UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended December 31, 2023

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to .

Commission File Number: 001-41318

THE MARYGOLD COMPANIES, INC.

(Exact name of registrant as specified in its charter)

Nevada		90-1133909
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

120 Calle Iglesia

Unit B

San Clemente, CA 92672

(Address of principal executive offices and zip code)

949-429-5370

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class of Security		Trading Symbol		Name of Exchange on Which Registered
Common Stock, par value $0.001 per share		MGLD		NYSE, American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of February 14, 2024, 39,383,459 shares of the registrant’s Common Stock, $0.001 par value per share, were issued and outstanding. In addition, as of this date 49,360 shares of Series B Preferred Stock were issued and outstanding. Each share of Series B Preferred Stock is convertible into 20 shares of Common Stock and votes pari passu on an as if converted basis on all matters presented to our stockholders for a vote.

THE MARYGOLD COMPANIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2023

Table of Contents

	Page

PART I. FINANCIAL INFORMATION	4

Item 1. Financial Statements (Unaudited)	4

Condensed Consolidated Balance Sheets	4

Condensed Consolidated Statements of Operations	5

Condensed Consolidated Statements of Comprehensive (Loss) Income	6

Condensed Consolidated Statements of Stockholders’ Equity	7

Condensed Consolidated Statements of Cash Flows	8

Notes to Condensed Consolidated Financial Statements	9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3. Quantitative and Qualitative Disclosures About Market Risk	27

Item 4. Controls and Procedures	27

PART II. OTHER INFORMATION	28

Item 1. Legal Proceedings	28

Item 1A. Risk Factors	31

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3. Defaults Upon Senior Securities	31

Item 4. Mine Safety Disclosures	31

Item 5. Other Information	31

Item 6. Exhibits	31

Signatures	32

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “would,” “shall,” “might,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

	●	the outcome of the class action litigation;
	●	recent resolutions with the Securities and Exchange Commission (the “SEC”) and the Commodity Futures Trading Commission (the “CFTC”) against United States Oil Fund, L.P., United States Commodity Funds, LLC, a subsidiary of our subsidiary, USCF Investments, Inc. (“USCF Investments”) (f/k/a Wainwright Holdings), and other related parties, as disclosed under “Item 1. Legal Proceedings”;
	●	our future financial performance, including our revenue, cost of revenue, gross profit, gross margin, operating expenses, ability to generate positive cash flow, and ability to achieve and maintain profitability;
	●	the sufficiency of our cash and cash equivalents to meet our working capital, capital expenditure, and liquidity needs;
	●	our operating subsidiaries’ ability to attract and retain customers to use our products, to optimize the pricing for our products, to expand our sales to our customers, and to convince our existing customers to renew subscriptions;
	●	the evolution of technologies affecting our operating subsidiaries’ products and markets;
	●	our operating subsidiaries’ ability to innovate and provide a superior user experience and our intentions and strategy with respect thereto;
	●	our operating subsidiaries’ ability to successfully penetrate enterprise markets;
	●	our operating subsidiaries’ ability to successfully expand in our existing markets and into new markets, including international markets;
	●	the attraction and retention of key personnel;
	●	our ability to effectively manage our growth and future expenses;
	●	worldwide economic conditions, including aftereffects from the economic disruption imposed by the COVID-19 pandemic, the conflicts in Israel and Ukraine, and their impact on spending;
	●	our operating subsidiaries’ ability to comply with modified or new laws and regulations applying to our business, including privacy and data security regulations.

We caution you that the foregoing list does not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our businesses, financial condition, operating results, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2023, and this Quarterly Report on Form 10-Q. Moreover, we and our subsidiaries operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. We cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We and our subsidiaries may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.

THE MARYGOLD COMPANIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

(unaudited)

	December 31, 2023			June 30, 2023

ASSETS

CURRENT ASSETS
Cash and cash equivalents	$	6,214		$	8,161
Accounts receivable, net (of which $1,624 and $1,674, respectively, due from related parties)		2,596			3,026
Inventories		2,389			2,254
Prepaid income tax and tax receivable		1,618			992
Investments, at fair value		12,379			11,481
Other current assets		1,057			904
Total current assets		26,253			26,818

Restricted cash		434			425
Property and equipment, net		1,215			1,255
Operating lease right-of-use assets		1,287			821
Goodwill		2,307			2,307
Intangible assets, net		2,112			2,330
Deferred tax assets, net		771			771
Other assets		553			554
Total assets	$	34,932		$	35,281

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES
Accounts payable and accrued expenses	$	3,287		$	2,771
Operating lease liabilities, current portion		715			457
Purchase consideration payable		637			605
Loans - property and equipment, current portion		352			359
Total current liabilities		4,991			4,192

LONG-TERM LIABILITIES
Loans - property and equipment, net of current portion		82			88
Operating lease liabilities, net of current portion		582			381
Deferred tax liabilities, net		242			242
Total long-term liabilities		906			711
Total liabilities		5,897			4,903

STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 50,000 shares authorized Series B: 49 shares issued and outstanding at December 31, 2023 and June 30, 2023		-			-
Common stock, $0.001 par value; 900,000 shares authorized; 39,383 shares issued and outstanding at December 31, 2023 and June 30, 2023		39			39
Additional paid-in capital		12,605			12,397
Accumulated other comprehensive loss		(12	)		(144	)
Retained earnings		16,403			18,086
Total stockholders’ equity		29,035			30,378
Total liabilities and stockholders’ equity	$	34,932		$	35,281

The accompanying notes are an integral part of these condensed consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	December 31, 2023			December 31, 2022			December 31, 2023			December 31, 2022
	Three Months Ended December 31,						Six Months Ended December 31,
	2023			2022			2023			2022

Revenue
Fund management - related party	$	4,997		$	5,266		$	10,047		$	10,686
Food products		1,920			1,932			3,649			3,870
Beauty products		842			785			1,617			1,588
Security systems		570			665			1,123			1,295
Financial services		128			124			256			258
Revenue		8,457			8,772			16,692			17,697

Cost of revenue		2,091			2,231			4,128			4,256

Gross profit		6,366			6,541			12,564			13,441

Operating expense
Salaries and compensation		2,999			2,805			5,589			5,173
General and administrative expense		2,306			1,820			4,556			3,512
Fund operations		1,187			1,112			2,461			2,253
Marketing and advertising		718			556			1,685			1,329
Depreciation and amortization		153			148			307			297
Total operating expenses		7,363			6,441			14,598			12,564

(Loss) income from operations		(997	)		100			(2,034	)		877

Other income (expense):
Interest and dividend income		138			63			331			115
Interest expense		(3	)		(4	)		(7	)		(11	)
Other (expense) income, net		(503	)		130			(458	)		32
Total other (expense) income, net		(368	)		189			(134	)		136

(Loss) income before income taxes		(1,365	)		289			(2,168	)		1,013

Benefit (provision) for income taxes		182			(107	)		484			(334	)

Net (loss) income	$	(1,183	)	$	182		$	(1,684	)	$	679

Weighted average shares of common stock
Basic		40,397			40,371			40,397			40,371
Diluted		40,397			40,371			40,397			40,384

Net (loss) income per common share
Basic	$	(0.03	)	$	-		$	(0.04	)	$	0.02
Diluted	$	(0.03	)	$	-		$	(0.04	)	$	0.02

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(in thousands)

(unaudited)

	December 31, 2023			December 31, 2022		December 31, 2023			December 31, 2022
	Three Months Ended December 31,					Six Months Ended December 31,
	2023			2022		2023			2022

Net (loss) income	$	(1,183	)	$	182	$	(1,684	)	$	679
Foreign currency translation gain		225			334		133			20
Comprehensive (loss) income	$	(958	)	$	516	$	(1,551	)	$	699

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Number of Shares		Amount		Number of Shares		Par Value		Additional Paid - in Capital		Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Total Stockholders’ Equity
Six Months Ended December 31, 2023	Preferred Stock (Series B)				Common Stock
	Number of Shares		Amount		Number of Shares		Par Value		Additional Paid - in Capital		Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Total Stockholders’ Equity
Balance at June 30, 2023		49	$	-		39,383	$	39	$	12,397	$	(144	)	$	18,086		$	30,378
Loss on currency translation		-		-		-		-		-		(94	)		-			(94	)
Stock-based compensation		-		-		-		-		93		-			-			93
Net loss		-		-		-		-		-		-			(500	)		(500	)
Balance at September 30, 2023		49		-		39,383		39		12,490		(238	)		17,586			29,877
Gain on currency translation		-		-		-		-		-		226			-			226
Stock-based compensation		-		-		-		-		115		-			-			115
Net loss		-		-		-		-		-		-			(1,183	)		(1,183	)
Balance at December 31, 2023		49	$	-		39,383	$	39	$	12,605	$	(12	)	$	16,403		$	29,035

Six Months Ended December 31, 2022	Preferred Stock (Series B)				Common Stock
	Number of Shares		Amount		Number of Shares		Par Value		Additional Paid - in Capital		Accumulated Other Comprehensive (Loss) Income			Retained Earnings		Total Stockholders’ Equity
Balance at June 30, 2022		49	$	-		39,383	$	39	$	12,313	$	(234	)	$	16,921	$	29,039
Loss on currency translation		-		-		-		-		-		(314	)		-		(314	)
Stock-based compensation		-		-		-		-		7		-			-		7
Net income		-		-		-		-		-		-			497		497
Balance at September 30, 2022		49		-		39,383		39		12,320		(548	)		17,418		29,229
Balance		49	$	-		39,383		39		12,320		(548	)		17,418		29,229
Gain on currency translation		-		-		-		-		-		334			-		334
Stock-based compensation		-		-		-		-		10		-			-		10
Net income		-		-		-		-		-		-			182		182
Net income (loss)		-		-		-		-		-		-			182		182
Balance at December 31, 2022		49	$	-		39,383	$	39	$	12,330	$	(214	)	$	17,600	$	29,755
Balance		49	$	-		39,383	$	39	$	12,330	$	(214	)	$	17,600	$	29,755

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	2023			2022
	Six Months Ended
	December 31,
	2023			2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income	$	(1,684	)	$	679
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:
Depreciation and amortization		307			297
Stock-based compensation		208			16
Net loss (gain) on investments		479			(11	)
Non-cash lease costs		(457	)		147
Changes in operating assets and liabilities:
Accounts receivable		444			265
Prepaid income taxes and tax receivable		(623	)		121
Inventories		(91	)		(360	)
Other current assets		(147	)		(33	)
Accounts payable and accrued expenses		547			50
Operating lease liabilities		459			(153	)
Net cash (used in) provided by operating activities		(558	)		1,018

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(30	)		(35	)
Payment of purchase consideration payable		-			(634	)
Proceeds from sale of investments		8,992			1,000
Purchase of investments		(10,362	)		(267	)
Net cash (used in) provided by investing activities		(1,400	)		64

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of property and equipment loans		(15	)		(7	)
Principal payments of finance lease liability		(6	)		(6	)
Net cash used in financing activities		(21	)		(13	)

Effect of exchange rate change on cash and cash equivalents		41			(12	)

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(1,938	)		1,057

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE		8,586			13,929

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE	$	6,648		$	14,986

Cash and cash equivalents	$	6,214		$	14,579
Restricted cash		434			407
Total cash, cash equivalents and restricted cash	$	6,648		$	14,986

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	5		$	8
Income taxes (net of refunds received)	$	100		$	164
NONCASH INVESTING AND FINANCING ACTIVITIES:
Acquisition of operating right-of-use assets through operating lease liabilities	$	795		$	104

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

THE MARYGOLD C

SEC Form 10-Q filed by The Marygold Companies Inc.