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What changed in Gold.com, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Gold.com, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+367 added−386 removedSource: 10-K (2023-09-12) vs 10-K (2022-09-02)

Top changes in Gold.com, Inc.'s 2023 10-K

367 paragraphs added · 386 removed · 290 edited across 3 sections

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

97 edited+37 added−31 removed125 unchanged
Biggest changeRisks Relating to Our Common Stock We have suspended regular dividends in the past and may not continue to pay any dividends in the future. The Company had suspended its regular dividend policy in the third quarter of fiscal 2019 but has recently announced an intention to resume payment of regular cash dividends of $0.20 per quarter.
Biggest changeAny inability to do so could have a material adverse effect on our business. 25 Risks Relating to Our Common Stock We may not continue to pay any dividends in the future. A-Mark’s board of directors has adopted a regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis).
Certain of JMB’s websites publish data concerning the precious metal and cryptocurrency markets obtained from third parties, which could be inaccurate. JMB’s silverprice.org and goldprice.org publish data on precious metal and cryptocurrency pricing which is obtained from third parties.
Certain of JMB’s websites publish data concerning the precious metal and cryptocurrency markets obtained from third parties, which could be inaccurate. JMB’s GoldPrice.org and SilverPrice.org publish data on precious metal and cryptocurrency pricing which is obtained from third parties.
We take the position that the arbitration provisions in loan and financing agreements, including class action waivers, are valid and enforceable; however, the enforceability of arbitration provisions is often challenged in court. If those challenges are successful, our arbitration and class action waiver provisions could be unenforceable, which could subject us to additional litigation, including additional class action litigation.
We take the position that the arbitration provisions in loan and financing agreements, including class action waivers, are valid and enforceable; however, the enforceability of arbitration provisions is often challenged in court. If those challenges are successful, our arbitration and class action waiver provisions could be unenforceable, which could subject us to additional litigation, including class action litigation.
In recent years, there has been an increasing focus by stakeholders of public companies—including investors, employees, customers, suppliers, governmental and non-governmental organizations—on ESG matters. A failure, whether real or perceived, to 24 address ESG could adversely affect our business, including by heightening other risks that we face, such as those related to consumer behavior and consumer perceptions of us.
In recent years, there has been an increasing focus by stakeholders of public companies—including investors, employees, customers, suppliers, and governmental and non-governmental organizations—on ESG matters. A failure, whether real or perceived, to address ESG could adversely affect our business, including by heightening other risks that we face, such as those related to consumer behavior and consumer perceptions of us.
Certain of such provisions allow the 23 Company to issue preferred stock with rights senior to those of the common stock, impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions and set forth rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings.
Certain of such provisions allow the Company to issue preferred stock with rights senior to those of the common stock, impose various procedural and other requirements which could make it more difficult for stockholders to effect certain corporate actions and set forth rules regarding how stockholders may present proposals or nominate directors for election at stockholder meetings.
The challenges of efficient SEO programming are continually evolving, and other e-commerce retailers in the 17 precious metal space are constantly working to improve their own SEO capabilities. If JMB does not continue to maintain its competitive edge in SEO technology, it could lose customers and market share to its competitors.
The challenges of efficient SEO programming are continually evolving, and other e-commerce retailers in the precious metal space are constantly working to improve their own SEO capabilities. If JMB does not continue to maintain its competitive edge in SEO technology, it could lose customers and market share to its competitors.
Failure to do so may create a perception that the websites of JMB’s competitors are easier to use and navigate or that they are better able to service customer needs for precious metal coins and bullion. If such a perception were to gain currency, traffic to JMB’s website and its revenues would suffer.
Failure to do so may create a perception that the websites of JMB’s competitors are easier to use and navigate or that they are better able to service customer needs for precious metal coins and bullion. If such a perception were to gain currency, traffic to JMB’s websites and its revenues would suffer.
JMB also owns two websites, GoldPrice.org and SilverPrice.org, which publish data on precious metal and cryptocurrency pricing and generate leads for its other websites. JMB must continually update its website (on all relevant platforms, including mobile) to improve and enhance its content, accessibility, convenience and ease of use.
JMB also owns two websites, GoldPrice.org and SilverPrice.org, which publish data on precious metal and cryptocurrency pricing and generate leads for its other websites. JMB must continually update its websites (on all relevant platforms, including mobile) to improve and enhance its content, accessibility, convenience and ease of use.
So, for example, we have been placing increasing emphasis on our direct-to-consumer business, in anticipation that the economic uncertainties, market volatilities and global challenges that we face will continue to make investment in precious metals and numismatics more attractive to individual consumers.
For example, we have been placing increasing emphasis on our direct-to-consumer business, in anticipation that the economic uncertainties, market volatilities and global challenges that we face will continue to make investment in precious metals and numismatics more attractive to individual consumers.
The concentration of beneficial ownership in the hands of our board and management may therefore limit the ability of our public stockholders to influence the affairs of the Company. Risk Factors of General Applicability If our customer data were breached, we could suffer damages and loss of reputation.
The concentration of beneficial ownership in the hands of our board and management may therefore limit the ability of our public stockholders to influence the affairs of the Company. 26 Risk Factors of General Applicability If our customer data were breached, we could suffer damages and loss of reputation.
In 2016, the European Union ("EU") adopted a comprehensive overhaul of its data protection regime from the current national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
In 2016, the European Union ("EU") adopted a comprehensive overhaul of its data protection regime from a national legislative approach to a single European Economic Area Privacy Regulation, the General Data Protection Regulation (“GDPR”), which went into effect in May 2018.
For example, because of the nature and value of the products in which deal, we are required to comply 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. 20 The SEC has promulgated rules mandated by the Dodd-Frank Act regarding disclosure, on an annual basis, of the use of tin, tantalum, tungsten and gold, known as conflict minerals, in products manufactured by public companies.
For example, because of the nature and value of the products in which deal, we are required to comply 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. 22 The SEC has promulgated rules mandated by the Dodd-Frank Act regarding disclosure, on an annual basis, of the use of tin, tantalum, tungsten and gold, known as conflict minerals, in products manufactured by public companies.
If we are unable to access funds under the Trading Credit Facility, we may be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. 12 We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments, including the Trading Credit Facility, upon demand or acceleration, or at maturity, or that we would be able to refinance or restructure the payments under the Trading Credit Facility.
If we are unable to access funds under the Trading Credit Facility, we may be limited in the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs. 14 We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments, including the Trading Credit Facility, upon demand or acceleration, or at maturity, or that we would be able to refinance or restructure the payments under the Trading Credit Facility.
Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action 22 liability. Our arbitration agreements do not generally have any impact on regulatory enforcement proceedings.
Thus, our arbitration agreements, if enforced, have the effect of shielding us from class action liability. Our arbitration agreements do not generally have any impact on regulatory enforcement proceedings.
While the notes are non-recourse to the Company or CFC, CFC is required to provide certain warranties concerning the loans and the security interest in the metals collateral securing the loans.
While the AMCF Notes are non-recourse to the Company or CFC, CFC is required to provide certain warranties concerning the loans and the security interest in the metals collateral securing the loans.
With the acquisition of JMB, whose sales are conducted exclusively through the internet, our dependence on computer and communications technology has further increased. It is therefore critical that we maintain uninterrupted operation of these systems, and we have invested considerable resources to protect our systems from physical compromise and security breaches and to maintain backup and redundancy.
Our dependence on computer and communications technology increased with the acquisition of JMB, whose sales are conducted exclusively through the internet. It is therefore critical that we maintain uninterrupted operation of these systems, and we have invested considerable resources to protect our systems from physical compromise and security breaches and to maintain backup and redundancy.
AMST's ability to continue to expand the scope of its services and customer base depends in part on its ability to increase the size of its skilled labor force. The inability to employ or retain skilled technical personnel could adversely affect AMST’s operating results. In the past, the demand for skilled personne l has been high and the supply limited.
AMST's ability to continue to expand the scope of its services and customer base depends in part on its ability to increase the size of its skilled labor force. In the past, the demand for skilled personnel has been high and the supply limited. The inability to employ or retain skilled technical personnel could adversely affect AMST’s operating results.
All such factors may change over time and as a consequence the results of our operations, profitability and stock price may vary over both the short and the long term. In recent times, our profitability and stock price have risen to historically unprecedented levels, but may in the future revert to more normalized levels.
All such factors may change over time and as a consequence the results of our operations, profitability and stock price may vary over both the short and the long term. In recent times, our profitability has risen to historically unprecedented levels, but may in the future revert to more normalized levels.
We believe that this program encourages the purchase of coins and bullion as an investment because it assures JMB’s customers that their investment in the products offered by JMB will be liquid and can be monetized if the customers have a need for cash.
We believe that this program encourages the purchase of coins and bullion as an investment because it assures customers that their investment in the products offered by JMB and Goldline will be liquid and can be monetized if the customers have a need for cash.
For example, the Consumer Financial Protection Bureau (“CFPB”) has indicated its intention to examine compliance with federal laws and regulations by lead providers and to scrutinize the flow of non-public, private borrower information between lead providers and lead buyers, such as us.
For example, the Consumer Financial Protection Bureau ("CFPB") has indicated its intention to examine compliance with federal laws and regulations by lead providers and to scrutinize the flow of non-public, private borrower information between lead providers and lead buyers, such as us.
Were this to occur, the Company could suffer adverse publicity, be subject to governmental enforcements actions or be forced to modify the sales and marketing practices of its direct-to-consumer business. Our Direct-to-Consumer businesses operates in a highly competitive environment.
Were this to occur, the Company could suffer adverse publicity, be subject to governmental enforcements actions or be forced to modify the sales and marketing practices of its direct-to-consumer business. Our Direct-to-Consumer businesses operate in a highly competitive environment.
The recent growth of the business of the Company generally, and the business of its recently acquired JMB subsidiary in particular, may be attributed to the unprecedented uncertainties and volatility in the financial markets resulting from the COVID-19 pandemic, its effects on the economy and the related government responses.
The recent growth of the business of the Company generally, and the business of its JMB subsidiary in particular, may be attributed to the unprecedented uncertainties and volatility in the financial markets resulting from the COVID-19 pandemic, its effects on the economy and the related government responses.
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 at its Logistics facility, at third-party depositories and in transit.
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 at its Logistics facilities, at third-party depositories and in transit.
The “personal information” regulated by CCPA is broadly defined to include identification or association with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create a profile about a consumer, and education information.
The “personal information” regulated by CCPA is broadly defined to include identification or association with a California consumer or household, including demographics, usage, transactions and inquiries, preferences, inferences drawn to create a profile about a consumer, government identification numbers, and education information.
On the other hand, we have a marketing support operation in Austria and have significant business in Germany and other parts of Europe that could be materially and adversely affected by prolonged or expanded military activity in that region.
On the other hand, we have a marketing support operation in Austria and have significant business in Germany and other parts of Europe that could be materially and adversely affected by the continuing or expanded military activity in that region.
As a result, the success of our Direct-to-Consumer and Secured Lending businesses depends substantially on the willingness and ability of lead providers or marketing affiliates to provide us customer leads at acceptable prices.
As a result, the success of our Direct-to-Consumer and Secured Lending businesses depends materially on the willingness and ability of lead providers or marketing affiliates to provide us customer leads at acceptable prices.
We have multiple sources for obtaining the bullion products which we resell to our customers, and our relationships with major refiners have to date provided us with an adequate source of material for our minting operations. We also maintain a supply of metal in case we experience a shortage of raw materials for our SilverTowne mint.
We have multiple sources for obtaining the bullion products which we resell to our customers, and our relationships with major refiners have to date provided us with an adequate source of material for our minting operations. We also maintain a supply of metal in case we experience a shortage of raw materials for our Silver Towne mint.
The Company is subject to risks relating to its AMST operations. Our AMST subsidiary, which operates our SilverTowne, Mint depends on critical pieces of equipment which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures or business interruptions.
The Company is subject to risks relating to its AMST operations. Our AMST subsidiary, which operates our Silver Towne Mint, depends on critical pieces of equipment which may be out of service occasionally for scheduled upgrades or maintenance or as a result of unanticipated failures or business interruptions.
Our Wholesale Sales and Ancillary Services segment maintains an office in Vienna, Austria that provides marketing support services for its international (including EU) customers. We have evaluated the new regulation and its requirements, and believe we are currently in compliance with the GDPR in all material respects.
Our Wholesale Sales and Ancillary Services segment maintains an office in Vienna, Austria that provides marketing support services for its international (including EU) customers. We have evaluated GDPR and its requirements, and believe we are currently in compliance with GDPR in all material respects.
There can be no assurance that these sources will be adequate to support the growth that we are hoping 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, on satisfactory terms or at all.
There can be no assurance that our sources of liquidity will be adequate to support the growth that we are hoping 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, on satisfactory terms or at all.
The “covered information” regulated by the bill is defined to include an enumerated list of items of personally identifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow a specific person to be contacted).
The “covered information” regulated by the Nevada law is defined to include an enumerated list of items of personally identifiable information (including names, addresses, email addresses, phone numbers, social security numbers and identifiers that allow a specific person to be contacted).
The bill requires operators of internet websites or online services to establish a designated request address through which a consumer may submit a verified request directing such operators not to make any sale of covered information collected about the consumer.
The law also requires operators of internet websites or online services to establish a designated request address through which a consumer may submit a verified request directing such operators not to make any sale of covered information collected about the consumer.
If JMB fails to continuously improve its websites (on all relevant platforms, including mobile), it may not attract or retain customers. JMB owns and operates four separately branded websites targeting specific segments within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, and Cybermetals.com.
If JMB fails to continuously improve its websites (on all relevant platforms, including mobile), it may not attract or retain customers. JMB owns and operates six separately branded websites targeting specific segments within the precious metals market: JMBullion.com, ProvidentMetals.com, Silver.com, BGASC.com, CyberMetals.com, and BullionMax.com.
However, while we currently do not anticipate that our business will suffer as a consequence of the current problems in the national and global supply chains, we cannot assure you that this will continue to be the case . Our business is subject to the risk of fraud and counterfeiting.
However, while we do not currently anticipate that our business will suffer as a consequence of the current problems in the national and global supply chains, we cannot assure you that this will continue to be the case.
We try to manage these risks by monitoring current and anticipated political, economic, legal and regulatory developments in the countries outside the United States in which we operate or have customers and adjusting operations as appropriate, but there can be no assurance that the measures we adopt will be successful in protecting the Company’s business interests. 15 The current inflationary environment could adversely affect our business .
We try to manage these risks by monitoring current and anticipated political, economic, legal and regulatory developments in the countries outside the United States in which we operate or have customers and adjusting operations as appropriate, but there can be no assurance that the measures we adopt will be successful in protecting the Company’s business interests.
The consequences of the COVID-19 pandemic and other global and macroeconomic events have had an overall positive effect on the demand for our products and ancillary services, the margins that we are able to realize on our products and services and our overall profitability. Our stock price has responded favorably to these unprecedented circumstances as well.
Global and macroeconomic events have had an overall positive effect on the demand for our products and ancillary services, the margins that we are able to realize on our products and services and our overall profitability. Our stock price has responded favorably to these unprecedented circumstances as well.
Our board and management beneficially own a sizeable percentage of our common stock and therefore have the ability to exert substantial influence as stockholders. Members of our board and management beneficially own approximately 25% of our outstanding common stock.
Our board and management beneficially own a sizable percentage of our common stock and therefore have the ability to exert substantial influence as stockholders. Members of our board and management beneficially own approximately 24% of our outstanding common stock.
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 of factors outside of our control, including (i) changes in economic conditions, including as a consequence of the COVID-19 pandemic, (ii) increases in market rates of interest and (iii) changes in the condition or value of the collateral; and • the reserves we establish for loan losses, which may prove insufficient.
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 of factors outside of our control, including (i) changes in economic conditions, (ii) increases in market rates of interest and (iii) changes in the condition or value of the collateral; and • the reserves we establish for loan losses, which may prove insufficient. 15 Liquidity constraints may limit our ability to grow our business.
In addition, a majority of the board of directors of the Company has retained an ownership interest in SGI that in the aggregate represents a controlling interest in SGI.
In addition, a majority of the board of directors of the Company have an ownership interest in SGI that in the aggregate represents a controlling interest in SGI.
The use of SOFR based rates is intended to replace rates based on the London interbank offered rate ("LIBOR"), and reflects the cessation of the publication of LIBOR rates previously announced by regulators in the United Kingdom and the discontinuation of the use of LIBOR in the financial markets.
The use of SOFR based rates replaced rates based on the London interbank offered rate (LIBOR), and reflects the cessation of the publication of LIBOR rates previously announced by regulators in the United Kingdom and the discontinuation of the use of LIBOR in the financial markets.
The Company has experienced outsized growth in its revenues and operating profits since the onset of the COVID-19 pandemic, but there can be no assurance that this level of performance will continue, and its performance may drop as the pandemic and its related effects subside.
The Company has experienced outsized growth in its revenues and operating profits since the onset of the COVID-19 pandemic, but there can be no assurance that this level of performance will continue.
In addition, PMPP is subject to the risks that it will be unable to sell the product that it acquires at economic prices or at all, similar to the risks described above with respect to JMB’s repurchase program. Risks Related to our Secured Lending Segment CFC may in certain circumstances be required to repurchase loans that it has securitized.
In addition, PMPP is subject to the risks that it will be unable to sell the product that it acquires at economic prices or at all, as described above with respect to the Company's overall Direct-to-Consumer Purchase Program. Risks Related to our Secured Lending Segment CFC may in certain circumstances be required to repurchase loans that it has securitized.
Because our business is dependent on the volatility and pricing of precious metals, we are likely to be influenced by world events more than businesses in other economic sectors. Currently, Russia is engaging in significant military action against Ukraine.
Because our business is dependent on the volatility and pricing of precious metals, we are likely to be influenced by world events more than businesses in other economic sectors. 16 Russia is continuing to engage in its military action against Ukraine.
Consistent with the lending industry as a whole, our advertising and marketing materials have come under increased scrutiny. There can be no guarantee that we will be able to continue advertising and marketing our business units in a manner we consider effective. Any inability to do so could have a material adverse effect on our business.
Consistent with the lending industry as a whole, our advertising and marketing materials have come under increased scrutiny. There can be no guarantee that we will be able to continue advertising and marketing our business units in a manner we consider effective.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” 19 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.
See “ Management’s Discussion and Analysis of Financial Condition and Results of Operations. ” Our business is exposed to the risk of changes in commodity prices, and our hedging activity to protect our inventory is subject to risks of default by our counterparties.
In a declining market for precious metal products, JMB could be burdened with substantial amounts of repurchased inventory that it is unable to resell at an economic price, or at all.
In a declining market for precious metal products, JMB and Goldline could be burdened with substantial amounts of purchased inventory that they are unable to resell at an economic price, or at all.
Compliance with CCPA requires the implementation of a series of operational measures such as preparing data maps, inventory, or other records of all personal information pertaining to California residents, households and devices, as well as information sources, usage, storage, and sharing, maintaining and updating detailed disclosures in privacy policies, establishing mechanisms (including, at a minimum, a toll-free telephone number and an online channel) to respond to consumers’ data access, deletion, portability, and opt-out requests, providing a clear and conspicuous “Do Not Sell My Personal Information” link on the home page of the business’ website, etc.
Compliance with CCPA requires the implementation of a series of operational measures such as: preparing data maps, inventory, or other records of all personal information pertaining to California residents, households and devices, as well as information sources, usage, storage, and sharing; maintaining and updating detailed disclosures in privacy policies; conducting risk assessments for the use of sensitive personal information; establishing mechanisms (including, at a minimum, a toll-free telephone number and an online channel) to respond to consumers’ data access, deletion, portability, and opt-out requests; and providing clear and conspicuous links on the home page of the business’ website, where applicable, allowing residents to limit or opt-out of certain data processing activities.
Additionally, new legislative or regulatory initiatives related to ESG could adversely affect our business. I T EM 1B. UNRESOLVED STAFF COMMENTS None. I T EM 2.
Additionally, new legislative or regulatory initiatives related to ESG could adversely affect our business. 27 ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Provisions in our Certificate of Incorporation and Bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decrease the trading price of our common stock.
We also issued stock to the public to finance, in part, the acquisition of JMB. Provisions in our Certificate of Incorporation and Bylaws and of Delaware law may prevent or delay an acquisition of the Company, which could decrease the trading price of our common stock.
While it is not possible to predict with any accuracy future market trends, our business may revert at some point to levels more closely in line with industry activity prior to the COVID-19 outbreak, particularly in the direct-to-consumer business of the Company and its recently acquired JMB subsidiary.
While it is not possible to predict with any accuracy future market trends, our business may revert at some point to levels more closely in line with industry activity prior to such events, particularly in the direct-to-consumer business of the Company.
The volatility of the commodity prices for precious metals is also likely to increase in politically uncertain times. Conversely, during periods of relative international calm precious metal volatility is likely to decrease, along with demand, and the prices of precious metals may retreat.
Conversely, during periods of relative international calm precious metal volatility is likely to decrease, along with demand, and the prices of precious metals may retreat.
Risks Related to World Events 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 secure financial investment in times of political upheaval or unrest, particularly in developing economies, which may drive up pricing.
The precious metals business is especially subject to global political conditions and world events. Precious metals are viewed by some as a secure financial investment in times of political upheaval or unrest, particularly in developing economies, which may drive up pricing. The volatility of the commodity prices for precious metals is also likely to increase in politically uncertain times.
Moreover, because of the nature of the current business and financial environment, particularly in regards to the precious metal industry, it is not possible to create with any acceptable measure of precision customary financial projections and forecasts for our business over the next several years.
Moreover, because of the nature of the current business and financial environment, particularly in regards to the precious metal industry, it is difficult to create with any acceptable measure of precision customary financial projections and forecasts for our business over the next several years. This could adversely affect our ability to engage in financial and operational planning for the future.
The Company’s interest in PMPP is subject to the risks customarily associated with the conduct of joint ventures, including the risk of (i) failure to agree on strategic decisions requiring the approval of both parties, (ii) failure of the joint venture partner to meet its obligations, and (iii) disputes between the joint venturers or litigation regarding joint venture matters.
PMPP purchases products primarily from end-user retail customers, which are then sold to the Company or affiliated companies. 20 The Company’s interest in PMPP is subject to the risks customarily associated with the conduct of joint ventures, including the risk of (i) failure to agree on strategic decisions requiring the approval of both parties, (ii) failure of the joint venture partner to meet its obligations, and (iii) disputes between the joint venturers or litigation regarding joint venture matters.
The loss of an authorized purchaser/distributor relationship, including with the U.S. Mint, could have a material adverse effect on our business. We operate in a highly competitive industry. The business of buying and selling precious metals is global and highly competitive.
Mint, could have a material adverse effect on our business. We operate in a highly competitive industry. The business of buying and selling precious metals is global and highly competitive.
Also, the Trading Credit Facility contains, and any future debt financing is likely to contain, various financial and other restrictive covenants. The need to comply with these covenants may limit our ability to implement our growth initiatives. We are dependent on our key management personnel and our trading experts.
Also, the Trading Credit Facility contains, and any future debt financing is likely to contain, various financial and other restrictive covenants. The need to comply with these covenants may limit our ability to implement our growth initiatives. We may experience supply chain disruptions in our operations.
Liquidity constraints may limit our ability to grow our business. We will require adequate sources of liquidity to fund both our existing business and our strategy for expansion, evidenced most recently by our acquisition of JMB.
We will require adequate sources of liquidity to fund both our existing business and our strategy for expansion, evidenced by our acquisition of JMB and other acquisition activity.
A-Mark’s business is heavily dependent on its purchaser/distributorship arrangements with various governmental mints. Our ability to offer numismatic coins and bars to our customers on a competitive basis is based on the ability to purchase products directly from a government source. The arrangements with the governmental mints may be discontinued by them at any time.
Our ability to offer numismatic coins and bars to our customers on a competitive basis is based on the ability to purchase products directly from a government source. The arrangements with the governmental mints may be discontinued by them at any time. The loss of an authorized purchaser/distributor relationship, including with the U.S.
CCPA prohibits businesses from discriminating against consumers who have opted out of the sale of their personal information, subject to a narrow exception. Violations of CCPA will result in civil penalties up to $7,500 per violation.
CCPA prohibits businesses from discriminating against consumers who have opted out of the sale of their personal information, subject to narrow exceptions. Failure to comply with the CCPA can result in civil penalties up to $7,500 per violation or actual damages suffered by a consumer.
We use lead providers and marketing affiliates to assist us in obtaining new customers and, and if lead providers or marketing affiliates do not comply with an increasing number of applicable laws and regulations, or if our ability to use such lead providers or marketing affiliates is otherwise impaired, it could adversely affect our business.
For other risks related to taxation, see “ Risk Factors of General Applicability — Changes in U.S. tax law could adversely affect our business ,” below. 24 We use lead providers and marketing affiliates to assist us in obtaining new customers, and if lead providers or marketing affiliates do not comply with an increasing number of applicable laws and regulations, or if our ability to use such lead providers or marketing affiliates is otherwise impaired, it could adversely affect our business.
In response, the U.S. and certain other countries imposed significant sanctions and export controls, and could impose further sanctions and controls, against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations.
In response, the U.S. and certain other countries imposed significant sanctions and export controls, and could impose further sanctions and controls, against Russia, Belarus and certain individuals and entities connected to Russian or Belarusian political, business, and financial organizations. The conflict has also created uncertainty regarding, and potential shortages of, grain and fossil fuel supplies in Europe and elsewhere.
For example, if there were to be disruptions in the supply chain for gold, silver, platinum or palladium, similar to what the market for nickel is currently experiencing as a consequence of the war in Ukraine and the Russian sanctions, our ability to buy and sell these metals on the commodity exchanges would be materially and adversely affected.
For example, if there were to be disruptions in the supply chain for gold, silver, platinum or palladium, our ability to buy and sell these metals on the commodity exchanges would be materially and adversely affected.
Business operations outside the U.S. are subject to political, economic and other risks inherent in operating in foreign countries. These include risks of general applicability, such as the need to comply with multiple regulatory regimes; trade protection measures and import or export licensing requirements; and fluctuations in equity, revenues and profits due to changes in foreign currency exchange rates.
These include risks of general applicability, such as the need to comply with multiple regulatory regimes; trade protection measures and import or export licensing requirements; and fluctuations in equity, revenues and profits due to changes in foreign currency exchange rates. Currently, we do not conduct substantial business with customers in developing countries.
CFC has entered into a securitization financing whereby it has transferred, and may continue from time to time to transfer, to its AMCF subsidiary loans 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 by these loans and related assets.
CFC has entered into a securitization financing whereby it has transferred, and may continue from time to time to transfer, to its AMCF subsidiary loans secured by precious metal coins or bullion.
Going forward, however, the expansion of our international operations could require us to change our business practices and may increase the costs and complexity of compliance. Also, a violation by the Company of this regulation could expose us to penalties and sanctions under the regulation.
Going forward, however, the expansion of our international operations could require us to change our business practices and may increase the costs and complexity of compliance.
The initial quarterly cash dividend under the policy will be paid on October 24, 2022 to stockholders of record as of October 10, 2022.
The initial quarterly cash dividend under the policy was paid on October 24, 2022 to stockholders of record as of October 10, 2022. The most recent cash dividend under the policy was paid on July 28, 2023 to stockholders of record as of July 17, 2023.
Notwithstanding the recently announced intention to resume payment of regular quarterly cash dividends, there can be be no assurance that the Company will pay dividends in the future on a regular basis or otherwise.
There can be no assurance that the Company will pay dividends in the future on a regular basis or otherwise.
Although we maintain insurance on terms and conditions that we consider appropriate, we may not have adequate sources of recovery if our precious metals inventory is lost, damaged, stolen or destroyed, and recovery may be limited. Among other things, our insurance policies exclude coverage in the event of loss as a result of terrorist attacks or civil unrest.
Although we maintain insurance on terms and conditions that we consider appropriate, we may not have adequate sources of recovery if our precious metals inventory is lost, damaged, stolen or destroyed, and recovery may be limited.
The failure of A-Mark to renew or replace the Trading Credit Facility under such circumstances would reduce the financing available to us and could limit our ability to conduct our business, including certain lending activity of our CFC subsidiary.
Our failure to renew or replace the Trading Credit Facility under such circumstances would reduce the financing available to us and could limit our ability to conduct our business, including certain lending activity of our CFC subsidiary. There can be no assurance that we could procure replacement financing on commercially acceptable terms on a timely basis, or at all.
CFC does not have the flexibility to defer or refrain from the liquidation, even if CFC were to determine that it would be in its best interests to do so. This requirement could impair valuable relationships that the Company may otherwise have with its customers whose loans have been securitized.
CFC does not have the flexibility to defer or refrain from the liquidation, even if CFC were to determine that it would be in its best interests to do so.
These advances are limited to a portion 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 rates determined on a customer-by-customer basis.
These advances are limited to a portion 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 rates determined on a customer-by-customer basis. • The Company operates a financing business through CFC which makes secured loans at loan-to-value ratios—principal loan amount divided by the liquidation value, as conservatively estimated by management, of the collateral—of, in most cases, 50% to 85%.
Our strategic vision and performance are dependent on Greg Roberts, our Chief Executive Officer, other members of our senior management and certain other key employees. We have employment agreements with Mr. Roberts and Brian Aquilino, our Chief Operating Officer, which both expire on June 30, 2023, and with Thor Gjerdrum, our President, which expires on June 30, 2025.
Our strategic vision and performance are dependent on Gregory Roberts, our Chief Executive Officer, other members of our senior management and certain other key employees. We have an employment agreement with Mr. Roberts which expires in June 2027.
These loans 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 loans are both variable and fixed interest rate loans, with some maturities on-demand and others from three to twelve months.
Other contemporary events and circumstances, including political polarization and global instability, may also have been contributing factors to the recent growth of the business of the Company.
Other contemporary events and circumstances, including political polarization, macroeconomic uncertainty, volatility in the financial markets and global instability, have also been contributing factors to the recent growth of the business of the Company. In this environment, consumers may have sought perceived financial safety in precious coins and metals.
One of A-Mark's key assets is the customer base of its Wholesale Sales & Ancillary Services segment. This customer base provides deep distribution of product and makes A-Mark a desirable trading partner for precious metals product manufacturers, including sovereign mints seeking to distribute precious metals coinage or large refiners seeking to sell large volumes of physical precious metals.
This customer base provides deep distribution of product and makes A-Mark a desirable trading partner for precious metals product manufacturers, including sovereign mints seeking to distribute precious metals coinage or large refiners seeking to sell large volumes of physical precious metals. In any given quarter, our sales in this segment may be derived from a small number of significant customers.
The Company may also experience disruption and risk of loss if futures commission merchants or commodity brokers with whom the Company deals were to become insolvent or bankrupt. We may be exposed to other risks in the supply chain for precious metals.
The Company may also experience disruption and risk of loss if futures commission merchants or commodity brokers with whom the Company deals were to become insolvent or bankrupt. Our business is subject to the risk of fraud and counterfeiting.
Other retailers of precious metal products have similarly been the subject of accusations regarding their sales practices, including claims of misrepresentation, excessive product markups, pressured sales tactics and product switching.
Prior to its acquisition by the Company, Goldline had been accused of improper sales practices, and was the subject of a state enforcement action that was subsequently settled. Other retailers of precious metal products have similarly been the subject of accusations regarding their sales practices, including claims of misrepresentation, excessive product markups, pressured sales tactics and product switching.
The Department of Financial Protection and Innovation may audit the books and records of CFC to determine whether CFC is in compliance with the terms of its lending license. We have been subject to an ongoing investigation by the Commodity Futures Trading Commission relating to certain activities of Goldline.
The Department of Financial Protection and Innovation may audit the books and records of CFC to determine whether CFC is in compliance with the terms of its lending license.
In addition, CFC and the Company may, from time to time, also contribute cash or sell precious metals to AMCF in exchange for subordinated, deferred payment obligations from AMCF. If the performance of AMCF were to suffer such that AMCF were unable to service its notes, CFC and the Company could lose part or all of their investments in AMCF.
In addition, CFC and the Company may, from time to time, also contribute cash or sell precious metals to AMCF in exchange for subordinated, deferred payment obligations from AMCF.
Interruptions in AMST's processing and production capabilities and shutdowns resulting from unanticipated events, or its inability to adequately staff its operations, could adversely affect our business. 16 We have in the past engaged, and continue to engage, in transactions with Stack’s Bowers, an affiliate of the Company, which could be perceived as not being made at arms-length.
We have in the past engaged, and continue to engage, in transactions with Stack’s Bowers, an affiliate of the Company, which could be perceived as not being made at arms-length.

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Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

10 edited+14 added−5 removed0 unchanged
Biggest changeThese quotations below reflect inter-dealer closing prices, without retail mark-up, mark-down, or commission and may not necessarily represent actual transactions. 25 Fiscal 2022 Fiscal 2021 Quarter High Low High Low First $ 30.55 $ 21.95 $ 17.26 $ 9.50 Second $ 39.50 $ 29.00 $ 18.70 $ 12.54 Third $ 41.55 $ 28.15 $ 19.87 $ 13.34 Fourth $ 44.17 $ 30.37 $ 28.18 $ 17.56 Issuer Purchases of Equity Securities In April 2018, the Company's board of directors approved a share repurchase program which authorized the Company to purchase up to 1,000,000 shares (as adjusted for the two-for-one split of A-Mark’s common stock in the form of a stock dividend in fiscal 2022) of its common stock from time to time, either in the open market or in block purchase transactions.
Biggest changeShare Repurchase Program In April 2018, the Company's board of directors approved a share repurchase program which authorized the Company to purchase up to 1,000,000 shares (as adjusted for the two-for-one split of A-Mark’s common stock in the form of a stock dividend in fiscal 2022) of its common stock.
Each stockholder of record at the close of business on May 23, 2022 received a dividend of one additional share of common stock for every share held on the record date that was distributed after the close of trading on June 6, 2022. This was a non cash transaction.
Each stockholder of record at the close of business on May 23, 2022 received a dividend of one additional share of common stock for every share held on the record date that was distributed after the close of trading on June 6, 2022. This was a noncash transaction.
On August 30, 2021, the Company's board of directors declared a non-recurring special dividend of $1.00 per common share (as adjusted for the two-for-one split of A-Mark’s common stock in the form of a stock dividend) to stockholders of record at the close of business on September 20, 2021.
In fiscal 2022, the Company paid the following dividends: • On August 30, 2021, the Company's board of directors declared a non-recurring special dividend of $1.00 per common share (as adjusted for the two-for-one split of A-Mark’s common stock in the form of a stock dividend) to stockholders of record at the close of business on September 20, 2021.
(See Note 20 to the consolidated financial statements.) Equity Compensation Plan Information The following table provides information as of June 30, 2022, with respect to the shares of our common stock that may be issued under existing equity compensation plans.
See Note 20 to the Company’s consolidated financial statements for more information regarding our dividends. Equity Compensation Plan Information The following table provides information as of June 30, 2023, with respect to the shares of our common stock that may be issued under existing equity compensation plans.
Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants, and restricted stock units (b) Weighted average exercise price of outstanding options, warrants, and restricted stock units (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 1,734,747 $ 6.74 (1) 286,847 Equity compensation plans not approved by security holders 120,000 $ 18.87 300,000 (2) 1,854,747 $ 7.52 (1) 586,847 (3) (1) The weighted average exercise prices are calculated including the restricted stock units (“RSUs”) as rights to acquire shares with an exercise price assumed to be zero.
Plan category (a) Number of securities to be issued upon exercise of outstanding options, warrants, and restricted stock units (b) Weighted average exercise price of outstanding options, warrants, and restricted stock units (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Equity compensation plans approved by security holders 1,539,217 $ 6.68 (1) 1,727,894 (2) Equity compensation plans not approved by security holders — — — 1,539,217 $ 6.68 (1) 1,727,894 (2) (1) The weighted average exercise prices are calculated including the restricted stock units ("RSUs") as rights to acquire shares with an exercise price assumed to be zero.
(3) Represents shares that are available for future issuance under the 2014 Plan. All of the 2014 Plan shares 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. 26 ITEM 6 . SELECTED FINANCIAL DATA Not applicable.
All of the 2014 Plan shares 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.
On April 28, 2022, the Company’s board of directors declared a two-for-one split of A-Mark’s common stock in the form of a stock dividend.
The dividend was paid on September 24, 2021 and totaled $22.6 million. • On April 28, 2022, the Company’s board of directors declared a two-for-one split of A-Mark’s common stock in the form of a stock dividend.
The weighted average exercise price of stock options approved by stockholders, but excluding RSUs was $7.04 and for all outstanding stock options excluding RSUs was $7.84. (2) Represents shares that are available for future issuance to only new hires under A-Mark's amended and restated 2014 Stock Award and Incentive Plan ("2014 Plan").
The weighted average exercise price of stock options for all outstanding stock options excluding RSUs was $7.11. (2) Represents shares that are available for future issuance under the 2014 Plan.
ITEM 4. MINE SAF ETY DISCLOSURES None. PA R T II — OTHER INFORMATION I T EM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information SGI effected the spinoff of A-Mark on March 14, 2014.
ITEM 4. MINE SAFETY DISCLOSURES None. PA R T II I T EM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information A-Mark's shares of common stock are traded on the NASDAQ Global Select Market under the symbol "AMRK".
The declaration of regular cash dividends in the future is subject to the determination each quarter by the board of directors, based on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants. In fiscal 2022, the Company issued two dividends.
While we currently intend to continue paying quarterly dividends, any future determination will be subject to the discretion of our board of directors and will be dependent on a number of factors, including the Company’s financial performance, available cash resources, cash requirements and alternative uses of cash and applicable bank covenants.
Removed
On March 17, 2014, A-Mark’s shares of common stock commenced trading on the NASDAQ Global Select Market under the symbol "AMRK." As of August 23, 2022, there were 113 registered stockholders of record of our common stock.
Added
As of September 1, 2023, there were 104 registered stockholders of record of our common stock.
Removed
The following table sets forth the range of high and low closing prices for our common stock for each full quarterly period during fiscal years 2022 and 2021, as reported by the NASDAQ Global Select Market, as adjusted for the effect of the two-for-one stock split in the form of a dividend effective June 6, 2022.
Added
Stock Performance Graph Set forth below is a graph comparing the cumulative total stockholder return on shares of A-Mark common stock against the cumulative total return of (i) the Nasdaq Composite Index and (ii) a group of companies that are in lines of business reasonably comparable to A-Mark's businesses ("peer companies") for the five-year period from June 30, 2018 to June 30, 2023.
Removed
The amount and timing of specific repurchases are subject to market conditions, applicable legal requirements and other factors. As of August 23, 2022, there have been no repurchases of equity securities under the above-referenced stock repurchase program.
Added
The graph assumes that $100 was invested on June 30, 2018 in our common stock, in the Nasdaq Composite Index companies and in the peer group companies (on a market-capitalization-weighted basis), and that all dividends were reinvested in the same class of stock. 28 Below are the companies which comprise the peer group in the graph above, in the indicated lines of business: Alternative Brokerage Firms Alternative Financial Services E-Commerce BGC Group, Inc.
Removed
Dividend Policy The Company suspended its regular dividend policy in the third quarter of fiscal 2019, but has recently announced an intention to resume payment of regular cash dividends of $0.20 per quarter. The initial quarterly cash dividend under the policy will be paid on October 24, 2022 to stockholders of record as of October 10, 2022.
Added
(BGC) Enova International, Inc. (ENVA) Carvana Co. (CVNA) IG Group Holdings plc (IGG.L) EZCORP, Inc. (EZPW) Stitch Fix, Inc. (SFIX) StoneX Group Inc. (SNEX) FirstCash Holdings, Inc. (FCFS) The Lovesac Company (LOVE) Swissquote Group Holding Ltd (SQN.SW) Regional Management Corp. (RM) Liquidity Services, Inc. (LQDT) B. Riley Financial, Inc. (RILY) World Acceptance Corporation (WRLD) Overstock.Com, Inc. (OSTK) Oppenheimer Holdings Inc.
Removed
The dividend was paid on September 24, 2021 and totaled $22.6 million. (See Note 17 of the Notes to Consolidated Financial Statements.) The Company has also recently announced that it will pay a non-recurring special cash dividend of $1.00 per common share on September 26, 2022 to holders of record on September 12, 2022.
Added
(OPY) GreenDot Corporation (GDOT) PC Connection, Inc. (CNXN) Dividend Policy The Company's board of directors has adopted a regular quarterly cash dividend policy of $0.20 per common share ($0.80 per share on an annual basis).
Added
In fiscal 2023, the Company paid the following dividends. • On August 18, 2022, the Company's board of directors declared a non-recurring special dividend of $1.00 per common share to stockholders of record at the close of business on September 12, 2022.
Added
The dividend was paid on September 26, 2022 and totaled $23.4 million. • On August 18, 2022, the Company's board of directors also declared the initial quarterly regular cash dividend under its dividend policy of $0.20 per common share to stockholders of record at the close of business on October 10, 2022.
Added
The dividend was paid on October 24, 2022 and totaled $4.7 million. 29 • On January 4, 2023, the Company's board of directors declared a quarterly regular cash dividend of $0.20 per common share to stockholders of record at the close of business on January 16, 2023.
Added
The dividend totaling $4.7 million was paid on January 27, 2023. • On April 5, 2023, our board of directors declared a regular dividend of $0.20 per share to shareholders of record at the close of business on April 17, 2023. The dividend totaling $4.7 million was paid on April 28, 2023.
Added
The share repurchase program was initially announced on May 8, 2018. In fiscal 2023, we repurchased a total of 335,735 shares under the program for $9.8 million.
Added
Late in fiscal 2023, the board revised the repurchase program to authorize the purchase of up to 1,000,000 shares of our common stock, in addition to the shares previously repurchased, and extended the expiration date of the program from June 30, 2023 to June 30, 2028. Prior to fiscal 2023, no shares had been repurchased under our share repurchase program.
Added
Under the share repurchase program, we may repurchase shares of our common stock from time to time at prevailing market prices, depending on market conditions, through open market or privately negotiated transactions. Subject to applicable corporate securities laws, repurchases may be made at such times and in amounts as management deems appropriate.
Added
We are not obligated to repurchase any shares under the program, and repurchases under the program may be discontinued if management determines that additional repurchases are not warranted. As of June 30, 2023, the maximum number of shares that may be repurchased under the share repurchase program authorized by the Board equaled 1,000,000 shares.
Added
The following table reflects activity related to equity securities we repurchased during the quarter ended June 30, 2023: Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares That May Yet Be Purchased Under the Plans or Programs 4/1/23 - 4/30/23 — — — 664,265 5/1/23 - 5/31/23 — — — 1,000,000 6/1/23 - 6/30/23 — — — 1,000,000 Total — — — Recent Sales of Unregistered Equity Securities We did not sell any unregistered equity securities during the period covered by this Annual Report. 30 ITEM 6. [RESERVED]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

183 edited+26 added−60 removed100 unchanged
Biggest changeEBITDA is reconciled directly to "net cash used in operating activities" below: 46 in thousands Years Ended June 30, 2022 2021 $ % Net income $ 133,079 $ 160,924 $ (27,845 ) (17.3 %) Adjustments: Interest income (21,800 ) (18,474 ) $ 3,326 18.0 % Interest expense 21,992 19,865 $ 2,127 10.7 % Amortization of acquired intangibles 25,668 9,342 $ 16,326 174.8 % Depreciation expense 1,632 1,447 $ 185 12.8 % Income tax expense 33,338 31,877 $ 1,461 4.6 % 60,830 44,057 $ 16,773 38.1 % Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 193,909 $ 204,981 $ (11,072 ) (5.4 %) Reconciliation of EBITDA to Operating Cash Flows: Earnings before interest, taxes, depreciation, and amortization (EBITDA) $ 193,909 $ 204,981 $ (11,072 ) (5.4 %) Amortization of loan cost 2,651 2,162 $ 489 22.6 % Deferred income taxes (4,106 ) (2,034 ) $ 2,072 101.9 % Interest added to principal of secured loans (14 ) (13 ) $ 1 7.7 % Share-based compensation 2,140 1,173 $ 967 82.4 % Write-down of digital assets 229 — $ 229 (— %) Remeasurement gain on pre-existing equity method investment — (26,306 ) $ (26,306 ) (100.0 %) Earnings from equity method investments (6,907 ) (15,547 ) $ (8,640 ) (55.6 %) Dividends received from equity method investees 1,678 343 $ 1,335 389.2 % Income tax expense (33,338 ) (31,877 ) $ 1,461 4.6 % Interest income 21,800 18,474 $ 3,326 18.0 % Interest expense (21,992 ) (19,865 ) $ 2,127 10.7 % Changes in operating working capital (245,216 ) (184,145 ) $ 61,071 33.2 % Net cash used in operating activities $ (89,166 ) $ (52,654 ) $ 36,512 69.3 % Cash Flow Data: Net cash used in operating activities $ (89,166 ) $ (52,654 ) $ 36,512 69.3 % Net cash used in investing activities $ (60,563 ) $ (130,393 ) $ (69,830 ) (53.6 %) Net cash provided by financing activities $ 86,107 $ 232,127 $ (146,020 ) (62.9 %) LIQUIDITY AND FIN ANCIAL CONDITION Primary Sources and Uses of Cash Overview Liquidity refers to the availability to the Company of amounts of cash to meet all of our cash needs.
Biggest changeBelow is the reconciliation of net cash provided by or used in operating activities to EBITDA (in thousands): Year Ended June 30, 2023 2022 Change $ $ $ % Net income $ 156,769 $ 133,079 $ 23,690 17.8 % Adjustments: Interest income (22,231 ) (21,800 ) $ 431 2.0 % Interest expense 31,528 21,992 $ 9,536 43.4 % Amortization of acquired intangibles 10,343 25,668 $ (15,325 ) (59.7 %) Depreciation expense 2,182 1,632 $ 550 33.7 % Income tax expense 46,401 33,338 $ 13,063 39.2 % 68,223 60,830 $ 7,393 12.2 % Earnings before interest, taxes, depreciation, and amortization (non-GAAP) $ 224,992 $ 193,909 $ 31,083 16.0 % Reconciliation of Operating Cash Flows to EBITDA: Net cash used in operating activities $ (30,323 ) $ (89,166 ) $ (58,843 ) (66.0 %) Changes in operating working capital 193,738 245,216 $ (51,478 ) (21.0 %) Interest expense 31,528 21,992 $ 9,536 43.4 % Interest income (22,231 ) (21,800 ) $ 431 2.0 % Income tax expense 46,401 33,338 $ 13,063 39.2 % Dividends and distributions received from equity method investees (978 ) (1,678 ) $ (700 ) (41.7 %) Earnings from equity method investments 12,576 6,907 $ 5,669 82.1 % Share-based compensation (2,176 ) (2,140 ) $ 36 1.7 % Deferred income taxes (1,585 ) 4,106 $ (5,691 ) (138.6 %) Amortization of loan cost (2,113 ) (2,651 ) $ (538 ) (20.3 %) Other 155 (215 ) $ 370 172.1 % Earnings before interest, taxes, depreciation, and amortization (non-GAAP) $ 224,992 $ 193,909 $ 31,083 16.0 % Cash Flow Data: Net cash used in operating activities $ (30,323 ) $ (89,166 ) $ (58,843 ) (66.0 %) Net cash provided by (used in) investing activities $ 6,839 $ (60,563 ) $ 67,402 111.3 % Net cash provided by financing activities $ 25,019 $ 86,107 $ (61,088 ) (70.9 %) LIQUIDITY AND FIN ANCIAL CONDITION Primary Sources and Uses of Cash Overview Liquidity refers to the availability to the Company of amounts of cash to meet all of our cash needs.
PMPP was formed in in fiscal 2019 pursuant to terms of a joint venture agreement, for the purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products back to affiliates of the partners. PMPP commenced operations in fiscal 2020.
PMPP was formed in fiscal 2019 pursuant to terms of a joint venture agreement, for the purpose of purchasing precious metals from the partners' retail customers, and then reselling the acquired products back to affiliates of the partners. PMPP commenced operations in fiscal 2020.
This diverse base of wholesale customers purchases a variety of products from the Company in a multitude of grades, primarily in the form of coins and bars. Our Direct-to-Consumer segment sells to (and, through JMB and PMPP, buys from) retail customers, with JMB focusing on e-commerce operations and Goldline marketing through various traditional channels to the investor community.
This diverse base of wholesale customers purchases a variety of products from the Company in a multitude of grades, primarily in the form of coins and bars. Our Direct-to-Consumer segment sells to (and, through JMB and PMPP, buys from) retail customers, with JMB focusing on e-commerce operations and Goldline marketing through various traditional and e-commerce channels to the investor community.
The Company also sells precious metals on forward contracts at a fixed price based on current prevailing precious metal spot prices with a certain delivery date in the future (up to six months from inception date of the forward contract). The Company also uses other derivative products (primarily futures contracts) or combinations thereof to hedge commodity risks.
The Company sells precious metals on forward contracts at a fixed price based on current prevailing precious metal spot prices with a certain delivery date in the future (up to six months from inception date of the forward contract). The Company also uses other derivative products (primarily futures contracts) or combinations thereof to hedge commodity risks.
Additionally, AMCF acquires certain loans from CFC that are secured by precious metal bullion to meet the collateral requirements of the Notes.
Additionally, AMCF acquires certain loans from CFC that are secured by precious metal bullion to meet the collateral requirements of the AMCF Notes.
As a result, a decline of precious metal market prices may cause a decrease in the number of loans outstanding in a period. Non-GAAP Financial Measures In addition to key operational metrics that are used to assess the performance of our business, management also uses non-GAAP financial performance and liquidity measures.
As a result, a decline of precious metal market prices may cause a decrease in the number of loans outstanding in a period. Non-GAAP Measures In addition to key operational metrics that are used to assess the performance of our business, management also uses non-GAAP financial performance and liquidity measures.
(See Note 5 to the Company’s consolidated financial statements.) AMCF also purchases and holds secured loans from CFC to meet its collateral requirements related to the Notes. (See Note 15 to Company’s consolidated financial statements.) Most of the Company's secured loans are short-term in nature.
See Note 5 to the Company’s consolidated financial statements. AMCF also purchases and holds secured loans from CFC to meet its collateral requirements related to the AMCF Notes. See Note 15 to Company’s consolidated financial statements. Most of the Company's secured loans are short-term in nature.
The Company’s gains (losses) on derivative instruments are substantially offset by the changes in fair market value of the underlying precious metals inventory position, including our open sale and purchase commitments.
The Company’s gains and losses on derivative instruments are substantially offset by the changes in fair market value of the underlying precious metals inventory position, including our open sale and purchase commitments.
Income Taxes As part of the process of preparing the Company’s consolidated financial statements, the Company is required to estimate its provision for income taxes in each of the tax jurisdictions in which it conducts business, in accordance with the Income Taxes Topic 740 of the ASC ("ASC 740").
Income Taxes As part of the process of preparing the Company’s consolidated financial statements, the Company is required to estimate its provision for income taxes in each of the tax jurisdictions in which it conducts business, in accordance with Income Taxes Topic 740 of the ASC ("ASC 740").
Also, the Company recognizes its storage, logistics, licensing, advertising revenue, and other services revenues in accordance with the FASB's release ASU 2014-09 Revenue From Contracts With Customers Topic 606 and subsequent related amendments ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
Also, the Company recognizes its storage, logistics, licensing, advertising revenue, and other services revenues in accordance with the FASB's release ASU 2014-09 Revenue From Contracts With Customers Topic 606 of the ASC and subsequent related amendments ("ASC 606"), which follows five basic steps to determine whether revenue can be recognized: (i) identify the contract with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation.
For this reason, the Company believes ounces sold (excluding ounces sold on forward sales contracts) is a meaningful 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.
For this reason, the Company believes ounces sold (excluding ounces sold on forward sales contracts) is a meaningful metric to assess our top line performance. 34 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.
We enter into these forward and future contracts as part of our hedging strategy to mitigate our price risk of holding inventory; they are not entered into for speculative purposes. 30 Forward sales contracts by their nature are required to be included in revenues, unlike futures contracts which do not impact the Company’s revenue.
We enter into these forward and future contracts as part of our hedging strategy to mitigate our price risk of holding inventory; they are not entered into for speculative purposes. Forward sales contracts by their nature are required to be included in revenues, unlike futures contracts which do not impact the Company’s revenue.
Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the 54 Company's effective tax rate on future earnings. Based on our assessment, it appears more likely than not that all of the net deferred tax assets will be realized through future taxable income.
Failure to achieve forecasted taxable income in applicable tax jurisdictions could affect the ultimate realization of deferred tax assets and could result in an increase in the Company's effective tax rate on future earnings. Based on our assessment, it appears more likely than not that all of the net deferred tax assets will be realized through future taxable income.
The Company incurs interest expense associated with its lines of credit, Notes, product financing agreements for the transfer and subsequent re-acquisition of gold, silver, and platinum at a fixed price with a third-party finance company ("product financing arrangements"), and short-term precious metal borrowing arrangements with our suppliers ("liabilities on borrowed metals").
The Company incurs interest expense associated with its lines of credit, notes payable, product financing agreements for the transfer and subsequent re-acquisition of gold, silver, and platinum at a fixed price with a third-party finance company ("product financing arrangements"), and short-term precious metal borrowing arrangements with our suppliers ("liabilities on borrowed metals").
Secured Lending The Company operates its Secured Lending segment through its wholly-owned subsidiary Collateral Finance Corporation, LLC ("CFC"). CFC has two wholly-owned subsidiaries: AM Capital Funding, LLC (“AMCF”), and CFC Alternative Investments (“CAI”). CFC is a California licensed finance lender that originates and acquires commercial loans secured by bullion and numismatic coins.
Secured Lending The Company operates its Secured Lending segment through its wholly-owned subsidiary Collateral Finance Corporation, LLC ("CFC"). CFC has two wholly-owned subsidiaries: AM Capital Funding, LLC (“AMCF”), and CFC Alternative Investments (“CAI”). CFC is a California licensed finance lender that originates and acquires commercial loans secured primarily by bullion and numismatic coins.
AMCF 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 Secured Subordinated Term Notes, Series 2018-1, Class B in the aggregate principal amount of $28.0 million (collectively referred to as the "Notes").
AMCF was formed for the purpose of securitizing eligible secured loans of CFC. AMCF issued and administers Secured Senior Term Notes: Series 2018-1, Class A, with an aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B in the aggregate principal amount of $28.0 million (collectively referred to as the "AMCF Notes").
During the term of the agreement both parties intend for inventory to be returned at an agreed-upon price based on the spot price on the termination (repurchase) date. The third parties charge monthly interest as a percentage of the market value of the outstanding obligation; such monthly charges are classified as interest expense.
During the term of the agreement both parties intend for inventory to be returned at an agreed-upon price based on the spot price on the repurchase date. The third parties charge monthly interest as a percentage of the market value of the outstanding obligation; such monthly charges are classified as interest expense.
Certain of those items are non-recurring, while others are non-cash in nature. Accordingly, this non-GAAP financial measure should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with U.S. GAAP.
Certain of those items are non-recurring, while others are non-cash in nature. Accordingly, this non-GAAP financial performance measure should be considered in addition to, and not as a substitute for or superior to, the comparable measures prepared in accordance with U.S.
During the term of the financing agreement, the third party company holds the inventory 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 the termination (repurchase) date.
During the term of the financing agreement, the third-party company holds the inventory 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 the repurchase date.
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. 28 The Company's wholly-owned subsidiary AMGL is based in Las Vegas, Nevada, and provides our customers an array of complementary services, including receiving, handling, inventorying, processing, packing, and shipping of precious metals and custom coins on a secure basis.
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. 32 The Company's wholly-owned subsidiary AMGL is based in Las Vegas, Nevada, and provides our customers an array of complementary services, including receiving, handling, inventorying, processing, packing, and shipping of precious metals and custom coins on a secure basis.
Inventory borrowed 50 is a natural hedge, since changes in value of the metal held are offset by the obligation to return the metal to the supplier or deliver metals to the customer.
Inventory borrowed is a natural hedge, since changes in value of the metal held are offset by the obligation to return the metal to the supplier or deliver metals to the customer.
Through its wholly-owned subsidiary AMST, the Company designs and produces minted silver products. Our SilverTowne Mint operations allow us to provide greater product selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to silver during volatile market environments, which have historically created higher demand for precious metals products.
Through its wholly-owned subsidiary AMST, the Company designs and produces minted silver products. Our Silver Towne Mint operations allow us to provide greater product selection to our customers and greater pricing stability within the supply chain, as well as to gain increased access to silver during volatile market environments, which have historically created higher demand for precious metals products.
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 the Company'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.
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 the Company's current plans, estimates and beliefs, and the Company's actual future activities and results of operations may be materially different from those set forth in the forward-looking statements.
We use the financial measure “adjusted net income before provision for income taxes” to present our pre-tax earnings from on-going business operations. This measure does not have standardized definitions and is not prepared in accordance with U.S. GAAP. The items excluded from this financial measure may have a material impact on our financial results.
We use the financial measure “adjusted net income before provision for income taxes” to present our pre-tax earnings from core business operations. This measure does not have standardized definitions and is not prepared in accordance with U.S. GAAP. The items excluded from this financial measure may have a material impact on our financial results.
As of June 30, 2022, the Trading Credit Facility provided the Company with access up to $350.0 million. The credit facility has a termination date of December 21, 2024. A-Mark routinely uses funds drawn under the Trading Credit Facility to purchase metals from its suppliers and for other operating cash flow purposes.
As of June 30, 2023, the Trading Credit Facility provided the Company with access up to $350.0 million. The credit facility has a termination date of December 21, 2024. A-Mark routinely uses funds drawn under the Trading Credit Facility to purchase metals from its suppliers and for other operating cash flow purposes.
Due to the nature of our hedging strategy, we are not using hedge accounting as defined under, Derivatives and Hedging Topic 815 of the Accounting Standards Codification ("ASC 815".) Unrealized gains or losses resulting from our futures and forward contracts are reported as cost of sales with the related amounts due from or to counterparties reflected as derivative assets or liabilities.
Due to the nature of our hedging strategy, we are not using hedge accounting as defined under Derivatives and Hedging Topic 815 of the ASC ("ASC 815"). Unrealized gains or losses resulting from our futures and forward contracts are reported as cost of sales with the related amounts due from or to counterparties reflected as derivative assets or liabilities.
We use the following three metrics indicators when assessing our ticket volume: • Ticket Volume from new Direct-to-Consumer Customers means the number of third-party product orders from new customers (refer to the definition of new customers above) processed by JMB, Goldline, and PMPP during the period. • Ticket Volume from Pre-existing Direct-to-Consumer Customers means the number of third-party product orders from pre-existing customers, processed by JMB, Goldline, and PMPP during the period. • Total Ticket Volume from Direct-to-Consumer Customers means the aggregate number of third-party product orders processed by JMB, Goldline, and PMPP during the period.
We use the following three metrics indicators when assessing our ticket volume: • Ticket Volume from New Direct-to-Consumer Customers means the number of product orders from new customers (refer to the definition of new customers above) processed by JMB, Goldline, and PMPP during the period. • Ticket Volume from Pre-existing Direct-to-Consumer Customers means the number of product orders from pre-existing customers, processed by JMB, Goldline, and PMPP during the period. • Total Ticket Volume from Direct-to-Consumer Customers means the aggregate number of product orders processed by JMB, Goldline, and PMPP during the period.
(5) Number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past. (6) Ticket volume from new customers represents the number of third-party product orders from new customers processed by JMB, Goldline, and PMPP during the period.
(5) Number of total customers represents the aggregate number of customers that have registered or set up an account or have made a purchase in the past. (6) Ticket volume from new customers represents the number of product orders from new customers processed by JMB, Goldline, and PMPP during the period.
This section provides an analysis of our cash flows, as well as a discussion of our outstanding debt as of June 30, 2022, sources of liquidity and the amount of financial capacity available to fund our future commitments and other financing arrangements. • Critical accounting policies .
This section provides an analysis of our cash flows, as well as a discussion of our outstanding debt as of June 30, 2023, sources of liquidity and the amount of financial capacity available to fund our future commitments and other financing arrangements. • Critical accounting policies .
When these contracts are settled, the unrealized gains and losses are reversed, and revenue is recognized 52 for contracts that are physically settled.
When these contracts are settled, the unrealized gains and losses are reversed, and revenue is recognized for contracts that are physically settled.
Reconciliation We calculate EBITDA by eliminating from net income the following five items: (i) interest income; (ii) interest expense; (iii) amortization expenses related to intangible assets acquired; (iv) depreciation expense; and (v) income tax expense. Management believes the most directly comparable GAAP financial measure is “net cash used in operating activities” presented in the consolidated statement of cash flows.
Reconciliation We calculate EBITDA by eliminating from net income the following five items: (i) interest income; (ii) interest expense; (iii) amortization expenses related to intangible assets acquired; (iv) depreciation expense; and (v) income tax expense. 48 Management believes the most directly comparable GAAP financial measure is “net cash provided by or used in operating activities” presented in the consolidated statement of cash flows.
(d) Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.909% for the period. (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 forward contracts.
(d) Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.482% for the period. (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 forward contracts.
Direct-to-Consumer Ticket Volume. Ticket volume for the Direct-to-Consumer segment measures the number of third-party product orders processed during the period. In periods of higher volatility, there is generally increased consumer demand for our products, resulting in higher business volume.
Ticket volume for the Direct-to-Consumer segment measures the number of product orders processed during the period. In periods of higher volatility, there is generally increased consumer demand for our products, resulting in higher business volume.
While the Company is able to obtain access to this inventory on demand, this type of inventory tends not to 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 repurchase for an unspecified period of time.
While the Company is able to obtain access to this inventory on demand, this type of inventory tends not to turn over as quickly as other types of inventory. • The Company enters into repurchase arrangements with customers under which it holds precious metals which are subject to repurchase for an unspecified period of time.
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 its wholly-owned subsidiary AMTAG, the Company promotes A-Mark's products and services to the international market.
Mint-authorized purchaser of gold, silver, platinum, and palladium coins, A-Mark purchases product directly from the U.S. Mint, and it also purchases product from other sovereign mints, for sale to its customers. Through its wholly-owned subsidiary AMTAG, the Company promotes its products and services to the international market.
Results of Operations — Wholesale Sales & Ancillary Services Segment The Company operates its Wholesale Sales & Ancillary Services segment directly and through its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS"), A-M Global Logistics, LLC ("Logistics"), and AM&ST Associates, LLC ("AMST" or "SilverTowne" or the "Mint").
Results of Operations — Wholesale Sales & Ancillary Services Segment The Company operates its Wholesale Sales & Ancillary Services segment directly and through its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services ("TDS"), A-M Global Logistics, LLC ("Logistics"), and AM&ST Associates, LLC ("AMST" or "Silver Towne" or the "Mint").
Wholesale Sales & Ancillary Services Segment The Company operates its Wholesale Sales & Ancillary Services segment directly and through its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services, LLC ("TDS" or “Storage”), A-M Global Logistics, LLC (“AMGL” or "Logistics"), and AM&ST Associates, LLC ("AMST" or the “SilverTowne Mint").
Wholesale Sales & Ancillary Services Segment The Company operates its Wholesale Sales & Ancillary Services segment directly and through its wholly-owned subsidiaries, A-Mark Trading AG (“AMTAG”), Transcontinental Depository Services, LLC ("TDS" or “Storage”), A-M Global Logistics, LLC (“AMGL” or "Logistics"), and AM&ST Associates, LLC ("AMST" or the “Silver Towne Mint").
(3) Number of new customers represents the number of customers that have registered or setup a new account or made a purchase for the first time during the period. (4) Number of active customers represents the number of customers that have made a purchase during the period.
(3) Number of new customers represents the number of customers that have registered or setup a new account or made a purchase for the first time during the period. (4) Number of active customers represents the number of customers that have made a purchase during any month during the period.
(7) Ticket volume from pre-existing customers represents the total number of third-party product orders from pre-existing customers processed by JMB, Goldline, and PMPP during the period. (8) Total ticket volume represents the total number of third-party product orders processed by JMB, Goldline, and PMPP during the period.
(7) Ticket volume from pre-existing customers represents the total number of product orders from pre-existing customers processed by JMB, Goldline, and PMPP during the period. (8) Total ticket volume represents the total number of product orders processed by JMB, Goldline, and PMPP during the period.
Our sources of liquidity principally include cash from operations, Trading Credit Facility (see “Lines of Credit” below), and product financing arrangements. A substantial portion of our assets are liquid. As of June 30, 2022, approximately 81.2% of our assets consisted of cash, receivables, derivative assets, secured loans receivables, precious metals held under financing arrangements and inventories, measured at fair value.
Our sources of liquidity principally include cash from operations, Trading Credit Facility (see “Lines of Credit” below), and product financing arrangements. A substantial portion of our assets are liquid. As of June 30, 2023, approximately 81.5% of our assets consisted of cash, receivables, derivative assets, secured loans receivables, precious metals held under financing arrangements, and inventories, measured at fair value.
Included in our analysis is a discussion of seven performance metrics: o (i) ounces of gold and silver sold, o (ii) Wholesale Sales ticket volume, o (iii) Direct-to-Consumer ticket volume: • (a) Direct-to-Consumer ticket volume from new customer, • (b) Direct-to-Consumer ticket volume from pre-existing customers, • (c) Direct-to-Consumer total ticket volume, 27 o (iv) Direct-to-Consumer average order value, o (v) number of Direct-to-Consumer customers, o (vi) inventory turnover ratio, and o (vii) number of secured loans at period-end. • Segment results of operations .
Included in our analysis is a discussion of seven performance metrics: o (i) ounces of gold and silver sold, o (ii) Wholesale Sales ticket volume, o (iii) Direct-to-Consumer ticket volume: • (a) Direct-to-Consumer ticket volume from new customers, • (b) Direct-to-Consumer ticket volume from pre-existing customers, • (c) Direct-to-Consumer total ticket volume, o (iv) Direct-to-Consumer and JMB average order value, o (v) number of Direct-to-Consumer customers: 31 • (a) Direct-to-Consumer number of new customers, • (b) Direct-to-Consumer number of active customers, • (c) Direct-to-Consumer total customers, o (vi) inventory turnover ratio, and o (vii) number of secured loans at period-end. • Segment results of operations .
The fair market value of the bullion and bullion coins comprises two components: (i) published market values attributable to the cost of the raw precious metal, and (ii) the published market values attributable to the premium, which is attributable to the incremental value of the product in its finished goods form.
The fair market value of the bullion and bullion coins comprises two components: (i) published market values attributable to the cost of the raw precious metal, and (ii) the premium paid at acquisition of the metal, which is attributable to the incremental value of the product in its finished goods form.
Management finds it useful to exclude these charges from our operating expenses to assist in the review of a measure that more closely corresponds to cash operating income generated from our business. Amortization of purchased intangible assets will recur in future periods. For additional information about the amortization of our purchased intangibles.
Due to amortization expense being non-cash in nature, management finds it useful to exclude these charges from our operating expenses to assist in the review of a measure that more closely corresponds to cash operating income generated from our business. Amortization of purchased intangible assets will recur in future periods. For additional information about the amortization of our purchased intangibles.
The increase is related to JMB’s product financing activity with A-Mark. 43 Results of Operations — Secured Lending Segment The Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation, LLC ("CFC"), AM Capital Funding, LLC (“AMCF”), and CFC Alternative Investments (“CAI”).
The increase is related to JMB’s increased product financing activity with A-Mark and higher interest rates. Results of Operations — Secured Lending Segment The Company operates its Secured Lending segment through its wholly-owned subsidiaries, Collateral Finance Corporation, LLC ("CFC"), AM Capital Funding, LLC (“AMCF”), and CFC Alternative Investments (“CAI”).
JMB is a leading e-commerce retailer providing access to a broad array of gold, silver, copper, platinum, and palladium products through its websites and marketplaces. JMB operates six separately branded, company-owned websites targeting specific niches within the precious metals retail market, including JMBullion.com, ProvidentMetals.com, Silver.com, Cybermetals.com, GoldPrice.org, and SilverPrice.org.
JMB is a leading e-commerce retailer providing access to a broad array of gold, silver, copper, platinum, and palladium products through its websites. JMB currently operates eight separately branded, company-owned websites targeting specific niches within the precious metals retail market, including JMBullion.com, ProvidentMetals.com, Silver.com, BGASC.com, CyberMetals.com, BullionMax.com, GoldPrice.org, and SilverPrice.org.
We use the following three metrics as revenue growth indicators when assessing our customer base: • New Direct-to-Consumer Customers means the number of customers that have registered or setup a new account or made a purchase for the first time during the period. 31 • Active Direct-to-Consumer Customers means the number of customers that have made a purchase during the period. • Total Direct-to-Consumer Customers means the aggregate number of customers that have registered or set up an account or have made a purchase in the past.
We use the following three metrics as revenue growth indicators when assessing our customer base: • New Direct-to-Consumer Customers means the number of customers that have registered or setup a new account or made a purchase for the first time during the period. • Active Direct-to-Consumer Customers means the number of customers that have made a purchase during any month during the period. • Total Direct-to-Consumer Customers means the aggregate number of customers that have registered or set up an account or have made a purchase in the past. 35 Direct-to-Consumer Ticket Volume.
Both the product financing and the underlying inventory (which is restricted) are carried at fair value, with changes in fair value included in cost of sales in the Company’s consolidated statements of income. The Company periodically loans metals to customers on a short-term consignment basis.
The obligation is stated at the amount required to repurchase the outstanding inventory. Both the product financing and the underlying inventory (which is restricted) are carried at fair value, with changes in fair value included in cost of sales in the Company’s consolidated statements of income. The Company periodically loans metals to customers on a short-term consignment basis.
Goldline, Inc. owns 100% of AMIP, LLC ("AMIP"), and has a 50% ownership interest in Precious Metals Purchasing Partners, LLC ("PMPP".) As the context requires, references in this Form 10-K to “JMB” may include GPG, Silver.com, GMBC, PMC, and CyberMetals, and references to “Goldline” may include AMIP and PMPP.
Goldline, Inc. owns 100% of AMIP, LLC ("AMIP"), and has a 50% ownership interest in Precious Metals Purchasing Partners, LLC ("PMPP"). As the context requires, references in this Form 10-K to JMB may include BGASC, BullionMax, GPG, Silver.com, PMC, and CyberMetals, and references to Goldline may include AMIP and PMPP.
We exclude acquisition expenses when we evaluate our on-going operational performance and to facilitate comparison of period-to-period operational performance. Amortization of purchased intangibles . Amortization expense of purchased intangibles varies in amount and frequency and is significantly impacted by the timing and size of our acquisitions.
We exclude acquisition expenses when we evaluate our core operating performance and to facilitate comparison of period-to-period operating performance. Amortization of purchased intangibles . Amortization expense of purchased intangibles varies in amount and frequency and is significantly impacted by the timing and size of our acquisitions.
Direct-to-Consumer Average Order Value. Average order value for the Direct-to-Consumer segment measures the average dollar value of third-party product orders (excluding accumulation program orders) delivered to the customer during the period. Inventory Turnover .
Average Order Value. Average order value for the Direct-to-Consumer segment and JMB measures the average dollar value of product orders (excluding accumulation program orders) delivered to the customer during the period. Inventory Turnover .
As of June 30, 2022, the consolidated aggregate carrying balance of the Notes was $94.1 million (which excludes the $5.0 million portion of the Class B Notes that the Company retained), and the remaining unamortized loan cost balance was approximately $0.9 million, which is amortized using the effective interest method through the maturity date.
As of June 30, 2023, the consolidated aggregate carrying balance of the AMCF Notes was $94.8 million (which excludes the $5.0 million portion of the Class B Notes that the Company retained), and the remaining unamortized loan cost balance was approximately $0.2 million, which is amortized using the effective interest method through the maturity date.
Performance Metrics In addition to financial statement indicators, management also utilizes 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).
Performance Metrics In addition to financial statement indicators, management also utilizes key operational metrics to assess the performance of our business. Gold and Silver Ounces Sold and Delivered to Customers . A key performance metric we utilize is the number of ounces of gold and silver sold and delivered to our customers (excluding ounces recorded on forward contracts).
(d) Gross profit percentage, excluding inter-segment company sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, is 8.226% for the period. (1) Gold ounces sold represents the ounces of gold product sold and delivered during the period. (2) Silver ounces sold represents the ounces of silver product sold and delivered during the period.
(d) Gross profit percentage, excluding inter-segment company sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 6.911% for the period. (1) Gold ounces sold represents the ounces of gold product sold and delivered during the period. (2) Silver ounces sold represents the ounces of silver product sold and delivered during the period.
The increase in interest expense was primarily driven by each of the following components: (i) $1.3 million associated with our Trading Credit Facility and the Notes (including amortization of debt issuance costs), (ii) $1.2 million related to product financing arrangements, (iii) $0.5 million of loan servicing fees, offset by a decrease of (iv) $0.9 million in interest associated with liabilities on borrowed metals.
The increase in interest expense was primarily driven by each of the following components: (i) $7.2 million associated with our Trading Credit Facility (primarily due to an increase in interest rates) and the AMCF Notes (including amortization of debt issuance costs), (ii) $2.6 million related to product financing arrangements, (iii) $0.6 million in interest associated with liabilities on borrowed metals, partially offset by (iv) a decrease of $0.9 million of loan servicing fees.
Excluding an increase of $664.5 million of forward sales, our revenues decreased $118.3 million or 1.7%, which was due to a decrease in gold ounces sold and lower average selling prices of silver, partially offset by an increase in silver ounces sold and higher average selling prices of gold.
Excluding an increase of $1.2 billion of forward sales, our revenues decreased $33.3 million or 0.5%, which was due to a decrease in gold ounces sold and lower average selling prices of silver, partially offset by an increase in silver ounces sold and higher average selling prices of gold.
Due to depreciation expense being non-cash in nature, management finds it useful to exclude these charges from our operating expenses to assist in the review of a measure that more closely corresponds to cash operating income generated from our business.
Due to depreciation expense being non-cash in nature, management finds it useful to exclude these charges from our operating expenses to assist in the review of a measure that more closely corresponds to cash operating income generated from our business. See Note 8 to the Company’s consolidated financial statements.
The overall decrease was primarily driven by inter-segment eliminations related to JMB’s product financing activity with A-Mark of $2.1 million, lower interest expense related to liabilities on borrowed metals of $0.9 million, and an increase of $0.1 million in connection with our Trading Credit Facility and the Notes, offset by higher interest and fees from product financing arrangements of $1.2 million.
The overall increase was primarily due to an increase of $7.6 million in connection with our Trading Credit Facility (primarily due to an increase in interest rates) and the AMCF Notes, higher interest and fees from product financing arrangements of $2.6 million, and higher interest expense related to liabilities on borrowed metals of $0.6 million, partially offset by inter-segment eliminations related to JMB’s product financing activity with A-Mark of $1.1 million.
The Company does not know how long the COVID-19 pandemic will continue, the extent to which the effects that the Company has experienced from the pandemic thus far will persist, or whether other effects on the Company and its businesses will materialize in the short or long term.
The Company does not know how long these conditions will continue, the extent to which the effects that the Company has experienced from these conditions will persist, or whether other effects on the Company and its businesses will materialize in the short or long term.
GAAP”) measure reported on the consolidated financial statements. The Company uses the following two non-GAAP measures: o “adjusted net income before provision for income taxes”, and o “'earnings before interest, taxes, depreciation, and amortization", or "EBITDA”. • Liquidity and financial condition .
GAAP”) measure reported on the consolidated financial statements. The Company uses the following two non-GAAP measures: o "adjusted net income before provision for income taxes", and o "earnings before interest, taxes, depreciation, and amortization", or "EBITDA". • Liquidity and financial condition .
The decrease in our inventory turnover ratio was primarily due to higher average inventory balances partially offset by higher forward sales.
The decrease in our inventory turnover ratio was primarily due to higher average inventory balances held under product financing arrangements, partially offset by higher forward sales.
This segment’s gross sales before eliminations of inter-segment activity totaled $7.648 billion. (b) Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.482% for the period. (c) Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $781.4 million. This segment’s gross sales before eliminations of inter-segment activity totaled $7.520 billion.
This segment’s gross sales before eliminations of inter-segment activity totaled $8.754 billion. (b) Revenues are presented net of inter-segment transactions with the Direct-to-Consumer segment that totaled $1.623 billion. This segment’s gross sales before eliminations of inter-segment activity totaled $7.648 billion. (c) Gross profit percentage before elimination of inter-segment sales to the Direct-to-Consumer segment was 1.449% for the period.
The increase was due to higher royalty income earned. N ON-GAAP MEASURES Adjusted net income before provision for income taxes Overview In addition to our results determined in accordance with U.S. GAAP, we believe the below non-GAAP measure is useful in evaluating our operating performance.
The change in other income, net was not significant. N ON-GAAP MEASURES Adjusted net income before provision for income taxes Overview In addition to our results determined in accordance with U.S. GAAP, we believe the below non-GAAP measure is useful in evaluating our operating performance.
We also maintain relationships with major market makers in every major precious metals dealing center. The Company enters into these derivative transactions solely for the purpose of hedging our inventory holding risk, and not for speculative market purposes.
We have access to all of the precious metals markets, allowing us to place hedges. We also maintain relationships with major market makers in every major precious metals dealing center. The Company enters into these derivative transactions solely for the purpose of hedging our inventory holding risk, and not for speculative market purposes.
Commodities Risk and Derivatives We use a variety of strategies to manage our risk including fluctuations in commodity prices for precious metals. Our inventory consists of, and our trading activities involve, precious metals and precious metal products, for which prices are linked to the corresponding precious metal commodity prices. Inventory purchased or borrowed by us is subject to price changes.
Commodities Risk and Derivatives We use a variety of strategies to manage our risk including fluctuations in commodity prices for precious metals. Our inventory consists of, and our trading activities involve, precious metals and precious metal products, for which prices are linked to the corresponding precious metal commodity prices.
On average, the selling prices for gold increased by 2.3% and selling prices for silver decreased by 4.9% during the year ended June 30, 2022 as compared to the prior year. JMB’s revenue represented 23.8% of the Company’s consolidated revenue for the year ended June 30, 2022.
On average, the selling prices for gold increased by 1.0% and selling prices for silver decreased by 9.5% during the year ended June 30, 2023 as compared to the prior year. JMB's revenue represented 19.4% and 23.8% of the Company's consolidated revenue for the years ended June 30, 2023 and 2022, respectively.
CCP commenced operations in fiscal 2022. 29 Our Strategy The Company was formed in 1965 and has grown into a significant participant in the bullion and coin markets, with approximately $8.2 billion in revenues for fiscal year 2022.
CCP commenced operations in fiscal 2022. 33 Our Strategy The Company was formed in 1965 and has grown into a significant participant in the bullion and coin markets, with $9.3 billion in revenues for fiscal year 2023.
(See Note 8 to the Company’s consolidated financial statements.) Earnings before interest, taxes, depreciation, and amortization Overview In addition to the performance non-GAAP measure discussed in the section above, we use the non-GAAP liquidity measure “earnings before interest, taxes, depreciation, and amortization” or "EBITDA" to evaluate our business operations unburdened by our capital structure, before investing activities, interest, and income taxes.
Earnings Before Interest, Taxes, Depreciation, and Amortization Overview In addition to the non-GAAP financial performance measure discussed in the section above, we use the non-GAAP liquidity measure “earnings before interest, taxes, depreciation, and amortization” or "EBITDA" to evaluate our business operations before investing activities, interest, and income taxes.
(See Note 20 to the consolidated financial statements.) Cash Flows The majority of the Company’s trading activities involve two-day value trades under which payment is received in advance of delivery or product is received in advance of payment.
Cash Flows The majority of the Company’s trading activities involve two-day value trades under which payment is received in advance of delivery or product is received in advance of payment.
CFC's customers include coin and precious metal dealers, investors, and collectors. As of June 30, 2022, CFC and AMCF had, in the aggregate, approximately $126.2 million in secured loans outstanding, of which approximately 64.7% were acquired from third parties (some of which may be customers of A-Mark) and approximately 35.3% were originated by CFC.
CFC's customers include coin and precious metal dealers, investors, and collectors. As of June 30, 2023, CFC and AMCF had, in the aggregate, approximately $100.6 million in secured loans outstanding, of which approximately 31.8% were acquired from third parties (some of which may be customers of A-Mark) and approximately 68.2% were originated by CFC.
Reconciliation We calculate this non-GAAP performance measure by eliminating from net income before provision for income taxes the impact of items we do not consider indicative of our ongoing operations. We eliminate the impact of the following four items: (i) remeasurement gains or losses; (ii) acquisition expenses; (iii) amortization expenses related to intangible assets acquired; and (iv) depreciation expense.
GAAP. 47 Reconciliation We calculate this non-GAAP financial performance measure by eliminating from net income before provision for income taxes the impact of items we do not consider indicative of our core operating performance. We eliminate the impact of the following three items: (i) acquisition expenses; (ii) amortization expenses related to intangible assets acquired; and (iii) depreciation expense.
Direct-to-Consumer The Company operates its Direct-to-Consumer segment through its wholly-owned subsidiaries JM Bullion, Inc. (“JMB”) and Goldline, Inc. (“Goldline”). JMB has five wholly-owned subsidiaries: Gold Price Group, Inc. (“GPG”), Silver.com, Inc. (“Silver.com”), Goldline Metal Buying Corp. (“GMBC”), Provident Metals Corp. (“PMC”), and Cybermetals Corp. ("CyberMetals").
Direct-to-Consumer The Company operates its Direct-to-Consumer segment through its wholly-owned subsidiaries JM Bullion, Inc. (“JMB”) and Goldline, Inc. (“Goldline”). JMB currently has six wholly-owned subsidiaries: Buy Gold and Silver Corp. ("BGASC"), BX Corporation ("BullionMax"), Gold Price Group, Inc. (“GPG”), Silver.com, Inc. (“Silver.com”), Provident Metals Corp. (“PMC”), and CyberMetals Corp. ("CyberMetals").
The Company also sells and delivers gold, silver, platinum, palladium, and copper products directly to customers and the investor community through its Direct-to Consumer segment. Customers may place orders online at one of the Company's websites or over the phone.
The metals are investment or industrial grade and are sold in a variety of shapes and sizes. The Company also sells and delivers gold, silver, platinum, palladium, and copper products directly to customers and the investor community through its Direct-to Consumer segment. Customers may place orders online at one of the Company's websites or over the phone.
(See Note 12 to the Company’s consolidated financial statements.) CRITICAL ACCOU NTING POLICIES The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
See Note 12 to the Company’s consolidated financial statements. Commitments and Contingencies Refer to Note 16 to the Company’s consolidated financial statements for information relating Company's commitments and contingencies. CRITICAL ACCOU NTING POLICIES AND ESTIMATES The Company’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
(See Note 13 to the Company’s consolidated financial statements for more information on the Company’s accounting for income taxes.) Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
Income taxes are accounted for using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements.
The Company recognizes interest and penalties related to certain uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and income taxes payable in the Company’s consolidated balance sheets.
The Company recognizes interest and penalties related to certain uncertain tax positions as a component of income tax expense and the accrued interest and penalties are included in deferred and income taxes payable in the Company’s consolidated balance sheets. See Note 13 to the Company’s consolidated financial statements for more information on the Company’s accounting for income taxes.
(b) Gross profit percentage, excluding inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, is 6.911% for the period. (c) Includes $8.5 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment.
(b) Includes $2.4 million of inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment. (c) Gross profit percentage, excluding inter-segment sales from the Direct-to-Consumer segment to the Wholesale Sales & Ancillary Services segment, was 8.468% for the period.
The Company’s net gains (losses) on derivative instruments for the years ended June 30, 2022 and 2021, totaled $47.8 million and $(125.6) million, respectively.
The Company’s net gains and losses on derivative instruments for the years ended June 30, 2023 and 2022 totaled gains of $97.1 million and gains of $47.8 million, respectively.
Our effective tax rate was approximately 20.0% and 16.5% for the years ended June 30, 2022 and 2021, respectively.
Our effective tax rate was approximately 22.8% and 20.0% for the years ended June 30, 2023 and 2022, respectively.
Net cash provided by financing activities Financing activities provided $86.1 million and $232.1 million in cash for the years ended June 30, 2022 and 2021, respectively, representing a $146.0 million decrease in cash provided compared to the year ended June 30, 2021.
Net Cash Flows From Financing Activities Financing activities provided $25.0 million and provided $86.1 million in cash for the years ended June 30, 2023 and 2022, respectively, representing a $61.1 million decrease in cash provided compared to the year ended June 30, 2022.
During the period between the trade and settlement dates, the Company has entered into a forward contract that meets the definition of a derivative in accordance with the Derivatives and Hedging Topic 815 of the ASC.
During the period between the trade and settlement dates, the Company enters into forward contracts that meet the definition of a derivative in accordance with the Derivatives and Hedging Topic 815 of the ASC (“ASC 815”).

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