oxley Act of 2002.31.2 * Certification Under Section 302 of the Sarbanes-Oxley Act of 2002.32.1 * Certification Under Section 906 of the Sarbanes-Oxley Act of 2002.32.2 * Certification Under Section 906 of the Sarbanes-Oxley Act of 2002.101.INS * XBRL Instance Document.101.SCH * XBRL Taxonomy Extension Calculation Schema Document.98Table of Contents Regulation S-KExhibit TableItem No. Description of Exhibit101.CAL * XBRL Taxonomy Extension Calculation Linkbase Document.101.DEF * XBRL Taxonomy Extension Definition Linkbase Document.101.LAB * XBRL Taxonomy Extension Label Linkbase Document.101.PRE * XBRL Taxonomy Extension Presentation Linkbase Document._________________________________ * Filed herewith ** Previously filed 99Exhibit 21Active Direct and Indirect Subsidiaries of A-Mark Precious Metals, Inc.(100% owned except where indicated)Name of Subsidiary Jurisdiction of IncorporationCollateral Finance Corporation DelawareA-Mark Trading AG AustriaTranscontinental Depository Services, LLC DelawareA-M Global Logistics, LLC DelawareAM&ST Associates, LLC Delaware (69% owned)Goldline Inc. DelawareAM Capital Funding, LLC DelawareAM IP Assets, LLC DelawareAM Services, Inc. DelawarePrecious Metals Purchasing Partners, LLC Delaware (50% owned)Exhibit 31.1CERTIFICATIONI, Gregory N. Roberts, certify that:1.I have reviewed this Annual Report on Form 10-K of A-Mark Precious Metals, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (theregistrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internalcontrol over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors andthe audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financialreporting.Date:September 13, 2019/s/ Gregory N. Roberts Name: Gregory N. Roberts Title: Chief Executive Officer Exhibit 31.2CERTIFICATIONI, Cary Dickson, certify that:1.I have reviewed this Annual Report on Form 10-K of A-Mark Precious Metals, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in lightof the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition,results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure thatmaterial information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to providereasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles;(c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of thedisclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and(d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (theregistrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internalcontrol over financial reporting; and5.The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors andthe audit committee of the registrant's board of directors (or persons performing the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely toadversely affect the registrant's ability to record, process, summarize and report financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financialreporting.Date:September 13, 2019/s/ Cary Dickson Name: Cary Dickson Title: Chief Financial Officer Exhibit 32.1CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with A-Mark Precious Metals, Inc.'s (the “Company”) Annual Report on Form 10-K for the year ended June 30, 2019, as filed with the Securities and ExchangeCommission on the date hereof (the “Report”), the undersigned Chief Executive Officer of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.Date:September 13, 2019/s/ Gregory N. Roberts Name: Gregory N. Roberts Title: Chief Executive Officer The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.Exhibit 32.2CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with A-Mark Precious Metals, Inc.'s (the “Company”) Annual Report on Form 10-K for the year ended June 30, 2019, as filed with the Securities and ExchangeCommission on the date hereof (the “Report”), the undersigned Chief Accounting Officer of the Company, hereby certifies pursuant to 18 U.S.C. § 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of 2002, that:(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2)The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.Date:September 13, 2019/s/ Cary Dickson Name: Cary Dickson Title: Chief Financial Officer The foregoing certification is being furnished solely pursuant to 18 U.S.C. § 1350 and is not being filed as part of the Report or as a separate disclosure document.

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