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Item 7. Management’s Discussion and Analysis

2024-09-18 compared with 2023-09-25 · 255 added, 1863 removed, 12 unchanged (99% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere in this Annual Report on Form 10-K.

See "Consolidated Financial Statements." In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions.

following discussion and analysis should be read in conjunction with our

consolidated financial statements and the accompanying notes thereto included in this Form 10-K and is qualified in its entirety by the

foregoing and by more detailed financial information appearing elsewhere in this Form 10-K.

See “Consolidated Financial Statements.”

In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve

risks, uncertainties and assumptions.

Some of the numbers included herein have been rounded for the convenience of presentation.

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed in the "Special Note Regarding Forward Looking Statements" found on page 4 of this Annual Report on Form 10-K.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

The Marygold Companies, Inc.

("The Marygold Companies" or the "Company") conducts business through its wholly-owned operating subsidiaries operating in the U.S., New Zealand and Canada.

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 that 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 began on June 20, 2022.

Because the Company conducts its businesses through its wholly-owned operating subsidiaries, the risks related to our wholly-owned subsidiaries are also risks that impact the Company's financial condition and results of operations.

See," Note 2.

Summary of Significant Accounting Policies / Major Customers and Suppliers - Concentration of Credit Risk " in the consolidated financial statements for more information.

The emergence of a novel coronavirus on a global scale, known as COVID-19, and related geopolitical events could lead to increased market volatility, disruption to U.S.

and world economies and markets and may have significant adverse effects on the Company and its wholly-owned subsidiaries.

The financial risk to future operations is largely unknown, (refer to Part I, Item 1A, for further details.)

Critical Accounting Policies

We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner.

Our significant policies are summarized in Note 2 to the Consolidated Financial Statements.

The preparation of financial statements in conformity with U.S.

generally accepted accounting principals ("US GAAP" or "GAAP") requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities.

We base our estimates on historical experience and other factors we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those

discussed in the “Special Note Regarding Forward Looking Statements” found on page 4 of this Form 10-K.

audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted

Accounting Principles.

Marygold Companies, Inc.

(“The Marygold Companies” or the “Company”) conducts business through its wholly-owned

operating subsidiaries operating in the U.S., New Zealand and Canada.

The operations of the Company’s wholly-owned subsidiaries

are more particularly described herein but are summarized as follows:

Management - USCF Investments, Inc., a Delaware corporation (“USCF Investments”), with corporate headquarters in Walnut

Creek, California and its wholly-owned subsidiaries:

United States Commodity

Funds, LLC, a Delaware limited liability company (“USCF LLC”), and

USCF Advisers, LLC, a Delaware

limited liability company (“USCF Advisers”).

The principal place of business for each of USCF LLC and USCF Advisers is

in Walnut Creek, California.

Food Products – Gourmet

Foods, Ltd., a registered New Zealand company located in Tauranga, New Zealand and its wholly-owned subsidiary, Printstock Products

Limited, a registered New Zealand company, with is principal manufacturing facility in Napier, New Zealand.

Security Systems –

Brigadier Security Systems (2000) Ltd., a Canadian registered corporation, with locations in Regina and Saskatoon, Saskatchewan,

Beauty Products - Kahnalytics,

Inc., a California corporation, doing business as “Original Sprout,” located in San Clemente, California.

Financial Services –

United States and Great Britain:

Marygold & Co., a Delaware

corporation, based in Denver, Colorado, and its wholly-owned subsidiary, Marygold & Co.

Advisory Services, LLC, a Delaware limited

liability company, whose principal business office is in New Albany, Ohio;

Marygold & Co., (UK)

Limited, a private limited company incorporated and registered in England and Wales, whose registered office is in London, England,

and its wholly-owned subsidiaries:

Tiger Financial & Asset

Management Limited, a company incorporated and registered in England and Wales, whose registered office is in Northampton, England;

Step-By-Step Financial

Planners Limited, a company incorporated and registered in England and Wales, whose registered office is in Staffordshire, England.

Accounting Policies

have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position,

and we apply those accounting policies in a consistent manner.

Our significant policies are summarized in Note 2 to the Consolidated

Financial Statements.

preparation of financial statements in conformity with U.S.

generally accepted accounting principles (“US GAAP” or “GAAP”)

requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and related

disclosures of contingent assets and liabilities.

We base our estimates on historical experience and other factors we believe to be reasonable

under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities

that are not readily apparent from other sources.

Actual results may vary from those estimates.

We believe the following accounting policies are the most critical in the preparation of our financial statements because they involve the most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

Business Combinations - Purchase Price Allocation

We are a diversified holding company whose activities involve the acquisition of operating companies through stock purchase or asset purchase transactions.

believe the following accounting policies are the most critical in the preparation of our financial statements because they involve the

most difficult, subjective or complex judgments about the effect of matters that are inherently uncertain.

Combinations - Valuation of Intangible Assets

are a diversified holding company whose activities involve the acquisition of operating companies through stock purchase or asset

purchase transactions.

We account for business combinations using the acquisition method of accounting.

All the assets acquired, liabilities assumed and amounts attributable to intangible assets, including goodwill, are recorded at their respective fair values at the date of acquisition.

The determination of fair values of identifiable assets and liabilities involves estimates and the use of valuation techniques when market value is not readily available.

We use various techniques to determine fair value in such instances, including the income approach and use of independent valuation firms.

Significant estimates used in determining fair value include, but are not limited to, the amount and timing of future cash flows, growth rates, discount rates and useful lives.

The excess of the purchase consideration over fair values of identifiable assets and liabilities is recorded as goodwill.

See Note 8 for further detail on goodwill.

Management's estimate of fair value is based on assumptions believed to be reasonable, and are supported by independent valuations where possible, but nevertheless remain subjective and subject to future adjustment if actual results differ from the estimates.

Foreign Subsidiaries

We currently have three wholly-owned subsidiaries that are domiciled in foreign countries.

In the future we may acquire additional foreign subsidiaries.

The financial statements of our foreign subsidiaries are kept in accordance with their respective local jurisdictions and require adjustment in order to conform to U.S.

Additionally, local currencies of these subsidiaries require conversion to our US dollar in accordance with ASC 830, Foreign Currency Matters .

Due to changing currency translation rates, the value of our assets and liabilities held in foreign jurisdictions are inherently volatile in nature and may vary significantly despite our use of averages and estimates.

Revenue Recognition

Our operating subsidiaries derive revenues from a number of sources including sales of hardware, services, food items, printing, financial services, and consumer products.

The company recognizes the revenue when the product or service is delivered, or the ownership of the product is deemed to have been transferred to the buyer.

We carefully monitor the outgoings of product shipments and service completions to ensure revenues are properly recorded.

In the case of continued support services, such as warranty or extended contracts, the company makes an assessment at each reporting period as to the significance of the cost of such support or warranty.

This estimate is based on historical experience and careful monitoring of costs throughout the reporting period to determine if any reserve should be recorded for estimated expenses.

We believe we have made careful and reasonable estimates, however adjustments may be required in the future if actual results vary from our estimates.

Plan of Operation for the Next Twelve Months

Our plan of operation for the next twelve months is to apply necessary resources, which may include experienced personnel, cash, or synergistic acquisitions made with cash, equity or debt, into growing each of our business units to their potential.

Original Sprout has found it necessary to alter its approach through domestic distribution channels.

Due to the effects of the COVID-19 pandemic on consumer shopping habits, many domestic distributors have found it advantageous to sell direct to consumers online, thus becoming retailers in lieu of distributors.

The result has been an erosion of profit margins and a fragmented sales channel which have slowed the product roll out plans of Original Sprout.

They are in the final stages of correcting this situation and, in spite of incurring losses as a result, expect to realize significant growth in sales volume and profits in the coming fiscal year.

Additionally, we are expecting moderate growth in Brigadier through focused management initiatives and partnering with local telecoms and contractors.

Similarly, we expect Gourmet Foods to be operating more efficiently as low margin products are eliminated, new channels to market are established, and the printing and sale of food wrappers by their subsidiary, Printstock, continue to improve.

USCF Investments will continue to develop innovative and new fund products to grow its portfolio.

In addition to our long-term mission that is an acquisition strategy based upon identifying and acquiring profitable, mature, companies of a diverse nature and with in-place management that produces increased revenue streams, the Company is also focused upon building expertise and developing Fintech opportunities in the financial services sector through its subsidiary Marygold and Co.

To augment that effort, the Company established a subsidiary in England, Marygold UK, who acquired a registered UK investment advisor, Tiger Financial and Asset Management ("Tiger").

We hope to leverage the client list, industry experience, and banking relationships of Tiger to project our Marygold & Co fintech offerings in the UK during the coming fiscal year.

In a more general sense, the Company is characterizing its business in two categories:

1) financial services and 2) other consumer-based operating units.

The purpose is to isolate the cyclical, and sometimes volatile, nature of the financial services business from our other industry segments.

As revenues from financial services fluctuate over time due to varying performance of the commodities markets, our other operations are expected to be stable and sustainable by comparison.

By these initiatives we seek to:

continue to gain market share for our wholly-owned subsidiaries' areas of operation,

increase our revenues and realize net operating profits,

lower our operating costs by unburdening certain selling expenses to third party distributors,

have sufficient cash reserves to pay down accrued expenses.

attract parties who have an interest in selling their privately held companies to us,

achieve efficiencies in accounting and reporting through adoption of standards used by all subsidiaries on a consistent basis,

strategically pursue additional company acquisitions, and

expand launch of services by Marygold & Co., Marygold UK, and Marygold & Co.

Advisory Services LLC, and the creation of new corporate entities as focused subsidiary holdings.

Results of Operations

For the Year Ended June 30, 2023 Compared to the Year Ended June 30, 2022

Revenue, Expenses and Operating Income

Consolidated revenues for the year ended June 30, 2023 were $34.9 million representing approximately a $3.0 million or 8% decrease from the prior year revenue of $37.8 million. The decrease in consolidated revenues is primarily attributed to the decrease in annual revenues of USCF Investments. USCF Investments' average Assets Under Management ("AUM") for the year ended June 30, 2023 was lower than that of 2022, which resulted in a revenue decrease of approximately $3.0 

The other non-financial subsidiaries combined for a total decrease in revenues of approximately $0.5 million or approximately 4%, offset by $0.5 million in revenue from our UK financial services subsidiary which did not have a full year of operations during the prior year.

Consolidated operating expenses for the year ended June 30, 2023 were $33.5 million, a decrease of $2.0 million from the prior year expense of $35.5 million primarily due to the $2.5 million legal settlement incurred by USCF Investments in the prior year.

The Marygold Companies produced operating income for the year ended June 30, 2023 of $1.4 million as compared to $2.4 million for the year ended June 30, 2022.

This represents a decrease in operating income of $1.0 million for the year ended June 30, 2023 when compared to the year ended June 30, 2022 or approximately 33%.

Apart from the $3.0 million decline in revenues, the difference in operating income is attributed to the expenses incurred by our subsidiary, Marygold & Co., in development of its mobile fintech app, which amounted to approximately $3.4 million, and a legal settlement of $2.5 million incurred by our USCF Investments subsidiary in the prior year.

Other Income (Expenses)  

Other income (expense) for the years ended June 30, 2023 and 2022 were $174 thousand and ($22) thousand, respectively, resulting in income before income tax of $1.6 million and $2.4 million, respectively.

Provision for income tax for the years ended June 30, 2023 and 2022 are $0.4 million and $1.2 million, respectively, primarily attributable to our United States operations through our USCF Investments subsidiary.

Income tax expense recorded at The Marygold Companies level totaled $0.3 million for the year ended June 30, 2023, while a tax expense of $1.1 million was recorded for the year ended June 30, 2022.

The remaining income tax expense was recorded at the subsidiary level during the years ended June 30, 2023 and 2022.

Overall, the net income between the year ended June 30, 2023 as compared to the year ended June 30, 2022 increased by approximately $19 thousand, or approximately 2%, to approximately $1.2 million.

The increase in net income for the year ended June 30, 2023 was primarily attributable to the $2.5 million legal expense incurred in the prior year, lower operating expenses in the current year, and offset by lower fund management revenue from USCF Investments due to a lower amount of AUM coupled with approximately $3.4 million expensed at The Marygold Companies for the mobile fintech app development costs.

Comprehensive Income

After giving consideration to a currency translation gain of approximately $0.1 million, our comprehensive income for the year ended June 30, 2023 was $1.3 million as compared to the year ended June 30, 2022 where there was a currency translation (loss) of ($0.4) million which resulted in comprehensive income of $0.8 million.

Comprehensive gain and loss are comprised of fluctuations in foreign currency exchange rates and effects in the valuation of our holdings in the U.K., New Zealand and Canada.

Investment Fund Management - USCF Investments

USCF Investments was founded as a holding company in March 2004 as a Delaware corporation with one subsidiary, Ameristock Corporation, which was an investment adviser to Ameristock Mutual Fund, Inc., a large cap value equity fund registered under the Investment Company Act of 1940, as amended (the "1940 Act").

In January 2010, Ameristock Corporation was spun off as a standalone company.

In May 2005, USCF was formed as a single member limited liability company in the state of Delaware.

In June 2013, USCF Advisers was formed as a Delaware limited liability company and in July 2014, was registered as an investment adviser under the Investment Advisers Act of 1940, as amended.

In November 2013, the USCF Advisers board of managers formed USCF ETF Trust ("ETF Trust") as an open-end management investment company registered under the 1940 Act.

The Trust is authorized to have multiple segregated series or portfolios.

USCF Investments owns all of the issued and outstanding limited liability company membership interests of its subsidiaries, USCF and USCF Advisers, each a Delaware limited liability company and are affiliated companies.

USCF serves as the general partner ("General Partner") for various limited partnerships ("LP") and sponsor ("Sponsor") as noted below.

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 ("CEA").

USCF Advisers is an investment adviser registered under the Investment Advisers Act of 1940, as amended and has registered as a CPO under the CEA.

Exchange traded products ("ETPs") issued or sponsored by USCF are required to be registered with the Securities and Exchange Commission (the "SEC") in accordance with the Securities Act of 1933.

USCF Investments operates through USCF and USCF Advisers, which collectively operate 14 exchange-traded products ("ETPs") and exchange traded funds ("ETFs"), regulated by the 1940 Act and 1933 Act, and listed on the NYSE Arca, Inc.

("NYSE Arca") with a total of approximately $3.5 billion assets under management as of June 30, 2023.

USCF Investments and subsidiaries USCF and USCF Advisers are collectively referred to as "USCF Investments" hereafter.

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

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.

USCF Investments' revenue and expenses are primarily driven by the amount of AUM.

USCF Investments earns monthly management and advisory fees based on agreements with each Fund as determined by the contractual basis point management fee structure in each agreement multiplied by the average AUM over the given period.

Many of the company's expenses are dependent upon the amount of AUM.

These variable expenses include Fund administration, custody, accounting, transfer agency, marketing and distribution, and sub-adviser fees and are primarily determined by multiplying contractual fee rates by AUM.

Total Operating Expenses are grouped into the following financial statement line items:

General and Administrative, Marketing, Operations and Salaries and Compensation.

For the Year Ended June 30, 202 3, Compared to the Year Ended June 30, 2022

Average AUM for the year ended June 30, 2023 was at $3.7 billion, as compared to approximately $4.4 billion from the year ended June 30, 2022 primarily due to a decrease in AUM at USO, BNO and USCI, partially offset by an increase with UNG.

As a result, the revenues from management and advisory fees decreased by approximately $3.0 million, or 12%, to $20.9 million for the year ended June 30, 2023 as compared to the year ended June 30, 2022 where revenues from management and advisory fees totaled $23.8 million.

USCF Investments' total operating expenses for the year ended June 30, 2023 decreased by $3.4 million, after recording the $2.5 million Wells Notice payment in the prior year, to $13.4 million, or approximately 20%, from $16.7 million for the year ended June 30, 2022.

Variable expenses, as described above, decreased by $1.2 million over the respective twelve-month period due to lower AUM for USO, BNO and USCI during the fiscal year which resulted in lower fund accounting and administration expenses, sub-advisory fees, marketing and distribution expenses and other variable costs.

General and Administrative expenses increased $0.3 million to $2.4 million for the year ended June 30, 2023 from $2.1 million for the year ended June 30, 2022 due to an increase in new fund start up costs, travel expenses and software subscriptions.

Total marketing expenses decreased $0.8 million to $1.7 million for the year ended June 30, 2023 as compared to the prior year period due to a decrease in marketing distribution costs as a result of lower overall AUM and new reduced contractual rates for fund distribution, partially offset by increases in advertising and marketing conferences.

Other Operating expenses decreased by $0.2 million primarily due to lower sub-adviser fees as result of lower AUM for USCI, and lower fund accounting and administration expense due to lower average AUM from other funds.

Employee Salaries and Compensation expenses were approximately $4.7 million and $4.9 million, a decrease of $0.2 million, for the years ended June 30, 2023 and June 30, 2022, respectively, primarily due to moving three employees to The Marygold Companies parent to better align functions and the related expense across the entities.

Income before income taxes for the year ended June 30, 2023 increased $0.5 million to $7.6 million from $7.1 million for the year ended June 30, 2022 due to a $3.0 million decrease in revenue as a result of lower AUM, a $3.4 million decrease in operating expenses, and after recording the $2.5 million legal settlement expense in the prior year.

Food Products - Gourmet Foods, Ltd.

Gourmet Foods was organized in its current form in 2005 (previously known as Pats Pantry Ltd).

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.

Gourmet Foods operates exclusively in New Zealand and thus the New Zealand dollar is its functional currency.

In order to consolidate The Marygold Companies' reporting currency, the US dollar, with that of Gourmet Foods, The Marygold Companies records foreign currency translation adjustments and transaction gains and losses in accordance with Accounting Standards Codification ("ASC") 830, Foreign Currency Matters .

The translation of New Zealand currency into U.S.

dollars is performed for balance sheet accounts using the exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period.

Gains and losses resulting from foreign currency translations are included in foreign currency translation (loss) gain on the Condensed Consolidated Statements of Comprehensive Income as well as accumulated other comprehensive (loss) income found on the Condensed Consolidated Balance Sheets.

For the Year Ended June 30, 2023, Compared to the Year Ended June 30, 2022

Net revenues for the year ended June 30, 2023 were $7.6 million with cost of goods sold of $5.7 million resulting in a gross profit of $1.9 million, or approximately 25% gross margin, as compared to the year ended June 30, 2022 where net revenues were $7.9 million and cost of goods sold were $5.9 million producing a gross profit of $2 million, or approximately 25% gross margin.

The decrease in revenues is partially attributed to the decline of the New Zealand dollar against the U.S.

dollar coupled with the changing product mix sold to grocery stores.

General, administrative and selling expenses, including wages, depreciation and marketing, for the years ended June 30, 2023 and 2022 were $1.6 million producing operating income of $0.3 million and $0.4 million, respectively, or approximately 4% net operating profit for the years ended June 30, 2023 and 2022.

Other income comprised of rental income, interest income less other expenses totaled approximately $27 thousand for the year ended June 30, 2023 as compared to ($29) thousand for the year ended June 30, 2022. 

Income for the year ended June 30, 2023, after income tax of $0.1 million, resulted in net income of approximately $0.3 million as compared to a net income of $0.3 million for the year ended June 30, 2022. 

Security Systems - Brigadier Security Systems (2000) Ltd.

Brigadier Security Systems, founded in 1985, is a leading electronic security company in the province of Saskatchewan.

Brigadier Security Systems has offices located in the urban areas of Saskatchewan, Brigadier Security in Saskatoon, and operating as Elite Security in Regina.

The company 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.

The company and 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.

The company demonstrates a commitment to delivering outstanding quality to customers by the notable facilities, businesses, and homes they secure.

Brigadier Security Systems 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.

Brigadier operates exclusively in Canada and thus the Canadian dollar is its functional currency.

In order to consolidate The Marygold Companies’

reporting currency, the U.S.

dollar, with that of Brigadier, The Marygold Companies records foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, Foreign Currency Matters .

The translation of Canadian currency into U.S.

For the Year Ended June 30, 2023, Compared to the Year Ended June 30, 2022

Net revenues for the year ended June 30, 2023 were $2.8 million with cost of goods sold of approximately $1.3 million, resulting in a gross profit of approximately $1.5 million with a gross margin of approximately 55% as compared to the year ended June 30, 2022 where net revenues were approximately $2.5 million with cost of goods sold of $1.2 million and a gross profit of $1.3 million, or approximately 54% gross margin. 

General, administrative and selling expenses for the year ended June 30, 2023 were $1.2 million producing an operating profit of $0.3 million or approximately 13% operating profit margin as compared to the year ended June 30, 2022 where general, administrative and selling expenses were $1.1 million producing an operating profit of $0.2 million, or approximately 10% operating profit margin.

Other income comprised of rental income, commission income, and income tax expense totaling approximately $73 thousand for the year ended June 30, 2023 resulted in income after income taxes of approximately $0.4 million as compared to income after income taxes of approximately $0.3 million for the year ended June 30, 2022 with other income totaling approximately $12 thousand.

Beauty Products - Original Sprout  

Kahnalytics was founded in 2015 and adopted the dba/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 the company's website.

The company operates from warehouse and sales offices located in San Clemente, CA, USA.

As a result of the COVID-19 pandemic lock downs, Original Sprout made adjustments to its primary channels to market to allow for online shopping and contactless deliveries.

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 post-COVID-19 wholesale distributors have now adopted the practice of selling direct to consumers via e-tail platforms such as Amazon.

This trend has eroded the retail price point and made it difficult for Original Sprout to maintain a presence on the shelf of retail outlets.

As a result, many of the agreements with domestic wholesalers have been cancelled in an effort to thwart brand and price erosion.

New channel partners are being established and price protections are being implemented, however the negative effects of the transition to new sales channels are reflected in reduced revenues and operating losses for the year ended June 30, 2023.

Management expects to recover from the transition and realize higher revenues and positive operating results in the coming fiscal year. 

For the Year Ended June 30, 2023, Compared to the Year Ended June 30, 2022

Net revenues for the year ended June 30, 2023 were $3 million with cost of goods sold of approximately $1.7 million resulting in a gross profit of approximately $1.3 million and a gross margin of approximately 42% compared to the year ended June 30, 2022 were net revenues totaled $3.5 million with cost of goods sold of approximately $2.1 million resulting in a gross profit of approximately $1.4 million and a gross margin of approximately 41%.

General, administrative and selling expenses for the years ended June 30, 2023 and 2022 were approximately $1.6 million and $1.6 million, respectively, resulting in operating (losses) of approximately ($285) thousand and ($193) thousand, respectively.

After consideration given to income tax provision and other (expenses) income of ($3) thousand and $5 thousand, respectively, the net (loss) for the years ended June 30, 2023 and 2022 were approximately ($289) thousand and ($188) thousand, respectively.

Financial Services - Marygold UK

Marygold UK operates through its wholly owned subsidiary Tiger Financial & Asset Management Limited ("Tiger"), which was acquired in June 2022.

Tiger acts as an investment advisor and financial planner to its clients and has two principal revenue streams which comprise ongoing fees for providing investment advice, and commissions for the intermediation of insurance-based products.

Approximately 39% of revenues are derived from fees earned from ongoing (recurring) investment advice as compared to 61% derived from ongoing (recurring) commissions received for intermediating insurance-based products.

Tiger does not provide investment management services directly, rather the clients’

assets are referred to third party investment managers, primarily discretionary investment managers. Tiger receives fees for the ongoing advice and financial planning services which are charged as a percentage of the assets under management, which as of June 30, 2023 was approximately $40 million.

There is no comparison data as Tiger was acquired in the current fiscal year and Marygold UK had no operations prior to the acquisition of Tiger in 2022.

For the Year Ended June 30, 2023

Net revenue for the year ended June 30, 2023 was $517 thousand.

General, administrative and operating expenses totaled $440,514 for the year ended June 30, 2023 resulting in an operating income of $76 thousand.

After consideration given to income tax provision of $23 thousand, the net income for the year ended June 30, 2023 was $53 thousand.

Liquidity and Capital Resources

The Marygold Companies is a holding company that conducts its operations through its subsidiaries.

At the holding-company level, its liquidity needs relate to operational expense, the funding of additional business acquisitions and new investment opportunities.

Our operating subsidiaries' principal liquidity requirements arise from cash used in operating activities, debt service, and capital expenditures, including purchases of equipment and services, operating costs and expenses, and income taxes.

Cash is managed at the holding company or the subsidiary level.

There are no limitations or constraints on the movement of funds between the entities.

As of June 30, 2023, we had $8.2 million of cash and cash equivalents, excluding $0.4 million in restricted cash, on a consolidated basis as compared to $12.9 million as of June 30, 2022.

The decrease in cash was primarily due to the continuing investment in the development of the mobile fintech app by Marygold.

During the past five fiscal years combined, The Marygold Companies has invested an aggregate of approximately $6.6 million in cash towards purchasing and assimilating Printstock within Gourmet Foods, and adding the Original Sprout assets into the The Marygold Companies group of companies as well as forming a new U.K.

limited company, Marygold UK, and funding it with enough capital to pay approximately $1.8 million in cash towards the $2.9 million purchase price of its subsidiary, Tiger.

We have also invested approximately $9.4 million in the development of Fintech applications through our development stage subsidiary, Marygold.

Despite these cash investments and expenses, our working capital position remains strong at approximately $22.6 million.

While The Marygold Companies intends to maintain and improve its revenue stream from wholly-owned subsidiaries, The Marygold Companies continues to pursue acquisitions of other profitable companies which meet its target profile.

Provided The Marygold Companies' subsidiaries continue to operate as they are presently, and are projected to operate, The Marygold Companies has sufficient capital to pay its general and administrative expenses for the coming fiscal year and to adequately pursue its long-term business objectives.

However, given the significant economic and financial market disruptions associated with the COVID-19 pandemic, the Company's results of operations could be adversely impacted.

Lease Liability

The Company has various operating leases for offices, warehouses and manufacturing facilities. The total amount due under these obligations was $837,844 and $1,404,880 as of June 30, 2023 and June 30, 2022, respectively.

The obligations will reduce over the passage of time through periodic lease payments.

See Note 15 for further analysis of this obligation.

As of June 30, 2023, we had $0.3 million of third-party indebtedness on a consolidated basis as compared to $0.4 million of third-party and related-party indebtedness as of June 30, 2022.

Approximately US$340,849 is owed by Brigadier and secured with the land and building in Saskatoon purchased in July 2019.

The initial principal balance was CD$525,000 (approximately US$401,000 translated as of the loan date July 1, 2019) with an annual interest rate of 4.14% maturing June 30, 2024.

The short-term portion of principal for this loan due within 12 months as of June 30, 2023 is CD$451,500 (approximately US$340,849). Interest on the loan is expensed or accrued as it becomes due.

Interest expense on the loan for the year ended June 30, 2023 and 2022 was US$14,231 and US$15,742, respectively.

In addition to the loan due by Brigadier, our subsidiary, Gourmet Foods, has a finance lease liability related to a solar energy system.

Total lease liabilities under the lease for the years ended June 30, 2023 and 2022 were NZ$174,405 (approximately US$106,469 translated as of June 30, 2023) as compared to NZ$203,814 (approximately US$124,422 translated as of June 30, 2023), respectively, and are included under loans - property and equipment on our consolidated balance sheets. 

The Marygold Companies, without inclusion of its subsidiary companies, had no debt as of June 30, 2023 and 2022. 

USCF Investments, from time to time, provides initial investments in the creation of ETP funds that USCF Investments manages.

USCF Investments classifies these investments as current assets as these investments are generally sold within one year from the balance sheet date.

As of June 30, 2023, USCF Investments held investment positions in three of its 40 Act funds, GLDX, ZSB and USE of $1.3 million, $1.9 million and $2.6 million, respectively.

As of June 30, 2022 USCF Investments had a $1.3 million position in GLDX.

These investments along with other investments, as applicable, are described further in Note 7 to our Financial Statements.

Our strategy on dividends is to declare and pay dividends only from retained earnings and only when our Board of Directors deems it prudent and in the best interests of the Company to declare and pay dividends.

We paid no dividends during the years ended June 30, 2023 and 2022.

Off-Balance Sheet Arrangements

At June 30, 2023, and as of September 25, 2023, we have not entered into any transaction, agreement or other contractual arrangement with an entity unconsolidated with us under which we have:

An obligation under a guarantee contract,

A retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets,

An obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and material to, us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging, or research and development services with us.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a "smaller reporting company", we are not required to provide the information required by this Item.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our financial statements appear as follows:

Report of Independent Registered Public Accounting Firm.

BPM San Francisco, CA.

Consolidated Balance Sheets, as of June 30, 2023 and 2022

Consolidated Statements of Income for the years ended June 30, 2023 and 2022

Consolidated Statements of Comprehensive Income for the years ended June 30, 2023 and 2022

Consolidated Statements of Stockholders' Equity for the years ended June 30, 2023 and 2022

Consolidated Statements of Cash Flows, for the years ended June 30, 2023 and 2022

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of The Marygold Companies, Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of The Marygold Companies, Inc.

and subsidiaries (the "Company") as of June 30, 2023 and 2022, and the related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows for each of the years in the two-year period ended June 30, 2023, and the related notes (collectively referred to as "the consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2023, in conformity with accounting principles generally accepted in the United States of America.

Basis of opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's consolidated financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting.

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee of the Board of Directors and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Description of the Matter

As described in Note 15, Commitments and Contingencies , of the consolidated financial statements, the Company is party to various legal proceedings and regulatory inquiries.

The Company discloses the legal proceedings and that no accrual has been recorded with respect to them as of June 30, 2023.

The Company further discloses that it is currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of possible losses resulting from these matters, and that it is reasonably possible that this estimate will change in the near term.

The Company discloses that an adverse outcome regarding these matters could materially adversely affect the Company's financial condition, results of operations and cash flows.

Auditing the Company's accounting for, and disclosure of, loss contingencies related to the various legal proceedings was especially challenging due to the significant judgement required to evaluate management's assessment of the likelihood of a loss, and of the potential amount or range of such loss.

How We Addressed the Matter in Our Audit

To test the Company's assessment of the probability of incurrence of a loss, whether the loss was reasonably estimable, and the conclusion and disclosures regarding any range of possible losses, including when the Company believes such a range cannot be reasonably estimated at this time, we read the minutes or a summary of the meetings of the Board of Directors, requested and received internal and external legal counsel confirmations letters, discussed with legal counsel the nature of the various matters and obtained representations from management.

We also evaluated the appropriateness of the related disclosures included in Note 15, Commitments and Contingencies , to the consolidated financial statements.

We have served as the Company’s auditor since 2017.

San Francisco, California

September 25, 2023

THE MARYGOLD COMPANIES, INC.

AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30, 2023

June 30, 2022

CURRENT ASSETS

Cash and cash equivalents

$ 8,161,167  

$ 12,915,620  

Accounts receivable, net

1,352,210  

959,350  

Accounts receivable - related parties

1,673,895  

2,230,874  

2,254,139  

2,200,742  

Prepaid income tax and tax receivable

991,797  

1,166,318  

Investments, at fair value

11,480,981  

5,065,931  

Other current assets

904,153  

699,547  

Total current assets

26,818,342  

25,238,382  

Restricted cash

425,043  

1,013,279  

Property, plant and equipment, net

1,255,302  

1,391,894  

Operating lease right-of-use asset

821,021  

1,357,686  

2,307,202  

Intangible assets, net

2,329,970  

2,708,896  

Deferred tax assets, net - United States

771,287  

753,078  

552,660  

540,160  

$ 35,280,827  

$ 35,310,577  

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable and accrued expenses

$ 2,711,931  

$ 2,805,790  

Expense waivers –

related parties

58,685  

70,199  

Operating lease liabilities, current portion

457,309  

660,957  

Purchase consideration payable

604,990  

1,237,207  

Loans - property and equipment, current portion

358,802  

33,496  

Total current liabilities

4,191,717  

4,807,649  

LONG-TERM LIABILITIES

Loans - property and equipment, net of current portion

88,516  

459,178  

Operating lease liabilities, net of current portion

380,535  

743,923  

Deferred tax liabilities, net - foreign

242,289  

260,553  

Total long-term liabilities

711,340  

1,463,654  

Total liabilities

4,903,057  

6,271,303  

STOCKHOLDERS' EQUITY

Preferred stock, $ 0.001 par value;

50,000,000 shares authorized

49,360 shares issued and outstanding at June 30, 2023 and at June 30, 2022

Common stock, $ 0.001 par value;

900,000,000 shares authorized;

39,383,459 shares issued and outstanding at June 30, 2023 and at June 30, 2022

39,384  

Additional paid-in capital

12,396,722  

12,313,205  

Accumulated other comprehensive loss

( 144,840 )  

Retained earnings

18,086,455  

16,921,426  

Total stockholders' equity

30,377,770  

29,039,274  

Total liabilities and stockholders' equity

$ 35,280,827  

$ 35,310,577  

The accompanying notes are an integral part of these consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

Year Ended June 30, 2023

Year Ended June 30, 2022

All the assets acquired,

liabilities assumed and amounts attributable to intangible assets, including goodwill, are recorded at their respective fair values

at the date of acquisition.

Determination of fair value involves estimates and assumptions which can be complex, most notably with respect to

intangible assets.

Critical estimates used in the valuation of intangible assets include, but are not limited to, the amount and timing

of projected cash flows, useful lives, and discount rates.

While management’s estimates of fair value are based on assumptions that

are believed to be reasonable, these assumptions are inherently uncertain as they pertain to forward-looking views of our business and

market conditions.

The judgments made in this valuation process could materially impact our consolidated financial statements.

operating subsidiaries derive revenues from a number of sources including sales of hardware, services, food items, printing, financial

services, and consumer products.

The company recognizes the revenue when the product or service is delivered, or the ownership of the

product is deemed to have been transferred to the buyer.

We carefully monitor the outgoings of product shipments and service completions

to ensure revenues are properly recorded.

In the case of continued support services, such as warranty or extended contracts, the company

makes an assessment at each reporting period as to the significance of the cost of such support or warranty.

This estimate is based on

historical experience and careful monitoring of costs throughout the reporting period to determine if any reserve should be recorded

for estimated expenses.

We believe we have made careful and reasonable estimates, however adjustments may be required in the future if

actual results vary from our estimates.

and other intangible assets are tested for impairment at the reporting unit level on an annual basis and between annual tests if an event

occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value.

events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators,

competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill and other intangible assets

impairment test requires judgment in the determination of the fair value of each reporting unit.

The fair value of each reporting unit

is estimated primarily through the use of a discounted cash flow methodology.

This analysis requires significant judgments, including

estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business,

estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.

these estimates and assumptions could materially affect the determination of fair value and impairment for each reporting unit.

and Other Contingencies

outcomes of legal proceedings and claims brought against us are subject to significant uncertainty.

We evaluate developments in these matters on a regular basis and a contingency

loss is accrued by a charge to income when we believe it is both probable that a loss has been incurred and the amount can be reasonably

In determining whether a loss should be accrued, we evaluate among other factors, the degree of probability of an unfavorable

outcome and the ability to make a reasonable estimate of the amount of loss.

Changes in these factors could materially impact our consolidated financial statements.

objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year, and deferred

tax liabilities and assets for the future tax consequences of events that have been recognized in an entity’s financial statements

or tax returns.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position

will be sustained on examination by the taxing authorities, based on the technical merits of the position.

The tax benefits recognized

in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of

being realized upon ultimate settlement.

Accounting literature also provides guidance on derecognition of income tax assets and liabilities,

classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and

income tax disclosures.

Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated

financial statements or tax returns.

Variations in the actual outcome of these future tax consequences could materially impact our consolidated

financial statements.

SUMMARY RESULTS OF OPERATIONS

(in thousands, except percentages)

Percentage Change

Cost of revenue

Operating expenses

(Loss) income from operations

Other income, net

(Loss) income before income taxes

Benefit (provision) of income taxes

Net (loss) income

Year 2024 Compared with Fiscal Year 2023

decreased by $2.0 million or 6% for fiscal 2024 driven by reduced average Assets Under Management (“AUM”) in our

fund management business.

Average AUM for fiscal 2024 was $3.3 billion compared to $3.7 billion for fiscal 2023.

The reduction in

AUM in fiscal 2024 was due to commodity price fluctuations, rising interest rate environment as well as geopolitical and

economic uncertainty.

profit decreased by $2.0 million or 8% for the reasons described above for the reduced revenue as cost of revenue was relatively flat

from fiscal 2024 at $8.7 million compared to fiscal 2023 at $8.8 million.

expenses increased by $5.7 million or 23% as a result of the following.

General and administrative expenses, including marketing and

advertising, increased by $2.4 million or 25% driven by increased costs associated with our Fintech app development including additional

software and security infrastructure.

We recorded a $1.4 million impairment charge relating to the goodwill and other intangible assets

in our beauty products unit as a result of increased losses resulting from pandemic-related changes in its distribution channels and

increased costs from the introduction of new product lines.

Salaries and compensation increased by $1.1 million or 11% compared to fiscal

2023 driven by increased hiring for the buildout of our mobile Fintech app.

Fund operations increased by $0.8 million or 17% driven by

increased costs associated with managing more funds.

income, net increased by $0.6 million or 364% driven by unrealized gains on investments.

tax went from a provision of $0.4 million in fiscal 2023 to a tax benefit of $1.4 million in fiscal 2024 as a result of generating pre-tax

income in the prior year to incurring a pre-tax loss in the current year.

loss of $4.1 million generated in fiscal 2024 compared to net income of $1.2 million in fiscal 2023 was driven by the increased costs

associated with the investment in our mobile Fintech app, the increased losses including the impairment charge relating to our beauty

products unit and the decreased profits from our fund management business due to lower AUM.

SEGMENT RESULTS OF OPERATIONS

(in thousands, except percentages)

Percentage Change

Fund management - related party

Food products

Security systems

Beauty products

Financial services

Cost of revenue

Operating expense

Salaries and compensation

General and administrative expense

Fund operations

Marketing and advertising

Depreciation and amortization

Legal settlement

Total operating expenses

Income from operations

Other income (expense):

Interest and dividend income

Interest expense

Other (expense), net

Total other income (expense), net

Income before income taxes

Provision of income taxes

Weighted average shares of common stock

Net income per common share

The accompanying notes are an integral part of these consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Year Ended June 30, 2023

Year Ended June 30, 2022

Other comprehensive income:

Foreign currency translation gain (loss)

Comprehensive income

The accompanying notes are an integral part of these consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDED JUNE 30, 2023 AND 2022

Period Ending June 30, 2023

Preferred Stock (Series B)

Number of Shares

Additional Paid - in Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

Total Stockholders' Equity

Balance at July 1, 2021

49,360  

37,485,959  

$ 37,486  

$ 9,330,843  

$ 142,581  

$ 15,775,705  

$ 25,286,664  

Loss on currency translation

( 377,371 )  

Issuance of common stock in public offering, net of issuance costs $ 549,090

1,897,500  

2,982,362  

2,984,260  

1,145,721  

Balance at June 30, 2022

49,360  

39,383,459  

$ 39,384  

$ 12,313,205  

$ ( 234,790 )  

$ 16,921,426  

$ 29,039,274  

Gain on currency translation

89,950  

Stock-based compensation

83,517  

1,165,029  

Balance at June 30, 2023

49,360  

39,383,459  

$ 39,384  

$ 12,396,722  

$ ( 144,840 )  

$ 18,086,455  

$ 30,377,770  

The accompanying notes are an integral part of these consolidated financial statements.

THE MARYGOLD COMPANIES, INC.

AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Year Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Bad debt expense

Impairment of inventory value and provision

Deferred taxes

Stock-based compensation

Unrealized loss (gain) on investments

Gain on disposal of equipment

Operating lease right-of-use asset - non-cash lease cost

Decrease (increase) in current assets:

Accounts receivable

Accounts receivable - related party

Prepaid income taxes and tax receivable

Other current assets

(Decrease) increase in operating liabilities:

Accounts payable, accrued expenses and legal settlement

Operating lease liabilities

Expense waivers - related party

Net cash provided by (used in) operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid for acquisition of business, net

Proceeds from sale of property, plant and equipment

Purchase of property, plant and equipment

Payment of purchase consideration payable

Proceeds from sale of investments

Purchase of investments

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of related party loans

Repayment of property and equipment loans

Principal payments of finance lease liability

Proceeds from issuance of common stock, net of issuance costs

Net cash (used in) provided by financing activities

Effect of exchange rate change on cash and cash equivalents

NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING BALANCE

CASH, CASH EQUIVALENTS AND RESTRICTED CASH, ENDING BALANCE

Cash and cash equivalents

Restricted cash

Total cash, cash equivalents and restricted cash shown in statement of cash flows

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest paid

Income taxes paid, net

NON CASH INVESTING AND FINANCING ACTIVITIES:

Purchase consideration payable

Acquisition of operating right-of-use assets through operating lease liability

Fair value of warrants of common stock issued to underwriters

Acquisition of equipment through finance lease liability

The accompanying notes are an integral part of these consolidated financial statements.

ORGANIZATION AND DESCRIPTION OF BUSINESS

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.

(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 

 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 condensed consolidated financial statements beginning on the acquisition date of June 20, 2022.

The Marygold Companies 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 Marygold Companies' management in the day-to-day business affairs of its operating subsidiary businesses apart from oversight.

The Marygold Companies' 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 Marygold Companies' corporate 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.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Accounting Principles

The Company has prepared the accompanying financial statements on a consolidated basis.

In the opinion of management, the accompanying consolidated balance sheets and related consolidated statements of income, comprehensive income, stockholders' equity, and cash flows include all adjustments, consisting only of normal recurring items, necessary for their fair presentation, prepared on an accrual basis, in conformity with accounting principles generally accepted in the United States of America ("U.S.

Principles of Consolidation

The accompanying consolidated financial statements, which are referred herein as the “Financial Statements”, include the accounts of The Marygold Companies and its wholly-owned subsidiaries, USCF Investments, Gourmet Foods, Brigadier, Original Sprout, Marygold and Marygold UK are presented on a consolidated basis.

All inter-company transactions and accounts have been eliminated in consolidation.

Use of Estimates

The preparation of the Financial Statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period.

Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and cash equivalents includes all cash and highly liquid debt instruments with original maturities of three months or less on the date of purchase.

The Company maintains its cash and cash equivalents in financial institutions in the United States, United Kingdom, Canada, and New Zealand.

Accounts in the United States are insured by the Federal Deposit Insurance Corporation up to $250,000 per depositor, accounts in Canada are insured by the Canada Deposit Insurance Corporation up to CD$100,000 per depositor and accounts in the United Kingdom are insured by the Financial Services Compensation Scheme up to £85,000.

Accounts in New Zealand are uninsured.

The Company has, at times, held deposits in excess of insured amounts, but the Company does not expect any losses in such accounts.

Accounts Receivable, net and Accounts Receivable - Related Parties

Accounts receivable, net, consist of receivables from the Brigadier, Gourmet Foods, and Original Sprout businesses.

Management regularly reviews the composition of accounts receivable and analyzes customer credit worthiness, customer concentrations, current economic trends and changes in customer payment patterns to determine whether or not an account should be deemed uncollectible.

Reserves, if any, are recorded on a specific identification basis.

Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

As of June 30, 2023 and June 30, 2022, the Company had $ 1,427  and $ 4,350 , respectively, reserved for doubtful accounts.

Accounts receivable - related parties, consist of fund asset management fees receivable from the USCF Investments business.

Management fees receivable generally consist of one month of management fees which are collected in the month after they are earned.

As of June 30, 2023 and June 30, 2022, there is no allowance for doubtful accounts as all amounts are deemed collectible.

Major Customers and Suppliers –

Concentration of Credit Risk

The Marygold Companies, as a holding company, operates through its wholly-owned subsidiaries and has no concentration of risk either from customers or suppliers as a stand-alone entity.

Marygold, as a newly formed development stage entity, had 

not commenced operations for the years ended June 30, 2023 and 2022.

Any transactions that did occur were combined with those of The Marygold Companies.

Marygold UK began operations through its newly acquired subsidiary, Tiger, on June 20, 2022 and had no significant transactions for the year ended June 30, 2022.

For our subsidiary, USCF Investments, the concentration of risk and the relative reliance on major customers are found within the various funds it manages and the associated 12 -month revenues and accounts receivable –

related parties as of June 30, 2023 and June 30, 2022 as depicted below.

For the Year Ended

June 30, 2023

June 30, 2022

$ 8,684,674  

$ 12,634,794  

1,700,995  

2,074,177  

4,572,559  

2,380,912  

1,967,048  

2,266,692  

3,936,915  

4,478,773  

$ 20,862,191  

$ 23,835,348  

As of June 30, 2023

As of June 30, 2022

Accounts Receivable

$ 596,039  

$ 1,101,495  

108,153  

192,208  

554,011  

249,638  

113,634  

270,796  

302,058  

416,737  

$ 1,673,895  

$ 2,230,874  

The Marygold Companies, through Gourmet Foods, 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.

Within the baking sector there are three major customer groups;

1 ) grocery, 2 ) gasoline convenience stores, and 3 ) independent retailers.

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 

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 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 

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.

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, however another customer accounted for 27 % of total Brigadier accounts receivable as of 

June 30, 2023 and 0 % as of June 30, 2022.

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.

The Marygold Companies, through 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 retailers or wholesalers, and 3 ) to retail stores selling to end users either from the shelf or online.

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.

The Marygold Companies, through Original Sprout, is dependent upon its relationship with a product packaging company who, at the direction of Original Sprout, produces the 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 this packaging company, although if this relationship were to fail 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 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.

The Marygold Companies, through Marygold UK and its wholly owned subsidiary, Tiger Financial and Asset Management ("Tiger"), identifies its concentration of risk as the reliance on a relatively small number of clients to continue their relationship with Tiger as their investment advisor. Tiger acts as an investment advisor and financial planner to its clients and has two principal revenue streams which comprise ongoing fees for providing investment advice, and commissions for the intermediation of insurance-based products.

Approximately 61 % of revenues are derived from fees earned from ongoing (recurring) investment advice as compared to 39 % derived from ongoing (recurring) commissions received for intermediating insurance-based products.

Tiger does not provide investment management services directly, rather the clients’

assets are referred to third party investment managers, primarily discretionary investment managers, and Tiger receives fees for the ongoing advice and financial planning services which are charged as a percentage of the assets under management.

Should the relationship with the current investment manager come to an end, management is confident that a similar arrangement can be easily made with alternative investment managers.

Tiger advises approximately 50 families/clients who collectively account for approximately $ 40 million in assets under management as of June 30, 2023.

Many of these clients have been awarded settlements relating to personal injuries and therefore the underlying advice is often over long-time horizons.

One client accounted for 33 % of the total revenue and assets under management for Tiger for the year ended June 30, 2023.

Marygold UK is seeking to further diversify its client base through ongoing outreach initiatives and, in the long term, add to its revenue streams through the development of the Marygold fintech app.

Inventories, consisting primarily of;

(i) food products, printing supplies, and packaging in New Zealand, (ii) hair and skin care finished products and components in the U.S., (iii) security system hardware in Canada, and (iv) printed debit cards and wearables at Marygold are valued at the lower of cost or net realizable value.

Inventories in Canada and New Zealand are maintained on the first -in, first -out method, while inventory in the U.S is maintained using the average cost method.

Inventories include product cost, inbound freight and warehousing costs where applicable.

Management compares the cost of inventories with the net realizable value and an allowance is made for writing down the inventories to their net realizable value, if lower. An assessment is made at the end of each fiscal quarter to determine what slow-moving inventory items, if any, should be deemed obsolete and written down to their estimated net realizable value. For the years ended 

June 30, 2023 

and June 30, 2022, the expense for slow moving or obsolete inventory was $ 2,698  and $ 10,509 , respectively.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, net of accumulated depreciation.

Expenditures for maintenance and repairs are charged to earnings as incurred;

additions, renewals and leasehold improvements are capitalized.

Office furniture and equipment include office fixtures, computers, printers and other office equipment plus software and applicable packaging designs.

Leasehold improvements, which are included in plant and equipment, are depreciated over the shorter of the useful life of the improvement and the length of the lease.

When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations.

Depreciation is computed using the straight line method over the estimated useful life of the asset (see Note 5 to the Consolidated Financial Statements). 

Estimated Useful Life (in years)

Plant and equipment:

5 to 10  

Furniture and office equipment

3 to 5  

Intangible Assets

Intangible assets consist of brand names, domain names, recipes, non-compete agreements and customer lists along with the internally developed software in process for the business applications of Marygold which launched in the latter part of June 2023, and the U.K.

regulatory certification acquired by Marygold UK in the Tiger purchase transaction.

Intangible assets with finite lives are amortized over the estimated useful life and are evaluated for impairment at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

When it is determined that an indefinite intangible asset is impaired, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets.

There was no impairment recorded for the years ended June 30, 2023 and 

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in a business combination transaction.

Goodwill is tested for impairment on an annual basis during the fourth quarter of the Company's fiscal year, or more frequently if events or changes in circumstances indicate that the carrying amount of goodwill may be impaired.

The Company first performs a qualitative test to determine if goodwill is impaired at a reporting unit.

In performing this test, the Company evaluates macroeconomic factors, industry and market considerations, cost factors such as the increase in the cost of materials or labor or other costs, overall financial performance, changes in key personnel or customers or strategy, and other entity-specific events or trends that could indicate impairment, among other items.

If the results of this test indicate that it is more likely than not that the fair value of the reporting is below its carrying value, a quantitative test is then performed to determine the amount of the impairment.

When impaired, the carrying value of goodwill is written down to fair value.

There was no impairment recorded for the years ended June 30, 2023 and 2022.

Impairment of Long-Lived Assets

The Company tests long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets.

Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value.

There was no impairment recorded for the years ended June 30, 2023 

Investments and Fair Value of Financial Instruments

Equity securities included in short-term investments are classified as available-for-sale securities and debt securities are classified as trading securities.

The Company measures the investments at fair value at period end with any changes in fair value reflected as unrealized gains or (losses) which is included as part of other (expense) income in the consolidated statements of income.

The Company values its investments in accordance with Accounting Standards Codification ("ASC") 820 –

Fair Value Measurements and Disclosures (“ASC 820”

ASC 820 defines fair value, establishes a framework for measuring fair value in U.S.

GAAP, and expands disclosures about fair value measurement.

The changes to past practice resulting from the application of ASC 820 relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurement.

ASC 820 establishes a fair value hierarchy that distinguishes between:

( 1 ) market participant assumptions developed based on market data obtained from sources independent of the Company (observable inputs) and ( 2 ) The Company’s own assumptions about market participant assumptions developed based on the best information available under the circumstances (unobservable inputs).

The three levels defined by the ASC 820 hierarchy are as follows:

Level 1 –

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2 –

Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level 2 assets include the following:

quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market-corroborated inputs).

Level 3 –

Unobservable pricing input at the measurement date for the asset or liability.

Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available.

In some instances, the inputs used to measure fair value might fall within different levels of the fair value hierarchy.

The level in the fair value hierarchy within which the fair value measurement in its entirety falls shall be determined based on the lowest input level that is significant to the fair value measurement in its entirety.

Revenue Recognition

Revenue consists of fees earned through management of investment funds in the United States and in the United Kingdom primarily based on assets under management ("AUM"), sales of gourmet meat pies and printing of food wrappers in New Zealand, sales of security alarm system installation and maintenance services in Canada, and sales of hair and skin care products internationally.

Revenue is accounted for net of sales taxes, sales returns, and trade discounts.

The performance obligation is satisfied when the product has been shipped and title, risk of loss and rewards of ownership have been transferred.

For most of the Company’s product sales or services, the revenue recognition criteria described below are met at the time the product is shipped, the subscription period commences, or the management services are provided.

For our Brigadier subsidiary in Canada, the Company operates under contract with an alarm monitoring company that pays a percentage of its recurring monitoring fee to Brigadier in exchange for continued customer service and support functions with respect to each customer maintained under contract by the monitoring company.

The Company has no costs of contracts which require capitalization.

The Company's only contract assets are accounts receivable, net, and accounts receivable - related parties.

The Company has no contract liabilities other than deposits received periodically which are insignificant to the consolidated financial statements.

The Company generates revenue, in part, through contractual monthly recurring fees received for providing ongoing customer support services to monitoring company clientele.

The five -step process governing contract revenue reporting includes:

Identifying the contract(s) with customers

Identifying the performance obligations in the contract

Determining the transaction price

Allocating the transaction price to the performance obligations in the contract

Recognizing revenue when or as the performance obligation is satisfied

Transactions involve security systems that are sold outright to the customer where the Company's performance obligations include customer support services and the sale and installation of the security systems.

For such arrangements, the Company allocates a portion of the transaction price to each performance obligation based on a relative stand-alone selling price.

Revenue associated with the sale and installation of security systems is recognized once installation is complete, and is reflected as security system revenue in the Consolidated Statements of Income.

Revenue associated with customer support services is recognized as those services are provided, and is included as a component of security system revenue in the Consolidated Statements of Income, which for the years ended June 30, 2023 and 2022,  were approximately $ 312,177 and $ 399,322 , or approximately 12 % and 16 %, respectively, of the total security system revenues.

These revenues for the years ended June 30, 2023 and 2022 accounted for approximately 1 % of total consolidated revenues.

None of the other subsidiaries of the Company generate revenues from long-term contracts.

Because the Company has no contract with the end user, and the monthly payments for customer support services are made to the Company by the monitoring company who has a contract with the end user, and end user customers are subject to cancellation through no control of the Company;

therefore, no deferred revenues or contingent liability reserves have been established with respect to these contracts.

The services are deemed delivered as the obligation is acknowledged on a monthly basis.

Income taxes are accounted for under the asset and liability method.

Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry forwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits or if future deductibility is uncertain.

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.

The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than- not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.

Applicable interest and penalties associated with unrecognized tax benefits are classified as additional income taxes in the statements of income.

Advertising Costs

The Company expenses the cost of advertising as incurred.

Marketing and advertising costs for the years ended June 30, 2023 

and 2022 were approximately $ 2.6  million and $ 3.0 million, respectively.

Other Comprehensive Income (Loss)

Foreign Currency Translation

We record foreign currency translation adjustments and transaction gains and losses in accordance with ASC 830, Foreign Currency Matters .

The accounts of Gourmet Foods use the New Zealand dollar as the functional currency.

The accounts of Brigadier Security System use the Canadian dollar as the functional currency, and the accounts of Marygold UK use the Great Britain pound as the functional currency.

Assets and liabilities are translated at the exchange rate on the balance sheet date, and operating results are translated at the weighted average exchange rate throughout the period.

Foreign currency transaction gains and (losses) can also occur if a transaction is settled in a currency other than the entity's functional currency.

Accumulated currency translation gains and (losses) are classified as an item of accumulated other comprehensive income (loss) in the stockholders’

equity section of the consolidated balance sheet.

Segment Reporting

The Company defines operating segments as components about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performances.

The Company allocates its resources and assesses the performance of its sales activities based on the geographic locations of its subsidiaries (Refer to Note 16  of the Consolidated Financial Statements).

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values.

The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill.

Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets.

Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired users, acquired trade names from a market participant perspective, useful lives and discount rates.

Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates.

During the measurement period, which is one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed.

For the years ended June 30, 2023 and 2022 a determination was made that no adjustments were necessary.

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Board Update (“ASU”) 2016 - 13, Financial Instruments –

Credit Losses (Topic 326 ):

Measurement of Credit Losses on Financial Instruments , and also issued subsequent amendments to the initial guidance:

ASU 2018 - 19, ASU 2019 - 04, ASU 2019 - 05, ASU 2019 - 10, and ASU 2019 - 11, which replace the existing incurred loss impairment model with an expected credit loss model and require a financial asset measured at amortized cost to be presented at the net amount expected to be collected.

The new guidance will be effective for annual reporting periods beginning after December 15, 2022 ( as amended by ASU 2019 - 10 ), including interim periods within that annual period.

The Company anticipates the adoption of the standard will lead to changes in disclosures as well as insignificant changes related to the period of recognition of losses on its receivables. 

In August 2020, the FASB issued ASU 

2020 - 06, Debt –

Debt with Conversion and Other Options (Subtopic 470 - 20 ) and Derivatives and Hedging –

Contracts in Entity ’

s Own Equity (Subtopic 815 - 40 ).

The amendment is meant to simplify the accounting for convertible instruments by removing certain separation models in subtopic 470 - 20 for convertible instruments.

The amendment also changed the method used to calculate diluted earnings per share ("EPS") for convertible instruments and for instruments that may be settled in cash.

The amendment is effective for years beginning after December 15, 2023, including interim periods for those fiscal years.

Early adoption is permitted for periods beginning after December 15, 2020, including interim periods within those fiscal years.

The Company anticipates the adoption of the standard will not have a material impact on its condensed consolidated financial statements and related disclosures given its current and anticipated operations.

BASIC AND DILUTED NET INCOME  

Basic net income per share is based upon the weighted average number of common shares outstanding.

This calculation includes the weighted average number of Series B Convertible Preferred shares outstanding also, as they are deemed to be substantially similar to the common shares and shareholders are entitled to the same liquidation and dividend rights.

Diluted net income per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised.

Dilution is computed by applying the treasury stock method.

Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

As of June 30, 2023 for were 281,696 common stock equivalents which were anti-dilutive.

During the year ended June 30, 2022, 

the Company did 

not have any options or warrants or other dilutive financial instruments.

As such, basic and diluted earnings per share were the same. 

Basic and diluted net income per share reflects the effects of shares actually potentially issuable upon conversion of convertible preferred stock.

The components of basic and diluted earnings per share were as follows:

Year Ended June 30, 2023

Basic income per share:

Net income available to common shareholders

$ 1,136,540  

39,383,459  

$ 0.03  

Net income available to preferred shareholders

28,489  

987,200  

$ 0.03  

Basic income per share

$ 1,165,029  

40,370,659  

$ 0.03  

Diluted income per share:

Net income available to common shareholders, basic

$ 1,135,602  

39,383,459  

Impact of dilutive securities

33,340  

Net income available to common shareholders, diluted

1,136,564  

39,416,799  

$ 0.03  

Net income available to preferred shareholders

28,465  

987,200  

$ 0.03  

Diluted income per share

$ 1,165,029  

40,403,999  

$ 0.03  

For the Year Ended June 30, 2022

Basic income per share:

Net income available to common shareholders

$ 1,116,745  

38,047,411  

$ 0.03  

Net income available to preferred shareholders

28,976  

987,200  

$ 0.03  

Basic and diluted income per share

$ 1,145,721  

39,034,611  

$ 0.03  

Inventories for Marygold, Gourmet Foods, Brigadier and Original Sprout consisted of the following totals:

Raw materials

$ 1,299,564  

$ 1,273,581  

Supplies and packing materials

156,050  

195,207  

Finished goods

798,525  

731,954  

Total inventories

$ 2,254,139  

$ 2,200,742  

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consisted of the following as of June 30, 2023 

Plant and equipment

$ 1,914,568  

$ 1,905,921  

Furniture and office equipment

287,344  

254,616  

Land and building

574,744  

590,662  

362,085  

363,295  

Solar energy system

134,970  

138,030  

Total property, plant and equipment, gross

3,273,711  

3,252,524  

Accumulated depreciation

( 2,018,409 )  

( 1,860,630 )

Total property, plant and equipment, net

$ 1,255,302  

$ 1,391,894  

For the years ended June 30, 2023 

and 2022, depreciation expense for property, plant and equipment totaled $ 198,160  and $ 243,295 respectively. 

INTANGIBLE ASSETS

Intangible assets consisted of the following as of June 30, 2023 and June 30, 2022:

Customer relationships

$ 1,363,935  

1,297,789  

36,913  

1,221,601  

Non-compete agreement

274,982  

Internally developed software

217,990  

4,413,210  

accumulated amortization

( 2,083,240 )  

( 1,704,314 )

Net intangibles

$ 2,329,970  

$ 2,708,896  

CUSTOMER RELATIONSHIP

On August 11, 2015, the Company acquired Gourmet Foods.

The fair value on the acquired customer relationships was estimated to be $ 66,153 and is amortized over the remaining useful life of 10 years.

On June 2, 2016, the Company acquired Brigadier Security Systems.

The fair value on the acquired customer relationships was estimated to be $ 434,099 and is amortized over the remaining useful life of 10 years.

On December 18, 2017 the Company’s wholly-owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC.

The fair value of the acquired customer relationships was determined to be $ 200,000 and is amortized over the remaining useful life of 7 years.

On July 1, 2020, our wholly-owned subsidiary, Gourmet Foods, acquired Printstock Products Limited.

The fair value of the acquired customer relationships was estimated to be $ 77,123 and is amortized over a useful life of 9 years.

On June 20, 2022 our wholly-owned subsidiary, Marygold UK, acquired Tiger Financial and Asset Management Limited.

The fair value of the acquired customer relationships was estimated to be $ 587,328 and is amortized over a useful life of 7 years.

Customer relationships

$ 1,363,935  

1,363,935  

accumulated amortization

( 629,568 )  

Total customer relationships, net

$ 734,367  

$ 905,385  

On August 11, 2015, the Company acquired Gourmet Foods.

The fair value on the acquired brand name was estimated to be $ 61,429 and is amortized over the remaining useful life of 10 years.

On June 2, 2016, the Company acquired Brigadier Security Systems.

The fair value on the acquired brand name was estimated to be $ 340,694 and is amortized over the remaining useful life of 10 years.

On December 18, 2017 the Company’s wholly-owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC.

The fair value of the acquired brand name was determined to be $ 740,000 and is considered to have an indefinite life. That brand name will continue to be associated with the product offering unless and until such time in the future as the Company may elect to discontinue the use of the brand and move towards establishment of an alternative product offering.

On July 1, 2020, our wholly-owned subsidiary, Gourmet Foods, acquired Printstock Products Limited.

The fair value of the brand name was determined to be $ 57,842 and, like that of Original Sprout, would continue to stay in use for an indefinite period of time.

Therefore, the Company will test for impairment of the brand names "Original Sprout" and "Printstock" at each reporting interval with 

no amortization recognized. On June 20, 2022 our wholly-owned subsidiary, Marygold UK, acquired Tiger Financial and Asset Management Limited.

The fair value of the acquired trade name, $ 24,456 , together with is regulatory business certification, $ 73,368 , totaled $ 97,824 and, like those of Printstock and Original Sprout, would continue to stay in use for an indefinite period of time.

Therefore, the Company will test for impairment at each reporting interval with no amortization recognized.

$ 1,297,789  

accumulated amortization

( 290,042 )  

Total brand name, net

$ 1,007,747  

$ 1,047,958  

On August 11, 2015, the Company acquired Gourmet Foods, Ltd.

The fair value on the acquired domain name was estimated to be $ 21,601 and is amortized over the remaining useful life of 5 years.

On June 2, 2016, the Company acquired Brigadier Security Systems.

The fair value on the acquired domain name was estimated to be $ 15,312 and is amortized over the remaining useful life of 5 years.

As of June 30, 2023 the fair value of the acquired domain names have been fully amortized.

$ 36,913  

accumulated amortization

( 36,913 )  

Total domain name, net

RECIPES AND FORMULAS

On August 11, 2015, the Company acquired Gourmet Foods.

The fair value on the recipes was estimated to be $ 21,601 and is amortized over the remaining useful life of 5 years.

On December 18, 2017 the Company’s wholly-owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC.

The fair value of the acquired recipes and formulas was determined to be $ 1,200,000 and is amortized over the remaining useful life of 8 years. 

Recipes and formulas

$ 1,221,601  

accumulated amortization

( 851,735 )  

Total recipes and formulas, net

$ 369,866  

$ 519,865  

NON-COMPETE AGREEMENT

On June 2, 2016, the Company acquired Brigadier Security Systems.

The fair value on the acquired non-compete agreement was estimated to be $ 84,982 and is amortized over the remaining useful life of 5 years.

On December 18, 2017 the Company’s wholly-owned subsidiary, Kahnalytics, Inc., acquired the assets of Original Sprout LLC.

The fair value of the acquired non-compete agreement was determined to be $ 190,000 and is amortized over the remaining useful life of 5 years.

As of June 30, 2023 the fair value of the non-compete agreements have been fully amortized.

Non-compete agreement

$ 274,982  

accumulated amortization

( 274,982 )  

Total non-compete agreement, net

$ 17,698  

INTERNALLY DEVELOPED SOFTWARE

During the first quarter of 

2020, Marygold began incurring expenses in connection with the internal development of software applications that are planned for eventual integration to its consumer Fintech offering.

Certain of these expenses, totaling $ 217,990 as of June 30, 2023 

and June 30, 2022, have been capitalized as intangible assets.

Once development has been completed and the product is commercially viable, these capitalized costs will be amortized over their useful lives.

As of June 30, 2023, no amortization expense has been recorded for these intangible assets.

AMORTIZATION EXPENSE

The total amortization expense for intangible assets for the years ended 

June 30, 2023 

and June 30, 2022 

was $ 378,926 and $ 317,675 , respectively.

Estimated amortization expenses of intangible assets for the next five years ending June 30, are as follows:

Years Ending June 30,

$ 361,226  

345,962  

234,194  

92,417  

1,203,754  

$ 2,329,970  

Other Current Assets

Other current assets totaling $ 904,153  as of June 30, 2023 

and $ 699,547 as of June 30, 2022 are comprised of various components as listed below.

As of June 30, 2023

As of June 30, 2022

Prepaid expenses

$ 889,128  

$ 630,285  

Other current assets

15,025  

69,262  

$ 904,153  

$ 699,547  

USCF Investments, from time to time, provides initial seed capital in connection with the creation of ETPs or ETFs that are managed by USCF or USCF Advisers.

USCF Investments classifies these investments as current assets as these investments are generally sold within one year of the balance sheet date.

Investments in which no controlling financial interest or significant influence exists are recorded at fair value with the change included in earnings on the Consolidated Statements of Income.

Investments in which no controlling financial interest exists, but significant influence exists are recorded per the equity method of investment accounting unless the fair value option is elected under Accounting Standards Codification ("ASC") 825, Fair Value Option.

As of June 30, 2023 and June 30 2022, the Company owned $ 1.3 million and $ 1.3 million, respectively, of the USCF Gold Strategy Plus Income Fund ("GLDX"), $ 1.9  million of the USCF Sustainable Battery Metals Strategy Fund ("ZSB") as of June 30, 2023, launched in January 2023 and $ 2.6  million of the USCF Energy Commodity Strategy Absolute Return Fund ("USE") as of June 30, 2023, launched in May 

These three funds are related parties managed by USCF Advisers, which are included in other equities in the below table.

The Company elected the fair value option related to this investment as the shares were purchased and will be sold on the market and this accounting treatment is deemed to be most informative. In addition to the holdings in GLDX, ZSB and USE, the Company also invests in marketable securities.

The Company recognized unrealized (losses) gains of ($ 126 ) thousand and $ 33  thousand 

for years ended June 30, 2023 and June 

30, 2022, respectively. As of June 30, 2023 and 2022, the aggregate of such investments were approximately $ 11.5  million and $ 5.1  million, respectively.

All of the Company's short-term investments are classified as Level 1 assets as of June 30, 2023 and June 30, 2022.

Investments measured at estimated fair value consist of the following as of June 30, 2023 and June 30, 2022:

June 30, 2023

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

Money market funds

$ 3,402,472  

Other short-term investments

280,401  

( 1,653 )  

278,748  

Short-term treasury bills

1,952,010  

16,950  

1,968,960  

Other equities - related parties

5,971,926  

88,345  

( 229,470 )  

5,830,801  

Total short-term investments

$ 11,606,809  

$ 105,295  

$ ( 231,123 )  

$ 11,480,981  

June 30, 2022

Gross Unrealized Gains

Gross Unrealized Losses

Estimated Fair Value

Money market funds

$ 1,051,017  

Other short term investments

271,346  

( 1,919 )  

269,427  

Short-term treasury bills

2,470,020  

( 4,156 )  

2,465,864  

Other equities - related parties

1,246,926  

32,697  

1,279,623  

Total short-term investments

$ 5,039,309  

$ 32,697  

$ ( 6,075 )  

$ 5,065,931  

During the years ended June 30, 2023 

and 2022, there were no transfers between Level 1 and Level 2.

Restricted Cash

At June 30, 2023 and 2022, Gourmet Foods had on deposit approximately NZ $20,000 (approximately US$12,209 and US$12,486, respectively after currency translation) securing a lease bond for one of its properties.

The cash securing the bond is restricted from access or withdrawal so long as the bond remains in place.

At June 30, 2023, Marygold UK had on deposit £327,694 (approximately US$413,560 ) securing a deferred purchase price payment due on December 31, 2023 to the seller of Tiger.

At June 30, 2022 the amount on deposit was £823,768 (approximately US$1,000,793 translated as of June 30, 2022).

The cash deposit is restricted by covenant from access or withdrawal prior to payment of the remaining deferred purchase price.

Long - Term Assets

Other long-term assets totaling $ 552,160  at June 30, 2023 and $ 540,160 at June 30, 2022, were attributed to USCF Investments and Original Sprout and consisted of

$ 500,000 as of June 30, 2023 and June 30, 2022 representing 10 % equity investment in a registered investment adviser accounted for on a cost basis, minus impairment, which we believe approximates fair value, given the lack of observable price changes in orderly transactions.

There was no impairment recorded for the years ended June 30, 2023 and June 30, 2022;

and $ 52,160 as of June 30, 2023 and $ 40,160 at June 30, 2022 representing deposits and prepayments of rent.

Goodwill represents the excess of the aggregate purchase price over the fair value of the net assets acquired in business combinations.

The amounts recorded in goodwill for June 30, 2023 and 2022 were $ 2,307,202 .

Goodwill is comprised of the following amounts:

Goodwill –

Original Sprout

$ 416,817  

Goodwill –

Gourmet Foods

275,311  

Goodwill –

351,345  

Goodwill - Marygold & Co.

1,263,729  

$ 2,307,202  

( 1 ) Refer to Note 13, Business Combinations , regarding increase in goodwill during the years ended June 30, 

The Company tests for goodwill impairment at each reporting unit.

There was no goodwill impairment for the years ended June 30, 2023 

and June 30, 2022.

ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following:

Accounts payable

$ 1,325,539  

$ 2,001,978  

Taxes payable

97,453  

196,473  

Accrued payroll, vacation and bonus payable

454,786  

331,644  

Accrued operating expenses

834,153  

275,695  

$ 2,711,931  

$ 2,805,790  

RELATED PARTY TRANSACTIONS

Notes Payable - Related Parties

Notes payable totaling $ 600,000 in principal plus $ 144,000 in accrued interest were repaid to two shareholders as of June 30, 2022, and the Company currently has no notes payable outstanding to related parties. Interest expense for all related party notes for the years ended June 30, 2023 

and 2022 was $ 0 and $ 19,798 , respectively.

Total accrued interest due related parties was $ 0  as of June 30, 2023 

USCF Investments - Related Party Transactions  

The Funds managed by USCF and USCF Advisers are deemed by management to be related parties.

The Company’s USCF Investments revenues, totaling $ 20.9  million and $ 23.8  million for the years ended June 30, 2023 and 2022, respectively, were earned from these related parties.

Accounts receivable, totaling $ 1.7  million and $ 2.2  million as of June 30, 2023 and June 30, 2022, respectively, were owed from the Funds that are related parties.

Fund expense waivers, totaling $ 0.2  million and $ 0.1  million and fund expense limitation amounts, totaling $ 0.1  million, for each of the years ended June 30, 2023 and 2022, were incurred on behalf of these related parties.

Waivers payable, totaling $ 0.1  million and $ 0.1 million as of June 30, 2023 and June 30, 2022, respectively, were owed to these related parties.

Fund expense waivers and fund expense limitation obligations are defined under Note 15  to the Consolidated Financial Statements. USCF Investments, from time to time, provides initial investments in the creation of ETP and ETF funds that USCF manages.

Such investments included GLDX, ZSB and USE, related party funds managed by USCF Advisers, and as of June 30, 2023 

the investments totaled $ 1.3  million, $ 1.9 million and $ 2.6 million, respectively.

As of June 30, 2022 the investments totaled $ 1.3 million, $0 and $ 0 , respectively.

The Company owns approximately 68 % and 40% of the outstanding shares of these investments as of June 30, 2023 and June 30, 2022, respectively.  

LOANS - PROPERTY AND EQUIPMENT

As of June 30, 2023, Brigadier had an outstanding principal balance of CD$451,500 (approx.

US$340,849 translated as of June 30, 2023) due to Bank of Montreal related to the purchase of its Saskatoon office land and building.

The Consolidated Balance Sheets as of June 30, 2023 

reflect the amount of the principal which is due within twelve months as a current liability of US$340,849  as compared to US$15,135 in current liabilities and US$350,293 in long term liabilities translated as of June 30, 2022.

Interest on the mortgage loan for the years ended June 30, 2023 and 2022 was US$14,231 and US$15,742, respectively.

In addition to the loan due by Brigadier, our subsidiary, Gourmet Foods, has a finance lease liability related to a solar energy system.

Total lease liabilities under the lease for the years ended June 30, 2023 and 2022 were NZ$174,405 (approximately US$106,469 translated as of June 30, 2023) as compared to NZ$203,814 (approximately US$124,422 translated as of June 30, 2023), respectively, and are included under loans-property and equipment on our Consolidated Balance Sheets.  

STOCKHOLDERS' EQUITY

Common Stock Issued in Underwritten Offering

On March 9, 2022, the Company entered into an underwriting agreement (the “Underwriting Agreement”) between the Company and Maxim Group LLC (the “Underwriter”), relating to the Company’s upsized underwritten public offering (the “Offering”) of 1,650,000 shares (the “Shares”) of the Company’s common stock, par value $ 0.001 per share (the “Common Stock”).

The Offering was made pursuant to the Company’s registration statement on Form S- 1 (File No.

333 - 261522 ), previously filed with Securities Exchange Commission (SEC) and subsequently declared effective by the SEC on March 9, 2022.

Pursuant to the Underwriting Agreement, the public offering price was $ 2.00 per Share (the "Offering Price"), and the Underwriter purchased the Shares at a 7.0 % discount to the public Offering Price.

The Company granted the Underwriter the option to purchase, within 45 days from the date of the Underwriting Agreement, an additional 247,500 shares of Common Stock at the same price per share as the Shares (the “Over-Allotment Option”), which the Underwriter exercised in full on March 11, 2022.

Maxim Group LLC acted as sole book-running manager for the Offering.

The Underwriting Agreement includes customary representations, warranties and agreements by the Company, customary conditions to closing, indemnification obligations of the Company and the Underwriter, including liabilities under the Securities Act of 1933, as amended, other obligations of the parties and termination provisions.

In addition, pursuant to the terms of the Underwriting Agreement and related “lock-up”

agreements, the Company, each director and executive officer of the Company and certain significant stockholders of the Company have agreed not to sell, transfer or otherwise dispose of securities of the Company, without the prior written consent of the Underwriter, for a 180 -day period, subject to certain limitations therein.

In exchange for the Underwriter's services, the Company agreed to (i) sell the Common Stock to the Underwriter at a purchase price of $ 1.86 per share of Common Stock, reflecting the underwriting discount of 7 %, and (ii) issue the Underwriter (or its designees) the Warrants to purchase shares of Common Stock equal to 5.0 % of the aggregate number of shares of Common Stock sold in the Offering, along with associated registration rights (the "Underwriter's Warrants").

On March 14, 2022, the Offering closed resulting in the Company selling a total of 1,897,500 shares of common stock, including 247,500 shares sold pursuant to the full exercise of the underwriter's over-allotment option.

Gross proceeds from the offering were approximately $ 3,795,000 before underwriting discounts and other estimated offering expenses which totaled $ 265,650 and $ 545,090 , respectively.

There has been no material change in the planned use of proceeds as described in our final prospectus filed with the SEC on March 9, 2022 pursuant to Rule 424 (b)( 4 ).

Warrants to Purchase Common Stock

On March 14, 2022, pursuant to the Underwriting Agreement, the Company issued the Underwriter's Warrants to purchase up to an aggregate of 82,500 shares of Common Stock as compensation for their services related to this issuance.

The Underwriter's Warrants may be exercised beginning on September 14, 2022, until March 14, 2027.

The initial exercise price of each Warrant is $ 2.40 per share, which represents 120 % of the Offering Price.

The total fair value of the warrants granted to the Underwriter was $ 132,000 .

The Company estimated the fair value of the warrants using the Black-Scholes option pricing model using the following assumptions:

Risk-free interest rate of 2.10 %, expected life of 5 years, dividend yield of 0 % and volatility of 117 %.

As the warrant issuance was for services rendered related to an equity issuance, no expense was recognized for the year ended June 30, 2023 and June 30, 2022 related to the issuance.

Convertible Preferred Stock

The Company has 50,000,000 shares authorized to issue as Preferred Stock.

The Preferred Stock is designated into two series, 5,000,000 designated as Series A, and 45,000,000 designated as Series B.

As of June 30, 2023 there are no issued or outstanding shares of Series A stock.

Each issued Series B Convertible Preferred Stock is convertible into 20 shares of common stock and carries a vote of 20 shares of common stock in all matters brought before the shareholders for a vote. On January 15, 2021, the Company converted 3,672 shares of Series B Convertible Preferred Stock to 73,440 shares of common stock per the request of the shareholder and pursuant to the stock designation.

There are 49,360 shares of Series B Convertible Preferred Stock outstanding as of June 30, 2023 and June 30, 2022.

Stock-based Compensation

In August 2021, the Company adopted the 2021 Omnibus Equity Incentive Plan ("the Equity Plan") which provides for the grant of stock-based awards, including stock options, restricted stock awards ("RSA") and restricted stock units ("RSU"), to employees and non-employees.

A total of 5,000,000  shares of common stock are authorized for issuance under the Plan, of which 4,441,267  are available for future grants as of June 30, 2023. 

The fair value of stock options are estimated on the date of grant using the Black-Scholes option pricing model and recognized as compensation on a straight-line basis between the date of grant and the date the options become fully vested.

During the year ended June 30, 2023 the Company granted 270,000 stock options with a weighted average grant date fair value of $ 1.59  per share.

No stock options were granted during the year ended June 30, 2022. 

Stock options issued have terms of ten years.

The fair value of the options granted were estimated 

using the following assumptions:

For the Year Ended June 30, 2023

Expected volatility

191 % - 197 %  

Expected term

Risk-Free interest rate

3.5 % - 3.7 %  

Weighted-average fair value per share of grants

$ 1.59  

Expected dividend yield

The following table summarizes the stock option activities for the Company's Equity Plan for year June 30, 2023.

Options Outstanding as of June 30, 2023

Outstanding Stock Options

Weighted Average Exercise Price

Weighted Average Remaining Contractual Life (Years)

Aggregate Intrinsic Value

Outstanding as of July 1, 2022

270,000  

$ 1.61  

Outstanding and expected to vest as of June 30, 2023

270,000  

$ 1.61  

Exercisable as of June 30, 2023

The fair value of these options, calculated using the Black-Scholes option-pricing model, was determined to be $ 428,300 using the assumptions note above.

The estimated aggregate intrinsic value of stock options exercisable as of June 30, 2023 was $ 0 .

Stock-based compensation relating to stock options totaled $ 48,229 and $ 0 for the years ending June 30, 2023 and 2022, respectively, and are included in the consolidated statements of income.

As of June 30, 2023, there was a total of $ 380,071 of unrecognized compensation expense related to outstanding stock options that will be recognized over a remaining weighted average period of 3.6  years.

The following table summarizes the restricted stock activities for the Company's Equity Plan for year June 30, 2023.

Restricted Stock Outstanding as of June 30, 2023

Number of Shares

Weighted Average Grant Date Fair Value

Nonvested as of July 1, 2022

288,733  

$ 1.36  

Nonvested as of June 30, 2023

288,733  

$ 1.36  

Expected to vest

288,733  

The fair value of RSA's is recognized as compensation on a straight-line basis between the date of grant and the date the RSA's become fully vested.

The fair value of RSA's is estimated on the grant date based on the closing quoted market price of the Company's stock and generally vest over a period of a 4 year period following issuance date, subject to continued service.

During year ended June 30, 2023, the Company granted 288,733 RSA's with a weighted average grant date fair value of $ 1.36 per share and a total fair value at date of grant of $ 394,000 .

No RSA's were granted in the year ended June 30, 2022. 

The intrinsic value of the RSA's was $ 314,719  as of June 30, 2023.

Stock-based compensation relating to RSA's totaled $ 35,288 and $ 0 for the years ended June 30, 2023 and 2022, respectively, and are included in the consolidated statements of income.

As of June 30, 2023, there was $ 358,712 of unrecognized compensation expense related to outstanding RSA's that will be recognized over a remaining weighted average period of 3.2  years. Holders of RSA's generally have the rights and privileges of a stockholder with respect to the shares of common stock granted to the holder, including the right to vote such shares and the right to receive dividends with respect to such shares.

However, all cash and stock dividends and distributions shall be held back by the Company for the holder's account until such time as the related portion of the restricted stock award vests (at which time such dividends or distributions, as applicable, shall be released and paid).

The Company does not consider the shares of common stock associated with the RSA's to be issued and outstanding until vesting occurs.

The aggregate expected stock-based compensation remaining to be recognized as of June 30, 2023 was as follows:

Fiscal Period

$ 182,919  

217,798  

253,875  

83,280  

Total stock-based compensation

$ 738,783  

The aggregate expected stock-based compensation expense remaining to be recognized reflects only awards as of June 30, 2023 and assumes no forfeiture activity and will be recognized over a weighted-average period of approximately 3.4  years.

There were no shares issued for vendor services during the years ending June 30, 2023 and June 30, 2022.

BUSINESS COMBINATIONS

On August 17, 2021, our wholly-owned subsidiary Marygold UK entered into a Stock Purchase Agreement ("SPA") to acquire all the issued and outstanding shares of Tiger Financial and Asset Management Limited ("Tiger"), a company incorporated and registered in England and Wales and located in Northampton, England.

Tiger is an asset manager and investment advisor operating pursuant to certification by the Financial Conduct Authority of the United Kingdom with approximately £42 million in assets under management as of June 20, 2022.

The transaction closed on June 20, 2022 with an agreed purchase price of £2,382,372 (translated to US$2,913,164 ), subject to adjustment as provided for in the SPA.

As of June 30, 2022 

approximately £1,018,935 ( US$1,245,954 ) remained payable, £18,935 ( US$23,154 ) of which was payable within 20 business days of closing, followed by subsequent equal payments of £500,000 due on December 31, 2022 and December 31, 2023, subject to downward adjustment per the terms of the SPA for an amount up to £500,000 should existing clientele close their accounts prior to December 31, 2023.

There is no provision for any upward adjustments.

As a result, management was able to complete its preliminary purchase price allocation as follows, under the assumption no downward adjustment will take place on December 31, 2023.

Included in the allocation are estimated income tax liabilities of approximately US$86,277 pertaining to the operations prior to acquisition, and US$113,833 of deferred income tax liabilities associated with the value of the acquired intangible assets.

Tiger will be operated as a subsidiary of Marygold UK and is expected to be initially cash flow neutral.

In addition to growing the business through increasing assets under management, Marygold UK intends to project the fintech mobile app services to be offered by Marygold in the U.S.

into the U.K.

through the established contacts and certifications held by Tiger.

As of June 30, 2023, £500,000 ( US$604,990 ) remains unpaid and due on December 31, 2023, subject to adjustment. The foregoing amounts have been translated to US currency as of the acquisition date.

$ 1,159,020  

Prepayments/deposits

17,962  

Plant, property and equipment

Intangible assets

684,768  

1,263,729  

Tax liability

Deferred tax liability

Accounts payable and accrued expenses

Total Purchase Price

$ 2,913,164  

Supplemental Pro Forma Information (Unaudited)

The following unaudited supplemental pro forma information for the year ended June 30, 2023, assumes the acquisition of Tiger had occurred as of July 1, 2021, giving effect on a pro forma basis to purchase accounting adjustments such as depreciation of property and equipment, amortization of intangible assets, and acquisition related costs.

The pro forma data is for informational purposes only and may not necessarily reflect the actual results of operations had Tiger been operated as part of the Company since July 1, 2021.

Furthermore, the pro forma results do not intend to predict the future results of operations of the Company.

Year Ended June 30, 2022

$ 37,829,123  

$ 38,475,091  

$ 1,145,721  

$ 1,464,172  

Basic and diluted earnings per share

$ 0.03  

$ 0.04  

The following table summarizes income before income taxes:

Years Ended June 30,

$ 1,321,043  

$ 2,067,224  

272,975  

290,897  

Income before income taxes

$ 1,594,018  

$ 2,358,121  

Income Tax Provision

Provision for income tax as listed on the Consolidated Statements of Income for the years ended June 30, 2023 

and 2022  are $ 428,989  and $ 1,212,400 , respectively. 

Provision for taxes consisted of the following:

Years Ended June 30,

$ 356,298  

$ 1,062,895  

Foreign operations

72,691  

149,505  

$ 428,989  

$ 1,212,400  

Provisions for income tax consisted of the following as of the years ended:

Years Ended June 30,

$ 299,707  

$ 741,200  

78,723  

242,393  

87,033  

177,118  

Total current

465,463  

1,160,711  

( 22,508 )  

69,422  

( 14,342 )  

Total deferred

( 36,474 )  

51,689  

$ 428,989  

$ 1,212,400  

Tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets for the years ended June 30, 2023 

and 2022  are presented below:

Years Ended June 30,  

Deferred tax assets:

Property and equipment and intangible assets - U.S.

$ 461,680  

$ 445,629  

Net operating loss

Capital loss carryover

Accruals, reserves and other - U.S.

305,808  

297,521  

Leasing assets

45,105  

137,756  

Leasing liabilities

( 43,259 )  

Gross deferred tax assets

771,287  

753,078  

Less valuation allowance

Total deferred tax assets - U.S.

$ 771,287  

$ 753,078  

Deferred tax liabilities:

Intangible assets - foreign

$ ( 211,406 )  

$ ( 237,844 )

Accruals, reserves and other - foreign

( 30,883 )  

Total deferred tax liabilities - foreign

$ ( 242,289 )  

$ ( 260,553 )

Total net deferred tax assets

$ 528,998  

$ 492,525  

The Company’s accounting for deferred taxes involves the evaluation of a number of factors concerning the realizability of the Company’s net deferred tax assets.

The Company primarily considered such factors as the Company’s history of operating losses;

the nature of the Company’s deferred tax assets and the timing, likelihood and amount, if any, of future taxable income during the periods in which those temporary differences and carryforwards become deductible. 

At present, the Company does believe that it is more likely than not that the deferred tax assets will be realized.

The valuation allowance was unchanged during the year ended 

June 30, 2023.

On March 27, 2020 the U.S.

enacted the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act).

The Company has evaluated the provisions of the CARES Act and determined that it did not result in a significant impact on the Company’s tax provision.

Income tax expense for the years ended 

June 30, 2023 

and June 30, 2022 

differed from the amounts computed by applying the statutory federal income tax rate of 21.0 % to pretax income as a result of the following:

Years Ended June 30,

Federal tax expense (benefit) at statutory rate

$ 334,950  

$ 495,287  

State income taxes

62,567  

201,369  

Permanent differences

73,142  

371,987  

Foreign tax credit

( 57,036 )  

Change in valuation allowance

Foreign rate differential

15,366  

202,170  

Total tax expense

$ 428,989  

$ 1,212,400  

Years Ended June 30,

Federal tax expense (benefit) at statutory rate

State income taxes

3.92 %  

Permanent differences *

Foreign rate differential

0.96 %  

Foreign tax credit

( 3.58 )%  

Change in valuation allowance

Total tax expense

26.89 %  

* Substantially all of the permanent differences in during the year ended June 30, 2023 related to the $ 2,500,000 legal settlement being permanently nondeductible for income taxes.

Tax positions are evaluated in a two -step process.

The Company first determines whether it is more likely than not that a tax position will be sustained upon examination.

If a tax position meets the more-likely-than- not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements.

The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The aggregate changes in the balance of gross unrecognized tax benefits, which includes interest and penalties, for the years ended 

June 30, 2023 

2022  are as follows:

Balance at June 30, 2022

$ 314,932  

Additions based on tax positions taken during a prior period

12,597  

Reductions based on tax positions taken during a prior period

Additions based on tax positions taken during the current period

Reductions based on tax positions taken during the current period

Reductions related to settlement of tax matters

Reductions related to a lapse of applicable statute of limitations

Balance at June 30, 2023

$ 327,530  

The Company files income tax returns in the United States, and various state and foreign jurisdictions.

The federal, state and foreign income tax returns are subject to tax examinations for the tax years 2019  through 2022  as of year ended June 30, 2023.

To the extent the Company has tax attribute carry forwards, the tax years in which the attribute was generated may still be adjusted upon examination by the U.S.

Internal Revenue Service, state or foreign tax authorities to the extent utilized in a future period. 

There were no ongoing examinations by taxing authorities as of June 30, 2023.

The Company had $ 0.3 million of unrecognized tax benefits as of June 30, 2023 

and 2022  that if recognized would affect the effective tax rate.

 The Company does not anticipate a significant change to its unrecognized tax benefits in the year ended June 30, 2023.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense.

As of June 30, 2023, and 2022, the Company accrued and recognized as a liability $ 75,584 and $ 62,297 , respectively, of interest and related penalties to uncertain tax positions.

COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company determines if an arrangement is a lease at inception.

Operating leases are included in operating lease right-of-use assets, accrued expenses, and long-term operating lease liabilities in the Consolidated Balance Sheets.

Right-of-use assets represent the Company's right to use an underlying asset for the lease term and lease liabilities represent the Company's obligation to make lease payments arising from the lease.

Operating lease right-of-use assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date.

The operating lease right-of-use assets also include any lease payments made at or before the commencement date and are reduced by any lease incentives received.

The Company's lease terms may include options to extend or not terminate the lease when it is reasonably certain that it will exercise any such options.

For the majority of its leases, the Company concluded that it is not reasonably certain that any renewal options would be exercised, and, therefore, the amounts are not recognized as part of operating lease right-of-use assets nor operating lease liabilities.

Leases with an initial term of 12 months or less are not recorded on the balance sheet and expensed as incurred and included within rent expense under general and administrative expense.

Lease expense is recognized on a straight-line basis over the expected lease term.

The Company's most significant operating leases are real estate leases of office, warehouse and production facilities.

The remaining operating leases are primarily comprised of leases of printers and other equipment which are deemed insignificant.

For all operating leases, the Company has elected the practical expedient permitted under Topic 842 to combine lease and non-lease components.

As a result, non-lease components, such as common area or equipment maintenance charges, are accounted for as a single lease element.

The Company has one finance lease wherein ownership of the underlying asset will be transferred to the Company at the end of the lease term.

The underlying asset of the finance lease is a solar energy system at our Gourmet Foods subsidiary in New Zealand that is included with property, plant and equipment on the Consolidated Balance Sheets.

Fixed lease expense payments are recognized on a straight-line basis over the lease term.

Variable lease payments vary because of changes in facts or circumstances occurring after the commencement date, other than the passage of time.

Certain of the Company's operating lease agreements include variable payments that are passed through by the landlord, such as insurance, taxes, and common area maintenance.

Variable payments are deemed immaterial, expensed as incurred, and included within rent expense under general and administrative expense.

The Company leases various facilities and offices throughout the world including the following subsidiary locations:

Gourmet Foods has operating leases for its office, factory and warehouse facilities located in Tauranga, New Zealand, and facilities leased by its subsidiary, Printstock, in Napier, New Zealand, as well as for certain equipment including printers and copiers.

These leases are generally for three -year terms, with some options to renew for an additional term.

The leases mature between October 2022 and October 2026, and require monthly rental payments of approximately $ 23,254 (GST not included) translated to U.S.

currency as of June 30, 2023.

Additionally, Gourmet Foods has one finance lease for its solar energy system that ends in December 2031 at the monthly rate (GST not included) of approximately US$1,610  translated as of June 30, 2023.

Brigadier leases office and storage facilities in Regina, Saskatchewan.

The minimum lease obligations for the Regina facility require monthly payments of approximately US$2,489 translated to U.S.

currency as of June 30, 2023.

Original Sprout currently leases office and warehouse space in San Clemente, CA with 3 -year facility lease expiring on November 30, 2023.

Minimum monthly lease payments of approximately $ 23,625 commenced December 1, 2021 with annual increases.

USCF Investments leases office space in Walnut Creek, California under an operating lease which expires in December 2023.

Minimum monthly lease payments are approximately $ 13,455 with increases annually.

For years ended June 30, 2023 

and 2022, the combined lease costs, including insignificant variable and short-term lease costs, of the Company and its subsidiaries totaled $ 815,699 and $ 824,196 , respectively, and recorded under general and administrative expense in the Consolidated Statements of Income.

As of June 30, 2023 the Consolidated Balance Sheets included operating lease right-of-use assets totaling $ 821,021 , recorded net of $ 16,823 in deferred rent, and $ 837,844  in total operating lease liabilities.

Future minimum consolidated lease payments for The Marygold Companies and its subsidiaries are as follows:

Year Ended June 30,

Finance Lease

$ 528,365  

$ 19,208  

226,713  

19,208  

177,108  

19,208  

56,188  

19,208  

65,626  

Total minimum lease payments

988,374  

161,666  

present value discount

( 150,530 )  

Total operating lease liabilities

$ 837,844  

$ 117,776  

The weighted average remaining lease term for the Company's operating leases was 2.91 years as of June 30, 2023 

and a weighted-average discount rate of 5.49 % was used to determine the total operating lease liabilities.

The remaining lease term for the Company's finance lease was 

8.4 years as of June 30, 2023 with an annual interest rate of 6.99 % and a present value discount of 27 %. 

Additionally, Gourmet Foods entered into a General Security Agreement in favor of the Gerald O'Leary Family Trust and registered on the Personal Property Securities Register for a priority sum of NZ$110,000 (approximately US$67,152 ) to secure the lease of its primary facility.

In addition, a NZ$20,000 (approximately US$12,209 ) bond has been posted through ANZ Bank and secured with a cash deposit of equal amount to secure a separate facilities lease.

The General Security Agreement and the cash deposit will remain until such time as the respective leases are satisfactorily terminated in accordance with their terms.

Interest from the cash deposit securing the lease accumulates to the benefit of Gourmet Foods and is listed as a component of interest income/expense on the accompanying Consolidated Statements of Income.

Other Agreements and Commitments   

USCF manages four Funds (BNO, CPER, UGA, UNL) which had expense waiver provisions during the prior fiscal year, whereby USCF reimbursed funds when fund expenditure levels exceed certain threshold amounts.

Effective May 1, 2021 USCF discontinued expense waiver reimbursements for BNO, CPER and UGA with only UNL continuing.

As of June 30, 2023 and 

2022 the expense waiver payable was $ 0.1  million and $ 0.1 million, respectively.

USCF has no obligation to continue such payments for UNL into subsequent periods.

As Marygold builds out its application, it enters into agreements with various service providers.

As of June 30, 2023, Marygold has future payment commitments with its primary service vendors totaling $ 1.7  million including approximately $ 1.3  million due in fiscal 2024  and $ 0.4 million due in fiscal 2025.

From time to time, the Company and its subsidiaries may be involved in legal proceedings arising primarily from the ordinary course of their respective businesses.

Except as described below, there are no pending legal proceedings against the Company.

USCF is an indirect wholly-owned subsidiary of the Company.

USCF, as the general partner of the United States Oil Fund, LP ("USO") and the general partner and sponsor of the related public funds may, from time to time, be involved in litigation arising out of its operations in the ordinary course of business.

Except as described herein, USO and USCF are not currently party to any material legal proceedings.

Settlement of SEC and CFTC Investigations

On November 8, 2021, USCF and USO announced a resolution with each of the SEC and the CFTC relating to matters set forth in certain Wells Notices issued by the staffs of each of the SEC and CFTC as more fully described below.

On August 17, 2020, USCF, USO, and John Love received a "Wells Notice" from the staff of the SEC (the "SEC Wells Notice").

The SEC Wells Notice stated that the SEC staff made a preliminary determination to recommend that the SEC file an enforcement action against USCF, USO, and Mr.

Love alleging violations of Sections 17 (a)( 1 ) and 17 (a)( 3 ) of the Securities Act of 1933, as amended (the "1933 Act"), and Section 10 (b) of the Securities Exchange Act of 1934, as amended (the "1934 Act"), and Rule 10b - 5 thereunder.

Subsequently, on August 19, 2020, USCF, USO, and Mr.

Love received a Wells Notice from the staff of the CFTC (the "CFTC Wells Notice").

The CFTC Wells Notice stated that the CFTC staff made a preliminary determination to recommend that the CFTC file an enforcement action against USCF, USO, and Mr.

Love alleging violations of Sections 4o ( 1 )(A) and (B) and 6 (c)( 1 ) of the Commodity Exchange Act of 1936, as amended (the "CEA"), 7 U.S.C.

6o ( 1 )(A) and (B) and 9 ( 1 ) ( 2018 ), and CFTC Regulations 4.26, 4.41, and 180.1 (a), 17 C.F.R.

4.26, 4.41, 180.1 (a) ( 2019 ).

On November 8, 2021, acting pursuant to an offer of settlement submitted by USCF and USO, the SEC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 8A of the 1933 Act, directing USCF and USO to cease and desist from committing or causing any violations of Section 17 (a)( 3 ) of the 1933 Act, 15 U.S.C.

77q (a)( 3 ) (the SEC Order).

In the SEC Order, the SEC made findings that, from April 24, 2020 to May 21, 2020, USCF and USO violated Section 17 (a)( 3 ) of 1933 Act, which provides that it is "unlawful for any person in the offer or sale of any securities to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser." USCF and USO consented to entry of the SEC Order without admitting or denying the findings contained therein, except as to jurisdiction.

Separately, on November 8, 2021, acting pursuant to an offer of settlement submitted by USCF, the CFTC issued an order instituting cease-and-desist proceedings, making findings, and imposing a cease-and-desist order pursuant to Section 6 (c) and (d) of the CEA, directing USCF to cease and desist from committing or causing any violations of Section 4o ( 1 )(B) of the CEA, 7 U.S.C.

6o ( 1 )(B), and CFTC Regulation 4.41 (a)( 2 ), 17 C.F.R.

4.41 (a)( 2 ) (the "CFTC Order").

In the CFTC Order, the CFTC made findings that, from on or about April 22, 2020 to June 12, 2020, USCF violated Section 4o ( 1 )(B) of the CEA and CFTC Regulation 4.41 (a)( 2 ), which make it unlawful for any commodity pool operator ("CPO") to engage in "any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant" and prohibit a CPO from advertising in a manner which "operates as a fraud or deceit upon any client or participant or prospective client or participant," respectively.

USCF consented to entry of the CFTC Order without admitting or denying the findings contained therein, except as to jurisdiction.

Pursuant to the SEC Order and the CFTC Order, in addition to the command to cease and desist from committing or causing any violations of Section 17 (a)( 3 ) of the 1933 Act, Section 4o ( 1 )(B) of the CEA, and CFTC Regulation 4.14 (a)( 2 ), civil monetary penalties totaling two million five hundred thousand dollars ( $2,500,000 ) in the aggregate were required to be paid to the SEC and CFTC, of which one million two hundred fifty thousand dollars ( $1,250,000 ) was paid by USCF to each of the SEC and the CFTC, respectively, pursuant to the offsets permitted under the orders.

United States Oil Fund, LP Securities Litigation

On June 19, 2020, USCF, USO, John P.

Love, and Stuart P.

Crumbaugh were named as defendants in a putative class action filed by purported shareholder Robert Lucas (the "Lucas Class Action").

The Court thereafter consolidated the Lucas Class Action with two related putative class actions filed on July 31, 2020 and August 13, 2020, and appointed a lead plaintiff.

The consolidated class action is pending in the U.S.

District Court for the Southern District of New York under the caption In re:

United States Oil Fund, LP Securities Litigation, Civil Action No.

1:20 -cv- 04740.

On November 30, 2020, the lead plaintiff filed an amended complaint (the "Amended Lucas Class Complaint").

The Amended Lucas Class Complaint asserts claims under the 1933 Act, the Exchange Act, and Rule 10b - 5.

The Amended Lucas Class Complaint challenges statements in registration statements that became effective on February 25, 2020 and March 23, 2020 as well as subsequent public statements through April 2020 concerning certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including the COVID- 19 global pandemic and the Saudi Arabia-Russia oil price war.

The Amended Lucas Class Complaint purports to have been brought by an investor in USO on behalf of a class of similarly-situated shareholders who purchased USO securities between February 25, 2020 and April 28, 2020 and pursuant to the challenged registration statements.

The Amended Lucas Class Complaint seeks to certify a class and to award the class compensatory damages at an amount to be determined at trial as well as costs and attorney's fees.

The Amended Lucas Class Complaint named as defendants USCF, USO, John P.

Love, Stuart P.

Crumbaugh, Nicholas D.

Gerber, Andrew F Ngim, Robert L.

Nguyen, Peter M.

Robinson, Gordon L.

Ellis, and Malcolm R.

Fobes III, as well as the marketing agent, ALPS Distributors, Inc., and the Authorized Participants:

ABN Amro, BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets, Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Goldman Sachs & Company, J.P.

Morgan Securities Inc., Merrill Lynch Professional Clearing Corporation, Morgan Stanley & Company Inc., Nomura Securities International Inc., RBC Capital Markets LLC, SG Americas Securities LLC, UBS Securities LLC, and Virtu Financial BD LLC.

The lead plaintiff has filed a notice of voluntary dismissal of its claims against BNP Paribas Securities Corporation, Citadel Securities LLC, Citigroup Global Markets Inc., Credit Suisse Securities USA LLC, Deutsche Bank Securities Inc., Morgan Stanley & Company, Inc., Nomura Securities International, Inc., RBC Capital Markets, LLC, SG Americas Securities LLC, and UBS Securities LLC.

USCF, 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.

No accrual has been recorded with respect to the above legal matters as of June 30, 2023 

We are currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of, possible losses resulting from these matters.

It is reasonably possible that this estimate will change in the near term.

An adverse outcome regarding these matters could materially adversely affect the Company's financial condition, results of operations and cash flows.

On August 10, 2020, purported shareholder Darshan Mehan filed a derivative action on behalf of nominal defendant USO, against defendants USCF, John P.

Love, Stuart P.

Crumbaugh, Nicholas D.

Gerber, Andrew F Ngim, Robert L.

Nguyen, Peter M.

Robinson, Gordon L.

Ellis, and Malcolm R.

Fobes, III (the "Mehan Action").

The action is pending in the Superior Court of the State of California for the County of Alameda as Case No.

The Mehan Action alleges that the defendants breached their fiduciary duties to USO and failed to act in good faith in connection with a March 19, 2020 registration statement and offering and disclosures regarding certain extraordinary market conditions that caused demand for oil to fall precipitously, including the COVID- 19 global pandemic and the Saudi Arabia-Russia oil price war.

The complaint seeks, on behalf of USO, compensatory damages, restitution, equitable relief, attorney's fees, and costs.

All proceedings in the Mehan Action are stayed pending disposition of the motion(s) to dismiss in In re:

United States Oil Fund, LP Securities Litigation .

USCF, USO, and the other defendants intend to vigorously contest such claims.

In re United States Oil Fund, LP Derivative Litigation

On August 27, 2020, purported shareholders Michael Cantrell and AML Pharm.

DBA Golden International filed two separate derivative actions on behalf of nominal defendant USO, against defendants USCF, John P.

Love, Stuart P.

Crumbaugh, Andrew F Ngim, Gordon L.

Ellis, Malcolm R.

Fobes, III, Nicholas D.

Gerber, Robert L.

Nguyen, and Peter M.

Robinson in the U.S.

District Court for the Southern District of New York at Civil Action No.

1:20 -cv- 06974 (the "Cantrell Action") and Civil Action No.

1:20 -cv- 06981 (the "AML Action"), respectively.

The complaints in the Cantrell and AML Actions are nearly identical.

They each allege violations of Sections 10 (b), 20 (a) and 21D of the Exchange Act, Rule 10b - 5 thereunder, and common law claims of breach of fiduciary duties, unjust enrichment, abuse of control, gross mismanagement, and waste of corporate assets.

These allegations stem from USO's disclosures and defendants' alleged actions in light of the extraordinary market conditions in 2020 that caused demand for oil to fall precipitously, including the COVID- 19 global pandemic and the Saudi Arabia-Russia oil price war.

The complaints seek, on behalf of USO, compensatory damages, restitution, equitable relief, attorney's fees, and costs.

The plaintiffs in the Cantrell and AML Actions have marked their actions as related to the Lucas Class Action.

The Court consolidated the Cantrell and AML Actions under the caption In re United States Oil Fund, LP Derivative Litigation, Civil Action No.

1:20 -cv- 06974 and appointed co-lead counsel.

All proceedings in In re United States Oil Fund, LP Derivative Litigation are stayed pending disposition of the motion(s) to dismiss in In re:

United States Oil Fund, LP Securities Litigation .

USCF, USO, and the other defendants intend to vigorously contest the claims in In re United States Oil Fund, LP Derivative Litigation .

Optimum Strategies Action

On April 6, 2022, USO and USCF were named as defendants in an action filed by Optimum Strategies Fund I, LP, a purported investor in call option contracts on USO (the "Optimum Strategies Action").

The action is pending in the U.S.

District Court for the District of Connecticut at Civil Action No.

3:22 -cv- 00511.

The Optimum Strategies Action asserts claims under the Securities Exchange Act of 1934, as amended (the "1934 Act"), Rule 10b - 5 thereunder, and the Connecticut Uniform Securities Act ("CUSA").

It purports to challenge statements in registration statements that became effective in February 2020, March 2020, and on April 20, 2020, as well as public statements between February 2020 and May 2020, in connection with certain extraordinary market conditions and the attendant risks that caused the demand for oil to fall precipitously, including the COVID- 19 global pandemic and the Saudi Arabia-Russia oil price war.

The complaint seeks damages, interest, costs, attorney's fees, and equitable relief.

On March 15, 2023, the court granted the USO defendants' motion to dismiss the complaint.

In its ruling, the court granted the USO defendants' motion to dismiss, with prejudice, the plaintiff's claims under Section 10 (b) of the Exchange Act and Rule 10b - 5 thereunder, and a claim for control person liability under Section 20 (a) of the Exchange Act.

Having dismissed all claims over which the court had original jurisdiction, the court declined to exercise supplemental jurisdiction over the plaintiff's state law claim under CUSA and dismissed the claim without prejudice.

No notice of appeal was filed.

No accrual has been recorded with respect to the above legal matters as of June 30, 2023 

We are currently unable to predict the timing or outcome of, or reasonably estimate the possible losses or range of, possible losses resulting from these matters.

It is reasonably possible that this estimate will change in the near term.

An adverse outcome regarding these matters could materially adversely affect the Company's financial condition, results of operations and cash flows.

Other Contingencies

On December 2, 2021, Marygold became aware of certain activity indicative of potential fraud on its Fintech platform, which was still in beta testing stage of development, and associated with the opening of end-customer accounts.

As of the date of this Annual Report on Form 10 -K filing, Marygold estimates that approximately 80 end-customer accounts were opened fraudulently that resulted in approximately $ 103,000 being misappropriated.

Upon learning of this activity, Marygold removed its app from all App Stores including, Apple and Android, to prevent any fraudulent activity through opening of new accounts created on its platform.

Marygold further believes that no personal identifiable information was compromised.

Marygold continues to monitor the security measures of its Fintech platform while continuing development. The accrual of approximately $ 250,000 was recorded through other income (expense) during the quarter ended December 31, 2021, and was reduced by approximately $ 147,000  later in the year ended June 30, 2022 

as the total amount of the estimated loss decreased resulting in an actual loss of approximately $ 103,000 . 

Retirement Plan

The Marygold Companies, through its wholly-owned subsidiary USCF, has a 401 (k) Profit Sharing Plan ( "401K Plan") covering U.S.

employees, including Original Sprout and Marygold, who are over 21 years of age and who have completed a minimum of 1,000 hours of service and have worked for the respective Marygold Companies subsidiary for at least three months.

Participants may make contributions pursuant to a salary reduction agreement.

In addition, the 401K Plan makes a safe harbor matching contribution.

Quarterly profit-sharing contributions paid totaled approximately $ 208  thousand and $ 169 thousand for each of the years ended 

June 30, 2023 

and 2022, respectively.

SEGMENT REPORTING

With the acquisition of USCF Investments, Gourmet Foods, Brigadier, Tiger, and the launch of the Original Sprout business unit of Kahnalytics, the Company has identified five  segments for its products and services;

investment fund management, U.S.A.

beauty products, New Zealand food industry and Canada security alarm systems.

Our recently incorporated subsidiary, Marygold, has 

not begun operations, so its accounts have been consolidated with those of the parent, The Marygold Companies, and is not yet identified as a separate segment.

Our recently acquired indirect subsidiary, Tiger, had only 9 days of operations during the year ended June 30, 2022 

and operating results were nil for the year ended June 30, 2022.

The Company's reportable segments are business units located in different global regions.

The Company’s operations in the U.S.A.

include the manufacture and wholesale distribution of hair and skin care products by Original Sprout and the income derived from management of various investment funds by our subsidiary USCF Investments.

In New Zealand operations include the production, packaging and distribution on a commercial scale of gourmet meat pies and related bakery confections, and the printing of specialized food wrappers through our wholly-owned subsidiary Gourmet Foods, Ltd.

and their subsidiary, Printstock.

In Canada, the Company provides security alarm system installation and maintenance services to residential and commercial customers sold through its wholly-owned subsidiary, Brigadier.

Our subsidiary in the U.K., Marygold UK, earns management fees through its wholly-owned subsidiary, Tiger, as an investment advisor and asset manager.

Separate management of each segment is required because each business unit is subject to different operational issues and strategies due to their particular regional location.

The Company accounts for intra-company sales and expenses as if the sales or expenses were to third parties and eliminates them in the consolidation.

Amounts are adjusted for currency translation as of the balance sheet date and presented in US dollars.

The following table presents a summary of identifiable assets as of June 30, 2023 

and June 30, 2022:

Identifiable assets:

U.S.A.:Corporate headquarters - including Marygold

$ 4,133,619  

$ 7,243,332  

investment fund management - related party

19,601,960  

18,006,771  

beauty products

2,888,721  

3,484,315  

food industry

3,933,463  

3,983,381  

Security systems

2,820,798  

2,592,778  

Financial services

1,902,266  

Consolidated total

$ 35,280,827  

$ 35,310,577  

( 1 ) The assets of Marygold UK, identified as located in the U.K.:

financial services segment as of June 30, 2023, were combined with those of the parent company as of June 30, 2022 due to its recent acquisition and limited operations.

The following table presents a summary of operating information for the years ended June 30, 2023 

and June 30, 2022:

June 30, 2023

June 30, 2022

Revenues from external customers:

investment fund management - related party

$ 20,862,191  

$ 23,835,348  

beauty products

3,033,100  

3,529,789  

New Zealand :

food industry

7,631,837  

7,930,888  

security systems

2,832,531  

2,533,098  

financial services

517,075  

Consolidated total

$ 34,876,734  

$ 37,829,123  

Net income (loss):

investment fund management - related party

7,579,329  

7,053,050  

beauty products

( 288,562 )  

New Zealand :

food industry

255,802  

323,621  

security systems

358,312  

246,086  

financial services

52,760  

Corporate headquarters - including Marygold

( 6,792,612 )  

( 6,289,068 )

Consolidated total

$ 1,165,029  

$ 1,145,721  

The following table presents a summary of capital expenditures for the year ended June 30,:

June 30, 2023

June 30, 2022

Capital expenditures, net of disposals:

investment fund management

beauty products

food industry

54,362  

security systems

financial services

corporate headquarters - including Marygold

26,651  

$ 94,730  

$ 7,555  

The following table represents property, plant and equipment in use at each of the Company's locations as of June 30,:

As of June 30, 2023

As of June 30, 2022

Asset Location

investment fund management

Total revenue

Operating (Loss) Income

Fund management - related party

Food products

Beauty products

62,456  

60,678  

food industry

2,240,357  

2,235,896  

Security systems

900,123  

916,054  

Financial services

23,695  

19,467  

corporate headquarters - including Marygold

47,080  

20,429  

Total all locations

3,273,711  

3,252,524  

Less accumulated depreciation

( 2,018,409 )  

( 1,860,630 )

Net property, plant and equipment

$ 1,255,302  

$ 1,391,894  

SUBSEQUENT EVENTS

The Company evaluated subsequent events for recognition and disclosure through the date the consolidated financial statements were issued or filed.

Nothing has occurred outside normal operations since that required recognition or disclosure in these financial statements.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There were no disagreements or disputes with our independent accountants.

Corporate headquarters

Total operating (loss) income

Reportable Segments

Fiscal Year 2024 Compared with Fiscal Year 2023

Management - USCF Investments

Revenue decreased by $1.9 million or 9% driven

by reduced average Assets Under Management (“AUM”) in our fund management business.

Average AUM for fiscal 2024 was $3.3

billion compared to $3.7 billion for fiscal 2023.

The reduction in AUM in fiscal 2024 was due to commodity price

fluctuations, rising interest rate environment as well as geopolitical and economic uncertainty.

Operating income decreased by $2.7 million or 36% driven by the decrease in average

AUM as described above and increased fund operations expenses of $0.8 million or 17% as a result of increased licenses and fees as well

as fund accounting and administration costs due to an increase in the number of funds managed.

Products - Gourmet Foods

decreased by $0.4 million or 5% and operating income increased slightly driven by changing our product mix and refocusing production

capacity to higher profit margin customers.

Products – Original Sprout

increased by $0.3 million or 9% and operating loss increased by $1.9 million or 650% driven by a $1.4 million impairment charge relating to the goodwill and other intangible

assets in our beauty products unit as a result of increased losses resulting from pandemic-related changes in its distribution channels

and increased costs from the introduction of new product lines.

Systems - Brigadier

decreased by $0.2 million or 6% and operating income decreased by $0.3 million or 46% driven by market timing and weather

Services – Marygold US and Marygold UK

Revenue increased by $0.1 million or 26% driven by increased revenues at Tiger and the incremental revenue from Step-By-Step

which was acquired in April 2024.

Operating loss increased by $2.6 million or 77% driven by increased costs incurred in connection

with the launch, marketing and roll-out of our mobile Fintech app in June 2023.

Corporate Headquarters

Operating loss for the corporate headquarters increased by $0.3 million or 10%

driven by higher stock-based compensation expenses as we began granting equity awards in fiscal 2023 and increased

the grants in fiscal 2024.

and Capital Resources

Marygold Companies is a holding company that conducts its individual business operations through its subsidiaries.

holding-company level, its liquidity needs relate to operational expenses, the funding of additional business acquisitions and new

investment opportunities.

Our operating subsidiaries’ principal liquidity requirements arise from cash used in operating

activities, debt service, and capital expenditures, including purchases of equipment and services, operating costs and expenses, and

income taxes.

Cash is managed at the holding company and the subsidiary level.

There are no limitations or constraints on the

movement of funds between the entities.

of June 30, 2024, we had $5.5 million of cash and cash equivalents on a consolidated basis as compared

to $8.2 million as of June 30, 2023, a decrease of $2.7 million or 33%.

Our cash used in operating activities for fiscal 2024 was $1.9 million.

For fiscal 2024, USCF Investments invested $3.0 million by

seeding one new fund and we made additional expenditures of $5.7 million in Marygold for the mobile Fintech app.

We have invested a total

of $15.1 million in the Fintech app since Marygold’s inception.

We expect that Marygold will require additional capital to fund

its losses over the coming 12 months.

As the funding requirements become known, we will decide upon the source of the additional capital

investment to be made as the need arises.

During fiscal 2024, we made a deposit of $1.8 million in connection with the potential acquisition

of a 9.9% equity interest in a domestic financial institution that is currently seeking certain regulatory approval.

Despite these cash

investments and expenses, our working capital position remains strong at $19.0 million as of June 30, 2024.

Based on our current operating plan which includes continued significant investments in the mobile Fintech app, we

intend to raise additional capital through one or more debt and/or equity financing to meet our operating and cash needs.

no assurance we will be able to raise additional financing or obtain terms that are acceptable to us.

In the event we are unable to find additional financing at terms that are acceptable to us, we would slow down the

investment in the development of our Fintech app.

Company has various operating leases for offices, warehouses and manufacturing facilities.

The total amount due under these obligations

was $1.0 million as of June 30, 2024.

The obligations will reduce over the passage of

time through periodic lease payments.

See Note 14 to our Financial Statements for further analysis of this obligation.

of June 30, 2024, we had $0.4 million of third-party indebtedness on a consolidated basis.

Brigadier owed $0.3 million under a loan

that was secured with the land and building in Canada.

In July 2024, Brigadier repaid the loan in full.

addition, Gourmet Foods has a finance lease liability of $0.1 million related to a solar energy system which is included under Loans

- property and equipment on our consolidated balance sheets.

Investments, from time to time, provides initial investments in the creation of ETP funds that USCF Investments manages.

Investments classifies these investments as current assets as these investments are generally sold within one year from the balance

As of June 30, 2024, USCF Investments held investment positions totaling $7.5 million in four of its registered

Investment Company Act funds.

These investments along with other investments, as applicable, are described further in “Note 5

– Investments” to our consolidated financial statements included elsewhere in this Annual Report on Form

strategy on dividends is to declare and pay dividends only from retained earnings and only when our Board of Directors deems it prudent

and in the best interests of the Company to declare and pay dividends.

We paid no dividends during fiscal 2024 and

Sheet Arrangements

June 30, 2024, and through the date of this Annual Report on Form 10-K, we have not entered into any transaction, agreement or other contractual arrangement with

an entity unconsolidated with us under which we have:

obligation under a guarantee contract,

retained or contingent interest in assets transferred to the unconsolidated entity or similar arrangement that serves as credit,

liquidity or market risk support to such entity for such assets,

obligation, including a contingent obligation, arising out of a variable interest in an unconsolidated entity that is held by, and

material to, us where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging,

or research and development services with us.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

a “smaller reporting company”, we are not required to provide the information required by this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis