Marygold Companies, Inc. 10-K

ITEM 1. BUSINESS.   General   The Marygold Companies, Inc., (the “Company” or "The Marygold Companies"), a Nevada corporation, operates through its wholly owned subsidiaries who are engaged in varied business activities. The operations of the Company’s wholly owned subsidiaries are more particularly described herein but are summarized as follows:     ● USCF Investments, Inc. (“USCF Investments”), a U.S. based company, is the sole member of two investment services limited liability company subsidiaries that manages, operates or is an investment advisor to exchange traded funds organized as limited partnerships or investment trusts that issue shares which trade on the NYSE Arca stock exchange.   ● Gourmet Foods, Ltd., a New Zealand based company, manufactures and distributes New Zealand meat pies on a commercial scale and its wholly-owned New Zealand subsidiary company, Printstock Products Limited, prints specialty wrappers for the food industry in New Zealand and Australia. (collectively "Gourmet Foods")    ● Brigadier Security Systems (2000) Ltd. (“Brigadier”), a Canadian based company, sells and installs commercial and residential alarm monitoring systems.   ● Kahnalytics, Inc. dba/Original Sprout (“Original Sprout”), a U.S. based company, is engaged in the wholesale distribution of hair and skin care products under the brand name Original Sprout on a global scale.    ● Marygold & Co., a newly formed U.S. based company, together with its wholly-owned limited liability company, Marygold & Co. Advisory Services, LLC, (collectively "Marygold") was established by The Marygold Companies to explore opportunities in the financial technology ("Fintech") space, completed its development phase in June 2023, and launched its commercial services in June 2023. Through June 30, 2023, expenditures have been limited to developing the business model and the associated application development.   ● Marygold & Co. (UK) Limited, a newly formed U.K. limited company, together with its newly acquired UK subsidiary, Tiger Financial and Asset Management, Ltd. (collectively “Marygold UK”) is an asset manager and registered investment advisor in the UK. Operations are included in these consolidated financial statements beginning on the acquisition date of June 20, 2022.   The Company manages its operating businesses on a decentralized basis. There are no centralized or integrated operational functions such as marketing, sales, legal or other professional services and there is little involvement by the Company’s management in the day-to-day business affairs of its operating subsidiary businesses apart from oversight. The Company’s corporate management is responsible for capital allocation decisions, investment activities and selection and retention of the Chief Executive to head each of the operating subsidiaries. The Company’s executive management is also responsible for corporate governance practices, monitoring regulatory affairs, including those of its operating businesses and involvement in governance-related issues of its subsidiaries as needed. Across the Company and its subsidiaries the Company employs 101 people.   Subsidiary Business Overview   USCF Investments   On December 9, 2016, we acquired all of the issued and outstanding stock in USCF Investments. USCF Investments wholly owns both USCF and USCF Advisers, which collectively operate 14 exchange traded products (“ETPs”) and exchange traded funds (“ETFs”), each of which has its shares listed on the NYSE Arca, Inc. ("NYSE Arca").  The ETPs and ETFs managed by USCF and USCF Advisers have a total of approximately $3.5 billion in assets under management as of June 30, 2023. USCF Investments receives revenues as a result of its ownership of USCF and USCF Advisers, which provides investment management and advisory services in exchange for management fees charged against the ETPs and ETFs. The ETPs and ETFs managed by USCF and USCF Advisers invest in a broad base index or single commodity, particularly in oil, natural gas, gasoline and metals.   USCF currently serves as the General Partner or the Sponsor to the following commodity pools, each of which is currently conducting a public offering of its shares pursuant to the Securities Act of 1933, as amended:   USCF as General Partner for the following funds United States Oil Fund, LP (“USO”) Organized as a Delaware limited partnership in May 2005 United States Natural Gas Fund, LP (“UNG”) Organized as a Delaware limited partnership in November 2006 United States Gasoline Fund, LP (“UGA”) Organized as a Delaware limited partnership in April 2007 United States 12 Month Oil Fund, LP (“USL”) Organized as a Delaware limited partnership in June 2007 United States 12 Month Natural Gas Fund, LP (“UNL”) Organized as a Delaware limited partnership in June 2007 United States Brent Oil Fund, LP (“BNO”) Organized as a Delaware limited partnership in September 2009   5 Table of Contents   USCF as fund Sponsor - each a series within the United States Commodity Index Funds   Trust ("USCIF Trust") United States Commodity Index Fund (“USCI”) Series of the USCIF Trust created in April 2010 United States Copper Index Fund (“CPER”)  Series of the USCIF Trust created in November 2010   USCF Advisers, a registered investment adviser, serves as the investment adviser to the funds listed below within the USCF ETF Trust (the “ETF Trust”) and has overall responsibility for the general management and administration for the ETF Trust. Pursuant to the current Investment Advisory Agreements, USCF Advisers provides an investment program for each of series within the ETF Trust and manages the investment of the assets.   USCF Advisers as fund manager for each series within the USCF ETF Trust: USCF SummerHaven Dynamic Commodity Strategy No K-1 Fund ("SDCI") Fund launched May 2018 USCF Midstream Energy Income Fund ("UMI") Fund launched March 2021 USCF Gold Strategy Plus Income Fund ("GLDX") Fund launched November 2021 USCF Dividend Income Fund ("UDI") Fund launched June 2022 USCF Sustainable Battery Metals Strategy Fund ("ZSB") Fund launched January 2023 USCF Energy Commodity Strategy Absolute Return Fund ("USE”) Fund launched May 2023   All commodity pools managed by USCF and each series of the ETF Trust managed by USCF Advisers are collectively referred to as the “Funds” hereafter.   For the year ended June 30, 2023 approximately 73% of USCF Investments’ revenue were attributed to its three largest funds which were United States Oil Fund, LP, United States Natural Gas Fund, LP and United States Commodity Index Fund as compared to the year ended June 30, 2022 with approximately 73% of the revenue attributed to United States Oil Fund, LP, United States Natural Gas Fund, LP and United States Commodity Index Fund.   Competition   USCF Investments faces competition from other commodity fund managers, which include larger, better financed companies that offer products similar to USCF Investments. Many of these competitors have substantially greater financial, technical, and human resources than USCF Investments does, as well as greater experience in the discovery and development of products and the commercialization of those products. Our competitors’ products may be more effective, or more effectively marketed and sold, than any products we may commercialize. USCF Investments will continue to develop and consider new fund opportunities identified through its research efforts and review of market needs. However, the cost of launching and seeding new funds is dependent upon existing and new capital resources. The ability to successfully launch new funds competing with much larger financial institutions with greater financial and human capital will be challenging.   Regulation   USCF Investments’ operating subsidiaries, USCF and USCF Advisers, are subject to federal, state and local laws and regulations generally applicable to the investment services industry. USCF is a commodity pool operator (“CPO”) subject to regulation by the Commodity Futures Trading Commission (the "CFTC") and the National Futures Association (the “NFA”) under the Commodities Exchange Act of 1936, as amended (the “CEA”). USCF Advisers is an investment adviser registered under the Investment Advisers Act of 1940, as amended, and is also registered as a CPO under the CEA. Public offerings conducted by ETPs sponsored by USCF are required to be registered with the Securities and Exchange Commission (the “SEC”) in accordance with the Securities Act of 1933, as amended and each ETP has SEC reporting obligations under the Securities Exchange Act of 1934, as amended. The series of the ETF Trust managed by USCF Advisers are registered investment companies under the Investment Company Act of 1940, as amended.   Employees   USCF Investments’ operating subsidiaries employ approximately 14 persons, a majority of whom are located in Walnut Creek, California. The operating subsidiaries are responsible for the retention of sub-advisers to manage the investments of each managed Funds’ assets in conformity with their respective investment policies if the operating subsidiary does not provide those services directly. USCF Investments’ operating subsidiaries may also retain third-parties to provide custody, distribution, fund administration, transfer agency, and all other non-distribution related services necessary for each fund to operate. USCF Investments, through its operating subsidiaries, bears all of its own costs associated with providing these advisory services and the expenses of the members of the board of directors of each fund who are affiliated with USCF Investments.   Intellectual Property   USCF Investments subsidiary USCF owns registered trademarks for USCF and USCF Advisers.  The Funds for which USCF is a general partner or sponsor have registered trademarks owned by USCF. Additionally, USCF was granted two patents Nos. 7,739,186 and 8,019,675, for systems and methods for an exchange traded fund (ETF) that tracks the price of one or more commodities.   6 Table of Contents   Gourmet Foods   Gourmet Foods, Ltd. (“Gourmet Foods”), was organized in its current form in 2005 (previously known as Pats Pantry Ltd) and acquired by The Marygold Companies in August 2015. Pats Pantry was founded in 1966 to produce and sell wholesale bakery products, meat pies and patisserie cakes and slices, in New Zealand. Gourmet Foods, located in Tauranga, New Zealand, sells substantially all of its goods to supermarkets and service station chains with stores located throughout New Zealand. Gourmet Foods also has a large number of smaller independent lunch bars, cafes and corner dairies among the customer list, however they comprise a relatively insignificant dollar volume in comparison to the primary accounts of large distributors and retailers.   On July 1, 2020, Gourmet Foods acquired the New Zealand company, Printstock Products Limited ("Printstock"). Located in nearby Napier, New Zealand, Printstock prints wrappers for food products, including those used by Gourmet Foods. Printstock is a wholly-owned subsidiary of Gourmet Foods and its operating results are consolidated with those of Gourmet Foods from July 1, 2020 onwards.   Products and Customers   The Marygold Companies, through Gourmet Foods, and following the acquisition of Printstock Products Limited on July 1, 2020, has two major customer groups comprising gross revenues: 1) baking, and 2) printing. While these major groups are comprised of different customers and supply chains, we consider the consolidation of Gourmet Foods with Printstock to be within the food industry as Printstock only supplies the food industry manufacturers, some of which are competitors to Gourmet Foods, and the inclusion of Printstock to the Gourmet Foods operations does not extend its presence beyond the food industry. Therefore, for the purpose of segment reporting (Note 16), both revenue streams are considered part of the same "food industry" segment.   Baking: Within the baking sector there are three major customer groups; 1) grocery, 2) gasoline convenience stores, and 3) independent retailers and cafes. The grocery industry is dominated by several large chain operations, which are customers of Gourmet Foods, and there are no long term guarantees that these major customers will continue to purchase products from Gourmet Foods, however, many of the existing relationships have been in place for sufficient time to give management reasonable confidence in their continuing business. For the year ended June 30, 2023, Gourmet Foods’ largest customer in the grocery and food industry, who operates through a number of independently branded stores, accounted for approximately 14% of baking sales revenues as compared to 22% for the year ended June 30, 2022. This customer accounted for 14% of the baking accounts receivable at June 30, 2023 as compared to 25% as of June 30, 2022. The second largest customer in the grocery and food industry did not account for significant sales during the years ended June 30, 2023 and 2022. However, this customer did account for 8% and 26% of baking accounts receivable as of June 30, 2023 and 2022, respectively.   In the gasoline convenience store market customer group, Gourmet Foods supplies two major channels. The largest is a marketing consortium of gasoline dealers operating under the same brand who, for the years ended June 30, 2023 and 2022 accounted for approximately 57% and 50%, respectively, of baking gross sales revenues. No single member of the consortium accounted for significant portion of baking sales revenues. No single member of the consortium is responsible for a significant portion of Gourmet Foods’ baking accounts receivable, however as a group they collectively accounted for 42% and 21% of baking accounts receivable as of June 30, 2023 and 2022, respectively. A second consortium of gasoline convenience stores accounted for 22% and 23% of baking accounts receivable as of June 30, 2023 and June 30, 2022, respectively. No single member of this consortium was a significant contributor to Gourmet Foods' sales revenues, but as a group they contributed 10% and 8% of the baking sales revenues for the years ended June 30, 2023 and 2022, respectively.   The third major customer group is independent retailers and cafes, which accounted for the balance of baking gross sales revenue, however no single customer in this group was a significant contributor of baking sales revenues or baking accounts receivable as of and for the years ended June 30, 2023 and 2022.   Printing: The printing sector of Gourmet Foods' gross revenues is comprised of many customers, some large and some small, with the largest customer accounting for 49% of the printing sector revenues and 39% of the printing sector accounts receivable as of and for the year ended June 30, 2023 as compared to 37% of printing sector revenues and 39% of printing sector accounts receivable as of and for the year ended June 30, 2022. The second largest customer accounted for 10% of printing sector revenues and 34% of printing sector accounts receivable as of June 30, 2023. There were no sales to this customer for the year ended June 30, 2022. No other customers comprised a significant contribution to printing sector sales revenues or accounts receivable as of and for the years ended June 30, 2023 and 2022.    Consolidated: With respect to Gourmet Foods’ consolidated risk, the largest three customers accounted for 35%, 21% and 9% as compared to 32%, 14% and 13% of Gourmet Foods' consolidated gross revenues for the years ended June 30, 2023 and 2022, respectively. These same customers accounted for 15%, 5% and 27%, respectively, with one additional customer accounting for 24% of the consolidated accounts receivable of Gourmet Foods as of June 30, 2023 as compared to 8%, 7%, 26% and 0%, respectively, as of June 30, 2022.   Sources and Availability of Materials   Gourmet Foods, including Printstock, is not dependent upon any one major supplier as many alternative sources are available in the local marketplace should the need arise. However, the aftereffects of the COVID-19 pandemic have resulted in increased cost of raw ingredients and local shipping. These cost increases, coupled with rising cost of labor, have negatively impacted Gourmet Foods profit margins and, in some instances, their ability to meet market demand in a timely manner. Although raw material availability has begun to return to normal levels, there remains a shortage of qualified labor for both the bakery and the printing sector at acceptable wage levels. Gourmet Foods is focused on securing the best prices available for raw materials in the local market and recruiting experienced staff to replace those persons who failed to return to the workplace after the lifting of the COVID-19 restrictions during the current fiscal year.   7 Table of Contents   Competition   Gourmet Foods faces competition from other commercial-scale manufacturers of meat pies located in New Zealand and Australia. Competitors’ products may be more effective, or more effectively marketed and sold, than any products Gourmet Foods may commercialize. Larger competitors in New Zealand also enjoy a wider and more entrenched market share making it particularly difficult for us to penetrate certain market segments and, even if penetrated, might make it difficult to maintain. In an effort to expand its market presence and limit competitive interference, Gourmet Foods from time to time attempts to acquire other commercial-scale manufacturers of meat pies or confections. Gourmet Foods has also collapsed a portion of its supply chain by acquiring Printstock, who prints the food wrappers utilized by Gourmet Foods. Printstock, in turn, also faces competition from other New Zealand-based printing companies who offer similar services to the food production industry.   Seasonality   The location of Gourmet Foods in the southern hemisphere provides it with a warm Christmas holiday season and some increased business as customers tend to be traveling and purchase more ready-to-eat foods. Although this increase in sales is observable, it is not deemed significant and the opposing seasons to the northern hemisphere work to offset any corresponding downturn in revenues for Brigadier, our Canadian subsidiary, during winter months. Overall, The Marygold Companies’ consolidated business does not experience any material seasonality due to Gourmet Foods.   Regulation   In New Zealand our subsidiary, Gourmet Foods, is required to have certain permits from health regulatory agencies and export permits for certain products it chooses to export. Gourmet Foods is also subject to local regulations as are usual and customary for those in the food processing, manufacturing and distribution business. Gourmet Foods believes it has all necessary licenses and permits and is compliant in all material respects with New Zealand laws and local regulations.   Employees   Gourmet Foods, including Printstock, employs approximately 52 persons in New Zealand.   Intellectual Property   Gourmet Foods, Ponsonby Pies and Pat’s Pantry are all registered trademarks of Gourmet Foods, Ltd.   Brigadier   On June 2, 2016, we acquired all of the issued and outstanding stock in Brigadier, a Canadian corporation headquartered in Saskatoon, Saskatchewan. Brigadier sells and installs alarm monitoring and security systems to commercial and residential customers under the brand names "Brigadier Security Systems" and "Elite Security" throughout the province of Saskatchewan with offices in Saskatoon and Regina.   Services, Products and Customers   Brigadier, founded in 1985, is a leading electronic security company in the province of Saskatchewan. Brigadier has two offices located in the urban areas of Saskatchewan, Brigadier Security Systems in Saskatoon, and operating as Elite Security in Regina. The company's management team has a combined industry experience of over 136 years. Brigadier provides comprehensive security solutions including access control, camera systems, fire alarm monitoring panels, and intrusion alarms to home and business owners as well as government offices, schools, and public buildings. Their experience as the provider of choice on many large notable sites shows a commitment to design, service and support. Brigadier specializes, and is certified, in several major manufacturers’ products: Honeywell Security, Panasonic, Avigilon and JCI/DSC/Kantech security products. Brigadier and its staff are recognized for dedication to customer service with annual awards from SecurTek including being recipients of the Customer Retention, Service Excellence, and overall best dealer with the President’s Award.  Brigadier has demonstrated a commitment to delivering outstanding quality to customers by the notable facilities, businesses, and homes they secure.   Brigadier is an authorized SecurTek dealer. SecurTek is owned by SaskTel which is Saskatchewan's leading Information and Communications Technology (ICT) provider with over 1.4 million customer connections across Canada. Under the terms of its authorized dealer contract with the monitoring company, Brigadier earns monthly payments during the term of the monitoring contract in exchange for performance of customer service activities on behalf of the monitoring company.   8 Table of Contents   The Marygold Companies, through Brigadier, is partially dependent upon its contractual relationship with the alarm monitoring company that provides monitoring services to Brigadier’s customers. In the event this contract is terminated, Brigadier would be compelled to find an alternate source of alarm monitoring, or establish such a facility itself. Management believes that the contractual relationship is sustainable, and has been for many years, with alternate solutions available should the need arise. Sales to the largest customer, which includes contracts and recurring monthly support fees, totaled 42% and 52% of the total Brigadier revenues for the years ended June 30, 2023 and June 30, 2022, respectively. The same customer accounted for approximately 25% of Brigadier's accounts receivable as of the balance sheet date of June 30, 2023 as compared to 31% as of June 30, 2022. No other customers were significant contributors to Brigadier sales revenues for the year ended June 30, 2023 or June 30, 2022, however another customer accounted for 27% of total Brigadier accounts receivable as of June 30, 2023 and 0% as of June 30, 2022.   Sources and Availability of Materials   Brigadier purchases alarm panels, digital and analog cameras, mounting hardware and accessory items needed to complete security installations from a variety of sources. The manufacture of electronic items such as those sought by Brigadier has expanded to a global scale thus providing Brigadier with a broad choice of suppliers. Brigadier bases its vendor selection on several criteria including: price, availability, shipping costs, quality, suitability for purpose and the technical support of the manufacturer. Brigadier is not reliant on any one supplier.   Competition   Although it holds a leading market position in the province of Saskatchewan, Brigadier faces competition from larger, better financed companies that offer similar products and services throughout Canada and globally. In addition, it is possible that Brigadier may face increasing competition as disruptive technologies enter the market. However, with respect to the market share it currently enjoys, Brigadier expects to maintain its current market position in Saskatchewan and believes that opportunities exist to capitalize on the deployment of new technologies within this market. Brigadier's management will continue efforts to capture additional customers through organic growth and a focus on quality.   Seasonality   Brigadier, due to its location in the province of Saskatchewan, Canada, is far enough north that winter weather has a negative effect on its ability to complete some installations, particularly those involving new construction. For this reason, the period from November through March typically produces less revenue than comparison periods during other seasons of the year. Although this decrease in sales is observable, the downturn in sales revenues for the winter months at Brigadier are offset in large part by the increase in revenues for our subsidiary Gourmet Foods in the Southern Hemisphere. Overall, The Marygold Companies, on a consolidated basis, does not experience any material seasonality due to Brigadier.   Employees   Brigadier employs approximately 18 persons in Canada.   Original Sprout   Kahnalytics was formed in 2015 as a wholly-owned subsidiary of the Company and acquired the assets of Original Sprout LLC in December 2017. Original Sprout LLC was founded in 2003. Kahnalytics began doing business as Original Sprout in December 2017. Original Sprout formulates and packages various hair and skin care products that are 100% vegan, tested safe and non-toxic, and marketed globally through distribution networks to salons, resorts, grocery stores, health food stores, e-tail sites and on Original Sprout's website. Original Sprout operates from warehouse and sales offices located in San Clemente, CA, USA.   Products and Customers   As a result of the COVID-19 pandemic, Original Sprout has made adjustments to its primary distribution and marketing channels. Prior to the pandemic Original Sprout relied heavily upon its wholesale distribution network to place products at retail locations and generally to make products available to consumers, whereas during the environment of social distancing and closures of retail businesses, consumers avoided traditional sales outlets. In response to this trend, many of Original Sprout's domestic distributors became retailers by selling direct to consumers on e-tail platforms. Original Sprout, in defense of its brand and price points, was compelled to commence a transition from its wholesale distribution model to one wherein Original Sprout sells direct to retail outlets, or even direct to consumers, through online platforms. The negative effects of this transition are being realized through reduced sales revenues as a result of cancellation of domestic distribution channels. This trend is expected to continue well into the coming fiscal year as Original Sprout engages new brand representation and secures reliable sales channels for its new and existing product lines.   Original Sprout sells its products through 3 channels to market: 1) direct sales to end users via online shopping carts, 2) sales through international wholesale distributors who, in turn, sell to other international retailers or wholesalers, and 3) to retail stores selling to end users either from the shelf or online.   9 Table of Contents   Original Sprout has thousands of customers and, from time to time, certain of them become significant during specific reporting periods, but may not be significant during other periods. Due to the increase in online sales channels and the discontinuation of most domestic distribution agreements, Original Sprout had no single customer who accounted for 10% or greater of total revenues for the year ended June 30, 2023 as compared to one customer who accounted for 11% of total revenues for the year ended June 30, 2022. There were four customers who accounted for 25%, 23% 13% and 11% of total accounts receivable at June 30, 2023. These same customers accounted for 11% 12% 15% and 0%, respectively, at June 30, 2022 with two other customers accounting for 16% and 13% of accounts receivable at June 30, 2022 while being insignificant at June 30, 2023.   Sources and Availability of Materials   Original Sprout is dependent upon its relationships with two product formulating and packaging companies who, at the direction of Original Sprout, produce its products in accordance with proprietary formulas, packages them in appropriate containers, and delivers the finished goods to Original Sprout for distribution to its customers. All of Original Sprout’s products are currently produced by these two packaging companies. If these relationships were to terminate, Original Sprout believes that there are other similar packaging companies available to Original Sprout at competitive pricing. Because of the nature of the Original Sprout product ingredients, some of the ingredients may, at times, be difficult to source in a timely fashion or at the expected price point. To safeguard against this possibility Original Sprout endeavors to maintain at least a 90-day supply of all products in stock. Estimating and maintaining a reserve stock account is not a guarantee that a shortage of ingredient supplies will not affect production such that Original Sprout will not exhaust its reserves or be unable to fulfill customer orders.   Competition   Original Sprout manufactures and distributes only 100% vegan, safe and non-toxic, hair and skin care products which it believes differentiate it significantly from competitors that do not employ such standards. The use of organic and natural extracts is a growing trend in the U.S. and abroad, and other established brands are beginning to make products that directly compete with Original Sprout. As more entrants to the high-end, vegan, hair care segment come into existence it is inevitable that some will be better financed and have more brand recognition and resources than those of Original Sprout. Original Sprout is focused on promoting its own brand name as a recognized pioneer in 100% vegan, safe, effective, hair care products through the recruitment of additional distributors, contracts with additional nationwide retail stores, a continued emphasis on online sales either directly or through retail stores and an increased social media presence. Original Sprout believes that these steps will allow for the continued growth of annual revenues and market share protection, though there can be no guarantees that such efforts will be sufficient to offset the effects of competition in the future.   Seasonality   There is no significant seasonality for sales of products for Original Sprout, though sales will fluctuate around traditional holidays, and certain products, such as sunscreen, will be lower in winter months than in summer months. Overall, The Marygold Companies, on a consolidated basis, does not experience any material seasonality due to Original Sprout.   Regulation   In the U.S. our subsidiary, Original Sprout, is not required to have permits or inspections by regulatory agencies for the products it formulates and distributes in the U.S.; however, it has chosen to gain recognition from certain testing laboratories and other quasi-regulatory agencies for compliance with accepted standards for hair and skin care ingredients and lack of toxic chemicals in their formulas and processes. For export, Original Sprout is often compelled to submit its products to foreign government agencies or certified laboratories for ingredient testing prior to being accepted for import as a “safe” product. We believe that Original Sprout products comply with all applicable regulations, both domestic and foreign, in areas where they are sold or distributed.   Intellectual Property   The formulations and ingredient percentages of the many products of Original Sprout are considered its intellectual property, though many cannot be patented, they are maintained as confidential. The names "Original Sprout", "D’Organiques Original Sprout" are registered trademarks of Original Sprout.   Employees   Original Sprout employees approximately 7 persons on a full-time basis, not including temporary workers or "temp-to-hire" status workers, in California.   Marygold   Marygold completed its development phase in June 2023. Marygold continues to devote considerable resources to the development of a proprietary Fintech software application that is envisioned to provide a superior mobile banking experience to its customers. Marygold employs six full time staff members and also subcontracts for a variety of services, both in the U.S. and internationally. These operating expenses are combined with those of The Marygold Companies in our Consolidated Financial Statements and segmented reports. Marygold launched its mobile app in June 2023 and thus had insignificant operations during the current year.  For fiscal 2024  its operations will be segregated from those of the parent, The Marygold Companies.    10 Table of Contents   Marygold UK   Marygold UK was formed under the laws of England and Wales as a wholly owned subsidiary of The Marygold Companies for the specific purpose of acquiring existing operating companies in the financial services sector of the U.K. On June 20, 2022, Marygold UK entered into a Variation Agreement providing for a revised schedule of payments which shall be paid by Marygold UK to the seller, as described therein (the "Variation Agreement") and simultaneously therewith, Marygold UK completed the acquisition of Tiger Financial and Asset Management Limited ("Tiger"). Prior to June 20, 2022, Marygold UK had no operations, and any incidental expenses were consolidated with those of the parent. For the period June 20, 2022 through June 30, 2023, operating income and expenses were de minimis and are combined with those of the parent in our Consolidated Financial Statements and segmented reports where indicated. The business of Marygold UK will be that of Tiger, an asset manager and investment advisor to residents of the U.K. As of June 30, 2023, Tiger has approximately £32 million (approximately US$40 million) in assets under management. Tiger earns revenues as a percentage of the assets under management. At this level of assets under management, Tiger is nominally cash flow breakeven. Although assets under management have been stable and consistent over the prior 5-year period, management expects to be able to increase the level through a concentrated sales effort, however there is no assurance that such effort will be successful or that assets under management will not decline from their present level. Marygold UK is also planning to introduce the Marygold fintech app to its customers and, more broadly, to the population of the U.K. as the mobile app finalizes its commercial launch in the U.S. and banking relationships are established in the U.K. There is no scheduled timeline for this launch, nor can assurances be made that the product will be widely or well received by the target customer base. Marygold UK employs 3 persons full time in the U.K.   Available Information   We maintain a website at www.themarygoldcompanies.com . We make available free of charge on or through our website our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q and any amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as reasonably practicable after we electronically file or furnish such materials to the SEC. The information on our website is not incorporated by reference in this annual report on Form 10-K.  In addition, the U.S. Securities and Exchange Commission ("SEC") maintains an Internet site at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, from which investors can electronically access The Marygold Companies' SEC filings.   Controlled Company Status   Pursuant to a voting agreement, (the “Voting Agreement”), Nicholas Gerber and Scott Schoenberger, through their respective trusts, will represent 22,948,008, or 56.84% of the Voting Stock with respect to matters that may have a material impact on Company strategy and shareholder rights. Because more than 50% of the combined voting power of all of our outstanding common stock is beneficially owned by Messrs. Gerber and Schoenberger, we are a “controlled company” as defined in section 801(a) of the NYSE American Company Guide. As such, we are exempt from certain NYSE American rules requiring our Board of Directors to have a majority of independent members, a compensation committee composed entirely of independent directors and a nominating and governance committee composed entirely of independent directors.