The Marygold panies(MGLD) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Unaudited statements show decreased assets and equity, a shift to net loss, and negative operating cash flow Condensed Consolidated Balance Sheets Total assets and stockholders' equity declined while total liabilities increased as of December 31, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Total Assets | $34,932 | $35,281 | | Cash and cash equivalents | $6,214 | $8,161 | | Total current assets | $26,253 | $26,818 | | Total Liabilities | $5,897 | $4,903 | | Total current liabilities | $4,991 | $4,192 | | Total Stockholders' Equity | $29,035 | $30,378 | Condensed Consolidated Statements of Operations The company reported significant net losses for the three and six-month periods, reversing prior-year net income Statement of Operations Summary (in thousands) | Metric | Three Months Ended Dec 31, 2023 | Three Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2023 | Six Months Ended Dec 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $8,457 | $8,772 | $16,692 | $17,697 | | Gross Profit | $6,366 | $6,541 | $12,564 | $13,441 | | (Loss) Income from Operations | ($997) | $100 | ($2,034) | $877 | | Net (Loss) Income | ($1,183) | $182 | ($1,684) | $679 | | Basic EPS | ($0.03) | $0.00 | ($0.04) | $0.02 | Condensed Consolidated Statements of Cash Flows Net cash from operations turned negative, contributing to an overall decrease in cash and cash equivalents Cash Flow Summary for Six Months Ended Dec 31 (in thousands) | Cash Flow Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($558) | $1,018 | | Net cash (used in) provided by investing activities | ($1,400) | $64 | | Net cash used in financing activities | ($21) | ($13) | | Net (Decrease) Increase in Cash | ($1,938) | $1,057 | Notes to Condensed Consolidated Financial Statements Notes detail segment performance, pending litigation without accrual, and stock-based compensation plans - The company operates through several wholly-owned subsidiaries, with the fund management subsidiary, USCF Investments, contributing approximately 60% of total revenue[27] - Subsidiary USCF and its fund USO are involved in multiple legal proceedings for which no accrual has been recorded as the outcome is not currently predictable[61][71][84] Segment Net (Loss) Income for Six Months Ended Dec 31 (in thousands) | Segment | 2023 | 2022 | | :--- | :--- | :--- | | Fund management - related party | $2,806 | $3,567 | | Food products | $197 | $218 | | Beauty products | ($444) | ($61) | | Security systems | $121 | $181 | | Financial services | ($3,000) | ($1,343) | | Corporate headquarters | ($1,364) | ($1,883) | | Total net (loss) income | ($1,684) | $679 | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Performance declined due to lower AUM and Fintech investments, resulting in an operating loss and reduced cash - The decrease in consolidated revenue was primarily attributed to lower Assets Under Management (AUM) at the USCF Investments subsidiary[92][97] - The shift from operating income to an operating loss was driven by revenue decline and increased marketing and development expenses[93][100] - Cash and cash equivalents decreased by $2.0 million to $6.2 million, largely due to investments in a new fund and the Marygold Fintech app[127] - The company's plan is to achieve profitability in established units and focus growth on the new Marygold Fintech app, which may require additional capital[125] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company is exempt from market risk disclosures as it qualifies as a smaller reporting company - As a "smaller reporting company," the registrant is not required to provide quantitative and qualitative disclosures about market risk[134] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no significant internal control changes - The company's principal executive officer and principal accounting officer concluded that disclosure controls and procedures were effective as of the end of the period[136] - No significant changes were made to the company's internal control over financial reporting during the quarter[137] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company details the status of significant litigation, including a dismissed case, settled investigations, and pending actions - The 'Optimum Strategies Action' against USO and USCF was dismissed by the court on March 15, 2023[142] - In November 2021, USCF and USO settled investigations with the SEC and CFTC, resulting in a total civil monetary penalty of $2.5 million[143][149] - A consolidated class action, 'In re: United States Oil Fund, LP Securities Litigation,' remains pending, and the company intends to vigorously contest the claims[150][153] - No financial accrual has been recorded for the pending legal matters as the company cannot reasonably estimate possible losses[163] Item 1A. Risk Factors No material changes to risk factors from the most recent Annual Report on Form 10-K have been reported - The company reports no material changes to the risk factors discussed in its 2023 Form 10-K[165] Other Items (Items 2-6) The company reports no activity for several items, including unregistered equity sales and defaults on senior securities - Item 2 (Unregistered Sales of Equity Securities), Item 3 (Defaults Upon Senior Securities), and Item 5 (Other Information) are all reported as "None"[166][167][169] - Item 4 (Mine Safety Disclosures) is reported as "Not applicable"[168]