U S GLOBAL INVESTORS INC

NOTE1. REVISION OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of its Consolidated Financial Statements for the fiscal year ended* June 30, 2023,the Company determined that its previously issued Consolidated Financial Statements as of and for thethree* andnine months ended* March 31, 2023*, contained an error. Specifically, the Company didnot record certain liabilities as required by FASB InterpretationNo. 48 “Accounting for Uncertainty in Income Taxes” (codified under ASC740-10). Based on management’s evaluation of the accounting error under the SEC Staff’s Accounting Bulletins Nos.99 and108 and interpretations thereof, the Company concluded the error isnot material, on an individual or aggregate basis, to the Company’s previously reported financial statements. The Company has corrected this accounting error in the accompanying Consolidated Financial Statements as of and for thethree andnine months ended* March 31, 2023*, as a revision to those financial statements.

The following table sets forth the impact of correcting this error in the Company’s previously issued Consolidated Financial Statements.

In addition to the changes listed above, the Consolidated Statements of Comprehensive Income, Consolidated Statements of Shareholders' Equity, Consolidated Statements of Cash Flows, and impacted footnote disclosures have also been revised to reflect the error correction.

NOTE2. BASIS OF PRESENTATION AND CONSOLIDATION

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) has prepared the Consolidated Financial Statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The financial information included herein reflects all adjustments (consisting solely of normal recurring adjustments), which are, in management’s opinion, necessary for a fair presentation of results for the interim periods presented. The Company has consistently followed the accounting policies set forth in the notes to the Consolidated Financial Statements in the Company’s Form10-K for the fiscal year ended* June 30, 2023* ("Form10-K"), except for the adoption of the new accounting pronouncement discussed below.

The Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, U.S. Global Investors (Bermuda) Limited, U.S. Global Investors (Canada) Limited (“USCAN”), and U.S. Global Indices, LLC.

There aretwo primary consolidation models in U.S. GAAP, the variable interest entity (“VIE”) and voting interest entity models. The Company’s evaluation for consolidation includes whether entities in which it has an interest or from which it receives fees are VIEs and whether the Company is the primary beneficiary of any VIEs identified in its analysis. A VIE is an entity in which either (a) the equity investment at risk isnot sufficient to permit the entity to finance its own activities without additional financial support or (b) the group of holders of the equity investment at risk lack certain characteristics of a controlling financial interest. The primary beneficiary is the entity that has the obligation to absorb a majority of the expected losses or the right to receive the majority of the residual returns and consolidates the VIE on the basis of having a controlling financial interest.

The Company holds variable interests in, but isnot deemed to be the primary beneficiary of, certain funds it advises, specifically, certain funds in U.S. Global Investors Funds (“USGIF” or the “Funds”). The Company’s interests in these VIEs consist of the Company’s direct ownership therein and any fees earned but uncollected. See further information about these funds in Notes3 and4. In the ordinary course of business, the Company* maychoose to waive certain fees or assume operating expenses of the funds it advises for competitive, regulatory or contractual reasons (see Note4* for information regarding fee waivers). The Company hasnot provided financial support to any of these entities outside the ordinary course of business. The Company’s risk of loss with respect to these VIEs is limited to the carrying value of its investments in, and fees receivable from, the entities. The Company isnot deemed to be the primary beneficiary because it doesnot have the obligation to absorb a majority of the expected losses or the right to receive the majority of the residual returns. The Company doesnot consolidate these VIEs because it isnot the primary beneficiary. The Company’s total exposure to unconsolidated VIEs, consisting of the carrying value of investment securities and receivables for fees, was $10.9 million at* March 31, 2024*, and $12.5 million at* June 30, 2023*.

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The carrying amount of assets and liabilities recognized in the Consolidated Balance Sheets related to the Company's interests in these non-consolidated VIEs were as follows:

Since the Company isnot the primary beneficiary of the above funds it advises, the Company evaluated if it should consolidate under the voting interest entity model. Under the voting interest model, for legal entities other than partnerships, the usual condition for control is ownership, directly or indirectly, of more than50 percent of the outstanding voting shares over an entity. The Company doesnot have control of any of the above funds it advises; therefore, the Company doesnot consolidate any of these funds.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes. Due to rounding, the year-to-date amount* may**not* be the exact sum of the quarterly amounts. The results of operations for the interim periods disclosed herein arenot necessarily indicative of the results the Company* mayexpect for the fiscal year ending June 30, 2024 (“fiscal2024”*).

The unaudited interim financial information in these Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements contained in the Company’s annual report on Form10-K; interim disclosures generally donot repeat those in the annual statements.

Use of Estimates

Preparation of the Consolidated Financial Statements in accordance with GAAP requires management to make estimates and assumptions that affect amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results* may*materially differ from those estimates.

Adoption of New Accounting Standard

In* June 2016,the Financial Accounting Standards Board ("FASB") issued ASU2016*-13, Financial Instruments–* Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments,and has subsequently issued several amendments (collectively, “ASU2016*-13”). ASU2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss model, or "CECL") that is based on expected losses rather than incurred losses for most financial assets and certain other instruments. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. It also modifies the impairment model for available-for-sale debt securities; the concept of "other-than-temporary" impairment was replaced by a determination of whether any impairment is a result of a credit loss or other factors. To adopt the standard, entities are required to make a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective. The Company adopted the standard using the modified-retrospective approach for all financial assets measured at amortized cost on* July 1, 2023,and recognized an initial allowance for credit losses of $232,000 forone* held-to-maturity debt security. The cumulative-effect adjustment to beginning retained earnings, net of the related tax effect, was a decrease of $183,000.

Recent Accounting Pronouncements

In* June 2022,the FASB issued ASU2022*-03, Fair Value Measurement (Topic820*): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions* (“ASU2022-03”) to clarify the guidance in Topic820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, and to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value. ASU2022-03 will be effective for fiscal years beginning after* December 15, 2023.Early adoption is permitted for both interim and annual financial statements that havenot* yet been issued or made available for issuance. The Company has evaluated the guidance and doesnot expect the adoption of the new standard to have a material impact on its Consolidated Financial Statements.

In* November 2023,the FASB issued ASU2023*-07, Segment Reporting (Topic280*): Improvements to Reportable Segment Disclosures* (“ASU2023-07”), which enhances the disclosures required for reportable segments in annual and interim consolidated financial statements, including additional, more detailed information about a reportable segment’s expenses. ASU2023-07 will be effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024,on a retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of the pending adoption of ASU2023*-07 on its Consolidated Financial Statements.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*): Improvements to Income Tax Disclosures* (“ASU2023-09”), which enhances the transparency and decision usefulness of income tax disclosures. ASU2023-09 will be effective for fiscal years beginning after* December 15, 2024.Early adoption is permitted for annual financial statements that havenot* yet been issued or made available for issuance. The Company is currently evaluating the impact of the pending adoption of ASU2023-09 on its Consolidated Financial Statements.

Significant Accounting Policies

As a result of the adoption of an accounting pronouncement during the current fiscal year, the following accounting policies have been updated. For a complete listing of the Company's significant accounting policies, please refer to the Annual Report on Form10-K for the year ended* June 30, 2023.*

**Investments in Debt Securities.**The Company classifies debt investments based on the Company’s intent to sell the security or its intent and ability to hold the debt security to maturity. Debt securities classified as trading are acquired with the intent to sell in the near term and are carried at fair value with changes reported in earnings. Held-to-maturity debt securities are purchased with the intent and ability to hold until maturity and are measured at amortized cost. All other debt securities are classified as available-for-sale and are carried at fair value, and changes in unrealized gains and losses are reported net of tax in accumulated other comprehensive income (loss), except for declines in fair value determined to be a result of credit loss, which are reported in earnings. Upon the disposition of an available-for-sale security, the Company reclassifies the gain or loss on the security from accumulated other comprehensive income (loss) to net investment income (loss). Both available-for-sale and held-to-maturity debt securities are subject to an allowance for credit losses.

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Allowance for Credit Losses (Held-to-Maturity Debt Securities). For held-to-maturity debt securities, the Company is required to utilize the CECL methodology to estimate expected credit losses. Securities are evaluated on an individual basis. The individual assessment and determination of expected credit losses is generally based on the discounted cash flow method. Under the discounted cash flow method, the allowance for credit losses reflects the difference between the amortized cost basis and the present value of the expected cash flows. The Company adjusts the discount rate utilized to determine the present value of the expected cash flows quarterly for subsequent fluctuations in market interest rates. Changes in the present value attributable to the passage of time are those solely due to changes in the present value of the expected cash flows as the instrument approaches maturity rather than expectations of cash flow timing or amounts, and are included in interest income within net investment income (loss) on the Consolidated Statements of Operations. Changes in the allowance attributable to expectations of cash flow timing or amounts are recorded as a provision (or release) for credit losses and are included within other income (loss) on the Consolidated Statements of Operations. Held-to-maturity debt securities, or portions thereof, are charged against the allowance when management believes the uncollectible status of a held-to-maturity security is confirmed. Accrued interest receivable is excluded from the allowance for credit losses. For more information about held-to-maturity debt securities, see Note3, Investments.

**Allowance for Credit Losses (Available-for-Sale Debt Securities).**The impairment model for available-for-sale debt securities differs from the CECL methodology applied for held-to-maturity debt securities because available-for-sale debt securities are measured at fair value rather than amortized cost. For available-for-sale debt securities in an unrealized loss position, the Companyfirst assesses whether it intends to sell, or it is more likely thannot that it will be required to sell, the security before recovery of its amortized cost basis. If either criterion is met, the security’s amortized cost basis is written down to fair value through earnings. For available-for-sale debt securities where neither of the criteria is met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited to the amount that the fair value is less than the amortized cost basis. Any remaining discount that hasnot been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as a provision (or release) for credit losses and are included within other income (loss) on the Consolidated Statements of Operations. Losses are charged against the allowance when management believes the uncollectible status of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable is excluded from the allowance for credit losses. See Note3, Investments, for more information about available-for-sale debt securities.

**Credit Quality Indicators.**The Company monitors the credit quality of debt securities through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade are considered to have distinctively higher credit risk than investment grade securities. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying organization.

Receivables and Allowance for Credit Losses.Receivables consist primarily of advisory and other fees owed to the Company by clients. The Company records an expense based on a forward-looking current expected credit loss model to maintain an allowance for credit losses. When determining the allowance for receivables, the probability of recoverability of the receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates, is considered. The Company also considers future economic trends to estimate expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable maybe fully reserved for when specific collection issues are known to exist, such as pending bankruptcies. Due to the short-term nature, the Company hadno allowance for credit losses related to receivables as of March 31, 2024, or June 30, 2023.

Dividends and Interest. Dividends are recorded on the ex-dividend date, and interest income is recorded on an accrual basis. Debt investments are placed on a non-accrual status when they are past due180 days or more as to contractual obligations or when other circumstances indicate that collection isnot probable. When a debt investment is placed on a non-accrual status, any interest accrued butnot received is reversed against interest income. Any discount between the cost and the principal amount of debt investments is amortized to interest income using the effective interest method. When the discounted cash flow method is utilized to estimate expected credit losses for held-to-maturity debt securities, any changes in the allowance for credit losses that are attributable to the passage of time are recognized in interest income. Both dividends and interest income are included within net investment income (loss) on the Consolidated Statements of Operations.

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NOTE3. INVESTMENTS

As of* March 31, 2024*, the Company held investments carried at fair value on a recurring basis 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.

The cost basis of investments is adjusted for amortization of premium or accretion of discount on debt securities held or the recharacterization of distributions from investments in partnerships.

Concentrations of Credit Risk

A significant portion of the Company’s investments carried at fair value on a recurring basis is investments in USGIF, which were $10.9 million and $12.4 million as of* March 31, 2024*, and* June 30, 2023*, respectively, and investments in HIVE Digital Technologies Ltd. (“HIVE”), which were convertible debentures valued at $5.2 million at* March 31, 2024*, and convertible debentures and common share purchase warrants valued at $7.3 million at* June 30, 2023*. For these investments, the maximum amount of loss due to credit risk the Company could incur is the fair value of the financial instruments.

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The valuation techniques described below maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value.

The inputs used for measuring financial instruments at fair value are summarized in thethree broad levels listed below:

Level1 – Inputs represent unadjusted quoted prices for identical assets exchanged in active markets.

Level2 – Inputs include directly or indirectly observable inputs (other than Level1 inputs) such as quoted prices for similar assets exchanged in active or inactive markets; quoted prices for identical assets exchanged in inactive markets; other inputs that* may*be considered in fair value determinations of the assets, such as interest rates and yield curves; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level3 – Inputs include unobservable inputs used in the measurement of assets. The Company is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets and it* may*be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. The inputs or methodology used for valuing securities arenot necessarily an indication of the risk associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected* may*materially differ from the values received upon actual sale of those investments.

The Company has established a Proprietary Valuation Committee (the “Committee”) to administer and oversee the Company’s valuation policies and procedures, which are approved by the Board of Directors, and to perform a periodic review of valuations provided by independent pricing services.

For actively traded securities, the Company values investments using the closing price of the securities on the exchange or market on which the securities principally trade. If the security isnot traded on the last business day of the quarter, it is generally valued at the mean between the last bid and ask quotation. The fair value of a security that has a restriction is based on the quoted price for an otherwise identical unrestricted instrument that trades in a public market, adjusted for the estimated effect of the restriction. Mutual funds, which include open- and closed-end funds and exchange-traded funds, are valued at net asset value or closing price, as applicable.

For common share purchase warrantsnot traded on an exchange, the estimated fair value is determined using the Black-Scholes option-pricing model. This sophisticated model utilizes a number of assumptions in arriving at its results, including the estimated life, the risk-free interest rate, and historical volatility of the underlying common stock. The Company* maychange the assumption of the risk-free interest rate and utilize the yield curve for instruments with similar characteristics, such as credit ratings and jurisdiction, or change the expected volatility. The effects of changing any of the assumptions or factors employed by the Black-Scholes model may*result in a significantly different valuation.

Certain convertible debt securitiesnot traded on an exchange are valued by an independentthird party using a binomial lattice model based on factors such as yield, quality, maturity, coupon rate, type of issuance, individual trading characteristics of the underlying common shares and other market data. The model utilizes a number of assumptions in arriving at its results. The effects of changing any of the assumptions or factors utilized in the binomial lattice model, including expected volatility, credit adjusted discount rates, and discounts for lack of marketability,* may*result in a significantly different valuation for the securities.

For other securities included in the fair value hierarchy with unobservable inputs, the Committee considers a number of factors in determining a security’s fair value, including the security’s trading volume, market values of similar class issuances, investment personnel’s judgment regarding the market experience of the issuer, financial status of the issuer, the issuer’s management, and back testing, as appropriate. The fair values* maydiffer from what mayhave been used had a broader market for these securities existed. The Committee reviews inputs and assumptions and reports material items to the Board of Directors. Securities which donot* have readily determinable fair values are also periodically reviewed by the Committee.

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The following tables summarize the major categories of investments with fair values adjusted on a recurring basis as of* March 31, 2024*, and* June 30, 2023*, and other investments with fair values adjusted on a nonrecurring basis, with fair values shown according to the fair value hierarchy.

The securities classified as Level3 and carried at fair value on a recurring basis in the preceding tables are investments in convertible securities of HIVE, a company that is headquartered in Canada with cryptocurrency mining facilities in Iceland, Sweden, and Canada. The Company purchased convertible securities for $15.0 million in* January 2021.The convertible securities were comprised of 8.0% interest-bearing unsecured convertible debentures, payable in quarterly installments with a final maturity in January 2026,and 5 million common share purchase warrants in the capital of HIVE. Under the original terms, the principal amount of each debenture was convertible into common shares in the capital of HIVE at a conversion rate of $2.34, and each whole warrant, which expired in January 2024,entitled the Company to acquireone* common share at a price of $3.00 (Canadian). Under the current terms, which reflect a reverse stock split, the principal amount of each debenture is convertible into common shares in the capital of HIVE at a conversion rate of $11.70, and each five whole warrants entitled the Company to acquireone common share at a price of $15.00 (Canadian). The remaining principal amount was $5.3 million as of* March 31, 2024*. Cryptocurrency markets and related securities have been, and are expected to continue to be, volatile. There has been significant volatility in the market price of HIVE, which has materially impacted the value of the investments included on the Consolidated Balance Sheets, unrealized gain (loss) recognized in net investment income (loss), and unrealized gain (loss) recognized in other comprehensive income (loss). The investments didnot represent ownership in HIVE as of* March 31, 2024*, or* June 30, 2023*. The securities are subject to Canadian securities regulations. Frank Holmes serves on the board as executive chairman of HIVE and held shares and options at* March 31, 2024*. From* August 2018through January 2023,*Mr. Holmes was Interim CEO of HIVE.

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The Company recorded the debentures at the estimated fair value of $16.0 million on purchase date, and an unrealized gain of $6.9 million was recognized in other comprehensive income (loss), which will be realized in net investment income (loss) ratably using the effective interest method until maturity, conversion, or other disposition. The fair value of the debentures was $5.2 million and $7.0 million at* March 31, 2024*, and* June 30, 2023*, respectively. The warrants were recorded at the estimated fair value of $5.9 million on the purchase date, and upon expiration in* January 2024,a realized loss of $5.9 million was recognized in net investment income (loss). The fair value of the warrants was $290,000 at June 30, 2023*.

The Company utilizes an independentthird-party to estimate the fair values of the HIVE convertible securities and currently considers the fair value measurements to contain Level3 inputs. The following table is a reconciliation of investments recorded at fair value for which unobservable inputs (Level3) were used in determining fair value during thenine months ended* March 31, 2024*.

Changes in Level3 Assets Measured at Fair Value on a Recurring Basis

The following is quantitative information as of* March 31, 2024*, with respect to the securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level3).

Investments in Trading Securities at Fair Value

Investments in trading securities with readily determinable fair values are carried at fair value, and changes in unrealized gains or losses are reported in the current period's earnings. The following details the components of the Company’s trading securities carried at fair value as of* March 31, 2024*, and* June 30, 2023*.

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Debt Investments

Investments in debt securities are classified on the acquisition dates and at each balance sheet date. Securities classified as held-to-maturity are carried at amortized cost, net of allowance for credit losses, reflecting the ability and intent to hold the securities to maturity. Debt securities classified as trading are acquired with the intent to sell in the near term and are carried at fair value with changes reported in earnings. All other debt securities are classified as available-for-sale and are carried at fair value.

Investment gains and losses on available-for-sale debt securities are recorded when the securities are sold, as determined on a specific identification basis, and recognized in current period earnings. Changes in unrealized gains on available-for-sale debt securities are reported net of tax in accumulated other comprehensive income (loss). For debt securities in an unrealized loss position, a loss in earnings is recognized for the excess of amortized cost over fair value if the Company intends to sell before the price recovers. Otherwise, the Company evaluates as of the balance sheet date whether the unrealized losses are attributable to credit losses or other factors. The severity of the decline in value, creditworthiness of the issuer and other relevant factors are considered. The portion of unrealized loss the Company believes is related to a credit loss is recognized in earnings, and the portion of unrealized loss the Company believes isnot related to a credit loss is recognized in other comprehensive income (loss).

Certain derivatives embedded in other financial instruments, such as the conversion option in a convertible bond, are reported at fair value, and changes in fair value are recorded through earnings within net investment income (loss). The host contract continues to be accounted for in accordance with the appropriate accounting standard. The embedded derivative and the related host contract representone legal contract and are combined on the Consolidated Balance Sheets and the tables below. The Company heldone financial instrument classified as available-for-sale containing an embedded derivative, which represents an investment in HIVE, at* March 31, 2024*, and* June 30, 2023*. As of* March 31, 2024*, the unrealized loss position in the available-for-sale security was related to changes in the fair value of the embedded derivatives andnot the result of credit losses; therefore, an allowance for credit losses wasnot recorded.

The following details the components of the Company’s available-for-sale debt investments as of* March 31, 2024*, and* June 30, 2023*.

The following table summarizes the fair values of embedded derivatives on the Consolidated Balance Sheets, categorized by risk exposure, at* March 31, 2024*, and* June 30, 2023*.

The following table presents the effect of embedded derivatives on the Consolidated Statements of Operations, categorized by risk exposure, for thethree andnine months ended* March 31, 2024,and2023*.

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At* March 31, 2024*, and* June 30, 2023*, the Company heldone debt security classified as held-to-maturity. The security had an estimated fair value that was lower than the carrying value by $157,000 at* March 31, 2024*, and $232,000 at* June 30, 2023*. The security has been in a continuous unrealized loss position for overtwelve months. We have evaluated the unrealized loss on the security at* March 31, 2024*, and determined it to be of a temporary nature and caused by fluctuations in market interest rates,not by concerns regarding the ability of the issuer to meet their obligations.

The following details the components of the Company’s held-to-maturity debt investments as of* March 31, 2024*, and* June 30, 2023*.

On* July 1, 2023,the Company adopted ASU2016*-13, which replaced the incurred loss methodology for determining our allowance for credit losses and related provision for credit losses with an expected loss methodology that is referred to as the Current Expected Credit Losses ("CECL") model. CECL is a significant accounting estimate used in the preparation of the Company's Consolidated Financial Statements. Upon adoption of ASU2016-13, the Company replaced the incurred loss impairment model that recognizes losses when it becomes probable that a credit loss will be incurred, with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. CECL is a valuation account that is deducted from the amortized cost basis of held-to-maturity debt securities to present the net amount expected to be collected on the securities. Held-to-maturity debt securities, or portions thereof, are charged against the allowance when they are deemed uncollectible. Arriving at an appropriate level of credit losses involves a high degree of judgment. While management uses available information to recognize losses, changing economic conditions and the economic prospects of the issuers* may*necessitate future additions or reductions to the allowance.

The Company monitors the credit quality of debt securities through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade are considered to have distinctively higher credit risk than investment grade securities. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying organization. As of* March 31, 2024*, and* June 30, 2023*, the held-to-maturity debt investment held by the Company didnot have a credit rating.

Since the held-to-maturity debt security doesnot have a credit rating, management has determined that the discounted cash flow method provides the best basis for its assessment and determination of expected credit losses. The Company has elected to reflect the change in the allowance solely attributable to the passage of time in interest income. Changes attributable to the passage of time are those solely due to changes in the present value of the expected cash flows as the instrument approaches maturity rather than expectations of cash flow timing or amounts. Since the adoption of ASU2016-13 on* July 1, 2023,and through March 31, 2024*, the allowance for credit losses decreased $75,000 which was attributable to the passage of time. For thethree andnine months ended* March 31, 2024*, $20,000 and $75,000, respectively, was included as an increase in interest income within net investment income (loss) on the Consolidated Statements of Operations.

The following table presents the activity in the allowance for credit losses for the held-to-maturity debt investment. There wasno allowance at* June 30, 2023*.

The following summarizes the net carrying amount and estimated fair value of debt securities at* March 31, 2024*, by contractual maturity dates. Actual maturities* may*differ from final contractual maturities due to principal repayment installments or prepayment rights held by issuers.

As of* March 31, 2024*,none of the Company's investments in debt securities were delinquent or in a non-accrual status.

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Other Investments

Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which donot have readily determinable fair values. For these securities, the Company generally elects to value using the measurement alternative, under which such securities are measured at cost, less impairment, if any. If the Company identifies observable price changes for identical or similar securities of the same issuer, the equity security is measured at fair value as of the date the observable transaction occurred, with such changes recorded in net investment income (loss).

The carrying value of equity securities without readily determinable fair values was approximately $2.4 million as of* June 30, 2023*. The following table presents the carrying value of equity securities without readily determinable fair values held as of* March 31, 2024,and2023*, that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes or impairments. These securities are included in the nonrecurring fair value hierarchy tables when applicable price changes are observable, or when impairments occur.

The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes. The cumulative amount of upward adjustments to all equity securities without readily determinable fair values total $2.5 million since their respective acquisitions through* March 31, 2024*. The cumulative amount of impairments and other downward adjustments, which include return of capital distributions and observable price changes, to all equity securities without readily determinable fair values total $5.0 million since their respective acquisitions through* March 31, 2024*.

The Company has an investment in The Sonar Company (“Sonar”), a company headquartered in the United States, at a cost of $175,000. The investment had a carrying value of approximately $362,000 at* March 31, 2024*, and at* June 30, 2023*. Roy D. Terracina, Director and Vice Chairman of the Board of Directors for U.S. Global, has served as the CEO of Sonar since* July 2021,and the Company’s ownership of Sonar was approximately 2.8 percent as of March 31, 2024*.

Net Investment Income (Loss)

Net investment income (loss) from the Company’s investments includes:

The following summarizes net investment income (loss) reflected in earnings for the periods presented.

Realized gains on debt securities reclassified from other comprehensive income (loss) related to the Company's investment in HIVE debentures were $267,000 and $906,000 for thethree andnine months ended* March 31, 2024*, respectively, and $394,000 and $1.3 million for thethree andnine months ended* March 31, 2023*, respectively.

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The following table presents unrealized gains and losses recognized during thethree andnine months ended* March 31, 2024,and2023*, on equity securities and debt securities classified as trading still held at each respective date.

Net investment income (loss) can be volatile and vary depending on market fluctuations, the Company’s ability to participate in investment opportunities, and the timing of transactions. The Company expects that gains and losses will continue to fluctuate in the future.

NOTE4. INVESTMENT MANAGEMENT AND OTHER FEES

The following table presents operating revenues disaggregated by performance obligation.

The Company serves as investment advisor tothree U.S.-based exchange-traded funds (ETFs): U.S. Global Jets ETF (ticker JETS), U.S. Global GO GOLD and Precious Metal Miners ETF (ticker GOAU), and U.S. Global Sea to Sky Cargo ETF (ticker SEA). The Company receives a unitary management fee of 0.60 percent of average net assets of the ETFs, and has agreed to bear all expenses of the ETFs, except the U.S. Global Sea to Sky Cargo ETF ("SEA"). The Company has agreed to contractually limit the expenses of SEA through* April 2025*. The aggregate fees waived, and expenses borne by the Company for SEA were $37,000 and $115,000 for thethree andnine months ended* March 31, 2024*, respectively, and $28,000 and $77,000 and for thethree andnine months ended* March 31, 2023*, respectively. The Company also serves as investment advisor toone European-based ETF, the U.S. Global Jets UCITS ETF. The Company receives a unitary management fee of 0.65 percent of average net assets and has agreed to bear all expenses of the ETF.

The Company serves as investment adviser to USGIF and receives a fee based on a specified percentage of average assets under management. The advisory agreement for the equity funds within USGIF provides for a base advisory fee that is adjusted upwards or downwards by 0.25 percent when there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling12 months.

The Company has agreed to contractually limit the expenses of the Near-Term Tax Free Fund and the Global Luxury Goods Fund through* April 2025.The Company has voluntarily waived or reduced its fees and/or agreed to pay expenses on the remaining USGIF funds. These caps will continue on a voluntary basis at the Company’s discretion. The aggregate fees waived and expenses borne by the Company for USGIF were $193,000 and $638,000 for thethree* andnine months ended* March 31, 2024*, respectively, and $299,000 and $822,000 for thethree andnine months ended* March 31, 2023*, respectively. Management cannot predict the impact of future waivers due to the number of variables and the range of potential outcomes.

The Company receives administrative service fees from USGIF based on an annual rate of 0.05 percent on the average daily net assets of each fund.

As of* March 31, 2024*, the Company had receivables from fund clients of $858,000, of which $738,000 was from the ETFs and $120,000 was from USGIF. As of* June 30, 2023*, the Company had $1.1 million in receivables from fund clients, of which $1.0 million was from ETFs and $126,000 was from USGIF. There wasno allowance for credit losses related to receivables as of* March 31, 2024*, or* June 30, 2023*.

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NOTE5. RESTRICTED AND UNRESTRICTED CASH

The Company maintains its cash deposits with established commercial banks. At times, balances* mayexceed federally insured limits. We havenot* experienced any losses in such accounts and donot believe that we are exposed to any significant credit risk associated with our cash deposits. Restricted cash represents cash invested in a money market account as collateral for credit facilities that isnot available for general corporate use.

A reconciliation of cash, cash equivalents, and restricted cash reported from the Consolidated Balance Sheets to the Consolidated Statements of Cash Flows is shown below.

NOTE6. LEASES

The Company has lease agreements for office equipment that expire in the fiscal year2026. Lease expenses included in general and administrative expense on the Consolidated Statements of Operations totaled $33,000 and $99,000 for thethree andnine months ended* March 31, 2024*, respectively, and $32,000 and $86,000 for thethree andnine months ended* March 31, 2023*, respectively.

The following table presents the components of lease cost.

Supplemental information related to the Company's leases follows.

Additional qualitative information concerning the Company’s leases follows.

The following table presents the maturities of lease liabilities as of* March 31, 2024*.

The Company is the lessor of certain areas of its owned office building under operating leases expiring in various months through fiscal year2025. At the commencement of an operating lease,no income is recognized; subsequently, lease payments received are recognized on a straight-line basis. Lease income included in other income on the Consolidated Statements of Operations was $23,000 and $78,000 for thethree andnine months ended* March 31, 2024*, respectively, and $31,000 and $96,000 for thethree andnine months ended* March 31, 2023*, respectively. The cost of obtaining lessor contracts, which is included in other assets on the Consolidated Balance Sheets, was $3,000 at* March 31, 2024*, and $4,000 at* June 30, 2023*.

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The following is a summary analysis of annual undiscounted cash flows to be received on leases as of* March 31, 2024*.

The Company* mayterminate the building leases withone hundred eighty* days written notice if it sells the property. If the Company terminates the lease, the Company will pay the tenant a termination fee of the lesser ofsix months of the base monthly rent or the base monthly rent times the number of months remaining in the initial term.

NOTE7. OTHER ACCRUED EXPENSES

Other accrued expenses consist of the following:

The Company had $127,000 and $43,000 of receivables from HIVE included in the Consolidated Balance Sheets within receivables as of* March 31, 2024*, and* June 30, 2023*, respectively, related to the reimbursement of certain amounts reflected in the table above.

NOTE8. DEBT

The Company has access to a $1 million credit facility for working capital purposes. The credit agreement requires the Company to maintain certain covenants; the Company has been in compliance with these covenants during the current fiscal year. The credit agreement expires on* May 31,2024, and the Company intends to renew annually. The credit facility is collateralized by approximately $1 million at March 31, 2024*, included in restricted cash on the Consolidated Balance Sheets, held in deposit in a money market account at the financial institution that provided the credit facility. As of* March 31, 2024*, the credit facility remains unutilized by the Company.

NOTE9. STOCKHOLDERS’** EQUITY**

Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. The dividend rate per share was $0.0075 per month for fiscal year2023 and through* March 2024*.

In* March 2024*, the Board authorized the continuance of the monthly dividend of $0.0075 per share from* April* through* June 2024*, at which time it will be considered for continuation by the Board.

The Company has a share repurchase program, approved by the Board of Directors, authorizing the Company to annually purchase up to $5.0 million of its outstanding common shares, as market and business conditions warrant, on the open market in compliance with Rule10b-18 and Rule10b5-1 of the Securities Exchange Act of1934. The repurchase program has been in place since* December 2012,and the Board of Directors has annually renewed the repurchase program each calendar year. The Company announced on February 25, 2022,that the Board of Directors of the Company approved an increase to the limit of its annual share buyback program from $2.75 million to $5.0 million. The acquired shares maybe used for corporate purposes, including shares issued to employees in the Company’s stock-based compensation programs. For thethree* andnine months ended* March 31, 2024*, the Company repurchased 211,282 and 605,790 class A shares using cash of $577,000 and $1.7 million, respectively. For thethree andnine months ended* March 31, 2023*, the Company repurchased 193,040 and 320,412 class A shares using cash of $556,000 and $938,000, respectively.

In* August 2022,the Inflation Reduction Act (IRA) was signed into law, which made a number of changes to the Internal Revenue Code, including adding a1%* excise tax on stock buybacks by publicly traded corporations, effective on* January 1, 2023.Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the Consolidated Statements of Shareholders' Equity. The impact of these provisions was $5,000 and $17,000 for thethree* andnine months ended* March 31, 2024*, respectively.

The Company’s stock option plans provide for the granting of class A shares as either incentive or nonqualified stock options to employees and non-employee directors. Options are subject to terms and conditions determined by the Compensation Committee of the Board of Directors. At* March 31, 2024,and2023*, there were 229,000 options outstanding and exercisable under the1989 Plan at a weighted average exercise price of $6.05, and 2,000 options outstanding and exercisable under the1997 Plan at a weighted average exercise price of $2.74. There wereno options granted or exercised for thethree andnine months ended* March 31, 2024*, or2023. There wereno options forfeited during thethree andnine months ended* March 31, 2024*, no options forfeited during thethree months ended* March 31, 2023*, and 2,000 options forfeited during thenine months ended* March 31, 2023*.

Stock-based compensation expense is measured at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the award’s vesting period. There wasno stock-based compensation expense for thethree andnine months ended* March 31, 2024*, or2023. As of* March 31, 2024,and2023*, there wasno unrecognized share-based compensation cost related to share-based awards granted under the plans.

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NOTE10. EARNINGS PER SHARE

The basic earnings per share (“EPS”) calculation excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of EPS that could occur if options to issue common stock were exercised.

The following table sets forth the computation for basic and diluted EPS.

The diluted EPS calculation excludes the effect of stock options when their exercise prices exceed the average market price for the period, as their inclusion would be anti-dilutive. For thethree andnine months ended* March 31, 2024*, employee stock options of 231,000 and 229,000, respectively, were excluded from diluted EPS. For thethree andnine months ended* March 31, 2023*, employee stock options of 229,000 were excluded from diluted EPS.

During thethree andnine months ended* March 31, 2024*, and2023, the Company repurchased class A shares on the open market. Upon repurchase, these shares are classified as treasury shares and are deducted from outstanding shares in the earnings per share calculation.

NOTE11. INCOME TAXES

The Company and its non-Canadian subsidiaries file a consolidated U.S. federal income tax return. USCAN files a separate tax return in Canada. Provisions for income taxes include deferred taxes for temporary differences in the bases of assets and liabilities for financial and tax purposes resulting from the use of the liability method of accounting for income taxes.

Income tax expense for the quarter is based upon the estimated annual ordinary income in each jurisdiction in which the Company operates. The tax effects of discrete items are recognized in the tax provision in the period they occur in accordance with U.S. GAAP. Due to various factors, such as the item’s significance in relation to total ordinary income and the rate of tax, discrete items in any quarter can materially impact the reported effective tax rate. The effective tax rate was 187.5 percent and 30.5 percent for thethree andnine months ended* March 31, 2024*, respectively; and16.8 percent and21.7 percent for thethree andnine months ended* March 31, 2023*, respectively.

A valuation allowance is provided when it is more likely thannot that some portion of the deferred tax amount willnot be realized. A valuation allowance of $26,000 and $24,000 was included to fully reserve for Canadian net operating loss carryovers at* March 31, 2024*, and* June 30, 2023*, respectively.

The Company maintains a reserve for uncertain tax positions for income tax matters. The Company believes the reserve for uncertain tax positions, including interest and penalties, and net of federal benefits, of $549,000 adequately covers open tax years and uncertain tax positions up to and including* March 31, 2024*, for major taxing jurisdictions. As of* March 31, 2024*, the entire $549,000 of unrecognized tax benefits, if recognized, would impact the Company's effective income tax rate.

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NOTE12. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The following table presents the change in accumulated other comprehensive income (loss) (“AOCI”) by component.

NOTE13. FINANCIAL INFORMATION BY BUSINESS SEGMENT

The Company operates principally intwo business segments: providing investment management services to USGIF and ETF clients; and investing for its own account in an effort to add growth and value to its cash position. The following schedule details gross identifiable assets, total revenues, and income by business segment.

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Net operating revenues from investment management services includes operating revenues from ETF clients of $2.2 million and $7.4 million for thethree andnine months ended* March 31, 2024*, respectively, and $3.1 million and $10.4 million for thethree andnine months ended* March 31, 2023*, respectively. Net operating revenues from investment management services also include operating revenues from USGIF of $369,000 and $1.2 million for thethree andnine months ended* March 31, 2024*, respectively, and $482,000 and $1.4 million for thethree andnine months ended* March 31, 2023*, respectively.

NOTE14. CONTINGENCIES AND COMMITMENTS

The Company continuously reviews investor, employee and vendor complaints, and pending or threatened litigation. The likelihood that a loss contingency exists is evaluated through consultation with legal counsel, and a loss contingency is recorded if probable and reasonably estimable.

During the normal course of business, the Company* maybe subject to various claims, legal proceedings, and other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters maybe resolved unfavorably. The Company establishes accruals for matters for which the outcome is probable and can be reasonably estimated. Management believes that any liability in excess of these accruals upon the ultimate resolution of these matters willnot* have a material adverse effect on the Consolidated Financial Statements of the Company. Excluding reserves for uncertain tax positions, the Company recordedno accruals for contingencies as of* March 31, 2024*, or* June 30, 2023*.

The Board has authorized a monthly dividend of $0.0075 per share through* June 2024*, at which time it will be considered for continuation by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. The total amount of cash dividends expected to be paid to class A and class C shareholders from* April* to* June 2024* is approximately $317,000.

The COVID-19 pandemic and the resulting actions to control or slow the spread have affected global and domestic economies and financial markets, and in the future it or other epidemics, pandemics or outbreaks* may*adversely affect the Company's results of operations, cash flows and financial position. The Company cannot reasonably estimate the future impact of these events, given the uncertainty over the duration and severity of the economic impact.

NOTE15. SUBSEQUENT EVENT

USGIF advisory fees are comprised oftwo components: a base management fee and a performance fee. The performance fee is a fulcrum fee that is adjusted upwards or downwards by 0.25 percent when there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling12 months.

Forthree offour USGIF equity funds, this performance adjustment began to be phased out on* April 1, 2024,and will cease on April 1, 2025.*In the phase-out period, performance can only be adjusted downward.

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