10-Q: Marygold Companies Narrows Losses, Shifts Focus After Brigadier Sale

The Marygold Companies reported a significant reduction in net loss for the quarter and six months ended December 31, 2025, driven by the sale of its Security Systems segment and a strategic pause in its U.S. Fintech app development.

Summary

• Net loss significantly decreased by 67% to $0.6 million for the three months ended December 31, 2025, compared to $1.7 million in the prior year, and by 72% to $0.9 million for the six months, compared to $3.3 million.
• Total revenue decreased by 5% to $7.6 million for the three months and by 8% to $14.6 million for the six months, primarily due to the sale of the Security Systems segment and a decline in U.S. Fund Management revenue.
• Operating expenses decreased by 19% to $6.3 million for the three months and by 18% to $12.9 million for the six months, largely due to pausing the U.S. Fintech app development and the Brigadier sale.
• The Security Systems segment (Brigadier) was sold to a related party on July 1, 2025, resulting in a $0.5 million gain on sale and the elimination of its revenue and expenses.
• Development and offering of the Marygold US Fintech app were paused effective April 1, 2025, due to de minimis revenues, leading to a $1.3 million reduction in financial services operating loss for the three months.
• The Beauty Products segment saw revenue increase by 39% for the three months and 28% for the six months, driven by changes in online distribution and international expansion, leading to improved operating income.
• The Streeterville note payable, with an effective interest rate of 41.3%, was fully repaid in September 2025, eliminating $1.4 million in principal and interest payments and releasing all pledged collateral.
• Cash and cash equivalents decreased by $0.9 million to $4.1 million as of December 31, 2025, from $5.0 million at June 30, 2025, while working capital remains strong at $12.9 million.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this as a positive report reflecting strategic restructuring and improved financial efficiency, despite revenue declines in some segments. The significant reduction in net loss and operating expenses, coupled with debt repayment, indicates a stronger financial position.

Positives

• Net loss decreased significantly by 67% for the three months and 72% for the six months ended December 31, 2025, indicating improved financial performance.
• Operating loss improved by 65% for the three months and 53% for the six months, primarily due to strategic cost reductions and the divestiture of an underperforming segment.
• The sale of Brigadier Security Systems generated a $0.5 million gain and eliminated a segment that contributed to revenue decline.
• Pausing the Marygold US Fintech app development led to a substantial reduction in operating losses for the Financial Services segment.
• The Beauty Products segment demonstrated strong growth, with revenue increasing by 39% for the three months and 28% for the six months, and achieved profitability.
• The high-interest Streeterville note payable was fully repaid, reducing interest expense and strengthening the balance sheet by releasing collateral.
• Working capital remains strong at $12.9 million, providing a solid liquidity position.

Negatives

• Total revenue decreased by 5% for the three months and 8% for the six months, primarily due to the Brigadier sale and a decline in U.S. Fund Management revenue.
• U.S. Fund Management revenue decreased by 3% for the three months and 4% for the six months, driven by a decrease in average Assets Under Management (AUM) from $3.1 billion to $3.0 billion (Q3) and $2.9 billion (H1).
• Cash and cash equivalents decreased by $0.9 million (18%) from June 30, 2025, to December 31, 2025.
• Marygold UK continued development of its Fintech app, incurring increased costs and contributing to an increased operating loss for the UK Financial Services segment.
• The company has invested a total of $19.3 million in the Fintech app since 2019, with the US version now paused due to de minimis revenues, indicating a significant prior capital deployment with limited return.

Risks

• The outcome of certain class action litigation involving the subsidiary USCF Investments Inc. and the United States Oil Fund, LP (USO) is uncertain and could materially adversely affect the company's financial condition, results of operations, and cash flows.
• The sufficiency of cash flows is primarily dependent on the performance of the U.S. investment fund management business and its ability to maintain and expand fund assets under management (AUM).
• The continued investments in Marygold & Co (UK) for its Fintech application face uncertainty regarding market acceptance and its ability to generate sufficient revenue to meet or exceed capital investment.
• The ability of operating subsidiaries to attract and retain customers, optimize pricing, expand sales, and retain existing customers is crucial for sustained performance.
• The company operates in a rapidly changing environment, and the evolution of technologies could affect its products, services, and markets.
• The ability to raise additional capital through debt or equity financing if needed to cover operating losses or invest in strategic acquisitions is not assured.
• Worldwide economic conditions, including increasing tariffs, the after-effects of the COVID-19 pandemic, and geopolitical conflicts (Ukraine and the Middle East), could impact spending and business operations.
• Operating subsidiaries must comply with modified or new laws and regulations, including privacy and data security regulations, which could incur additional costs or liabilities.
• The ability to acquire new businesses or expand existing ones, including the integration and financing of acquisitions, as well as the ability to dispose of under-performing businesses, carries inherent risks.

Future Outlook

The company intends to continue developing its financial services industry focus, including ETF management. It plans to fund additional investments in its mobile Fintech app for the U.K. market only to the extent of existing funds on hand. If further investment is pursued beyond current funds, additional financing may be required. Losses and negative cash flows from the Marygold US Fintech app are expected to be significantly reduced for the remainder of the fiscal year.

Management Comments

• "The Company believes that its cash and cash equivalents along with the cash generated from ongoing operations will be sufficient to fund its cash requirements over the next 12 months."
• "If we decide to invest more in our mobile Fintech app, then we may need to raise additional funds through one or more debt, equity or equity linked financings."
• "Losses and negative cash flows from Marygold US are expected to be significantly reduced for the remainder of this fiscal year."

Industry Context

StockSavvy.ai notes that the decline in Fund Management AUM due to "commodity price fluctuations, along with geopolitical and economic uncertainty" reflects broader market volatility impacting commodity-focused ETFs. The strategic pivot in Fintech app development, pausing the US offering while continuing in the UK, indicates a pragmatic approach to market fit and capital allocation in a highly competitive digital financial services landscape. The growth in the Beauty Products segment, driven by online and international expansion, suggests effective adaptation to evolving consumer distribution channels.

Legal Proceedings

• **In re: United States Oil Fund, LP Securities Litigation**: A putative class action filed on June 19, 2020, consolidated with other actions, alleging claims under the Securities Act of 1933 and Securities Exchange Act of 1934. Challenges statements in registration statements and public statements from February-April 2020 concerning extraordinary market conditions affecting oil demand. The court granted dismissal without prejudice on September 29, 2025, and plaintiff filed a motion to amend on November 26, 2025. Defendants intend to vigorously contest these claims.
• **Mehan Action**: A derivative action filed on August 10, 2020, alleging breach of fiduciary duties and failure to act in good faith by defendants in connection with a March 19, 2020 registration statement and disclosures. Proceedings are stayed pending disposition of motions to dismiss in the Lucas Class Action. Defendants intend to vigorously contest these claims.
• **In re United States Oil Fund, LP Derivative Litigation**: Two derivative actions filed on August 27, 2020, consolidated, alleging violations of Sections 10(b), 20(a), and 21D of the Securities Exchange Act, Rule 10b-5, and common law claims. Allegations stem from USO's disclosures and defendants' actions regarding extraordinary oil market conditions in 2020. Proceedings are stayed pending disposition of motions to dismiss in the Lucas Class Action. Defendants intend to vigorously contest these claims.

Related Party Transactions

• Fund management revenue of $4.6 million for the three months and $8.9 million for the six months ended December 31, 2025, was earned from funds managed by USCF LLC and USCF Advisers, which are considered related parties.
• Accounts receivable of $1.6 million as of December 31, 2025, and $1.3 million as of June 30, 2025, were owed from these related parties.
• The company held investments totaling $1.9 million as of December 31, 2025, and $3.6 million as of June 30, 2025, in funds managed by USCF Advisers.
• Dividends of $0.1 million for the three months and $0.2 million for the six months ended December 31, 2025, were earned from these related party investments.
• Brigadier Security Systems (2000) Ltd. was sold to SKCAL LLC, an entity whose sole member is Scott Schoenberger, a director and 10.9% shareholder of the company, for $2.2 million (adjusted to $2.3 million) on July 1, 2025.
• The Nicholas and Melinda Gerber Living Trust, of which the CEO is a trustee, provided a guaranty and pledged common stock as security for the Streeterville note payable, which has since been repaid and all collateral released.

Stakeholder Impact

• **Shareholders**: Experienced a significant reduction in net losses, potentially improving long-term value, but face ongoing uncertainties from AUM decline in fund management and pending litigation. Potential for future dilution exists if additional capital is raised.
• **Employees**: The Beauty Products segment saw a reduction in staff, and the pause of the Marygold US Fintech app likely impacted related personnel.
• **Customers**: Customers of the US Fintech app are affected by the pause in its offering. Customers of other segments continue to be served.
• **Creditors**: The full repayment of the high-interest Streeterville note payable strengthens the company's credit profile and reduces financial risk.

Next Steps

• Continue developing and marketing the Marygold mobile Fintech app for the U.K. market.
• Evaluate the impact of new accounting standards, ASU No. 2023-09 and ASU 2025-05, on future income tax and credit loss disclosures.
• Vigorously contest the ongoing class action and derivative litigation claims related to USCF LLC and USO.
• Potentially raise additional funds through debt or equity financing if further investment in the UK Fintech app is pursued beyond existing cash on hand.

Key Dates

Recommendation

The company demonstrated significant improvement in net loss and operating efficiency through strategic divestitures and pausing underperforming initiatives. However, revenue declines in key segments like Fund Management due to AUM reduction, coupled with ongoing litigation and the uncertain, costly development of the UK Fintech app, suggest a "hold" position. The company is in a transitional phase, and while the cost-cutting measures are positive, sustained revenue growth and resolution of legal matters are needed for a stronger outlook.

Keywords

Marygold Companies, MGLD, Financial Results, Quarterly Report, Fund Management, Fintech, Beauty Products, Food Products, Security Systems Sale, Asset Under Management, Net Loss Reduction, Operating Expenses, SEC Filing, Commodity Funds, ETFs, Litigation, Capital Raise