The Marygold panies(MGLD) - 2025 Q2 - Quarterly Report

PART I Item 1. Financial Statements (Unaudited) Unaudited Q4 2024 financials show a widening net loss from decreased revenue and higher expenses, increasing liabilities and reducing equity Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | June 30, 2024 | | :--- | :--- | :--- | | Total Current Assets | $22,597 | $24,253 | | Total Assets | $32,998 | $32,899 | | Total Current Liabilities | $8,161 | $5,233 | | Total Liabilities | $9,645 | $6,285 | | Total Stockholders' Equity | $23,353 | $26,614 | - The significant increase in current liabilities is primarily due to a rise in the current portion of notes payable from $315 thousand to $3.5 million[15] - Stockholders' equity decreased by approximately $3.3 million, largely attributable to a decline in retained earnings from $14.0 million to $10.7 million[16] Condensed Consolidated Statements of Operations Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $8,004 | $8,457 | $15,913 | $16,692 | | Gross Profit | $5,928 | $6,366 | $11,710 | $12,564 | | Loss from Operations | $(1,826) | $(997) | $(3,996) | $(2,034) | | Net Loss | $(1,747) | $(1,183) | $(3,332) | $(1,684) | | Net Loss Per Share | $(0.04) | $(0.03) | $(0.08) | $(0.04) | - Revenue for the three and six-month periods decreased by 5% year-over-year, primarily driven by lower performance in the Fund Management and Food Products segments[18] - The net loss for the six months ended December 31, 2024, nearly doubled to $3.3 million from $1.7 million in the prior-year period, reflecting lower revenues and higher operating expenses[18] Condensed Consolidated Statements of Comprehensive Loss Comprehensive Loss (in thousands) | Metric | Three Months Ended Dec 31, 2024 | Three Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(1,747) | $(1,183) | $(3,332) | $(1,684) | | Foreign Currency Translation (Loss) Gain | $(342) | $225 | $(299) | $133 | | Comprehensive Loss | $(2,089) | $(958) | $(3,631) | $(1,551) | Condensed Consolidated Statements of Stockholders' Equity - Total stockholders' equity decreased from $26.6 million on July 1, 2024, to $23.4 million on December 31, 2024. The primary drivers were a net loss of $3.3 million and a foreign currency translation loss of $0.3 million, partially offset by $0.6 million in stock-based compensation[21] Condensed Consolidated Statements of Cash Flows Cash Flow Summary (in thousands) | Cash Flow Activity | Six Months Ended Dec 31, 2024 | Six Months Ended Dec 31, 2023 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(1,663) | $(564) | | Net Cash Used in Investing Activities | $(1,141) | $(1,400) | | Net Cash Provided by (Used in) Financing Activities | $3,118 | $(15) | | Net Increase (Decrease) in Cash | $215 | $(1,938) | - The company generated $3.1 million from financing activities, primarily from $3.7 million in net proceeds from a new note payable, which offset cash used in operations and investing[23] Notes to Condensed Consolidated Financial Statements - The company operates as a diversified holding company with segments in U.S. Fund Management, Food Products, Security Systems, Beauty Products, and U.S. & U.K. Financial Services[26][29] - In September 2024, the company entered into a note purchase agreement for an initial principal amount of $4.38 million, secured by company assets and stock in its subsidiary USCF Investments, Inc[51][53] - Subsidiary USCF LLC is involved in several legal proceedings, including a class action lawsuit related to the United States Oil Fund, LP (USO). The company is contesting the claims and has not accrued a reserve for these matters[67][79] - Subsequent to the quarter end, in January 2025, the company closed a public offering of 2,050,000 shares of common stock at $1.10 per share, with estimated net proceeds of approximately $1.85 million[89][90] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes revenue decline and widened net loss to lower AUM and increased expenses, with liquidity bolstered by recent financing, though additional funding is anticipated Results of Operations Three Months Ended Dec 31, 2024 vs 2023 (in thousands) | Metric | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $8,004 | $8,457 | -5% | | Gross Profit | $5,928 | $6,366 | -7% | | Loss from Operations | $(1,826) | $(997) | 83% | | Net Loss | $(1,747) | $(1,183) | 48% | - The decrease in fund management revenue was driven by a decline in average AUM from $3.5 billion in Q2 2023 to $3.1 billion in Q2 2024, attributed to commodity price fluctuations and economic uncertainty[102][110] - The Financial Services segment's operating loss increased by 15% to $1.7 million for the quarter, primarily due to continued investment in the development of the Fintech app[104][120] Liquidity and Capital Resources - As of December 31, 2024, the company had $5.7 million in cash and cash equivalents and a working capital position of $14.4 million[145] - In September 2024, the company secured a note financing with an initial principal amount of $4.38 million to bolster liquidity[145][151] - In January 2025, the company raised approximately $1.85 million in net proceeds from a public equity offering, intended for debt reduction, financial services investments, and working capital[146][147] - The company has invested a total of $18 million in its Fintech app since inception and expects to require additional financing to fund its continued development over the coming 12 months[145][148] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide information for this item as it qualifies as a "smaller reporting company" - As a "smaller reporting company," the registrant is exempt from the disclosure requirements of this item[163] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of December 31, 2024, with no material changes in internal control over financial reporting - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[165] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[166] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company refers to Note 10 for details on ongoing litigation, primarily class action lawsuits against its subsidiary USCF LLC and USO - This section directs readers to Note 10 for details on legal proceedings, which primarily concern litigation against the company's subsidiary, USCF LLC, related to the United States Oil Fund (USO)[168][66][67] Item 1A. Risk Factors The company highlights significant risks from recent debt financing, including repayment challenges and default, and from its substantial Fintech app investment requiring uncertain additional funding - The company's recent debt financing has increased its obligations and includes restrictive covenants. Failure to repay could lead to default, acceleration of debt, and foreclosure on pledged assets, including shares in its subsidiary USCF Investments[170][171] - The company has invested approximately $18 million in its Fintech app as of December 31, 2024, and may need to raise additional capital to continue its development. There is no assurance such financing will be available[173] - If additional financing is unavailable, the company may have to curtail or suspend the development of its Fintech app or attempt to license the technology to third parties[173][175] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities during the period - None[177] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None[178] Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable[179] Item 5. Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans or arrangements during the quarter - No directors or executive officers adopted or terminated any Rule 10b5-1 trading plans during the quarter[180] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - The report includes certifications from the Principal Executive Officer and Principal Accounting Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[183] - Interactive Data Files (Inline XBRL documents) are also filed as exhibits[182]