Marygold Companies Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
Extracted filing text, with the paragraph anchors used by the comparison.
See the whole filing, with its images and exhibitsContents
Item 1A. Risk Factors
The Marygold Companies and its subsidiaries (referred to herein as “we,” “us,” “our” or similar expressions) are subject to certain risks and uncertainties in their business operations. In addition to the other information set forth in this report, you should carefully consider the factors discussed under “Risk Factors” and elsewhere in our Annual Report on Form 10-K for the year ended June 30, 2024 (“2024 Form 10-K”), which could materially affect our business, financial condition and/or operating results. The risks described in our 2024 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or operating results.
See risk factors discussed in “Risk Factors” in our 2024 Form 10-K. These risk factors should be read in connection with the other information included in this quarterly report on Form 10-Q, including Management’s Discussion and Analysis of Financial Condition and Results of Operations and our financial statements and the related notes, specifically*“Liquidity and Capital Resources – Recent Note Financing.”*
In addition to the “Risk Factors” included in our 2024 Form 10-K we are adding the following risk factor in connection with our recent debt financing.
We may be unable to generate sufficient cash flow from operations to repay amounts due under our recent debt financing or other obligations we have incurred which could adversely affect our business, including our ability to further develop and market our Fintech app, as well as our financial condition, results of operations, and our stock price.
We recently entered into a significant debt financing transaction, which has increased our financial leverage. This heightened level of indebtedness could limit our ability to operate effectively and may expose us to various risks, including:
| 1) | Inability to repay debt when due: Our cash flow may not be sufficient to meet our debt service obligations, especially if our revenues and/or cash flows from operations decline or if we encounter unforeseen operational or other challenges. Failure to repay this debt when due could lead to a default under the terms of our debt agreements. |
| 2) | Event of default consequences: The occurrence of an event of default under our debt agreements could result in the acceleration of our indebtedness, requiring immediate repayment of outstanding amounts an increase in the amount due, and a requirement to pay an increased (or default) rate of interest on the outstanding amount due. Our obligations under the debt agreements are secured by a pledge of our shares in USCF Investments and a security interest in all our assets enabling the lender to foreclose on our assets upon the occurrence of an event of default. Further, the performance of our obligations under the debt agreements is guaranteed by the Gerber Trust and our obligations under the note are secured by a pledge of all the shares of Marygold owned by the Gerber Trust, of which our CEO is a trustee. An event of a default under the debt agreements could force us to liquidate assets, seek additional financing, or restructure our obligations, all of which may adversely affect our liquidity, financial condition, results of operations, and stock price. There can be no assurance we will be able to liquidate our assets, restructure our indebtedness, or obtain additional financing upon terms acceptable to us, or at all. |
| 3) | Restrictive covenants: Our debt agreements contain certain covenants that restrict our operational flexibility, including limitations on mergers and acquisitions, sales of assets, and our ability to engage in certain equity linked financing transactions in which the conversion or exercise price of any debt or other equity linked securities we issue in the transaction varies with the market price of our shares or upon the occurrence of certain trigger events, and other strategic initiatives. Our non-compliance with these covenants could lead to an event of default and further exacerbate our financial position. |
Failure to manage these risks effectively or repay our debt when due could result in severe financial and operational consequences, including a potential reduction in the market price of our securities and a negative impact on our shareholders.
Also, if we issue additional shares in a financing, any such issuance could be dilutive to our existing shareholders.See “Liquidity and Capital Resources – Recent Note Financing.”
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.