Business Context and Reporting Period
Company: The Marygold Companies, Inc. (MGLD)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter ended September 30, 2025
Business Overview: A 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 during the quarter.
Key Financial Metrics
| Metric (in thousands) | Q1 2025 (Sep 30) | Q1 2024 (Sep 30) |
|---|---|---|
| Revenue | $6,963 | $7,910 |
| Gross Profit | $5,364 | $5,782 |
| Gross Margin | 77.0% | 73.1% |
| Operating Loss | $(1,264) | $(2,170) |
| Net Loss | $(356) | $(1,586) |
| Cash and Cash Equivalents | $4,860 | $6,665 |
| Working Capital | $13,490 | $12,414 |
| Total Debt | $0 | $1,268 (Current) |
Note: All figures in thousands except per share data and percentages. Working capital calculated as Current Assets ($18,365) minus Current Liabilities ($4,875).
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 12% to $6.96 million. This was primarily driven by the divestiture of the Security Systems segment (Brigadier), which contributed $0.69 million in the prior year, and a 6% decline in Fund Management revenue due to lower Average Assets Under Management (AUM) of $2.9 billion vs. $3.1 billion.
- Improved Profitability: Net loss improved significantly by 78% to $0.36 million. Operating loss narrowed by 42% to $1.26 million.
- One-Time Gain: The company recorded a $0.52 million gain on the sale of Brigadier Security Systems to a related party, which significantly offset operating losses.
- Debt Reduction: The company fully repaid a secured promissory note of approximately $1.4 million (principal and interest) during the quarter. As of September 30, 2025, the company has no outstanding indebtedness.
- Segment Performance:
- Beauty Products: Revenue increased 12% to $0.67 million; turned profitable with $0.12 million operating income.
- Financial Services: Operating loss improved by 76% to $0.37 million, largely due to pausing the U.S. Fintech app development.
Guidance, Outlook, and Risks
- Outlook: Management expects cash and cash equivalents to be sufficient for the next 12 months. However, continued investment in the U.K. Fintech app may require additional financing. If capital cannot be raised, the company plans to curtail Fintech development.
- Recent Financing: In January 2025, the company raised $1.8 million in net proceeds from a public offering. An Equity Distribution Agreement (EDA) with Maxim Group allows for up to $4.65 million in future sales, though no shares have been sold under this agreement yet.
- Strategic Shifts: The U.S. Fintech app ("Money Pools") has been paused due to de minimis revenue. Focus has shifted to the U.K. market for the Fintech application.
- Legal Risks: The company is involved in ongoing class action and derivative litigation regarding its subsidiary USCF Investments and the United States Oil Fund (USO). No reserves have been established, but an adverse outcome could materially affect financial condition.
- Market Risks: Fund management revenue is sensitive to commodity price fluctuations and geopolitical uncertainty affecting AUM.
Investor Verification Checklist
- Debt Status: Confirm the full repayment of the Streeterville Capital note and the release of all collateral/guarantees.
- Litigation Exposure: Review the status of the In re: United States Oil Fund, LP Securities Litigation and potential financial impact.
- Fintech Viability: Assess the progress and capital requirements for the U.K. Fintech app versus the paused U.S. version.
- AUM Trends: Monitor the trajectory of Assets Under Management for USCF funds, as this is the primary revenue driver.
- Related Party Transactions: Verify the terms and pricing of the Brigadier sale to SKCAL LLC (controlled by a director) and ongoing fund management fees from related party funds.