Business Context and Reporting Period
Company: The Marygold Companies, Inc. (MGLD)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Three and six months ended December 31, 2025
Business Overview: A multinational holding company operating through subsidiaries in U.S. fund management (USCF Investments), food products (Gourmet Foods), beauty products (Original Sprout), and financial services (Marygold & Co. US/UK). The security systems segment (Brigadier) was sold on July 1, 2025.
Key Financial Metrics
| Metric | Three Months Ended Dec 31, 2025 | Six Months Ended Dec 31, 2025 |
|---|---|---|
| Total Revenue | $7.6 million | $14.6 million |
| Gross Profit | $5.7 million | $11.0 million |
| Operating Loss | $(0.6) million | $(1.9) million |
| Net Loss | $(0.6) million | $(0.9) million |
| Cash and Cash Equivalents | $4.1 million | $4.1 million (Ending Balance) |
| Working Capital | $12.9 million | N/A |
| Debt | $0 (Note Payable Repaid) | $0 |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased 5% ($0.4M) for the quarter and 8% ($1.3M) for the six months compared to the prior year. This was primarily driven by the divestiture of the Security Systems segment (Brigadier) and a 3-4% decline in Fund Management revenue due to lower average Assets Under Management (AUM) caused by commodity price fluctuations.
- Improved Profitability: Net loss decreased significantly by 67% for the quarter and 72% for the six months. This improvement was driven by a $1.3M reduction in operating expenses from pausing the U.S. Fintech app development and the elimination of expenses related to the sold security systems segment.
- Segment Performance:
- Beauty Products: Revenue increased 39% (quarter) and 28% (six months) due to expanded international distribution and optimized online channels.
- Financial Services: Operating loss improved by 78% (quarter) and 77% (six months) following the pause of the U.S. app, though U.K. app development costs increased.
- Debt Elimination: The Company fully repaid a $1.3 million secured note payable to Streeterville Capital, LLC during the six-month period, reducing interest expense significantly.
Guidance, Outlook, and Risks
- Outlook: Management expects losses and negative cash flows from the U.S. Fintech subsidiary to be significantly reduced for the remainder of the fiscal year. The Company plans to fund U.K. Fintech app development only with existing funds; further investment may require additional financing.
- Liquidity: The Company holds $4.1 million in cash and maintains a strong working capital position of $12.9 million. Management believes current cash and operating cash flows are sufficient for the next 12 months.
- Capital Resources: An Equity Distribution Agreement (EDA) with Maxim Group allows for the sale of up to $4.65 million in stock, though no shares have been sold under this agreement as of December 31, 2025.
- Risks and Contingencies:
- Litigation: Ongoing class action and derivative litigation regarding the United States Oil Fund (USO) related to 2020 market disclosures. No accrual has been made, but an adverse outcome could materially affect financial condition.
- Concentration Risk: Fund management revenue is concentrated in specific ETFs (USO, UNG, UMI, USCI, CPER), which accounted for 82% of fund management revenue in the quarter.
- Fintech Uncertainty: Uncertainty regarding the acceptance and revenue generation of the U.K. Fintech application relative to capital invested.
Investor Verification Checklist
- Debt Status: Confirm the full release of collateral and guarantees associated with the repaid Streeterville note.
- Litigation Exposure: Monitor the status of the In re: United States Oil Fund, LP Securities Litigation and potential future accruals.
- Fintech Viability: Assess the progress and burn rate of the U.K. Fintech app development versus the $19.3 million total investment to date.
- AUM Trends: Verify the trajectory of Assets Under Management for USCF funds, as revenue is directly tied to AUM levels.
- Related Party Transactions: Review the terms and pricing of the Brigadier sale to SKCAL LLC (controlled by a director) and ongoing fund management fees from related party funds.