10-K: Marygold Companies Reports Increased Net Loss in FY25

The Marygold Companies, Inc. reported an increased net loss of $5.8 million for fiscal year 2025, driven by reduced revenue in fund management and food products, despite decreased operating expenses.

Summary

• The Marygold Companies, Inc. (MGLD) is a holding company operating through subsidiaries in financial services, ETF management, food products, security systems, and beauty products.
• Net loss increased by 43% to $5.8 million in fiscal year 2025, compared to $4.1 million in fiscal year 2024.
• Total revenue decreased by 8% to $30.154 million in fiscal year 2025 from $32.836 million in fiscal year 2024.
• Fund management revenue, primarily from USCF Investments, decreased by 10% to $17.135 million due to a 12% reduction in average Assets Under Management (AUM) to $2.9 billion.
• The U.S. Fintech app development and operations were paused effective March 31, 2025, due to limited consumer adoption and failure to meet revenue targets, after investing $19.1 million since inception.
• A secured promissory note of $4.38 million was issued on September 19, 2024, with an effective interest rate of 41.3%, and a current outstanding balance of $1.3 million due within 12 months.
• The Brigadier Security Systems subsidiary was sold to a related party, SKCAL LLC (whose sole member is a director and 10.9% shareholder of Marygold), for $2.3 million, with the closing on July 1, 2025.
• Working capital decreased by 35% from $19.0 million in fiscal 2024 to $12.4 million in fiscal 2025.
• Cash and cash equivalents decreased by 8% to $5.0 million as of June 30, 2025.
• The company raised $1.8 million in net proceeds from an equity offering in January 2025 and has an at-the-market (ATM) equity distribution agreement for up to $4.65 million, with no shares sold as of June 30, 2025.

Sentiment

Score: 3

Explanation: The company reported an increased net loss and declining revenues across most segments, particularly in its core fund management business due to reduced AUM. The significant investment in the U.S. Fintech app yielded minimal returns and led to a pause in operations, indicating poor capital allocation in that venture. While there are efforts to raise capital and expand the Fintech app in the UK, the high-interest debt and continued losses present substantial financial challenges and uncertainty.

Positives

• Operating loss for the beauty products segment (Original Sprout) decreased by 82% due to a $1.4 million impairment charge in fiscal 2024 and reduced marketing expenses, indicating a potential turnaround or stabilization.
• Financial services revenue, driven by Marygold UK, increased by 32% to $0.854 million, benefiting from a full year of revenue from the Step-By-Step acquisition.
• Overall operating expenses decreased by 6% ($1.8 million) in fiscal 2025, primarily due to the impairment charge in beauty products in 2024 and reduced marketing for the U.S. Fintech app.
• The company maintains a strong working capital position of $12.4 million as of June 30, 2025.
• The sale of Brigadier Security Systems for $2.3 million provides additional liquidity, with $1.6 million received after June 30, 2025.

Negatives

• Net loss increased by 43% to $5.8 million in fiscal 2025, compared to $4.1 million in fiscal 2024.
• Total revenue decreased by 8% to $30.154 million in fiscal 2025, with declines across fund management (-10%), food products (-8%), beauty products (-10%), and security systems (-7%).
• Fund management operating income decreased by 31% due to a 12% reduction in average AUM, impacted by commodity price fluctuations and geopolitical uncertainty.
• The U.S. Fintech app development and operations were paused due to limited consumer adoption and failure to meet revenue targets, resulting in a significant investment of $19.1 million with minimal return.
• The company incurred $1.2 million in interest expense in fiscal 2025, primarily from a $4.38 million secured promissory note with an effective interest rate of 41.3%.
• Working capital decreased by 35% from $19.0 million in fiscal 2024 to $12.4 million in fiscal 2025.
• Cash and cash equivalents decreased by $0.5 million (8%) to $5.0 million.
• Food products operating income decreased by 55% due to a non-recurring cost of goods sold adjustment and depreciation, despite a focus on higher-margin products.
• Corporate headquarters operating loss increased by 21% due to higher stock-based compensation and employee transitions.

Risks

• Litigation risks, including a class action lawsuit against USCF LLC and derivative actions, could result in substantial costs, divert management attention, and adversely affect financial condition and reputation.
• Incurrence of net losses in fiscal 2025 and 2024, and the pause of the U.S. Fintech app development, indicate challenges in achieving profitability and generating sufficient revenue from new ventures.
• As a holding company, dependence on distributions from subsidiaries, which may be limited by law, contract, or insufficient performance, could restrict growth and acquisition financing.
• Loss of key personnel, particularly CEO Nicholas Gerber, could materially impact operations due to their significant role in capital allocation and investment decisions.
• Abnormally wide bid/ask spreads and market disruptions could undermine investor confidence in ETPs, limiting growth or reducing revenue for the USCF Investments subsidiary.
• Substantial portion of revenues (57% in FY25) derived from USCF Investments, making operating results highly exposed to investor sentiment and AUM performance in ETFs.
• Reliance on third-party suppliers for food products and security systems, without long-term contracts, exposes the company to supply interruptions and increased costs.
• Product recalls or liability claims in food and beauty products could result in significant losses, damage reputation, and negatively impact sales and financial condition.
• International expansion (UK, New Zealand, Canada) subjects the company to increased operational, regulatory, financial, compliance, reputational, and foreign exchange rate risks.
• Risk management policies and procedures, including oversight of third-party vendors, may not be fully effective in identifying or mitigating risk exposure, including employee misconduct.
• Reliance on trademarks, trade secrets, and other intellectual property protections may not be adequate against misappropriation or infringement, harming business.
• Potential impairment of goodwill or intangible assets could reduce earnings or increase losses, as demonstrated by the $1.4 million impairment in beauty products in fiscal 2024.
• Potential for double taxation on certain income earned by non-U.S. subsidiaries due to U.S. federal income tax rules on controlled foreign corporations.
• Extensive government regulation and oversight in financial services, commodity funds, and other industries, with failure to comply leading to significant fines, penalties, and operational restrictions.
• Risk of delisting from NYSE American if the company fails to comply with continued listing standards, such as low stock price or failure to file timely reports.
• Substantial costs incurred to operate as a public reporting company, which are a disproportionately larger percentage of revenues for smaller companies.
• Failure to establish and maintain effective internal control over financial reporting and disclosure controls could adversely affect financial reporting reliability and investor confidence.
• Controlled company status, with Messrs. Gerber and Schoenberger controlling over 50% of voting stock, allows reliance on exemptions from certain NYSE American corporate governance requirements, potentially reducing protections for other stockholders.
• The CEO's significant control (43.4% of common stock) and heightened voting power at the board level may prevent other stockholders from influencing significant corporate decisions.
• Information systems interruptions, cybersecurity attacks, or other disruptions could have a material adverse effect on business and results from operations, especially with reliance on internet technology and remote work.
• Future acquisitions or business opportunities could involve unknown risks, especially in unfamiliar industries, leading to unanticipated costs and liabilities.
• Consumption of resources in researching unconsummated acquisitions, dispositions, or financings could result in unrecoverable costs and hinder future attempts.
• Inaccurate prediction of revenue streams while consuming capital resources, particularly in the nascent Fintech app, could impact ability to meet operating expenses and capital requirements.
• Failure to effectively integrate acquired businesses or realize anticipated synergies could adversely affect business and results of operations.
• Continuing aftereffects from the economic disruption imposed by the COVID-19 pandemic, including supply chain disruptions and lower consumer demand.
• Impact of political events, new tariffs, war, terrorism, public health issues, natural disasters, and other uncontrollable circumstances on business operations and demand.
• Stock price volatility due to various factors beyond control, including operating results, analyst expectations, management changes, litigation, and general economic conditions.
• Potential for dilution from future equity issuances or exercise of outstanding options and warrants.
• Future sales of shares by existing stockholders or through the ATM agreement could depress the stock price.
• Board of directors may issue preferred stock without stockholder approval, potentially affecting voting power or discouraging acquisitions.
• No cash dividends paid to date, and no anticipation of paying cash dividends in the foreseeable future, making capital appreciation the sole source of gain for stockholders.

Future Outlook

The company intends to continue developing its financial services industry focus, including ETF management. It is seeking funding options or partners for a re-entry into the U.S. Fintech market and/or licensing arrangements for the app. The Marygold UK Fintech app is expected to be introduced more broadly in the U.K. within the coming fiscal year, with expectations that it will accelerate growth and differentiate from competitors. The company believes its cash and cash equivalents, along with cash from ongoing operations, will be sufficient for the next 12 months, but may need additional financing for continued investment in the U.K. Fintech app or future acquisitions. The company is evaluating the impact of new FASB accounting standards on income tax disclosures for fiscal year 2026.

Management Comments

• Our executive management team is primarily responsible for vision and strategy of the Company while effectively implementing capital allocation decisions, investment activities, leadership talent selection, development, performance and retention of the management executives to head each of the operating subsidiaries.
• Our executive management is also responsible for organizational accountability, corporate governance practices, monitoring regulatory affairs, including those of our operating businesses and involvement in governance-related issues of its subsidiaries as needed.
• Management believes that the contractual relationship with SecurTek (for Brigadier) is sustainable, and has been for many years, but that alternate solutions would be available if such monitoring company terminates its agreement with Brigadier.
• Management of Original Sprout believes that, if either of its two primary packaging companies is unable to provide services, there are other similar production and packaging companies available at competitive pricing.
• Management believes there are several financial institutions and other payment providers in the U.S. and abroad who may be interested in a consumer faced mobile app such as ours, in the event additional financing is not available for further development.

Industry Context

The company operates in diverse industries, with a primary focus on financial services, particularly ETF management and Fintech. The ETF market is competitive, with larger, better-financed companies. The Fintech industry is also heavily saturated with well-funded competitors. The company aims to differentiate through niche ETFs and bespoke funds in the commodity sector, and by introducing its Fintech app in the UK. The food products segment faces challenges from increased raw material and labor costs, and competition from larger players with economies of scale. The beauty products segment is navigating a growing trend towards organic and natural extracts, facing competition from established brands. The security systems business, now divested, operated in a competitive market with disruptive technologies. The company's decentralized management approach allows subsidiaries to adapt to their specific market conditions.

Comparison to Industry Standards

• USCF Investments competes with larger, better-financed commodity fund managers and boutique companies offering similar ETFs. Its strategy of creating and launching bespoke funds and series funds in the commodity sector aims to carve out a unique position against competitors like BlackRock (iShares), Vanguard, and State Street (SPDR), which have substantially greater technical and human resources.
• Gourmet Foods competes with other commercial-scale meat pie manufacturers in New Zealand. Larger competitors enjoy economies of scale, allowing them to offer products at lower retail prices, making it difficult for Gourmet Foods to compete in online sales channels. Specific comparable companies are not named in the filing, but the competitive landscape suggests a struggle against established food manufacturers in the region.
• The U.S. Fintech app faced intense competition from well-financed players with extensive capital resources for marketing campaigns, such as PayPal (Venmo), Block (Cash App), and Zelle, leading to its pause in the U.S. market due to insufficient consumer adoption rates.
• Marygold UK's asset management subsidiaries, Marygold & Co. Limited and Step-By-Step, pursue niche markets to differentiate from institutional and larger organizations providing investment advice and wealth management services in the U.K., such as Hargreaves Lansdown or St. James's Place. The introduction of the Fintech app is expected to further differentiate them from competitors who do not offer this capability.

Corporate Governance

Legal Proceedings

• In re: United States Oil Fund, LP Securities Litigation: A putative class action filed on June 19, 2020, consolidated with two other actions, pending in the U.S. District Court for the Southern District of New York. It asserts claims under the 1933 Act, the Exchange Act, and Rule 10b-5, challenging statements in registration statements and public statements from February to April 2020 concerning extraordinary market conditions affecting oil demand. The lead plaintiff seeks compensatory damages, costs, and attorneys' fees. Defendants include USCF, USO, and several individuals and authorized participants. USCF, USO, and individual defendants intend to vigorously contest these claims.
• Mehan Action: A derivative action filed on August 10, 2020, on behalf of nominal defendant USO, against USCF and several individuals, pending in the Superior Court of California for Alameda County. It alleges breach of fiduciary duties and failure to act in good faith related to a March 19, 2020 registration statement and disclosures regarding oil market conditions. The complaint seeks compensatory damages, restitution, equitable relief, attorneys' fees, and costs. All proceedings are stayed pending disposition of motions to dismiss in the Lucas Class Action. USCF, USO, and other defendants intend to vigorously contest these claims.
• In re United States Oil Fund, LP Derivative Litigation: Two separate derivative actions filed on August 27, 2020, on behalf of nominal defendant USO, against USCF and several individuals, consolidated in the U.S. District Court for the Southern District of New York. Allegations include violations of Sections 10(b), 20(a), and 21D of the Exchange Act, Rule 10b-5, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets, stemming from USO's disclosures and defendants' actions during the 2020 oil market conditions. The complaints seek compensatory damages, restitution, equitable relief, attorneys' fees, and costs. All proceedings are stayed pending disposition of motions to dismiss in the Lucas Class Action. USCF, USO, and other defendants intend to vigorously contest these claims.

Related Party Transactions

• USCF Investments' fund management revenue of $17.1 million (FY2025) and $19.0 million (FY2024) was earned from funds managed by USCF and USCF Advisers, which are considered related parties.
• Accounts receivable of $1.3 million (FY2025) and $1.5 million (FY2024) were owed from these related party funds.
• USCF Investments holds investments totaling $3.6 million (FY2025) and $7.5 million (FY2024) in funds managed by USCF Advisers, representing approximately 21% and 45% ownership, respectively.
• License fees paid to an affiliated entity by USCF Advisers totaled $0.3 million (FY2025) and $0.1 million (FY2024), with the agreement amended in February 2025 to reduce future fees to zero.
• The sale of Brigadier Security Systems (2000) Ltd. to SKCAL LLC for $2.3 million was a related party transaction, as Scott Schoenberger, a director and 10.9% shareholder of The Marygold Companies, is the sole member of SKCAL LLC.
• The CEO's trust, the Nicholas and Melinda Gerber Living Trust, provided a guaranty of the company's obligations under the $4.38 million secured promissory note and pledged all of the company's common stock owned by the Gerber Trust.

Stakeholder Impact

• Shareholders: Experience dilution from recent equity offerings and potential future capital raises. The increased net loss and declining revenues may negatively impact share price. The controlled company status and concentrated voting power of Messrs. Gerber and Schoenberger limit the influence of other shareholders.
• Employees: The U.S. Fintech app pause resulted in termination of all employees in that segment. The company emphasizes competitive compensation packages at the business unit level to attract and retain talent.
• Customers: The pause of the U.S. Fintech app led to account closures and refunds for customers. Gourmet Foods' discontinuation of lower-margin products to some grocery outlets may affect certain customer segments. Brigadier's customers are now served by SKCAL LLC following the sale.
• Suppliers: Gourmet Foods is focused on securing the best prices for raw materials, which could impact supplier relationships. Brigadier's reliance on SecurTek for monitoring services highlights supplier dependency.
• Creditors: The company has significant debt, including a secured promissory note with a high effective interest rate, and its obligations are secured by company assets and a personal guaranty from the CEO's trust. The ability to meet debt obligations is a key concern.

Next Steps

• Evaluate the acceptance and success of the Marygold UK Fintech app and seek market information for a potential relaunch in the U.S.
• Continue to develop and consider new fund opportunities in the commodity sector through USCF Investments.
• Gourmet Foods will focus on securing best prices for raw materials and encouraging grocery outlets to adopt price increases.
• Original Sprout will continue promoting its brand through additional distributors, nationwide retail stores, online sales, and increased social media presence.
• Marygold UK plans to introduce the Marygold Fintech app to its customers and more broadly in the U.K. within the coming fiscal year.
• The company may need to raise additional debt or equity financing to support the continued development and marketing of its financial technology business in the U.K., ongoing operations, and future acquisitions.
• Management may seek to license or otherwise offer the Fintech app to third parties if unable to raise additional financing for its development.
• The company will continue to monitor cybersecurity risks associated with its service providers.
• The Corporate Governance & Nominating Committee will continue oversight of the cybersecurity risk management program and receive reports on breaches.
• The company will evaluate the impact of new FASB ASU No. 2023-09 on income tax disclosures for fiscal year 2026.

Key Dates

Recommendation

The Marygold Companies presents a mixed financial picture. While the company is actively managing its portfolio through divestitures (Brigadier) and strategic pauses (U.S. Fintech app), the significant increase in net loss, declining revenues in key segments like fund management, and the high-cost debt financing are concerning. The substantial investment in the U.S. Fintech app with minimal return highlights execution risks in new ventures. However, the company maintains a strong working capital position, is pursuing new growth avenues in the U.K. Fintech market, and has access to additional capital through its ATM facility and potential further tranches from the note holder. The ongoing litigation and the controlled company structure add layers of uncertainty. Given the current challenges and the potential for future growth initiatives, a 'hold' recommendation is appropriate, suggesting investors monitor the execution of the U.K. Fintech strategy and the impact of debt repayment on liquidity, while acknowledging the inherent risks in its diverse and evolving business model.

Keywords

Financial Services, ETF Management, Commodity Funds, Fintech, Investment Advisory, Food Products, Beauty Products, Security Systems, SEC Filing, 10-K, Net Loss, Revenue Decline, Assets Under Management, Debt Financing, Equity Offering, Related Party Transaction, Goodwill Impairment, Corporate Governance, Risk Factors, USCF Investments, Marygold & Co., Original Sprout, Gourmet Foods, Brigadier Security Systems