# Marygold Companies, Inc.: Form 10-Q for the period ended Sep 30, 2022

- Company: [Marygold Companies, Inc.](/companies/mgld.md) (CIK 1005101)
- Form: 10-Q
- Filed: 2022-11-14
- Accepted by EDGAR: Nov 14, 2022, 16:18 ET
- Period: 2022-09-30
- Accession: 0001437749-22-027284
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1005101/000143774922027284/mgld20220930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1005101/000143774922027284/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2022-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2022-07-01 to 2022-09-30 | $8.9m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2022-07-01 to 2022-09-30 | $2.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2022-07-01 to 2022-09-30 | $6.9m | us-gaap:GrossProfit |
| Operating income | 3 months, 2022-07-01 to 2022-09-30 | $777.1k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2022-07-01 to 2022-09-30 | $7.8k | us-gaap:InterestExpense |
| Income tax | 3 months, 2022-07-01 to 2022-09-30 | $226.3k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2022-07-01 to 2022-09-30 | $497.2k | us-gaap:NetIncomeLoss |
| Basic EPS | 3 months, 2022-07-01 to 2022-09-30 | $0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2022-07-01 to 2022-09-30 | 40,399,873 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2022-07-01 to 2022-09-30 | $879.2k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2022-09-30 | $13.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2022-09-30 | $25.4m | us-gaap:AssetsCurrent |
| Total assets | at 2022-09-30 | $34.9m | us-gaap:Assets |
| Current liabilities | at 2022-09-30 | $4.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2022-09-30 | $5.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2022-09-30 | $29.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 37,709 characters.

The following discussion and analysis should be read in conjunction with the unaudited condensed consolidated financial statements and the accompanying notes thereto and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this quarterly report on Form 10-Q. See "Financial Statements."

### Forward-Looking Statements

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 1A. Risk Factors” in Part II of this report and “Item 1A. Risk Factors” in the Form 10-K.

### Overview

The Marygold Companies, Inc. (“The Marygold Companies” or the “Company”) conducts business through its wholly owned operating subsidiaries operating in the U.S., New Zealand, and Canada. Further, the Company anticipates operating in the United Kingdom upon the consummation of the pending acquisition of Tiger Financial & Asset Management Limited, a U.K. limited company. The operations of the Company’s wholly owned subsidiaries are more particularly described herein but are summarized as follows:

- USCF Investments, Inc. ("USCF Investments") (f/k/a Wainwright Holdings, Inc.), a U.S. based company, is the sole member of two investment services limited liability company subsidiaries, United States Commodity Funds LLC (“USCF”), and USCF Advisers LLC (“USCF Advisers”), each of which manages, operates or is an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares which trade on the NYSE Arca stock exchange..
- Gourmet Foods, Ltd., a New Zealand based company, manufactures and distributes New Zealand meat pies on a commercial scale and its wholly owned New Zealand subsidiary company, Printstock Products Limited, prints specialty wrappers for the food industry in New Zealand and Australia. (collectively "Gourmet Foods")
- Brigadier Security Systems (2000) Ltd. (“Brigadier”), a Canadian based company, sells and installs commercial and residential alarm monitoring systems.
- Kahnalytics, Inc. dba/Original Sprout (“Original Sprout”), a U.S. based company, is engaged in the wholesale distribution of hair and skin care products under the brand name Original Sprout on a global scale.
- Marygold & Co., a newly formed U.S. based company, together with its wholly owned limited liability company, Marygold & Co. Advisory Services, LLC, (collectively "Marygold") was established by The Marygold Companies to explore opportunities in the financial technology ("Fintech") space, still in the development stage as of September 30, 2021, and estimated to launch commercial services in the current fiscal year. Through September 30, 2022, expenditures have been limited to developing the business model and the associated application development.
- Marygold & Co. (UK) Limited, a newly formed U.K. limited company (“Marygold UK”), was established to act as a holding company for acquisitions to be made in the U.K. As of September 30, 2022, the accounts of Marygold UK are consolidated with its wholly owned subsidiary, Tiger Financial and Asset Management Limited.

Because the Company conducts its businesses through its wholly owned operating subsidiaries, the risks related to our wholly owned subsidiaries are also risks that impact the Company's financial condition and results of operations. See, "*Note 2. Summary of Significant Accounting Policies / Major Customers and Suppliers - Concentration of Credit Risk*" in the notes to the condensed consolidated financial statements for more information. The emergence of a novel coronavirus on a global scale, known as COVID-19, and related geopolitical events could lead to increased market volatility, disruption to U.S. and world economies and markets and may have significant adverse effects on the Company and its wholly owned subsidiaries. The financial risk to future operations is largely unknown, (refer to Part II, Item 1A, for further details.)

### Results of Operations

### The Marygold Companies and Subsidiaries

*Financial summary and comparison data for the three month periods ended September 30, 2022 and September 30, 2021.*

#### For the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

#### Revenue and Operating Income

Consolidated revenue for the three months ended September 30, 2022 was $8.9 million representing a $0.8 million decrease from the three months ended September 30, 2021 revenue of $9.7 million. The decrease in consolidated revenues was primarily attributed to a decrease of $0.4 million in revenues of Gourmet Foods which were impacted by a strong U.S. Dollar where approximately $0.3 million of the decrease was due to currency translation and $0.1 million from lower same dollar sales. The remainder of the decrease came from USCF Investments where Assets Under Management ("AUM") for the three months ended September 30, 2022 was lower than that of 2021, which resulted in a revenue decrease of approximately $0.2 million, Original Sprout had a $0.2 million decrease and our Canadian subsidiary, Brigader, which experienced a $0.1 million decrease primarily due to currency translation. Our recent Marygold UK acquisition contributed $0.1 million to overall revenue vs. $0 during the three months ended September 30, 2021. The Marygold Companies produced an operating income for the three months ended September 30, 2022 of $0.8 million as compared to an operating loss of ($1.6) million for the three months ended September 30, 2021. This represents an increase in operating income of $2.4 million for the three months ended September 30, 2022 when compared to the three months ended September 30, 2021 or approximately 147%. Apart from the $0.8 million decline in revenues, the difference in operating income is attributed to the expenses incurred by our subsidiary, Marygold & Co., in development of its mobile fintech app, which amounted to approximately $0.6 million, and a legal settlement of $2.5 million incurred by our USCF Investments subsidiary in the prior year quarter.

*Other Income* (Expenses)

Other (expense) income for the three months ended September 30, 2022 and 2021 were ($54) thousand and $4 thousand, respectively, resulting in income (loss) before income tax of $0.7 million and ($1.6) million, respectively.

#### Income Tax

Provision for income tax for the three months ended September 30, 2022 and 2021 are $0.1 million and $0.2 million, respectively, primarily attributable to our United States operations through our USCF Investments subsidiary. Income tax expense recorded at The Marygold Companies level totaled $0.2 million for the three months ended September 30, 2022, while a tax expense of $0.2 million was recorded for the three months ended September 30, 2021. The remaining income tax expense was recorded at the subsidiary level during the three months ended September 30, 2022 and 2021.

#### Net Income

Overall, the net income between the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 increased by approximately $2.4 million, or approximately 126%, to approximately $0.5 million. The increase in net income for the three months ended September 30, 2022 was primarily attributable to the prior year legal settlement cost of $2.5 million impacting last years net income coupled with $0.8 million in lower revenues offset by $0.6 million in lower cost of revenue and $0.1 million in lower operating expenses.

#### Comprehensive Income

After giving consideration to currency translation loss of approximately $0.3 million our comprehensive income for the three months ended September 30, 2022 was $0.2 million as compared to the three months ended September 30, 2021 where there was a currency translation loss of $0.1 million which resulted in comprehensive loss of $2.0 million. Comprehensive gain and loss are comprised of fluctuations in foreign currency exchange rates and effects in the valuation of our holdings in the U.K., New Zealand and Canada.

### Investment Fund Management - USCF Investments

USCF Investments was founded as a holding company in March 2004 as a Delaware corporation with one subsidiary, Ameristock Corporation, which was an investment adviser to Ameristock Mutual Fund, Inc., a large cap value equity fund registered under the Investment Company Act of 1940, as amended (the “1940 Act”). In January 2010, Ameristock Corporation was spun off as a standalone company. In May 2005, USCF was formed as a single member limited liability company in the state of Delaware. In June 2013, USCF Advisers was formed as a Delaware limited liability company and in July 2014, was registered as an investment adviser under the Investment Advisers Act of 1940, as amended. In November 2013, the USCF Advisers board of managers formed USCF ETF Trust (“ETF Trust”) as an open-end management investment company registered under the 1940 Act. The Trust is authorized to have multiple segregated series or portfolios. USCF Investments owns all of the issued and outstanding limited liability company membership interests of its subsidiaries, USCF and USCF Advisers, each a Delaware limited liability company and are affiliated companies. USCF serves as the general partner (“General Partner”) for various limited partnerships (“LP”) and sponsor (“Sponsor”) as noted below. USCF and USCF Advisers are subject to federal, state and local laws and regulations generally applicable to the investment services industry. USCF is a commodity pool operator (“CPO”) subject to regulation by the Commodity Futures Trading Commission (the “CFTC”) and the National Futures Association (the “NFA”) under the Commodities Exchange Act (“CEA”). USCF Advisers is an investment adviser registered under the Investment Advisers Act of 1940, as amended and has registered as a CPO under the CEA. Exchange traded products (“ETPs”) issued or sponsored by USCF are required to be registered with the Securities and Exchange Commission (the “SEC”) in accordance with the Securities Act of 1933. USCF Investments operates through USCF and USCF Advisers, which collectively operate twelve exchange-traded products (“ETPs”) and exchange traded funds (“ETFs”), regulated by the 1940 Act and 1933 Act, and listed on the NYSE Arca, Inc. (“NYSE Arca”) with a total of approximately $3.7 billion assets under management as of September 30, 2022. USCF Investments and subsidiaries USCF and USCF Advisers are collectively referred to as “USCF Investments” hereafter.

USCF currently serves as the General Partner or the Sponsor to the following commodity pools, each of which is currently conducting a public offering of its shares pursuant to the Securities Act of 1933, as amended:

| USCF as General Partner for the following funds |  |
| --- | --- |
| United States Oil Fund, LP (“USO”) | Organized as a Delaware limited partnership in May 2005 |
| United States Natural Gas Fund, LP (“UNG”) | Organized as a Delaware limited partnership in November 2006 |
| United States Gasoline Fund, LP (“UGA”) | Organized as a Delaware limited partnership in April 2007 |
| United States 12 Month Oil Fund, LP (“USL”) | Organized as a Delaware limited partnership in June 2007 |
| United States 12 Month Natural Gas Fund, LP (“UNL”) | Organized as a Delaware limited partnership in June 2007 |
| United States Brent Oil Fund, LP (“BNO”) | Organized as a Delaware limited partnership in September 2009 |

| USCF as fund Sponsor - each a series within the United States Commodity Index Funds Trust ("USCIF Trust") |  |
| --- | --- |
| United States Commodity Index Fund (“USCI”) | Series of the USCIF Trust created in April 2010 |
| United States Copper Index Fund (“CPER”) | Series of the USCIF Trust created in November 2010 |

USCF Advisers, a registered investment adviser, serves as the investment adviser to the funds listed below within the USCF ETF Trust (the “ETF Trust”) and has overall responsibility for the general management and administration for the ETF Trust. Pursuant to the current Investment Advisory Agreements, USCF Advisers provides an investment program for each of series within the ETF Trust and manages the investment of the assets.

| USCF Advisers as fund manager for each series within the USCF ETF Trust: |  |
| --- | --- |
| USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund ("SDCI") | Fund launched May 2018 |
| USCF Midstream Energy Income Fund ("UMI") | Fund launched March 2021 |
| USCF Gold Strategy Plus Income Fund ("GLDX") | Fund launched November 2021 |
| USCF Dividend Income Fund ("UDI") | Fund launched June 2022 |

All commodity pools managed by USCF and each series of the ETF Trust managed by USCF Advisers are collectively referred to as the “Funds” hereafter.

USCF Investments' revenue and expenses are primarily driven by the amount of AUM. USCF Investments earns monthly management and advisory fees based on agreements with each Fund as determined by the contractual basis point management fee structure in each agreement multiplied by the average AUM over the given period. Many of the company’s expenses are dependent upon the amount of AUM. These variable expenses include Fund administration, custody, accounting, transfer agency, marketing and distribution, and sub-adviser fees and are primarily determined by multiplying contractual fee rates by AUM. Total Operating Expenses are grouped into the following financial statement line items: General and Administrative, Marketing, Operations and Salaries and Compensation.

#### For the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

#### Revenue

Average AUM for the three months ended September 30, 2022 was at $3.9 billion, as compared to approximately $4.2 billion from the three months ended September 30, 2021 primarily due to a decrease in USO, CPER and BNO AUM partially offset by an increase in UNG and USCI AUM. As a result, the revenues from management and advisory fees decreased by approximately $238 thousand, or 4%, to $5.4 million for the three months ended September 30, 2022 as compared to the three months ended September 30, 2021 where revenues from management and advisory fees totaled $5.7 million.

#### Expenses

USCF Investments total operating expenses for three months ended September 30, 2022 decreased by $2.5 million to $3.5 million, or approximately 41%, from $6.0 million for the three months ended September 30, 2021. $2.5 million of the decrease was due to the legal settlement cost which occurred in the prior year quarter. Variable expenses, as described above, decreased by $30 thousand due to a decrease in total AUM which included a $70 thousand decrease in variable marketing and distribution expenses, and fund accounting and administration expenses offset by a smaller increase of $40 thousand in sub-advisory fees related to increase in UMI AUM over the prior year quarter. General and administrative ("G&A") expenses of $585 thousand decreased $85 thousand from $670 thousand for the three months ended September 30, 2022 compared to three months ended September 30, 2021, respectively. G&A expenses decreased primarily due to lower legal and professional expenses. Total marketing expenses remained at approximately $600 thousand for the three months ended September 30, 2022 and September 30, 2021. Employee salaries and benefit compensation expenses were approximately $1.1 million for both three month periods ended September 30, 2022 and September 30, 2021, respectively. Operations expenses remained flat at $1.1 million during the quarter compared to the prior year quarter.

#### Income

Operating income increased $2.2 million to $1.8 million for the three months ended September 30, 2022 from a ($0.4) million operating loss for the three months ended September 30, 2021. The increase was due to the prior year legal settlement cost of $2.5 million. Other income (expense) was ($62) thousand for the three months ended September 30, 2022 compared to $6 thousand for the three months ended September 30, 2021 due to unrealized losses in investments. Net income before income taxes for the three months ended September 30, 2022 increased $2.2 million to $1.8 million compared to a net loss of ($0.4) million for three months ended September 30, 2021 due to a $0.2 million decrease in revenue as a result of lower AUM, as well as a $0.1 million increase in total expenses excluding the legal settlement cost.

### Food Products - Gourmet Foods, Ltd. and Printstock Products Limited

Gourmet Foods, Ltd. was organized in its current form in 2005 (previously known as Pats Pantry Ltd). Pats Pantry was founded in 1966 to produce and sell wholesale bakery products, meat pies and patisserie cakes and slices, in New Zealand. Gourmet Foods, located in Tauranga, New Zealand, sells substantially all of its goods to supermarkets and service station chains with stores located throughout New Zealand. Gourmet Foods, Ltd. also has a large number of smaller independent lunch bars, cafes and corner dairies among the customer list, however they comprise a relatively insignificant dollar volume in comparison to the primary accounts of large distributors and retailers. On July 1, 2020, Gourmet Foods, Ltd. acquired the New Zealand company, Printstock Products Limited. Located in nearby Napier, New Zealand, Printstock prints wrappers for food products, including those used by Gourmet Foods, Ltd. Printstock is a wholly owned subsidiary of Gourmet Foods, Ltd. and its operating results are consolidated with those of Gourmet Foods, Ltd. from July 1, 2020 onwards.

Gourmet Foods operates exclusively in New Zealand and thus the New Zealand dollar is its functional currency. In order to consolidate The Marygold Companies’ reporting currency, the US dollar, with that of Gourmet Foods, The Marygold Companies records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830-30. The translation of New Zealand currency into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. Gains and losses resulting from foreign currency translations are included in foreign currency translation (loss) gain on the Condensed Consolidated Statements of Comprehensive Income as well as accumulated other comprehensive (loss) income found on the Condensed Consolidated Balance Sheets.

#### For the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

#### Revenue

Net revenues for the three months ended September 30, 2022 were $1.9 million with cost of goods sold of $1.3 million resulting in a gross profit of $0.6 million, or approximately 32% gross margin, as compared to the three month period ended September 30, 2021 where net revenues were $2.3 million and cost of goods sold were $1.7 million producing a gross profit of $0.6 million, or approximately 27%. The decrease in net revenues is attributed to a changing product mix affording better profit margins, but lower sales volume.

#### Expenses

Operating expenses, including wages and marketing, for the three month periods ended September 30, 2022 and September 30, 2021 were $0.4 million and $0.4 million, respectively, producing an operating income of $0.3 million and $0.2 million, respectively, or approximately 13% operating income for the three months ended September 30, 2022 and 8% for the three months ended September 30, 2021. Other income totaled $5 thousand for three months ended September 30, 2022 as compared to $1 thousand for the three months ended September 30, 2021.

#### Income

Income for the three months ended September 30, 2022 was approximately $0.2 million after provision for income tax of $61 thousand as compared to a net income of $0.2 million after income tax provision of $48 thousand for the three months ended September 30, 2021.

### Security Systems - Brigadier Security Systems (2000) Ltd.

Brigadier, founded in 1985, is a leading electronic security company in the province of Saskatchewan. Brigadier has offices located in the urban areas of Saskatchewan, Canada; Brigadier Security Systems in Saskatoon, and operating as Elite Security in Regina. The company has a combined industry experience of over 135 years. Brigadier provides comprehensive security solutions including access control, camera systems, fire alarm monitoring panels, and intrusion alarms to home and business owners as well as government offices, schools, and public buildings. Their experience as the provider of choice on many large notable sites shows a commitment to design, service and support. Brigadier specializes, and is certified, in several major manufacturers’ products: Honeywell Security, Panasonic, Avigilon and JCI/DSC/Kantech security products. The company and staff are recognized for dedication to customer service with annual awards from SecurTek including being recipients of the Customer Retention, Service Excellence, and overall best dealer with the President’s Award. The company demonstrates a commitment to delivering outstanding quality to customers by the notable facilities, businesses, and homes they secure.

Brigadier is an authorized SecurTek dealer. SecurTek is owned by SaskTel which is Saskatchewan's leading Information and Communications Technology (ICT) provider with over 1.4 million customer connections across Canada. Under the terms of its authorized dealer contract with the monitoring company, Brigadier earns monthly payments during the term of the monitoring contract in exchange for performance of customer service activities on behalf of the monitoring company.

Brigadier operates exclusively in Canada and thus the Canadian dollar is its functional currency. In order to consolidate The Marygold Companies’ reporting currency, the U.S. dollar, with that of Brigadier, The Marygold Companies records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, *Foreign Currency Matters*. The translation of Canadian currency into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period.

#### For the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

#### Revenue

Net revenues for the three months ended September 30, 2022 were $0.6 million with cost of goods sold recorded as approximately $0.2 million, resulting in a gross profit of approximately $0.4 million with a gross margin of approximately 61% as compared to the three months ended September 30, 2021 where net revenues were approximately $0.7 million with cost of goods sold of $0.3 million and a gross profit of $0.4 million, or approximately 52%.

#### Expenses

Operating expenses for the three months ended September 30, 2022 were $0.3 million producing an operating profit of $0.1 million or approximately 19% as compared to the three months ended September 30, 2021 where operating profits were $0.1 million, or approximately 13%, with operating expenses of $0.3 million.

#### Income

Other income comprised of interest income, rental income and commission income totaled approximately $14 thousand for the three months ended September 30, 2022, and provision for income tax expense was $23 thousand, resulting in net income after income taxes of approximately $0.1 million as compared to net income after income taxes of approximately $79 thousand for the three months ended September 30, 2021 where other income totaled $7 thousand and income tax was $18 thousand.

### Beauty Products - Original Sprout

Kahnalytics was founded in 2015 and adopted the dba/Original Sprout in December 2017. Original Sprout formulates and packages various hair and skin care products that are 100% vegan, tested safe and non-toxic, and marketed globally through distribution networks to salons, resorts, grocery stores, health food stores, e-tail sites and on the company's website. The company operates from warehouse and sales offices located in San Clemente, CA, USA. As a result of the ongoing COVID-19 pandemic, Original Sprout has made adjustments to its primary channels to market. Prior to the pandemic Original Sprout relied heavily upon its wholesale distribution network to place products at retail locations and generally to make products available to consumers, whereas in the current environment of social distancing and closures of retail businesses the company found a significant drop in sales volumes as consumers avoided traditional sales outlets. Moreover, distributors found it more profitable to sell directly to consumers via ecommerce that to sell wholesale to resellers. The result was a dramatic downturn in the average selling price of Original Sprout products on ecommerce sites as distributors began selling to end users at wholesale price. In response to this trend, Original Sprout has established new sales channels with online retailers and also reconstructed many of its distribution agreements and pricing tiers. The positive effects of this transition are expected to be evident during the summer months of 2022, while the negative effects of the COVID-19 pandemic on the wholesale distribution business continues to disrupt the global marketplace. The result is that sales overall have been relatively stable during the pandemic, though derived from different sources, however profit margins have temporarily decreased as changes are implemented. The company has also incurred expenses related to new product development and creation of upcoming marketing collateral, which is expected to continue for the remainder of the fiscal year.

#### For the Three Months Ended September 30, 2022 Compared to the Three Months Ended September 30, 2021

#### Revenue

Net revenues for the three months ended September 30, 2022 were $0.8 million as compared to $1.0 million for the three months ended September 30, 2021. Cost of goods sold for the three months ended September 30, 2022 and September 30, 2021 were $0.5 million and $0.6 million, respectively, resulting in a gross profit of approximately $0.3 million and $0.4 million, respectively, or 43% as compared to 41% gross margin. The decrease in revenues was due to the continuing trends of increased online shopping at lower prices and the loss of domestic distribution to hair salons and boutiques as a result of COVID restrictions in the U.S.

#### Expenses

Operating expenses were approximately $0.4 million resulting in an operating loss of $20 thousand, as compared to $0.4 million of operating expenses resulting in near breakeven at $4 thousand for the three months ended September 30, 2021.

#### Income (Loss)

The net loss for the three months ended September 30, 2022 was approximately $20 thousand as compared to $5 thousand net income for the three months ended September 30, 2021 where other income totaled $1 thousand.

### Financial Services - Marygold & Co. (UK) Limited

Marygold & Co. (UK) Limited was formed in August 2021 as a wholly owned subsidiary of The Marygold Companies. There were no operations in Marygold UK until June 20, 2022 when the acquisition of Tiger Financial and Asset Management Limited was completed in the U.K. Tiger is a company incorporated and registered in England and Wales and located in Northampton, England. Tiger is an asset manager and investment advisor operating pursuant to certification by the Financial Conduct Authority of the United Kingdom. Tiger derives revenues from providing ongoing investment advice to clients as a percentage of total Assets Under Management (‘AUM’) which, as of September 30, 2022, totaled approximately £35 million. Additionally, the company earns fees and commissions on the sale of insurance-based products and other financial instruments secured through third parties. Results of operations for the period from June 20, 2022 through June 30, 2022 were insignificant and thus combined with those of the parent. Because the company has only begun operations in the current fiscal year, there is no comparison data for the prior year period. The accounts of Tiger are consolidated with those of Marygold UK.

Marygold UK operates exclusively in the U.K. and thus the Great Britain Pound (“GBP”) is its functional currency. In order to consolidate The Marygold Companies’ reporting currency, the U.S. dollar, with that of Marygold UK, The Marygold Companies records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, *Foreign Currency Matters*. The translation of U.K. currency into U.S. dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period.

#### For the three months ended September 30, 2022

#### Revenues

Net revenues for the three months ended September 30, 2022 were $133 thousand, resulting in a gross profit of $9 thousand.

#### Expenses

Operating expenses were approximately $6 thousand resulting in an operating income of $3 thousand

#### Income

Net income, after giving consideration to income tax provision of $1 thousand, was $2 thousand.

### Plan of Operation for the Next Twelve Months

Our plan of operation for the next twelve months is to apply necessary resources, which may include experienced personnel, cash, or synergistic acquisitions made with cash, equity or debt, into growing each of our business units to their potential. Original Sprout is transitioning from a largely boutique offering distributed through specialty wholesalers to a more mainstream product available at traditional outlets and online and as such we anticipate measurable growth in revenues for the coming years, though there may be one-time initial expenses associated with the launch of new sales channels. Additionally, we are expecting moderate growth in Brigadier through focused management initiatives and consolidation within the security industry coupled with expanded product offerings. Similarly, we expect Gourmet Foods to be operating more efficiently under current management and continue to increase market share through additional product offerings and channels to market, including the printing and sale of food wrappers by their subsidiary, Printstock. USCF Investments expects to continue development of innovative and new fund products to grow its portfolio. In addition to our long-term mission that is an acquisition strategy based upon identifying and acquiring profitable, mature, companies of a diverse nature and with in-place management that produces increased revenue streams, the Company is also focused upon building expertise and developing Fintech opportunities in the financial services sector through its development stage subsidiary Marygold and Co. In a more general sense, the Company is characterizing its business in two categories: 1) financial services and 2) other consumer-based operating units. The purpose is to isolate the cyclical, and sometimes volatile, nature of the financial services business from our other industry segments. As revenues from financial services fluctuate over time due to varying performance of the commodities markets, our other operations are expected to be stable and sustainable by comparison. By these initiatives we seek to:

- continue to gain market share for our wholly owned subsidiaries’ areas of operation,
- increase our gross revenues and realize net operating profits,
- lower our operating costs by unburdening certain selling expenses to third party distributors,
- have sufficient cash reserves to pay down accrued expenses and losses,
- attract parties who have an interest in selling their privately held companies to us,
- achieve efficiencies in accounting and reporting through adoption of standards used by all subsidiaries on a consistent basis,
- strategically pursue additional company acquisitions, and
- explore opportunities as may present themselves in the Fintech space, including the launch of services by Marygold and Marygold Advisory Services, and the creation of new corporate entities as focused subsidiary holdings.

### Liquidity and Capital Resources

The Marygold Companies is a holding company that conducts its operations through its subsidiaries. At the holding-company level, its liquidity needs relate to operational expense, the funding of additional business acquisitions and new investment opportunities. Our operating subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of equipment and services, operating costs and expenses, and income taxes. Cash is managed at the holding company or the subsidiary level. There are no limitations or constraints on the movement of funds between the entities.

As of September 30, 2022, we had $13.4 million of cash and cash equivalents on a consolidated basis as compared to $12.9 million as of June 30, 2022.

During the past five fiscal years combined, The Marygold Companies has invested an aggregate of approximately $6.6 million in cash towards purchasing and assimilating Printstock within Gourmet Foods, and adding the Original Sprout assets into the The Marygold Companies group of companies as well as forming a new U.K. limited company, Marygold UK, and funding it with enough capital to pay approximately $1.8 million in cash towards the $2.9 million purchase price of its subsidiary, Tiger. We have also invested approximately $6.1 million in the development of Fintech applications through our development stage subsidiary, Marygold. Despite these cash investments and expenses, our working capital position remains strong at $21 million. While The Marygold Companies intends to maintain and improve its revenue stream from wholly owned subsidiaries, The Marygold Companies continues to pursue acquisitions of other profitable companies which meet its target profile. Provided The Marygold Companies’ subsidiaries continue to operate as they are presently, and are projected to operate, The Marygold Companies has sufficient capital to pay its general and administrative expenses for the coming fiscal year and to adequately pursue its long-term business objectives. However, given the significant economic and financial market disruptions associated with the COVID-19 pandemic, the Company’s results of operations could be adversely impacted.

#### Lease Liability

In relation to the adoption of ASC 842, the Company recognized $1,150,916 of operating lease liabilities on July 1, 2019. The total amount due under these obligations was $1,171,073 and $1,404,880 as of September 30, 2022 and June 30, 2022, respectively. The obligations will reduce over the passage of time through periodic lease payments. See Note 15 for further analysis of this obligation.

#### Borrowings

As of September 30, 2022, we had $0.4 million of third-party indebtedness on a consolidated basis as compared to $0.5 million of third-party indebtedness as of June 30, 2022. Approximately US$340,235 is owed by Brigadier and secured with the land and building in Saskatoon purchased in July 2019. The initial principal balance was CD$525,000 (approximately US$401,000 translated as of the loan date July 1, 2019) with an annual interest rate of 4.14% maturing June 30, 2024. The short-term portion of principal for this loan due within 12 months as of September 30, 2022 is CD$19,711 (approximately US$14,384) and the long term principal amount due is CD$446,539 (approximately US$325,851). Interest on the loan is expensed or accrued as it becomes due. Interest expense on the loan for the three months ended September 30, 2022 and 2021 was US$3,706 and US$4,048, respectively.

In addition to the loan due by Brigadier, our subsidiary, Gourmet Foods, on December 21, 2021 entered into a finance lease agreement related to a solar energy system. The present value of the leased asset is included on the Consolidated Balance Sheets with property, plant and equipment as US$118,944. The solar assets are amortized over a life span of 10 years with monthly payments, including GST, totaling $4,480 for the three months ended September 30, 2022.

The Marygold Companies, without inclusion of its subsidiary companies, as of September 30, 2022, has no debt.

#### Investments

USCF Investments, from time to time, provides initial investments in the creation of ETP funds that USCF Investments manages. USCF Investments classifies these investments as current assets as these investments are generally sold within one year from the balance sheet date. As of September 30, 2022 and June 30, 2022, USCF Investments held an initial investment position of $1.2 million and $1.3 million, respectively, in one of its 40 Act funds, GLDX. This investment along with other investments, as applicable, are described further in Note 7 to our Financial Statements.

#### Dividends

Our strategy on dividends is to declare and pay dividends only from retained earnings and only when our Board of Directors deems it prudent and in the best interests of the Company to declare and pay dividends. We paid no dividends during the three months ended September 30, 2022 and 2021.

## Controls and procedures

As filed, 2,154 characters.

### (a) Evaluation of Disclosure Controls and Procedures

The Marygold Companies maintains disclosure controls and procedures that are designed to provide reasonable assurances that the information required to be disclosed in The Marygold Companies’ periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), is recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures and any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their control objectives.

The duly appointed officers of The Marygold Companies, including its chief executive officer and chief financial officer, who perform functions equivalent to those of a principal executive officer and principal financial officer of The Marygold Companies, have evaluated the effectiveness of The Marygold Companies’ disclosure controls and procedures and have concluded that the disclosure controls and procedures of The Marygold Companies were effective as of the end of the period covered by this quarterly report on Form 10-Q.

### (b) Change in Internal Control Over Financial Reporting

There were no significant changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) under the Exchange Act) during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.

## Risk factors

As filed, 1,376 characters.

The Marygold Companies and its subsidiaries (referred to herein as “we,” “us,” “our” or similar expressions) are subject to certain risks and uncertainties in its business operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed in “Risk Factors” in our registration statement, as amended, filed December 7, 2021 and the September 22, 2021 filing of our Annual Report on Form 10-K, which could materially affect our business, financial condition and/or operating results. The risks described in our registration statement and Annual Report are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.

There have been no material changes to the risk factors discussed in “Risk Factors” in our registration statement, as amended, filed on December 7, 2021, the related prospectus, and the September 28, 2022 filing of our Annual Report on Form 10-K. These risk factors should be read in connection with the other information included in this quarterly report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the related notes.

Filed Nov 14, 2022.
Source: SEC EDGAR, the filing index for accession 0001437749-22-027284. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.