Business Context and Reporting Period
The filing is a Form 10-K for Concierge Technologies, Inc., the predecessor name of Marygold Companies, Inc., covering the fiscal year ended June 30, 2021, with comparative results for fiscal 2020. The request metadata refers to “2020 Q4,” but the source filing is an annual report for fiscal 2021, not a quarterly filing.
The company operates as a decentralized holding company through subsidiaries in investment fund management, food manufacturing and printing, security systems, beauty products, and fintech development. Its subsidiaries include Wainwright Holdings, Gourmet Foods and Printstock, Brigadier Security Systems, Original Sprout, and development-stage Marygold & Co.
- Wainwright managed approximately $4.5 billion of assets at June 30, 2021 through 10 exchange-traded products and funds.
- Printstock was acquired by Gourmet Foods on July 1, 2020 and is consolidated from that date.
- Marygold & Co. remained in the development stage, with a planned mobile-app launch during fiscal 2022.
Financial Performance and Position
| Metric | FY2021 | FY2020 | Change |
|---|---|---|---|
| Revenue | $39.9 million | $26.7 million | Up 49% |
| Gross profit | $30.6 million | $20.3 million | Up 51% |
| Gross margin | 76.7% | 75.8% | Up approximately 0.9 percentage points |
| Operating income | $7.4 million | $1.9 million | Up 287% |
| Income before taxes | $7.6 million | $2.3 million | Up 227% |
| Net income | $5.8 million | $1.8 million | Up approximately 230% |
| Basic and diluted EPS | $0.15 | $0.05 | Up $0.10 |
| Cash flow from operations | $7.2 million | $1.7 million | Up $5.6 million |
Revenue growth was concentrated in Wainwright and Gourmet Foods. Wainwright revenue increased 63% to $25.2 million, reflecting average assets under management of approximately $4.9 billion versus $3.0 billion in fiscal 2020. Gourmet Foods revenue increased to $8.3 million from $4.7 million, including approximately $3.0 million from Printstock. Security systems revenue was broadly stable at $2.7 million, while beauty-products revenue declined slightly to $3.8 million.
Consolidated operating expenses increased 27% to $23.2 million, primarily from higher general and administrative expenses, salaries and compensation, fund operations, and marketing costs. The effective income tax rate was approximately 23.4%, compared with 24.1% in fiscal 2020. Comprehensive income was $6.1 million, including a $287,000 foreign-currency translation gain.
| Balance-sheet metric | June 30, 2021 | June 30, 2020 |
|---|---|---|
| Cash and cash equivalents | $16.1 million | $9.8 million |
| Total current assets | $24.1 million | $17.6 million |
| Total assets | $31.5 million | $24.3 million |
| Total liabilities | $6.2 million | $5.1 million |
| Stockholders’ equity | $25.3 million | $19.1 million |
| Borrowings, excluding lease liabilities | Approximately $1.0 million | Approximately $1.0 million |
Liquidity improved materially, with working capital reported at approximately $19 million. Investing cash flow was negative $1.2 million, including $1.1 million paid for the Printstock acquisition. Financing cash flow was negative $28,000, principally reflecting repayment of property and equipment debt. Operating lease liabilities totaled $1.1 million at year-end.
Material Changes Versus the Prior Comparable Period
- Revenue increased $13.2 million, principally because of higher Wainwright assets under management and the inclusion of Printstock.
- Operating income increased $5.5 million, driven primarily by the 63% increase in Wainwright revenue.
- Net income increased $4.1 million to $5.8 million.
- Cash increased $6.3 million to $16.1 million, supported by stronger operating cash flow.
- Gourmet Foods’ gross margin declined modestly to approximately 31% from 32%, despite the Printstock acquisition.
- Brigadier’s revenue remained approximately flat, but gross margin declined to 53% from 56% because of COVID-19-related sourcing and installation constraints.
- Original Sprout revenue declined to $3.8 million from $3.9 million; gross margin fell to 40% from 46%, and the subsidiary moved from approximately $200,000 of net income to an approximately $200,000 net loss. The filing cites facility relocation, obsolete inventory disposal, packaging changes, and new-product development as unusual cost factors.
- Corporate headquarters, including Marygold, generated a net loss of approximately $4.7 million versus $1.9 million in fiscal 2020, reflecting increased corporate and fintech-development costs.
Guidance, Outlook, Risks, Contingencies, and Unusual Items
Management expects growth initiatives across the operating businesses. Original Sprout is transitioning toward broader retail and online distribution; Brigadier is targeting moderate growth through management initiatives, industry consolidation, and expanded products; Gourmet Foods expects efficiency and market-share gains through additional products, channels, and Printstock; and Wainwright plans to develop additional fund products. Management stated that the company had sufficient capital for expected fiscal 2022 general and administrative expenses and stated objectives, although COVID-19 could adversely affect results.
Marygold & Co. planned to launch its mobile application in fiscal 2022. Subsequent to year-end, Marygold formed a U.K. subsidiary and signed an agreement to acquire Tiger Financial and Asset Management Limited for approximately £1.5 million plus acquired cash, subject to regulatory approval and other closing conditions. Stockholders also approved a company name change to The Marygold Companies, Inc., a possible reverse stock split between 1-for-1.5 and 1-for-2.75, and a 2021 equity incentive plan; the name change and reverse split had not yet become effective as of the filing.
USCF, USO, and related individuals received SEC and CFTC Wells Notices concerning disclosures and actions during the 2020 oil-market disruption. The company and related defendants also face consolidated securities and derivative litigation. No accrual was recorded because the timing, outcome, and potential losses could not be reasonably estimated. An adverse outcome could materially affect financial condition, results of operations, and cash flows.
- Wainwright generated approximately 63% of consolidated revenue, creating substantial exposure to assets under management, commodity prices, investor sentiment, and fund flows.
- The three largest Wainwright funds contributed approximately 84% of Wainwright revenue in fiscal 2021; USO alone represented approximately 65% of Wainwright revenue.
- Customer concentration is significant at several subsidiaries, including Brigadier’s largest customer at 49% of revenue and Gourmet Foods’ largest baking customer group at 49% of baking revenue.
- The company is exposed to COVID-19 effects, commodity-market volatility, regulatory compliance, cybersecurity, foreign-exchange movements, supplier availability, product liability, and key-person risk.
- The company trades on the OTC Markets and is subject to penny-stock trading restrictions. No dividends were paid or expected in the foreseeable future.
- The financial statements received an unqualified audit opinion. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not provide an internal-control attestation because the company was not required to obtain one.
Important Facts for Investors to Verify
- Confirm the effective date and final ratio, if any, of the approved reverse stock split and the status of the corporate name change.
- Review subsequent filings for completion, financing, and regulatory approval of the proposed Tiger acquisition in the United Kingdom.
- Monitor the SEC Wells Notice, CFTC Wells Notice, consolidated class action, and derivative litigation, including any accruals, settlements, or changes in estimated exposure.
- Assess the sustainability of Wainwright’s assets under management and revenue concentration in USO, BNO, and UNG.
- Evaluate whether Original Sprout’s channel transition can restore margins and whether Brigadier’s deferred installation demand materializes after COVID-19 disruptions.
- Verify Marygold’s remaining development commitments, launch timing, funding needs, and ability to generate revenue.
- Reconcile cash, working capital, related-party notes, lease liabilities, and the approximately $395,000 secured Brigadier property loan.
- Consider the voting control associated with Series B preferred stock and the Gerber and Schoenberger voting agreement, which represented approximately 59.33% of voting stock for director elections.