amrk-10q_20201231.htm

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes. ☑ No. ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes. ☑ No. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes. ☐ No. ☑

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☑ No ☐

As of February 4, 2021, the registrant had 7,195,434 shares of common stock outstanding, par value $0.01 per share.

	December 31, 2020		June 30, 2020
ASSETS
Current assets:
Cash⁽¹⁾	$	14,922	$	52,325
Receivables, net⁽¹⁾		101,864		49,142
Derivative assets⁽¹⁾		57,849		46,325
Secured loans receivable⁽¹⁾		95,817		63,710
Precious metals held under financing arrangements⁽¹⁾		160,255		178,577
Inventories:
Inventories⁽¹⁾		245,151		246,603
Restricted inventories		272,531		74,678
		517,682		321,281
Prepaid expenses and other assets⁽¹⁾		3,131		2,659
Total current assets		951,520		714,019
Operating lease right of use assets		3,642		4,223
Property, plant, and equipment, net		5,913		5,675
Goodwill		8,881		8,881
Intangibles, net		4,657		4,974
Long-term investments		30,013		16,763
Other long-term assets		2,500		3,500
Total assets	$	1,007,126	$	758,035
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Lines of credit	$	175,000	$	135,000
Liabilities on borrowed metals		141,796		168,206
Product financing arrangements		272,531		74,678
Accounts payable and other current liabilities		142,372		140,930
Derivative liabilities⁽¹⁾		50,809		25,414
Accrued liabilities⁽¹⁾		9,431		10,397
Income tax payable		715		2,135
Total current liabilities		792,654		556,760
Notes payable⁽¹⁾		92,874		92,517
Deferred tax liabilities		62		62
Other liabilities		3,108		3,802
Total liabilities		888,698		653,141
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 10,000,000 shares; issued and outstanding: none as of December 31, 2020 and June 30, 2020		—		—
Common stock, par value $0.01; 40,000,000 shares authorized; 7,131,462 and 7,031,500 shares issued and outstanding as of December 31, 2020 and June 30, 2020, respectively		72		71
Additional paid-in capital		29,093		27,289
Retained earnings		84,461		73,644
Total A-Mark Precious Metals, Inc. stockholders’ equity		113,626		101,004
Non-controlling interests		4,802		3,890
Total stockholders’ equity		118,428		104,894
Total liabilities, non-controlling interests and stockholders’ equity	$	1,007,126	$	758,035

In September 2018, AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, completed an issuance of Secured Senior Term Notes, Series 2018-1, Class A in the aggregate principal amount of $72.0 million and Secured Subordinated Term Notes, Series 2018-1, Class B in the aggregate principal amount of $28.0 million (collectively, the "Notes"). The Class A Notes bear interest at a rate of 4.98% and the Class B Notes bear interest at a rate of 5.98%. The Notes have a maturity date of December 15, 2023.

The Company consolidates a variable interest entity ("VIE") if it is considered to be the primary beneficiary. AMCF is a VIE because its equity may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company. The securitization is primarily secured by cash, bullion loans, and precious metals, and the Company is required to continuously hedge the value of certain collateral and make future contributions as necessary. The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., cash, secured loans, or precious metals) placed into the entity, has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income.

The following table presents the assets and liabilities of this VIE, which is included in the condensed consolidated balance sheets above. The holders of the Notes have a first priority security interest in the assets as shown in the table below, which are in excess of the Notes' aggregate principal amount. Additionally, the liabilities of the VIE include intercompany balances, which are eliminated in consolidation. See Note 14 for additional information.

	December 31, 2020		June 30, 2020
ASSETS OF THE CONSOLIDATED VIE
Cash	$	3,529	$	26,697
Receivables, net		446		3,005
Secured loans receivable		69,937		34,739
Precious metals held under financing arrangements		27,889		20,968
Inventories		7,907		24,057
Prepaid expenses and other assets		42		16
Total assets of the consolidated variable interest entity	$	109,750	$	109,482
LIABILITIES OF THE CONSOLIDATED VIE
Deferred payment obligations⁽¹⁾	$	15,010	$	13,275
Derivative liabilities		87		541
Accrued liabilities		728		387
Notes payable⁽²⁾		97,875		97,517
Total liabilities of the consolidated variable interest entity	$	113,700	$	111,720

	Three Months Ended						Six Months Ended
	December 31, 2020			December 31, 2019			December 31, 2020			December 31, 2019
Revenues	$	1,518,744		$	1,055,590			3,384,860		$	2,536,604
Cost of sales		1,499,993			1,047,459			3,329,964			2,520,133
Gross profit		18,751			8,131			54,896			16,471
Selling, general, and administrative expenses		(9,033	)		(7,870	)		(19,039	)		(16,140	)
Interest income		4,533			6,232			8,516			12,000
Interest expense		(5,037	)		(5,081	)		(9,330	)		(10,223	)
Other income (expense), net		2,567			150			7,052			(16	)
Unrealized gains (losses) on foreign exchange		19			125			(78	)		3
Net income before provision for income taxes		11,800			1,687			42,017			2,095
Income tax expense		(2,586	)		(432	)		(9,097	)		(537	)
Net income		9,214			1,255			32,920			1,558
Net income attributable to non-controlling interests		289			21			912			196
Net income attributable to the Company	$	8,925		$	1,234		$	32,008		$	1,362
Basic and diluted net income per share attributable to A-Mark Precious Metals, Inc.:
Basic	$	1.26		$	0.17		$	4.53		$	0.19
Diluted	$	1.16		$	0.17		$	4.21		$	0.19

Weighted average shares outstanding:
Basic		7,063,000			7,031,400			7,064,800			7,031,400
Diluted		7,713,300			7,056,300			7,610,400			7,074,800

	Common Stock (Shares)		Common Stock		Additional Paid-in Capital		Retained Earnings		Total A-Mark Precious Metals, Inc. Stockholders' Equity		Non- Controlling Interests		Total Stockholders’ Equity
Balance, June 30, 2019		7,031,450		71		26,452		43,135		69,658		2,908		72,566
Net income		—		—		—		128		128		175		303
Share-based compensation		—		—		166		—		166		—		166
Balance, September 30, 2019		7,031,450		71		26,618		43,263		69,952		3,083		73,035
Net income		—		—		-		1,234		1,234		21		1,255
Share-based compensation		—		—		244		—		244		—		244
Balance, December 31, 2019		7,031,450		71		26,862		44,497		71,430		3,104		74,534

	Common Stock (Shares)		Common Stock		Additional Paid-in Capital		Retained Earnings			Total A-Mark Precious Metals, Inc. Stockholders' Equity			Non- Controlling Interests		Total Stockholders’ Equity
Balance, June 30, 2020		7,031,500		71		27,289		73,644			101,004			3,890		104,894
Net income		—		—		—		23,083			23,083			623		23,706
Share-based compensation		—		—		178		—			178			—		178
Net settlement on issuance of common shares on exercise of options		35,030		—		416		—			416			—		416
Dividends declared ($1.50 per common share)		—		—		—		(10,553	)		(10,553	)		—		(10,553	)
Balance, September 30, 2020		7,066,530		71		27,883		86,174			114,128			4,513		118,641
Net income		—		—		—		8,925			8,925			289		9,214
Share-based compensation		—		—		210		—			210			—		210
Net settlement on issuance of common shares on exercise of options		64,932		1		1,000		—			1,001			—		1,001
Dividends declared ($1.50 per common share)		—		—		—		(10,638	)		(10,638	)		—		(10,638	)
Balance, December 31, 2020		7,131,462		72		29,093		84,461			113,626			4,802		118,428

Six Months Ended December 31,	2020			2019
Cash flows from operating activities:
Net income	$	32,920		$	1,558
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		1,006			1,334
Amortization of loan cost		968			730
Deferred income taxes		—			474
Interest added to principal of secured loans		(4	)		(10	)
Share-based compensation		388			410
Earnings from equity method investments		(6,488	)		(114	)
Changes in assets and liabilities:
Receivables		(52,722	)		2,297
Secured loans receivable		(309	)		2,131
Secured loans made to affiliates		8,662			5,108
Derivative assets		(11,524	)		(2,931	)
Income tax receivable		—			7
Precious metals held under financing arrangements		18,322			11,820
Inventories		(196,401	)		29,930
Prepaid expenses and other assets		(532	)		359
Accounts payable and other current liabilities		1,442			174
Derivative liabilities		25,395			(923	)
Liabilities on borrowed metals		(26,410	)		(8,255	)
Accrued liabilities		(1,068	)		(743	)
Income tax payable		(1,420	)		—
Net cash (used in) provided by operating activities		(207,775	)		43,356
Cash flows from investing activities:
Capital expenditures for property, plant, and equipment		(937	)		(455	)
Purchase of long-term investments		(6,763	)		—
Purchase of intangible assets		—			(150	)
Secured loans receivable, net		(40,456	)		(34,274	)
Other secured loans, net		1,000			(3,500	)
Net cash used in investing activities		(47,156	)		(38,379	)
Cash flows from financing activities:
Product financing arrangements, net		197,853			(14,739	)
Dividends paid		(21,191	)		—
Borrowings and repayments under lines of credit, net		40,000			13,000
Debt funding issuance costs		(551	)		—
Net settlement on issuance of common shares on exercise of options		1,417			—
Net cash provided by (used in) financing activities		217,528			(1,739	)
Net (decrease) increase in cash, cash equivalents, and restricted cash		(37,403	)		3,238
Cash, cash equivalents, and restricted cash, beginning of period		52,325			8,320
Cash, cash equivalents, and restricted cash, end of period	$	14,922		$	11,558
Supplemental disclosures of cash flow information:
Interest paid	$	7,721		$	10,026
Income taxes paid	$	11,561		$	50
Income taxes refunded	$	(1,044	)	$	—
Non-cash investing and financing activities:
Interest added to principal of secured loans	$	4		$	10

The condensed consolidated financial statements comprise those of A-Mark Precious Metals, Inc. ("A-Mark" or the "Company"), its wholly owned consolidated subsidiaries, and its joint ventures in which the Company has a controlling interest.

The Company conducts its operations in three reportable segments: (i) Wholesale Sales & Ancillary Services (formerly known as Wholesale Trading & Ancillary Services segment), (ii) Secured Lending, and (iii) Direct Sales. Each of these reportable segments represents an aggregation of operating segments that meets the aggregation criteria set forth in the Segment Reporting Topic 280 of the Financial Accounting Standards Board’s ("FASB") Accounting Standards Codification (“ASC”). (See Note 18.)

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

The Wholesale Sales & Ancillary Services segment operates as a full-service precious metals company. The products sold within this segment include: gold, silver, platinum, and palladium primarily in the form of coins, rounds, bars, wafers, and grain. This segment's trading-related services include: consignment, storage, logistics, hedging, and various customized financial programs.

Through its wholly owned subsidiary, A-Mark Trading AG (“AMTAG”), the Company promotes A-Mark's goods and services to the international market. Transcontinental Depository Services (“TDS”), also a wholly owned subsidiary of the Company, offers worldwide storage solutions to institutions, dealers, and consumers.

The Company's wholly-owned subsidiary, A-M Global Logistics, LLC. ("Logistics" or “AMGL”), operates the Company's logistics fulfillment center. Logistics provides customers an array of complementary services, including packaging, shipping, handling, receiving, processing, and inventorying of precious metals and custom coins on a secure basis.

Through our partially-owned subsidiary, AM&ST Associates, LLC. ("AMST" or "SilverTowne" or the "Mint"), the Company designs and produces minted silver products. The Company operates the Mint pursuant to a joint venture agreement with SilverTowne, L.P. The Company and SilverTowne L.P. own 69% and 31%, respectively, of AMST.

The Company operates its Secured Lending segment through its wholly-owned subsidiary, Collateral Finance Corporation LLC. ("CFC".) CFC is a California licensed finance lender that originates and acquires commercial loans secured by bullion and numismatic coins. CFC's customers include coin and precious metal dealers, investors, and collectors.

AM Capital Funding, LLC. (“AMCF”), a wholly owned subsidiary of CFC, was formed for the purpose of securitizing eligible secured loans of CFC. AMCF issued and administers the Notes. For additional information, see Note 14.

The Company's wholly-owned subsidiary, Goldline, Inc. ("Goldline"), is a direct retailer of precious metals to the investor community. Goldline markets its precious metal products primarily on radio, television, and the internet. Goldline sells gold and silver bullion in the form of coins, rounds, and bars.

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

Precious Metals Purchasing Partners, LLC, ("PMPP"), is a 50% owned subsidiary of Goldline. PPMP acquires precious metals from retail customers and resells the metals to partners or affiliates of the joint venture.

The condensed consolidated financial statements reflect the financial condition, results of operations, statement of stockholders’ equity, and cash flows of the Company, and were prepared using accounting principles generally accepted in the United States (“U.S. GAAP”). The Company consolidates its subsidiaries that are wholly owned, majority owned, and entities that are variable interest entities where the Company is determined to be the primary beneficiary. Our condensed consolidated financial statements include the accounts of A-Mark, AMTAG, TDS, AMGL, AMST, CFC, AMCF, Goldline, AMIP, and PMPP (collectively the “Company”). Intercompany accounts and transactions are eliminated.

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

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting periods. These estimates include, among others, determination of fair value, allowances for doubtful accounts, impairment assessments of property, plant and equipment and intangible assets, valuation allowance determination on deferred tax assets, determining the incremental borrowing rate for calculating right of use assets and lease liabilities, and revenue recognition judgments. Significant estimates also include the Company's fair value determination with respect to its financial instruments and precious metals inventory. Actual results could materially differ from these estimates.

The accompanying interim condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments and accruals) necessary to present fairly the condensed consolidated balance sheets, condensed consolidated statements of income, condensed consolidated statements of stockholders’ equity, and condensed consolidated statements of cash flows for the periods presented in accordance with U.S. GAAP. Operating results for the six months ended December 31, 2020 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2021 or for any other interim period during such fiscal year. Certain information and footnote disclosures normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP have been omitted in accordance with the rules and regulations of the SEC. These interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K for the fiscal year ended 2020 (the “2020 Annual Report”), as filed with the SEC. Amounts related to disclosure of June 30, 2020 balances within these interim condensed consolidated financial statements were derived from the aforementioned audited consolidated financial statements and notes thereto included in the 2020 Annual Report.

The Fair Value Measurements and Disclosures Topic 820 of the ASC ("ASC 820"), creates a single definition of fair value for financial reporting. The rules associated with ASC 820 state that valuation techniques consistent with the market approach, income approach, and/or cost approach should be used to estimate fair value. Selection of a valuation technique, or multiple valuation techniques, depends on the nature of the asset or liability being valued, as well as the availability of data. (See Note 3.)

Cash is maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has not experienced any losses related to these balances.

Assets that potentially subject the Company to concentrations of credit risk consist principally of receivables, loans of inventory to customers, and inventory hedging transactions. Concentration of credit risk with respect to receivables is limited due to the large number of customers composing the Company's customer base, the geographic dispersion of the customers, and the collateralization of substantially all receivable balances. Based on an assessment of credit risk, the Company typically grants collateralized credit to its customers. Credit risk with respect to loans of inventory to customers is minimal. The Company enters into inventory hedging

transactions, principally utilizing metals commodity futures contracts traded on national futures exchanges or forward contracts with credit worthy financial institutions. All of our commodity derivative contracts are under master netting arrangements and include both asset and liability positions. Substantially all of these transactions are secured by the underlying metals positions.

The functional currency of the Company is the United States dollar ("USD"). Also, the functional currency of the Company's wholly-owned foreign subsidiary, AMTAG, is USD, but it maintains its books of record in the European Union Euro. The Company remeasures the financial statements of AMTAG into USD. The remeasurement of local currency amounts into USD creates remeasurement gains and losses, which are included in the condensed consolidated statements of income.

To manage the effect of foreign currency exchange fluctuations, the Company utilizes foreign currency forward contracts. These derivatives generate gains and losses when settled and/or marked-to-market.

A variable interest entity ("VIE") is a legal entity that has either i) a total equity investment that is insufficient to finance its activities without additional subordinated financial support or ii) whose equity investors as a group lack the ability to control the entity’s activities or lack the ability to receive expected benefits or absorb obligations in a manner that is consistent with their investment in the entity.

A VIE is consolidated for accounting purposes by its primary beneficiary, which is the party that has both the power to direct the activities that most significantly impact the VIEs economic performance, and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. The Company consolidates VIEs when it is deemed to be the primary beneficiary. Management regularly reviews and reconsiders its previous conclusions regarding whether it holds a variable interest in potential VIEs, the status of an entity as a VIE, and whether the Company is required to consolidate such VIEs in the consolidated financial statements.

AMCF, a wholly owned subsidiary of CFC, is a special purpose entity ("SPE") formed as part of a securitization transaction in order to isolate certain assets and distribute the cash flows from those assets to investors. AMCF was structured to insulate investors from claims on AMCF’s assets by creditors of other entities. The Company has various forms of ongoing involvement with AMCF, which may include (i) holding senior or subordinated interests in AMCF; (ii) acting as loan servicer for a portfolio of loans held by AMCF; and (iii) providing administrative services to AMCF. AMCF is required to maintain separate books and records. The assets and liabilities of this VIE, as of December 31, 2020 and June 30, 2020, are indicated on the table that follows the condensed consolidated balance sheets.

AMCF is a VIE because its initial equity investment may be insufficient to maintain its ongoing collateral requirements without additional financial support from the Company. The securitization is primarily secured by bullion loans and precious metals, and the Company is required to continuously hedge the value of certain collateral and make future contributions as necessary. The Company is the primary beneficiary of this VIE because the Company has the right to determine the type of collateral (i.e., cash, secured loans, or precious metals), has the right to receive (and has received) the proceeds from the securitization transaction, earns on-going interest income from the secured loans (subject to collateral requirements), and has the obligation to absorb losses should AMCF's interest expense and other costs exceed its interest income. (See Note 14.)

The Company considers all highly liquid investments with original maturities of three months or less, when purchased, to be cash equivalents. The Company does not have any cash equivalents as of December 31, 2020 and June 30, 2020.

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

The Company enters into arrangements with certain customers under which A-Mark purchases precious metals from the customers which are subject to repurchase by the customer at the spot value of the product on the repurchase date. The precious metals purchased under these arrangements consist of rare and unique items, and therefore the Company accounts for these transactions as precious metals held under financing arrangements, which generate financing income rather than revenue from precious metals inventory sales. In these repurchase arrangements, the Company holds legal title to the metals and earns financing income for the duration of the agreement.

These arrangements are typically terminable by either party upon 14 days' notice. Upon termination, the customer’s right to repurchase any remaining precious metal is forfeited, and the related precious metals are reclassified as inventory held for sale. As of December 31, 2020 and June 30, 2020, precious metals held under financing arrangements totaled $160.3 million and $178.6 million respectively.

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

The Company's inventory primarily includes bullion and bullion coins, which is acquired and initially recorded at cost and then marked to fair market value. The fair market value of the bullion and bullion coins comprises two components: (i) published market values attributable to the costs of the raw precious metal, and (ii) a published premium paid at acquisition of the metal. The premium is attributable to the additional value of the product in its finished goods form, and the market value attributable solely to the premium may be readily determined, as it is published by multiple reputable sources.

The Company’s inventory, except for certain lower of cost or net realizable value basis products (as discussed below), are subsequently recorded at their fair market values, that is, "marked-to-market." The daily changes in the fair market value of our inventory are offset by daily changes in the fair market value of hedging derivatives that are taken with respect to our inventory positions; both the change in the fair market value of the inventory and the change in the fair market value of these derivative instruments are recorded in cost of sales in the condensed consolidated statements of income.

While the premium component included in inventory is marked-to-market, our commemorative coin inventory, including its premium component, is held at the lower of cost or net realizable value, because the value of commemorative coins is influenced more by supply and demand determinants than on the underlying spot price of the precious metal content of the commemorative coins. Unlike our bullion coins, the value of commemorative coins is not subject to the same level of volatility as bullion coins because our commemorative coins typically carry a substantially higher premium over the spot metal price than bullion coins. Neither the commemorative coin inventory nor the premium component of our inventory is hedged. (See Note 6.)

We lease warehouse space, office facilities, and equipment. Our operating leases with terms longer than twelve months are recorded at the sum of the present value of the lease's fixed minimum payments as operating lease right of use assets ("ROU assets") in the condensed consolidated balance sheets. Our finance leases (previously considered by the Company as capital leases prior to our adoption of ASC 842) are another type of ROU asset, but are classified in the condensed consolidated balance sheets as a component of property, plant, and equipment at the present value of the lease payments.

For leases that contain termination options, where the rights to terminate are held by either us, the lessor, or both parties and it is reasonably certain that we will exercise that option, we factor these extended or shortened lease terms into the minimum lease payments. The ROU assets also include any initial direct costs incurred and lease payments made at or before the commencement date and are reduced by lease incentives. We use our incremental borrowing rate as the discount rate to determine the present value of the lease payments for leases, as our leases do not have readily determinable implicit discount rates. Our incremental borrowing rate is the rate of interest that we would incur to borrow on a collateralized basis over a similar term and amount in a similar economic environment.

Operating lease cost is recognized on a straight-line basis over the lease term. Finance lease cost is recognized as a combination of the amortization expense for the ROU assets and interest expense for the outstanding lease liabilities using the discount rate discussed above. The depreciable life of ROU assets is limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Our lease agreements do not contain any significant residual value guarantees or material restrictive covenants. Components of operating lease expense for the three and six months ended December 31, 2020 and 2019 were as follows:

in thousands
	Three Months Ended					Six Months Ended
	December 31, 2020		December 31, 2019			December 31, 2020		December 31, 2019
Operating lease costs	$	350	$	350		$	699	$	699
Short term and variable lease costs		91		99			224		192
Finance lease costs		5		5			11		11
Sublease income		—		(27	)		—		(54	)
Total lease costs, net	$	446	$	427		$	934	$	848

For the six months ended December 31, 2020 and 2019, we made cash payments for operating lease obligations of $0.8 million and $0.7 million, respectively. These payments are included in operating cash flows. At December 31, 2020, the weighted-average remaining lease term under our capitalized operating leases was 4.2 years, while the weighted-average discount rate for our operating leases was approximately 4.9%.

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AMRK	NASDAQ Global Select Market

			Page
PART I
	Item 1.	Condensed Consolidated Financial Statements	2
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	43
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	76
	Item 4.	Controls and Procedures	76

PART II
	Item 1.	Legal Proceedings	77
	Item 1A.	Risk Factors	77
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	87
	Item 3.	Defaults upon Senior Securities	88
	Item 4.	Mine Safety Disclosures	88
	Item 5.	Other Information	88
	Item 6.	Exhibits	88
Signatures			89

Index to the Condensed Consolidated Financial Statements and Notes thereof
	Page
Condensed Consolidated Balance Sheets as of December 31, 2020 and June 30, 2020	3
Condensed Consolidated Statements of Income for the Three and Six Months Ended December 31, 2020 and 2019	5
Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended December 31, 2020 and 2019	6
Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2020 and 2019	7
Notes to Consolidated Financial Statements	8
Note 1. Description of Business	8
Note 2. Summary of Significant Accounting Policies	9
Note 3. Assets and Liabilities, at Fair Value	18
Note 4. Receivables	21
Note 5. Secured Loans Receivable	21
Note 6. Inventories	23
Note 7. Property, Plant, and Equipment	25
Note 8. Goodwill and Intangible Assets	25
Note 9. Long-Term Investments	26
Note 10. Accounts Payable and Other Current Liabilities	27
Note 11. Derivative Instruments and Hedging Transactions	27
Note 12. Income Taxes	30
Note 13. Related Party Transactions	31
Note 14. Financing Agreements	33
Note 15. Commitments and Contingencies	35
Note 16. Stockholders' Equity	35
Note 17. Customer and Supplier Concentrations	37
Note 18. Segments and Geographic Information	38
Note 19. Subsequent Events	42

Years ending June 30,	Operating Leases
2021 (6 months remaining)		767
2022		1,313
2023		834
2024		860
2025		816
Thereafter		370
Total lease payments		4,960

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☑	Smaller reporting company	☑
		Emerging growth company	☐