8-K: USCF 2025 Financials & Legal Update: Assets Decline

United States Commodity Funds LLC (USCF) reported a decrease in total assets and member's equity for 2025, while navigating several ongoing legal proceedings.

Summary

• USCF's total assets decreased by approximately $416,448 to $6,712,164 in 2025 from $7,128,612 in 2024.
• Member's equity declined by approximately $202,965 to $5,075,965 in 2025 from $5,278,930 in 2024.
• Cash and cash equivalents decreased by approximately $726,742 to $1,540,906 in 2025 from $2,267,648 in 2024.
• Investments at fair value increased by approximately $99,851 to $2,432,322 in 2025 from $2,332,471 in 2024.
• Management fees receivable from related parties decreased to $1,185,761 in 2025 from $1,227,784 in 2024.
• Other receivables from related parties significantly increased to $543,006 in 2025 from $203,660 in 2024.
• Income taxes payable decreased to $0 in 2025 from $630,771 in 2024.
• The company is involved in several legal proceedings, with some class actions dismissed or stayed, but the 'In re: United States Oil Fund, LP Securities Litigation' remains pending.
• USCF paid $850,000 in dividends to USCF Investments in February and March 2026.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this as a moderately negative report due to the decline in key financial metrics like total assets, member's equity, and cash, coupled with the significant uncertainty and ongoing costs associated with multiple unresolved legal proceedings. While some legal actions were dismissed, the primary class action remains active.

Positives

• The Optimum Strategies Action and Wang Class Action, both federal securities claims, were dismissed in favor of the defendants or voluntarily dismissed.
• Income taxes payable decreased to $0 in 2025 from $630,771 in 2024.
• Investments at fair value increased by $99,851 to $2,432,322 in 2025.
• The company received three months of free rent in fiscal 2025 as part of an office lease extension.

Negatives

• Total assets decreased by approximately $416,448 (5.8%) from $7,128,612 in 2024 to $6,712,164 in 2025.
• Member's equity decreased by approximately $202,965 (3.8%) from $5,278,930 in 2024 to $5,075,965 in 2025.
• Cash and cash equivalents decreased by approximately $726,742 (32%) from $2,267,648 in 2024 to $1,540,906 in 2025.
• Other receivables from related parties significantly increased to $543,006 in 2025 from $203,660 in 2024, indicating more cash tied up with related entities.
• USCF and USO previously settled SEC and CFTC investigations on November 8, 2021, incurring civil monetary penalties totaling $2,500,000 and cease-and-desist orders.
• The 'In re: United States Oil Fund, LP Securities Litigation' (Lucas Class Action) remains pending, with the plaintiff seeking to amend the complaint after an initial dismissal without prejudice.
• The Mehan Action and In re United States Oil Fund, LP Derivative Litigation are stayed pending the outcome of the Lucas Class Action, indicating continued legal exposure.
• Management fees for UNL were reduced from 0.75% to 0.60% per annum effective May 1, 2024, potentially impacting future revenue.

Risks

• The company is party to various legal proceedings and regulatory inquiries, and an adverse outcome could materially adversely affect its financial condition, results of operations, and cash flows.
• Management is currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of possible losses resulting from these legal matters.
• It is reasonably possible that the estimate of potential losses from legal matters will change in the near term.
• The 'In re: United States Oil Fund, LP Securities Litigation' is ongoing, with the plaintiff attempting to amend the complaint after an initial dismissal without prejudice, indicating continued litigation risk.
• The Mehan Action and In re United States Oil Fund, LP Derivative Litigation are stayed pending the outcome of the Lucas Class Action, meaning these derivative actions could reactivate and pose further risk.
• The company maintains cash deposits in excess of FDIC coverage, which could expose it to losses if a financial institution fails, though it does not expect any losses.
• Tax regulations within each jurisdiction are subject to interpretation and require significant judgment, posing a risk of future tax adjustments.

Future Outlook

The company is currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of possible losses resulting from ongoing legal matters, and it is reasonably possible that this estimate will change in the near term. An adverse outcome could materially adversely affect the company's financial condition, results of operations, and cash flows.

Management Comments

• Management closely monitors receivables and records an allowance for credit losses for any balances that are determined to be uncollectible. As of December 31, 2025 and 2024, the Company considered all remaining accounts receivable to be fully collectible.
• No interest is charged on such receivables [Other Receivables Related Party], and there is no allowance for credit losses as the Company anticipates repayment in full.
• USCF, USO, and the individual defendants in In re: United States Oil Fund, LP Securities Litigation intend to continue to vigorously contest such claims and have moved for their dismissal.
• USCF, USO, and the other defendants intend to vigorously contest such claims [Mehan Action].
• USCF, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation.
• Based upon available objective evidence, management believes it is more likely than not that the net deferred tax assets will be fully realizable.

Industry Context

StockSavvy.ai notes that USCF operates in the highly regulated commodity fund sector, which is susceptible to market volatility, as evidenced by the 'extraordinary market conditions' in 2020 that led to significant legal challenges. The reduction in management fees for UNL reflects competitive pressures or strategic adjustments within the ETF/ETN space, while the increase in CPER and USCI's contribution to management fees receivable suggests shifting investor interest or fund performance dynamics among its diverse commodity offerings.

Corporate Governance

Legal Proceedings

• Optimum Strategies Action: Filed April 6, 2022, in U.S. District Court for the District of Connecticut, asserting claims under the Securities Exchange Act of 1934, Rule 10b-5, and the Connecticut Uniform Securities Act. Challenged statements in registration statements and public statements between February and May 2020 related to oil market conditions. Dismissed with prejudice on March 15, 2023, with no notice of appeal filed.
• Settlement of SEC and CFTC Investigations: Resolved November 8, 2021. SEC issued a cease-and-desist order for violations of Section 17(a)(3) of the 1933 Act from April 24, 2020, to May 21, 2020. CFTC issued a cease-and-desist order for violations of Section 4o(1)(B) of the CEA and CFTC Regulation 4.41(a)(2) from April 22, 2020, to June 12, 2020. Civil monetary penalties totaling $2,500,000 were paid ($1,250,000 to SEC, $1,250,000 to CFTC).
• In re: United States Oil Fund, LP Securities Litigation (Lucas Class Action): Consolidated class action filed June 19, 2020, in U.S. District Court for the Southern District of New York. Asserts claims under the 1933 Act, the Exchange Act, and Rule 10b-5, challenging statements in registration statements from February and March 2020 and subsequent public statements through April 2020 regarding oil market conditions. The court granted defendants' motion to dismiss the complaint without prejudice on September 29, 2025, and plaintiff filed a motion to amend on November 26, 2025, which is pending.
• Wang Class Action: Filed July 10, 2020, in U.S. District Court for the Northern District of California, asserting federal securities claims under the 1933 Act, challenging disclosures in a March 19, 2020, registration statement. Voluntarily dismissed on August 4, 2020.
• Mehan Action: Derivative action filed August 10, 2020, in the Superior Court of California, County of Alameda, alleging breach of fiduciary duties and failure to act in good faith related to a March 19, 2020, registration statement and oil market disclosures. All proceedings are stayed pending disposition of motions to dismiss in the Lucas Class Action.
• In re United States Oil Fund, LP Derivative Litigation (Cantrell and AML Actions): Consolidated derivative actions filed August 27, 2020, in U.S. District Court for the Southern District of New York, alleging violations of Sections 10(b), 20(a), and 21D of the 1934 Act, Rule 10b-5, and common law claims (breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, waste of corporate assets) related to USO's disclosures and defendants' actions during 2020 oil market conditions. All proceedings are stayed pending final disposition of motions to dismiss in the Lucas Class Action.

Related Party Transactions

• Management fees receivable from the Funds (USO, UNG, UGA, USL, UNL, BNO, USCI, CPER) totaled $1,185,761 as of December 31, 2025, and $1,227,784 as of December 31, 2024.
• Other receivables from the Company's parent (USCF Investments, Inc., a subsidiary of The Marygold Companies, Inc.) and other related party entities totaled $543,006 as of December 31, 2025, and $203,660 as of December 31, 2024. No interest is charged on these receivables, and no allowance for credit losses is recorded.
• The Company files a federal consolidated income tax return with entities not included on these financial statements, and the tax benefit of utilizing tax losses generated by the consolidated group is not reflected on USCF's statements of financial condition.
• The Company approved and paid a $450,000 dividend to USCF Investments on February 9, 2026.
• The Company approved and paid a $400,000 dividend to USCF Investments on March 10, 2026.

Stakeholder Impact

• Shareholders (of USL and other funds): The ongoing legal proceedings, particularly the class action litigation, represent a potential financial liability that could impact the value of their investments. The reduction in UNL's management fee could affect USCF's profitability, indirectly impacting the parent company's (MGLD) shareholders.
• Shareholders (of The Marygold Companies, Inc. MGLD): As USCF is a wholly-owned subsidiary, its financial performance and legal liabilities directly impact MGLD's consolidated results. The dividends paid to USCF Investments benefit MGLD.
• Management/Employees: The legal proceedings create uncertainty and demand significant management attention and resources.
• Regulatory Authorities (SEC, CFTC): Past settlements indicate regulatory scrutiny, and ongoing compliance is critical.

Next Steps

• The plaintiff in the 'In re: United States Oil Fund, LP Securities Litigation' has filed a motion for leave to file a proposed second consolidated amended complaint, which is pending before the Court.
• All proceedings in the Mehan Action and In re United States Oil Fund, LP Derivative Litigation are stayed pending final disposition of the motion(s) to dismiss in the 'In re: United States Oil Fund, LP Securities Litigation.'
• The company's tax years 2020 through 2025 will remain open for examination by federal and state authorities for three and four years, respectively.

Key Dates

Recommendation

While some past legal issues have been resolved, the decline in key financial metrics (total assets, member's equity, cash) for USCF in 2025 is concerning. The significant increase in related party receivables and the ongoing, material class action litigation ('In re: United States Oil Fund, LP Securities Litigation') introduce substantial uncertainty and potential future liabilities. The inability to estimate potential losses from these legal matters is a major red flag. However, the company continues to operate its funds and has paid dividends, suggesting ongoing business operations. Given the mixed signals—resolved past issues vs. new financial declines and persistent legal risks—a 'Hold' recommendation is appropriate until there is greater clarity on the financial trajectory and the resolution of the pending litigation.

Keywords

USCF, United States Commodity Funds, 12 Month Oil Fund, USL, SEC filing, 8-K, financial condition, commodity pool operator, CPO, financial statements, legal proceedings, litigation, oil funds, commodity funds, asset management, regulatory inquiry, financial reporting, MGLD, The Marygold Companies