# Marygold Companies, Inc.: Form 10-Q for the period ended Mar 31, 2023

- Company: [Marygold Companies, Inc.](/companies/mgld.md) (CIK 1005101)
- Form: 10-Q
- Filed: 2023-05-15
- Accepted by EDGAR: May 15, 2023, 15:53 ET
- Period: 2023-03-31
- Accession: 0001437749-23-014542
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1005101/000143774923014542/mgld20230331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1005101/000143774923014542/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-01 to 2023-03-31 | $8.3m | us-gaap:Revenues |
| Revenue | 9 months, 2022-07-01 to 2023-03-31 | $26.0m | us-gaap:Revenues |
| Cost of revenue | 3 months, 2023-01-01 to 2023-03-31 | $2.2m | us-gaap:CostOfRevenue |
| Cost of revenue | 9 months, 2022-07-01 to 2023-03-31 | $6.4m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-01-01 to 2023-03-31 | $6.1m | us-gaap:GrossProfit |
| Gross profit | 9 months, 2022-07-01 to 2023-03-31 | $19.6m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-01-01 to 2023-03-31 | $166.1k | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2022-07-01 to 2023-03-31 | $1.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-01-01 to 2023-03-31 | $4.9k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2022-07-01 to 2023-03-31 | $16.3k | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-01-01 to 2023-03-31 | −$29.7k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2022-07-01 to 2023-03-31 | $304.9k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-01 to 2023-03-31 | $153.3k | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2022-07-01 to 2023-03-31 | $832.3k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.00 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2022-07-01 to 2023-03-31 | $0.02 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-01 to 2023-03-31 | $0.00 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2022-07-01 to 2023-03-31 | $0.02 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-01 to 2023-03-31 | 40,438,348 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2022-07-01 to 2023-03-31 | 40,401,952 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2022-07-01 to 2023-03-31 | $819.1k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Cash and equivalents | at 2023-03-31 | $9.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-03-31 | $26.0m | us-gaap:AssetsCurrent |
| Total assets | at 2023-03-31 | $34.7m | us-gaap:Assets |
| Current liabilities | at 2023-03-31 | $3.7m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-03-31 | $4.8m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-03-31 | $29.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 47,764 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 March 31, 2023, and estimated to launch commercial services in the current fiscal year. Through March 31, 2023, 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 June 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 has 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 March 31, 2023 and March 31, 2022.*

#### For the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

#### Revenue and Operating Income

Consolidated revenue for the three months ended March 31, 2023 was $8.3 million representing a $0.5 million decrease from the three months ended March 31, 2022 revenue of $8.8 million. The decrease in consolidated revenues was primarily attributed to a decrease of $0.8 million in revenues of USCF Investments which were impacted by lower assets under Assets Under Management ("AUM"). The other operating subsidiaries combined for an increase of $0.3 million for the three months ended March 31, 2023 as compared to March 31, 2022 which partially offset the decrease of USCF Investments. Our recent Marygold UK acquisition also contributed $0.1 million to overall revenue compared to $0 during the three months ended March 31, 2022. The Marygold Companies produced an operating income for the three months ended March 31, 2023 of $0.2 million as compared to an operating income of $1.0 million for the three months ended March 31, 2022. This represents an decrease in operating income of $0.8 million for the three months ended March 31, 2023 when compared to the three months ended March 31, 2022. Apart from the $0.5 million decline in revenues, the difference in operating income is attributed to higher general & administrative ("G&A") expenses and additional expenses incurred by our subsidiary, Marygold & Co., in development of its mobile fintech app, which amounted to approximately $1.0 million.

#### Other (Expense) Income

Other (expense) income for the three months ended March 31, 2023 was ($43) thousand compared to the same period in 2022 where other income was $247 thousand, resulting in income before income tax for the three months ended March 31, 2023 and 2022 of $0.1 million and $1.3 million, respectively.

#### Income Tax

Benefit (provision) for income tax for the three months ended March 31, 2023 and 2022 was $30 thousand and ($421) thousand, respectively, primarily attributable to our United States operations through our USCF Investments subsidiary. The Company files income taxes as a combined group and records most income taxes at the parent level. The remaining income tax expense was recorded at the subsidiary level during the three months ended March 31, 2023 and 2022.

#### Net Income

Overall, the net income between the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 decreased by approximately $0.7 million, or approximately 82%, to approximately $0.2 million. The decrease in net income for the three months ended March 31, 2023 was primarily due to $0.5 million in lower revenue, an increase in staffing and other expenses at our development stage company, Marygold, and other expenses rather than other income.

#### Comprehensive Income

After giving consideration to currency translation (loss) gain of approximately ($30) thousand our comprehensive income for the three months ended March 31, 2023 was $123 thousand as compared to the three months ended March 31, 2022 where there was a currency translation gain of $79 thousand which resulted in comprehensive income of $950 thousand. 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.

#### For the Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022

#### Revenue and Operating Income

Consolidated revenue for the nine months ended March 31, 2023 was $26 million representing a $2 million decrease from the same prior year period revenue of $28 million. Net revenues declined from our fund management business as a result of lower AUM by approximately $1.5 million, or 9%, for the nine months ended March 31, 2023 as compared to the nine months ended March 31, 2022. The Company's revenues derived from its other operating units decreased by $0.4 million, or 4%, from the same prior year period offset by $0.4 million from our Marygold UK subsidiary which had $0 revenue in the prior year nine month period, resulting in an overall decrease in consolidated revenue of approximately 7%. The Marygold Companies produced an operating income for the nine months ended March 31, 2023 of $1.0 million as compared to an operating income of $0.7 million for the nine months ended March 31, 2022. The increase in operating income was primarily attributable to the $2.5 million SEC / CFTC Wells Notice settlement incurred in the prior year nine month period in addition to lower revenue from USCF Investments and our other operating subsidiaries.

#### Other Income

Other income for the nine months ended March 31, 2023 increased $55 thousand compared to the same period in 2022 due to higher interest income and lower interest expense, and were $90 thousand and $35 thousand, respectively, resulting in income before taxes of $1.1 million and $0.8 million, respectively.

#### Income Tax

Provision for income tax for the nine months ended March 31, 2023 and 2022 were $0.3 million and $0.7 million, respectively, primarily attributable to our United States operations through our USCF Investment subsidiary. The Company files income taxes as a combined group and records most income taxes at the Parent level.

#### Net Income (Loss) and Comprehensive Income (Loss)

Overall, the net income for the nine months ended March 31, 2023 as compared to the nine months ended March 31, 2022 increased by approximately $0.8 million. The increase in profits for the nine months ended March 31, 2023 was primarily attributable to the $2.5 million SEC / CFTC Wells Notice settlement recorded in the prior year reporting period in addition to lower revenue from each of our operating subsidiaries. Adding to the loss were expenses of $2.4 million related to our development stage subsidiary, Marygold. After giving consideration to currency translation loss of ($10) thousand our comprehensive income for the nine months ended March 31, 2023 was $0.8 million as compared to the nine months ended March 31, 2022 where there was a currency translation loss of ($21) thousand resulting in a comprehensive loss of ($9) thousand. Comprehensive gain and loss are comprised of fluctuations in foreign currency exchange rates related to the effects in the valuation of our holdings in 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 March 31, 2023. 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 |
| USCF Sustainable Battery Metals Strategy Fund ("ZSB") | Fund launched January 2023 |

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 March 31, 2023 Compared to the Three Months Ended March 31, 2022

#### Revenue

Average AUM for the three months ended March 31, 2023 was at $3.7 billion, as compared to approximately $4.4 billion from the three months ended March 31, 2022 primarily due to a decrease in USO, USCI and CPER AUM, partially offset by an increase in UNG and UMI AUM. As a result, the revenues from management and advisory fees decreased by approximately $846 thousand, or 14%, to $5.0 million for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022 where revenues from management and advisory fees totaled $5.9 million.

#### Expenses

USCF Investments total operating expenses for three months ended March 31, 2023 decreased approximately $561 thousand to $3.1 million compared to the three months ended March 31, 2022. Variable expenses, as described above, decreased by $355 thousand due to a decrease in total AUM along with a new negotiated agreement with the existing marketing distributor resulting in lower fees, which included a $292 thousand decrease in variable marketing and distribution expenses, in addition to small decreases in fund accounting and administration expenses and in sub-advisory fees related to lower AUM over the prior year quarter. General and administrative ("G&A") expenses decreased $69 thousand to $535 thousand from $604 thousand for the three months ended March 31, 2023 compared to three months ended March 31, 2022, respectively. G&A expenses decreased primarily due to lower legal and professional expenses. Total marketing expenses decreased $251 thousand to $374 thousand for the three months ended March 31, 2023 compared to $625 thousand for the three months ended March 31, 2022 due to the new reduced fee agreement with the existing marketing distributor as noted above. Employee salaries and benefit compensation expenses were approximately $1.0 million for the three months ended March 31, 2023 and $1.2 million for the three months ended March 31, 2022 due to allocating employee costs related to time working at the Marygold Companies, Inc. corporate level. Operations expenses decreased $90 thousand to $1.1 million during the quarter compared $1.2 million to the prior year quarter.

#### Income

Operating income decreased $0.3 million to $1.9 million for the three months ended March 31, 2023 from $2.2 million for the three months ended March 31, 2022. Other income (expense) was ($52) thousand for the three months ended March 31, 2023 compared to $93 thousand for the three months ended March 31, 2022 due to unrealized (losses) gains in investments partially offset by interest income. Net income before income taxes for the three months ended March 31, 2023 decreased $0.4 million to $1.9 million compared to $2.3 million for three months ended March 31, 2022 due to a $0.9 million decrease in revenue as a result of lower AUM, offset by a $0.6 million decrease in total expenses and a $0.1 million increase in Other non-operating expenses.

#### For the Nine Months Ended March 31, 2023, Compared to the Nine Months Ended March 31, 2022

#### Revenue

Average AUM for the nine months ended March 31, 2023 was at $3.8 billion, as compared to approximately $4.3 billion from the nine months ended March 31, 2022 primarily due to decreases in USO, BNO and USL AUM. As a result, the revenues from management and advisory fees decreased by approximately $1.5 million, or 9%, to $15.7 million for the nine months ended March 31, 2023 as compared to the nine months ended March 31, 2022 where revenues from management and advisory fees totaled $17.2 million.

#### Expenses

USCF Investments total operating expenses decreased to $10.3 million, or approximately 23%, from $13.4 million for the nine months ended March 31, 2023 compared to same prior year period after recording the $2.5 million SEC / CFTC Wells Notice settlement in the prior year period. Excluding the Wells Notice settlement from the prior year period, total operating expenses decreased $603 thousand, or approximately 6%. Variable expenses, as described above, decreased by the same amount of $603 thousand over the respective nine-month period due to lower overall average AUM offset by a small increase in sub-advisory fees for UMI which did not exist for the full prior year nine month period, as well as with small offset decreases in USCI and CPER sub-advisory fees due to decreases in their respective AUM from the prior year nine month period. G&A expenses were $1.8 million and $1.6 million for the nine months ended March 31, 2023 and March 31, 2022, respectively. G&A expenses increased $0.2 million due to increases in travel & entertainment and professional fees. Total marketing expenses decreased $0.5 million to $1.3 million for the nine months ended March 31, 2023 as compared to the prior year period due to a decrease in variable distribution costs as a result of lower AUM and reduced rates in marketing distribution expenses as mentioned above partially offset by increases in marketing and conference expenses. Employee salaries and benefit compensation expenses were approximately $3.7 million and $4.0 million for the nine months ended March 31, 2023 and March 31, 2022, respectively due to to allocating employee costs related to time working at the Marygold Companies, Inc. corporate level. Operations expenses remained flat at approximately $3.3 million.

#### Income

Operating income, excluding the $2.5 million settlement expense in the prior year, decreased $0.9 million to $5.4 million for the nine months ended March 31, 2023, or approximately 14%, from $6.3 million for the nine months ended March 31, 2022. Other income (expense) was $66 thousand for the nine months ended March 31, 2023 compared to $136 thousand for the nine months ended March 31, 2022. Income before income taxes for the nine months ended March 31, 2023 decreased $1.0 million, to $5.4 million, excluding the prior year SEC / CFTC Wells Notice settlement, compared to $6.4 million for nine months ended March 31, 2022 due to a $1.5 million decrease in revenue as a result of lower AUM offset by a decrease of $0.6 million in total operating expenses and an decrease of $0.1 million in other income.

### 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 March 31, 2023 Compared to the Three Months Ended March 31, 2022

#### Revenue

Net revenues for the three months ended March 31, 2023 were $1.8 million with cost of goods sold of $1.5 million resulting in a gross profit of $0.3 million, or approximately 18% gross margin, as compared to the three month period ended March 31, 2022 where net revenues were $1.7 million and cost of goods sold were $1.4 million producing a gross profit of $0.3 million, or approximately 18%.

#### Expenses

Operating expenses, including wages and marketing, for the three month periods ended March 31, 2023 and March 31, 2022 were $0.4 million and $0.4 million, respectively, producing an operating loss of ($42) thousand and ($84) thousand, respectively, or approximately nil% operating income for the three months ended March 31, 2023 and (5%) for the three months ended March 31, 2022. Other income totaled $6 thousand for three months ended March 31, 2023 as compared to $13 thousand for the three months ended March 31, 2022.

#### (Loss) Income

(Loss) for the three months ended March 31, 2023 was approximately ($36) thousand as compared to ($72) thousand for the three months ended March 31, 2022.

#### For the Nine Months Ended March 31, 2023, Compared to the Nine Months Ended March 31, 2022

#### Revenue

Net revenues for the nine months ended March 31, 2023 were $5.7 million with cost of goods sold of $4.3 million resulting in a gross profit of $1.4 million, or approximately 25% gross margin, as compared to the nine month period ended March 31, 2022 where net revenues were $6.1 million and cost of goods sold were $4.6 million producing a gross profit of $1.5 million, or approximately 24%. The decrease in revenues is largely due to a changing product mix due to the rising costs of some raw ingredients, and the company's response to focus on production of higher margin products even though they may have a lower selling price.

#### Expenses

General, administrative and selling expenses, including wages and marketing, for the nine month periods ended March 31, 2023 and 2022 were $1.2 million and $1.2 million producing operating income of $0.2 million and $0.3 million, respectively, or approximately 4% net operating profit for the nine months ended March 31, 2023 and 5% for the nine months ended March 31, 2022. Other income for the nine month periods ended March 31, 2023 and 2022 were $15 thousand and $23 thousand, respectively.

#### Income

Income for the nine months ended March 31, 2023, after income tax provision of approximately $62 thousand, resulted in a net income of approximately $186 thousand, as compared to $215 thousand for the nine months ended March 31, 2022 where the income tax provision was approximately $88 thousand.

### 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 March 31, 2023 Compared to the Three Months Ended March 31, 2022

#### Revenue

Net revenues for the three months ended March 31, 2023 were $0.8 million with cost of goods sold recorded as approximately $0.3 million, resulting in a gross profit of approximately $0.5 million with a gross margin of approximately 57% as compared to the three months ended March 31, 2022 where net revenues were approximately $0.6 million with cost of goods sold of $0.3 million and a gross profit of $0.3 million, or approximately 54%.

#### Expenses

Operating expenses for the three months ended March 31, 2023 were $0.2 million producing an operating profit of $0.1 million or approximately 13% as compared to the three months ended March 31, 2022 where operating profits were $38 thousand, or approximately 7%, with operating expenses of $0.3 million.

#### Income

Other income comprised of interest income, rental income and commission income totaled approximately $9 thousand for the three months ended March 31, 2023, and provision for income tax expense was $10 thousand, resulting in net income after income taxes of approximately $84 thousand as compared to net income after income taxes of approximately $40 thousand for the three months ended March 31, 2022 where other income totaled $5 thousand and income tax was $4 thousand.

#### For the Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022

#### Revenue

Net revenues for the nine months ended March 31, 2023 were $1.9 million with cost of goods sold recorded as approximately $0.8 million, resulting in a gross profit of approximately $1.0 million with a gross margin of approximately 55% as compared to the nine months ended March 31, 2022 where net revenues were approximately $1.9 million with cost of goods sold of $0.9 million and a gross profit of $1.0 million, or approximately 53%.

#### Expenses

Operating expenses for the nine months ended March 31, 2023 were $0.8 million producing an operating profit of $0.3 million or approximately 14% as compared to the nine months ended March 31, 2022 where operating profits were $0.2 million, or approximately 11%, with operating expenses of $0.8 million.

#### Income

Other income totaled approximately $36 thousand and income tax provision was $44 thousand for the nine months ended March 31, 2023 resulting in income after income taxes of approximately $302 thousand as compared to income after income taxes of approximately $188 thousand for the nine months ended March 31, 2022 where other income totaled approximately $19 thousand and provision for income tax was approximately $33 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 take up to 12 months to realize, while the negative effects of the COVID-19 pandemic on the wholesale distribution business seems to be easing somewhat and management expects overall positive results to occur in the global marketplace. The company has also incurred expenses related to new product development and creation of upcoming marketing collateral, which is expected to continue well into calendar year 2023 as the company pursues its growth initiatives.

#### For the Three Months Ended March 31, 2023 Compared to the Three Months Ended March 31, 2022

#### Revenue

Net revenues for the three months ended March 31, 2023 were $0.7 million as compared to $0.7 million for the three months ended March 31, 2022. Cost of goods sold for the three months ended March 31, 2023 and March 31, 2022 were $0.4 million and $0.4 million, respectively, resulting in a gross profit of approximately $0.3 million and $0.3 million, respectively, or 40% as compared to 38% gross margin. The increase in gross profit percentage was due to the restructuring of domestic distribution channels in an effort to thwart Internet diverters.

#### Expenses

Operating expenses were approximately $0.4 million resulting in an operating loss of ($132) thousand, as compared to $0.4 million of operating expenses resulting in an operating loss of ($148) thousand for the three months ended March 31, 2022.

#### (Loss)

The net loss for the three months ended March 31, 2023 was approximately ($133) thousand after other expenses of $1 thousand as compared to ($147) thousand net loss for the three months ended March 31, 2022 where other income totaled $1 thousand.

#### For the Nine Months Ended March 31, 2023 Compared to the Nine Months Ended March 31, 2022

#### Revenue

Net revenues for the nine months ended March 31, 2023 were $2.3 million as compared to $2.7 million for the nine months ended March 31, 2022. Cost of goods sold for the nine months ended March 31, 2023 and March 31, 2022 were $1.3 million and $1.6 million, respectively, resulting in a gross profit of approximately $1.0 million and $1.1, respectively, for each period.

#### Expenses

Operating expenses for the nine months ended March 31, 2023 were approximately $1.2 million resulting in an operating loss of approximately ($192) thousand, as compared to $1.3 million of operating expenses resulting in an operating loss of approximately ($160) thousand for the nine months ended March 31, 2022.

#### Income (Loss)

The net loss for the nine months ended March 31, 2023 was approximately ($193) thousand after other expense of approximately $1 thousand as compared to ($155) thousand net loss for the nine months ended March 31, 2022 where the other income totaled approximately $5 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 March 31, 2023, 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 March 31, 2023

#### Revenues

Net revenues for the three months ended March 31, 2023 were $130 thousand, resulting in a gross profit of $130 thousand as there are no cost of goods sold within the business.

#### Expenses

Operating expenses were approximately $114 thousand resulting in an operating income of $16 thousand.

#### Income

Net income, after giving consideration to interest income of $1 thousand and income tax provision of $5 thousand, was $12 thousand.

#### For the nine months ended March 31, 2023

#### Revenues

Net revenues for the nine months ended March 31, 2023 were $388 thousand, resulting in a gross profit of $388 thousand.

#### Expenses

Operating expenses were approximately $336 thousand resulting in an operating income of $52 thousand.

#### Income

Net income, after giving consideration to interest income of $3 thousand and income tax provision of $16 thousand, was $39 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 March 31, 2023, we had $10.3 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 $8 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 $22 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 and the conflict in the Ukraine, the Company’s results of operations could be adversely impacted.

#### Lease Liability

The Company has various operating leases. The total amount due under these obligations was $1,166,135 and $1,404,880 as of March 31, 2023 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 March 31, 2023, we had $0.4 million of third-party indebtedness on a consolidated basis as compared to $0.4 million of third-party indebtedness as of June 30, 2022. Approximately US$336,951 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 March 31, 2023 is approximately US$14,854, and the long term principal amount due is approximately US$322,097. Interest on the loan is expensed or accrued as it becomes due. Interest expense on the loan for the three and nine months ended March 31, 2023 were US$3,511 and US$10,740, respectively. Interest expense on the loan for the three and nine months ended March 31, 2022 were $3,865 and $11,884, 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 $121,058. The solar assets are amortized over a life span of 10 years with monthly payments, including GST, totaling $4,935 for the three months ended March 31, 2023 and $14,805 for the nine months ended March 31, 2023.

The Marygold Companies, without inclusion of its subsidiary companies, as of March 31, 2023, 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 March 31, 2023 and June 30, 2022, USCF Investments held an investment position in its 40 Act funds including GLDX of $1.3 million and $1.3 million, respectively, along with ZSB, launched January 2023, of $2.1 million as of March 31, 2023. 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 March 31, 2023 and 2022.

## 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, 5,016 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 March 8, 2022 and the September 28, 2022 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.

***Abrupt changes in market and general economic conditions may in the future adversely affect our business and profitability and cause volatility in our results of operations.***

Economic and market conditions may have a direct and material impact on our results of operations and financial condition because performance in the financial services industry is heavily influenced by the overall strength of general economic conditions and financial market activity.

Recently, concerns have arisen with respect to the financial condition of a number of banking organizations in the United States, in particular those with exposure to certain types of depositors and large portfolios of investment securities. On March 10, 2023, Silicon Valley Bank (“SVB”) was closed by the California Department of Financial Protection and Innovation, and the Federal Deposit Insurance Corporation (the “FDIC”) was appointed receiver of SVB. On March 12, 2023, the FDIC was appointed receiver of Signature Bank. While we do not have any exposure to SVB, Signature Bank, or any other bank that has become insolvent to date, we do maintain our cash at financial institutions, often in balances that exceed the current FDIC insurance limits. If other banks and financial institutions enter receivership or become insolvent in the future due to financial conditions affecting the banking system and financial markets, our ability to access our cash, cash equivalents and investments, including transferring funds, making payments or receiving funds, may be threatened and could have a material adverse effect on our business and financial condition. In addition, the operating environment and public trading prices of financial services sector securities can be highly correlated, in particular in times of stress, which may adversely affect the trading price of our common stock and potentially our results of operations.

Our banking is directly related to general economic conditions and corresponding financial market activity. When the outlook for such economic conditions is uncertain or negative, financial market activity generally tends to decrease, which reduces banking investments and revenues. Reduced expectations of U.S. economic growth or a decline in the global economic outlook could cause financial market activity to decrease and negatively affect our banking investments and revenues. A sustained and continuing market downturn could lead to or exacerbate declines in the financial condition of the Company.

In addition, global economic conditions and global financial markets remain vulnerable to the potential risks posed by certain events, which could include, among other things, level and volatility of interest rates, availability and market conditions of financing, economic growth or its sustainability, unforeseen changes to gross domestic product, inflation, energy prices, fluctuations or other changes in both debt and equity capital markets and currencies, political and financial uncertainty in the United States and the European Union, ongoing concern about Asia’s economies, global supply disruptions, complications involving terrorism and armed conflicts around the world (including the conflict between Russia and Ukraine), or other challenges to global trade or travel, such as those that have occurred due to the COVID-19 pandemic. More generally, because our business is closely correlated to the general economic outlook, a significant deterioration in that outlook or realization of certain events would likely have an immediate and significant negative impact on our business and overall results of operations

There have been no other 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 May 15, 2023.
Source: SEC EDGAR, the filing index for accession 0001437749-23-014542. Last ingested by Listed: Nov 6, 2026, 16:44 ET. No prices; not investment advice.