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, 2017

RELATED PARTY TRANSACTIONS

Sales and Purchases Made to Affiliated Companies

During the three and six months ended December 31, 2017 and 2016, the Company made sales and purchases to various companies, which have been deemed to be related parties, as follows:



in thousands
	Three Months Ended								Six Months Ended
	December 31, 2017				December 31, 2016				December 31, 2017				December 31, 2016
	Sales		Purchases		Sales		Purchases		Sales		Purchases		Sales		Purchases
Former Parent	$	8,065	$	1,152	$	14,999	$	12,137	$	12,497	$	3,541	$	21,667	$	23,336
Equity method investee	112,316		670		137,460		408		194,287		1,028		266,536		497
SilverTowne	4,133		6,280		12,030		130		7,283		6,379		18,819		2,742
	$	124,514	$	8,102	$	164,489	$	12,675	$	214,067	$	10,948	$	307,022	$	26,575

Balances with Affiliated Companies or Persons

As of December 31, 2017 and June 30, 2017, the Company had related party receivables and payables balances as set forth below:



in thousands
	December 31, 2017						June 30, 2017
	Receivables			Payables			Receivables		Payables
Former Parent	$	1,424	⁽¹⁾	$	—		$	—	$	27
Equity method investee	1,835		⁽²⁾	—			—		558
SilverTowne	—			363		⁽³⁾	—		1,768
Goldline Lenders	—			8,015		⁽⁴⁾	—		—
	$	3,259		$	8,378		—		$	2,353

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(1) Balance includes a secured line of credit with a balance of $1.5 million.
(2) Balance represents mostly open trade receivables.
(3) Balance includes: (a) a trade receivables of $0.2 million (shown as a component of receivables), and (b) a contingent earn-out liability of $0.6 million (shown as a component of other long-term liabilities).
(4) Balance includes: the face value the Goldline Credit Facility ($7.5 million), and the associated estimated debt funding fees payable ($0.5 million). The Goldline Credit facility and the debt funding fee is payable in August 2020.

Secured Loans Made to an Affiliated Company

On September 29, 2017, CFC entered into a loan agreement with Former Parent providing a secured line of credit, bearing interest at a competitive rate per annum. The loan is secured by numismatic and semi-numismatic products. As of December 31, 2017 and June 30, 2017, the aggregate carrying value of this loan was $1.5 million and $0.0 million, respectively, and is shown on the condensed consolidated balance sheets as a component of secured loans receivable (see Note 5).

Note payable to SilverTowne

On August 31, 2016, the Company signed a $500,000 promissory note with SilverTowne that was payable in one year related to our acquisition of AMST. This note was paid in full in August 2017.

Long Term Debt Obligations with Goldline Lenders

As of December 31, 2017, the carrying value of the long term debt obligation payable to Goldline Lenders totaled $6,873,000, and is shown in the condensed consolidated balance sheets as debt obligations (related party). The face value of this debt obligation is $7,500,000 and the related unamortized loan funding fee, a contra-liability, totaled $627,000 as of December 31, 2017 (see Note 14). The estimated loan funding fee payable to Goldline Lenders as of December 31, 2017 totaled $515,000 and is shown on the condensed consolidated balance sheets as component of other long-term liabilities.

Activity with Affiliated Companies or Persons

Interest Income Earned from Affiliated Companies

During the three and six months ended December 31, 2017 and 2016, the Company earned interest income related to loans made to Former Parent and related to financing products sold to affiliated companies, as set forth below:



in thousands
	Three Months Ended				Six Months Ended
	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Interest income from secured loan receivables	$	51	$	22	$	53	$	32
Interest income from finance products	576		687		1,120		1,355
	$	627	$	709	$	1,173	$	1,387

Interest Expense Incurred Related to Notes Payable and Long-Term Debt Obligation

During the three and six months ended December 31, 2017 and 2016, the Company incurred interest related to notes payable due to SilverTowne and a long-term debt payable to the Goldline Lenders, as set forth below:



in thousands
	Three Months Ended				Six Months Ended
Three Months Ended December 31,	December 31, 2017		December 31, 2016		December 31, 2017		December 31, 2016
Interest expense incurred related to notes payable	$	1	$	—	$	1	$	—
Interest expense incurred related to long-term debt obligation	201		—		279		—
	$	202	$	—	$	280	$	—

Other Income Earned from Equity Method Investee

During the three months ended December 31, 2017 and 2016, the Company recorded its proportional share of its equity method investee's net income (loss) as other income (expense) that total $122,000 and $93,000, respectively. During the six months ended December 31, 2017 and 2016, the Company recorded its proportional share of its equity method investee's net income (loss) as other income (expense) that total $179,000 and $79,000, respectively. As of December 31, 2017 and June 30, 2017, the carrying balance of the equity method investment was $7.6 million and $7.5 million, respectively.