The Marygold panies(MGLD) - 2025 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) The unaudited financial statements show decreased current assets, increased liabilities, and a significantly wider net loss driven by lower revenues and higher interest expenses Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,321 | $5,461 | | Total current assets | $21,922 | $24,253 | | Total assets | $33,469 | $32,899 | | Liabilities & Equity | | | | Total current liabilities | $8,186 | $5,233 | | Total liabilities | $9,193 | $6,285 | | Total stockholders' equity | $24,276 | $26,614 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $7,027 | $7,880 | $22,940 | $24,571 | | Gross Profit | $5,272 | $5,557 | $16,982 | $18,122 | | Loss from Operations | $(1,504) | $(1,471) | $(5,500) | $(3,504) | | Net Loss | $(1,012) | $(529) | $(4,344) | $(2,212) | | Net Loss Per Share (Basic & Diluted) | $(0.02) | $(0.01) | $(0.11) | $(0.05) | Condensed Consolidated Statements of Cash Flows Cash Flow Summary for Nine Months Ended March 31 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,818) | $(1,222) | | Net cash used in investing activities | $(2,765) | $(2,755) | | Net cash provided by (used in) financing activities | $4,553 | $(11) | | Net Decrease in Cash | $(1,140) | $(4,082) | - Financing activities in the nine months ended March 31, 2025, were primarily driven by $3.69 million in net proceeds from a new note payable and $1.85 million from a common stock sale[22] Notes to Condensed Consolidated Financial Statements - The company is a diversified holding company with operations in U.S. Fund Management, Food Products, Security Systems, Beauty Products, and U.S. & U.K. Financial Services[25][28] - In September 2024, the company entered into a secured promissory note agreement for an initial principal amount of $4.38 million with an effective interest rate of 41.3%, secured by company assets[49][51][54] - In January 2025, the company closed a public offering of 2,050,000 shares of common stock at $1.10 per share, raising net proceeds of $1.8 million[56][57] - The company's subsidiary, USCF LLC, is involved in several lawsuits related to the United States Oil Fund, LP (USO), for which no reserve has been made as of March 31, 2025[71][72][83] Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Revenue declines from lower AUM and sales, coupled with higher expenses, widened operating losses, prompting new debt and equity financing to support a strategic pivot Results of Operations Comparison of Three Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $7,027 | $7,880 | -11% | | Gross Profit | $5,272 | $5,557 | -5% | | Loss from Operations | $(1,504) | $(1,471) | 2% | | Net Loss | $(1,012) | $(529) | 91% | Comparison of Nine Months Ended March 31 (in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $22,940 | $24,571 | -7% | | Gross Profit | $16,982 | $18,122 | -6% | | Loss from Operations | $(5,500) | $(3,504) | 57% | | Net Loss | $(4,344) | $(2,212) | 96% | - The decrease in revenue for both periods was primarily driven by a decline in average AUM in the U.S. fund management segment, which fell from $3.0 billion to $2.6 billion for the quarter year-over-year[98][118] Segment Results of Operations - U.S. Fund Management: Operating income for the nine-month period decreased 31% to $2.6 million YoY, due to lower average AUM and increased fund operations expenses[123][126] - Food Products: Revenue decreased 9% for the nine-month period due to a temporary cancellation of certain product categories sold to national grocery chains[127] - Beauty Products: Operating loss for the nine-month period narrowed by 42% to $(0.36) million YoY, despite a 16% revenue decline, due to reduced marketing costs[123][130][131] - Financial Services: The segment's operating loss widened to $4.8 million for the nine-month period, prompting a strategic pause of its U.S. Fintech app to focus on a U.K. launch[112][133][134] Liquidity and Capital Resources - As of March 31, 2025, the company had $4.3 million in cash and cash equivalents and a working capital position of $13.8 million[137][138] - The company has invested a total of $19.1 million in its Fintech app since inception, with $3.8 million spent in the nine months ended March 31, 2025[137] - The company secured financing through a $4.4 million note in September 2024 and a $1.8 million net proceed equity offering in January 2025 to fund operations[138][139][140] - Management believes current cash will be sufficient for the next 12 months but may need additional financing for continued investment in the Fintech app for the U.K. market[142] Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the registrant is not required to provide this information - As a "smaller reporting company", the registrant is not required to provide the information required by this Item[155] Controls and Procedures Disclosure controls and procedures were deemed effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - Management, including the CEO and Chief Accounting Officer, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report[157] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[158] PART II. OTHER INFORMATION Legal Proceedings The company faces ongoing litigation related to its subsidiary, USCF LLC, and the United States Oil Fund, LP (USO) - The company directs readers to Note 10 for details on legal proceedings, which primarily involve litigation against its subsidiary USCF LLC regarding the United States Oil Fund, LP (USO)[71][160] Risk Factors The company highlights a significant risk related to the potential need for additional financing to continue funding its Fintech app development and other operations - The company may need to raise additional capital to continue the development and marketing of its Fintech app, in which it has invested approximately $19 million as of March 31, 2025[162][163] - Failure to raise additional financing could negatively impact the company's business plans and may require suspending the Fintech app's future development[163] - As an alternative, management may seek to license or offer the Fintech app to third-party financial institutions, but there is no assurance of success in monetizing the app through this strategy[164] Unregistered Sales of Equity Securities and Use of Proceeds There were no unregistered sales of equity securities during the period - None[165] Other Information No directors or officers adopted or terminated any Rule 10b5-1 trading plans during the quarter - During the quarter ended March 31, 2025, no directors or officers adopted or terminated any Rule 10b5-1 trading plans or similar arrangements[168] Exhibits This section lists the exhibits filed with the Form 10-Q, including required officer certifications and Inline XBRL documents - The exhibits filed include CEO and PAO certifications pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL data files[169][170]