A-Mark Precious Metals, Inc.

Effective October 1, 2020, A-Mark exercised its right to convert $1.0 million of the $3.5 million outstanding convertible revolving credit facility balance and exercised our right to repay in full borrower’s third-party loan, which totaled $5.8 million at the exercise date. As a result, the Company owns 31.2% of borrower’s outstanding common stock.  As of December 31, 2020 and June 30, 2020, the carrying value of the convertible revolving credit facility was $2.5 million and $3.5 million, respectively.

On September 3, 2020, the Company's Board of Directors declared a non-recurring special dividend of $1.50 per share to common stock shareholders of record at the close of business on September 21, 2020. On October 29, 2020, the Company's Board of Directors declared a non-recurring special dividend of $1.50 per share to common stock shareholders of record at the close of business on November 23, 2020.  In the aggregate, the Company paid $21.2 million in dividends for the six months ended December 31, 2020.

On September 19, 2019, the Company, as lender, entered into a convertible revolving credit facility with one of its privately-held customers (the borrower) that provides the borrower an aggregate principal amount of up to $4.0 million, bearing interest at 12.0% per annum.  The convertible revolving credit facility collateral includes all: (i) account receivables; (ii) inventory; (iii) fixed assets; (iv) intellectual property; (v) contract rights; and (vi) deposit accounts, in each case subordinated to an unrelated third-party lender’s security interest.  As of December 31, 2020 and June 30, 2020, the carrying value of the convertible revolving credit facility was $2.5 million and $3.5 million, respectively. (See Note 2 for further details.)

On February 8, 2021, the Company entered into a stock purchase agreement with the stockholders of JM Bullion, Inc., a Delaware corporation (“JMB”), for the acquisition of the 79.47% interest in JMB that is not currently owned by the Company.  JMB is an e-commerce retailer of gold, silver, copper, platinum and palladium products. The purchase price is approximately $138.3 million, consisting of $103.7 million in cash and $34.6 million in common stock of the Company, valued at $28.96 per share, in each case subject to adjustment.  The share valuation represents the volume weighted average of the trading prices of the Company’s common stock for the 30 consecutive trading days preceding the date of the purchase agreement. The cash portion of the purchase price will be reduced by an amount equal to 20.53% (which is the Company’s percentage ownership interest in JMB) of the amount of a cash redemption to be made by JMB to its stockholders, other than the Company, prior to the acquisition.  In addition, the stock portion of the purchase price will be reduced such that no single stockholder of JMB will own more than 4.8% of the Company’s common stock immediately following the acquisition. If the stock consideration of a selling JMB stockholder is reduced, the cash consideration payable to that JMB stockholder will be increased by an amount equal to 65% of the value of the decrease in stock consideration.  The Company intends to finance the cash portion of the purchase price with cash on hand and through any available means of financing, including a public or private equity or convertible debt offering. The acquisition is subject to various closing conditions. The Company anticipates closing the acquisition in the third quarter of the current fiscal year. 

Investing activities used $47.2 million and used $38.4 million in cash for the six months ended December 31, 2020 and 2019, respectively, representing a $8.8 million decrease in the source of cash compared to the six months ended December 31, 2019.  This period over period decrease was due to the change in the balance of long term investments of $6.8 million, as the Company acquired a 31.2% ownership interest in a supplier and counterparty, secured loans of $6.2 million, as a higher number of loans were acquired in the current period, partially offset by the change in the balance of other long term assets (long term loans to customers) of $4.5 million.