The Marygold panies(MGLD) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) The company reported a Q3 2023 net loss of $0.5 million, a reversal from a $0.5 million net income in Q3 2022 Condensed Consolidated Balance Sheets Key Balance Sheet Items | Balance Sheet Items | Sep 30, 2023 | Jun 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $27,288,855 | $26,818,342 | | Total Assets | $35,465,200 | $35,280,827 | | Total Current Liabilities | $4,911,041 | $4,191,717 | | Total Liabilities | $5,588,220 | $4,903,057 | | Total Stockholders' Equity | $29,876,980 | $30,377,770 | - Cash and cash equivalents decreased to $6.99 million as of September 30, 2023, from $8.16 million as of June 30, 2023[14] Condensed Consolidated Statements of (Loss) Income Key Income Statement Items | Income Statement Items | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net Revenue | $8,235,514 | $8,923,288 | | Gross Profit | $6,198,326 | $6,899,624 | | (Loss) Income from Operations | ($1,036,279) | $777,092 | | Net (Loss) Income | ($500,181) | $497,168 | | Diluted EPS | ($0.01) | $0.01 | - The company shifted from an operating income of $777,092 in Q3 2022 to an operating loss of $1,036,279 in Q3 2023[17] Condensed Consolidated Statements of Cash Flows Key Cash Flow Items | Cash Flow Items | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $292,348 | $879,197 | | Net cash (used in) investing activities | ($1,536,610) | ($267,042) | | Net cash (used in) by financing activities | ($3,656) | ($3,476) | | Net (decrease) increase in cash | ($1,185,694) | $371,348 | - The net decrease in cash, cash equivalents, and restricted cash was approximately $1.19 million for Q3 2023[22] Notes to Condensed Consolidated Financial Statements - The company operates through wholly-owned subsidiaries in diverse sectors including investment services, food products, and fintech[27] - USCF Investments' revenue is concentrated, with the USO and UNG funds accounting for 67% of its fund management revenue[33] - The company is involved in multiple legal proceedings related to its subsidiary USCF, with no accrual for potential losses recorded[148][159] - U.S. investment fund management is the primary profit driver, while the new U.S. fintech segment incurred a net loss of $1.45 million[165] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Q3 2023 revenue declined to $8.2 million, resulting in a $1.0 million operating loss due to lower AUM and fintech investments Results of Operations - Consolidated revenue decreased by $0.7 million to $8.2 million in Q3 2023, driven by lower AUM and unfavorable currency translation[171] - Operating income saw a $1.8 million negative swing from a $0.8 million profit in Q3 2022 to a $1.0 million loss in Q3 2023[173] - Net loss for Q3 2023 was approximately $0.5 million, a $1.0 million decrease from the prior-year quarter's net income[177] Segment Performance Segment Results (Q3 2023 vs Q3 2022) | Segment | Q3 2023 Revenue | Q3 2022 Revenue | Q3 2023 Net Income/(Loss) | Q3 2022 Net Income/(Loss) | | :--- | :--- | :--- | :--- | :--- | | USCF Investments | $5.0M | $5.4M | $2.0M (pre-tax) | $1.8M (pre-tax) | | Gourmet Foods | $1.7M | $1.9M | $22k | $0.2M | | Brigadier Security | $0.5M | $0.6M | $61k | $107k | | Original Sprout | $0.8M | $0.8M | ($322k) | ($20k) | | Marygold (U.K.) | $127k | $133k | ($68k) | $10k | | Marygold (U.S.A.) | $401 | $0 | ($1.45M) | ($641k) | - The Marygold (U.S.A.) fintech segment incurred operating expenses of $1.45 million in Q3 2023 due to app development and launch costs[206] - Original Sprout's net loss widened significantly to $322k from $20k year-over-year due to higher marketing expenses[197][198][199] Liquidity and Capital Resources - As of September 30, 2023, the company held $7.0 million in cash and cash equivalents, down from $8.2 million at June 30, 2023[209] - The company maintains a strong working capital position of $22.4 million despite significant investments in its fintech subsidiary[210] - Future plans include growing business units, expanding fintech services, and pursuing strategic acquisitions[207] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, The Marygold Companies is not required to provide this information - The company is not required to provide information for this item as it qualifies as a "smaller reporting company"[216] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of the quarter's end - The company's principal executive and financial officers concluded that disclosure controls and procedures were effective[218] - No significant changes were made to the company's internal control over financial reporting during the quarter[219] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company's subsidiary USCF faces ongoing lawsuits related to 2020 oil market events, with no loss accrual recorded - Subsidiary USCF and its fund USO are defendants in a consolidated class action lawsuit related to 2020 oil market volatility[229][230] - Multiple derivative actions alleging breaches of fiduciary duty have been filed and are currently stayed[233][234][236] - The company has not recorded any accrual for these legal matters due to their unpredictable nature[232][243] Item 1A. Risk Factors No material changes to risk factors have occurred since the last Annual Report on Form 10-K - The company states there have been no material changes to the risk factors disclosed in its Annual Report on Form 10-K[245] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds None - None[246] Item 3. Defaults Upon Senior Securities None - None[247] Item 4. Mine Safety Disclosures Not applicable - Not applicable[248] Item 5. Other Information None - None[249] Item 6. Exhibits This section lists filed exhibits, including required CEO/CFO certifications and XBRL data files - The report includes CEO and CFO certifications pursuant to the Sarbanes-Oxley Act of 2002[251] - Exhibits include Inline XBRL data files for financial reporting[251]