10-Q: Marygold Companies Reports Net Loss Amidst Revenue Decline in Q3 2025

The Marygold Companies, Inc. reports a net loss of $1.012 million for the quarter ended March 31, 2025, amidst a decrease in revenue compared to the same period last year.

Summary

• The Marygold Companies, Inc. reported a net loss of $1.012 million for the three months ended March 31, 2025, compared to a net loss of $0.529 million for the same period in 2024.
• Revenue decreased by 11% to $7.027 million, primarily due to lower revenue in the U.S. fund management, food products, and beauty products segments.
• The U.S. fund management segment saw a revenue decrease due to a decline in average Assets Under Management (AUM) from $3.0 billion to $2.6 billion.
• The food products segment experienced a revenue decrease due to a temporary cancellation of certain product categories sold to national grocery chains.
• The beauty products segment's revenue declined due to the discontinuation of sales to domestic distributors on Amazon.
• Operating expenses decreased slightly by 4%, while other income decreased significantly due to increased interest expense from recent debt financing.
• For the nine months ended March 31, 2025, the company reported a net loss of $4.344 million compared to a net loss of $2.212 million for the same period in 2024.
• Revenue for the nine-month period decreased by 7% to $22.940 million.
• The company has invested a total of $19.1 million in its Fintech app since inception.
• The company closed a public offering on January 28, 2025, generating net proceeds of $1.8 million.
• The company entered into an Equity Distribution Agreement (EDA) with Maxim Group LLC on March 7, 2025, for potential sales of common stock up to $4.65 million.

Sentiment

Score: 4

Explanation: The document presents a mixed picture. While there are some positive aspects, such as the completion of a public offering and the growth in the UK financial services segment, the overall sentiment is negative due to the net loss, revenue decline, and increased interest expense. The high effective interest rate on the note payable is also a concern.

Positives

• Operating expenses decreased by 4% for the quarter ended March 31, 2025.
• The company completed a public offering, raising $1.8 million in net proceeds.
• The company has an Equity Distribution Agreement in place for potential future capital raising.
• Brigadier Security Systems saw a 4% revenue increase for the nine months ended March 31, 2025.
• Financial Services revenue, derived entirely from Marygold UK, for the nine months ended March 31, 2025 increased by $0.3 million or 67%.

Negatives

• The company reported a net loss of $1.012 million for the quarter ended March 31, 2025.
• Revenue decreased by 11% for the quarter ended March 31, 2025.
• Average Assets Under Management (AUM) in the U.S. fund management segment decreased.
• The food products segment experienced a revenue decrease due to a temporary cancellation of certain product categories.
• The beauty products segment's revenue declined due to the discontinuation of sales to domestic distributors on Amazon.
• The company's note payable has an effective interest rate of 41.3%.

Risks

• The company's performance is heavily reliant on the performance of its U.S. investment fund management business and its ability to maintain and expand fund assets under management (AUM).
• The company faces uncertainty regarding the acceptance and revenue generation of its Fintech application.
• The company's operating subsidiaries face risks related to attracting and retaining customers, optimizing pricing, and expanding into new markets.
• The company faces risks related to worldwide economic conditions, including potential impacts from tariffs, global economic growth forecasts, and geopolitical conflicts.
• The company's ability to repay its existing indebtedness when due or at all, including in connection with its recent debt financing transaction, is a risk.
• The company may need to raise additional financing in connection with further development of its fintech app and to cover its operating losses.

Future Outlook

The company expects the trend of decreased revenue in the beauty products segment to continue for the remainder of the current fiscal year as Original Sprout reduces the number of authorized Internet sales channels, recovers control over its price points, and repositions its products for a larger presence on store shelves. 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. However, based on our current operating plan which we expect may include continued additional investments in our mobile Fintech app for the U.K. market, we may need to raise additional funds through one or more debt, equity or equity linked financings to meet our operating and cash needs.

Management Comments

• Management recognizes that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures and any controls and procedures, no matter how well designed and operated, can only provide reasonable assurance of achieving their control objectives.
• Our management, including our Chief Executive Officer and Chief Accounting Officer, after evaluating the effectiveness of our disclosure controls and procedures, concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Report.

Industry Context

The report reflects challenges faced by companies in the fund management and consumer products sectors, including market volatility, supply chain disruptions, and changing consumer behavior. The company's investment in Fintech aligns with the broader industry trend of digital transformation in financial services.

Comparison to Industry Standards

• The decrease in AUM in the fund management segment reflects broader market trends of volatility and uncertainty, impacting asset values across the industry; companies like BlackRock and Vanguard have also reported fluctuations in AUM due to market conditions.
• The challenges faced by the beauty products segment in controlling online pricing and distribution are common among consumer goods companies, with brands like Estee Lauder and L'Oreal also implementing strategies to manage their online presence.
• The company's investment in Fintech is comparable to initiatives by larger financial institutions like Goldman Sachs (Marcus) and JP Morgan Chase, which are investing heavily in digital banking and financial technology.

Legal Proceedings

• USCF LLC, USO, and the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to vigorously contest such claims and have moved for their dismissal.
• USCF LLC, USO, and the other defendants intend to vigorously contest such claims in the Mehan Action.
• USCF LLC, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation.

Related Party Transactions

• The company's fund management revenue, totaling $4.1 million and $4.4 million for the three months ended March 31, 2025 and 2024, respectively, and $13.4 million and $14.5 million for the nine months ended March 31, 2025 and 2024, respectively, were earned from related parties.
• As of March 31, 2025 and June 30, 2024, the Company held a total of $6.5 million and $7.5 million, respectively, in funds managed by USCF Advisers which are included in investments on the consolidated balance sheets.
• The Gerber Trust, of which our CEO is a trustee, provided to the holder of the note issued in the financing transaction a guaranty of the Company's performance under the note and, as security, a pledge of all of the shares of the Company's common stock owned by the Gerber Trust.

Stakeholder Impact

• Shareholders may be concerned about the net loss and revenue decline.
• Employees may be affected by potential cost-cutting measures or changes in investment strategies.
• Customers may experience changes in product offerings or service quality.
• Suppliers may be impacted by changes in procurement strategies.
• Creditors may be concerned about the company's ability to repay its debt.

Next Steps

• The company intends to use the net proceeds from the Offering to retire or reduce debt, make additional investments in its financial services operations, and for other general working capital and corporate purposes.
• The company may sell shares of its common stock under the Equity Distribution Agreement (EDA) with Maxim Group LLC.
• The company may need to raise additional funds through one or more debt, equity or equity linked financings to meet its operating and cash needs.

Key Dates

Keywords

Marygold Companies, financial results, fund management, Fintech, revenue, net loss, AUM, USCF Investments, equity offering, debt financing