The Marygold panies(MGLD) - 2024 Q3 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides unaudited condensed consolidated financial statements and management's discussion for the three and nine months ended March 31, 2024 Item 1. Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended March 31, 2024, highlighting a net loss and decreased assets Condensed Consolidated Balance Sheets The balance sheet as of March 31, 2024, shows total assets decreased to $33.7 million, primarily due to a reduction in cash and cash equivalents | Balance Sheet Items (in thousands) | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $4,490 | $8,161 | | Total current assets | $25,771 | $26,818 | | Total assets | $33,709 | $35,281 | | Liabilities & Equity | | | | Total current liabilities | $4,541 | $4,192 | | Total liabilities | $5,328 | $4,903 | | Total stockholders' equity | $28,381 | $30,378 | Condensed Consolidated Statements of Operations The statements of operations show a net loss of $529 thousand for Q3 2024 and $2.2 million for the nine-month period, driven by decreased revenue and increased expenses | Metric (in thousands, except EPS) | Q3 2024 | Q3 2023 | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $7,880 | $8,299 | $24,571 | $26,003 | | Gross Profit | $5,557 | $6,104 | $18,122 | $19,553 | | (Loss) Income from Operations | $(1,471) | $166 | $(3,504) | $1,047 | | Net (Loss) Income | $(529) | $153 | $(2,212) | $832 | | Basic EPS | $(0.01) | $0.00 | $(0.05) | $0.02 | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities was $1.2 million for the nine months ended March 31, 2024, leading to a $4.1 million decrease in total cash | Cash Flow Activity (in thousands) | Nine Months Ended Mar 31, 2024 | Nine Months Ended Mar 31, 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(1,216) | $819 | | Net cash used in investing activities | $(2,755) | $(4,397) | | Net cash used in financing activities | $(17) | $(16) | | Net Decrease in Cash | $(4,082) | $(3,653) | | Ending Cash Balance | $4,504 | $10,276 | Notes to Condensed Consolidated Financial Statements These notes detail the company's diversified operations, significant legal contingencies, and a subsequent acquisition by its UK financial services arm - The company operates through several wholly owned subsidiaries, with USCF Investments being the largest, contributing approximately 55% to 60% of total revenues[27] - A deposit of $1.8 million was made during the quarter for the potential acquisition of a 9.9% equity interest in a domestic financial institution, contingent on regulatory approval[39] - The company is involved in multiple legal proceedings, including a class action lawsuit, related to its subsidiary USCF and the United States Oil Fund (USO); no accrual has been recorded as the outcome cannot be reasonably estimated[65][78] - On April 30, 2024, after the quarter's end, the company's UK subsidiary closed the acquisition of Step-by-Step Financial Planners Limited for approximately $1.1 million[83] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial condition and results of operations, attributing the net loss to lower AUM and increased operating expenses from Fintech investments Results of Operations Consolidated revenue decreased by 5% in Q3 2024 and 6% for the nine-month period, resulting in a net loss due to lower fund management revenue and higher Fintech costs | Performance Metric | Q3 2024 vs Q3 2023 | Nine Months 2024 vs Nine Months 2023 | | :--- | :--- | :--- | | Consolidated Revenue | Decreased 5% to $7.9M | Decreased 6% to $24.6M | | Operating (Loss) Income | Decreased by $1.6M to ($1.5M) loss | Decreased by $4.2M to ($3.1M) loss | | Net (Loss) Income | Decreased by $0.7M to ($0.5M) loss | Decreased by $3.0M to ($2.2M) loss | Segment Operations Segment operations show a 12% revenue decrease in Fund Management due to lower AUM, while Financial Services expenses rose from Fintech investments - Fund Management (USCF): Q3 revenue decreased 12% to $4.4 million as average AUM fell 19% to $3.0 billion compared to the prior year[101] - Financial Services (Marygold USA): Q3 operating expenses rose by $0.4 million to $1.4 million, driven by ongoing development and marketing for the new Fintech app[115] - Food Products: Q3 revenue was flat at $1.8 million, but profitability improved due to a more favorable product mix[107] - Beauty Products: Q3 revenue increased by $0.1 million, but the net loss widened due to higher expenses for new product development and marketing[109] Liquidity and Capital Resources Cash and cash equivalents decreased by 45% to $4.5 million due to significant investments in the Fintech app and a potential acquisition - Cash and cash equivalents decreased by $3.7 million (45%) to $4.5 million as of March 31, 2024, compared to June 30, 2023[118] - Significant cash uses in the nine-month period include $4.1 million for the Marygold Fintech app and a $1.8 million deposit for a potential acquisition[118] - Total investment in the Fintech app has reached $13.5 million since its inception[118] - Management believes existing cash resources will be sufficient to meet working capital requirements for the next twelve months[119] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a "smaller reporting company", the registrant is not required to provide market risk disclosures - As a "smaller reporting company", the registrant is not required to provide the information requested by this item[125] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2024, with no significant changes to internal control over financial reporting - The company's disclosure controls and procedures were concluded to be effective as of the end of the period covered by the report[127] - No significant changes were made to the company's internal control over financial reporting during the quarter[128] PART II. OTHER INFORMATION This section covers other required disclosures, including legal proceedings, risk factors, and various corporate governance matters Item 1. Legal Proceedings Information regarding legal proceedings is detailed in Note 11 of the financial statements - Information on legal proceedings is detailed in Note 11 of the financial statements[130] Item 1A. Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2023 Form 10-K - There have been no material changes to the risk factors discussed in the company's 2023 Form 10-K[131] Other Items (Items 2, 3, 4, 5, 6) This section covers various standard disclosures, including no unregistered equity sales, no defaults on senior securities, and no changes to Rule 10b5-1 trading plans - The company reported no unregistered sales of equity securities or defaults upon senior securities[132][133] - During the fiscal quarter, no directors or executive officers adopted or terminated any Rule 10b5-1 trading plans[135]