# Marygold Companies, Inc.: Form 10-Q for the period ended Sep 30, 2023

- Company: [Marygold Companies, Inc.](/companies/mgld.md) (CIK 1005101)
- Form: 10-Q
- Filed: 2023-11-13
- Accepted by EDGAR: Nov 13, 2023, 16:54 ET
- Period: 2023-09-30
- Accession: 0001493152-23-040591
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1005101/000149315223040591/form10-q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1005101/000149315223040591/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Cost of revenue | 3 months, 2023-07-01 to 2023-09-30 | $2.0m | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2023-07-01 to 2023-09-30 | $6.2m | us-gaap:GrossProfit |
| Operating income | 3 months, 2023-07-01 to 2023-09-30 | −$1.0m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2023-07-01 to 2023-09-30 | $3.6k | us-gaap:InterestExpense |
| Income tax | 3 months, 2023-07-01 to 2023-09-30 | −$302.6k | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-07-01 to 2023-09-30 | −$500.2k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-07-01 to 2023-09-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-07-01 to 2023-09-30 | 40,397,375 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-07-01 to 2023-09-30 | $292.3k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-07-01 to 2023-09-30 | $25.2k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2023-09-30 | $7.0m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-09-30 | $27.3m | us-gaap:AssetsCurrent |
| Total assets | at 2023-09-30 | $35.5m | us-gaap:Assets |
| Current liabilities | at 2023-09-30 | $4.9m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2023-09-30 | $5.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2023-09-30 | $29.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 38,079 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 , the United Kingdom and Canada. The operations of the Company’s wholly-owned subsidiaries are more particularly described herein but are summarized as follows:

- USCF Investments, Inc. (“USCF Investments”), a U.S. based company, is the sole member of two investment services limited liability company subsidiaries that manages, operates or is an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares that 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, completed its development phase in June 2023, and launched its commercial services in June 2023. Through September 30, 2023, Marygold continued its launch efforts and commenced with new marketing campaigns.
- Marygold & Co. (UK) Limited, a newly formed U.K. limited company, together with its newly acquired UK subsidiary, Tiger Financial and Asset Management, Ltd. (collectively “Marygold UK”) is an asset manager and registered investment advisor in the UK. Operations began on June 20, 2022.

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, 2023 and September 30, 2022.*

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenue

Consolidated revenue for the three months ended September 30, 2023 was $8.2 million representing a $0.7 million decrease from the three months ended September 30, 2022 revenue of $8.9 million. The decrease in consolidated revenue was primarily attributed to USCF Investments where Assets Under Management (“AUM”) for the three months ended September 30, 2023 was lower than 2022, which resulted in a revenue decrease of approximately $0.4 million, Gourmet Foods, where revenue decreased by $0.2 million, was impacted by a strong U.S. Dollar where approximately half of the decrease was due to currency translation from lower same dollar sales. and our Canadian subsidiary, Brigadier, which experienced a $0.1 million decrease primarily due to currency translation. Our Marygold U.K. subsidiary contributed $0.1 million to overall revenue which was comparable to the three months ended September 30, 2022.

#### Expenses and Operating (Loss) Income

The Marygold Companies produced an operating loss for the three months ended September 30, 2023 of ($1.0) million as compared to an operating income of $0.8 million for the three months ended September 30, 2022. This represents a decrease in operating income of $1.8 million for the three months ended September 30, 2023 when compared to the three months ended September 30, 2022. Apart from the $0.7 million decline in revenues, the remaining $1.1 million difference in operating income is primarily attributed to the expense increases of $0.8 million incurred by our subsidiary, Marygold & Co., in development of its mobile fintech app as well as a $0.2 million increase in marketing and advertising at Original Sprout related to a new product launch. Operating expenses also included $0.1 million in stock-based compensation from stock grants with the Company’s stock Equity Plan.

*Other Income* (Expenses)

Other income (expense) for the three months ended September 30, 2023 and 2022 were $233 thousand and ($54) thousand, respectively, resulting in income (loss) before income tax of ($0.8) million and $0.7 million, respectively.

#### Income Tax

Income tax benefit (provision) for the three months ended September 30, 2023 and 2022 was $0.3 million and ($0.2) million, respectively, primarily attributable to our United States operations through our USCF Investments subsidiary. Income tax benefit recorded at The Marygold Companies level totaled $0.2 million for the three months ended September 30, 2023, while a tax expense of $0.2 million was recorded for the three months ended September 30, 2022. The remaining income tax expense was recorded at the subsidiary level during the three months ended September 30, 2023 and 2022.

#### Net Income

Overall, the net (loss) income between the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 decreased by approximately $1.0 million to approximately ($0.5) million. The decrease in net income for the three months ended September 30, 2023 was primarily attributable to $0.7 million in lower revenues coupled with increased expenses at Marygold & Co of $0.8 million partially offset by increases in other income and the recording of a tax benefit for the period. The Company continues to contribute capital and profits into the Marygold & Co. fintech subsidiary. The current quarter included $1.45 million of Marygold & Co. expenses paid entirely from the Company.

#### Comprehensive Income

After giving consideration to currency translation loss of approximately ($0.1) million our comprehensive (loss) for the three months ended September 30, 2023 was ($0.6) million as compared to comprehensive income for the three months ended September 30, 2022 where there was a currency translation loss of ($0.3) million which resulted in comprehensive income of $0.2 million. Comprehensive gains and losses 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 fifteen 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 $3.5 billion assets under management as of September 30, 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 |
| USCF Energy Commodity Strategy Absolute Return Fund (“USE”) | Fund launched May 2023 |
| USCF Sustainable Commodity Strategy Fund (“ZSC”) | Fund launched August 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 September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenue

Average AUM for the three months ended September 30, 2023 was at $3.5 billion, as compared to approximately $3.9 billion from the three months ended September 30, 2022 primarily due to a decrease in USO, USCI and BNO AUM, partially offset by an increase in UNG AUM. As a result, the revenues from management and advisory fees decreased by approximately $370 thousand, or 7%, to $5.0 million for the three months ended September 30, 2023 as compared to the three months ended September 30, 2022 where revenues from management and advisory fees totaled $5.4 million.

#### Expenses

USCF Investments total operating expenses for three months ended September 30, 2023 decreased by $245 thousand to $3.3 million, or approximately 7%, from $3.6 million for the three months ended September 30, 2022. Variable expenses, as described above, decreased by $260 thousand due to a decrease in total AUM which included a $252 thousand decrease in variable marketing and distribution expenses, a decrease of $52 thousand in sub-advisory fees related to lower USCI AUM and a $44 thousand increase in fund accounting and administration expenses due to an increase in the number of funds under management. General and administrative (“G&A”) expenses of $543 thousand decreased $42 thousand from $585 thousand for the three months ended September 30, 2023 compared to three months ended September 30, 2022, respectively. G&A expenses decreased primarily due to lower legal and professional expenses. Total marketing expenses decreased $192 thousand to $420 thousand from $612 thousand for the three months ended September 30, 2023 and September 30, 2022, respectively. Employee salaries and benefit compensation expenses were approximately $1.0 million for the months ended September 30, 2023 compared to $1.2 million for three months ended September 30, 2022 primarily due to lower bonus accruals. Operations expenses increased $130 thousand to $1.3 million for the three months ended September 30, 2023 compared to the prior year quarter of $1.1 million due an increase in license fees for new funds.

#### Income

Operating income decreased $125 thousand to $1.7 million for the three months ended September 30, 2023 from $1.9 million for the three months ended September 30, 2022. The decrease was primarily due to lower revenue. Other income (expense) was $218 thousand for the three months ended September 30, 2023 compared to ($62) thousand for the three months ended September 30, 2022 due to dividend income and realized and unrealized gains / losses on investments. Net income before income taxes for the three months ended September 30, 2023 increased $0.2 million to $2.0 million compared to a $1.8 million for three months ended September 30, 2022 due to a $0.4 million decrease in revenue as a result of lower AUM, offset by a $0.2 million decrease in operating expenses and $0.3 million increase in other income.

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

Gourmet Foods 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 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 acquired the New Zealand company, Printstock Products Limited (“Printstock”). Located in nearby Napier, New Zealand, Printstock prints wrappers for food products, including those used by Gourmet Foods. Printstock is a wholly-owned subsidiary of Gourmet Foods and its operating results are consolidated with those of Gourmet Foods from July 1, 2020 onwards.

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenue

Net revenues for the three months ended September 30, 2023 were $1.7 million with cost of goods sold of $1.3 million resulting in a gross profit of $0.4 million, or approximately 24% gross margin, as compared to the three month period ended September 30, 2022 where net revenues were $1.9 million and cost of goods sold were $1.3 million producing a gross profit of $0.6 million, or approximately 32%. The decrease in net revenues is attributed to increased shipping charges resulting in fewer sales to distant customers, and further negative effects of an unfavorable trend in local currency translation to the U.S. dollar.

#### Expenses

Operating expenses, including wages and marketing, for the three month periods ended September 30, 2023 and September 30, 2022 were $0.4 million and $0.4 million, respectively, producing an operating income of $10 thousand and $0.3 million, respectively, or approximately 1% operating income for the three months ended September 30, 2023 and 13% for the three months ended September 30, 2022. Other income totaled $12 thousand for three months ended September 30, 2023 as compared to $5 thousand for the three months ended September 30, 2022.

#### Income

Net income for the three months ended September 30, 2023 was approximately $22 thousand as compared to a net income of $0.2 million after income tax provision of $61 thousand for the three months ended September 30, 2022.

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

Brigadier Security Systems, founded in 1985, is a leading electronic security company in the province of Saskatchewan. Brigadier Security Systems has offices located in the urban areas of Saskatchewan, Brigadier Security in Saskatoon, and operating as Elite Security in Regina. The company has a combined industry experience of over 136 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 Security Systems 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.

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenue

Net revenues for the three months ended September 30, 2023 were $0.5 million with cost of goods sold recorded as approximately $0.2 million, resulting in a gross profit of approximately $0.3 million with a gross margin of approximately 55% as compared to the three months ended September 30, 2022 where net revenues were approximately $0.6 million with cost of goods sold of $0.2 million and a gross profit of $0.4 million, or approximately 61%.

#### Expenses

Operating expenses for the three months ended September 30, 2023 were $0.2 million producing an operating profit of $53 thousand or approximately 10% as compared to the three months ended September 30, 2022 where operating profits were $0.1 million, or approximately 19%, with operating expenses of $0.3 million.

#### Income

Other income comprised of interest income, rental income and commission income totaled approximately $13 thousand for the three months ended September 30, 2023, and provision for income tax expense was $5 thousand, resulting in net income after income taxes of approximately $61 thousand as compared to net income after income taxes of approximately $107 thousand for the three months ended September 30, 2022 where other income totaled $14 thousand and income tax was $23 thousand.

### Beauty Products – Original Sprout

Kahnalytics was founded in 2015 and adopted the dba/Original Sprout in December 2017. Original Sprout formulates and packages 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 COVID-19 pandemic lock downs, Original Sprout made adjustments to its primary channels to market to allow for online shopping and contactless deliveries. 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 post-COVID-19 wholesale distributors have now adopted the practice of selling direct to consumers via e-tail platforms such as Amazon. This trend has eroded the retail price point and made it difficult for Original Sprout to maintain a presence on the shelf of retail outlets. As a result, many of the agreements with domestic wholesalers have been cancelled in an effort to thwart brand and price erosion. New channel partners are being established and aggressive marketing campaigns have been implemented to reestablish the brand in retail outlets. Management expects to realize operating losses for the short term due to these marketing costs, however recover through this transition and realize higher revenues and positive operating results in the coming fiscal year.

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenue

Net revenues for the three months ended September 30, 2023 were $0.8 million as compared to $0.8 million for the three months ended September 30, 2022. Cost of goods sold for the three months ended September 30, 2023 and September 30, 2022 were $0.5 million and $0.5 million, respectively, resulting in a gross profit of approximately $0.3 million and $0.3 million, respectively, or 39% as compared to 43% gross margin. The failure to increase revenues during the three months ended September 30, 2023 compared to September 30, 2022 is due primarily to the cancellation of domestic distribution agreements and the aggressive policing of online sales platforms in advance of a new marketing campaign.

#### Expenses

Operating expenses were approximately $0.6 million resulting in an operating loss of $319 thousand, as compared to $0.4 million of operating expenses resulting in an operating loss of $20 thousand for the three months ended September 30, 2022.

#### Income (Loss)

The net loss for the three months ended September 30, 2023, after other expenses of $3 thousand, was approximately $322 thousand as compared to a $20 thousand net loss for the three months ended September 30, 2022.

### Financial Services – Marygold (U.K.)

Marygold U.K. operates through its wholly owned subsidiary Tiger Financial & Asset Management Limited (“Tiger”), which was acquired in June 2022. Tiger acts as an investment advisor and financial planner to its clients and has two principal revenue streams which comprise ongoing fees for providing investment advice, and commissions for the intermediation of insurance-based products. Tiger does not provide investment management services directly, rather the clients’ assets are referred to third party investment managers, primarily discretionary investment managers. Tiger receives fees for the ongoing advice and financial planning services which are charged as a percentage of the assets under management, which as of June 30, 2023 was approximately $40 million. The ratio of fees earned from investment advice as compared to commissions earned is approximately 80:20 for any given period.

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

#### Revenues

Net revenues for the three months ended September 30, 2023 were $127 thousand as compared to the three months ended September 30, 2022 where net revenues were $133 thousand.

#### Expenses

Operating expenses for the three months ended September 30, 2023 were approximately $197 thousand as compared to $114 thousand for the three months ended September 30, 2022 representing an increase of approximately 73% in operating expenses. Management attributes the increase to the hiring of additional staff in preparation for the development of the Marygold mobile fintech app in the U.K.

#### Income

Net loss, after giving consideration to interest income of $2 thousand, was $68 thousand for the three months ended September 30, 2023 as compared to a net income of $10 thousand for the three months ended September 30, 2022.

### Financial Services – Marygold (U.S.A.)

#### For the Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Marygold & Co. is a financial technology company, not a bank, providing an all-in-one banking and payment services app offering FDIC-insured accounts with a Debit Mastercard®. Like a private banker on your phone, Marygold is introducing a secure way to send, receive, spend, save and invest with no banking fees or minimum balance requirements and aims to redefine mobile banking and payments, all in one app. Marygold completed its development phase in June 2023 and continues to devote considerable resources to the development and launch of its proprietary Fintech app. Revenue is earned from the Mastercard® interchange system with debit card spend by users and from asset management fees earned on investments through the use of MoneyPools, which are goal based savings and investment accounts.

#### Revenue

On boarding of new customers commenced during the three months ended September 30, 2023 resulting in nominal revenue of $401.

#### Expenses

Operating expenses for the three months ended September 30, 2023 increased $810 thousand to $1.45 million compared to $641 thousand in the prior year quarter. The increase was attributed to ongoing development of the app and continued ramping up for the product post launch. Increases from the prior year’s quarter included additional spend of $369 thousand in product development and app service provider infrastructure, a $193 thousand increase in advertising and marketing and a $196 thousand increase in employee compensation & benefits.

### 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 has found it necessary to alter its approach through domestic distribution channels. Due to the effects of the COVID-19 pandemic on consumer shopping habits, many domestic distributors have found it advantageous to sell direct to consumers online, thus becoming retailers in lieu of distributors. The result has been an erosion of profit margins and a fragmented sales channel which have slowed the product roll out plans of Original Sprout. They are in the final stages of correcting this situation and, in spite of incurring losses as a result, expect to realize significant growth in sales volume and profits in the coming fiscal year. Additionally, we are expecting moderate growth in Brigadier through focused management initiatives and partnering with local telecoms and contractors. Similarly, we expect Gourmet Foods to be operating more efficiently as low margin products are eliminated, new channels to market are established, and the printing and sale of food wrappers by their subsidiary, Printstock, continue to improve. USCF Investments will continue to develop 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 subsidiary Marygold and Co. To augment that effort, the Company established a subsidiary in England, Marygold UK, who acquired a registered UK investment advisor, Tiger Financial and Asset Management (“Tiger”). We hope to leverage the client list, industry experience, and banking relationships of Tiger to project our Marygold & Co fintech offerings in the UK during the coming fiscal year. 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 USCF Investments 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 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.
- 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
- expand launch of services by Marygold & Co., Marygold UK, and Marygold & Co. Advisory Services LLC, 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, 2023, we had $7.0 million of cash and cash equivalents, excluding $0.4 million in restricted cash, on a consolidated basis as compared to $8.2 million as of June 30, 2023. The decrease in cash was primarily due to the continuing investment in the development of the mobile fintech app by Marygold along with providing initial seed capital for the USCF Investments ZSC fund launch.

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 $11.1 million in the development of our Fintech applications subsidiary, Marygold. Despite these cash investments and expenses, our working capital position remains strong at approximately $22.4 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 conflicts in Israel and the Ukraine, the Company’s results of operations could be adversely impacted.

#### Lease Liability

The Company has various operating leases for offices, warehouses and manufacturing facilities. The total amount due under these obligations was $713,360 and $837,844 as of September 30, 2023 and June 30, 2023, 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, 2023, we had $0.4 million of third-party indebtedness on a consolidated basis as compared to $0.3 million of third-party and related-party indebtedness as of June 30, 2023. Approximately US$328,646 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. Interest on the loan is expensed or accrued as it becomes due. Interest expense on the loan for the three months ended September 30, 2023 and 2022 was US$3,488 and US$3,706, respectively.

In addition to the loan due by Brigadier, our subsidiary, Gourmet Foods, has a finance lease liability related to a solar energy system. Total lease liabilities under the lease for the three months ended September 30, 2023 and 2022 were NZ$167,058 (approximately US$100,178 translated as of September 30, 2023) as compared to NZ$174,405 (approximately US$106,469 translated as of June 30, 2023), respectively, and are included under loans - property and equipment on our consolidated balance sheets.

#### 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, 2023, USCF Investments held investment positions in four of its 40 Act funds, GLDX, ZSB, USE and ZSC (launched in August 2023) of $1.2 million, $0.5 million, $3.2 million, and $2.7 million, respectively. As of June 30, 2023 USCF held position in GLDX, ZSB, and USE of $1.3 million, $1.9 million, and $2.6 million, respectively. These investments 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, 2023 or year ended June 30, 2023.

## Controls and procedures

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### (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

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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 25, 2023 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 25, 2023 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 13, 2023.
Source: SEC EDGAR, the filing index for accession 0001493152-23-040591. Last ingested by Listed: Oct 24, 2026, 15:02 ET. No prices; not investment advice.