Description of Business |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Description of Business |
DESCRIPTION OF BUSINESS
A-Mark Precious Metals, Inc. and its subsidiaries (“A-Mark” or the “Company”) is a full-service precious metals trading company. Its products include gold, silver, platinum and palladium for storage and delivery primarily in the form of coins, bars, wafers and grain. The Company's trading-related services include financing, consignment, logistics, hedging and various customized financial programs.
Through its wholly owned subsidiary, Collateral Finance Corporation (“CFC”), a licensed California Finance Lender, the Company offers loans on precious metals, rare coins and other collectibles collateral to coin dealers, collectors and investors. Through its wholly owned subsidiary, A-Mark Trading AG (“AMTAG”), the Company promotes A-Mark bullion products throughout the European continent. 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"), operates the Company's logistics fulfillment center based in Las Vegas, Nevada. Logistics provides our customers an array of complementary services, including: packaging, shipping, handling, receiving, processing, and inventorying of precious metals and custom coins on a secure basis.
The Company’s majority-owned affiliate, AM&ST Associates, LLC, operates the Company's minting operations in Winchester, Indiana (see Silver Towne Mint Transaction below).
Silver Towne Mint Transaction
On August 31, 2016, the Company formed a joint venture AM&ST Associates, LLC (“AMST”) with Silver Towne, L.P. (“Silver Towne”), an Indiana-based producer of minted silver products. The purpose of the joint venture was to acquire the entire minting operations of Silver Towne and continue to manage and grow that business using the expanded resources of the joint venture.
In exchange for their respective membership interests in AMST, (i) Silver Towne contributed a 48.47% interest in the Silver Towne's assets to AMST, valued at $3,453,750, and (ii) A-Mark contributed $3,721,250 in cash to AMST and agreed to contribute an additional $500,000 in cash in August 2017, resulting in Silver Towne and the Company owning 45% and 55% of AMST, respectively. Of the cash contributions made at closing, $3,171,250 was used to purchase the interest in the remaining interest in Silver Towne' contributed assets (see following paragraph), $250,000 was used to purchase the land and building where ASMT's minting operations is located, and $300,000 was provided for working capital.
Simultaneously with the formation of AMST, under the Asset Purchase Agreement dated August 31, 2016, AMST purchased the remaining 51.53% interest in the Silver Towne's assets for an aggregate purchase price of $3,671,250, of which $3,171,250 was paid at closing and the balance of $500,000 was represented by a promissory note, which is due and payable one year following the closing. The real estate was acquired separately from the Asset Purchase agreement. As additional consideration for the acquired assets (the tangible plant assets and identifiable intangible assets), AMST agreed to pay Silver Towne earn-out payments over three years of up to $1.0 million each year based on the achievement of specified performance and production thresholds. The total fair value of Mint's assets contributed (by Silver Towne and A-Mark) and acquired by AMST was $7,675,000 before contingent future earn-out payments. The Company has measured the fair value of the contingent future earn-out payments based on the weighted average probability of anticipated outcomes, and estimates the potential consideration to be $1,523,000 as of September 30, 2016.
At the closing, AMST entered into (a) an exclusive distribution agreement with the Company with respect to the silver products produced by the Mint that sets weekly minimum order quantities by A-Mark (see Note 15), and (b) a supply agreement with Asahi Refining USA, Inc. ("Asahi") to provide all refined silver products needed by the Mint in the conduct of its business (see Note 15), and grant Asahi the option to purchase a 10% membership interest in AMST through 2019.
The purchase price (consisting of: $3,453,750 of assets contributed by Silver Towne, $3,721,250 of cash and agreement to contribute an additional $500,000 in cash on August 31, 2017 by the Company, and $1,523,000 contingent earn-out obligation of AMST) has been allocated to the total assets purchased based on their fair value on the date of acquisition as follows:
The purchase price allocation is subject to completion of the Company's analysis of the fair value of the assets acquired. The final valuation is expected to be completed as soon as practicable, but no later than one year from the closing date of the transaction. The estimates of the fair value of the contingent consideration, and the allocation of the tangible and identifiable intangible assets requires extensive use of accounting estimates and management judgment. These estimates could be material. The fair values assigned to the assets acquired are based on estimates and assumption from data currently available.
Spinoff from Spectrum Group International, Inc.
On March 14, 2014, the Company's former parent, Spectrum Group International, Inc. ("SGI" or the "Former Parent"), effected a spinoff (the "spinoff" or the "Distribution") of the Company from SGI. As a result of the Distribution, the Company became a publicly traded company independent from SGI. On March 17, 2014, A-Mark’s shares of common stock commenced trading on the NASDAQ Global Select Market under the symbol "AMRK."
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