Company: MGLD
Filing Date: 2025-09-19
Form Type: 10-K
Source: 0001493152-25-014286
Chunk: 68

Company: Marygold Companies, Inc.
Filing Date: 2025-09-19
Form: 10-K
Item: Item 1
Chunk 68
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 consumers through online platforms as well as through wholesalers. The negative effects of this transition
resulted in reduced sales and increased operating losses as a result of the cancellation of domestic distribution channels. This trend
is expected to continue as Original Sprout engages in new brand representation and secures reliable sales channels for its new and existing
product lines. As a result, we recorded an impairment loss of $1.4 million during fiscal 2024 related to the goodwill and other intangible
assets for Original Sprout.

Original
Sprout sells its products through five distribution channels:

    ●
    direct
    sales to end users via online shopping carts;

    ●
    sales
    made to an exclusive reseller on Amazon;

    ●
    sales
    through international wholesale distributors who, in turn, sell to other international retailers or wholesalers;

    ●
    sales
    to domestic wholesale distributors of products to professional salons, and

    ●
    to
    retail stores selling to end users either from the shelf or online.

11

During
the year ended June 30, 2025, Original Sprout did not have any significant customers; however, certain of Original Sprout’s customers
may, from time to time, become significant during a reporting period.

Sources
and Availability of Materials

Original
Sprout is reliant upon its relationships with two product formulating and packaging companies who, at the direction of Original Sprout,
manufacture its products in accordance with proprietary formulas, package them in appropriate containers supplied by Original Sprout,
and deliver the finished goods to Original Sprout for distribution to its customers. All of Original Sprout’s products are currently
produced by these two packaging companies. However, management of Original Sprout believes that, if either of these companies is unable
to provide such services, there are other similar production and packaging companies available at competitive pricing. Because of the
nature of the Original Sprout product ingredients, some of the ingredients may, at times, be difficult to source in a timely fashion
or at the expected price point. To safeguard against this possibility Original Sprout endeavors to maintain at least a 90-day supply
of all products in stock. Estimating and maintaining a reserve stock account is not a guarantee that a shortage of ingredient supplies
will not affect production such that Original Sprout will not exhaust its reserves or be unable to fulfill customer orders.

Competition

Original
Sprout distributes only 100% vegan, safe and non-toxic, hair and skin care