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

9 Months Ended

Mar. 31, 2016

RELATED PARTY TRANSACTIONS

Sales and Purchases Made to Affiliated Companies

During the three and nine months ended March 31, 2016 and 2015, the Company made sales and purchases to various companies, which have been deemed to be related parties; one of these companies is an equity method investee of the Company and the others have been deemed to be under common control with A-Mark.



in thousands
	Three Months Ended								Nine Months Ended
	March 31, 2016				March 31, 2015				March 31, 2016				March 31, 2015
	Sales		Purchases		Sales		Purchases		Sales		Purchases		Sales		Purchases
Calzona Ventures, LLC	$	—	$	—	$	—	$	—	$	—	$	—	$	157	$	—
Stack's Bowers Numismatics, LLC	6,695		1,242		2,365		1,740		25,595		31,810		5,290		8,278
Equity method investee	154,848		1,170		99,006		77		558,804		5,595		281,653		117
	$	161,543	$	2,412	$	101,371	$	1,817	$	584,399	$	37,405	$	287,100	$	8,395

As of March 31, 2016 and June 30, 2015, the Company had related party receivables (including secured loans and income taxes receivable from Former Parent) and payables (including income taxes payable to Former Parent) balances as set forth below:



in thousands
	March 31, 2016				June 30, 2015
	Receivables		Payable		Receivables		Payable
Stack's Bowers Numismatics, LLC	$	1,360	$	40	$	2	$	10
Equity method investee	777		—		279		—
SGI (Former Parent)	38		760		1,095		—
	$	2,175	$	800	$	1,376	$	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 March 31, 2016, 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 March 31, 2016, 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 March 31, 2016, the aggregate carrying value of this loan was $1.4 million.

Interest Income Earned from Affiliated Companies

During the three and nine months ended March 31, 2016 and 2015, the Company earned interest income related to loans made to Stack's Bowers and related to financing products sold to Stack's Bower and to the equity method investee, as set forth below:



in thousands
	Three Months Ended				Nine Months Ended
	March 31, 2016		March 31, 2015		March 31, 2016		March 31, 2015
Interest income from loan receivables	$	16	$	99	$	48	$	222
Interest income from finance products	577		299		1,725		637
	$	593	$	398	$	1,773	$	859

Other Income Earned from Equity Method Investee

During the three and nine months ended March 31, 2016, the Company recorded its proportional share of its equity method investee's net income as other income that total $107,000 and $613,000, respectively. No amounts were recorded during the three and nine months ended March 31, 2015. As of March 31, 2016 and June 30, 2015 the carrying balance of the equity method investment was $7.3 million and $2.0 million, respectively.

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 March 31, 2016 and 2015 the Company recognized approximately $38,000 and $0, respectively, of secondment fees. During the nine months ended March 31, 2016 and 2015, the Company recognized approximately $113,000 and $75,000, respectively, of secondment fees. As of March 31, 2016 and June 30, 2015 the outstanding balance of secondment fees due from SGI was $38,000 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 March 31, 2016 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 March 31, 2016 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 12.)

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 $62,000 in selling, general and administrative expenses (royalty expense) during the three months ended March 31, 2016 and 2015, respectively. The Company incurred $21,000 and $194,000 in selling, general and administrative expenses (royalty expense) during the nine months ended March 31, 2016 and 2015, respectively. The total amount due to the former owner of $0 and $254,000 are included in accrued liabilities as of March 31, 2016 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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