A-Mark Precious Metals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

Related Party Transactions

6 Months Ended

Dec. 31, 2015

RELATED PARTY TRANSACTIONS

Sales and Purchases Made to Affiliated Companies

During the three and six months ended December 31, 2015 and 2014, the Company made sales and purchases to various companies that had been under common control with A-Mark through the date of Distribution, and which have been deemed to be related parties.



in thousands
	Three Months Ended								Six Months Ended
	December 31, 2015				December 31, 2014				December 31, 2015				December 31, 2014
	Sales		Purchases		Sales		Purchases		Sales		Purchases		Sales		Purchases
Related Party Company
Calzona Ventures, LLC	$	—	$	—	$	—	$	—	$	—	$	—	$	157	$	—
Stack's Bowers Numismatics, LLC	8,418		3,564		1,530		3,617		18,900		30,568		2,925		6,538
Related party, total	$	8,418	$	3,564	$	1,530	$	3,617	$	18,900	$	30,568	$	3,082	$	6,538

As of December 31, 2015 and June 30, 2015, the Company's had related party receivables and payables balance as set forth below:



in thousands
	December 31, 2015				June 30, 2015
	Receivables		Payable		Receivables		Payable
Related Party Company
Stack's Bowers Numismatics, LLC	$	927	$	—	$	2	$	10
SGI (Former Parent)	75		510		1,095		—
Related party, total	$	1,002	$	510	$	1,097	$	10

Secured Loans Made to Affiliated Companies

On June 18, 2014, CFC assumed the rights to a secured portfolio of short-term loan receivables totaling $2.6 million from Stack's Bowers Numismatics, LLC (Stack's Bowers), a related party. The Company reflects this transaction as a financing arrangement with the related party, secured by the portfolio of short-term loan receivables collateralized by numismatic and semi numismatic products, and bearing interest at 5.5% per annum. This secured loan was paid off in full, plus accrued interest, on August 19, 2014. As of December 31, 2015, the aggregate carrying value of this loan was $0.0 million.

On October 9, 2014, CFC entered into a loan agreement with Stack’s Bowers providing for a secured line of credit in the maximum principal amount of up to $16.0 million, bearing interest at a competitive rate per annum. Advances under the line of credit were secured by numismatic and semi-numismatic products. This secured loan was paid off in full, plus accrued interest, on April 15, 2015. As of December 31, 2015, the aggregate carrying value of this loan was $0.0 million.

On July 23, 2015, CFC entered into a loan agreement with Stack's Bowers providing a secured line of credit in the maximum principal amount of up to $2.5 million, bearing interest at a competitive rate per annum. The loan is secured by numismatic and semi-numismatic products. As of December 31, 2015, the aggregate carrying value of this loan was $0.9 million.

Interest Income Earned from Affiliated Companies

During the three and six months ended December 31, 2015 and 2014, the Company earned interest income related to loans that we made to Stack's Bowers and financing products sold to Stack's Bower, as set forth below:



in thousands
	Three Months Ended				Six Months Ended
	December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
Related Party Company
Stack's Bowers Numismatics, LLC
Interest income from loan receivables	$	12	$	100	$	32	$	123
Interest income from finance products	160		3		316		7
Total	$	172	$	103	$	348	$	130

Secondment Agreement Fees and Reimbursements

In connection with the Distribution, SGI and the Company entered into a secondment agreement (the "Secondment Agreement"). Under the terms of the Secondment Agreement, A-Mark has agreed to make Gregory N. Roberts, our Chief Executive Officer, and Carol Meltzer, our Executive Vice President, General Counsel and Secretary, available to SGI for the performance of specified management and professional services following the spinoff in exchange for an annual secondment fee of $150,000 and reimbursement of certain bonus payments.

Neither Mr. Roberts nor Ms. Meltzer will devote more than 20% of their professional working time on a monthly basis to SGI and in no event will the performance of services for SGI interfere with the performance of the duties and responsibilities of Mr. Roberts and Ms. Meltzer to A-Mark. In addition, to the services to be provided under the Secondment Agreement, both Mr. Roberts and Ms. Meltzer continue to serve as officers and directors of SGI. The Secondment Agreement will terminate on June 30, 2016 and is subject to earlier termination under certain circumstances. Under the Secondment Agreement, SGI will be obligated to reimburse A-Mark for the portion of the performance bonus payable under Mr. Roberts’ employment agreement with A-Mark attributable to pre-tax profits of SGI.

The Company records the accrual of secondment fees as a reduction to selling, general and administration expense. During the three months ended December 31, 2015 and 2014 the Company recognized approximately $75,000 and $75,000, respectively, of secondment fees. During the six months ended December 31, 2015 and 2014, the Company recognized approximately $75,000 and $75,000, respectively, of secondment fees. As of December 31, 2015 and June 30, 2015 the outstanding balance of secondment fees due from SGI was $75,000 and $0, respectively.

Income Tax Sharing Obligations

The amount payable under the Company's income tax sharing obligation due from SGI totaled $0.5 million, and $0 million as of December 31, 2015 and June 30, 2015, respectively, and is shown on the face of the condensed consolidated balance sheets as income taxes payable to Former Parent. The amount receivable under the Company's income tax sharing obligation due from SGI, totaled $0.0 million, and $1.1 million as of December 31, 2015 and June 30, 2015, respectively, and is shown on the face of the condensed consolidated balance sheets as income taxes receivable from Former Parent (see Note 11.)

Transaction with Affiliate of Board Member

In February 2015, A-M Global Logistics, LLC ("Logistics"), a wholly owned subsidiary of the Company that was formed to operate the Company's logistics fulfillment center in Las Vegas, Nevada, entered into various agreements with W. A. Richardson Builders, LLC ("WAR"), for the buildout of and improvements to the Las Vegas premises. The spouse of the Chairman of the Company's Audit Committee, Ellis Landau, is an owner and a managing member of WAR. The agreements were amended in January 2016. The amounts involved under the WAR contract, as amended, are approximately $1.5 million. WAR is entitled to a fee equal to 5.0% of the contract work.

Royalties to Former Owner

As part of the sales agreement dated July 1, 2005, a former owner of the Company receives a portion of the finance income earned with a specific customer through July 2015. The Company incurred $0 and $47,000 in selling, general and administrative expenses (royalty expense) during the three months ended December 31, 2015 and 2014, respectively. The Company incurred $21,000 and $120,000 in selling, general and administrative expenses (royalty expense) during the six months ended December 31, 2015 and 2014, respectively. The total amount due to the former owner of $275,000 and $254,000 are included in accrued liabilities as of December 31, 2015 and June 30, 2015, respectively.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

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