Marygold Companies, Inc. 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The 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” above. Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles. Introduction The Marygold Companies, Inc., a Nevada corporation (together with its subsidiaries, “we,” “us,” “our,” “Company,” or “The Marygold Companies”) is a holding company which operates through its wholly owned subsidiaries on a multinational scale that is focused upon financial services, exchange traded funds management and certain other business activities listed below: ● U.S. Fund Management - USCF Investments, Inc., a Delaware corporation (“USCF Investments”), with corporate headquarters in Walnut Creek, California and its wholly owned subsidiaries, which provide fund management services to exchange traded fund and exchange traded products (“ETFs”): ○ 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, Canada. This business was sold in July 2025 as further described below in the Certain Recent Developments – Sale of Brigadier, and in Note 16. Subsequent Events to the audited consolidated financial statements included in this Form 10-K. ● Beauty Products - Kahnalytics, Inc., a California corporation, doing business as “Original Sprout,” located in San Clemente, California. ● U.S. and U.K. Financial Services: ○ Marygold & Co., a Delaware corporation and its wholly owned subsidiary, Marygold & Co. Advisory Services, LLC, a Delaware limited liability company, whose principal business offices are located in Walnut Creek, California; ○ 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: ■ Marygold & Co. Limited f/k/a Tiger Financial & Asset Management Limited, a company incorporated and registered in England and Wales, whose registered office is in Northampton, England; and ■ Step-By-Step Financial Planners Limited, a company incorporated and registered in England and Wales, whose registered office is in Staffordshire, England. 23 Table of Contents Certain Recent Developments See “Item 1. Business – Certain Recent Developments” above. 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 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 - Valuation of Intangible Assets We are a 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. 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. 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. Impairments Goodwill 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. These 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. Changes in these estimates and assumptions could materially affect the determination of fair value and impairment for each reporting unit. Legal and Other Contingencies The 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 estimated. 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. Income Taxes The 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 to assess 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. 24 Table of Contents SUMMARY RESULTS OF OPERATIONS (in thousands, except percentages) Fiscal 2025 Fiscal 2024 Percentage Change Revenue $ 30,154 $ 32,836 -8 % Cost of revenue 8,282 8,720 -5 % Gross profit 21,872 24,116 -9 % Operating expenses 28,562 30,372 -6 % Loss from operations (6,690 ) (6,256 ) 7 % Other (expense) income, net (692 ) 808 -186 % Loss before income taxes (7,382 ) (5,448 ) 35 % Benefit from income taxes 1,562 1,379 13 % Net loss $ (5,820 ) $ (4,069 ) 43 % Fiscal Year 2025 Compared with Fiscal Year 2024 Revenue decreased by $2.7 million or 8% for fiscal 2025 driven by reduced revenue of $1.8 million at our fund management segment, $0.6 million at our food products segment and $0.3 million at our beauty products segment. Average Assets Under Management (“AUM”) in our fund management business for fiscal 2025 was $2.9 billion compared to $3.3 billion for fiscal 2024. The reduction in AUM in fiscal 2025 was due to commodity price fluctuations, energy demand as well as geopolitical and economic uncertainty. The decreased revenue in food products was driven by changing our product mix and refocusing production capacity to higher profit margin customers. The decreased revenue in beauty products was driven by the efforts to control the discounted price of products sold online by unauthorized resellers. Gross profit decreased by $2.2 million or 9% for the reasons described above for the reduced revenue as the gross profit margin remained consistent from fiscal 2024 to fiscal 2025. Operating expenses decreased by $1.8 million or 6% as a result of the following. During fiscal 2024, 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. Our marketing expenses decreased by $0.7 million during fiscal 2025 by putting our US fintech app on pause and reducing the marketing costs at our beauty products segment. Partially offsetting the decreased operating expenses were an increase in stock-based compensation expenses of $0.4 million. Other (expense) income, net went from a $0.8 million of other income in fiscal year 2024 to a $0.7 million other expense in fiscal year 2025. The $1.5 million or 186% change was driven by the $1.2 million of interest expense incurred on the $4.4 million loan payable that we took out in September 2024. Benefit from income taxes increased by $0.2 million or 13% from fiscal 2024 to fiscal 2025 as a result of the increased loss before income taxes as described above. Net loss of $5.8 million in fiscal 2025 increased by $1.8 million or 43% compared to $4.1 million in fiscal 2024. The increase in net loss was driven by the decreased profits from our fund management business due to lower average AUM, decreased other income as described above and offset by improved net overall profits from our other operating segments. 25 Table of Contents SEGMENT RESULTS OF OPERATIONS (in thousands, except percentages) Fiscal 2025 Fiscal 2024 Percentage Change Revenue Fund management - related party $ 17,135 $ 18,965 -10 % Food products 6,720 7,271 -8 % Beauty products 2,974 3,296 -10 % Security systems 2,471 2,655 -7 % Financial services 854 649 32 % Total revenue $ 30,154 $ 32,836 -8 % Operating Income (Loss) Fund management - related party $ 3,274 $ 4,773 -31 % Food products 145 321 -55 % Beauty products (395 ) (2,138 ) -82 % Security systems 250 325 -23 % Financial services (5,621 ) (5,943 ) -5 % Corporate headquarters (4,343 ) (3,594 ) 21 % Total operating loss $ (6,690 ) $ (6,256 ) 7 % Reportable Segments Fiscal Year 2025 Compared with Fiscal Year 2024 U.S. Fund Management - USCF Investments Revenue decreased by $1.8 million or 10% driven by reduced average Assets Under Management (“AUM”) in our fund management business. Average AUM for fiscal 2025 was $2.9 billion compared to $3.3 billion for fiscal 2024, a decrease of $0.4 billion or 12%. The decrease in average AUM in fiscal 2025 was due to commodity price fluctuations, energy demand as well as geopolitical and economic uncertainty. Operating income decreased by $1.5 million or 31% driven by the decrease in average AUM as described above and partially offset by decreased operating expenses of $0.3 million or 2% as a result of lower license fees, and variable fund accounting and administration costs due to lower AUM for funds overall. Food Products - Gourmet Foods Revenue decreased from $7.3 million in fiscal 2024 to $6.7 million in fiscal 2025 which was a decrease of $0.6 million or 8%. The decrease in revenue was in our bakery business and was due to a temporary cancellation of certain product categories sold to national grocery chains during fiscal 2025. Operating income decreased by $0.2 million or 55% which was driven by a non-recurring cost of goods sold adjustment coupled with a depreciation charge taken for its solar electricity system and partially offset by increased profits from the sale of higher margin products at our bakery business. Beauty Products – Original Sprout Beauty products revenue decreased by $0.3 million or 10% driven by the efforts to control the discounted price of products sold online by unauthorized resellers. For the past year Original Sprout has been reducing the number of unauthorized Internet sales channels, recovering control over its price points, and repositioning its products for a larger presence on store shelves. Operating loss decreased by $1.7 million or 82% driven by a $1.4 million impairment charge taken in fiscal 2024 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. After the impairment charge taken in fiscal 2024, Original Sprout no longer has any amortization charges from the intangible assets that were written down. Original Sprout also reduced its marketing expense by $0.3 million from fiscal 2024 to fiscal 2025. Security Systems - Brigadier Revenue decreased by $0.2 million or 7% and operating income decreased by $0.1 million or 23% driven by market timing and weather patterns. Revenues from monitoring residual fees remained relatively static while sales and installations of larger commercial installations decreased for fiscal 2025 as compared to 2024. The larger commercial accounts generate more revenue and profit but take longer to complete, thus may produce spikes or declines in revenue and profits for specific reporting periods. Brigadier was sold to a related party on July 1, 2025 (see “Certain Recent Developments – Sale of Brigadier” and Note 16, Subsequent Events to the audited consolidated financial statements included in this Form 10-K). 26 Table of Contents U.S. and U.K. Financial Services – Marygold US and Marygold UK Marygold US incurred an operating loss of $4.7 million in fiscal 2025 compared to an operating loss of $5.7 million in fiscal 2024. Since the Marygold US app earned only de minimis revenues since its launch in June 2023, Marygold US decided to pause operations of the app in the U.S. effective March 31, 2025. As such, the losses and negative cash flows from Marygold US are expected to be reduced going forward as the Company assesses whether it will continue further development of the app for the U.S. market; discontinue development of the app other than for the U.K market; or license or sell the app to a third party, of which there can be no assurance. In order to further develop the app for the U.S. market, the Company anticipates it would need to raise additional debt or equity financing. There can be no assurance the Company will be able to raise such additional financing or upon terms acceptable to it. The overall financial services revenue driven by Marygold UK increased by $0.2 million or 32% driven by having a full year of revenue in fiscal 2025 from Step-By-Step which was acquired in April 2024. Marygold UK released a narrower version of the mobile Fintech app in the UK during the fourth quarter of fiscal 2025. The development, marketing and support of the UK Fintech app negatively impacted the financial performance of Marygold UK during fiscal 2025 but was offset due to reduced expenses of Marygold US. The overall financial services operating loss decreased by $0.3 million, or 5%, as a result. Corporate Headquarters Operating loss for the corporate headquarters increased by $0.7 million or 21% driven by higher stock-based compensation expenses of $0.4 million and the transition of certain employees from the financial services segment to the parent company. Liquidity and Capital Resources The Marygold Companies is a holding company that conducts its individual business operations through its subsidiaries. At the 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. As of June 30, 2025, we had $5.0 million of cash and cash equivalents on a consolidated basis as compared to $5.5 million as of June 30, 2024, a decrease of $0.5 million or 8%. Our cash used in operating activities for fiscal 2025 was $3.3 million. For fiscal 2025, we made additional expenditures of $3.3 million through Marygold US for the development of the mobile Fintech app in the United States. We have invested a total of $19.1 million in the Fintech app through Marygold US since inception. Despite these cash investments and expenses, our working capital position remains strong at $12.4 million as of June 30, 2025. As described below, in September 2024 we entered into a financing arrangement under which we borrowed $4.4 million and have the potential to borrow an additional $2.2 million. The financing arrangement also gives the lender the right but not the obligation to provide an additional $10.0 million in financing to us on the same terms as the initial loans. Also as described below, on January 28, 2025, we received $1.8 million in net proceeds from the sale of our shares in a firm commitment underwritten offering. Also, on July 1, 2025, the Company sold Brigadier to a related party. As of June 30, 2025, $0.7 million had been received as a deposit, and the Company received the remaining proceeds of $1.6 million in accordance with the schedule described in Note 16, Subsequent Events to the Consolidated Financial Statements included in this Form 10-K. Recent Equity Financing On January 28, 2025, we closed on the sale of an aggregate of 2,050,000 shares of our common stock, $0.001 par value per share (“Common Stock”) at a price to the public of $1.10 per share (before deduction of underwriting discounts and commissions) in a firm commitment underwritten public offering (“Offering”) pursuant to an underwriting agreement, dated January 26, 2025 (“Underwriting Agreement”), between us and the Maxim Group LLC (“Maxim”), as sole underwriter and book-running manager for the Offering. Pursuant to the Underwriting Agreement, we granted Maxim a 45-day option to purchase up to an additional 307,500 shares of Common Stock at the public offering price before deduction of underwriting discounts and commissions (“Overallotment Option”). Maxim did not exercise its Overallotment Option. The net proceeds of the Offering to us, after deducting underwriting discounts and commissions and estimated offering expenses, were $1.8 million. We intend to use the net proceeds from the Offering to retire or reduce debt, make additional investments in our financial services operations, and for other general working capital and corporate purposes. At-the-Market Securities Offering On March 7, 2025, we entered into an Equity Distribution Agreement (“EDA”) with Maxim pursuant to which we may sell from time-to-time shares of our common stock having an aggregate offering price of up to $4.65 million through or to Maxim, as sales agent or principal. We have agreed to pay Maxim a commission equal to three percent (3%) of the aggregate gross proceeds from the sale of any shares through Maxim under the EDA, reimburse Maxim for certain legal fees and disbursements, and have agreed to indemnify Maxim against certain liabilities under the Securities Act. The EDA requires that, until May 28, 2025, the date of the expiration of the standstill period in our Underwriting Agreement with Maxim for the Offering described above, sales of our shares of common stock be made at a minimum price per share of $1.50 unless, at any time, Maxim and the Company mutually agree upon a lower minimum price per share. During the fiscal year ended June 30, 2025, we did not sell any shares pursuant to the EDA. The offer and sale, if any, of our shares of common stock under the EDA will be made pursuant to our shelf registration statement on Form S-3 which was filed with the SEC on December 18, 2024, and became effective on December 27, 2024, the base prospectus included therein, and a prospectus supplement that was filed by the Company with the SEC on March 7, 2025. The Company believes that its cash and cash equivalents along with the cash generated from ongoing operations will be sufficient to fund its cash requirements over the next 12 months. However, based on our current operating plan which we expect may include continued additional investments in our mobile Fintech app for the U.K. market, we may need to raise additional funds through one or more debt, equity or equity linked financings to meet our operating and cash needs. There can be no assurance we will be able to raise such additional financing upon terms acceptable to us or at all. In the event we are unable to obtain additional financing in an amount or upon terms acceptable to us, we expect to further reduce or curtail our investment in the development of our Fintech app. Lease Liability The 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, 2025. 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. In addition, Gourmet Foods has a finance lease liability of $0.1 million related to a solar energy system which is included under Lease liabilities on our consolidated balance sheets. 27 Table of Contents Recent Note Financing On September 19, 2024, we entered into a note purchase agreement (“Purchase Agreement”) with Streeterville Capital, LLC, a Utah limited liability company (“Holder”), pursuant to which we agreed to issue and sell to Holder a secured promissory note in an initial principal amount of $4,380,000 (“Initial Note”) payable on or before 24 months from the issuance date (“Maturity Date”) and, upon the satisfaction of certain conditions in the Purchase Agreement, up to one additional secured promissory note (“Subsequent Note,” Initial Note and Subsequent Note, “Notes”). The initial principal amount of the Notes includes an original issue discount of 9% and expenses the Company agreed to pay to the Holder to cover the Holder’s transaction costs. The original issue discount of the Initial Note was $360,000. Interest on the principal amount of the Notes accrues at a rate of 9% per annum. The Company may pay all or any portion of the amount owed under the Notes earlier than it is due. All payments made under the Notes, including any repayments, are subject to an additional amount payable equal to 6% of the portion of the outstanding balance being repaid. The Subsequent Note would have a principal amount of $2,180,000, which will have terms substantially similar to the terms of the Initial Note. The original issue discount on the Subsequent Note, if issued, will be $180,000. The Purchase Agreement contains certain covenants and agreements, including that we will not pledge or grant any lien or security interest in our or our subsidiaries’ assets without the Holder’s prior written consent and that we will file reports under the Securities Exchange Act timely, and that our shares will continue to be listed or quoted on the NYSE American or Nasdaq. Also, without the Holder’s prior written consent, we may not: issue, incur or guarantee any debt obligations other than trade payables in the ordinary course; issue any security that has conversion rights in which the number of shares varies with the market price of our shares; issue any securities convertible into our shares with a conversion price that varies with the market price of our shares; issue any securities that have a conversion or exercise price subject to a reset due to a change in the market price of our shares or upon the occurrence of certain events related to our business (but excluding certain standard antidilution protection for any reorganization, recapitalization, noncash dividend, stock split or similar transaction); issue and securities pursuant to an equity line of credit, standby equity purchase agreement or similar arrangement. The Purchase Agreement also contains a most favored nations provision that provides we will grant to the Holder the same terms as we offer any subsequent investor in our debt securities and certain arbitration provisions in the event of a claim arising under the Purchase Agreement and other transaction documents. The Notes contain certain trigger events, including in the event that: (a) we fail to pay any amount when due; (b) a receiver or trustee is appointed with respect to our assets; (c) we become insolvent; (d) we make an assignment for the benefit of creditors; (e) we file a petition under bankruptcy, insolvency or similar laws; (f) an involuntary bankruptcy proceeding is filed against us; (g) a “fundamental transaction” occurs without Holder’s prior written consent: (h) we, USCF Investments or any of the USCF Investments subsidiaries, fail to observe covenants in our agreements with the Holder; (i) we default in observing or performing any covenant in the transaction documents; (j) any representation in the transaction documents is or becomes false or incorrect; (i) we effect a reverse stock split without 20 trading days’ prior written notice to the Holder; (k) any judgment is entered against us for more than $500,000 which remains unstayed for more than 20 days unless consented to by the Holder; (m) our shares cease to be DTC (Depositary Trust Company) eligible; or (n) we breach any covenant or agreement in any other agreement with Holder or in any financing or other agreement that affects our ongoing business operations. A “fundamental transaction” occurs if: we merge with another entity; we dispose of all or substantially all of our assets, we allow more than 50% of our voting shares to be acquired by another person; we enter into a share purchase agreement with a third party that acquires more than 50% of our shares; we recapitalize or reclassify our shares; we transfer a material asset to a subsidiary; we pay a dividend to our shareholders; or any person or group becomes the beneficial owner of 50% of the ordinary voting power of our shares. Upon the occurrence of a trigger event, the Holder may increase the amount outstanding under a Note by 10% for an event described in (a) through (h) above or 5% for an event described in (i) through (n) above (a “default amount”). Alternatively, the Holder may treat the trigger event as an event of default and demand repayment of the Note, subject to a five-day cure period, together with any applicable default amount. The Company’s obligations under the Note are secured by: (i) a pledge of all the common stock the Company owns in USCF Investments, Inc. and (ii) a security interest in all of the assets of the Company. Further, the Company’s Chief Executive Officer’s trust, the Nicholas and Melinda Gerber Living Trust (“Gerber Trust”), provided: (i) a guaranty of the Company’s obligations to the Holder under the Note and (ii) a pledge of all of the common stock of the Company owned by the Gerber Trust. Beginning on the date that is six months from the issuance date until the applicable Note is paid in full, each month the Holder has the right to require the Company to redeem up to an aggregate of $400,000 with respect to the Initial Note and $200,000 with respect to the Subsequent Note plus any interest accrued thereunder and an additional amount payable equal to 6% of the principal amount and accrued interest redeemed. The Company has the right to defer such redemption payments that Holder could otherwise elect to make three times by providing advance written notice to Holder. If Company exercises its deferral right, the outstanding balance automatically increases by 0.85% for each instance that the deferral right is exercised by Company, which cannot be exercised more than once every ninety calendar days. Pursuant to the terms of the Purchase Agreement, beginning on the date of the issuance and sale of the Note and ending 24 months later, Holder will have the right, but not the obligation, with Company’s prior written consent, to reinvest up to an additional $10,000,000 in the Company on the same terms and conditions as the Notes (structured as two tranches of $5,000,000 each). The Company engaged Maxim Group LLC to serve as placement agent for the transaction between the Company and Holder in exchange for an aggregate commission equal to 7% of the gross cash proceeds received from the sale of the Notes. As of June 30, 2025, the note payable balance outstanding, net of the original issue discount and fees paid, was $1.3 million, all of which is due within 12 months from June 30, 2025 assuming no deferral rights are exercised. The effective interest rate for this note is 41.3%. In July 2024, Brigadier repaid its mortgage loan of $0.3 million in full that was secured with the land and building in Canada. Investments USCF Investments, from time to time, provides initial investments in the creation of ETF 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, 2025, USCF Investments held investment positions in four of its exchange traded funds registered under the Investment Company Act of 1940, as amended, USG (ticker changed from GLDX in March 2024), ZSB, USE and ZSC of $0.5 million, $0.2 million, $0.8 million, and $2.1 million, respectively. These investment positions along with other investments, as applicable, are described further in Note 5 to our Consolidated Financial Statements. Dividends 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 fiscal 2025 and 2024. Off-Balance Sheet Arrangements At June 30, 2025, and through September 19, 2025, the filing 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: ● 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a “smaller reporting company”, we are not required to provide the information required by this Item. 28 Table of Contents