U S GLOBAL INVESTORS INC
For the period ended Mar 31, 2024. Filed May 9, 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.
Mar 31, 2024 · Filed May 9, 2024
GROW$2.50+1.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2023-12-31; filed 2024-02-08.
0001437749-24-003526
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSCurrent report: 10-Q
Period ended 2024-03-31; filed 2024-05-09.
0001437749-24-015690
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 50 current paragraphs.
29 unchanged; 18 reworded; 3 added; 3 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 10 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (3)
Current report
RESULTS OF OPERATIONS–** Nine months ended March 31, 2024, and 2023**
Current report
Total consolidated operating expenses for the nine months ended March 31, 2024, increased $85,000, or 1.0 percent, compared with the nine months ended March 31, 2023. The increase in operating expenses was primarily attributable to an increase in general and administrative expenses of $236,000, or 5.3 percent, partially offset by a decrease in employee compensation of $124,000, or 3.5 percent. The increase in general and administrative expenses are primarily due to increases in USGIF expenses related to a performance fee elimination proxy; and increases in ETF expenses related to merging the European-based ETF, the U.S. Global Jets UCITS ETF, into the Travel UCITS ETF (TRIP).
Current report
A tax expense of $446,000 was recorded for the nine months ended March 31, 2024, compared to $698,000 for the nine months ended March 31, 2023, a decrease of $252,000. The decrease was primarily the result of an operating loss in the current period compared to operating income in the same period in the prior year, partially offset by higher net investment income (loss) in the current period compared to the same period in the prior year.
Removed paragraphs (3)
Previous report
RESULTS OF OPERATIONS–** Six months ended December 31, 2023, and 2022**
Previous report
Total consolidated operating expenses for the six months ended December 31, 2023, decreased $102,000, or 1.8 percent, compared with the six months ended December 31, 2022. The decrease in operating expenses was primarily attributable to a decrease in employee compensation of $69,000, or 3.0 percent and a decrease in general and administrative expenses of $20,000, or 0.7 percent.
Previous report
A tax expense of $371,000 was recorded for the six months ended December 31, 2023, compared to a tax expense of $372,000 for the six months ended December 31, 2022, a change of $1,000. In the comparable prior period, the tax expense percentage was high in comparison to pre-tax income primarily due to discrete foreign currency losses for which the Company cannot claim a tax benefit.
Reworded paragraphs (18)
Previous wording
Since May 2022, market volatility in the prices of digital assets has been elevated due to a variety of factors, including, but not limited to, the macroeconomic environment (high inflation and rising interest rates) as well as the ‘crypto credit crisis’ brought on by the collapse and bankruptcy of a number of key players in the sector (cryptocurrency Luna collapse, hedge fund Three Arrows Capital default on loans and filing for bankruptcy, crypto-lending platform Celsius freezing all withdraws, cryptocurrency lender Voyager Digital filing for bankruptcy, crypto platform FTX filing for bankruptcy, crypto platform BlockFi filing for bankruptcy among others). The Company does not have direct exposure to any of the foregoing firms affected by the recent crypto credit crisis. Although the Company has no current intention of directly investing in cryptocurrencies, the Company has indirect exposure to cryptocurrencies by investing in securities of issuers with exposure to the cryptocurrency industry. There has been significant volatility in the market price of the securities, which has had a material impact, and may continue to have a material impact, on the investment values included on the Consolidated Balance Sheets and unrealized gain (loss) recognized in net investment income.
Current wording
Market volatility in the prices of digital assets has been elevated due to a variety of factors, including, but not limited to, the macroeconomic environment (high inflation and rising interest rates) as well as the ‘crypto credit crisis of 2022’ brought on by the collapse and bankruptcy of a number of key players in the sector (cryptocurrency Luna collapse, hedge fund Three Arrows Capital default on loans and filing for bankruptcy, crypto-lending platform Celsius freezing all withdraws, cryptocurrency lender Voyager Digital filing for bankruptcy, crypto platform FTX filing for bankruptcy, crypto platform BlockFi filing for bankruptcy among others). The Company did not have direct exposure to any of the foregoing firms affected by the crypto credit crisis of 2022. Although the Company has no current intention of directly investing in cryptocurrencies, the Company has indirect exposure to cryptocurrencies by investing in securities of issuers with exposure to the cryptocurrency industry. There has been significant volatility in the market price of the securities, which has had a material impact, and may continue to have a material impact, on the investment values included on the Consolidated Balance Sheets and unrealized gain (loss) recognized in net investment income.
Previous wording
At December 31, 2023, total assets under management, including ETF and USGIF clients, were approximately $2.1 billion versus $2.4 billion at December 31, 2022, a decrease of $0.3 billion. During the six months ended December 31, 2023, average assets under management, including ETF and USGIF clients, were $2.0 billion, versus $2.7 billion during the six months ended December 31, 2022. At June 30, 2023, the Company’s prior fiscal year end, total assets under management, including ETF and USGIF clients, were approximately $2.4 billion, and decreased $0.3 billion during the six months ended December 31, 2023.
Current wording
At March 31, 2024, total assets under management, including ETF and USGIF clients, were approximately $1.7 billion versus $2.3 billion at March 31, 2023, a decrease of $0.5 billion. During the nine months ended March 31, 2024, average assets under management, including ETF and USGIF clients, were $1.9 billion, versus $2.6 billion during the nine months ended March 31, 2023. At June 30, 2023, the Company’s prior fiscal year end, total assets under management, including ETF and USGIF clients, were approximately $2.4 billion, and decreased $0.6 billion during the nine months ended March 31, 2024.
Previous wording
The following tables summarize the changes in assets under management for USGIF for the three and six months ended December 31, 2023, and 2022.
Current wording
The following tables summarize the changes in assets under management for USGIF for the three and nine months ended March 31, 2024, and 2023.
Previous wording
As shown above, USGIF period-end assets under management were lower at December 31, 2023, compared to December 31, 2022. Average net assets for the three and six months in the current fiscal year were lower than the same periods in the previous fiscal year.
Current wording
As shown above, USGIF period-end assets under management were lower at March 31, 2024, compared to March 31, 2023. Average net assets for the three and nine months in the current fiscal year were lower than the same periods in the previous fiscal year.
Previous wording
USGIF period-end assets under management increased during the three months ended December 31, 2023, and 2022, primarily due to market appreciation, and decreased during the six months ended December 31, 2023, and 2022. During the six months ended December 31, 2023, the decrease was primarily due to redemptions, primarily driven by equity fund liquidations. During the six months ended December 31, 2022, the decrease was primarily due to dividends and distributions.
Current wording
USGIF period-end assets under management decreased during the nine months ended March 31, 2024, and 2023, decreased during the three months ended March 31, 2024, and increased during the three months ended March 31, 2023. During the nine months ended March 31, 2024, the decrease was primarily due to redemptions, primarily driven by equity fund liquidations. The increase during the three months ended March 31, 2023, was primarily due to market appreciation.
Previous wording
The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 65 basis points for the three and six months ended December 31, 2023, and 62 basis points and 66 basis points for the three and six months ended December 31, 2022, respectively. The average investment management fee for the equity funds was 82 basis points and 81 basis points for the three and six months ended December 31, 2023, respectively, and 77 basis points and 82 basis points for the three and six months ended December 31, 2022, respectively. The Company has agreed to contractually or voluntarily limit the expenses of the Funds. Therefore, the Company waived or reduced its fees and/or agreed to pay expenses of the Funds. Due to fee waivers, the average investment management fee for the fixed income funds was minimal. Additionally, due to fee waivers, the equity fund liquidations did not have a significant impact of decreasing the average investment management fee rate for the equity funds.
Current wording
The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 64 basis points for the three and nine months ended March 31, 2024, and 65 basis points for the three and nine months ended March 31, 2023. The average investment management fee for the equity funds was 81 basis points for the three and nine months ended March 31, 2024, and 79 basis points and 81 basis points for the three and nine months ended March 31, 2023, respectively. The Company has agreed to contractually or voluntarily limit the expenses of the Funds. Therefore, the Company waived or reduced its fees and/or agreed to pay expenses of the Funds. Due to fee waivers, the average investment management fee for the fixed income funds was minimal. Additionally, due to fee waivers, the equity fund liquidations did not have a significant impact of decreasing the average investment management fee rate for the equity funds.
Previous wording
As of December 31, 2023, the Company held investments carried at fair value of $17.3 million and a cost basis of $25.1 million. The fair value of these investments is approximately 32.3 percent of the Company’s total assets at December 31, 2023. In addition, the Company held other investments of approximately $1.6 million and held-to-maturity debt investments, net of allowance for credit losses, of $823,000.
Current wording
As of March 31, 2024, the Company held investments carried at fair value of $16.7 million and a cost basis of $18.9 million. The fair value of these investments is approximately 31.6 percent of the Company’s total assets at March 31, 2024. In addition, the Company held other investments of approximately $1.1 million and held-to-maturity debt investments, net of allowance for credit losses, of $843,000.
Previous wording
Investments recorded at fair value on a recurring basis were approximately $17.3 million at December 31, 2023, compared to approximately $20.2 million at June 30, 2023, the Company’s prior fiscal year end, which is a decrease of approximately $2.9 million. See Note 3, Investments, in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q, for further information regarding investment activities.
Current wording
Investments recorded at fair value on a recurring basis were approximately $16.7 million at March 31, 2024, compared to approximately $20.2 million at June 30, 2023, the Company’s prior fiscal year end, which is a decrease of approximately $3.5 million. See Note 3, Investments, in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q, for further information regarding investment activities.
Previous wording
The Company recorded net income of $1.2 million ($0.09 per share) for the three months ended December 31, 2023, compared to net income of $847,000 ($0.06 per share) for the three months ended December 31, 2022, an increase of approximately $382,000. The increase is primarily due to an increase in net investment income compared to the same period in the prior year, offset by a decrease in operating revenues and increase in tax expense compared to the same period in the prior year, as discussed further below.
Current wording
The Company recorded a net loss of $35,000 ($(0) per share) for the three months ended March 31, 2024, compared to net income of $1.6 million ($0.11 per share) for the three months ended March 31, 2023, a change of approximately $1.7 million. The change is primarily due to a decrease in operating revenues and net investment income compared to the same period in the prior year, as discussed further below.
Previous wording
Total consolidated operating revenues for the three months ended December 31, 2023, decreased $910,000, or 24.4 percent, compared with the three months ended December 31, 2022. This decrease was primarily attributable to the following:
Current wording
Total consolidated operating revenues for the three months ended March 31, 2024, decreased $1.0 million, or 28.4 percent, compared with the three months ended March 31, 2023. This decrease was primarily attributable to the following:
Previous wording
Total consolidated operating expenses for the three months ended December 31, 2023, decreased $194,000, or 6.9 percent, compared with the three months ended December 31, 2022. The decrease in operating expenses was primarily attributable to a decrease in employee compensation of $168,000, or 14.9 percent and a decrease in general and administrative expenses of $18,000, or 1.2 percent.
Current wording
Total consolidated operating expenses for the three months ended March 31, 2024, increased $187,000, or 6.5 percent, compared with the three months ended March 31, 2023. The increase in operating expenses was primarily attributable to an increase in general and administrative expenses of $256,000, or 17.3 percent, somewhat offset by a decrease in employee compensation of $55,000, or 4.4 percent. The increase in general and administrative expenses are primarily due to increases in USGIF expenses related to a performance fee elimination proxy; and increases in ETF expenses related to merging the European-based ETF, the U.S. Global Jets UCITS ETF, into the Travel UCITS ETF (TRIP).
Previous wording
Total consolidated other income for the three months ended December 31, 2023, was $1.5 million, compared to $178,000 for the three months ended December 31, 2022, a change of approximately $1.3 million. This change was primarily due to the following factors:
Current wording
Total consolidated other income for the three months ended March 31, 2024, was $528,000, compared to $1.2 million for the three months ended March 31, 2023, a decrease of approximately $688,000. This decrease was primarily due to the following factors:
Previous wording
A tax expense of $436,000 was recorded for the three months ended December 31, 2023, compared to $239,000 for the three months ended December 31, 2022, an increase of $197,000. The increase was primarily the result of higher net investment income (loss) somewhat offset by lower operating income compared to the same period in the prior year.
Current wording
A tax expense of $75,000 was recorded for the three months ended March 31, 2024, compared to $326,000 for the three months ended March 31, 2023, a decrease of $251,000. The decrease was primarily the result of an operating loss in the current period compared to operating income in the same period in the prior year, and lower net investment income (loss) in the current period compared to the same period in the prior year.
Previous wording
The Company recorded net income of $1.1 million ($0.07 per share) for the six months ended December 31, 2023, compared to net income of $900,000 ($0.06 per share) for the six months ended December 31, 2022, a change of approximately $153,000. The change is primarily due to net investment income in the current period compared to net investment losses in same period in the prior year, somewhat offset by a decrease in operating revenues compared to the same period in the prior year, as discussed further below.
Current wording
The Company recorded net income of $1.0 million ($0.07 per share) for the nine months ended March 31, 2024, compared to net income of $2.5 million ($0.17 per share) for the nine months ended March 31, 2023, a decrease of approximately $1.5 million. The decrease is primarily due to a decrease in operating revenues compared to the same period in the prior year, somewhat offset by net investment income in the current period compared to net investment losses in same period in the prior year, as discussed further below.
Previous wording
Total consolidated operating revenues for the six months ended December 31, 2023, decreased $2.2 million, or 26.9 percent, compared with the six months ended December 31, 2022. This decrease was primarily attributable to the following:
Current wording
Total consolidated operating revenues for the nine months ended March 31, 2024, decreased $3.2 million, or 27.4 percent, compared with the nine months ended March 31, 2023. This decrease was primarily attributable to the following:
Previous wording
Total consolidated other income for the six months ended December 31, 2023, was $1.0 million, compared to a loss of $1.2 million for the six months ended December 31, 2022, a change of approximately $2.2 million. This change was primarily due to the following factors:
Current wording
Total consolidated other income for the nine months ended March 31, 2024, was $1.5 million, compared to a loss of $5,000 for the nine months ended March 31, 2023, a change of approximately $1.6 million. This change was primarily due to the following factors:
Previous wording
At December 31, 2023, the Company had net working capital (current assets minus current liabilities) of approximately $38.3 million, an increase of $840,000, or 2.2 percent, since June 30, 2023, and a current ratio (current assets divided by current liabilities) of 18.8 to 1. With approximately $27.5 million in cash and cash equivalents, an increase of $2.1 million, or 8.1 percent since June 30, 2023, and $11.6 million in securities carried at fair value on a recurring basis, excluding convertible securities, which together comprise approximately 72.8 percent of total assets, the Company has adequate liquidity to meet its current obligations.
Current wording
At March 31, 2024, the Company had net working capital (current assets minus current liabilities) of approximately $38.6 million, an increase of $1.2 million, or 3.1 percent, since June 30, 2023, and a current ratio (current assets divided by current liabilities) of 17.5 to 1. With approximately $27.5 million in cash and cash equivalents, an increase of $2.1 million, or 8.1 percent since June 30, 2023, and $11.5 million in securities carried at fair value on a recurring basis, excluding convertible securities, which together comprise approximately 73.8 percent of total assets, the Company has adequate liquidity to meet its current obligations.
Previous wording
The increase in cash, and accordingly, net working capital, was primarily due to net cash provided by operating activities of $910,000, proceeds from principal paydowns of $1.5 million, and proceeds from sales of corporate investments of $1.8 million; offset by repurchases of the Company's common stock of $1.2 million, dividends paid of $648,000, and purchases of trading securities of $215,000. Consolidated shareholders’ equity at December 31, 2023, was $50.9 million, a decrease of $1.3 million, or 2.5 percent since June 30, 2023. The decrease was primarily due to repurchases of the Company's common stock of $1.2 million, dividends declared of $642,000, the impact of ASU 2016-13 adoption of $183,000, other comprehensive loss of $385,000, offset by net income of $1.1 million, for the six months ended December 31, 2023.
Current wording
The increase in cash, and accordingly, net working capital, was primarily due to net cash provided by operating activities of $853,000, proceeds from principal paydowns of $2.3 million, and proceeds from sales of corporate investments of $1.8 million; offset by repurchases of the Company's common stock of $1.7 million, and dividends paid of $965,000. Consolidated shareholders’ equity at March 31, 2024, was $49.8 million, a decrease of $2.4 million, or 4.5 percent since June 30, 2023. The decrease was primarily due to repurchases of the Company's common stock of $1.8 million, dividends declared of $954,000, the impact of ASU 2016-13 adoption of $183,000, other comprehensive loss of $517,000, offset by net income of $1.0 million, for the nine months ended March 31, 2024.