The Marygold panies(MGLD) - 2025 Q4 - Annual Report

FORM 10-K Filing Information Registrant Information This section provides basic information about the registrant, The Marygold Companies, Inc., including its state of incorporation, principal executive offices, telephone number, and common stock listing on NYSE American LLC - Registrant name: The Marygold Companies, Inc., a Nevada corporation[1][2] - Principal executive offices: 120 Calle Iglesia, Unit B, San Clemente, CA 92672[2] Securities Class and Trading Symbol | Securities Class | Trading Symbol | Registered Exchange | | :--- | :--- | :--- | | Common Stock, $0.001 par value per share | MGLD | NYSE American LLC | Filing Status and Market Value The company is designated as a non-accelerated filer and a smaller reporting company, disclosing the aggregate market value of common stock held by non-affiliates and outstanding shares as of June 30, 2025 Filer Type and Status | Filer Type | Status | | :--- | :--- | | Large Accelerated Filer | ☐ | | Accelerated Filer | ☐ | | Non-Accelerated Filer | ☒ | | Smaller Reporting Company | ☒ | - As of December 31, 2024, the aggregate market value of voting and non-voting common stock held by non-affiliates was approximately $18.6 million[5] - As of June 30, 2025, there were 42,817,687 shares of common stock and 13,302 shares of Series B convertible, voting preferred stock outstanding[6] DOCUMENTS INCORPORATED BY REFERENCE Certain information required in Part III of this annual report is incorporated by reference from the company's definitive proxy statement for the 2025 Annual Meeting of Stockholders, to be filed within 120 days after the fiscal year-end - Part III information will be incorporated by reference from the company's definitive proxy statement for the 2025 Annual Meeting of Stockholders, to be filed within 120 days after the fiscal year ended June 30, 2025[7] PART I ITEM 1. Business The Marygold Companies, Inc. is a holding company operating globally through wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities, with a decentralized management model - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[17][281] - The company employs a decentralized management model, with the executive team responsible for corporate vision, strategy, capital allocation, and the selection and retention of subsidiary management[18][281] - As of the fiscal year ended June 30, 2025, the company's business segments globally (New Zealand, Canada, UK, and US) employed a total of 104 employees[20] Certain Recent Developments The company recently completed equity and note financings to support debt repayment and financial services investments, entered into an equity distribution agreement, and sold its security systems subsidiary in July 2025 Recent Equity Financing Overview | Metric | Detail | | :--- | :--- | | Issuance Date | January 28, 2025 | | Shares Issued | 2,050,000 common shares | | Issuance Price | $1.10 per share | | Underwriter | Maxim Group LLC | | Net Proceeds | Approximately $1.8 million | | Use of Proceeds | Repay or reduce debt, additional investments in financial services businesses, and other general working capital and corporate purposes | Recent Note Financing Overview | Metric | Detail | | :--- | :--- | | Agreement Date | September 19, 2024 | | Initial Principal | $4.38 million (secured promissory note) | | Original Issue Discount | 9% ($360,000) | | Annual Interest Rate | 9% | | Additional Payment | 6% of outstanding balance | | Subsequent Notes (potential) | $2.18 million (9% OID) | | Collateral | Pledge of all common stock of USCF Investments, Inc., security interest in all company assets, CEO trust guarantee of company obligations and pledge of company common stock held by trust | | Outstanding Balance as of June 30, 2025 (net) | $1.3 million | | Effective Interest Rate | 41.3% | | FY2025 Interest Expense | $1.2 million (including $600,000 amortization of debt issuance costs) | - The company entered into an equity distribution agreement with Maxim Group LLC on March 7, 2025, to sell common stock with an aggregate offering price of up to $4.65 million from time to time, but no shares were sold as of June 30, 2025[32][37][242][243] - The company sold its wholly-owned Canadian subsidiary, Brigadier Security Systems (2000) Ltd., to an affiliate, SKCAL LLC, on July 1, 2025, for a total consideration of $2.3 million[38][391][392] Subsidiary Business Overview The company operates through various subsidiaries in US ETF fund management, New Zealand food production, Canadian security systems, US beauty products, and financial services in the US and UK, each facing market competition and specific regulations U.S. ETF Fund Management - USCF Investments USCF Investments and its subsidiaries provide fund management and advisory services for 16 ETFs, with $2.8 billion in assets under management as of June 30, 2025, relying heavily on its top three funds and competing through unique product offerings - USCF Investments and its subsidiaries manage and service 16 ETFs, with total assets under management (AUM) of $2.8 billion as of June 30, 2025[39] - As of June 30, 2025, 70% of USCF Investments' revenue was derived from its three largest funds: United States Oil Fund, LP; United States Natural Gas Fund, LP; and USCF Midstream Energy Income Fund[44] - USCF Investments maintains competitiveness against large financial institutions by offering first-to-market and customized commodity and equity index funds[45] - USCF Investments' operating subsidiaries are strictly regulated by the CFTC, NFA, SEC (under the Investment Advisers Act and Securities Act), and NYSE Arca[46][47] - USCF LLC owns registered trademarks for "USCF LLC" and "USCF Advisers" and has been granted two patents for systems and methods related to exchange-traded funds (ETFs)[49] Food Products - Gourmet Foods Gourmet Foods, a New Zealand commercial bakery, produces meat pies, sausage rolls, and pastries, expanding into food packaging printing through Printstock Products Limited, serving national supermarket chains and convenience stores while facing rising raw material and labor costs - Gourmet Foods is a New Zealand commercial bakery producing meat pies, sausage rolls, and pastries, and acquired Printstock Products Limited, a food packaging printing company, in 2020[52][53] - Key customers include national supermarket chains, convenience stores, and gas stations, with the gas station convenience store market accounting for 55% of total bakery revenue in FY2025[54] - Rising raw material, local transportation, and labor costs post-COVID-19 negatively impacted Gourmet Foods' profit margins, leading the company to discontinue some low-margin products[55] - The company addresses competition by developing new products, such as vegan pies, and integrating its supply chain through the Printstock acquisition[56] - As of June 30, 2025, Gourmet Foods (including Printstock) employed 48 full-time employees in New Zealand[59] Security Systems - Brigadier Brigadier Security Systems (2000) Ltd. sold and installed alarm systems, security monitoring hardware, and access control systems in Saskatchewan, Canada, as an authorized SecurTek dealer, with its largest customer contributing 44% of total revenue in FY2025, and was sold to an affiliate in July 2025 - Brigadier sells and installs alarm systems, security monitoring hardware, access control systems, and fire monitoring panels in Saskatchewan, Canada[61][62] - Brigadier is an authorized dealer for SecurTek, and its largest customer accounted for 44% of total revenue in FY2025[63][64] - Brigadier was sold to an affiliate, SKCAL LLC, on July 1, 2025[68][391] Beauty Products - Original Sprout Original Sprout distributes 100% vegan, safe, and non-toxic hair and skin care products, shifting to online direct sales due to the pandemic, resulting in decreased sales, increased operating losses, and a $1.4 million goodwill and intangible asset impairment charge in FY2024 - Original Sprout distributes 100% vegan, safe, and non-toxic hair and skin care products globally[69][75] - Due to the COVID-19 pandemic, the company's distribution model shifted from wholesale to online direct sales, leading to decreased sales and increased operating losses[70] - In FY2024, the company recorded a $1.4 million impairment loss for goodwill and intangible assets due to increased losses and changes in distribution channels within the beauty products business segment[70][125][328] - The company relies on two product formulation and packaging companies for manufacturing and strives to maintain at least a 90-day inventory supply to mitigate raw material procurement challenges[74] - Original Sprout addresses competition by promoting its brand, recruiting distributors, expanding retail store coverage, and increasing social media presence[75] U.S. and U.K. Financial Services – Marygold US and Marygold UK Marygold US suspended its P2P fintech mobile app operations in the US due to low user adoption, while Marygold UK expanded its asset management business through acquisitions and soft-launched its fintech app in the UK in April 2025 - Marygold US launched a P2P fintech mobile application in June 2023 but suspended US operations and further development on March 31, 2025, due to lower-than-expected user adoption[81][105] - The company has invested $19.1 million in the US fintech app development and is currently seeking funding or partners to re-enter the US market or license the technology[84][105][178] - Marygold UK expanded its asset management business in the UK by acquiring Tiger Financial & Asset Management Limited (renamed Marygold & Co. Limited) in June 2022 and Step-By-Step Financial Planners Limited in May 2024[89][90][91] - Marygold UK soft-launched its fintech application in the UK in April 2025, offering "Piggy Bank" and "Me2Me" features and partnering with Griffin Bank Ltd. for high-yield savings accounts[92] - As of June 30, 2025, Marygold UK had $80.2 million in assets under management, but its fintech application has not yet generated significant revenue[94] Available Information The company provides its annual, quarterly, and 8-K reports and amendments free of charge on its official website, with these electronic filings also accessible via the SEC website - The company provides its annual reports, quarterly reports, 8-K reports, and amendments free of charge on its website, www.themarygoldcompanies.com[98](index=98&type=chunk) - The company's electronic filings are also available on the SEC website, www.sec.gov[98](index=98&type=chunk) Controlled Company Status The company is designated as a "controlled company" because Nicholas Gerber and Scott Schoenberger, through their family trusts, collectively control over 50% of the voting power, exempting it from certain NYSE American corporate governance requirements - Nicholas Gerber and Scott Schoenberger, through their family trusts, own over 50% of the company's voting power, making it a "controlled company" under NYSE American rules[99] - As a controlled company, the company is exempt from NYSE American requirements regarding a majority of independent directors, a fully independent compensation committee, and a nominating and governance committee[99] ITEM 1A. Risk Factors Investing in the company's stock involves a high degree of risk and dilution, with business operations, financial condition, operating results, and stock price potentially affected by various factors including litigation, business structure, regulatory compliance, concentration of control, general business risks, and recent financing risks - Investing in the company's stock involves a high degree of risk and dilution, and business operations, financial condition, operating results, and stock price may be affected by various factors[101] Litigation Risks The company and its subsidiaries face class action and derivative lawsuits that could result in significant costs, divert management attention, harm reputation, and materially adversely affect financial condition, operating results, or cash flows - The company's indirect wholly-owned subsidiary, USCF LLC, currently faces class action lawsuits and derivative lawsuits against USO and USCF[102][373][378][381] - Litigation could result in significant costs, divert management's attention, damage relationships with investors, customers, and suppliers, and make it more difficult to attract and retain qualified personnel[104] - Due to the uncertainty of litigation outcomes, the company cannot currently predict the ultimate outcome or reasonably estimate potential losses, but an unfavorable outcome could materially adversely affect its financial condition, operating results, or cash flows[103][386] Risks Related to our Business and Structure The company incurred net losses in FY2025 and FY2024 and suspended further development of its US fintech app; as a holding company, its cash flow depends on subsidiary dividends, which may be legally and contractually restricted, and it faces risks related to key personnel, ETP market volatility, supply chain disruptions, product liability, international expansion, and goodwill and intangible asset impairment Net Loss and Working Capital Changes | Metric | FY2025 | FY2024 | Change | | :--- | :--- | :--- | :--- | | Net Loss | $5.8 million | $4.1 million | Increased by 43% | | Working Capital | $12.4 million | $19.0 million | Decreased by 35% | - The company has suspended further development of its US fintech application, despite investing $19.1 million, due to limited market acceptance[105][178][238] - As a holding company, the company's primary cash flow sources are dividends, loans, or other payments from subsidiaries, but subsidiaries may be legally and contractually restricted from distributing funds to the company[106][107] - The company is highly dependent on key personnel, such as CEO Nicholas Gerber, and their loss could materially adversely affect operations[110] - A significant portion of the company's revenue (57% in FY2025, 58% in FY2024) is derived from its USCF Investments subsidiary, making its operating results particularly vulnerable to investor sentiment towards ETF investments[114] - In FY2024, the company recorded a $1.4 million impairment loss for goodwill and intangible assets within the beauty products business segment[125][328] Legal, Compliance and Regulatory Risks The company's operations are subject to extensive government regulations and oversight, with non-compliance potentially leading to significant fines, legal actions, and reputational damage, while also incurring high operating costs as a public company and facing risks related to NYSE American listing standards, internal control effectiveness, and cybersecurity threats - The company's businesses are subject to complex and evolving laws and regulations concerning banking, credit, data privacy, cybersecurity, and anti-money laundering, with non-compliance potentially leading to significant fines, legal actions, and operational restrictions[127][128] - The company must comply with NYSE American's continued listing standards, or it may face delisting risk, which would adversely affect its stock price and ability to raise capital[130] - As a public company, the company incurs significant legal, financial, and accounting costs, and management must dedicate substantial time and resources to ensure compliance[131] - The company relies on information technology systems and faces cybersecurity threats, such as data breaches and ransomware attacks, which could result in significant adverse reputational, financial, legal, and operational consequences[139][140] Risks Related to Our Controlled Company Election and Status As a "controlled company," the company is exempt from certain NYSE American corporate governance requirements, potentially depriving shareholders of protections enjoyed by shareholders of other companies, and the CEO and his family trusts exert significant control over major corporate decisions - As a "controlled company," the company is exempt from NYSE American corporate governance requirements regarding a majority of independent directors, an independent compensation committee, and a nominating and governance committee[141][143] - CEO Nicholas D. Gerber and his family trusts, along with Scott Schoenberger, collectively control 54.3% of the company's voting power, giving them significant influence over director elections and major corporate decisions[145][146][147] General Business Risks The company faces various general business risks including information system disruptions, cybersecurity attacks, resource consumption from unsuccessful acquisitions or dispositions, inaccurate revenue projections for new business opportunities, failed acquisition integration, lingering effects of the COVID-19 pandemic, geopolitical events, and inadequate intellectual property protection - The company relies on information technology infrastructure and faces risks such as cybersecurity attacks and system disruptions, which could materially adversely affect its business, operating results, and financial condition[149][150] - The company may expend significant resources researching unsuccessful acquisitions or dispositions, new business opportunities, or financings, leading to lost costs and impacting future transactions[153] - The company may not accurately project revenue streams from newly acquired businesses or fintech applications, which could affect its ability to meet operating expenses and capital requirements[154] - The company faces the risk of failing to effectively integrate acquired businesses, which could adversely affect its business and operating results[155] - The company's business may be affected by uncontrollable factors such as political events, new tariffs, wars, terrorism, public health issues, and natural disasters[158][159] - The company relies on trademarks, trade secrets, and other forms of intellectual property protection but cannot guarantee that its intellectual property will adequately prevent misappropriation or infringement[160][161] Risks Related to Ownership of Our Shares The company's stock price may fluctuate significantly, investors may not be able to sell shares at or above the purchase price, and they may suffer losses due to dilution, future stock issuances, board-issued preferred stock, and the company's policy of not paying cash dividends - The company's stock price may fluctuate significantly due to operating results, analyst expectations, market conditions, litigation, insider stock sales, and various other factors[163][164][167] - Future equity issuances or option exercises could dilute the voting power and ownership percentage of existing shareholders[168][169][170][171][172][173] - The Board of Directors may issue preferred stock without shareholder approval, which could adversely affect the voting or other rights of common stock holders[174] - The company has not paid cash dividends to date and does not intend to do so in the foreseeable future, meaning shareholders' sole source of return may be stock appreciation[176][177] Risks Related to our Recent Note Financing The company may require additional equity or debt financing to continue developing and promoting its fintech applications, fund operations, and acquisitions, and failure to obtain sufficient financing could force it to reduce or suspend fintech app development or seek to license it to third parties - The company may require additional equity or debt financing to continue developing and promoting its fintech applications, fund ongoing operations, and invest in acquisitions[178][179] - Failure to obtain sufficient financing could force the company to reduce or suspend fintech application development or seek to license it to third-party financial institutions or payment providers[179][180] - The fintech industry is highly competitive with well-funded competitors, increasing the challenges for the company to secure financing and achieve its business objectives[179] ITEM 1B. Unresolved Staff Comments There are no unresolved staff comments in this report - No unresolved staff comments[181] ITEM 1C. Cybersecurity The company recognizes cybersecurity threats as a significant business risk and has established processes to identify, assess, and manage these threats, implementing a cybersecurity program with tailored solutions for each business unit, reporting to senior management and the Corporate Governance and Nominating Committee, with no reportable cyber incidents in FY2025 - The company has established processes to identify, assess, and manage cybersecurity threats and has implemented a cybersecurity management program across its business units[181][182] - Each business unit's Chief Information Security Officer (CISO) reports annually on cybersecurity programs and significant cyber risks to the company's senior management, with oversight by the Corporate Governance and Nominating Committee (CGNC)[182][184][185] - The company and its business units rely on information systems of third-party service providers, which increases the risk of cyberattacks[183] - As of the fiscal year ended June 30, 2025, the company had no cyber incidents requiring disclosure under Form 8-K, Item 1.05[186] ITEM 2. Properties The company and its subsidiaries own or lease office, warehouse, and production facilities in various locations; Brigadier owned office facilities and land in Saskatoon, with its loan repaid in July 2024, and the company believes existing facilities are sufficient for current operational needs - Brigadier purchased its office facilities and land in Saskatoon in 2019 for $600,000, and the related bank loan was repaid in full in July 2024[187] - The company's administrative offices are located within facilities leased by Original Sprout, Gourmet Foods leases facilities in New Zealand, USCF Investments and Marygold US lease office space in California, and Marygold UK leases office space in the UK[188][189][190][191][192][193] - The company believes its existing facilities are sufficient to meet current and foreseeable operational needs[194] ITEM 3. Legal Proceedings This section refers to information in Note 14, "Commitments and Contingencies – Litigation," to the consolidated financial statements, detailing the company's legal proceedings - Legal proceedings information is referenced in Note 14, "Commitments and Contingencies – Litigation," to the consolidated financial statements[196] ITEM 4. Mine Safety Disclosures This section is not applicable - Not applicable[197] PART II ITEM 5. Market for Registrant's Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities The company's common stock is traded on NYSE American; as of September 11, 2025, there were 360 common stock holders and 2 Series B preferred stock holders, with no cash dividends ever paid or planned for the foreseeable future, and the Schoenberger family trust converted Series B preferred stock to common stock in FY2025 - The company's common stock is traded on the NYSE American LLC stock exchange under the symbol "MGLD"[199] - As of September 11, 2025, the company had 360 record holders of common stock and 2 holders of Series B preferred stock[199] - The company has never declared or paid cash dividends on its common or preferred stock and does not intend to do so in the foreseeable future[200][256] - On February 17, 2025, the Schoenberger family trust converted 36,058 shares of Series B preferred stock into 721,160 shares of restricted common stock[203] ITEM 6. [Reserved.] This section is reserved - This section is reserved[204] ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and operating results for the fiscal year ended June 30, 2025, including key accounting policies, consolidated and segment operating results, liquidity, and capital resources, noting an increased net loss in FY2025 primarily due to decreased fund management revenue and new loan interest expense, partially offset by reduced beauty product losses Introduction This section introduces The Marygold Companies, Inc. as a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[206] Critical Accounting Policies The company employs several critical accounting policies in preparing its financial statements, including the valuation of intangible assets in business combinations, revenue recognition, asset impairment testing, accounting for legal and other contingencies, and income tax accounting, all involving significant judgments and estimates - The company accounts for business combinations using the acquisition method, with fair value valuation of intangible assets (including goodwill) involving complex estimates and assumptions regarding future cash flows, useful lives, and discount rates[211] - Revenue is recognized when products or services are delivered or ownership is transferred, with ongoing support services evaluated based on historical experience and cost monitoring[212] - Goodwill and other intangible assets are tested for impairment annually or more frequently if circumstances change, primarily by estimating fair value using discounted cash flow methods[213] - Contingent losses from legal proceedings and claims are accrued when a loss is probable and the amount can be reasonably estimated[214] - Income taxes are accounted for using the balance sheet method, with deferred tax assets and liabilities recognized for future tax consequences, and uncertain tax positions are evaluated[215] Summary Results of Operations In FY2025, the company's revenue decreased by 8% and gross profit by 9%, primarily due to reduced revenue in fund management, food products, and beauty products; despite a 6% decrease in operating expenses (partially due to FY2024 impairment charges), net other (expense) income turned negative due to interest expense from new loans, leading to a 43% increase in net loss FY2025 vs. FY2024 Operating Results Comparison (in thousands of USD) | Metric | FY2025 | FY2024 | Change Rate | | :--- | :--- | :--- | :--- | | Revenue | $30,154 | $32,836 | -8% | | Cost of Sales | $8,282 | $8,720 | -5% | | Gross Profit | $21,872 | $24,116 | -9% | | Operating Expenses | $28,562 | $30,372 | -6% | | Operating Loss | ($6,690) | ($6,256) | 7% | | Other (Expense) Income, Net | ($692) | $808 | -186% | | Loss Before Income Taxes | ($7,382) | ($5,448) | 35% | | Income Tax Benefit | $1,562 | $1,379 | 13% | | Net Loss | ($5,820) | ($4,069) | 43% | - Revenue decreased primarily due to a $1.8 million reduction in fund management revenue, a $600,000 reduction in food products, and a $300,000 reduction in beauty products[218] - Operating expenses decreased by 6%, mainly due to a $1.4 million impairment charge for beauty product goodwill and intangible assets in FY2024, and a $700,000 reduction in marketing expenses in FY2025 (due to suspension of US fintech app operations)[220] - Net other (expense) income shifted from $800,000 income in FY2024 to $700,000 expense in FY2025, primarily influenced by $1.2 million in interest expense from the $4.4 million loan originated in September 2024[221] Segment Results of Operations In FY2025, fund management revenue and operating profit declined due to decreased AUM; food product revenue and operating profit also fell due to product mix adjustments and non-recurring costs; beauty product revenue decreased, but operating loss significantly narrowed due to FY2024 impairment charges and reduced marketing spend; security systems revenue and operating profit both decreased, and this business was sold in July 2025; financial services revenue increased, but overall operating loss remained high, though Marygold US's suspension reduced its loss; and corporate headquarters operating loss expanded due to increased stock-based compensation expense FY2025 vs. FY2024 Segment Revenue Comparison (in thousands of USD) | Business Segment | FY2025 Revenue | FY2024 Revenue | Change Rate | | :--- | :--- | :--- | :--- | | Fund Management - Related Party | $17,135 | $18,965 | -10% | | Food Products | $6,720 | $7,271 | -8% | | Beauty Products | $2,974 | $3,296 | -10% | | Security Systems | $2,471 | $2,655 | -7% | | Financial Services | $854 | $649 | 32% | | Total Revenue | $30,154 | $32,836 | -8% | FY2025 vs. FY2024 Segment Operating Profit (Loss) Comparison (in thousands of USD) | Business Segment | FY2025 Operating Profit (Loss) | FY2024 Operating Profit (Loss) | Change Rate | | :--- | :--- | :--- | :--- | | Fund Management - Related Party | $3,274 | $4,773 | -31% | | Food Products | $145 | $321 | -55% | | Beauty Products | ($395) | ($2,138) | -82% | | Security Systems | $250 | $325 | -23% | | Financial Services | ($5,621) | ($5,943) | -5% | | Corporate Headquarters | ($4,343) | ($3,594) | 21% | | Total Operating Loss | ($6,690) | ($6,256) | 7% | - Fund management revenue decreased by 10%, and operating profit decreased by 31%, primarily due to a 12% decrease in average assets under management (AUM) from $3.3 billion in FY2024 to $2.9 billion in FY2025[226][227] - Beauty products operating loss significantly decreased by 82%, primarily benefiting from a $1.4 million impairment charge in FY2024 and a $300,000 reduction in marketing expenses in FY2025[231] - Marygold US incurred an operating loss of $4.7 million in FY2025 and suspended its US app operations on March 31, 2025, with future losses and negative cash flows expected to decrease[234] - Corporate headquarters operating loss increased by 21%, mainly due to a $400,000 increase in stock-based compensation expense and the transfer of some employees from the financial services segment to the parent company[236] Liquidity and Capital Resources As of June 30, 2025, cash and cash equivalents decreased to $5 million, and working capital fell to $12.4 million; FY2025 saw $3.3 million in cash outflows from operating activities and $3.3 million invested in fintech applications; the company obtained $1.8 million net proceeds from equity financing and entered into a $4.38 million note financing agreement, believing existing cash and operating cash flow are sufficient for the next 12 months, but may require additional financing for fintech app development and future acquisitions Cash and Working Capital Changes (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | Change Rate | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | $5,005 | $5,461 | -8% | | Working Capital | $12,400 | $19,000 | -35% | | Cash Outflow from Operating Activities (FY2025) | $3,319 | $1,911 | 73.7% | | Total Investment in Fintech App Development | $19,100 | - | - | - The company obtained $1.8 million in net proceeds from equity financing on January 28, 2025, used for debt repayment, investment in financial services businesses, and general working capital[241] - The company entered into a $4.38 million secured promissory note financing agreement on September 19, 2024, with a net outstanding balance of $1.3 million and an effective annual interest rate of 41.3% as of June 30, 2025[247][254] - The company believes its cash and cash equivalents and cash generated from ongoing operations are sufficient to meet cash needs for the next 12 months, but may require additional financing to support ongoing development of the UK fintech application and future acquisitions[244] - As of June 30, 2025, the company's total lease liabilities were $1 million, comprising $1.034 million in operating lease liabilities and $102,000 in finance lease liabilities[245][246][370] - As of June 30, 2025, the company had not entered into any off-balance sheet arrangements[257] ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company," the company is not required to provide the information requested by this item - As a "smaller reporting company," the company is not required to provide the information requested by this item[257] ITEM 8. Financial Statements and Supplementary Data This section contains the company's consolidated financial statements for the fiscal year ended June 30, 2025, including the report of independent registered public accounting firm, consolidated balance sheets, consolidated statements of operations, consolidated statements of comprehensive loss, consolidated statements of stockholders' equity, consolidated statements of cash flows, and notes to financial statements Report of Independent Registered Public Accounting Firm BPM LLP issued an unqualified opinion on the company's consolidated financial statements as of June 30, 2025, and 2024, highlighting the accounting and disclosure of contingent losses related to various legal proceedings as a critical audit matter due to the significant judgment involved in assessing management's estimates of loss probability and amount - BPM LLP issued an unqualified opinion on the company's consolidated financial statements as of June 30, 2025, and 2024[260] - A critical audit matter is the accounting and disclosure of contingent losses related to various legal proceedings, as assessing management's judgment regarding the likelihood and amount of loss is challenging[264][265] Consolidated Balance Sheets As of June 30, 2025, the company's total assets were $30.42 million, a decrease from FY2024; total liabilities increased to $7.433 million, while total stockholders' equity decreased to $22.987 million Consolidated Balance Sheets Summary (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total Assets | $30,420 | $32,899 | | Total Liabilities | $7,433 | $6,285 | | Total Stockholders' Equity | $22,987 | $26,614 | Current Assets and Liabilities (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Cash and Cash Equivalents | $5,005 | $5,461 | | Investments (at fair value) | $7,829 | $9,551 | | Total Current Assets | $19,046 | $24,253 | | Total Current Liabilities | $6,632 | $5,233 | Consolidated Statements of Operations In FY2025, the company reported total revenue of $30.154 million and a net loss of $5.82 million, an increase from the $4.069 million net loss in FY2024, with operating loss and interest expense being primary contributors to the increased net loss Consolidated Statements of Operations Summary (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Revenue | $30,154 | $32,836 | | Gross Profit | $21,872 | $24,116 | | Operating Loss | ($6,690) | ($6,256) | | Other (Expense) Income, Net | ($692) | $808 | | Loss Before Income Taxes | ($7,382) | ($5,448) | | Net Loss | ($5,820) | ($4,069) | | Basic and Diluted Net Loss Per Share | ($0.14) | ($0.10) | Consolidated Statements of Comprehensive Loss In FY2025, the company's net loss was $5.82 million, and total comprehensive loss was $5.971 million, including $151,000 in other comprehensive loss from foreign currency translation adjustments Consolidated Statements of Comprehensive Loss Summary (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Loss | ($5,820) | ($4,069) | | Other Comprehensive Loss (Foreign Currency Translation) | ($151) | ($124) | | Total Comprehensive Loss | ($5,971) | ($4,193) | Consolidated Statements of Stockholders' Equity As of June 30, 2025, total stockholders' equity was $22.987 million, with changes in FY2025 driven by net loss, common stock issuance, stock-based compensation, Series B preferred stock conversion, and stock repurchases Consolidated Stockholders' Equity Summary (in thousands of USD) | Metric | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Preferred Stock (Series B) | 13 shares | 49 shares | | Common Stock | 42,818 shares | 40,096 shares | | Additional Paid-in Capital | $15,167 | $12,825 | | Accumulated Other Comprehensive Loss | ($420) | ($269) | | Retained Earnings | $8,198 | $14,018 | | Total Stockholders' Equity | $22,987 | $26,614 | - In FY2025, the company received $1.808 million net proceeds from common stock sales, incurred $825,000 in stock-based compensation expense, converted Series B preferred stock to common stock, and repurchased $289,000 in stock to cover employee payroll taxes[276] Consolidated Statements of Cash Flows In FY2025, the company experienced $3.319 million in cash outflows from operating activities, $1.203 million in cash inflows from investing activities, and $1.83 million in cash inflows from financing activities, resulting in a net decrease of $455,000 in cash and restricted cash, with an ending balance of $5.068 million Consolidated Statements of Cash Flows Summary (in thousands of USD) | Cash Flow Category | FY2025 | FY2024 | | :--- | :--- | :--- | | Net Cash Outflow from Operating Activities | ($3,319) | ($1,911) | | Net Cash Inflow (Outflow) from Investing Activities | $1,203 | ($926) | | Net Cash Inflow (Outflow) from Financing Activities | $1,830 | ($30) | | Effect of Exchange Rate Changes | ($169) | ($196) | | Net Decrease in Cash, Cash Equivalents, and Restricted Cash | ($455) | ($3,063) | | Ending Cash, Cash Equivalents, and Restricted Cash | $5,068 | $5,523 | - In FY2025, the company paid $464,000 in interest and $48,000 in income taxes[279][280] - Non-cash investing and financing activities included an increase of $380,000 in notes payable (original issue discount and loan fees) and the acquisition of right-of-use assets through operating lease liabilities of $690,000[280] Notes to Consolidated Financial Statements This section provides detailed notes to the consolidated financial statements, covering the company's organization, significant accounting policies, net loss per share, balance sheet details, investments, business combinations, impairment losses, goodwill, intangible assets, related party transactions, notes payable, stockholders' equity, income taxes, commitments and contingencies, segment reporting, and subsequent events NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities, with management responsible for capital allocation and the selection and retention of subsidiary executives - The company is a holding company operating globally through its wholly-owned subsidiaries, primarily focused on financial services, exchange-traded fund management, and other business activities[281][285] - Company management is responsible for capital allocation decisions, investment activities, and the selection and retention of chief executive officers for each operating subsidiary[281] NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the significant accounting policies followed in preparing the consolidated financial statements, including consolidation principles, use of estimates, foreign currency translation, cash and cash equivalents, accounts receivable, inventory, property and equipment, leases, intangible assets, goodwill, impairment of long-lived assets, investments and fair value of financial instruments, revenue recognition, income taxes, advertising expenses, segment reporting, stock-based compensation, and business combinations - The company's financial statements are prepared on a consolidated basis in accordance with U.S. GAAP and involve management's estimates and assumptions regarding assets, liabilities, revenues, and expenses[282][283][284] - Intangible assets and goodwill are tested for impairment annually; in FY2024, the beauty products business recorded a $1 million impairment loss for intangible assets and a $400,000 impairment loss for goodwill[296][297][328] - Investments are measured at fair value, with changes in fair value recognized in other income (expense) in the statements of operations[299] - Revenue recognition follows a five-step model, recognized upon product shipment, commencement of subscription periods, or provision of management services[304][306] - Advertising expenses are expensed as incurred, totaling $2.5 million in FY2025 and $3.2 million in FY2024[309] - Stock-based compensation is accounted for using the fair value method, with stock options valued using the Black-Scholes model and restricted stock awards based on market price at the grant date[311] - The company has adopted ASU 2023-07 (Improvements to Reportable Segment Disclosures) and is evaluating the impact of ASU 2023-09 (Improvements to Income Tax Disclosures)[313][314] NOTE 3. NET LOSS PER SHARE Basic and diluted net loss per share are identical due to the company incurring net losses in both FY2025 and FY2024, with anti-dilutive stock options, restricted stock awards, and warrants excluded from the calculation Basic and Diluted Net Loss Per Share (in thousands of USD, except per share data) | Metric | FY2025 Net Loss | FY2025 Shares | FY2025 Per Share | FY2024 Net Loss | FY2024 Shares | FY2024 Per Share | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net Loss Attributable to Common Stockholders | ($5,719) | 40,977 | ($0.14) | ($3,970) | 39,409 | ($0.10) | | Net Loss Attributable to Preferred Stockholders | ($101) | 724 | ($0.14) | ($99) | 987 | ($0.10) | | Basic and Diluted Net Loss Per Share | ($5,820) | 41,701 | ($0.14) | ($4,069) | 40,396 | ($0.10) | - Basic and diluted net loss per share are identical due to the company incurring net losses in both FY2025 and FY2024, and anti-dilutive stock options, restricted stock awards, and warrants were excluded from the calculation[315] NOTE 4. CERTAIN BALANCE SHEET DETAILS This note provides detailed information on specific balance sheet accounts, including restricted cash, other current assets, inventory, property and equipment, net, and other non-current assets, notably reclassifying a $1.8 million equity investment deposit from FY2024 to a non-current asset in FY2025 Restricted Cash (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Restricted deposits related to fintech app accounts | $51 | $50 | | Lease security deposits | $12 | $12 | | Total Restricted Cash | $63 | $62 | Other Current Assets (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Deposit for potential 9.9% equity investment in financial institution | - | $1,800 | | Prepaid expenses and other current assets | $1,067 | $1,234 | | Total Other Current Assets | $1,067 | $3,034 | - The $1.8 million deposit for a potential equity investment in a financial institution included in FY2024 was reclassified as an equity investment in non-current assets in FY2025 after regulatory approval in September 2024[318][321] Property and Equipment, Net (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Manufacturing equipment | $1,935 | $1,935 | | Land and buildings | $575 | $575 | | Other equipment | $854 | $827 | | Total Property and Equipment | $3,364 | $3,337 | | Accumulated depreciation | ($2,326) | ($2,171) | | Property and Equipment, Net | $1,038 | $1,166 | NOTE 5. INVESTMENTS USCF Investments periodically provides initial seed capital for ETF funds; as of June 30, 2025, the company held $3.6 million in investments in affiliate-managed funds, down from $7.5 million in FY2024, resulting in $800,000 in unrealized losses in FY2025 compared to $100,000 in unrealized gains in FY2024 - USCF Investments periodically provides initial seed capital for ETF funds, and these investments are classified as current assets[255][323] - In FY2025, the company recognized $800,000 in unrealized losses, compared to $100,000 in unrealized gains in FY2024[323] - All short-term investments are classified as Level 1 assets[324] Short-Term Investments (in thousands of USD) | Item | June 30, 2025 Fair Value | June 30, 2024 Fair Value | | :--- | :--- | :--- | | Money market funds | $3,877 | $1,788 | | Other short-term investments | $312 | $296 | | Other equity - related party | $3,640 | $7,467 | | Total Short-Term Investments | $7,829 | $9,551 | NOTE 6. BUSINESS COMBINATIONS On April 30, 2024, Marygold UK completed the acquisition of Step-By-Step Financial Planners Limited for $1.2 million, recognizing $600,000 in goodwill, aiming to expand its business by increasing assets under management and introducing fintech mobile application services - Marygold UK acquired all outstanding shares of Step-By-Step Financial Planners Limited on April 30, 2024, for $1.2 million[326] - The acquisition recognized $600,000 in goodwill[326] - Step-By-Step is an asset management firm and registered investment advisor, with $42.4 million in assets under management as of June 30, 2025[326] NOTE 7. IMPAIRMENT LOSS In FY2024, the company recorded a $1.4 million impairment loss due to increased losses and changes in distribution channels within the beauty products business segment, comprising $400,000 for goodwill and $1 million for intangible assets, with no impairment losses recorded in FY2025 - In FY2024, the company recorded a $1.4 million impairment loss for goodwill and intangible assets within the beauty products business segment due to increased losses and changes in distribution channels[328] - This impairment loss included $400,000 for goodwill and $1 million for intangible assets such as brand names, formulations, and customer relationships[328] - No impairment losses were recorded in FY2025[296][297][328] NOTE 8. GOODWILL As of June 30, 2025, and 2024, the company's total goodwill was $2.481 million; in FY2024, goodwill increased by $591,000 due to acquisitions and decreased by $417,000 due to impairment in the beauty products business Changes in Goodwill Carrying Amount (in thousands of USD) | Goodwill Category | June 30, 2023 | Acquisitions | Impairment | June 30, 2024 | June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Beauty Products - Original Sprout | $417 | - | ($417) | - | - | | Food Products - Gourmet Foods | $275 | - | - | $275 | $275 | | Security Systems - Brigadier | $351 | - | - | $351 | $351 | | Financial Services - Marygold & Co. (UK) | $1,264 | $591 | - | $1,855 | $1,855 | | Total | $2,307 | $591 | ($417) | $2,481 | $2,481 | - The company tests goodwill for impairment annually on June 30 for each reporting unit[330] NOTE 9. INTANGIBLE ASSETS The company's intangible assets include customer relationships, brand names, and internally developed software; as of June 30, 2025, net intangible assets were $1.029 million, a decrease from $1.375 million in FY2024, with amortization expense of $300,000 in FY2025 and $400,000 in FY2024 Intangible Asset Composition (in thousands of USD) | Intangible Asset Category | June 30, 2025 Net | June 30, 2024 Net | | :--- | :--- | :--- | | Customer relationships | $719 | $916 | | Brand names | $31 | $82 | | Brand names – indefinite life | $206 | $231 | | Internally developed software | $73 | $146 | | Total | $1,029 | $1,375 | Intangible Asset Amortization Expense (in thousands of USD) | Fiscal Year | Amortization Expense | | :--- | :--- | | 2025 | $300 | | 2024 | $400 | Estimated Amortization Expense for Intangible Assets for the Next Five Years and Thereafter (in thousands of USD) | Year Ending June 30 | Expense | | :--- | :--- | | 2026 | $290 | | 2027 | $146 | | 2028 | $146 | | 2029 | $144 | | 2030 | $54 | | Thereafter | $249 | | Total | $1,029 | NOTE 10. RELATED PARTY TRANSACTIONS This note discloses transactions between the company and related parties, primarily including USCF Investments' revenue and accounts receivable from funds it manages, and investments in these funds; additionally, USCF Advisers paid licensing fees to an affiliate, and Brigadier Security Systems was sold to an affiliate USCF Investments Related Party Transactions (in thousands of USD) | Metric | FY2025 | FY2024 | | :--- | :--- | :--- | | Fund management revenue | $17,135 | $18,965 | | Accounts receivable | $1,281 | $1,455 | | Investments in affiliate funds | $3,600 | $7,500 | - USCF Advisers paid $300,000 and $100,000 in licensing fees to an affiliate in FY2025 and FY2024, respectively, with the licensing agreement amended in February 2025 to reduce future fees to zero[336] - The company entered into an agreement on June 19, 2025, with SKCAL LLC (sole member Scott Schoenberger, a company director and 10.9% shareholder) to sell its wholly-owned subsidiary, Brigadier Security Systems (2000) Ltd.[337] NOTE 11. NOTES PAYABLE This note details the $4.38 million secured promissory note agreement entered into with Streeterville Capital, LLC on September 19, 2024, featuring a 9% original issue discount and 9% annual interest rate, secured by company assets and the CEO's trust's common stock; as of June 30, 2025, the net outstanding balance was $1.3 million with an effective interest rate of 41.3% - The company entered into a secured promissory note agreement with Streeterville Capital, LLC on September 19, 2024, for an initial principal of $4.38 million, with a 9% annual interest rate and a 9% original issue discount[338] - The note is secured by all common stock of USCF Investments, Inc. held by the company, a security interest in all company assets, and a guarantee from the company's CEO's trust, which also pledged its common stock holdings in the company[340] - The noteholder has the right to require the company to redeem up to $400,000 (initial note) or $200,000 (subsequent notes) monthly, six months after the issuance date, and the company has the right to defer redemption payments three times[341] - As of June 30, 2025, the net outstanding balance of the note was $1.3 million, with an effective interest rate of 41.3%; FY2025 interest expense was $1.2 million, including $600,000 in amortization of debt issuance costs[344] - Brigadier's $300,000 mortgage loan was repaid in full in July 2024[345] NOTE 12. STOCKHOLDERS' EQUITY This note details the company's warrants, convertible preferred stock, and stock-based compensation plans; as of June 30, 2025, 82,500 warrants remained unexercised, Series B preferred stock decreased to 13,302 shares, and 36,058 Series B preferred shares were converted to common stock, with FY2025 stock-based compensation expense totaling $800,000 - The company issued 82,500 warrants in FY2022 with an exercise price of $2.40 per share, expiring March 14, 2027, and remained unexercised as of June 30, 2025[346] - As of June 30, 2025, 13,302 shares of Series B convertible preferred stock were outstanding, and 36,058 Series B preferred shares were converted into 721,160 common shares in FY2025[349] - The company's 2021 Equity Incentive Plan authorized the issuance of 5 million shares of common stock, with 3,772,485 shares available for future grants as of June 30, 2025[350] - Total stock-based compensation expense was $800,000 in FY2025 and $400,000 in FY2024[356] NOTE 13. INCOME TAXES This note discloses the company's loss before income taxes, income tax benefit composition, and deferred tax assets and liabilities for FY2025 and FY2024; the company incurred pre-tax losses in both fiscal years, recognized income tax benefits, possesses federal and state net operating loss carryforwards, has not established a valuation allowance, and is evaluating the potential impact of the newly enacted "One Big Beautiful Bill Act" on future tax obligations Loss Before Income Taxes (in thousands of USD) | Region | FY2025 | FY2024 | | :--- | :--- | :--- | | United States | ($6,327) | ($5,420) | | Foreign | ($1,055) | ($28) | | Total Loss Before Income Taxes | ($7,382) | ($5,448) | Income Tax Benefit (in thousands of USD) | Region | FY2025 | FY2024 | | :--- | :--- | :--- | | United States | $1,302 | $1,408 | | Foreign | $260 | ($29) | | Total Income Tax Benefit | $1,562 | $1,379 | Deferred Tax Assets and Liabilities (in thousands of USD) | Item | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Total deferred tax assets - US | $3,440 | $1,969 | | Total deferred tax liabilities - Foreign | ($221) | ($360) | | Total Net Deferred Tax Assets | $3,219 | $1,609 | - The company has not established a valuation allowance as of June 30, 2025, and 2024, believing that net deferred tax assets are more likely than not to be realized[361] - As of June 30, 2025, the company had $9.4 million in federal net operating loss carryforwards and $6.9 million in state net operating loss carryforwards[364] - The company is evaluating the potential impact of the "One Big Beautiful Bill Act," enacted on July 4, 2025, on deferred taxes and future tax obligations[367] NOTE 14. COMMITMENTS AND CONTINGENCIES This note details the company's lease commitments, other agreements and commitments, legal proceedings, and retirement plans; the company leases facilities in various regions and has future payment commitments to a former key service provider; it faces class action and derivative lawsuits related to the USO fund but has not accrued for losses, and provides a 401(k) retirement plan for US employees Future Minimum Consolidated Lease Payments (in thousands of USD) | Year Ending June 30 | Operating Leases | Finance Leases | | :--- | :--- | :--- | | 2026 | $587 | $19 | | 2027 | $333 | $19 | | 2028 | $155 | $19 | | 2029 | - | $19 | | 2030 | - | $19 | | Thereafter | - | $29 | | Total Minimum Lease Payments | $1,075 | $124 | | Less: Discount to Present Value | ($41) | ($22) | | Total Lease Liabilities | $1,034 | $102 | - Marygold US has $700,000 in future payment commitments to a former key service provider, with $200,000 due in FY2026[371] - The company faces class action and derivative lawsuits related to the Uni