

Employees

As of June 30, ~~2015~~,2016, U.S. Global and its ~~wholly-owned~~ subsidiaries employed 4023 full-time employees and 2 part-time employees; as of June 30, ~~2014~~,2015, it employed 4840 full-time employees and 42 part-time employees. The Company considers its relationship with its employees to be good.



~~Competition~~

Competition

The mutual fund industry is highly competitive. According to the Investment Company Institute, at the end of ~~2014~~2015 there were approximately ~~9,300~~9,500 domestically registered open-end investment companies and approximately 1,600 exchange-traded funds of varying sizes and investment policies, whose shares are being offered to the public ~~worldwide. Generally, there are two types of mutual funds: “load” and “no-load.” In addition, there are both load and no-load funds that have adopted Rule 12b-1 plans authorizing~~in the payment of distribution costs of the funds out of fund assets. USGIF is a trust with no-load funds that have adopted 12b-1 plans. Load funds are typically sold through or sponsored by brokerage firms, and a sales commission is charged on the amount of the investment. No-load funds, such as the USGIF, however, may be purchased directly from the particular mutual fund organization or through a distributor, and no sales commissions are charged.

U.S. In addition to competition from other mutual fund managers and investment advisers, the Company and the mutual fund industry are in competition with various investment alternatives offered by insurance companies, banks, securities broker-dealers, and other financial ~~institutions, and ETFs. ETFs have had a significant impact on the industry in the past decade, growing from nearly nothing to approximately 1,500 ETFs available at the end of 2014.~~institutions. Many of these institutions are able to engage in more liberal advertising than mutual funds and ETFs and may offer accounts at competitive interest rates, which may be insured by federally chartered corporations such as the Federal Deposit Insurance Corporation.

A number of mutual fund groups are significantly larger than the funds managed by U.S. Global, offer a greater variety of investment objectives and have more experience and greater resources to promote the sale of investments therein. However, the Company believes it has the resources, products, and personnel to compete with these other mutual funds. In particular, the Company is known for its expertise in the gold mining and exploration, natural resources and emerging markets. Competition for sales of fund shares is influenced by various factors, including investment objectives and performance, advertising and sales promotional efforts, distribution channels, and the types and quality of services offered to fund shareholders.

Success in the investment advisory ~~and mutual fund distribution businesses~~business is substantially dependent on each fund’s investment performance, the quality of services provided to shareholders, and the Company’s efforts to market the Funds effectively. Sales of Fund shares generate management ~~distribution~~ and administrative services fees (which are based on the assets of the Funds)~~, and shareholder services fees (which are based on the assets of the Funds held through institutions)~~. Costs of distribution and compliance continue to put pressure on profit margins for the mutual fund industry.

Despite the Company’s expertise in gold mining and exploration, natural resources, and emerging markets, the Company faces the same obstacle many advisers face, namely uncovering undervalued investment opportunities as the markets face further uncertainty and increased volatility. In addition, the growing number of alternative investments, especially in specialized areas, has created pressure on the profit margins and increased competition for available investment opportunities.



~~Supervision and Regulation~~

Supervision and Regulation

The Company ~~USGB,~~ and the clients the Company manages and administers operate under certain laws, including federal and state securities laws, governing their organization, registration, operation, legal, financial, and tax status. Among the potential penalties for violation of the laws and regulations applicable to the Company and its subsidiaries are fines, imprisonment, injunctions, revocation of registration, and certain additional administrative sanctions. Any determination that the Company or its management has violated applicable laws and regulations could have a material adverse effect on the business of the Company. Moreover, there is no assurance that changes to existing laws, regulations, or rulings promulgated by governmental entities having jurisdiction over the Company and the Funds will not have a material adverse effect on the Company’s business. The Company has no control over regulatory rulemaking or the consequences it may have on the mutual fund and investment advisory industry.

Recent and accelerating regulatory pronouncements and oversight have significantly increased the burden of compliance infrastructure with respect to the mutual fund industry and the capital markets. This momentum of new regulations has contributed significantly to the costs of managing and administering mutual funds.

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U.S. Global is registered as an investment adviser with the SEC. As a registered investment adviser, it is subject to the requirements of the Advisers Act, and the SEC’s regulations thereunder, as well as to examination by the SEC’s staff. The Advisers Act imposes substantive regulation on virtually all aspects of the Company’s business and relationships with the Company’s clients. Applicable rules relate to, among other things, fiduciary duties to clients, transactions with clients, effective compliance programs, conflicts of interest, advertising, recordkeeping, reporting, and disclosure requirements. The Funds and ETF for which the Company acts as the investment adviser are registered with the SEC under the Investment Company Act. The Investment Company Act imposes additional obligations, including detailed operational requirements for both funds and their advisers. Moreover, an investment adviser’s contract with a registered fund may be terminated by the fund on not more than 60 days’ notice and is subject to annual renewal by the fund’s board after an initial two-year term. Both the Advisers Act and the Investment Company Act regulate the “assignment” of advisory contracts by the investment adviser. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act and the Investment Company Act, ranging from fines and censures to termination of an investment adviser’s registration. The failure of the Company, or the Funds and ETF which the Company advises, to comply with the requirements of the SEC could have a material adverse effect on the Company. The Company is also subject to federal and state laws affecting corporate governance, including the Sarbanes-Oxley Act of 2002 (“S-Ox Act”), as well as rules adopted by the SEC.

USGB iswas subject to regulation by the SEC under the Exchange Act and regulation by FINRA, a self-regulatory organization composed of other registered broker-dealers. U.S. Global and USGB are required to keep and maintain certain reports and records, which must be made available to the SEC and FINRA upon request.

Galileo Global Equity Advisors Inc. (“Galileo”) is registered as a portfolio manager and investment fund manager with the Ontario Securities Commission (“OSC”). As a registered portfolio manager, the OSC imposes substantive regulation on virtually all aspects of Galileo's business and relationships with Galileo’s clients. Applicable legislation relate to, among other things, fiduciary duties to clients, transactions with clients, effective compliance programs, conflicts of interest, advertising, recordkeeping, reporting, and disclosure requirements. The Canadian funds for which Galileo acts as the investment fund manager are registered with the OSC follow under National Instrument 81-101/102/106. These National Policies impose additional obligations, including detailed operational requirements for both funds and their managers. The OSC is authorized to institute proceedings and impose sanctions for violations of the rules ranging from fines and censures to termination of a portfolio manager and investment fund manager’s registration. The failure of Galileo, or the Canadian funds which Galileo advises, to comply with the requirements of the OSC could have a material adverse effect on Galileo.



~~Relationships with Clients~~

Relationships with Clients

The businesses of the Company are to a very significant degree dependent on their associations and contractual relationships with USGIF. In the event the advisory or administrative agreements with USGIF are canceled or not renewed pursuant to the terms thereof, the Company would be substantially adversely affected. U.S. Global ~~and USGB consider their~~considers its relationships with the Funds to be good, and ~~they have~~management has no reason to believe that ~~their~~the management and service contracts will not be renewed in the future; however, there is no assurance that USGIF will choose to continue its relationship with the ~~Company or USGB.~~Company.

In addition, the Company is also dependent on its relationships with its offshore and exchange traded fund clients. Even though the Company views its relationship with its offshore and exchange traded fund clients as stable, the Company could be adversely affected if these relationships ended.

Galileo is also dependent on its relationships with its clients. Even though Galileo views its relationship with its clients as stable, the Company could be adversely affected if these relationships ended.



~~Available Information~~

Available Information

Available Information. The Company’s Internet website address is www.usfunds.com. Information contained on the Company’s website is not part of this annual report on Form 10-K. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed with (or furnished to) the SEC are available through a link on the Company’s Internet website, free of charge, soon after such material is filed or furnished. (The link to the Company’s SEC filings can be found at www.usfunds.com by clicking “About Us,” followed by “Investor Relations,” followed by ~~“SEC~~“Financial Information and SEC Filings.”) The Company routinely posts important information on its website.

The Company also posts its Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Principal Executive and Senior Financial Officers and the charters of the audit and compensation committees of its Board of Directors on the Company’s website in the “Policies and Procedures” section. The Company’s SEC filings and governance documents are available in print to

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any stockholder that makes a written request to: Investor Relations, U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229.

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The Company files reports electronically with the SEC via the SEC’s Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”), which may be accessed through the Internet. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, at www.sec.gov.

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

Investors and others should note that we announce material financial information to our investors using the website, SEC filings, press releases, public conference calls and webcasts. We also use social media to communicate with our customers and the public about our company. It is possible that the information we post on social media could be deemed to be material information. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on social media channels listed below. This list may be updated from time to time.

https://www.facebook.com/USFunds

https://twitter.com/USFunds

https://twitter.com/USGlobalETFs

https://www.linkedin.com/company/u-s-global-investors

https://www.instagram.com/usglobal

https://pinterest.com/usfunds

https://www.youtube.com/c/usglobalinvestorssanantonio

https://www.youtube.com/channel/UCDkX1zvbWPyWc99esHOhwRQ

Information contained on our website or on social media channels is not deemed part of this report.

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Item 1A. Risk Factors

The Company faces a variety of significant and diverse risks, many of which are inherent in the business. Described below are certain risks that could materially affect the Company. Other risks and uncertainties that the Company does not presently consider to be material, or of which the Company is not presently aware, may become important factors that affect it in the future. The occurrence of any of the risks discussed below could materially and adversely affect the business, prospects, financial condition, results of operations, or cash flow.

The investment management business is intensely competitive.

Competition in the investment management business is based on a variety of factors, including:

·	Investment performance;

·	Investor perception of an investment team’s drive, focus, and alignment of interest with them;

·	Quality of service provided to, and duration of relationships with, clients and shareholders;

·	Business reputation; and

·	Level of fees charged for services.

The Company competes with a large number of investment management firms, commercial banks, broker-dealers, insurance companies, and other financial institutions. Competitive risk is heightened by the fact that some competitors may invest according to different investment styles or in alternative asset classes which the markets may perceive as more attractive than the Company’s investment approach. If the Company is unable to compete effectively, revenues and earnings may be reduced and the business could be materially affected.

Poor investment performance could lead to a decline in revenues.

Success in the investment management industry is largely dependent on investment performance relative to market conditions and the performance of competing products. Good relative performance generally attracts additional assets under management, resulting in additional revenues. Conversely, poor performance generally results in decreased sales and increased redemptions with a corresponding decrease in revenues. Therefore, poor investment performance relative to the portfolio benchmarks and to competitors could impair the Company’s revenues and growth. Theequity funds within USGIF have a performance fee whereby the base advisory fee is adjusted upwards or downwards by 0.25 percent if 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 rolling 12 ~~months.~~months.

The Company’s clients can terminate their agreements with the Company on short notice, which may lead to unexpected declines in revenue and profitability.

The Company’s investment advisory agreements are generally terminable on short notice and subject to annual renewal. If the Company’s investment advisory agreements are terminated, which may occur in a short time frame, the Company may experience a decline in revenues and profitability.

Difficult market conditions can adversely affect the Company by reducing the market value of the assets we manage or causing shareholders to make significant redemptions.

Changes in economic or market conditions may adversely affect the profitability, performance of and demand for the Company’s investment products and services. Under the Company’s advisory fee arrangements, the fees received are primarily based on the market value of assets under management. Accordingly, a decline in the price of securities held in the Funds would be expected to cause revenues and net income to decline, which would result in lower advisory fees, or cause increased shareholder redemptions in favor of investments they perceive as offering greater opportunity or lower risk, which redemptions would also result in lower advisory fees. The ability of the Company to compete and grow is dependent on the relative attractiveness of the types of investment products the Company offers and its investment performance and strategies under prevailing market conditions.

Market-specific risks may negatively impact the Company’s earnings.

The Company manages certain funds in the emerging market and natural resources sectors, which are highly cyclical. The investments in the Funds are subject to significant loss due to political, economic and diplomatic developments, currency fluctuations, social instability, and changes in governmental policies. Foreign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than the U.S. and other established markets.

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The market price and trading volume of the Company’s class A common stock may be volatile, which could result in rapid and substantial losses for the Company’s stockholders.

The market price of the Company’s class A common stock may be volatile and the trading volume may fluctuate, causing significant price variations to occur. If the market price of the Company’s class A common stock declines significantly, stockholders may be unable to sell their shares at or above their purchase price. The Company cannot assure that the market price of its class A common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of the Company’s class A common stock, or result in fluctuations in price or trading volume, include:

·	Decreases in assets under management;

·	Variations in quarterly and annual operating results;

·	Publication of research reports about the Company or the investment management industry;

·	Departures of key personnel;

·	Adverse market reactions to any indebtedness the Company may incur, acquisitions or disposals the Company may make, or securities the Company may issue in the future;

·	Changes in market valuations of similar companies;

·	Changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting the business, or enforcement of these laws and regulations, or announcements relating to these matters;

·	Adverse publicity about the asset management industry, generally, or individual scandals, specifically; and

·	General market and economic conditions.

The market price of the Company’s class A common stock could decline due to the large number of shares of the Company’s class C common stock eligible for future sale upon conversion to class A shares.

The market price of the Company’s class A common stock could decline as a result of sales of a large number of shares of class A common stock eligible for future sale upon the conversion of class C shares, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for the Company to raise additional capital by selling equity securities in the future, at a time and price the Company deems appropriate.

Failure to comply with government regulations could result in fines, which could cause the Company’s earnings and stock price to decline.

The Company and its subsidiaries are subject to a variety of federal securities laws and agencies, including, but not limited to, the Advisers Act, the Investment Company Act, the S-Ox Act, the Gramm-Leach-Bliley Act of 1999, the Bank Secrecy Act of 1970, as amended, the USA PATRIOT Act of 2001, the SEC, FINRA, and NASDAQ. Moreover, financial reporting requirements and the processes, controls, and procedures that have been put in place to address them, are comprehensive and complex. While management has focused attention and resources on compliance policies and procedures, non-compliance with applicable laws or regulations could result in fines, sanctions or censures which could affect the Company’s reputation, and thus its revenues and earnings.

Furthermore, Galileo is subject to the rules and regulations of the OSC, and failure of the company or the funds it advises to comply with the requirements of the OSC could have a material adverse ~~affect~~effect on the company.

Our business is subject to substantial risk from litigation, regulatory investigations and potential securities laws liability.

Many aspects of U.S. Global’s business involve substantial risks of litigation, regulatory investigations and/or arbitration. The Company is exposed to liability under federal and state securities laws, other federal and state laws and court decisions, as well as rules and regulations promulgated by the SEC ~~FINRA~~ and other regulatory bodies. U.S. Global, its subsidiaries, and/or officers could be named as parties in legal actions, regulatory investigations and proceedings. An adverse resolution of any lawsuit, legal or regulatory proceeding or claim against the Company could result in substantial costs or reputational harm to the Company, and have a material adverse effect on the Company’s business, financial condition or results of operations, which, in turn, may negatively affect the market price of the Company’s common stock and U.S. Global’s ability to pay dividends. In addition to these financial costs and risks, the defense of litigation or arbitration may divert resources and management’s attention from operations.

Galileo is also subject to risks of litigation, regulatory investigations and/or arbitration. Galileo is exposed to liability under provincial laws and court decisions, as well as rules and regulations promulgated by the OSC.

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Higher insurance premiums and related insurance coverage risks could increase costs and reduce profitability.

While U.S. Global carries insurance in amounts and under terms that it believes are appropriate, the Company cannot assure that its insurance will cover most liabilities and losses to which it may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees. U.S. Global is subject to regulatory and governmental inquiries and civil litigation. An adverse outcome of any such proceeding could involve substantial financial penalties. From time to time, various claims against us arise in the ordinary course of business, including employment-related claims. There has been increased incidence of litigation

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and regulatory investigations in the financial services industry in recent years, including customer claims and class action suits alleging substantial monetary damages. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As U.S. Global’s insurance policies come up for renewal, the Company may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which would increase the Company’s expenses and reduce net income.

Increased regulatory and legislative actions and reforms could increase costs and negatively impact the Company’s profitability and future financial results.

During the past decade, federal securities laws have been substantially augmented and made significantly more complex by the S-Ox Act and the USA PATRIOT Act of 2001. With new laws and changes in interpretations and enforcement of existing requirements, the associated time the Company must dedicate to, and related costs the Company must incur in, meeting the regulatory complexities of the business have increased. In order to comply with these new requirements, the Company has had to expend additional time and resources, including substantial efforts to conduct evaluations required to ensure compliance with the S-Ox Act.

The Company is subject to financial services laws, regulations, corporate governance requirements, administrative actions and policies. During 2009 and 2010, as many emergency government programs slowed or wound down, global regulatory and legislative focus generally moved to a second phase of broader reform and a restructuring of financial institution regulation. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (“(“Dodd-Frank ~~Act~~”Act”), which fundamentally changed the U.S. financial regulatory landscape. The full scope of the regulatory changes imposed by the Dodd-Frank Act will only be determined once extensive rules and regulations have been proposed and become effective, which may result in significant changes in the manner in which the Company’s operations are regulated.

Further, adverse results of regulatory investigations of mutual fund, investment advisory, and financial services firms could tarnish the reputation of the financial services industry generally, and mutual funds and investment advisers more specifically, causing investors to avoid further fund investments or redeem their balances. Redemptions would decrease the Company’s assets under management, which would reduce its advisory revenues and net income.

The Company intends to pay regular dividends to its stockholders, but the ability to do so is subject to the discretion of the Board of Directors.

The Company intends to pay cash dividends on a monthly basis, but the Board of Directors, at its discretion, may decrease the level or frequency of dividends or discontinue payment of dividends entirely based on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions.

One person beneficially owns substantially all of our voting stock and controls the outcome of all matters requiring a vote of stockholders, which may influence the value of our publicly traded non-voting stock.

Frank Holmes, CEO, is the beneficial owner of over 99 percent of ~~the~~our class C voting convertible common stock and controls the outcome of all issues requiring a vote of stockholders. All of our publicly traded stock is nonvoting stock. Consequently, except to the extent provided by law, stockholders other than Frank Holmes have no vote with respect to the election of directors or any other matter requiring a vote of stockholders. This lack of voting rights may adversely affect the market value of the publicly traded class A nonvoting common stock.

The loss of key personnel could negatively affect the Company’s financial performance.

The success of the Company depends on key personnel, including the portfolio managers, analysts, and executive officers. Competition for qualified, motivated, and skilled personnel in the asset management industry remains significant. As the business grows, the Company will likely need to increase the number of employees. Moreover, in order to retain certain key personnel, the Company may be required to increase compensation to such individuals, resulting in additional expense. The loss of key personnel or the Company’s failure to attract replacement personnel could negatively affect its financial performance.

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The Company could be subject to losses if it fails to properly safeguard sensitive and confidential information.

As part of the Company’s normal operations, it maintains and transmits confidential information about the Company and the Funds’ clients as well as proprietary information relating to its business operations. These systems could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information. Such a breach could subject the Company to liability for a failure to safeguard client data, result in the termination of relationships with our existing customers, require significant capital and operating expenditures to investigate and remediate the breach and subject the Company to regulatory action.

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We rely upon certain critical information systems for the operation of our business, and the failure of any critical information system, including a cyber-security breach, may result in harm to our business.

We are heavily dependent on technology infrastructure and rely upon certain critical information systems for the effective operation of our business. These information systems include data network and telecommunications, internet access and our websites, and various computer hardware equipment and software applications. These information systems are subject to damage or interruption from a number of potential sources including natural disasters, software viruses or other malware, power failures, cyber-attacks and other events to the extent that these information systems are under our control. We have implemented measures, such as virus protection software, intrusion detection systems and emergency recovery processes to address the outlined risks. However, security measures for information systems cannot be guaranteed to be failsafe. Any compromise of our data security or our inability to use or access these information systems at critical points in time could unfavorably impact the timely and efficient operation of our business and subject us to additional costs and liabilities, which could adversely affect our results of operations. Finally, federal legislation relating to cyber-security threats could impose additional requirements on our operations.

Adverse changes in foreign currencies could negatively impact financial results.

~~Table~~Our subsidiary Galileo conducts its business in Canada. We translate Galileo’s foreign currency financial statements into U.S. dollars in the financial statement consolidation process. Adverse changes in foreign currency exchange rates would lower the carrying value of ~~Contents~~Galileo’s assets and reduce its results in the consolidated U.S. financial statements. We also have certain corporate investments held in foreign currencies. Adverse changes in foreign currency exchange rates would also lower the value of those corporate investments. Certain assets under management also have exposure to foreign currency fluctuations in various markets, which could impact their valuation and thus the revenue we receive.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

The Company presently owns and occupies an office building as its headquarters in San Antonio, Texas. The office building is approximately 46,000 square feet on approximately 2.5 acres of land. Galileo leases office space in Toronto, Canada.

Item 3. Legal Proceedings

There are no material legal proceedings in which the Company is involved.

Item 4. Mine Safety Disclosures

Not applicable.

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Part II of Annual Report on Form 10-K

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities



~~Market Information~~

Market Information

U.S. Global Investors, Inc. (“U.S. Global” or the “Company”) has three classes of common equity: class A, class B, and class C common stock, par value $0.025 per share.

The Company’s class A common stock is traded over-the-counter and is quoted daily under NASDAQ’s Capital Markets. Trades are reported under the symbol “GROW.”

There is no established public trading market for the Company’s class B and class C common stock.

The Company’s class A and class B common stock have no voting privileges.

The following table sets forth the range of high and low sales prices of “GROW” from NASDAQ for the fiscal years ended June 30, ~~2015,~~2016, and June 30, ~~2014.~~2015. The quotations represent prices between dealers and do not include any retail markup, markdown, or commission.

	Sales Price
	2016				2015
	High ($)		Low ($)		High ($)		Low ($)
First quarter (9/30)		2.92		1.67		4.00		3.26
Second quarter (12/31)		1.78		1.00		3.60		2.57
Third quarter (3/31)		1.90		0.96		3.51		2.74
Fourth quarter (6/30)		2.07		1.48		3.40		2.72

Holders

Sales Price
2015 2014
High ($) Low ($) High ($) Low ($)
First quarter (9/30) 4.00
3.26
3.40
2.10
Second quarter (12/31) 3.60
2.57
2.93
2.37
Third quarter (3/31) 3.51
2.74
4.05
2.45
Fourth quarter (6/30) 3.40
2.72
3.80
3.20



~~Holders~~

On September ~~4, 2015,~~2, 2016, there were approximately 159 holders of record of class A common stock, no holders of record of class B common stock, and 34 holders of record of class C common stock.



~~Dividends~~

Dividends

The Company ~~has~~ paid $0.005 per share per month in fiscal year 2015 and ~~2014. A monthly dividend of $0.005 has been authorized from July 2015~~ through September 2015 and a$0.0025 per share per month from October 2015 through June 2016. A monthly dividend of $0.0025 has been authorized from ~~October 2015~~July 2016 through December ~~2015,~~2016, and will be reviewed by the Board quarterly. 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.



~~Securities authorized for issuance under equity compensation plans~~

Securities authorized for issuance under equity compensation plans

Information relating to equity compensation plans under which our stock is authorized for issuance is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.”

~~Table~~Purchases of ~~Contents~~

equity securities by the issuer



~~Purchases of equity securities by the issuer~~

Effective January 1, 2013, the Board of Directors approved a share repurchase program authorizing the Company to purchase up to $2.75 million of its outstanding class A common shares as market and business conditions warrant on the open market in compliance with Rule 10b-18 of the Securities Exchange Act of 1934. On December 12, 2013, ~~and~~ December 10, 2014, and December 9, 2015, the Board of Directors renewed the ~~share~~ repurchase program for ~~up to~~calendar years 2014, 2015 and 2016, respectively. The total amount of shares that may be repurchased in 2016 under the renewed program is $2.75 ~~million~~million.

Table of ~~its outstanding class A common stock through calendar year 2015.~~Contents

For the quarter ended June 30, ~~2015,~~2016, the Company ~~had~~ purchased a total of ~~9,001~~25,493 class A shares using cash of ~~$25,000.~~$44,000. The Company may repurchase class A stock from employees; however, none were repurchased from employees during the quarter ended June 30, ~~2015~~.2016. The Company did not repurchase any classes B or C common stock during the quarter ended June 30, ~~2015~~2016.

(dollars in thousands, except price data)
Period
Total Number of
Shares
Purchased ¹

Total
Amount
Purchased

Average
Price Paid
Per Share ²

Total Number of
Shares Purchased
as Part of
Publicly
Announced Plan ³

Approximate Dollar
Value of Shares that
May Yet Be Purchased
Under the Plan
04-01-15 to 04-30-15 —
—
n/a
—
2,689
05-01-15 to 05-31-15 400
1
2.83
400
2,688
06-01-15 to 06-30-15 8,601
24
2.82
8,601
2,664
Total 9,001
$ 25
$ 2.82
9,001

(dollars in thousands, except price data) Period	Total Number of Shares Purchased ¹		Total Amount Purchased		Average Price Paid Per Share ²		Total Number of Shares Purchased as Part of Publicly Announced Plan ³		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan

04-01-16 to 04-30-16		6,448	$	10	$	1.61		6,448	$	2,714
05-01-16 to 05-31-16		11,035		20		1.79		11,035		2,694
06-01-16 to 06-30-16		8,010		14		1.76		8,010		2,680
Total		25,493	$	44	$	1.73		25,493


^1.	The Board of Directors of the Company approved on December 7, 2012, and renewed on December 12, 2013, ~~and~~ December 10, 2014, and December 9, 2015, a repurchase of up to $2.75 million in each of calendar years 2013, 2014, 2015, and ~~2015,~~2016, respectively, of its outstanding class A common stock from time to time on the open market in accordance with all applicable rules and regulations.


^2.	The average price paid per share of stock repurchased under the stock repurchase program includes the commissions paid to brokers.


^3.	The repurchase plan was approved on December 7, 2012, renewed on December 12, 2013, ~~and~~ December 10, 2014, and December 9, 2015, and will continue through calendar year ~~2015.~~2016. The total dollar amount of shares that may be repurchased in ~~2015~~2016 under the renewed program is $2.75 million.

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Company Performance Presentation



~~Company Performance Presentation~~

The following graph compares the cumulative total return for the Company’s class A common stock (GROW) to the cumulative total return for the S&P 500 Index, the Russell 2000 Index, and the NYSE Arca Gold BUGS Index for the Company’s last five fiscal years. The graph assumes an investment of $10,000 in the class A common stock and in each index as of June 30, ~~2010,~~2011, and that all dividends are reinvested. The historical information included in this graph is not necessarily indicative of future performance and the Company does not make or endorse any predictions as to future stock performance.

	Fiscal Year-end Date
	2011		2012		2013		2014		2015		2016
U.S. Global Investors, Inc., class A (GROW)	$	10,000	$	6,290	$	3,156	$	5,371	$	4,321	$	2,704
S&P 500 Index	$	10,000	$	10,545	$	12,717	$	15,846	$	17,022	$	17,702
Russell 2000 Index	$	10,000	$	9,792	$	12,163	$	15,038	$	16,013	$	14,935
NYSE Arca Gold BUGS Index	$	10,000	$	8,308	$	4,507	$	4,829	$	3,045	$	5,053

Fiscal Year-End Date
2010 2011 2012 2013 2014 2015
U.S. Global Investors, Inc. class A (GROW) $ 10,000
$ 10,529
$ 6,622
$ 3,323
$ 5,655
$ 4,550
S&P 500 Index $ 10,000
$ 12,385
$ 13,060
$ 15,750
$ 19,626
$ 21,082
Russell 2000 Index $ 10,000
$ 12,676
$ 12,413
$ 15,417
$ 19,062
$ 20,298
NYSE Arca Gold BUGS Index $ 10,000
$ 11,579
$ 9,620
$ 5,219
$ 5,592
$ 3,525

Table of Contents

Item 6. Selected Financial Data

The following selected financial data is qualified by reference to, and should be read in conjunction with, the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report inon Form 10-K. The selected financial data as of June 30, ~~2011,~~2012, through June 30, ~~2015,~~2016, and the years then ended, is derived from the Company’s audited Consolidated Financial Statements.

The Company’s Board of Directors formally agreed on August 23, 2013, to exit the transfer agency business so that the Company could focus more on its core strength of investment management. USSI served as transfer agent until conversion to the new transfer agent on December 9, 2013. The transfer agency results, together with expenses associated with discontinuing transfer agency operations, are reflected as discontinued operations in the Consolidated Statement of Operations and are, therefore, excluded from continuing operations results.

In December 2015, USGIF elected a new slate of trustees to the Board of Trustees of the Funds. The Company proposed the election of new trustees with the intention of streamlining the Company’s responsibilities, so it can better focus on strategic activities. The new Board of Trustees of USGIF adopted several new agreements. As anticipated, effective December 10, 2015, the Company, through its wholly-owned subsidiary, U.S. Global Brokerage, Inc., ceased to be the distributor for USGIF and no longer received distribution fees and shareholder services fees from USGIF. Due to this transition, the Company is no longer responsible for paying certain distribution and shareholder servicing related expenses and is reimbursed for certain distribution expenses from the new distributor for USGIF. The distribution and shareholder services revenues and the expenses associated with certain distribution operations for USGIF are reflected as discontinued operations in the Consolidated Statement of Operations and are, therefore, excluded from continuing operations results. Comparative periods shown in the Statement of Operations and below have been adjusted to conform to this presentation.

(dollars in thousands, except operating data and per share data)	Year Ended June 30,
Selected Financial Data	2016			2015			2014			2013			2012
Operating revenues	$	5,505		$	7,333		$	8,534		$	13,118		$	16,254
Operating expenses		9,681			10,840			11,811			13,087			13,748
Operating income (loss)		(4,176	)		(3,507	)		(3,277	)		31			2,506
Other income (loss)		485			434			2,165			262			(177	)
Income (loss) from continuing operations before income taxes		(3,691	)		(3,073	)		(1,112	)		293			2,329
Income tax expense (benefit)		(6	)		822			(475	)		176			911
Income (loss) from continuing operations		(3,685	)		(3,895	)		(637	)		117			1,418
Income (loss) from discontinued operations		(18	)		(81	)		(326	)		(311	)		112
Net income (loss)		(3,703	)		(3,976	)		(963	)		(194	)		1,530
Less net income (loss) attributable to non-controlling interest		(28	)		54			7			-			-
Net income (loss) attributable to U.S. Global Investors, Inc.	$	(3,675	)	$	(4,030	)	$	(970	)	$	(194	)	$	1,530

Earnings Per Share Attributable to U.S. Global Investors, Inc. - Basic
Income (loss) from continuing operations	$	(0.24	)	$	(0.25	)	$	(0.04	)	$	0.01		$	0.09
Income (loss) from discontinued operations		-			(0.01	)		(0.02	)		(0.02	)		0.01
Net income (loss) attributable to U.S. Global Investors, Inc.	$	(0.24	)	$	(0.26	)	$	(0.06	)	$	(0.01	)	$	0.10

Dividends per common share	$	0.0375		$	0.06		$	0.06		$	0.17		$	0.24

Balance Sheet
Working capital	$	16,874		$	19,767		$	24,673		$	22,958		$	25,711
Total assets		26,346			30,770			37,846			38,683			41,756
Total U.S. Global Investors, Inc. Shareholders' Equity		24,528			28,569			35,070			36,849			38,710

Cash Flow
Net cash provided by (used in) operating activities	$	3,033		$	(672	)	$	(15,189	)	$	461		$	1,817
Net cash provided by (used in) used in investing activities		(646	)		(390	)		4,050			(368	)		(4,894	)
Net cash used in financing activities		(1,828	)		(1,122	)		(1,061	)		(2,621	)		(3,518	)

Operating Data (in millions)
Average assets under management	$	744		$	931		$	1,078		$	1,552		$	2,055

(dollars in thousands, except operating data and per share data)
Year Ended June 30,
Selected Financial Data
2015 2014 2013 2012 2011
Operating revenues
$ 9,371
$ 11,439
$ 17,318
$ 22,374
$ 39,118
Operating expenses
12,959
14,841
17,509
19,535
27,890
Operating income (loss)
(3,588 ) (3,402 ) (191 ) 2,839
11,228
Other income (loss)
434
2,165
262
(177 ) 1,008
Income (loss) from continuing operations before income taxes
(3,154 ) (1,237 ) 71
2,662
12,236
Income tax expense (benefit)
822
(517 ) 100
1,024
4,268
Income (loss) from continuing operations (3,976 ) (720 ) (29 ) 1,638
7,968
Loss from discontinued operations —
(243 ) (165 ) (108 ) (136 )
Net income (loss)
(3,976 ) (963 ) (194 ) 1,530
7,832
Less net income attributable to non-controlling interest 54
7
—
—
—
Net income (loss) attributable to U.S. Global Investors, Inc. $ (4,030 ) $ (970 ) $ (194 ) $ 1,530
$ 7,832

Earnings Per Share Attributable to U.S. Global Investors, Inc. - Basic
Income (loss) from continuing operations $ (0.26 ) $ (0.04 ) $ 0.00
$ 0.11
$ 0.52
Loss from discontinued operations 0.00
(0.02 ) (0.01 ) (0.01 ) (0.01 )
Net income (loss) attributable to U.S. Global Investors, Inc.
$ (0.26 ) $ (0.06 ) $ (0.01 ) $ 0.10
$ 0.51

Dividends per common share $ 0.06
$ 0.06
$ 0.17
$ 0.24
$ 0.24

Balance Sheet
Working capital
$ 19,767
$ 24,673
$ 22,958
$ 25,711
$ 32,366
Total assets
30,770
37,846
38,683
41,756
45,967
Total U.S. Global Investors, Inc. Shareholders’ Equity
28,569
35,070
36,849
38,710
41,057

Cash Flow
Net cash provided by (used in) operating activities
$ (672 ) $ (15,189 ) $ 461
$ 1,817
$ 7,719
Net cash provided by (used in) investing activities
(390 ) 4,050
(368 ) (4,894 ) (846 )
Net cash used in financing activities
(1,122 ) (1,061 ) (2,621 ) (3,518 ) (3,503 )

Operating Data (in millions)
Average assets under management
$ 931
$ 1,078
$ 1,552
$ 2,055
$ 2,819

Table of Contents

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion reviews and analyzes the consolidated results of operations of U.S. Global Investors, Inc. and its subsidiaries (collectively, “U.S. Global” or the “Company”) for the past three fiscal years and other factors that may affect future financial performance. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to the Consolidated Financial Statements and Selected Financial Data of this Annual Report inon Form 10-K.

Recent Trends in Financial Markets

During the fiscal year ended June 30, ~~2015,~~2016, global markets faced a number of challenges, including ~~Russia’s invasion of Ukraine,~~China’s continued drawdown, geopolitical uncertainty in Europe (specifically in the ~~Greek debt crisis, falling commodity prices,~~United Kingdom), unrest in the Middle East, a highly contentious and atypical U.S. election cycle and tepid manufacturing ~~activity~~activity. Global central banks took center stage during the period, with the Federal Reserve raising interest rates 25 basis points in December 2015 and ~~an economic slowdown~~the possibility of a further hike in ~~China,~~2016. Other banks, the ~~world’s second-largest economy. In March 2015,~~Bank of Japan and the European Central Bank ~~(“ECB”) initiated a long-awaited quantitative easing (“QE”) program, after Japan began its own in 2013.~~chief among them, implemented experimental monetary policies such as lowering rates into negative territory, which had the effect of pushing many yield-starved foreign investors into gold and American municipal bonds.

~~The Federal Reserve (“Fed”) completed its QE program in October 2014 with~~Deutsche Bank argued that 2015 will mark the ~~belief that the economy had improved enough since the recession to weather a reduction of the monetary stimulus. However, this coincided with a~~ peak in ~~U.S. industrial production. Months of speculation as~~global FX reserve accumulation, with three drivers pointing to ~~when the Fed might begin the process of normalizing interest rates spooked some investors, even as dividends from S&P 500 Index companies jumped 15 percent~~further reserve drawdowns in the ~~first quarter of 2015~~short term: China’s economic slowdown, impending U.S. monetary tightening and ~~stock buyback programs were expected to reach an all-time high of $1.2 trillion by~~ the ~~end of the year.~~

~~Gold prices have fallen from their peak~~collapse in September 2011 when real interest rates were a negative three percent for a 10-year U.S. Treasury, versus a positive two percent at the end of June 2015. The fear of rising real interest rates, inflation minus the consumer price index (“CPI”), also put pressure on the price of oil. On the other hand, central banks have been increasing their exposure to gold as part of their asset mix, presenting a compelling opportunity moving forward.

In 2015, the ~~metal, which doesn’t pay a dividend, becomes less attractive to some investors when real rates are higher. Also putting pressure on gold and other~~Bloomberg Commodity Index witnessed its worst performance since 2008, dropping 19 percent. A significant reason for the disappointing performance in commodities was the strong U.S. dollar, which ~~began to rise in July 2014 on improved economic and employment trends. The dollar hit a high of 100 in March~~was up 9.40 percent for 2015 against a ~~basket~~group of ~~currencies, its highest level since April 2003. There is a strong inverse relationship between the dollar and commodity prices.~~

~~During this period,~~other global currencies. Many of the gold ~~bear market was extended~~stocks traded below the levels they plummeted to ~~four years, the second-longest such market~~ in ~~40 years, with some investors wondering if the yellow metal had lost its “safe haven” status. In the past, gold~~2008.

Commodity prices ~~have often responded positively~~began to financial and economic crises, but they budged little in response to the Shanghai stock market crash in June 2015 or to Greece and Puerto Rico’s ongoing debt troubles. Despite losing 1.7 percent, the yellow metal was the second-best-performing global currency in 2014, following the U.S. dollar.

The U.S. leads the world in technology, including fracking, which greatly expands U.S. production to become a global leader again. The success of American ingenuity has both positive and negative consequences. It’s great for consumersrecover at the ~~gas pump~~start of 2016, with gold rallying 25 percent as ~~well as airlines but bad for drillers and producers.~~

~~Starting in July 2014, the price~~ of crude oil fell dramatically as the shale revolution and unconventional extraction methods, including fracking, allowed American producers to increase output and saturate the marketplace with crude. Meanwhile, memberJune 30, 2016, its best first half of the year since 1980. Demand during the first half of 2016 set a new record, reaching 1,064 tonnes, a 16 percent increase over the previous high set in 2009.

Oil prices remained under pressure, however, with worldwide supply staying ahead of demand and inventory builds reaching all-time record levels. The Organization of ~~the~~ Petroleum Exporting Countries (“OPEC”) ~~agreed~~failed to reach a production cap on numerous occasions, while Iran began production following the lifting of sanctions. Lower fuel costs benefited airlines and transportation stocks, not to mention consumers, but put a strain on oil company margins.

Overall merger and acquisition activity on a worldwide scale, in ~~November 2014 to maintain the production level of 30 million barrels per day,~~fact, slowed dramatically in the ~~interest~~first half of ~~“restoring market equilibrium.” While low oil prices have been~~2016, following a ~~detriment~~record 2015. The Brexit referendum, coupled with the upcoming U.S. election and tougher anti-trust regulations, were to net exporting countries such as Russia and Venezuela, they have been a boon to net importing countries, specifically in Asia: China, India, Thailand and others. Industries and sectors that benefited fromblame for the ~~oil slump included transportation, travel and leisure and automobile manufacturing.~~lack of business deals.

Mutual funds in general continued to see outflows as mutual funds were relatively out of favor compared to other investment alternatives, including exchange-traded funds (“ETFs”), whose asset flows increased during the period.

~~Assets~~Average assets under management ~~(“AUM”)~~ declined during the period along with falling emerging markets and resources. However, assets under management (“AUM”) by our June 30, 2016, fiscal year-end increased over the prior fiscal year-end, primarily due to the rally in the gold markets. To manage expenses, the Company maintains a flexible structure for one of its largest costs, compensation expense, by setting relatively ~~lower~~low base salaries with bonuses that are tied to ~~average AUM and~~ fund performance. Thus, our expense model somewhat expands and contracts with asset swings and performance.

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~~Business Segments~~

Business Segments

The Company, with principal operations located in San Antonio, Texas, manages three business segments:


1.	Investment ~~Management Services,~~management services, through which the Company offers, through U.S. Global Investors Funds (“USGIF” or the “Fund(s)”), offshore clients and an ~~exchange traded fund (“ETF”),~~ETF, a range of investment management products and services to meet the needs of individual and institutional investors;


2.	Investment ~~Management Services~~management services - Canada, through which, as of June 1, 2014, the Company owns a 65% controlling interest in Galileo Global Equity Advisors Inc. (“Galileo”), a privately held Toronto-based asset management firm which offers investment management products and services in Canada; and


3.	Corporate ~~Investments,~~investments, through which the Company invests for its own account in an effort to add growth and value to its cash position. Although the Company generates the majority of its revenues from its investment advisory segments, the Company holds a significant amount of its total assets in investments.

Assets Under Management ("AUM")
(dollars in thousands)	June 30, 2016		June 30, 2015
Investment Management Services
USGIF	$	703,020	$	590,826
U.S. Global Jets ETF		43,430		39,200
Offshore Advisory Clients		13,777		11,527
Total AUM		760,227		641,553

Investment Management Services - Canada
Galileo Funds		48,407		67,571
Other Advisory Clients		74,437		83,147
Total AUM		122,844		150,718
Total AUM	$	883,071	$	792,271

Assets Under Management (“AUM”)
(dollars in thousands) June 30, 2015 June 30, 2014
Investment Management Services USGIF $ 590,826
$ 945,928
U.S Global Jets ETF 39,200
—
Offshore Advisory Clients 11,527
20,012
Total AUM 641,553
965,940
Investment Management Services - Canada
Canadian Funds 67,571
127,053
Other Advisory Clients 83,147
140,157
Total AUM 150,718
267,210
Total AUM $ 792,271
$ 1,233,150

On June 30, ~~2015,~~2016, total ~~assets under management~~AUM as of period end ~~were~~was $883 million versus $792 million ~~versus $1.23 billion~~ on June 30, ~~2014, a decrease~~2015, an increase of 3611 percent. The ~~decrease~~increase was primarily due to market ~~depreciation~~appreciation in USGIF and ~~redemptions in USGIF,~~the offshore funds and ~~Galileo funds,~~growth of the ETF client, somewhat offset by ~~the addition~~decreases in assets of the ~~ETF.~~Galileo Funds and other Canadian advisory clients.

During fiscal year ~~2015,~~2016, average ~~assets under management were $931~~AUM was $744 million versus ~~$1.08 billion~~$931 million in fiscal year ~~2014,~~2015, a decrease of 1420 percent. The decrease was primarily due to net shareholder redemptions and market depreciation.

The following is a brief discussion of the Company’s three business segments.

Investment Management Services

In fiscal year ~~2015,~~2016, the Company generated ~~substantially~~a majority of all of its operating revenues from managing and servicing the ~~Funds and offshore advisory clients.~~Funds. These revenues are largely dependent on the total value and composition of assets under its management. Fluctuations in the markets and investor sentiment directly impact the Funds’ asset levels, thereby affecting income and results of operations.

Detailed information regarding the ~~funds~~Funds managed by the Company within USGIF can be found on the Company’s website, www.usfunds.com, including the prospectus and performance information for each ~~fund for various time periods, assets under management as of the most recent month end, and inception date of each fund.~~Fund.

The mutual fund shareholders in USGIF are not required to give advance notice prior to redemption of shares in the ~~funds;~~Funds; however, the USGIF equity funds charge a redemption fee if the Fund shares have been held for less than the applicable periods of time set forth in the Funds’ prospectuses. The fixed income funds charge no redemption fee. Detailed information about redemption fees can be found in the Funds’ ~~prospectus,~~prospectuses, which is available on the Company’s website, www.usfunds.com.

Beginning in April 2015, the Company provides advisory services for an ETF and receives monthly advisory fees, based on the net asset values of the fund. ~~In fiscal year 2015, the~~The Company recorded advisory fees from the ETF client totaling ~~$26,000.~~$296,000 and $26,000 in fiscal 2016 and fiscal 2015, respectively. Information on the ETF can be found at www.usglobaletfs.com, including the prospectus, performance and holdings.

~~Table of Contents~~

The Company provides advisory services for two offshore clients (a third offshore fund liquidated in November 2013) and receives monthly advisory fees, based on the net asset values of the clients and performance fees based on the overall increase in net asset values, if any. ~~In fiscal year 2015, the~~The Company recorded advisory fees from the offshore clients of $91,000 and $130,000 in fiscal years 2016 and 2015, respectively. No performance fees from the offshore clients ~~totaling $130,000 and~~ $0~~, respectively, and $190,000 and $4,000, respectively,~~were recorded in fiscal ~~year 2014.~~years 2016 and 2015. The performance fees for these clients are calculated and recorded in accordance with the terms of the advisory agreements. These fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control. Frank Holmes, CEO, serves as a director of the two offshore clients.

Table of Contents

The following tables summarize the changes in assets under management for USGIF for fiscal years 2016, 2015, ~~2014~~ and ~~2013:~~2014:

	2016
(dollars in thousands)	Equity			Fixed Income			Total
Beginning Balance	$	442,243		$	148,583		$	590,826
Market appreciation		104,113			2,877			106,990
Dividends and distributions		(14,068	)		(1,625	)		(15,693	)
Net shareholder purchases (redemptions)		(6,510	)		27,407			20,897
Ending Balance	$	525,778		$	177,242		$	703,020
Average investment management fee		0.93	%		0.00	%		0.66	%
Average net assets	$	403,424		$	163,718		$	567,142

	2015
(dollars in thousands)	Equity			Fixed Income			Total
Beginning Balance	$	815,368		$	130,560		$	945,928
Market appreciation (depreciation)		(256,504	)		761			(255,743	)
Dividends and distributions		(10,590	)		(1,666	)		(12,256	)
Net shareholder purchases (redemptions)		(106,031	)		18,928			(87,103	)
Ending Balance	$	442,243		$	148,583		$	590,826
Average investment management fee		0.95	%		0.00	%		0.76	%
Average net assets	$	581,188		$	146,027		$	727,215

	2014
(dollars in thousands)	Equity			Money Market and Fixed Income			Total
Beginning Balance	$	857,302		$	283,144		$	1,140,446
Market appreciation		132,774			2,806			135,580
Dividends and distributions		(20,287	)		(1,695	)		(21,982	)
Net shareholder redemptions		(154,421	)		(153,695	)		(308,116	)
Ending Balance	$	815,368		$	130,560		$	945,928
Average investment management fee		0.97	%		0.00	%		0.79	%
Average net assets	$	841,492		$	195,050		$	1,036,542

2015
(dollars in thousands) Equity Fixed Income Total
Beginning Balance $ 815,368
$ 130,560
$ 945,928
Market appreciation/(depreciation) (256,504 ) 761
(255,743 )
Dividends and distributions (10,590 ) (1,666 ) (12,256 )
Net shareholder purchases/(redemptions) (106,031 ) 18,928
(87,103 )
Ending Balance $ 442,243
$ 148,583
$ 590,826
Average investment management fee 0.95 % — % 0.76 %
Average net assets $ 581,188
$ 146,027
$ 727,215

2014
(dollars in thousands) Equity
Money Market
and
Fixed Income
Total
Beginning Balance $ 857,302
$ 283,144
$ 1,140,446
Market appreciation 132,774
2,806
135,580
Dividends and distributions (20,287 ) (1,695 ) (21,982 )
Net shareholder redemptions (154,421 ) (153,695 ) (308,116 )
Ending Balance $ 815,368
$ 130,560
$ 945,928
Average investment management fee 0.97 % — % 0.79 %
Average net assets $ 841,492
$ 195,050
$ 1,036,542

2013
(dollars in thousands) Equity
Money Market
and
Fixed Income
Total
Beginning Balance $ 1,289,160
$ 302,770
$ 1,591,930
Market depreciation (146,115 ) (87 ) (146,202 )
Dividends and distributions (14,981 ) (1,675 ) (16,656 )
Net shareholder redemptions (270,762 ) (17,864 ) (288,626 )
Ending Balance $ 857,302
$ 283,144
$ 1,140,446
Average investment management fee 0.98 % — % 0.79 %
Average net assets $ 1,229,373
$ 293,027
$ 1,522,400

As shown above, ~~both~~average assets under management decreased in fiscal year 2016 compared to fiscal year 2015, while period-end assets increased. The decrease in average assets under management in fiscal year 2016 was driven by market depreciation and redemptions, primarily in the natural resources funds, somewhat offset by shareholder purchases in the fixed income funds. However, assets under management as of the end of fiscal year 2016 increased over the prior year, primarily driven by market appreciation in the gold funds and shareholder purchases in the fixed income funds.

Both average and period-end assets under management decreased in fiscal year 2015 compared to fiscal year ~~2014 and in fiscal year 2014 compared to fiscal year 2013.~~2014. The decrease in assets under management in fiscal year 2015 was driven by market depreciation and redemptions, primarily in the natural resources funds, and redemptions in the international equity funds. The decrease in assets under management in fiscal year 2014 was driven by redemptions, primarily in the money market and natural resources funds, offset by market appreciation, primarily in the natural resources funds. In fiscal 2014, the Company liquidated one of its money market funds and converted the other money market fund to an ultra-short bond fund, which contributed to the redemptions in these funds.

A significant portion of the dividends and distributions shown above are reinvested and included in net shareholder ~~purchases/~~purchases (redemptions).

The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 7666 basis points in fiscal year 2016, 76 basis points in fiscal year 2015, and 79 basis points in fiscal year ~~2014 and fiscal year 2013.~~2014. The average investment management fee for equity funds in fiscal year 2016, 2015, and 2014 was 93, 95 and ~~2013 was~~ 95, 97 ~~and 98~~ basis points,

~~Table of Contents~~

respectively. The average investment management fee for the money market and fixed income funds was nil ~~or close to nil~~ for fiscal years 2016, 2015, ~~2014,~~ and ~~2013.~~2014. This is due to voluntary fee waivers on these funds as discussed in Note 65 Investment Management and Other Fees ofin the Consolidated Financial Statements of this Annual Report inon Form 10-K.

Table of Contents

Investment Management Services -– Canada

Effective March 31, 2013, the Company, through its wholly-owned subsidiary, U.S. Global Investors (Canada) Limited (“USCAN”), purchased 50 percent of the issued and outstanding shares of Galileo, ~~Global Equity Advisors Inc. (“Galileo”),~~ a privately held Toronto-based asset management firm, for ~~$600,000~~$600,000 cash.

Effective June 1, 2014,, the Company, through USCAN, completed its purchase of an additional 15 percent interest in Galileo from the company’s founder, Michael Waring, for ~~$180,000~~$180,000 cash. This strategic investment ~~brings~~brought USCAN’s ownership to 65 percent of the issued and outstanding shares of Galileo, which ~~represents~~represented controlling interest of Galileo. ~~Through Galileo, the Company expects to increase its presence in Canada.~~ The non-controlling interest in this subsidiary is included in “non-controlling interest in subsidiaries” in the equity section of the Consolidated Balance Sheets. Frank Holmes, CEO, and Susan McGee, President, ~~and~~ General Counsel, and Chief Compliance Officer, serve as directors of Galileo.

Corporate Investments

Management believes it can more effectively manage the Company’s cash position by maintaining certain types of investments utilized in cash management and continues to believe that such activities are in the best interest of the Company.

The following summarizes the market value, cost, and unrealized gain or loss on investments recorded at fair value as of June 30, ~~2015~~,2016, and June 30, ~~2014~~.2015.

Securities Market Value Cost
Unrealized Gain
(Loss)

Unrealized gains on
available-for-sale
securities, net of tax
(dollars in thousands)
Trading ¹
$ 15,640
$ 16,491
$ (851 ) N/A
Available-for-sale ²
4,263
4,602
(339 ) $ (339 )
Total at June 30, 2015 $ 19,903
$ 21,093
$ (1,190 )

Trading ¹
$ 17,817
$ 18,067
$ (250 ) N/A
Available-for-sale ²
6,196
4,851
1,345
$ 888
Total at June 30, 2014 $ 24,013
$ 22,918
$ 1,095

Securities	Market Value		Cost		Unrealized Gain (Loss)			Unrealized gains on available-for-sale securities, net of tax
(dollars in thousands)
Trading¹	$	10,104	$	11,048	$	(944	)		N/A
Available-for-sale²		3,481		3,436		45		$	45
Total at June 30, 2016	$	13,585	$	14,484	$	(899	)

Trading¹	$	15,640	$	16,491	$	(851	)		N/A
Available-for-sale²		4,263		4,602		(339	)	$	(339	)
Total at June 30, 2015	$	19,903	$	21,093	$	(1,190	)


^1.	Unrealized and realized gains and losses on trading securities are included in earnings in the Consolidated Statements of Operations.


^2.	Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.

In addition, as of June 30, ~~2015~~,2016, and ~~2014~~2015, the Company owned other investments of approximately $1.9 million and $2.3 million, respectively, accounted for under the cost method of accounting. The Company also had invested in notes receivable of $2.2 million at June 30, 2016.

As of June 30, 2016, and 2015, the Company held approximately~~$2.3~~ $4.0 million and ~~$1.4~~$5.1 million, ~~respectively, in other investments held at cost.~~

~~As of~~ ~~June 30, 2015, and~~ ~~2014, the Company held approximately~~ ~~$5.1 million~~ ~~and~~ ~~$6.1 million~~, respectively, in investments other than the clients the Company advises. Investments in securities classified as trading are reflected as current assets on the Consolidated Balance Sheets at their fair market value. Unrealized gains and losses on trading securities are included in earnings in the Consolidated Statements of Operations. Investments in securities classified as available for sale, which may not be readily marketable, are reflected as non-current assets on the Consolidated Balance Sheets at their fair value. Unrealized gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.

Table of Contents

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

·	realized gains and losses on sales of securities;

·	unrealized gains and losses on trading securities;

·	realized foreign currency gains and losses;

~~other-than-temporary impairments on available-for-sale securities; and~~

·	other-than-temporary impairments on available-for-sale securities;

~~dividend and interest income.~~

·	other-than-temporary impairments on held-at-cost securities; and

·	dividend and interest income.

~~Table of Contents~~

Investment income can be volatile and may vary depending on market fluctuations, the Company’s ability to participate in investment opportunities, and timing of transactions. A significant portion of the unrealized gains and losses is concentrated in a small number of issuers. For fiscal years 2016, 2015,, ~~2014~~, and ~~2013~~,2014, the Company had ~~net recognized gains (losses) on sales or other-than-temporary impairment~~total investment income of ~~securities of~~ ~~$313,000~~; ~~$878,000~~;$485,000; $434,000; and ~~$(26,000)~~;$2.1 million, respectively. Due to market volatility, the Company expects that gains or losses will continue to fluctuate in the future.



~~Consolidated Results of Operations~~

Consolidated Results of Operations

The following is a discussion of the consolidated results of operations of the Company and a detailed discussion of the Company’s revenues and expenses.

	Year Ended June 30,
(dollars in thousands, except per share data)	2016			2015			2014
Net Loss
Loss from continuing operations	$	(3,685	)	$	(3,895	)	$	(637	)
Less: Income (loss) attributable to non-controlling interest in subsidiary		(28	)		54			7
Loss from continuing operations attributable to U.S. Global Investors, Inc.		(3,657	)		(3,949	)		(644	)
Loss from discontinued operations attributable to U.S. Global Investors, Inc.		(18	)		(81	)		(326	)
Net loss attributable to U.S. Global Investors, Inc.	$	(3,675	)	$	(4,030	)	$	(970	)

Weighted average number of outstanding shares
Basic		15,294,893			15,399,831			15,459,022
Effect of dilutive securities
Employee stock options		-			-			-
Diluted		15,294,893			15,399,831			15,459,022

Net loss per share attributable to U.S. Global Investors, Inc.
Basic
Loss from continuing operations	$	(0.24	)	$	(0.25	)	$	(0.04	)
Loss from discontinued operations		-			(0.01	)		(0.02	)
Net loss attributable to U.S. Global Investors, Inc.	$	(0.24	)	$	(0.26	)	$	(0.06	)
Diluted
Loss from continuing operations	$	(0.24	)	$	(0.25	)	$	(0.04	)
Loss from discontinued operations		-			(0.01	)		(0.02	)
Net loss attributable to U.S. Global Investors, Inc.	$	(0.24	)	$	(0.26	)	$	(0.06	)

Year Ended June 30, 2016, Compared with Year Ended June 30, 2015

The Company posted a net loss attributable to U.S. Global Investors, Inc., as shown in the Consolidated Statements of Operations, of $3,675,000 ($0.24 loss per share) for the year ended June 30, 2016, compared with a net loss attributable to U.S. Global Investors, Inc. of $4,030,000 ($0.26 loss per share) for the year ended June 30, 2015. The decrease in net loss is mainly due to a decrease in expenses, offset somewhat by a decrease in revenues, resulting primarily from a decrease in assets under management.

Year Ended June 30,
(dollars in thousands, except per share data) 2015 2014 2013
Net income (loss)
Loss from continuing operations $ (3,976 ) $ (720 ) $ (29 )
Less: Income attributable to non-controlling interest in subsidiary 54
7
—
Loss from continuing operations attributable to U.S. Global Investors, Inc. (4,030 ) (727 ) (29 )
Loss from discontinued operations attributable to U.S. Global Investors, Inc. —
(243 ) (165 )
Net loss attributable to U.S. Global Investors, Inc. $ (4,030 ) $ (970 ) $ (194 )

Weighted average number of outstanding shares
Basic 15,399,831
15,459,022
15,482,612
Effect of dilutive securities
Employee stock options —
—
—
Diluted 15,399,831
15,459,022
15,482,612

Earnings (loss) per share attributable to U.S. Global Investors, Inc.
Basic
Loss from continuing operations $ (0.26 ) $ (0.04 ) $ 0.00
Loss from discontinued operations 0.00
(0.02 ) (0.01 )
Net loss attributable to U.S. Global Investors, Inc. $ (0.26 ) $ (0.06 ) $ (0.01 )
Diluted
Loss from continuing operations $ (0.26 ) $ (0.04 ) $ 0.00
Loss from discontinued operations 0.00
(0.02 ) (0.01 )
Net loss attributable to U.S. Global Investors, Inc. $ (0.26 ) $ (0.06 ) $ (0.01 )

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Operating Revenues

Total consolidated operating revenues for the year ended June 30, 2016, decreased $1.8 million, or 24.9 percent, compared with the year ended June 30, 2015. This decrease was primarily attributable to the following:

Advisory fees decreased by $1.5 million, or 22.4 percent as the result of lower assets under management, somewhat offset by higher ETF advisory fees and lower performance fee payouts. USGIF advisory fees are comprised of two components: a base management fee and a performance fee.

o	Base management fees decreased approximately $2.4 million, primarily as a result of lower assets under management in the USGIF and Galileo funds due to market depreciation and shareholder redemptions. This decrease was somewhat offset by an increase in ETF advisory fees.

Performance fee adjustments paid out in the current period were $868,000 less compared to the prior year. 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 rolling 12 months.

Administrative services fees decreased by $331,000, or 50.8 percent, as a result of lower average net assets under management upon which these fees are based and the outsourcing to other service providers a portion of these services previously provided to USGIF. Effective December 10, 2015, due to the Company’s reduced administrative responsibilities, the administrative fee paid to the Company by USGIF was decreased. As noted below, the Company has less related expenses due to these reduced responsibilities.

Operating Expenses

Total consolidated operating expenses for the year ended June 30, 2016, decreased by $1.2 million, or 10.7 percent, compared with the prior year and was primarily attributable to the following:

Employee compensation and benefits decreased by $481,000, or 8.9 percent, primarily as a result of lower performance-based bonuses and fewer employees.

General and administrative expenses decreased $396,000, or 9.6 percent, primarily due to strategic cost cutting measures, offset somewhat by costs of approximately $290,000 in fiscal 2016 related to the USGIF transition to third-party service providers.

Platform fees decreased by $348,000, or 40.7 percent, due to lower assets held through broker-dealer platforms.

Advertising increased $77,000, or 57.0 percent, primarily due to marketing costs related to the ETF launched in April 2015.

Other Income

Total consolidated other income for the year ended June 30, 2016, increased $51,000, or 11.8 percent, compared with the year ended June 30, 2015. This increase was primarily attributable to lower unrealized losses on trading securities in fiscal 2016 compared to fiscal 2015, offset somewhat by an increase in other-than-temporary impairment losses and a decrease in dividend and interest income.

Discontinued Operations

Effective December 10, 2015, the Company ceased to be the distributor for USGIF and no longer received distribution fees and shareholder services fees from USGIF. Due to this transition, the Company is no longer responsible for paying certain distribution and shareholder servicing related expenses and is reimbursed for certain distribution expenses from the new distributor for USGIF. The operations associated with providing these services are considered discontinued operations.

Loss attributed to discontinued operations for the distributor for the year ended June 30, 2016, declined $63,000, or 77.8 percent, compared to the year ended June 30, 2015. This prior year loss reflects a full year of distribution operations, while the current year reflects operations until the transition to the new distributor in December 2015.

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Year Ended June 30, 2015, Compared with Year Ended June 30, 2014

The Company posted a net loss attributable to U.S. Global Investors, Inc. of $4,030,000 ($0.26 loss per share) for the year ended June 30, 2015, compared with a net loss attributable to U.S. Global Investors, Inc. of $970,000 ($0.06 loss per share) for the year ended June 30, ~~2014~~.2014. This decrease in profitability is primarily attributable to the following factors:

Operating Revenues

Total consolidated operating revenues for the year ended June 30, 2015, decreased ~~$2.1~~$1.2 million, or ~~18.1~~14.1 percent, compared with the year ended June 30, ~~2014~~.2014. This decrease was primarily attributable to the following:

Advisory fees decreased by $1.1 million, or 13.9 percent, as the result of lower assets under management and increased performance fee adjustments. Investment advisory fees are comprised of two 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 rolling 12 months.

◦o

Base management fees decreased approximately $893,000 primarily as a result of lower USGIF assets under management due to market depreciation in the natural resources funds and shareholder redemptions in the natural resources and international equity funds. Included in the net $893,000 decrease was an increase in Canadian-based advisory fees of $1.8 million due to consolidating twelve months of Galileo revenue in fiscal year 2015 versus consolidating only one month in fiscal year 2014.


◦o	Performance fee adjustments paid out in the current period increased $185,000 versus the corresponding period in the prior year. 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 rolling 12 months.

~~Distribution fees decreased by $566,000, or 28.7 percent, as a result of lower average net assets under management upon which these fees are based.~~

~~Shareholder services fees decreased by $301,000, or 32.3 percent, as a result of a decline in net assets held through institutions.~~

Administrative services fees decreased by $123,000, or 15.9 percent, as a result of lower average net assets under management upon which these fees are based.

Operating Expenses

Total consolidated operating expenses for the year ended June 30, 2015, decreased by ~~$1.9 million,~~$971,000, or ~~12.7~~8.2 percent, compared with the prior year and was primarily attributable to the following:

Employee compensation and benefits decreased by ~~$916,000,~~$913,000, or ~~13.5~~14.5 percent, primarily as a result of fewer employees and lower performance-based bonuses.

Platform fees increased by $153,000, or 8.0 percent, due to consolidation of Galileo fees for twelve months in fiscal year 2015 versus one month in fiscal year 2014, but the increase in platform fees was somewhat offset by lower assets held through broker-dealer platforms.

~~Advertising decreased $204,000, or 33.2 percent, as a result of decreased marketing and sales costs.~~

General and administrative expenses decreased ~~$986,000~~,$848,000, or ~~18.7~~17.1 percent,, primarily due to higher fund reimbursements and fund restructuring costs in the prior year, but offset somewhat by the consolidation of twelve months of Galileo expenses in fiscal year 2015, versus one month of Galileo expenses in fiscal year 2014.

Platform fees increased by $640,000, or 296.3 percent, due to consolidation of Galileo fees for twelve months in fiscal year 2015 versus one month in fiscal year 2014.

Advertising increased $79,000, or 141.1 percent, primarily due to marketing costs in fiscal 2015 related to the ETF launched in April 2015.

Other Income

Total consolidated other income for the year ended June 30, 2015, decreased $1.7 million, or 80.0 percent, compared with the year ended June 30, ~~2014~~.2014. This decrease was primarily attributable to unrealized losses on trading securities in fiscal 2015 versus unrealized gains in fiscal 2014. The Company also recognized a gain in conjunction with the acquisition of Galileo and had more realized gains on sales of available-for-sale securities in fiscal 2014 versus fiscal 2015.

Discontinued Operations

There was $81,000 in loss attributed to discontinued operations of the distributor, net of tax, in the year ended June 30, 2015, compared to $83,000 in the year ended June 30, 2014.

There was no loss attributed to discontinued ~~operation in~~operations of the transfer agent for the year ended June 30, 2015. Total loss, net of tax, on discontinued operations for the transfer agent for the year ended June 30, 2014, was $243,000. This ~~prior year~~ loss reflects residual costs from winding down operations after the transfer agent transitioned to a third party in December 2013.

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~~Year Ended June 30, 2014 Compared with Year Ended June 30, 2013~~

~~The Company posted a net loss attributable to U.S. Global Investors, Inc. of $970,000 ($0.06 loss per share) for the year ended~~ ~~June 30, 2014~~, compared with net loss attributable to U.S. Global Investors, Inc. of $194,000 ($0.01 loss per share) for the year ended June 30, 2013. This decrease in profitability is primarily attributable to the following factors:

~~Operating Revenues~~

~~Total consolidated operating revenues for the year ended~~ ~~June 30, 2014, decreased $5.9 million, or 33.9 percent, compared with the year ended June 30, 2013. This decreased was primarily attributable to the following:~~

Advisory fees decreased by $4.4 million, or 36.3 percent as the result of lower assets under management and increased performance fees adjustment. Advisory fees are comprised of two 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 rolling 12 months.


◦	~~Base management fees decreased $3.9 million as a result of lower assets under management due to market depreciation and shareholder redemptions in the natural resources and money markets funds.~~


◦	~~Performance fee adjustments paid out in the current period increased $682,000 versus the corresponding period in the prior year.~~

~~Distribution fees decreased by $843,000, or 29.9 percent, as a result of lower average net assets under management upon which these fees are based.~~

~~Shareholder services fees decreased by $452,000, or 32.7 percent, as a result of a decline in net assets held through institutions.~~

Administrative services fees decreased by $155,000, or 16.7 percent, as a result of lower average net assets under management upon which these fees are based, offset by the fee change implemented in December 2013.

~~Operating Expenses~~

~~Total consolidated operating expenses for the year ended~~ ~~June 30, 2014, decreased by $2.7 million, or 15.2 percent, compared with the prior year and was primarily attributable to the following:~~

~~Employee compensation and benefits decreased by $1.5 million, or 18.4 percent, primarily as a result of lower performance-based bonuses and fewer employees.~~

~~Platform fees decreased by $760,000, or 28.5 percent, primarily due to lower assets held through broker-dealer platforms.~~

~~Advertising decreased $247,000, or 28.7 percent, as a result of decreased marketing and sales costs.~~

General and administrative expenses decreased $110,000, or 2.0 percent, representing a decrease of approximately $635,000 primarily due to lower fund and operation expenses offset by one-time costs of approximately $525,000, including legal and proxy filing and solicitation costs, related to strategic fund changes in the fall of 2013.

~~Other Income~~

~~Total consolidated other income for the year ended~~ ~~June 30, 2014~~, increased $1.9 million, or 726.3 percent, compared with the year ended June 30, 2013. This increase was primarily attributable to realized gains on sale of available-for-sale securities, unrealized gains on trading securities, increased dividend and interest income and gains recognized in conjunction with the acquisition of Galileo.

~~Discontinued Operations~~

~~Total loss, net of tax, on discontinued operations for the year ended~~ ~~June 30, 2014~~, increased by $78,000, or 47.3 percent, from $165,000 for fiscal year 2013 to $243,000 for fiscal year 2014. The prior year loss reflects a period in which the transfer agent was still in full operations while the current year reflects residual costs from winding down operations after the transfer agent transitioned to a third party in December 2013.

~~Table of Contents~~

Operating Revenues and Other Income


(dollars in thousands)	2015		2014		% Change		2014		2013		% Change		2016		2015		% Change			2015		2014		% Change
Investment advisory fees:
Natural resources funds	$	2,866	$	5,019	(42.9	)%	$	5,019	$	9,302	(46.0	)%	$	2,557	$	2,866		(10.8	%)	$	2,866	$	5,019		(42.9	%)
International equity funds	1,144		1,666		(31.3	)%	1,666		2,170		(23.2	)%		652		1,144		(43.0	%)		1,144		1,666		(31.3	%)
Domestic equity funds	509		640		(20.5	)%	640		399		60.4	%		425		509		(16.5	%)		509		640		(20.5	%)
Fixed income funds	—		7		(100.0	)%	7		—		N/A			-		-		N/A			-		7		(100.0	%)
Total investment advisory fees - USGIF	4,519		7,332		(38.4	)%	7,332		11,871		(38.2	)%		3,634		4,519		(19.6	%)		4,519		7,332		(38.4	%)
Galileo advisory fees	2,007		234		757.7	%	234		—		N/A			1,164		2,007		(42.0	%)		2,007		234		757.7	%
Offshore advisory fees	130		194		(33.0	)%	194		318		(39.0	)%		91		130		(30.0	%)		130		194		(33.0	%)
ETF advisory fees	26		—		N/A		—		—		N/A			296		26		1038.5	%		26		-		N/A
Total advisory fees	6,682		7,760		(13.9	)%	7,760		12,189		(36.3	)%		5,185		6,682		(22.4	%)		6,682		7,760		(13.9	%)
Distribution fees	1,408		1,974		(28.7	)%	1,974		2,817		(29.9	)%
Shareholder services fees	630		931		(32.3	)%	931		1,383		(32.7	)%
Administrative services fees	651		774		(15.9	)%	774		929		(16.7	)%		320		651		(50.8	%)		651		774		(15.9	%)
Total Operating Revenue	$	9,371	$	11,439	(18.1	)%	$	11,439	$	17,318	(33.9	)%	$	5,505	$	7,333		(24.9	%)	$	7,333	$	8,534		(14.1	%)

Other Income (Loss)
Investment income (loss)	$	434	$	2,145	(79.8	)%	$	2,145	$	208	931.3	%
Other Income
Investment income													$	485	$	434		11.8	%	$	434	$	2,145		(79.8	%)
Equity in earnings of Galileo	—		20		(100.0	)%	20		54		(63.0	)%		-		-		N/A			-		20		(100.0	%)
Total Other Income (Loss)	$	434	$	2,165	(80.0	)%	$	2,165	$	262	726.3	%
Total Other Income													$	485	$	434		11.8	%	$	434	$	2,165		(80.0	%)

Advisory Fees. Advisory fees, the largest component of the Company’s revenues, are derived from four sources: USGIF advisory fees, Galileo advisory fees, offshore advisory fees and ~~exchange traded~~exchange-traded fund advisory fees. In fiscal year ~~2015~~,2016, these sources accounted for ~~67.6~~70.1 percent,, ~~30.0~~ 22.4 percent,~~, 2.0~~ 1.8 percent and ~~0.4~~5.7 percent,, respectively, of the Company’s total investment advisory fees.

Investment advisory fees from USGIF are calculated as a percentage of average net assets, ranging from 0.375 percent to ~~1.375~~1.25 percent, and are paid monthly. These advisory fees decreased by approximately ~~$2.8 million~~,$885,000, or ~~38.4~~19.6 percent,, in fiscal year ~~2015~~2016 compared to fiscal year ~~2014~~,2015, primarily as a result of ~~decreased~~a decrease in average assets under management driven by market depreciation and redemptions, primarily in the natural resources ~~funds and redemptions in the international equity market~~ funds.

~~Investment~~

Mutual fund investment advisory fees are also affected by changes in assets under management, which include:

·	market appreciation or depreciation;

~~the addition of new client~~

·	the addition of new fund shareholder accounts;

~~client~~

·	fund shareholder contributions of additional assets to existing accounts;

~~withdrawals of assets from and termination of client~~

·	withdrawals of assets from and termination of fund shareholder accounts;

·	exchanges of assets between accounts or products with different fee structures; and

·	the amount of fees voluntarily reimbursed.

As discussed above, the fees on the equity funds within USGIF consist of a base advisory fee that is adjusted upward or downward based on performance. For the ~~year~~years ended June 30, 2016, 2015~~, 2014~~ and ~~2013,~~2014, the Company adjusted its base advisory fees downward by ~~$1 million~~, ~~$815,000~~,$132,000; $1.0 million; and ~~$133,000~~,$815,000, respectively.

Galileo provides advisory services for clients in Canada and receives advisory fees based on the net asset values of the clients. Galileo recorded advisory fees from these clients totaling $1.2 million; $2.0 million; and $234,000 for the years ended June 30, 2016, 2015, and 2014, respectively.

The Company also serves as investment advisor to ~~an ETF,~~ U.S. Global Jets ETF. The ETF ~~that~~ commenced operations in April ~~2015.~~2015, and fiscal year 2016 was its first full year of operations. The Company receives a unitary management fee of 0.60 percent of average net assets and has agreed to bear all expenses of the ETF.

~~Distribution Fees.~~ ~~The Funds pay U.S. Global Brokerage, Inc. (“USGB”) a distribution fee at an annual rate of 0.25 percent of the average daily net assets of the investor class of each of theequity funds. Distribution fees decreased by~~ ~~$566,000~~ ~~and~~ ~~$843,000~~ ~~in fiscal years~~ ~~2015~~ ~~and~~ ~~2014, respectively, due to lower average net assets under management upon which these fees are based.~~21

~~Shareholder Services Fees.~~ In connection with obtaining and/or providing administrative services to the beneficial owners of USGIF through broker-dealers, banks, trust companies and similar institutions which provide such services, the Company receives shareholder services fees at an annual rate of up to 0.20 percent of the value of shares held in accounts at the institutions, which helps offset related platform costs. Shareholder services fees decreased by $301,000 and $452,000 in fiscal years 2015 and 2014, respectively, due to a decline in net assets held through institutions.

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Administrative Services Fees.The Funds pay the Company compensation based on average daily net assets for administrative services provided by the Company to the Funds. Effective December 2013, the Funds’ Board of Trustees increased the rate from 0.08 percent to 0.10 percent for each investor class and from 0.06 percent to 0.08 percent for each institutional class plus $10,000 per ~~Fund.~~fund. Effective November 1, 2014, the annual per fund fee changed to ~~$7,000~~$7,000. Effective December 10, 2015, the annual rate changed to 0.05 percent for each investor class and to 0.04 percent for each institutional class, and the per ~~year.~~ fund fee was eliminated. Administrative services fees decreased by ~~$123,000~~$331,000 and ~~$155,000~~$123,000 in fiscal years ~~2015~~2016 and ~~2014~~,2015, respectively, due to the changes in the fee structure and lower average net assets under management upon which these fees are based.

Investment Income (Loss).Investment income (loss) from the Company’s investments includes:

·	realized gains and losses on sales of securities;

·	unrealized gains and losses on trading securities;

·	realized foreign currency gains and losses;

~~other-than-temporary impairments on available-for-sale securities; and~~

·	other-than-temporary impairments on available-for-sale securities;

·	other-than-temporary impairments on held-at-cost securities; and

·	dividend and interest income.

This source of revenue is dependent on market fluctuations and does not remain at a consistent level. Timing of transactions and the Company’s ability to participate in investment opportunities largely affect this source of revenue.

Investment income increased by $51,000 in fiscal year 2016 primarily due to lower unrealized losses on trading securities, offset somewhat by an increase in other-than-temporary impairment losses and a decrease in dividend and interest income. Investment income decreased by ~~$1.7~~$1.7 million in fiscal year 2015 primarily due to unrealized losses on trading securities in fiscal 2015 versus unrealized gains in fiscal 2014. The Company also recognized a gain in conjunction with the acquisition of Galileo and had more realized gains on sale of available-for-sale securities in fiscal 2014 versus fiscal 2015. ~~Investment income increased by~~ ~~$1.9 million~~ ~~in fiscal year~~ ~~2014~~ due to realized gains on sales of available-for-sale securities, unrealized gains on trading securities, increased dividend and interest income and gains recognized in conjunction with the acquisition of Galileo.This decrease was primarily attributable to unrealized losses on trading securities in fiscal 2015 versus unrealized gains in fiscal 2014.

Included in investment income were other-than-temporary impairments of $517,000; $247,000; ~~$3,000;~~ and ~~$47,000~~$3,000 in fiscal years 2016, 2015,, ~~2014~~, and ~~2013~~,2014, respectively. The impairment in fiscal year 2016 resulted from fair values of certain equity investments being lower than book value and a debt security written down to estimated future cash flows based on proposed restructuring totaling approximately $259,000, and approximately $258,000 in declines in estimated values of securities held at cost. The impairment in fiscal year 2015 resulted from ~~the~~ issuers defaulting on scheduled payments. One security ~~with a cost basis of $44,000~~ was written down to its fair value ~~of $5,000. Two~~and two other securities ~~which have resumed interest payments,~~ were written down to the net present value of estimated cash flows. ~~These securities had a cost basis of $310,000 and $1,102,000, respectively, and were written down to $234,000 and $970,000, respectively.~~ In making these determinations, the Company considered the length of time and extent to which the fair value has been less than cost basis, financial condition and prospects of the issuers and the Company's ability to hold the investment until recovery.

Equity Investment in Galileo.In fiscal year 2013, the Company made an investment in Galileo Global Equity Advisors Inc.that was accounted for under the equity method. Effective June 1, 2014,, the Company acquired an additional 15 percent interest, bringing its ownership to 65 percent of the issued and outstanding shares, which represents a controlling interest. From March 31, 2013, to June 1, 2014,, the Company accounted for its interest in Galileo under the equity method with its share of Galileo’s profit or loss recognized in earnings, including $20,000 in other income in fiscal year 2014. Effective June 1, 2014,, the Company accounted for the Galileo acquisition as a business combination. For additional details, please see Note 318 Business Combination toin the Consolidated Financial Statements of this Annual Report inon Form 10-K.

Operating Expenses


(dollars in thousands)	2015		2014		% Change		2014		2013		% Change		2016		2015		% Change			2015		2014		% Change
Employee compensation and benefits	$	5,890	$	6,806	(13.5	)%	$	6,806	$	8,345	(18.4	)%	$	4,918	$	5,399		(8.9	%)	$	5,399	$	6,312		(14.5	%)
General and administrative	4,275		5,261		(18.7	)%	5,261		5,371		(2.0	)%		3,727		4,123		(9.6	%)		4,123		4,971		(17.1	%)
Platform fees	2,056		1,903		8.0	%	1,903		2,663		(28.5	)%		508		856		(40.7	%)		856		216		296.3	%
Advertising	411		615		(33.2	)%	615		862		(28.7	)%		212		135		57.0	%		135		56		141.1	%
Depreciation and amortization	327		256		27.7	%	256		268		(4.5	)%		316		327		(3.4	%)		327		256		27.7	%
Total operating expenses	$	12,959	$	14,841	(12.7	)%	$	14,841	$	17,509	(15.2	)%
Total													$	9,681	$	10,840		(10.7	%)	$	10,840	$	11,811		(8.2	%)

Employee Compensation and Benefits. Employee compensation and benefits decreased ~~$916,000,~~$481,000, or ~~13.5~~8.9 percent, in fiscal year 2016 and decreased $913,000, or 14.5 percent, in fiscal year 2015 ~~and decreased $1,539,000, or 18.4 percent, in fiscal year 2014~~ as a result of fewer employees and lower performance-based ~~bonuses and fewer employees.~~bonuses.

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General and Administrative. General and administrative expenses decreased ~~$986,000~~$396,000, or 9.6 percent, in fiscal year 2016 due to strategic expense reductions, offset somewhat by fund proxy-related costs of approximately $290,000. General and administrative expenses decreased $848,000, or 17.1 percent, in fiscal year 2015 compared to fiscal year 2014, primarily due to higher fund reimbursements and fund restructuring ~~cost~~costs in ~~the prior~~fiscal year 2014, offset somewhat by the consolidation of twelve months of Galileo expenses in fiscal year 2015 versus one month of Galileo expenses in fiscal year 2014. General and administrative expenses were relatively flat in fiscal year 2014 compared to fiscal year 2013. The change in fiscal year 2014 represents a decrease of approximately $635,000 primarily due to lower fund and operational expenses offset by one-time costs of approximately $525,000, including legal and proxy filing and solicitation costs related to strategic fund changes in the fall of 2013.

Platform Fees. Broker-dealers typically charge an asset-based fee for assets held through their platforms. Platform fees decreased $348,000, or 40.7 percent, in fiscal year 2016 due to lower assets held through broker-dealer platforms. Platform fees increased ~~$153,000,~~$640,000, or ~~8.0~~296.3 percent, in fiscal year 2015 due to consolidation of Galileo fees for twelve months in fiscal year 2015 versus one month in fiscal year ~~2014, but were offset~~2014.

Advertising. Advertising increased by ~~lower assets held through broker-dealer platforms~~$77,000, or 57.0 percent, in fiscal year ~~2015. Platform fees decreased $760,000,~~2016 and increased by $79,000, or 28.5 percent, in fiscal year 2014 due to decreases in assets held through the broker-dealer platforms. The incremental assets received through the broker-dealer platforms are not as profitable as those received from direct shareholder accounts because of platform fees paid to various broker-dealers for the assets held through the platforms.

~~Advertising.~~ ~~Advertising decreased by $204,000, or 33.2~~141.1 percent, in fiscal year 2015 ~~and decreased by $247,000, or 28.7 percent, in fiscal year 2014~~ as a result of ~~reduced~~ marketing ~~and sales costs.~~expenses related to the ETF launched in April 2015.

Income Taxes

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

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. A valuation allowance ~~of $2,073,000 related~~ to fully reserve for the net operating loss carryforward, other carryovers and book/tax differences in the balance sheet is included in deferred taxes at ~~June 30, 2015. A valuation allowance~~in the amount of ~~$35,000 related to the charitable contribution carryover is included in deferred taxes~~$3.1 million at June 30, ~~2014.~~2016, and $2.1 million at June 30, 2015. In assessing the valuation allowance, the Company considered, among other matters, the nature, frequency and severity of recent losses, forecast of future profitability, and the duration of statutory carry back and carry forward periods.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements.

Contractual Obligations

A summary of contractual obligations of the Company as of June 30, ~~2015~~,2016, is as follows:


	Payments due by period
			Less than		1-3		4-5		More than		Payments due by period
Contractual Obligations	Total		1 year		years		years		5 years		Total		Less than 1 year		1-3 years		4-5 years		More than 5 years
(dollars in thousands)
(dollars in thousands)
Operating lease obligations	$	507	$	237	$	270	$	—	$	—	$	461	$	196	$	265	$	-	$	-
Contractual obligations	351		254		97		—		—			308		216		92		-		-
Total	$	858	$	491	$	367	$	—	$	—	$	769	$	412	$	357	$	-	$	-

Operating leases consist of office equipment leased from several vendors and office facilities in Canada. Contractual obligations consist of agreements for services used in daily operations. Other contractual obligations not included in this table consist of agreements to waive or reduce fees and/or pay expenses on certain funds. Future obligations under these agreements are dependent upon future levels of fund assets.

The Board of Directors has authorized a monthly dividend of ~~$0.005~~$0.0025 per share from July ~~2015 through September 2015 and a monthly dividend of $0.0025 from October 2015~~2016 through December ~~2015,~~2016, at which time the Board of Directors will consider continuation of the dividend. 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. Prior to the June 30, 2016, fiscal year-end, the Board of Directors approved monthly dividends from July 2016 to September 2016, and estimated dividends payable of $115,000 for that period is included in the Consolidated Balance Sheets at June 30, 2016. The total amount of cash dividends to be paid to class A and class C shareholders from July ~~2015~~2016 to December ~~2015~~2016 will be approximately $229,000.

~~$345,000.~~23

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Liquidity and Capital Resources

At June 30, ~~2015~~,2016, the Company had net working capital (current assets minus current liabilities) of approximately ~~$19.8~~$16.9 million and a current ratio (current assets divided by current liabilities) of ~~13.1~~14.0 to 1. With approximately ~~$3.5~~$4.0 million in cash and cash equivalents and ~~$19.9~~$13.6 million in securities recorded at fair value, which together comprise approximately 7667 percent of total assets, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity attributable to U.S. Global Investors, Inc. was approximately ~~$28.6 million~~.$24.5 million. Approximately ~~$3.6~~$4.0 million in cash and investments in USCAN and Galileo are included in the amounts above. ~~USGI would~~The Company could be required to accrue and pay taxes to repatriate (i.e., bring back into the U.S.) these funds, and there is no current intention to ~~repatriate.~~repatriate these amounts.

The Company has no long-term debt; thus, the Company’s only material commitment going forward is for operating expenses. The Company also has access to a $1 million credit facility, which can be utilized for working capital purposes. ~~The Company’s available working capital and projected cash flow are expected to be sufficient to cover current expenses.~~As of June 30, 2016, this credit facility remained unutilized by the Company.

Investment advisory contracts pursuant to the Investment Company Act of 1940 and related affiliated contracts in the U.S., by law, may not exceed one year in length and, therefore, must be renewed at least annually after an initial two-year term. The investment advisory and related contracts between the Company or its subsidiaries and USGIF expire in September ~~2016.~~2017. The investment advisory contract between the Company and the ETF client is in its initial two-year term and will not expire until April 2017.

With respect to the Company’s two offshore advisory clients, the contracts between the Company and the clients expire periodically, and management anticipates that its offshore clients will renew the contracts. Galileo’s investment management agreement with Canadian registered mutual funds may be terminated each September 30 with a 180-day prior notice of unitholders’ resolution. Galileo’s advisory agreements with other advisory clients can be terminated upon 30-day written notice.

The primary cash requirements are for operating activities. The Company also uses cash to purchase investments, pay dividends and repurchase Company stock. The cash outlays for investments and dividend payments are discretionary and management or the Board may discontinue as deemed necessary. The stock repurchase plan is approved through December 31, 2016. Although the Company had a net loss of $3.7 million for the year ended June 30, 2016, cash and marketable securities of approximately $17.6 million are available to fund current activities. Certain revenues and expenses have decreased due to the outsourcing to other service providers certain services previously provided to USGIF. The transition has allowed the Company to streamline its responsibilities so it can focus on strategic activities. The Company’s portion of the one-time transition expenses, recorded in the quarter ending December 31, 2015, was approximately $290,000.

Management believes current cash reserves, investments, and financing available ~~financing~~ will be sufficient to meet foreseeable cash needs ~~or capital necessary~~ for ~~the above-mentioned activities and allow the Company to take advantage of investment opportunities whenever available.~~operating activities.

Critical Accounting Estimates

The discussion and analysis of financial condition and results of operations are based on the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses. Management reviews these estimates on an ongoing basis. Estimates are based on experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While recent accounting policies are described in more detail in Note 2 ~~Significant Accounting Policies~~ to the ~~Consolidated Financial Statements of this Annual Report in Form 10-K,~~consolidated financial statements, the Company believes the accounting policies that require management to make assumptions and estimates involving significant judgment are those relating to valuation of investments, income taxes, and valuation of stock-based compensation.

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries: United Shareholder Services, Inc.(“USSI”), U.S. Global Investors (Guernsey) Limited (“USGG”), U.S. Global Investors (Bermuda) Limited (“USBERM”), U.S. Global Brokerage, Inc. (“USGB”), U.S. Global Investors (Canada) Limited (“USCAN”) and U.S. Global Indices, LLC.

As previously discussed, effective June 1, 2014, the Company, through USCAN, completed its purchase of an additional 15 percent interest in Galileo, which ~~brings~~brought USCAN’s ownership to 65 percent of the issued and outstanding shares of Galileo and ~~represents~~represented controlling interest of Galileo. Galileo is consolidated with USCAN and the non-controlling interest in this subsidiary is included in “non-controlling interest in subsidiary” in the equity section of the Consolidated Balance Sheets. After the purchase of the additional interest, Galileo changed its fiscal year end from December 31 to June 30, effective June 30, 2014, to correspond to the Company’s year end. This change was treated as a change in accounting principle.

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The Company’s evaluation for consolidation includes whether entities in which it has an interest are variable interest entities (“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 is not 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 lacks certain characteristics of a controlling financial interest. The primary beneficiary is the entity that has the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or right to receive benefits from the VIE that could potentially be significant to the VIE. If the VIE qualifies for the investment company deferral, 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.

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810-10-65-2 (aa) and thus determines whether it is the primary beneficiary of these entities by virtue of its exposure to the expected losses and expected residual returns of the entity. The Company’s interests in these entities consist of the Company’s direct ownership therein, which in each case is insignificant to the total ownership of the fund, and any fees earned but uncollected. In the ordinary course of business, the Company may choose to waive certain fees or assume operating expenses of the funds it advises for competitive, regulatory or contractual reasons (see No~~te 6~~Note 5 Investment Management and Other Fees to the Consolidated Financial Statements of this Annual Report inon Form 10-K forfor information regarding fee waivers). The Company has not provided financial support to any of these entities outside the ordinary course of business. The Company’s risk of loss with respect to these managed entities is limited to the carrying value of its investments in, and fees receivable from, the entities. The Company does not consolidate these VIEs because it is not the primary beneficiary of these VIEs.

Business Combinations. Business combinations are accounted for under the acquisition method of accounting. Results of operations of an acquired business are included from the date of acquisition. Management estimates the fair value of the acquired assets, including identifiable intangible assets, assumed liabilities, and non-controlling interest in the acquiree based on their estimated fair values as of the date of acquisition. Any excess fair value of the acquired net assets over the acquisition date fair value of the consideration transferred, if any, is recorded as “goodwill” on the Consolidated Balance Sheets. Any excess acquisition date fair value of the consideration transferred over fair value of the acquired net assets is recorded as a gain on the Consolidated Statements of Operations.

Investments. The Company classifies its investments based on intent at the time of purchase and reevaluates such designation as of each reporting period date. The Company records security transactions on trade date. Realized gains (losses) from security transactions are calculated on the first-in/first-out cost basis, unless otherwise identifiable, and are recorded in earnings on the date of sale.

Trading Securities.Securities that are purchased and held principally for the purpose of selling in the near term are classified as trading securities and ~~are~~ reported at fair value. Unrealized ~~holding~~ gains and losses on these securities are included in earnings.

Held-to-Maturity Securities. ~~Investments in debt~~Debt securities that are purchased with the intent and ability to hold until maturity are classified as held-to-maturity and measured at amortized cost. ~~The Company currently has no investments classified as held-to-maturity.~~

Available-for-sale Securities. ~~Investments~~Securities that are neither trading securities nor held-to-maturity securities and for which the Company does not have significant influence are classified as available-for-sale securities and reported at fair value. Unrealized holding gains and losses on these available-for-sale securities are excluded from earnings, reported net of tax as a separate component of shareholders’ equity, and recorded in earnings on the date of sale.

The Company evaluates its available-for-sale investments for other-than-temporary decline in value on a periodic basis. This may exist when the fair value of an investment security has been below the current value for an extended period of time. When a security in the Company’s investment portfolio has an unrealized loss in fair value that is deemed to be other than temporary, the Company reduces the book value of such security to its current fair value, recognizing the credit related decline as a realized loss in the Consolidated Statements of Operations and a revised GAAP cost basis for the security is established. For available-for-sale securities with declines in value deemed other than temporary, the unrealized loss recorded net of tax in accumulated other comprehensive income (loss) is realized as a charge to net income.

Other Investments. Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which do not have readily determinable fair values. These equity investments are accounted for under the cost method of accounting and evaluated for impairment. The Company considers many factors in determining impairment, including the severity and duration of the decline in value below cost, the Company’s interest and ability to hold the security for a period of time sufficient for an anticipated recovery in value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in ~~earnings.~~earnings.

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Fair Value of Financial Instruments. The financial instruments of the Company are reported on the Consolidated Balance Sheets at market or fair values or at carrying amounts that approximate fair values.

~~Table of Contents~~

Intangible Asset.An intangible asset, consisting of a non-compete agreement, acquired in connection with the acquisition of Galileo shares effective June 1, 2014, iswas recorded at fair value determined using a discounted cash flow model as of the date of acquisition. The discounted cash flow model included various factors to project future cash flows expected to be generated from the asset, including: (1) an estimated rate of change for underlying managed assets; (2) expected revenue per managed assets; (3) incremental operating expenses; and (4) a discount rate. Management ~~estimates~~estimated a rate of change for underlying managed assets based on an estimated net redemption or sales rate. Expected revenue per managed assets and incremental operating expenses of the acquired assets ~~are~~was generally based on contract terms.

The Company ~~has~~ determined that the non-compete agreement has a finite useful life. The Company ~~amortizes~~amortized this finite-lived identifiable intangible asset on a straight-line basis over its estimated useful life. Management periodically evaluates the remaining useful lives and carrying values of intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying the intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the finite-lived intangible asset, the Company compares the carrying value of the asset and its related useful life to the projected discounted cash flows expected to be generated from the underlying managed assets over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the discounted cash flows, the asset is written down to its fair value determined using discounted cash flows.

Non-Controlling Interests.The Company reports “non-controlling interest in subsidiary” as equity, separate from parent’s equity, on the Consolidated Balance Sheets. In addition, the Company’s Consolidated Statements of Operations includes “net income (loss) attributable to non-controlling interest.”

Income Taxes.The Company’s annual effective income tax rate is based on the mix of income and losses in its U.S. and non-U.S. entities which are part of the Company’s Consolidated Financial Statements, statutory tax rates, and tax-planning opportunities available to the Company in the various jurisdictions in which it operates. Significant judgment is required in evaluating the Company’s tax positions.

Tax law requires certain items to be included in the tax return at different times from when these items are reflected in the Company’s Consolidated Statements of Operations. As a result, the effective tax rate reflected in the Consolidated Financial Statements is different from the tax rate reported on the Company’s consolidated tax return. Some of these differences are permanent, such as expenses that are not deductible in the tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment dates. In addition, excess tax benefits associated with stock option exercises also create a difference between the tax rate used in the consolidated tax return and the effective tax rate in the Company’s Consolidated Statements of Operations.

The Company assesses uncertain tax positions in accordance with ASC 740, Income Taxes. Judgment is used to identify, recognize, and measure the amounts to be recorded in the financial statements related to tax positions taken or expected to be taken in a tax return. A liability is recognized to represent the potential future obligation to the taxing authority for the benefit taken in the tax return. These liabilities are adjusted, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which a reserve has been established is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction.

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Judgment is used in classifying unrecognized tax benefits as either current or noncurrent liabilities in the Company’s Consolidated Balance Sheets. Settlement of any particular issue would usually require the use of cash. A liability associated with unrecognized tax benefits will generally be classified as a noncurrent liability because there will usually be a period of several years between the filing of the tax return and the final resolution of an uncertain tax position with the taxing authority. Favorable resolutions of tax matters for which reserves have been established are recognized as a reduction to income tax expense when the amounts involved become known.

The Company assesses whether a valuation allowance should be established against its deferred income tax assets based on consideration of available evidence, both positive and negative, using a more likely than not standard. This assessment considers, among other matters, the nature, frequency and severity of recent losses, forecast of future profitability, the duration of statutory carry back and carry forward periods, the Company’s experience with tax attributes expiring unused, and tax planning alternatives.

Assessing the future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations or cash flows.

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Stock-Based Compensation. 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. No options were granted in fiscal years 2016, 2015, ~~2014~~ or ~~2013.~~2014.

The Company believes that the estimates related to stock-based compensation expense are critical accounting estimates because the assumptions used could significantly impact the timing and amount of stock-based compensation expense recorded in the Company’s Consolidated Financial Statements.

Foreign Exchange. The balance sheets of certain foreign subsidiaries of the Company and certain foreign-denominated investment products are translated at the current exchange rate as of the end of the accounting period and the related income or loss is translated at the average exchange rate in effect during the period. Net exchange gains and losses resulting from ~~these~~balance sheet translations of foreign subsidiaries are excluded from income and are recorded in “accumulated other comprehensive income (loss)” on the Consolidated Balance Sheets. Net exchange gains and losses resulting from income or loss translations are included in income and are recorded in “investment income (loss)” on the Consolidated Statements of Operations. Investment transactions denominated in foreign currencies are converted to U.S. dollars using the exchange rate on the date of the transaction and any related gain or loss is included in “investment income (loss)” on the Consolidated Statements of Operations.

Recent Accounting Pronouncements. See information regarding accounting pronouncements that have been issued but not yet adopted by the Company in Note 2, Significant Accounting Policies, to the Consolidated Financial Statements of this Annual Report on Form 10-K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

~~Market Risk Disclosures~~

Market Risk Disclosures

The following information, together with information included in other parts of this Management’s Discussion and Analysis of Financial Condition and Results of Operations, describes the key aspects of certain financial instruments that have market risk to the Company.

Investment Management and Administrative Services Fees

Revenues are generally based upon a percentage of the market value of assets under management in accordance with contractual agreements. Accordingly, fluctuations in the financial markets have a direct effect on the Company’s operating results. A significant portion of assets under management in equity funds have exposure to international markets and/or natural resource sectors, which may experience volatility. In addition, fluctuations in interest rates may affect the value of assets under management in fixed income funds.

Performance Fees

USGIF advisory fees are comprised of two 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 rolling 12 months.

As a result, the Company’s revenues are subject to volatility beyond market-based fluctuations discussed in the investment management and administrative fees section above. For the years ended June 30, 2016, 2015, and 2014, the Company realized a decrease in its USGIF base advisory fee of $132,000; $1.0 million; and $815,000, respectively, due to these performance adjustments.

The Company also may receive performance fees from its offshore advisory clients based on the overall increase in net asset values, if any. The Company recorded no performance fees from these clients for the years ended June 30, 2016, and 2015, and $4,000 for the year ended June 30, 2014.

Corporate Investments

The Company’s Consolidated Balance Sheets includes assets whose fair value is subject to market risk. Due to the Company’s investments in securities recorded at fair value, price fluctuations represent a market risk factor affecting the Company’s consolidated financial position. The carrying values of investments subject to price risks are based on quoted market prices or, if not actively traded, management’s estimate of fair value as of the balance sheet date. Market prices fluctuate, and the amount realized in the subsequent sale of an investment may differ significantly from the reported market value.

The Company’s investment activities are reviewed and monitored by Company compliance personnel, and various reports are provided to certain investment advisory clients. Written procedures are in place to manage compliance with the code of ethics and other policies affecting the Company’s investment practices.

The table below summarizes the Company’s equity price risks as of June 30, ~~2015,~~2016, and shows the effects of a hypothetical 25 percent increase and a 25 percent decrease in market prices.

(dollars in thousands) Fair Value
Hypothetical
Percentage Change

Estimated Fair
Value After
Hypothetical Price
Change

Increase (Decrease) in
Shareholders’ Equity,
Net of Tax
Trading securities ¹
$ 15,640
25% increase $ 19,550
$ 3,910
25% decrease 11,730
(3,910 )
Available-for-sale ²
4,263
25% increase 5,329
1,066
25% decrease 3,197
(1,066 )

(dollars in thousands)	Fair Value at June 30, 2016		Hypothetical Percentage Change	Estimated Fair Value After Hypothetical Price Change		Increase (Decrease) in Shareholders' Equity, Net of Tax
Trading securities ¹	$	10,104	25% increase	$	12,630	$	2,526
			25% decrease	$	7,578	$	(2,526	)
Available-for-sale ²	$	3,481	25% increase	$	4,351	$	870
			25% decrease	$	2,611	$	(870	)


^1.	Unrealized and realized gains and losses on trading securities are included in earnings in the Consolidated Statements of Operations.


^2.	Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a component of shareholders’ equity until realized.

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The selected hypothetical changes do not reflect what could be considered best- or worst-case scenarios. Results could be significantly different due to both the nature of equity markets and the concentration of the Company’s investment portfolio.

Foreign currency risk

The Company’s subsidiary Galileo conducts its business in Canada. We translate Galileo’s foreign currency financial statements into U.S. dollars in the financial statement consolidation process. Adverse changes in foreign currency exchange rates would lower the carrying value of Galileo’s assets and reduce its results in the consolidated U.S. financial statements. For the year ended June 30, 2016, Galileo represented 21.1 percent of net operating revenues, 3.3 percent of loss from continuing operations before taxes, and 6.1 percent of total assets (see Note 17, Financial Information by Business Segment, to the Consolidated Financial Statements of this Annual Report on Form 10-K). Certain corporate investments are held in foreign currencies. Adverse changes in foreign currency exchange rates would also lower the value of those corporate investments. Certain assets under management also have exposure to foreign currency fluctuations in various markets, which could impact their valuation and thus the revenue received by the Company.

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Item 8. Financial Statements and Supplementary Data

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements

~~Report of Independent Registered Public Accounting Firm on Consolidated~~

~~Financial Statements~~

Board of Directors and Stockholders

U.S. Global Investors, Inc.

San Antonio, Texas

We have audited the accompanying Consolidated Balance Sheets of U.S. Global Investors, Inc. (the “Company”) as of June 30, ~~2015~~2016 and ~~2014~~2015 and the related Consolidated Statements of Operations, Comprehensive Income (Loss), Shareholders’ Equity, and Cash Flows for each of the three years in the period ended June 30, ~~2015.~~2016. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of U.S. Global Investors, Inc. at June 30, ~~2015~~2016 and ~~2014,~~2015, and the results of its operations and its cash flows for each of the three years in the period ended June 30, ~~2015~~,2016, in conformity with accounting principles generally accepted in the United States of

America.

/s/ BDO USA, LLP

BDO USA, LLP

Dallas, Texas

September 14, 2016

~~/s/ BDO USA, LLP~~

~~BDO USA, LLP~~

~~Dallas, Texas~~

~~September 16, 2015~~

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U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS


Assets	June 30, 2015			June 30, 2014			June 30, 2016			June 30, 2015
(dollars in thousands)
Current Assets
Cash and cash equivalents	$	3,507		$	5,910		$	3,993		$	3,507
Trading securities, at fair value	15,640			17,817
Receivables	1,837			2,513
Restricted cash								1,000			-
Investment securities - trading, at fair value								10,104			15,640
Accounts and other receivables								787			1,653
Note receivable								2,000			-
Prepaid expenses	410			525				290			410
Deferred tax asset	—			51
Total assets held related to discontinued operations								-			184
Total Current Assets	21,394			26,816				18,174			21,394

Net Property and Equipment	2,736			3,024				2,466			2,736

Other Assets
Deferred tax asset, long-term	—			298
Investment securities available-for-sale, at fair value	4,263			6,196
Investment securities - available-for-sale, at fair value								3,481			4,263
Other investments	2,303			1,413				1,924			2,303
Note receivable, long term								212			-
Intangible assets, net	41			86				-			41
Other assets, long term	33			13				89			33
Total Other Assets	6,640			8,006				5,706			6,640
Total Assets	$	30,770		$	37,846		$	26,346		$	30,770
Liabilities and Shareholders’ Equity
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable	$	119		$	219		$	148		$	114
Accrued compensation and related costs	456			581				451			456
Dividends payable	231			232				115			231
Other accrued expenses	821			1,064				586			692
Total liabilities held related to discontinued operations	—			47				-			134
Total Current Liabilities	1,627			2,143				1,300			1,627
Commitments and Contingencies (Note 19)
Shareholders’ Equity
Common stock (class A) - $0.025 par value; nonvoting; authorized, 28,000,000 shares; issued,13,866,421 and 13,866,361 shares at June 30, 2015, and June 30, 2014, respectively	347			347

Commitments and Contingencies (Note 20)

Shareholders' Equity
Common stock (class A) - $0.025 par value; nonvoting; authorized, 28,000,000 shares; issued, 13,866,421 at June 30, 2016, and June 30, 2015								347			347
Common stock (class B) - $0.025 par value; nonvoting; authorized, 4,500,000 shares; no shares issued	—			—				-			-
Convertible common stock (class C) - $0.025 par value; voting; authorized, 3,500,000 shares; issued, 2,069,127 and 2,069,187 shares at June 30, 2015, and June 30, 2014, respectively	52			52
Convertible common stock (class C) - $0.025 par value; voting; authorized, 3,500,000 shares; issued, 2,069,127 shares at June 30, 2016, and June 30, 2015								52			52
Additional paid-in-capital	15,694			15,669				15,651			15,694
Treasury stock, class A shares at cost; 555,786 and 501,518 shares at June 30, 2015, and June 30, 2014, respectively	(1,464		)	(1,280		)
Accumulated other comprehensive income (loss), net of tax	(483		)	906
Treasury stock, class A shares at cost; 688,700 and 555,786 shares at June 30, 2016, and June 30, 2015, respectively								(1,663	)		(1,464	)
Accumulated other comprehensive loss, net of tax								(149	)		(483	)
Retained earnings	14,423			19,376				10,290			14,423
Total U.S. Global Investors, Inc. Shareholders’ Equity	28,569			35,070
Total U.S. Global Investors Inc. Shareholders' Equity								24,528			28,569
Non-Controlling Interest in Subsidiary	574			633				518			574
Total Shareholders’ Equity	29,143			35,703
Total Liabilities and Shareholders’ Equity	$	30,770		$	37,846
Total Shareholders' Equity								25,046			29,143
Total Liabilities and Shareholders' Equity							$	26,346		$	30,770

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

Year Ended June 30,
(dollars in thousands, except per share data) 2015
2014
2013
Operating Revenues
Advisory fees $ 6,682
$ 7,760
$ 12,189
Distribution fees 1,408
1,974
2,817
Shareholder services fees 630
931
1,383
Administrative services fees 651
774
929
9,371
11,439
17,318
Operating Expenses
Employee compensation and benefits 5,890
6,806
8,345
General and administrative 4,275
5,261
5,371
Platform fees 2,056
1,903
2,663
Advertising 411
615
862
Depreciation and amortization 327
256
268
12,959
14,841
17,509
Operating Loss (3,588 ) (3,402 ) (191 )
Other Income
Investment income 434
2,145
208
Equity in earnings of Galileo
—

20

54
Total Other Income 434
2,165
262
Income (Loss) from Continuing Operations Before Income Taxes (3,154 ) (1,237 ) 71
Provision for Federal Income Taxes
Tax expense (benefit) 822
(517 ) 100
Loss from Continuing Operations (3,976 ) (720 ) (29 )
Discontinued Operations
   Loss from operations of discontinued transfer agent —
(368 ) (250 )
   Tax benefit —
(125 ) (85 )
Loss from Discontinued Operations —
(243 ) (165 )
Net Loss
(3,976 )
(963 )
(194 )
Less: Net Income Attributable to Non-Controlling Interest
54

7

—
Net Loss Attributable to U.S. Global Investors, Inc.
$ (4,030 )
$ (970 )
$ (194 )

Earnings Per Share Attributable to U.S. Global Investors, Inc.
Basic
   Loss from continuing operations $ (0.26 ) $ (0.04 ) $ 0.00
   Loss from discontinued operations 0.00
(0.02 ) (0.01 )
   Net loss $ (0.26 ) $ (0.06 ) $ (0.01 )
Diluted
   Loss from continuing operations $ (0.26 ) $ (0.04 ) $ 0.00
   Loss from discontinued operations 0.00
(0.02 ) (0.01 )
   Net loss $ (0.26 ) $ (0.06 ) $ (0.01 )

Basic weighted average number of common shares outstanding 15,399,831
15,459,022
15,482,612
Diluted weighted average number of common shares outstanding 15,399,831
15,459,022
15,482,612

~~The accompanying notes are an integral part of these consolidated financial statements.~~

~~Table of Contents~~

~~U.S. GLOBAL INVESTORS, INC.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)~~

Year Ended June 30,
(dollars in thousands) 2015 2014 2013
Net Loss Attributable to U.S. Global Investors, Inc. $ (4,030 ) $ (970 ) $ (194 )
Other Comprehensive Income (Loss), Net of Tax:

Unrealized gains (losses) on available-for-sale securities arising during period (1,000 ) 923
350
Less: reclassification adjustment for gains included in net income (227 ) (687 ) (164 )
Net change from available-for-sale investments, net of tax (1,227 ) 236
186
Foreign currency translation adjustments (248 ) 27
—
Other Comprehensive Income (Loss) (1,475 ) 263
186
Comprehensive Loss (5,505 ) (707 ) (8 )
Less: Comprehensive Income Attributable to Non-Controlling Interest (86 ) 9
—
Comprehensive Loss Attributable to U.S. Global Investors, Inc. $ (5,419 ) $ (716 ) $ (8 )

	Year Ended June 30,
(dollars in thousands, except per share data)	2016			2015			2014
Operating Revenues
Advisory fees	$	5,185		$	6,682		$	7,760
Administrative services fees		320			651			774
		5,505			7,333			8,534
Operating Expenses
Employee compensation and benefits		4,918			5,399			6,312
General and administrative		3,727			4,123			4,971
Platform fees		508			856			216
Advertising		212			135			56
Depreciation and amortization		316			327			256
		9,681			10,840			11,811
Operating Loss		(4,176	)		(3,507	)		(3,277	)
Other Income
Investment income		485			434			2,145
Equity in earnings of Galileo		-			-			20
Total Other Income		485			434			2,165
Loss from Continuing Operations Before Income Taxes		(3,691	)		(3,073	)		(1,112	)
Provision for Federal Income Taxes
Tax expense (benefit)		(6	)		822			(475	)
Loss from Continuing Operations		(3,685	)		(3,895	)		(637	)
Discontinued Operations
Loss from discontinued operations of transfer agent before income taxes		-			-			(368	)
Tax benefit		-			-			(125	)
Loss from discontinued operations of distributor before income taxes		(18	)		(81	)		(125	)
Tax benefit		-			-			(42	)
Loss from Discontinued Operations		(18	)		(81	)		(326	)
Net Loss		(3,703	)		(3,976	)		(963	)
Less: Net Income (Loss) Attributable to Non-Controlling Interest		(28	)		54			7
Net Loss Attributable to U.S. Global Investors, Inc.	$	(3,675	)	$	(4,030	)	$	(970	)

Net Loss Per Share Attributable to U.S. Global Investors, Inc.
Basic
Loss from continuing operations	$	(0.24	)	$	(0.25	)	$	(0.04	)
Loss from discontinued operations		-			(0.01	)		(0.02	)
Net loss	$	(0.24	)	$	(0.26	)	$	(0.06	)
Diluted
Loss from continuing operations	$	(0.24	)	$	(0.25	)	$	(0.04	)
Loss from discontinued operations		-			(0.01	)		(0.02	)
Net loss	$	(0.24	)	$	(0.26	)	$	(0.06	)

Basic weighted average number of common shares outstanding		15,294,893			15,399,831			15,459,022
Diluted weighted average number of common shares outstanding		15,294,893			15,399,831			15,459,022

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF ~~SHAREHOLDERS’ EQUITY~~COMPREHENSIVE INCOME (LOSS)

(dollars in thousands)
Common
Stock
(class A)

Common
Stock
(class C)

Additional
Paid-in
Capital

Treasury
Stock

Accumulated
Other
Comprehensive
Income (Loss)

Retained
Earnings
Non-Controlling Interest Total
Balance at June 30, 2012 (13,862,505 shares of class A; 2,073,043 shares of class C) $ 347
$ 52
$ 15,548
$ (1,107 ) $ 466
$ 23,404
$ —
$ 38,710
Purchases of 55,052 shares of common stock (class A) —
—
—
(174 ) —
—
—
(174 )
Issuance of stock under ESPP of 48,679 shares of common stock (class A) —
—
69
116
—
—
—
185
Conversion of 2,516 shares of class C common stock for class A common stock —
—
—
—
—
—
—
—
Dividends declared —
—
—
—
—
(1,937 ) —
(1,937 )
Stock bonuses —
—
28
36
—
—
—
64
Stock-based compensation expense —
—
9
—
—
—
—
9
Other comprehensive income, net of tax —
—
—
—
186
—
—
186
Net loss —
—
—
—
—
(194 ) —
(194 )
Balance at June 30, 2013 (13,865,021 shares of class A; 2,070,527 shares of class C) 347
52
15,654
(1,129 ) 652
21,273
—
36,849
Purchases of 93,351 shares of common stock (class A) —
—
—
(289 ) —
—
—
(289 )
Issuance of stock under ESPP of 52,191 shares of common stock (class A) —
—
27
129
—
—
—
156
Conversion of 1,340 shares of class C common stock for class A common stock —
—
—
—
—
—
—
—
Dividends declared —
—
—
—
—
(927 ) —
(927 )
Stock bonuses —
—
2
9
—
—
—
11
Stock-based compensation expense —
—
(14 ) —
—
—
—
(14 )
Galileo acquisition - non-controlling interest 617
617
Other comprehensive income, net of tax —
—
—
—
254
—
9
263
Net loss —
—
—
—
—
(970 ) 7
(963 )
Balance at June 30, 2014 (13,866,361 shares of class A; 2,069,187 shares of class C) 347
52
15,669
(1,280 ) 906
19,376
633
35,703
Purchases of 95,251 shares of common stock (class A) —
—
—
(292 ) —
—
—
(292 )
Issuance of stock under ESPP of 37,383 shares of common stock (class A) —
—
23
98
—
—
—
121
Conversion of 60 shares of class C common stock for class A common stock —
—
—
—
—
—
—
—
Dividends declared —
—
—
—
—
(923 ) —
(923 )
Stock bonuses —
—
2
10
—
—
—
12
Distribution to non-controlling interests in subsidiary —
—
—
—
—
—
(27 ) (27 )
Other comprehensive income, net of tax —
—
—
—
(1,389 ) —
(86 ) (1,475 )
Net loss —
—
—
—
—
(4,030 ) 54
(3,976 )
Balance at June 30, 2015 (13,866,421 shares of class A; 2,069,127 shares of class C) $ 347
$ 52
$ 15,694
$ (1,464 ) $ (483 ) $ 14,423
$ 574
$ 29,143

	Year Ended June 30,
(dollars in thousands)	2016			2015			2014
Net Loss Attributable to U.S. Global Investors, Inc.	$	(3,675	)	$	(4,030	)	$	(970	)
Other Comprehensive Income (Loss), Net of Tax:
Unrealized gains (losses) on available-for-sale securities arising during period		657			(1,000	)		923
Less: reclassification adjustment for gains/losses included in net income		(273	)		(227	)		(687	)
Net change from available-for-sale investments, net of tax		384			(1,227	)		236
Foreign currency translation adjustment		(78	)		(248	)		27
Other Comprehensive Income (Loss)		306			(1,475	)		263
Comprehensive Loss		(3,369	)		(5,505	)		(707	)
Less: Comprehensive Income (Loss) Attributable to Non-Controlling Interest		(28	)		(86	)		9
Comprehensive Loss Attributable to U.S. Global Investors, Inc.	$	(3,341	)	$	(5,419	)	$	(716	)

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY

Year Ended June 30,
(dollars in thousands) 2015 2014 2013
Cash Flows from Operating Activities:
Net loss $ (3,976 ) $ (963 ) $ (194 )
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:

Depreciation and amortization 327
259
275
Net recognized loss on disposal of property and equipment 26
26
—
Net recognized loss (gain) on securities (313 ) (878 ) 26
Gain on acquisition of Galileo —
(290 ) —
Net income from equity method investment —
(20 ) (54 )
Provision for deferred taxes 807
387
9
Stock bonuses 12
11
64
Stock-based compensation expense —
1
9
Changes in operating assets and liabilities:
Accounts receivable 655
(634 ) 617
Prepaid expenses 86
109
1
Trading securities 2,176
(13,222 ) 213
Accounts payable and accrued expenses (472 ) 25
(505 )
Total adjustments 3,304
(14,226 ) 655
Net cash provided by (used in) operating activities (672 ) (15,189 ) 461
Cash Flows from Investing Activities:
Purchase of property and equipment (40 ) (30 ) (39 )
Purchase of Galileo shares —
—
(600 )
Cash acquired in excess of payment to acquire Galileo shares —
1,236
—
Purchase of available-for-sale securities (186 ) (1,317 ) (473 )
Purchase of other investments (1,000 ) (1,187 ) —
Proceeds on sale of available-for-sale securities 795
5,305
744
Proceeds from other investment 5
—
—
Return of capital on investments 36
43
—
Net cash provided by (used in) investing activities (390 ) 4,050
(368 )
Cash Flows from Financing Activities:
Issuance of common stock 121
156
185
Repurchases of common stock (292 ) (289 ) (174 )
Distributions to non-controlling interests in subsidiary (27 ) —
—
Dividends paid (924 ) (928 ) (2,632 )
Net cash used in financing activities (1,122 ) (1,061 ) (2,621 )
Effect of exchange rate changes on cash and cash equivalents (219 ) 25
—
Net decrease in cash and cash equivalents (2,403 ) (12,175 ) (2,528 )
Beginning cash and cash equivalents 5,910
18,085
20,613
Ending cash and cash equivalents $ 3,507
$ 5,910
$ 18,085

Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes $ 8
$ —
$ 118

(dollars in thousands)	Common Stock (class A)		Common Stock (class C)		Additional Paid-in Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non- Controlling Interest			Total
Balance at June 30, 2013 (13,865,021 shares of class A; 2,070,527 shares of class C)	$	347	$	52	$	15,654		$	(1,129	)	$	652		$	21,273		$	-		$	36,849
Purchases of 93,351 shares of Common Stock (class A)		-		-		-			(289	)		-			-			-			(289	)
Issuances of stock under ESPP of 52,191 shares of Common Stock (class A)		-		-		27			129			-			-			-			156
Conversion of 1,340 shares of class C common stock for class A common stock		-		-		-			-			-			-			-			-
Dividends declared		-		-		-			-			-			(927	)		-			(927	)
Stock bonuses		-		-		2			9			-			-			-			11
Stock-based compensation expense		-		-		(14	)		-			-			-			-			(14	)
Galileo acquisition - non-controlling interest		-		-		-			-			-			-			617			617
Other comprehensive income, net of tax		-		-		-			-			254			-			9			263
Net income (loss)		-		-		-			-			-			(970	)		7			(963	)
Balance at June 30, 2014 (13,866,361 shares of class A; 2,069,187 shares of class C)		347		52		15,669			(1,280	)		906			19,376			633			35,703
Purchases of 95,251 shares of Common Stock (class A)		-		-		-			(292	)		-			-			-			(292	)
Issuance of stock under ESPP of 37,383 shares of Common Stock (class A)		-		-		23			98			-			-			-			121
Conversion of 60 shares of class C common stock for class A common stock		-		-		-			-			-			-			-			-
Dividends declared		-		-		-			-			-			(923	)		-			(923	)
Stock bonuses		-		-		2			10			-			-			-			12
Distribution to non-controlling interests in subsidiary		-		-		-			-			-			-			(27	)		(27	)
Other comprehensive income, net of tax		-		-		-			-			(1,389	)		-			(86	)		(1,475	)
Net income (loss)		-		-		-			-			-			(4,030	)		54			(3,976	)
Balance at June 30, 2015 (13,866,421 shares of class A; 2,069,127 shares of class C)		347		52		15,694			(1,464	)		(483	)		14,423			574			29,143
Purchases of 177,998 shares of Common Stock (class A)		-		-		-			(313	)		-			-			-			(313	)
Issuance of stock under ESPP of 39,084 shares of Common Stock (class A)		-		-		(40	)		99			-			-			-			59
Dividends declared		-		-		-			-			-			(458	)		-			(458	)
Stock bonuses		-		-		(3	)		15			-			-			-			12
Other comprehensive income, net of tax		-		-		-			-			334			-			(28	)		306
Net loss		-		-		-			-			-			(3,675	)		(28	)		(3,703	)
Balance at June 30, 2016 (13,866,421 shares of class A; 2,069,127 shares of class C	$	347	$	52	$	15,651		$	(1,663	)	$	(149	)	$	10,290		$	518		$	25,046

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended June 30,
(dollars in thousands)	2016			2015			2014
Cash Flows from Operating Activities:
Net loss	$	(3,703	)	$	(3,976	)	$	(963	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		316			327			259
Net recognized loss on disposal of fixed assets		3			26			26
Net recognized gain on securities		(13	)		(313	)		(878	)
Gain on acquisition of Galileo		-			-			(290	)
Net income from equity method investment		-			-			(20	)
Provision for deferred taxes		-			807			387
Stock bonuses		12			12			11
Stock-based compensation expense		-			-			1
Changes in operating assets and liabilities:
Accounts receivable		1,046			655			(634	)
Prepaid expenses		63			86			109
Trading securities		5,509			2,176			(13,222	)
Accounts payable and accrued expenses		(200	)		(472	)		25
Total adjustments		6,736			3,304			(14,226	)
Net cash provided by (used in) operating activities		3,033			(672	)		(15,189	)
Cash Flows from Investing Activities:
Purchase of property and equipment		(13	)		(40	)		(30	)
Cash acquired in excess of payment to acquire Galileo shares		-			-			1,236
Purchase of available-for-sale securities		(155	)		(186	)		(1,317	)
Purchase of other investments		(751	)		(1,000	)		(1,187	)
Payment to acquire note receivable		(2,000	)		-			-
Proceeds on sale of available-for-sale securities		1,386			795			5,305
Proceeds from other investment		751			5			-
Return of capital on investments		136			36			43
Net cash provided by (used in) investing activities		(646	)		(390	)		4,050
Cash Flows from Financing Activities:
Increase in restricted cash		(1,000	)		-			-
Issuance of common stock		59			121			156
Repurchases of common stock		(313	)		(292	)		(289	)
Distributions to non-controlling interests in subsidiary		-			(27	)		-
Dividends paid		(574	)		(924	)		(928	)
Net cash used in financing activities		(1,828	)		(1,122	)		(1,061	)
Effects of foreign currency translation		(73	)		(219	)		25
Net increase (decrease) in cash and cash equivalents		486			(2,403	)		(12,175	)
Beginning cash and cash equivalents		3,507			5,910			18,085
Ending cash and cash equivalents	$	3,993		$	3,507		$	5,910

Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes	$	49		$	8		$	-

The accompanying notes are an integral part of these consolidated financial statements.



~~Notes to Consolidated Financial Statements~~

Table of Contents

Notes to Consolidated Financial Statements

NOTE 1. ORGANIZATION

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) serves as investment adviser to U.S. Global Investors ~~funds~~Funds (“USGIF” or the “Fund(s)”), a Delaware statutory trust that is a no-load, open-end investment company offering shares in numerous mutual funds to the investing public. The Company also provides administrative services ~~and distribution~~ to ~~USGIF and through December 6, 2013, provided transfer agency functions.~~USGIF. For these services, the Company receives fees from USGIF. It also provided to USGIF transfer agent functions through December 6, 2013, and distribution services through December 9, 2015. The Company also provides advisory services to offshore clients and an SEC registered exchange traded fund (“ETF”). Effective June 1, 2014, the Company holds a controlling interest in Galileo Global Equity Advisors Inc. (“Galileo”), a privately held Toronto-based asset management firm. See Note 2 Significant Accounting Policies and Note 318 Business Combination for additional information on the acquisition of controlling interest of Galileo.

U.S. Global formed the following companies to provide transfer agent and distribution services to USGIF: United Shareholder Services, Inc. (“USSI”) and U.S. Global Brokerage, Inc. (“USGB”). USSI, which ceased operations in fiscal 2014, was legally dissolved in December 2015. USGB ceased operations in December 2015 as discussed in Note 3.

The Company formed three subsidiaries utilized primarily for corporate investment purposes: U.S. Global Investors (Guernsey) Limited (“USGG”), incorporated in Guernsey (on August 3, 2013, USGG was dissolved); U.S. Global Investors (Bermuda) Limited (“USBERM”), incorporated in Bermuda; and U.S. Global Investors (Canada) Limited (“USCAN”), formed in March 2013. In July 2013, the Company created U.S. Global Indices, LLC, a Texas limited liability company, of which the Company is the sole member, to provide indexing services to exchange-traded funds managed by the ~~Company.~~Company.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: USSI, USGB, USGG, USBERM, USCAN and U.S. Global Indices, LLC.

In addition, effective June 1, 2014, the Company, through USCAN, completed its purchase of an additional 15 percent interest in Galileo from the company’s founder, Michael Waring. This ~~additional~~strategic investment ~~brings~~brought USCAN’s ownership to 65 percent of the issued and outstanding shares of Galileo, ~~and~~which represents a controlling interest of Galileo. ~~With the additional investment, the Company expects to increase its presence in Canada.~~ Galileo is consolidated with USCAN and the non-controlling interest in this subsidiary is included in “non-controlling interest in subsidiary” in the equity section of the Consolidated Balance Sheets. See Note 318 Business Combination for additional information. After the purchase of the additional interest, Galileo changed its fiscal year end from December 31 to June 30, effective June 30, 2014, to correspond to the Company’s year end. This change was treated as a change in accounting principle.

The Company holds variable interests in, but is not deemed to be the primary beneficiary of, the funds it advises. The Company has determined that these entities qualify for the Investment Company deferral in ASC 810-10-65-2 (aa) and thus determines whether it is the primary beneficiary of these entities by virtue of its exposure to the expected losses and expected residual returns of the entity. The Company’s interests in these entities consist of the Company’s direct ownership therein, which in each case is insignificant to the total ownership of the fund, and any fees earned but uncollected. In the ordinary course of business, the Company may choose to waive certain fees or assume operating expenses of the funds it advises for competitive, regulatory or contractual reasons (see No~~te 6~~Note 5 Investment Management and Other Fees forfor information regarding fee waivers). The Company has not provided financial support to any of these entities outside the ordinary course of business. The Company’s risk of loss with respect to these managed entities is limited to the carrying value of its investments in, and fees receivable from, the entities. The Company does not consolidate these VIEs because it is not the primary beneficiary of these VIEs.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes.

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Business Combinations. Business combinations are accounted for under the acquisition method of accounting. Results of operations of an acquired business are included from the date of acquisition. Management estimates the fair value of the acquired assets, including identifiable intangible assets, assumed liabilities, and non-controlling interest in the acquiree based on their estimated fair values as of the date of acquisition. Any excess acquisition date fair value of the consideration transferred over fair value of the acquired net assets, if any, is recorded as “goodwill” on the Consolidated Balance Sheets. Any excess fair value of the acquired net assets over the acquisition date fair value of the consideration transferred is recorded as a gain on the Consolidated Statements of Operations.

Cash and Cash Equivalents. Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Restricted Cash. Restricted cash represents cash invested in a money market account as collateral for the credit facility that is not available for general corporate use.

Investments.The Company classifies its investments based on intent at the time of purchase and reevaluates such designation as of each reporting period date. The Company records security transactions on trade date. Realized gains (losses) from security transactions are calculated on the first-in/first-out cost basis, unless otherwise identifiable, and are recorded in earnings on the date of sale.

Trading Securities.Securities that are purchased and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value. Unrealized gains and losses on these securities are included in Investment income (loss).

Held-to-Maturity Securities. ~~Investments in debt~~Debt securities that are purchased with the intent and ability to hold until maturity are classified as held-to-maturity and measured at amortized cost. The Company currently has no investments in held-to-maturity securities.

Available-for-sale Securities. ~~Investments~~Securities that are neither trading securities nor held-to-maturity securities and for which the Company does not have significant influence are classified as available-for-sale securities and reported at fair value. Unrealized gains and losses on these available-for-sale securities are excluded from earnings, reported net of tax as a separate component of shareholders’ equity, and recorded in earnings on the date of sale.

Other Investments.Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which do not have readily determinable fair values. These equity investments are accounted for under the cost method of accounting and evaluated for impairment. The Company considers many factors in determining impairment, including the severity and duration of the decline in value below cost, the Company’s interest and ability to hold the security for a period of time sufficient for an anticipated recovery in value, and the financial condition and specific events related to the issuer.

Equity Method Investments. Investments classified as equity method consist of investments in companies in which the Company is able to exercise significant influence but not control. Under the equity method of accounting, the Company’s proportional share of investee’s underlying net income or loss is recorded as a component of “other income” with a corresponding increase or decrease to the carrying value of the investment. Distributions received from the investee reduce the Company’s carrying value of the investment. These investments are evaluated for impairment if events or circumstances arise that indicate that the carrying amount of such assets may not be recoverable. No impairment was recognized for the Company’s equity method investment during the years presented. No investments were held at June 30, ~~2015~~2016, or ~~2014~~2015 that are accounted for using the equity method. See Note 318 Business Combination for further information.

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Receivables.Receivables other than notes receivable consist primarily of ~~monthly~~ advisory and other fees owed to the Company by ~~USGIF as well as receivables related to ETF and offshore investment advisory fees.~~clients. Receivables also include advisory fees owed to Galileo by the funds and clients it manages. ~~Management considers~~The Company also invests in notes receivable. Notes receivable are recorded in accordance with the terms of the agreement, and accrued interest is recorded when earned. The Company reviews the need for an allowance for credit losses for notes and other receivables based on various factors including ~~current sales amounts,~~payment history, historical ~~charge-offs~~bad debt experience, aging and specific accounts identified as high risk. Uncollectible ~~accounts receivable,~~receivables, if any, are charged against the allowance ~~for doubtful accounts~~ when all reasonable efforts to collect the amounts due have been exhausted. The Company had no allowance for ~~doubtful accounts~~credit losses as of June 30, ~~2015, and~~ ~~2014~~.2016, or 2015.

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Property and Equipment.Fixed assets are recorded at cost. Except for Galileo, depreciation for fixed assets is recorded using the straight-line method over the estimated useful life of each asset as follows: furniture and equipment are depreciated over 3 to 10 years, and the building and related improvements are depreciated over 14 to 40 years. Galileo fixed assets, consisting of furniture, equipment and leasehold improvements, are depreciated over 2 to 5 years.

Impairment of Long-Lived Assets.The Company reviews property and equipment and other long-lived assets for impairment whenever events or changes in business circumstances indicate the net book values of the assets may not be recoverable. Impairment is indicated when the assets’ net book value is less than fair value of the asset. If this occurs, an impairment loss is recognized for the difference between the fair value and net book value. Factors that indicate potential impairment include: a significant decrease in the market value of the asset or a significant change in the asset’s physical condition or use. No impairments of long-lived assets were recorded during the years included in these financial statements.

The Company ~~has~~ determined that the non-compete agreement has a finite useful life. The Company ~~will amortize~~amortized this finite-lived identifiable intangible asset on a straight-line basis over its estimated useful life ~~currently expected to be approximately~~of 2 years. Management periodically evaluates the remaining useful lives and carrying values of intangible assets to determine whether events and circumstances indicate that a change in the useful life or impairment in value may have occurred. Indicators of impairment monitored by management include a decline in the level of managed assets, changes to contractual provisions underlying the intangible assets and reductions in underlying operating cash flows. Should there be an indication of a change in the useful life or impairment in value of the finite-lived intangible asset, the Company compares the carrying value of the asset and its related useful life to the projected discounted cash flows expected to be generated from the underlying managed assets over its remaining useful life to determine whether impairment has occurred. If the carrying value of the asset exceeds the discounted cash flows, the asset is written down to its fair value determined using discounted cash flows.

Treasury Stock. Treasury stock purchases are accounted for under the cost method. The subsequent issuances of these shares are accounted for based on their weighted-average cost basis.

Income ~~Taxes.~~Taxes. The Company and its non-Canadian subsidiaries file a consolidated federal income tax return. USCAN and Galileo file separate tax returns 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. The liability method requires that deferred tax assets be reduced by a valuation allowance in cases where it is more likely than not that the deferred tax assets will not be realized.

The Company accounts for income taxes in accordance with ASC 740, Income ~~Taxes.~~Taxes. The Company’s policy is to recognize interest and penalties related to uncertain tax positions in income tax expense. As of June 30, ~~2015~~,2016, the Company did not have any accrued interest or penalties related to uncertain tax positions. The tax years from ~~2011~~2012 through ~~2014~~2015 remain open to examination by the U.S. Federal tax jurisdictions to which the Company is subject. The tax years from ~~2008~~2009 through ~~2014~~2015 remain open to examination by the non-U.S. Federal tax jurisdictions to which the Company is subject.

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Revenue Recognition. The Company earns substantially all of its revenues from advisory ~~distribution services,~~ and administrative fees that are calculated as a percentage of assets under management and are recorded as revenue as services are performed. Offshore advisory client contracts provide for monthly management fees, in addition to performance fees. The advisory contract for the equity funds within USGIF provides for a performance fee on the base advisory fee that are calculated and recorded monthly. ~~Shareholder services fees are based on the assets of the funds held through institutions.~~ Revenue shown on the Consolidated Statements of Operations is net of fee waivers.

Dividends and Interest. Dividends are recorded on the ex-dividend date, and interest income is recorded on an accrual basis. Both dividends and interest income are included in investment income.

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Advertising Costs. The Company expenses advertising costs as they are incurred. Certain sales materials, which are considered tangible assets, are capitalized and then expensed during the period in which they are distributed. Net advertising expenditures were ~~$411,000; $615,000;~~$212,000; $135,000; and ~~$862,000~~$56,000; during fiscal years 2016, 2015, and 2014, respectively, after adjustments for discontinued operations.~~2014, and~~ ~~2013, respectively.~~

Foreign Exchange.The balance sheets of certain foreign subsidiaries of the Company and certain foreign-denominated investment products are translated at the current exchange rate as of the end of the accounting period and the related income or loss is translated at the average exchange rate in effect during the period. Net exchange gains and losses resulting from ~~these~~balance sheet translations of foreign subsidiaries are excluded from income and are recorded in “accumulated other comprehensive income (loss)” on the Consolidated Balance Sheets. Net exchange gains and losses resulting from income or loss translations are included in income and are recorded in “investment income (loss)” on the Consolidated Statements of Operations. Investment transactions denominated in foreign currencies are converted to U.S. dollars using the exchange rate on the date of the transaction and any related gain or loss is included in “investment income (loss)” on the Consolidated Statements of Operations.

Use of Estimates. The preparation of the consolidated financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

Earnings Per Share. The Company computes and presents earnings per share attributable to U.S. Global Investors, Inc. in accordance with ASC 260, Earnings Per Share. Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income (loss) attributable to U.S. Global Investors, Inc. 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 Company has two classes of common stock with outstanding shares. Both classes share equally in dividend and liquidation preferences.

Accumulated Other Comprehensive Income (Loss).Accumulated other comprehensive income (loss) (“AOCI”), net of tax is reported in the Consolidated Balance Sheets and the Consolidated Statements of Shareholders’ Equity and includes the unrealized gains and losses on securities classified as available-for-sale andforeign currency translation adjustments.

Recent Accounting Pronouncements

Accounting Pronouncements Adopted During the Period

In April 2014, the FASB issued Accounting Standard Update (“ASU”) ~~No.~~ 2014-08, Presentation of Financial Statements and Property, Plant, and Equipment - Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity (“ASU 2014-08”). ASU 2014-08 ~~will become~~became effective for the Company on July 1, 2015. ~~Management is evaluating~~The adoption of ASU 2014-08 was not material to the ~~ASU and its potential impact on the~~consolidated financial statements.

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Accounting Pronouncements Not Yet Adopted

In May 2014, the FASB issued ASU ~~No.~~ 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five-step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP.

The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein, using either of the following transition methods: (i) a full retrospective approach reflecting the application of the standard in each prior reporting period with the option to elect certain practical expedients, or (ii) a retrospective approach with the cumulative effect of initially adopting ASU 2014-09 recognized at the date of adoption (which includes additional footnote disclosures). We are currently evaluating the impact of our pending adoption of ASU 2014-09 on our consolidated financial statements and have not yet determined the method by which we will adopt the standard in 2018.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going

Concern (“ASU 2014-15”). This update requires an entity's management to evaluate whether there are conditions or events,

considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern within one year

after the date that the financial statements are issued (or within one year after the date that the financial statements are available

to be issued when applicable). When conditions or events raise substantial doubts about an entity’s ability to continue as a going concern, management shall disclose: i) the principal conditions or events that raise substantial doubt about the entity's ability to continue as a going concern; ii) management's evaluation of the significance of those conditions or events in relation to the entity's ability to meet its obligations; and iii) management's plans that are intended to mitigate the conditions or events - and whether or not those plans alleviate the substantial doubt about the entity's ability to continue as a going concern. ASU 2014-15 is effective for the annual period ending after December 15, 2016, and early application is permitted. Management does not currently anticipate that this update will have any impact on the Company’s financial statement disclosures.

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~~In November 2014, the FASB issued ASU 2014-17,~~ ~~Business Combinations: Pushdown Accounting~~ ~~(“ASU 2014-17”). ASU~~

2014-17 provides companies with the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of the acquired entity. The election to apply pushdown accounting can be made either in the period in which the change of control occurred, or in a subsequent period. If the election is made in a subsequent period, it would be considered a change in accounting principle and treated in accordance with Topic 250, Accounting Changes ~~and Error Corrections. ASU 2014-17 became effective for the Company on November 18, 2014. The adoption of ASU 2014-17 was not material to the consolidated financial statements.~~

In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends the consolidation requirements in ~~Accounting Standards Codification (“ASC”)~~ASC 810, Consolidation. This standard modifies existing consolidation guidance for reporting organizations that are required to evaluate whether they should consolidate certain legal entities. ASU 2015-02 is effective for fiscal years and interim periods within those years beginning after December 15, 2015, and requires either a retrospective or a modified retrospective approach to adoption. Early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements, as well as the available transition methods.

In May 2015, the FASB issued ASU 2015-07, Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (“ASU 2015-07”). ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the NAV per share practical expedient. The update is effective for interim and annual reporting periods in fiscal years beginning after December 15, 2015, and early adoption is permitted. The update requires the retrospective adoption approach. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as noncurrent in a classified balance sheet. It simplifies the current guidance, which requires entities to separately present deferred tax assets and liabilities as current or noncurrent in a classified balance sheet. Netting by tax jurisdiction is still required under the new guidance. The update is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods, and early adoption is permitted. Entities are permitted to apply the amendments either prospectively or retrospectively. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). ASU 2016-01 amends the guidance on the classification and measurement of investments in equity securities. It also amends certain presentation and disclosure requirements. ASU 2016-01 is effective for public business entities for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. The new guidance will be effective for public business entities for annual periods beginning after December 15, 2018, and interim periods therein. Early adoption is permitted. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

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In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts from Customers - Principal versus Agent Considerations (Reporting Revenue Gross versus Net) (“ASU 2016-08”). ASU 2016-08 amends the guidance in ASU 2014-09, which is not yet effective. Among other things, the ASU clarifies that an entity should evaluate whether it is the principal or the agent for each specified good or service promised in a contract with a customer. The effective date and transition requirements for the amendments in ASU 2016-08 are the same as the effective date and transition requirements of ASU 2014-09. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). ASU 2016-09 includes provisions intended to simplify various aspects related to how share-based payments are accounted for and disclosed. ASU 2016-09 is effective for public entities for annual reporting periods beginning after December 15, 2016, and interim periods within that reporting period. Early adoption will be permitted in any interim or annual period, as long as all elements of the new standard are adopted at the same time. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”), which clarifies the guidance related to identifying performance obligations and the licensing guidance in ASU 2014-09. The standard is effective for annual periods beginning after December 15, 2017, and interim periods therein. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 provides a new current expected credit loss model to account for credit losses on certain financial assets and off-balance sheet exposures (e.g., loans held for investment, debt securities held to maturity, reinsurance receivables, net investments in leases and loan commitments). The model requires an entity to estimate lifetime credit losses related to such financial assets and exposures based on relevant information about past events, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. The guidance also modifies the current other-than-temporary impairment guidance for available-for-sale debt securities to require the use of an allowance rather than a direct write down of the investment, and replaces existing guidance for purchased credit deteriorated loans and debt securities. ASU 2016-13 is effective for public entities that are SEC filers for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Entities may adopt earlier as of the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the potential impact of this standard on its consolidated financial statements.

NOTE 3. ~~BUSINESS COMBINATION~~DISCONTINUED OPERATIONS

~~Effective March 31, 2013,~~

Distributor

In December 2015, USGIF elected a new slate of trustees to the Board of Trustees of the Funds. The Company proposed the election of new trustees and the transition of certain functions to third-party service providers with the intention of streamlining the Company’s responsibilities so it can better focus on strategic activities. The new Board of Trustees of USGIF adopted several new service agreements. As anticipated, effective December 10, 2015, the Company, through ~~USCAN, purchased~~ its wholly-owned subsidiary, U.S. Global Brokerage, Inc., ceased to be the distributor for USGIF and no longer receives distribution fees and shareholder services fees from USGIF. The Company’s portion of one-time transition expenses, recorded in the quarter ended December 31, 2015, was approximately $290,000. Due to this transition, the Company is no longer responsible for paying certain distribution and shareholder servicing related expenses and is reimbursed for certain distribution expenses from the new distributor for USGIF. As a result of this change, the Company filed Form BDW, the Uniform Request Withdrawal From Broker-Dealer Registration, with FINRA, which was approved in February 2016. This constitutes a strategic shift that has started to have, and will continue to have, a major effect on the Company’s operating revenues and expenses.

The distribution and shareholder services revenues and the expenses associated with certain distribution operations for USGIF are reflected as discontinued operations in the statement of operations and are, therefore, excluded from continuing operations results. Comparative periods shown in the Statement of Operations have been adjusted to conform with this presentation. These revenues and expenses were included in the investment management services segment in previous reporting periods.

The discontinued operations did not have depreciation, amortization, capital expenditures or significant non-cash operating and investing items.

41~~50 percent~~

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The assets and liabilities related to distribution discontinued operations are as follows at June 30, 2016, and June 30, 2015:

(dollars in thousands)	June 30, 2016		June 30, 2015
Assets
Receivables	$	-	$	184
Total assets held related to discontinued operations	$	-	$	184

Liabilities
Accounts payable	$	-	$	5
Other accrued expenses		-		129
Total liabilities held related to discontinued operations	$	-	$	134

The components of loss from discontinued operations of the ~~issued and outstanding shares~~distributor were as follows:

	Year Ended June 30,
(dollars in thousands)	2016			2015			2014
Revenues
Distribution fees	$	425		$	1,408		$	1,974
Shareholder services fees		183			630			931
		608			2,038			2,905
Expenses
Employee compensation and benefits		188			491			493
General and administrative		77			152			291
Platform fees		347			1,201			1,687
Advertising		14			275			559
		626			2,119			3,030
Loss from discontinued operations of distributor before income taxes		(18	)		(81	)		(125	)
Tax benefit		-			-			(42	)
Loss from discontinued operations of distributor	$	(18	)	$	(81	)	$	(83	)

Through December 9, 2015, USGIF paid the Company a distribution fee at an annual rate of ~~Galileo Global Equity Advisors, Inc., a privately held Toronto-based asset management firm, for~~ ~~$600,000~~ ~~cash.~~

0.25 percent of the average daily net assets of the investor class of each of the equity funds. Effective ~~June 1, 2014~~,December 10, 2015, the Company, through ~~USCAN, completed its purchase of an additional~~ ~~15 percent~~ ~~interest in Galileo~~U.S. Global Brokerage, Inc., ceased to be the distributor for USGIF and no longer receives distribution fees directly from the ~~company’s founder, Michael Waring,~~Funds.

In addition, through December 9, 2015, the Company received shareholder servicing fees from USGIF based on the value of Fund assets held through broker-dealer platforms. Effective December 10, 2015, the Company ceased to be the distributor for USGIF and no longer receives shareholder services fees from the Funds.

Due to this transition, the Company is no longer responsible for paying the platform fees for the USGIF equity funds and is reimbursed for certain distribution expenses from the new distributor for USGIF.

42~~$180,000~~ ~~cash. This strategic~~

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Transfer Agent

The Company’s Board of Directors formally agreed on August 23, 2013, to exit the transfer agency business so that the Company could focus more on its core strength of investment ~~brought USCAN’s ownership~~management. USSI served as transfer agent until conversion to ~~65 percent~~a third-party transfer agent on December 9, 2013.

The transfer agency results, together with expenses associated with discontinuing transfer agency operations, are reflected as “discontinued operations” in the Consolidated Statements of Operations and are therefore, excluded from continuing operations results. These expenses include approximately $65,000 of expenses in fiscal 2014 related to leased equipment that will not be utilized. Comparative periods shown in the Consolidated Financial Statements have been adjusted to conform to this presentation.

As of June 30, 2016, and 2015, there were no material remaining assets or liabilities related to the transfer agency business.

The components of loss from discontinued operations of the ~~issued and outstanding shares~~transfer agent were as follows:

	Year Ended June 30,
(dollars in thousands)	2016		2015		2014
Operating revenue	$	-	$	-	$	529
Operating expenses		-		-		897
Loss from discontinued operations of transfer agent before income taxes		-		-		(368	)
Tax benefit		-		-		(125	)
Loss from discontinued operations of transfer agent	$	-	$	-	$	(243	)

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NOTE 4. INVESTMENTS

As of ~~Galileo. Through Galileo,~~June 30, 2016, the Company expects to increase its presence in Canada. The non-controlling interest in this subsidiary is included in “non-controlling interest in subsidiaries” in the equity section of the Consolidated Balance Sheets. Frank Holmes, CEO, and Susan McGee, President and General Counsel, serve as directors of Galileo.

~~From March 31, 2013, to~~ ~~June 1, 2014, the Company accounted for its interest in Galileo under the equity method~~held investments with ~~its share of Galileo’s profit or loss recognized in earnings. $20,000 and $54,000 was included in other income in fiscal year 2014 and 2013, respectively.~~

~~The Company accounted for the~~ ~~June 1, 2014~~, Galileo share purchase using the acquisition method of accounting, which requires, among other things, that the fair values of assets acquired, including an intangible asset, and liabilities assumed, along with thea fair value of $13.6 million and a cost basis of $14.5 million. The market value of these investments is approximately 51.6 percent of the ~~non-controlling interest~~Company’s total assets. In addition, the Company owned other investments of $1.9 million accounted for under the cost method of accounting.

Investments in ~~the subsidiary, be recognized~~securities classified as trading are reflected as current assets on the Consolidated Balance Sheets at their fair market value. Unrealized gains and losses on trading securities are included in earnings in the Consolidated Statements of Operations.

Investments in securities classified as available-for-sale, which may not be readily marketable but have readily determinable fair values, are reflected as non-current assets on the Consolidated Balance Sheets at their fair value. Unrealized gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.

Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which do not have readily determinable fair values. These equity investments are accounted for under the cost method of accounting and evaluated for impairment. The Company considers many factors in determining impairment, including the severity and duration of the ~~acquisition date.~~decline in value below cost, the Company’s interest and ability to hold the security for a period of time sufficient for an anticipated recovery in value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings.

~~Business combinations achieved in stages also must value prior investments at fair value. A $161,000 increase in fair value~~

The following details the components of the Company’s ~~initial investment was recognized as a gain and included in investment income in fiscal year 2014.~~

~~The Company recognized a gain of $129,000 on the~~ ~~June 1, 2014, purchase since the~~investments recorded at fair value as of ~~the net assets acquired was greater than the fair value of consideration given. This gain was also included in investment income in fiscal 2014.~~June 30, 2016, and 2015:

	June 30, 2016
(dollars in thousands)	Cost		Gains		(Losses)			Fair Value
Trading securities¹
Offshore fund	$	1,184	$	-	$	(826	)	$	358
Mutual funds - Fixed income		9,284		124		-			9,408
Mutual funds - Domestic equity		535		-		(197	)		338
Other		45		-		(45	)		-
Total trading securities	$	11,048	$	124	$	(1,068	)	$	10,104

Available-for-sale securities²
Common stock - Domestic	$	109	$	21	$	-		$	130
Common stock - International		613		16		(83	)		546
Corporate debt		1,038		86		-			1,124
Mutual funds - Fixed income		1,226		18		(23	)		1,221
Mutual funds - Domestic equity		394		2		-			396
Other		56		8		-			64
Total available-for-sale securities³	$	3,436	$	151	$	(106	)	$	3,481

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	June 30, 2015
(dollars in thousands)	Cost		Gains		(Losses)			Fair Value
Trading securities¹
Offshore fund	$	1,184	$	-	$	(703	)	$	481
Mutual funds - Fixed income		14,691		68		(5	)		14,754
Mutual funds - Domestic equity		535		-		(130	)		405
Other		81		-		(81	)		-
Total trading securities	$	16,491	$	68	$	(919	)	$	15,640

Available-for-sale securities²
Common stock - Domestic	$	535	$	316	$	(9	)	$	842
Common stock - International		695		309		(39	)		965
Corporate debt		1,433		-		(817	)		616
Mutual funds - Fixed income		1,227		9		(22	)		1,214
Mutual funds - Domestic equity		543		-		(80	)		463
Other		169		1		(7	)		163
Total available-for-sale securities³	$	4,602	$	635	$	(974	)	$	4,263

~~The Consolidated Balance Sheet~~

¹	Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.

²	Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.

³	Net unrealized gains (losses) on available-for-sale securities gross and net of tax as of June 30, 2016, are $45 and $45, respectively, and as of June 30, 2015, are $(339) and $(339), respectively.

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

(dollars in thousands)	Year Ended June 30,
Investment Income	2016			2015			2014
Realized gains on sales of available-for-sale securities	$	532		$	591		$	1,044
Realized losses on sales of trading securities		(25	)		(1	)		(163	)
Realized gains (losses) on sales of securities classified as other investments		3			(30	)		-
Unrealized gains (losses) on trading securities		(93	)		(601	)		450
Realized gain on Galileo acquisition		-			-			290
Realized foreign currency gains		43			71			1
Other-than-temporary declines in available-for-sale securities		(259	)		(247	)		(3	)
Other-than-temporary declines in securities held at cost		(258	)		-			-
Dividend and interest income		542			651			526
Total Investment Income	$	485		$	434		$	2,145

Included in investment income were other-than temporary declines in value on available-for-sale securities of approximately $259,000; $247,000; and $3,000 in fiscal years 2016, 2015, and 2014, respectively. The impairment losses resulted from fair values of certain equity securities being lower than book value and from proposed changes to debt securities. For the year ending June 30, ~~2014, reflects~~2016, there were eight securities with a combined cost basis of $702,000 that were written down to a combined fair value of $466,000. Also during the ~~purchase price allocations~~year ending June 30, 2016, another security with a cost basis of $970,000 was written down to $947,000 based on ~~an assessment~~the net present value of estimated future cash flows. The impairment losses in the 2015 fiscal year resulted from issuers defaulting on scheduled payments. One security with a cost basis of $44,000 was written down to its fair value of $5,000. Two other securities, for which the common issuer has resumed interest payments, were written down to the net present value of estimated future cash flows. These securities had a cost basis of $310,000 and $1.1 million, respectively, and were written down to $234,000 and $970,000, respectively. Also included in investment income for the year ended June 30, 2016, were approximately $258,000 in other-than-temporary declines in value on securities held at cost. The impairment loss resulted from the estimated values of certain securities being lower than cost. Three securities held at cost with a combined cost basis of $1.1 million were written down to a combined adjusted cost basis of $867,000. In making these determinations, the Company considered the length of time and extent to which the fair value has been less than the cost basis, financial condition and prospects of the ~~assets acquired, liabilities assumed~~issuers, and ~~non-controlling interest in subsidiary. The table below presents~~ the ~~purchase price allocation as of~~Company's ability to hold the ~~June 1, 2014, acquisition date:~~investment until recovery.

(dollars in thousands)
Fair value of acquisition components
Current assets
$ 1,788
Property and equipment
149
Intangible asset re: non-compete agreement
90
Other noncurrent assets
13
Current liabilities
(278 )
Non-controlling interest in subsidiary
(617 )
Gain on purchase of 15%
(129 )
$ 1,016

Fair value of consideration as of June 1, 2014
Fair value of March 31, 2013 initial investment for 50% of stock $ 836
June 1, 2014 acquisition for 15% of stock for cash 180
$ 1,016

~~The following unaudited pro forma condensed consolidated results of operations for the years ended~~ ~~2014~~ ~~and~~ ~~2013~~ are presented as if the Galileo acquisition had been completed on July 1, 2012. The unaudited pro forma results do not include any adjustments to eliminate the impact of cost savings or other synergies that may result from the acquisition. In addition, the unaudited pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future.45

~~The information below reflects certain nonrecurring adjustments to remove the Company’s equity in earnings of Galileo and include amortization of the intangible asset.~~

Year Ended June 30,
(dollars in thousands) 2014 2013
Operating revenues

$ 13,771

$ 20,234
Net loss

(856 )
(13 )
Net loss attributable to U.S. Global Investors, Inc.

(916 )
(99 )

Net Loss per Share

Loss from continuing operations - basic

$ (0.04 )
$ 0.00
Loss from continuing operations - diluted

(0.04 )
0.00

~~Post-Acquisition Financial Information~~

~~The following amounts associated with the acquisition of Galileo, subsequent to the~~ ~~June 1, 2014, effective date, are included in the Consolidated Statements of Operations:~~

Year Ended June 30,
(dollars in thousands) 2014
Total revenues
$ 234
Net income 18
Net income attributable to U.S. Global Investors, Inc.
12
Costs associated with the acquisition ¹

33


^1.	~~Costs associated with the Galileo acquisition are included in generaland administrative expenses in the Consolidated Statements of Operations.~~

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Unrealized Losses

The following tables show the gross unrealized losses and fair values of available-for-sale investment securities with unrealized losses aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position. The Company reviewed the gross unrealized losses shown as of June 30, 2016, and determined that the losses were not other-than-temporary based on consideration of the nature of the investment and the cause, severity and duration of the loss.

	June 30, 2016
	Less Than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Available-for-sale securities
Common stock - Domestic	$	-	$	-		$	-	$	-		$	-	$	-
Common stock - International		246		(60	)		23		(23	)		269		(83	)
Corporate debt		-		-			-		-			-		-
Mutual funds - Fixed income		1		-			201		(23	)		202		(23	)
Mutual funds - Domestic equity		-		-			-		-			-		-
Other		-		-			-		-			-		-
Total available-for-sale securities	$	247	$	(60	)	$	224	$	(46	)	$	471	$	(106	)

	June 30, 2015
	Less Than 12 Months					12 Months or Greater					Total
			Gross					Gross					Gross
			Unrealized					Unrealized					Unrealized
(dollars in thousands)	Fair Value		Losses			Fair Value		Losses			Fair Value		Losses
Available-for-sale securities
Common stock - Domestic	$	77	$	(7	)	$	107	$	(2	)	$	184	$	(9	)
Common stock - International		114		(23	)		39		(16	)		153		(39	)
Corporate debt		386		(817	)		-		-			386		(817	)
Mutual funds - Fixed income		67		(7	)		139		(15	)		206		(22	)
Mutual funds - Domestic equity		463		(80	)		-		-			463		(80	)
Other		112		(7	)		-		-			112		(7	)
Total available-for-sale securities	$	1,219	$	(941	)	$	285	$	(33	)	$	1,504	$	(974	)

Fair Value Hierarchy

ASC 820, Fair Value Measurement and Disclosures, defines fair value 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. ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy (i.e., Levels 1, 2, and 3 inputs, as defined below). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Additionally, companies are required to provide enhanced disclosures regarding instruments in the Level 3 category (which have inputs to the valuation techniques that are unobservable and require significant management judgment), including a reconciliation of the beginning and ending values separately for each major category of assets or liabilities.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities at the reporting date. Since valuations are based on quoted prices that are readily and regularly available in an active market, value of these products does not entail a significant degree of judgment.

Level 2 – Valuations based on quoted prices in markets for which not all significant inputs are observable, directly or indirectly. Corporate debt securities valued in accordance with the evaluated price supplied by an independent service are categorized as Level 2 in the hierarchy. Other securities categorized as Level 2 included securities valued at the mean between the last reported bid and ask quotation.

Level 3 – Valuations based on inputs that are unobservable and significant to the fair value measurement.

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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 are not necessarily an indication of the risk associated with the 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.

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 is not traded on the last business day of the quarter, it is generally valued at the mean between the last bid and ask quotation. Mutual funds, which include open- and closed-end funds, exchange-traded funds, and offshore funds are valued at net asset value or closing price, as applicable. Certain corporate debt securities are valued by an independent pricing service using an evaluated quote based on such factors as institutional-size trading in similar groups of securities, yield, quality maturity, coupon rate, type of issuance and individual trading characteristics and other market data. As part of its independent price verification process, the Company periodically reviews the fair value provided by the pricing service using information such as transactions in these investments, broker quotes, market transactions in comparable investments, general market conditions and the issuer’s financial condition. Debt securities that are not valued by an independent pricing service are valued based on review of similarly structured issuances in similar jurisdictions when possible. The Company also takes into consideration numerous other factors that could affect valuation such as overall market conditions, liquidity of the security and bond structure. Securities for which market quotations are not readily available are valued at their fair value as determined by the portfolio management team. The portfolio management team includes representatives from the investment, accounting and legal/compliance departments. The portfolio management team meets periodically to consider 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 may differ from what may have been used had a broader market for these securities existed. The portfolio management team reviews inputs and assumptions and reports material items to the Board of Directors.

The following presents fair value measurements, as of each balance sheet date, for the major categories of U.S. Global’s investments measured at fair value on a recurring basis:

	June 30, 2016
			Significant		Significant
	Quoted Prices		Other Inputs		Unobservable Inputs
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Trading securities
Offshore fund	$	-	$	358	$	-	$	358
Mutual funds - Fixed income		9,408		-		-		9,408
Mutual funds - Domestic equity		338		-		-		338
Other		-		-		-		-
Total trading securities		9,746		358		-		10,104
Available-for-sale securities
Common stock - Domestic		130		-		-		130
Common stock - International		546		-		-		546
Corporate debt		1,124		-		-		1,124
Mutual funds - Fixed income		1,221		-		-		1,221
Mutual funds - Domestic equity		396		-		-		396
Other		64		-		-		64
Total available-for-sale securities		3,481		-		-		3,481
Total	$	13,227	$	358	$	-	$	13,585

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	June 30, 2015
			Significant		Significant
	Quoted Prices		Other Inputs		Unobservable Inputs
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Trading securities
Offshore fund	$	-	$	481	$	-	$	481
Mutual funds - Fixed income		14,754		-		-		14,754
Mutual funds - Domestic equity		405		-		-		405
Other		-		-		-		-
Total trading securities		15,159		481		-		15,640
Available-for-sale securities
Common stock - Domestic		842		-		-		842
Common stock - International		965		-		-		965
Corporate debt		-		77		539		616
Mutual funds - Fixed income		1,214		-		-		1,214
Mutual funds - Domestic equity		463		-		-		463
Other		163		-		-		163
Total available-for-sale securities		3,647		77		539		4,263
Total	$	18,806	$	558	$	539	$	19,903

As of June 30, 2016, approximately 97 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, three percent are derived from Level 2 inputs and none from Level 3 inputs. As of June 30, 2015, approximately 94 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, three percent are derived from Level 2 inputs and the remaining three percent are Level 3 inputs. The Company recognizes transfers between levels at the end of each quarter.

In Level 2, the Company has an investment in an affiliated offshore fund, classified as trading and which invests in companies in the energy and natural resources sectors, with a fair value of $358,000 and $481,000 as of June 30, 2016, and 2015, based on the net asset value per share. The Company may redeem this investment on the first business day of each month after providing a redemption notice at least forty-five days prior to the proposed redemption date.

In addition, the Company had investments in corporate debt securities, classified as available-for-sale, of $77,000 as of June 30, 2015, categorized as Level 2 which the Company valued in accordance with the evaluated price supplied by an independent service or valued using the mean between the last reported bid ask quotation. These corporate debt securities were sold in the year ended June 30, 2016.

At June 30, 2015, Level 3 corporate debt, classified as available-for-sale, consisted of debt from two issuers. Debt from one issuer was valued at June 30, 2015, at $314,000 based on other traded debt of the issuer. This corporate debt was transferred during the quarter ended March 31, 2016, at its then-current value of $1.0 million from Level 3 to Level 1, as it now also trades on a market. This corporate debt, which matures in 2020, was valued at $1.1 million at June 30, 2016, in Level 1.

The other corporate debt classified as Level 3 at June 30, 2015, was valued at cost of $225,000, which approximated fair value as a result of the Company’s review of similar structured issuances in similar jurisdictions. This holding was transferred out of available-for-sale Level 3 assets and classified as a note receivable at its June 30, 2016, value of $212,000.

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The following table is a reconciliation of investments recorded at fair value for which unobservable inputs (Level 3) were used in determining fair value during the years ended June 30, 2016, and 2015:

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis
	June 30, 2016			June 30, 2015
(dollars in thousands)	Corporate Debt			Corporate Debt
Beginning Balance	$	539		$	250
Return of capital		(13	)		(25	)
Total gains or losses (realized/unrealized)
Included in earnings (investment income)		(23	)		(133	)
Included in other comprehensive income (loss)		710			104
Purchases		-			-
Sales		-			-
Transfers into Level 3		-			343
Transfers out of Level 3		(1,213	)		-
Ending Balance	$	-		$	539

NOTE ~~4. DISCONTINUED OPERATIONS~~

The ~~transfer agency results, together~~Company serves as investment adviser to USGIF and receives a fee based on a specified percentage of net 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 if 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 rolling 12 months. For the years ended June 30, 2016, 2015, and 2014, the Company realized a decrease in its base advisory fee of $132,000; $1.0 million; and $815,000, respectively, due to these performance adjustments.

The Company has agreed to contractually limit the expenses of the Near-Term Tax Free Fund through April 2017. The Company has voluntarily waived or reduced its fees and/or agreed to pay expenses on the remaining funds. These caps will continue on a voluntary basis at the Company’s discretion. The aggregate fees waived and expenses borne by the Company were $1.3 million; $1.3 million; and $2.4 million for the years ended June 30, 2016, 2015, and 2014, respectively. Management cannot predict the impact of future waivers due to the number of variables and the range of potential outcomes.

In addition, the Company has an administrative services agreement with USGIF. Effective December 2013, the Funds’ Board of Trustees increased the administrative services fees paid to the Company from an annual rate of 0.08 percent to 0.10 percent per investor class and from 0.06 percent to 0.08 percent per institutional class of each Fund, based on average daily net assets, plus $10,000 per Fund. Effective November 1, 2014, the annual per fund fee changed to $7,000. Effective December 10, 2015, upon amending the agreement and reducing the administrative services performed, the annual rate changed to 0.05 percent for each investor class and to 0.04 percent for each institutional class, and the per fund fee was eliminated.

The Company also serves as investment advisor to U.S. Global Jets ETF. The ETF commenced operations in April 2015, and fiscal 2016 was its first full year of operations. The Company receives a unitary management fee of 0.60 percent of average net assets and has agreed to bear all expenses ~~associated~~of the ETF. The Company recorded advisory fees from the ETF totaling $296,000 and $26,000 in fiscal 2016 and fiscal 2015, respectively.

The Company provides advisory services to offshore clients and received a monthly advisory fee based on the net asset values of the clients and performance fees based on the overall increase in net asset values, if any. The Company recorded advisory fees from these clients totaling $91,000; $130,000; and $190,000 for the years ended June 30, 2016, 2015, and 2014, respectively. The Company recorded no performance fees from these clients for the years ended June 30, 2016, and 2015, and $4,000 for the year ended June 30, 2014. One of the offshore funds liquidated in November 2013. The contracts between the Company and the two current offshore clients expire periodically, and management anticipates that its remaining offshore clients will renew the contracts.

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Prior to December 10, 2015, in connection with ~~discontinuing transfer agency operations,~~obtaining and/or providing administrative services to the beneficial owners of USGIF through broker-dealers, banks, trust companies and similar institutions which provide such services, the Company received shareholder services fees at an annual rate of up to 0.20 percent of the value of shares held in accounts at the institutions. The Company also received distribution fees from USGIF based on average net assets. The Company no longer receives shareholder services or distribution fees, which are ~~reflected as~~included in “discontinued operations” in the Consolidated Statements of ~~Operations and are therefore, excluded from continuing operations results. These expenses include approximately~~ ~~$65,000~~ ~~of expenses related to leased equipment that will not be utilized. Comparative periods shown~~Operations. See further discussion in ~~the Consolidated Financial Statements have been adjusted to conform to this presentation.~~Note 3, Discontinued Operations.

AsPrior to conversion to a third party transfer agent on December 9, 2013, USSI received transfer agent fees from USGIF based on the number of ~~June 30, 2015, remaining liabilities related to the~~shareholder accounts, transaction and activity-based fees and certain miscellaneous fees. The transfer agency ~~business were immaterial.~~

~~The components of loss from discontinued operations were as follows:~~

Year Ended June 30,
(dollars in thousands) 2015
2014
2013
Operating revenue $ —
$ 529
$ 1,348
Operating expenses —
897
1,598
Loss from discontinued operations before income taxes —
(368 ) (250 )
Income tax benefit —
(125 ) (85 )
Loss from discontinued operations, net of tax $ —
$ (243 ) $ (165 )

~~NOTE 5. INVESTMENTS~~

~~As of~~ ~~June 30, 2015, the Company held investments with a fair value of $19.9 million and a cost basis of~~ ~~$21.1 million. The market value of these investments is approximately~~ ~~64.7 percent~~ ~~of the Company’s total assets. In addition, the Company held other investments of $2.3 million accounted for under the cost method of accounting.~~

~~Investments in securities classified as trading are reflected as current assets on the Consolidated Balance Sheets at their fair market value. Unrealized gains and losses on trading securities~~fees are included in ~~earnings~~“discontinued operations” in the Consolidated Statements of Operations. See further discussion in Note 3, Discontinued Operations.

~~Investments in securities classified as available-for-sale, which may not be readily marketable but have readily determinable fair values, are reflected as non-current assets on~~

The following changes were made during fiscal year 2014 to the Consolidated Balance Sheets at their fair value. Unrealized gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.

~~Other investments consist of equity investments in entities over which~~mutual funds the Company ~~is unable to exercise significant influence and which do not have readily determinable fair values. These equity investments are accounted for under~~manages: (1) the ~~cost method of accounting and evaluated for impairment. The Company considers many factors in determining impairment, including~~Global Emerging Markets Fund liquidated on October 31, 2013, (2) the ~~severity and duration of~~MegaTrends Fund was reorganized into the ~~decline in value below cost,~~Holmes Growth Fund (renamed Holmes Macro Trends Fund), (3) the ~~Company’s interest and ability to hold~~Tax Free Fund was reorganized into the security for a period of time sufficient for an anticipated recovery in value, and the financial condition and specific events related to the issuer. When an impairment of an equity security is determined to be other-than-temporary, the impairment is recognized in earnings.

~~In December 2013, the shareholders of~~Near-Term Tax Free Fund, (4) the U.S. Government Securities Savings Fund ~~approved a proposal resulting in the conversion of the fund~~changed from a money market fund to ~~a U.S. Government ultra-short bond fund that is not a money market fund. The fund was renamed~~the U.S. Government Securities Ultra-Short Bond Fund (“(“Government Fund”). , and (5) the U.S. Treasury Securities Cash Fund was liquidated on December 27, 2013.

Prior to the Government Fund conversion ~~while~~in December 2013, the Company voluntarily agreed to waive fees and/or reimburse the fund was a money market fund, the amount held in the fund was classified as a cash equivalent. After the conversion, the amount held in the fund is classified as a Level 1 trading mutual fund investment. The amount held in the fund by the Company as of the conversion date was $14.1 million.

~~Table of Contents~~

~~The following details the components of the Company’s investments recorded at fair value as of June 30, 2015, and 2014:~~

June 30, 2015
(dollars in thousands) Cost Gains (Losses) Fair Value
Trading securities ¹

Offshore fund $ 1,184
$ —
$ (703 ) $ 481
Mutual funds - Fixed income 14,691
68
(5 ) 14,754
Mutual funds - Domestic equity 535
—
(130 ) 405
Other 81
—
(81 ) —
Total trading securities $ 16,491
$ 68
$ (919 ) $ 15,640

Available-for-sale securities ²

Common stock - Domestic $ 535
$ 316
$ (9 ) $ 842
Common stock - International 695
309
(39 ) 965
Corporate debt 1,433
—
(817 ) 616
Mutual funds - Fixed income 1,227
9
(22 ) 1,214
Mutual funds - Domestic equity 543
—
(80 ) 463
Other 169
1
(7 ) 163
Total available-for-sale securities ³
$ 4,602
$ 635
$ (974 ) $ 4,263

June 30, 2014
(dollars in thousands) Cost Gains (Losses) Fair Value
Trading securities ¹

Offshore fund $ 1,184
$ —
$ (186 ) $ 998
Mutual funds - Fixed income 16,241
92
—
16,333
Mutual funds - Domestic equity 535
—
(76 ) 459
Other 107
—
(80 ) 27
Total trading securities $ 18,067
$ 92
$ (342 ) $ 17,817

Available-for-sale securities ²

Common stock - Domestic $ 535
$ 586
$ (3 ) $ 1,118
Common stock - International 607
802
—
1,409
Corporate debt 1,706
—
(74 ) 1,632
Mutual funds - Fixed income 1,228
21
(2 ) 1,247
Mutual funds - Domestic equity 543
7
—
550
Other 232
9
(1 ) 240
Total available-for-sale securities ³
$ 4,851
$ 1,425
$ (80 ) $ 6,196


¹	~~Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.~~


²	Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income (loss) as a separate component of shareholders’ equity until realized.


³	~~Net unrealized gains (losses) on available-for-sale securities gross and net of tax as of June 30, 2015, are $(339) and $(339), respectively, and as of June 30, 2014, are~~ ~~$1,345~~ ~~and~~ ~~$888, respectively.~~

~~Table of Contents~~

~~The following summarizes investment income (loss) reflected in earnings for the periods presented:~~

(dollars in thousands) Year Ended June 30,
Investment Income (Loss) 2015 2014 2013
Realized losses on sales of trading securities $ (1 ) $ (163 ) $ (245 )
Realized gains on sales of available-for-sale securities 591
1,044
266
Realized losses on sales of securities classified as other investments (30 ) —
—
Unrealized gains (losses) on trading securities (601 ) 450
45
Realized gain on Galileo acquisition
—

290

—
Realized foreign currency gains 71
1
1
Other-than-temporary declines in available-for-sale securities (247 ) (3 ) (47 )
Dividend and interest income 651
526
188
Total Investment Income (Loss) $ 434
$ 2,145
$ 208

Included in investment income were other-than-temporary impairments of $247,000; $3,000; and $47,000 in fiscal years 2015, 2014, and 2013, respectively. The impairment in fiscal year 2015 resulted from the issuers of these corporate notes defaulting on scheduled payments. One security with a cost basis of $44,000 was written down to its fair value of $5,000. Two other securities, for which the common issuer has resumed interest payments, were written down to the ~~net present value of estimated cash flows. These securities had~~extent necessary to maintain the fund’s yield at a cost basis of $310,000 and $1,102,000, respectively, and were written down to $234,000 and $970,000, respectively. In making these determinations, the Company considered the length of time and extent to which the fair value has been less than cost basis, financial condition and prospects of the issuers and the Company's ability to hold the investment until recovery.

~~Unrealized Losses~~

June 30, 2015
Less Than 12 Months 12 Months or Greater Total
(dollars in thousands)
Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses
Available-for-sale securities
Common stock - Domestic $ 77
$ (7 ) $ 107
$ (2 ) $ 184
$ (9 )
Common stock - International 114
(23 ) 39
(16 ) 153
(39 )
Corporate debt 386
(817 ) —
—
386
(817 )
Mutual funds - Fixed income 67
(7 ) 139
(15 ) 206
(22 )
Mutual funds - Domestic equity 463
(80 ) —
—
463
(80 )
Other 112
(7 ) —
—
112
(7 )
Total available-for-sale securities $ 1,219
$ (941 ) $ 285
$ (33 ) $ 1,504
$ (974 )

June 30, 2014
Less Than 12 Months 12 Months or Greater Total
(dollars in thousands)
Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses

Fair
Value

Gross
Unrealized
Losses
Available-for-sale securities
Common stock - Domestic $ 125
$ (3 ) $ —
$ —
$ 125
$ (3 )
Corporate debt 1,382
(74 ) —
—
1,382
(74 )
Mutual funds - Fixed income 151
(2 ) —
—
151
(2 )
Other 118
(1 ) —
—
118
(1 )
Total available-for-sale securities $ 1,776
$ (80 ) $ —
$ —
$ 1,776
$ (80 )

~~Table of Contents~~

~~Fair Value Hierarchy~~

~~ASC 820,~~ ~~Fair Value Measurement and Disclosures~~, defines fair value 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. ASC 820 establishes a hierarchy that prioritizes inputs to valuation techniques used to measure fair value and requires companies to disclose the fair value of their financial instruments according to a fair value hierarchy (i.e., Levels 1, 2, and 3 inputs, as defined below). The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. Additionally, companies are required to provide enhanced disclosures regarding instruments in the Level 3 category (which have inputs to the valuation techniques that are unobservable and require significant management judgment), including a reconciliation of the beginning and ending values separately for each major category of assets or liabilities.

~~Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories:~~

~~Level 3 – Valuations based on inputs that are unobservable and significant to the fair value measurement.~~

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 is not traded on the last business day of the quarter, it is generally valued at the mean between the last bid and ask quotation. Mutual funds, which include open- and closed-end funds, exchange-traded funds, and offshore funds are valued at net asset value or closing price, as applicable. Certain corporate debt securities are valued by an independent pricing service using an evaluated quote based on such factors as institutional-size trading in similar groups of securities, yield, quality maturity, coupon rate, type of issuance and individual trading characteristics and other market data. As part of its independent price verification process, the Company periodically reviews the fair value provided by the pricing service using information such as transactions in these investments, broker quotes, market transactions in comparable investments, general market conditions and the issuer’s financial condition. Debt securities that are not valued by an independent pricing service are valued based on review of similarly structured issuances in similar jurisdictions when possible. The Company also takes into consideration numerous other factors that could affect valuation such as overall market conditions, liquidity of the security and bond structure. Securities for which market quotations are not readily available are valued at their fair valuecertain level as determined by the portfolio management team. The portfolio management team includes representatives from the investment, accounting and legal/compliance departments. The portfolio management team meets periodically to consider 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 may differ from what may have been used had a broader market for these securities existed. The portfolio management team reviews inputs and assumptions and reports material items to the Board of Directors.

~~Table of Contents~~

~~The following presents fair value measurements, as of each balance sheet date, for the major categories of U.S. Global’s investments measured at fair value on a recurring basis:~~

June 30, 2015
Fair Value Measurement using
(dollars in thousands)
Quoted Prices
(Level 1)

Significant Other
Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)
Total
Trading securities
Offshore fund $ —
$ 481
$ —
$ 481
Mutual funds - Fixed income 14,754
—
—
14,754
Mutual funds - Domestic equity 405
—
—
405
Other —
—
—
—
Total trading securities 15,159
481
—
15,640

Available-for-sale securities
Common stock - Domestic 842
—
—
842
Common stock - International 965
—
—
965
Corporate debt —
77
539
616
Mutual funds - Fixed income 1,214
—
—
1,214
Mutual funds - Domestic equity 463
—
—
463
Other 163
—
—
163
Total available-for-sale securities 3,647
77
539
4,263

Total $ 18,806
$ 558
$ 539
$ 19,903

June 30, 2014
Fair Value Measurement using
(dollars in thousands)
Quoted Prices
(Level 1)

Significant Other
Inputs
(Level 2)

Significant
Unobservable Inputs
(Level 3)
Total
Trading securities
Offshore fund $ —
$ 998
$ —
$ 998
Mutual funds - Fixed income 16,333
—
—
16,333
Mutual funds - Domestic equity 459
—
—
459
Other 27
—
—
27
Total trading securities 16,819
998
—
17,817

Available-for-sale securities
Common stock - Domestic 1,118
—
—
1,118
Common stock - International 1,406
3
—
1,409
Corporate debt 292
1,090
250
1,632
Mutual funds - Fixed income 1,247
—
—
1,247
Mutual funds - Domestic equity 550
—
—
550
Other 240
—
—
240
Total available-for-sale securities 4,853
1,093
250
6,196

Total $ 21,672
$ 2,091
$ 250
$ 24,013

As of June 30, 2015, approximately 94 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, three percent are derived from Level 2 inputs and the remaining three percent are Level 3 inputs. As of June 30, 2014, approximately 90 percent of the Company’s financial assets measured at fair value are derived from Level 1 inputs, nine percent are derived from Level 2 inputs and the remaining one percent are Level 3 inputs.Company (Minimum Yield). The Company ~~recognizes transfers between levels at~~may recapture any fees waived and/or expenses reimbursed to maintain Minimum Yield within three years after the end of ~~each quarter.~~

~~In Level 2,~~the fund’s fiscal year of such waiver and/or reimbursement to the extent that such recapture would not cause the funds’ yield to fall below the Minimum Yield. Thus, $498,000 of the waiver for the Government Fund is recoverable by the Company through December 31, 2016. The U.S. Treasury Securities Cash Fund also had waivers subject to future recapture; however, because the fund was liquidated in December 2013, there will be no recapture.

NOTE 6. NOTES RECEIVABLE

The Company has ~~an investment~~invested in ~~an affiliated offshore fund, classified as trading, with a fair value~~notes receivable consisting of ~~$481,000 and $998,000 as of June 30, 2015, and 2014, respectively, based on the net asset value per share, which invests in companies~~two promissory notes. One note in the

~~Table~~ amount of ~~Contents~~

~~energy~~$2 million was entered into with an unrelated third party in June 2016 and ~~natural resources sectors.~~matures in June 2017. The note has a one-year extension option by the issuer upon payment of a 2.5 percent extension fee. The note bears interest at 12 percent, with 10 percent payable monthly and 2 percent payable at maturity. In case of prepayment, there would be a penalty for the amount of lost interest. The other note of $212,000 is with an unrelated third party, has a stated annual interest rate of 15 percent payable quarterly and matures in 2017. The Company ~~may redeem this investment on~~considered the ~~first business day of each month after providing a redemption notice at least forty-five days prior to the proposed redemption date.~~

In addition, the Company has investments in corporate debt securities, classified as available-for-sale, of $77,000 and $1.1 million as of June 30, 2015, and June 30, 2014, respectively, categorized as Level 2 which the Company valued in accordance with the evaluated price supplied by an independent service or valued using the mean between the last reported bid ask quotation.

The corporate debt in Level 3 is valued based on review of similarly structured issuances in similar jurisdictions. At June 30, 2015, Level 3 corporate debt is valued at cost, which approximates fair value as a resultcredit quality of the ~~Company’s review of similarly structured issuances in comparable jurisdictions or valued based on traded issuances from the issuer.~~other parties and determined that no allowance for credit losses is necessary.

During the year ended June 30, 2014, approximately $385,000 in investments in private and venture capital securities were transferred out of available-for-sale Level 3 assets and classified as other investments. During the year ended June 30, 2015, approximately $343,000 in investments in available-for-sale corporate debt securities were transferred from level 2 into Level 3.

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

Year Ended June 30,

2015 2014
(dollars in thousands)
Corporate Debt Common Stock - International Corporate Debt Other
Beginning Balance
$ 250

$ 95
$ —
$ 163
Return of capital
(25 )
—
—
(43 )
Total gains or losses (realized/unrealized)

Included in earnings (investment income)
(133 )
—
—
—
Included in other comprehensive income (loss)
104

5
—
5
Purchases
—

—
250
160
Sales
—

—
—
—
Transfers into Level 3
343

—
—
—
Transfers out of Level 3
—

(100 ) —
(285 )
Ending Balance
$ 539

$ —

$ 250

$ —

~~NOTE 6. INVESTMENT MANAGEMENT AND OTHER FEES~~

~~The Company serves as investment adviser to USGIF and receives a fee based on a specified percentage of net 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 if 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 rolling 12 months. For the years ended ~~June 30, 2015~~, ~~2014, and~~ ~~2013, the Company realized a decrease in its base advisory fee of~~ ~~$1,000,000~~; ~~$815,000; and~~ ~~$133,000; respectively.~~

The following changes were made during fiscal year 2014 to the mutual funds the Company manages: (1) the Global Emerging Markets Fund liquidated on October 31, 2013, (2) the MegaTrends Fund was reorganized into the Holmes Growth Fund (renamed Holmes Macro Trends Fund), (3) the Tax Free Fund was reorganized into the Near-Term Tax Free Fund, (4) the U.S. Government Securities Savings Fund changed from a money market fund to the U.S. Government Securities Ultra-Short Bond Fund, and (5) the U.S. Treasury Securities Cash Fund was liquidated on December 27, 2013.

The Company has agreed to contractually limit the expenses of the Near-Term Tax Free Fund through April 2016. The Company has voluntarily waived or reduced its fees and/or agreed to pay expenses on the remaining funds. These caps will continue on a voluntary basis at the Company’s discretion. The aggregate fees waived and expenses borne by the Company were ~~$1.3 million~~; ~~$2.4 million; and~~ ~~$3.3 million~~ ~~for the years ended~~ ~~June 30, 2015~~, ~~2014, and~~ ~~2013, respectively. Management cannot predict the impact of future waivers due to the number of variables and the range of potential outcomes.~~

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Prior to the U.S. Treasury Securities Cash Fund liquidation and the Government Fund conversion, the Company voluntarily agreed to waive fees and/or reimburse these funds to the extent necessary to maintain the respective fund’s yield at a certain level as determined by the Company (Minimum Yield). The above waived fees include fees waived and/or expenses reimbursed for these funds as a result of this agreement totaling $583,000 and $1.2 million for the year ended ~~June 30, 2014, and June 30, 2013, respectively.~~

The Company may recapture any fees waived and/or expenses reimbursed to maintain Minimum Yield within three years after the end of the funds’ fiscal year of such waiver and/or reimbursement to the extent that such recapture would not cause the funds’ yield to fall below the Minimum Yield. Thus, ~~$510,000~~ ~~of the waiver for the Government Fund is recoverable by the Company through December 31,~~ ~~2015, and~~ ~~$498,000~~ ~~through December 31,~~ ~~2016. The U.S. Treasury Securities Cash Fund also had waivers subject to future recapture; however, because the fund was liquidated in December 2013, there will be no recapture.~~

~~In addition, effective December 2013, the Funds’ Board of Trustees increased the administrative services fees paid to the Company from an annual rate of~~ ~~0.08 percent~~ to ~~0.10 percent~~ ~~per investor class and from~~ ~~0.06 percent~~ to ~~0.08 percent~~ ~~per institutional class of each Fund, based on average daily net assets, plus~~ ~~$10,000~~ ~~per Fund. Effective November 1, 2014, the per fund fee changed to $7,000 per year.~~

In connection with obtaining and/or providing administrative services to the beneficial owners of USGIF through broker-dealers, banks, trust companies and similar institutions which provide such services, the Company receives shareholder services fees at an annual rate of up to 0.20 percent of the value of shares held in accounts at the institutions. The Company also receives distribution fees from USGIF based on average net assets.

The Company also serves as investment advisor to an ETF, U. S. Global Jets ETF, that commenced operations in April 2015. The Company receives a unitary management fee of 0.60 percent of average net assets and has agreed to bear all expenses of the ETF.

The Company provided advisory services to offshore clients and received a monthly advisory fee based on the net asset values of the clients and performance fees based on the overall increase in net asset values, if any. One of the offshore funds liquidated in November 2013. The contracts between the Company and the offshore clients expire periodically, and management anticipates that its remaining offshore clients will renew the contracts. The Company recorded advisory and performance fees from these clients totaling ~~$130,000~~ ~~and~~ $0 ~~for the year ended~~ ~~June 30, 2015~~; ~~$190,000~~ ~~and~~ ~~$4,000~~ ~~for the year ended~~ ~~June 30, 2014; and~~ ~~$299,000~~ ~~and~~ ~~$19,000~~ ~~for the year ended~~ ~~June 30, 2013, respectively.~~

The Company’s Board of Directors formally agreed on August 23, 2013, to exit the transfer agency business so that the Company could focus more on its core strength of investment management. USSI served as transfer agent to USGIF until conversion to a third party transfer agent on December 9, 2013. Before the conversion, USSI received fees based on the number of shareholder accounts, transaction and activity-based fees and certain miscellaneous fees. The transfer agency fees are included in “discontinued operations” in the Consolidated Statements of Operations.

NOTE 7. PROPERTY AND EQUIPMENT

Property and equipment are composed of the following:


	June 30,						June 30,
(dollars in thousands)	2015			2014			2016			2015
Building and land	$	4,608		$	4,608		$	4,597		$	4,608
Furniture, equipment, and other	2,412			2,795				2,103			2,412
	7,020			7,403				6,700			7,020
Accumulated depreciation	(4,284		)	(4,379		)		(4,234	)		(4,284	)
Net property and equipment	$	2,736		$	3,024		$	2,466		$	2,736

Depreciation expense totaled $275,000; $282,000; ~~$255,000;~~ and ~~$275,000~~$255,000 in fiscal years 2016, 2015,, ~~2014~~, and 2014, respectively.

~~2013, respectively.~~50

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NOTE 8. INTANGIBLE ASSETS

Intangible assets consist of the following:


	June 30,						June 30,
(dollars in thousands)	2015			2014			2016			2015
Intangible asset - Non-compete agreement
Gross carrying amount	$	90		$	90		$	90		$	90
Accumulated amortization	(49		)	(4		)		(90	)		(49	)
Net carrying amount	$	41		$	86		$	-		$	41

The non-compete agreement included as an intangible asset was acquired effective June 1, 2014, in connection with the acquisition of Galileo. This finite-lived identifiable intangible asset iswas amortized on a straight-line basis over its estimated useful life. ~~As of~~ ~~June 30, 2015, the remaining weighted-average estimated useful life is approximately 0.9 years.~~

Amortization expense totaled ~~$45,000~~$41,000; $45,000; and $4,000 ~~for the year ended~~ in fiscal years 2016, 2015, and 2014~~June 30, 2015~~, ~~and June 30, 2014,~~ respectively. ~~There was no amortization expense for the year ended~~ ~~2013~~. Amortization expense is included in depreciation and amortization on the Consolidated Statements of Operations.

~~Estimated aggregate annual amortization expense for the intangible asset in each of the five succeeding fiscal years assuming no new acquisitions or impairments is as follows:~~

(dollars in thousands)
Amortization Expense
2016
$ 41
2017
—
2018
—
2019
—
2020
—

NOTE 9. OTHER ACCRUED EXPENSES

Other accrued expenses consist of the following:


	June 30,				June 30,
(dollars in thousands)	2015		2014		2016		2015
Legal, professional and consulting fees	$	270	$	325
Professional fees					$	272	$	297
Vendors payable	333		246			253		278
Investments payable	—		187
Platform fees	101		170
Taxes payable	117		131			61		117
Other	—		5
Other accrued expenses	$	821	$	1,064	$	586	$	692

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~~NOTE 18. RELATED PARTY TRANSACTIONS~~

On From March 31, 2013, to June ~~30, 2015, and~~1, 2014, the Company ~~had$17.1 million~~accounted for its interest in Galileo under the equity method with its share of Galileo’s profit or loss recognized in earnings. $20,000 was included in other income in fiscal year 2014.

The Company accounted for the June 1, 2014, Galileo share purchase using the acquisition method of accounting, which requires, among other things, that the fair values of assets acquired, including an intangible asset, and ~~$19.4 million, respectively,~~liabilities assumed, along with the fair value of the non-controlling interest in the subsidiary, be recognized on the Consolidated Balance Sheets as of the acquisition date.

Business combinations achieved in stages also must value prior investments at fair value. A $161,000 increase in fair value ~~invested~~of the Company’s initial investment was recognized as a gain and included in ~~USGIF~~investment income in fiscal year 2014.

The Company recognized a gain of $129,000 on the June 1, 2014, purchase since the fair value of the net assets acquired was greater than the fair value of consideration given. This gain was also included in investment income in fiscal 2014.

The following unaudited pro forma condensed consolidated results of operations for the year ended 2014 are presented as if the Galileo acquisition had been completed on July 1, 2013. The unaudited pro forma results do not include any adjustments to eliminate the impact of cost savings or other synergies that may result from the acquisition. In addition, the unaudited pro forma results of operations do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future.

The information below reflects certain nonrecurring adjustments to remove the Company’s equity in earnings of Galileo and ~~offshore clients~~include amortization of the ~~Company advises. These~~intangible asset.

(dollars in thousands)	Year Ended June 30, 2014
Operating revenues	$	10,866
Net loss		(856	)
Net loss attributable to U.S. Global Investors, Inc.		(916	)

Net Loss per Share
Loss from continuing operations - basic	$	(0.04	)
Loss from continuing operations - diluted	$	(0.04	)

Post-Acquisition Financial Information

The following amounts ~~were~~associated with the acquisition of Galileo, subsequent to the June 1, 2014, effective date, are included in the Consolidated ~~Balance Sheet as “trading securities” and “available-for-sale securities” in fiscal year~~ ~~2015, and in “cash and cash equivalents,” “trading securities” and “available-for-sale securities” in fiscal year~~ ~~2014. The Company recorded~~ ~~$157,000~~; ~~$132,000; and~~ ~~$114,000~~ ~~in dividend income and~~ ~~$(846,000)~~; ~~$(143,000); and~~ ~~$(147,000)~~ ~~in net unrealized gains (losses) on its investments in the Funds and offshore clients for fiscal years~~ ~~2015~~, ~~2014, and~~ ~~2013, respectively.~~Statements of Operations:

The Company earned advisory, administrative, distribution and shareholder services fees, as applicable, from the various funds for which it and its subsidiaries act as investment adviser, as disclosed in Note 4. Receivables include amount due from the funds for those fees and out-of-pocket expenses, net of amounts payable to the funds, for expense reimbursements. As of ~~June 30, 2015, and~~ ~~2014, the Company had $701,000 and $1.3 million, respectively, of receivables from mutual funds included in the Consolidated Balance Sheets within “receivables.”~~

Frank Holmes, a director and Chief Executive Officer of the Company, is a trustee of USGIF. Mr. Holmes is a director of each offshore fund and is also a director of Meridian Fund Managers Ltd., the manager of the offshore funds.

(dollars in thousands)	Year Ended June 30, 2014
Total revenues	$	234
Net income		18
Net income attributable to U.S. Global Investors, Inc.		12
Costs associated with the acquisition¹		33

~~The Company has an available-for-sale investment in Charlemagne Capital Limited with a fair value of approximately~~ ~~$864,000~~ and $1,314,000 at June 30, 2015 and 2014, respectively. Charlemagne Capital (IOM) Limited, a wholly owned subsidiary of Charlemagne Capital Limited, was the non-discretionary subadviser to the Emerging Europe Fund, a fund within USGIF, through July 31, 2014.

¹	Costs associated with the Galileo acquisition are included in general and administrative expenses in the Consolidated Statements of Operations.

NOTE 19. ~~CONTINGENCIES AND COMMITMENTS~~RELATED PARTY TRANSACTIONS

On June 30, 2016, and 2015, the Company had $11.5 million and $17.1 million, respectively, at fair value invested in USGIF and offshore funds the Company advises. These amounts were included in the Consolidated Balance Sheet as “trading securities” and “available-for-sale securities” in fiscal year 2016 and 2015. The Company ~~continuously reviews all investor, employee,~~recorded $180,000; $244,000; and ~~vendor complaints~~$132,000 in income from dividends and ~~pending or threatened litigation. The likelihood that a loss contingency exists is evaluated through consultation with legal counsel,~~capital gain distributions and ~~a loss contingency is recorded if probable~~$(273,000); $(596,000); and ~~reasonably estimable.~~

~~During~~$942,000 in net recognized gains (losses) on its investments in the ~~normal course of business, the Company may be subject to claims, legal proceedings,~~Funds and ~~other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably. The Company establishes accruals~~offshore clients 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 will not have a material adverse effect on the consolidated financial statements of the Company.

~~The Board of Directors has authorized a monthly dividend of~~ ~~$0.005~~ ~~per share from July 2015 through September~~fiscal years 2016, 2015, and a monthly dividend of $0.0025 from October 2015 through December 2015, at which time it will be considered for continuation by the Board of Directors. 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 to be paid to class A and class C shareholders from July 2015 to 2014, respectively.

~~December 2015~~ ~~will be approximately$345,000~~.59

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~~NOTE 20. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)~~

The Company earned advisory, administrative, distribution and shareholder services fees, as applicable, from the various funds for which it and its subsidiaries act as investment adviser, as disclosed in Note ~~that quarterly per share~~5 and Note 3. Receivables include amounts ~~may not add~~due from the funds for those fees and out-of-pocket expenses, net of amounts payable to the ~~annual total due~~funds, for expense reimbursements. As of June 30, 2016, and 2015, the Company had $595,000 and $701,000, respectively, of receivables from mutual funds included in the Consolidated Balance Sheets within “receivables.”

Frank Holmes, a director and Chief Executive Officer of the Company, was a trustee of USGIF until December 2015. Mr. Holmes is a director of each offshore fund and is also a director of Meridian Fund Managers Ltd., the manager of the offshore funds.

Mr. Holmes is also a director of a private company in which the Company holds common stock and warrants classified as other investments and valued at $723,000 at June 30, 2016, and in which he holds nontransferable stock options. The Company received $117,000 and $68,000 in dividend and interest income from its investments in this company in fiscal year 2016 and 2015, respectively. The Company recorded $211,000 in recognized losses on its investments in this company in fiscal year 2016.

Charlemagne Capital (IOM) Limited, a wholly owned subsidiary of Charlemagne Capital Limited, was the non-discretionary subadviser to ~~rounding.~~the Emerging Europe Fund, a fund within USGIF, through July 31, 2014. The Company paid $5,000 and $60,000 in subadvisory fees in fiscal years 2015 and 2014, respectively. While still in the subadvisory relationship, the Company received $60,000 in dividend income in fiscal year 2014 from an investment in the common stock of the subadviser.

Quarters
Fiscal 2015 1st 2nd 3rd 4th Total
(dollars in thousands except per share data)
Operating revenues $ 3,297
$ 2,371
$ 1,831
$ 1,872
$ 9,371
Loss from continuing operations before income taxes (96 ) (838 ) (969 ) (1,251 ) (3,154 )
Tax expense (benefit) (7 ) 3
25
801
822
Loss from continuing operations (89 ) (841 ) (994 ) (2,052 ) (3,976 )
Net loss (89 ) (841 ) (994 ) (2,052 ) (3,976 )
Net income attributable to non-controlling interest 39
1
13
1
54
Net loss attributable to U.S. Global Investors, Inc. (128 ) (842 ) (1,007 ) (2,053 ) (4,030 )
Comprehensive loss (593 ) (1,586 ) (1,225 ) (2,101 ) (5,505 )
Comprehensive loss attributable to U.S. Global Investors, Inc. (604 ) (1,562 ) (1,177 ) (2,076 ) (5,419 )
Earnings (loss) per share attributable to U.S. Global Investors, Inc.:
Basic
Loss from continuing operations $ (0.01 ) $ (0.05 ) $ (0.07 ) $ (0.13 ) $ (0.26 )
Loss from discontinued operations 0.00
0.00
0.00
0.00
0.00
Net loss attributable to U.S. Global Investors, Inc. $ (0.01 ) $ (0.05 ) $ (0.07 ) $ (0.13 ) $ (0.26 )
Diluted
Loss from continuing operations $ (0.01 ) $ (0.05 ) $ (0.07 ) $ (0.13 ) $ (0.26 )
Loss from discontinued operations 0.00
0.00
0.00
0.00
0.00
Net loss attributable to U.S. Global Investors, Inc. $ (0.01 ) $ (0.05 ) $ (0.07 ) $ (0.13 ) $ (0.26 )

Quarters
Fiscal 2014 1st 2nd 3rd 4th Total
(dollars in thousands except per share data)
Operating revenues $ 3,052
$ 2,740
$ 2,742
$ 2,905
$ 11,439
Income (loss) from continuing operations before income taxes (23 ) (1,424 ) (12 ) 222
(1,237 )
Tax expense (benefit) (14 ) (466 ) 14
(51 ) (517 )
Income (loss) from continuing operations (9 ) (958 ) (26 ) 273
(720 )
Loss on discontinued operations (28 ) (207 ) (2 ) (6 ) (243 )
Net income (loss) (37 ) (1,165 ) (28 ) 267
(963 )
Net income attributable to non-controlling interest —
—
—
7
7
Net income (loss) attributable to U.S. Global Investors, Inc. (37 ) (1,165 ) (28 ) 260
(970 )
Comprehensive income (loss) (236 ) (1,052 ) 151
430
(707 )
Comprehensive income (loss) attributable to U.S. Global Investors, Inc. (236 ) (1,052 ) 151
421
(716 )
Earnings (loss) per share attributable to U.S. Global Investors, Inc.:
Basic
Income (loss) from continuing operations $ 0.00
$ (0.06 ) $ 0.00
$ 0.02
$ (0.04 )
Loss from discontinued operations 0.00
(0.02 ) 0.00
0.00
(0.02 )
Net income (loss) attributable to U.S. Global Investors, Inc. $ 0.00
$ (0.08 ) $ 0.00
$ 0.02
$ (0.06 )
Diluted
Income (loss) from continuing operations $ 0.00
$ (0.06 ) $ 0.00
$ 0.02
$ (0.04 )
Loss from discontinued operations 0.00
(0.02 ) 0.00
0.00
(0.02 )
Net income (loss) attributable to U.S. Global Investors, Inc. $ 0.00
$ (0.08 ) $ 0.00
$ 0.02
$ (0.06 )

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NOTE 20. CONTINGENCIES AND COMMITMENTS

The Company continuously reviews all 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 may be subject to claims, legal proceedings, and other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters may be 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 will not have a material adverse effect on the consolidated financial statements of the Company.

The Board of Directors has authorized a monthly dividend of $0.0025 per share from July 2016 through December 2016, at which time it will be considered for continuation by the Board of Directors. 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. Prior to the June 30, 2016, fiscal year-end, the Board of Directors approved monthly dividends from July 2016 to September 2016, and estimated dividends payable of $115,000 for that period is included in the Consolidated Balance Sheets at June 30, 2016. The total amount of cash dividends to be paid to class A and class C shareholders from July 2016 to December 2016 will be approximately $229,000.

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NOTE 21. SELECTED QUARTERLY FINANCIAL DATA (Unaudited)

Note that quarterly per share amounts may not add to the annual total due to rounding.

	Quarters
Fiscal 2016	1st			2nd			3rd			4th			Total
(dollars in thousands except per share data)
Operating revenues	$	1,250		$	1,289		$	1,330		$	1,636		$	5,505
Loss from continuing operations before income taxes		(861	)		(2,187	)		(392	)		(251	)		(3,691	)
Tax expense (benefit)		11			-			(16	)		(1	)		(6	)
Loss from continuing operations		(872	)		(2,187	)		(376	)		(250	)		(3,685	)
Income (loss) from discontinued operations		7			(25	)		-			-			(18	)
Net loss		(865	)		(2,212	)		(376	)		(250	)		(3,703	)
Net income (loss) attributable to non-controlling interest		3			-			(26	)		(5	)		(28	)
Net loss attributable to U.S. Global Investors, Inc.		(868	)		(2,212	)		(350	)		(245	)		(3,675	)
Comprehensive income (loss)		(1,577	)		(1,592	)		148			(348	)		(3,369	)
Comprehensive income (loss) attributable to U.S. Global Investors, Inc.		(1,533	)		(1,575	)		115			(348	)		(3,341	)
Earnings (loss) per share attributable to U.S. Global Investors, Inc.:
Basic
Loss from continuing operations	$	(0.06	)	$	(0.14	)	$	(0.02	)	$	(0.02	)	$	(0.24	)
Loss from discontinued operations		-			-			-			-			-
Net loss attributable to U.S. Global Investors, Inc.	$	(0.06	)	$	(0.14	)	$	(0.02	)	$	(0.02	)	$	(0.24	)
Diluted
Loss from continuing operations	$	(0.06	)	$	(0.14	)	$	(0.02	)	$	(0.02	)	$	(0.24	)
Loss from discontinued operations		-			-			-			-			-
Net loss attributable to U.S. Global Investors, Inc.	$	(0.06	)	$	(0.14	)	$	(0.02	)	$	(0.02	)	$	(0.24	)

	Quarters
Fiscal 2015	1st			2nd			3rd			4th			Total
(dollars in thousands except per share data)
Operating revenues	$	2,628		$	1,858		$	1,389		$	1,458		$	7,333
Loss from continuing operations before income taxes		(108	)		(784	)		(922	)		(1,259	)		(3,073	)
Tax expense (benefit)		(7	)		3			26			800			822
Loss from continuing operations		(101	)		(787	)		(948	)		(2,059	)		(3,895	)
Income (loss) on discontinued operations		12			(54	)		(46	)		7			(81	)
Net loss		(89	)		(841	)		(994	)		(2,052	)		(3,976	)
Net income attributable to non-controlling interest		39			1			13			1			54
Net loss attributable to U.S. Global Investors, Inc.		(128	)		(842	)		(1,007	)		(2,053	)		(4,030	)
Comprehensive loss		(632	)		(1,587	)		(1,225	)		(2,061	)		(5,505	)
Comprehensive loss attributable to U.S. Global Investors, Inc.		(604	)		(1,562	)		(1,177	)		(2,076	)		(5,419	)
Earnings (loss) per share attributable to U.S. Global Investors, Inc.:
Basic
Loss from continuing operations	$	(0.01	)	$	(0.05	)	$	(0.06	)	$	(0.13	)	$	(0.25	)
Loss from discontinued operations		-			-			(0.01	)		-			(0.01	)
Net loss attributable to U.S. Global Investors, Inc.	$	(0.01	)	$	(0.05	)	$	(0.07	)	$	(0.13	)	$	(0.26	)
Diluted
Loss from continuing operations	$	(0.01	)	$	(0.05	)	$	(0.06	)	$	(0.13	)	$	(0.25	)
Loss from discontinued operations		-			-			(0.01	)		-			(0.01	)
Net loss attributable to U.S. Global Investors, Inc.	$	(0.01	)	$	(0.05	)	$	(0.07	)	$	(0.13	)	$	(0.26	)

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

There were no changes in or disagreements with accountants on accounting and financial disclosure during the two most recent fiscal years.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. An evaluation was conducted under the supervision and with the participation of the Company’s management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of June 30, ~~2015.~~2016. Based on that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of June 30, ~~2015,~~2016, to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act is: (1) recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms; and (2) accumulated and communicated to management, including the principal executive and principal financial officers, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined by Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management assessed the effectiveness of its internal control over financial reporting as of June 30, ~~2015.~~2016. In making this assessment, the Company’s management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework (2013). Based on the Company’s assessment, management believes that, as of June 30, ~~2015,~~2016, the Company’s management has maintained effective internal control over financial reporting.

Changes in Internal Control over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f)) during the fourth quarter ended June 30, ~~2015,~~2016, that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.

Inherent Limitation of the Effectiveness of Internal ~~Control~~Control.. A control system, no matter how well conceived, implemented and operated, can provide only reasonable, not absolute, assurance that the objectives of the internal control system are met. Because of such inherent limitations, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company or any division of a company have been detected.

Item 9B. Other Information

In light of Frank Holmes’ ownership of 99.78 percent of the class C voting shares, the Company is eligible to rely on the exemption from certain of the NASDAQ corporate governance listing requirements relating to the independence of the Board of Directors and certain committees that is afforded to controlled companies. Under NASDAQ rules, a controlled company is a company of which more than 50 percent of the voting power for the election of directors is held by an individual, a group or another company.

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Part III of Annual Report on Form 10-K

Item 10. Directors, Executive Officers and Corporate Governance

The directors and executive officers of U.S. Global Investors, Inc. (“U.S. Global” or the “Company”) are as follows:



Name	Age	Position
Frank E. Holmes	6061	Director of the Company and Chief Executive Officer of the Company since October 1989, and Chief Investment Officer since June 1999. Since October 1989, Mr. Holmes has served and continues to serve in various positions with the Company, its subsidiaries, and the investment companies it sponsors. Mr. Holmes ~~has~~ served as Trustee of U.S. Global Investors Funds ~~since~~from August ~~1989.~~1989 to December 2015. Mr. Holmes has also served as Director of Meridian Fund Managers Ltd. since November 2003, Director of Meridian Global Gold & Resources Fund Ltd. since December 2003, Director of Meridian Global Energy & Resources Fund Ltd. since April 2006, Director of Meridian Global Dividend Income Fund from April 2011 to March 2014.

Jerold H. Rubinstein	7778	Chairman of the Board of Directors since February 2006 and Director of the Company since October 1989. Director, Chairman of the Board and CEO of Stratus Media Group, Inc. from April 2011 to July 2014. Director, Chief Executive Officer, and Chairman of the Board for ProElite, Inc. from June 2012 to July 2014. Director, Chairman of the Board and Chairman of the Audit Committee of RestorGenex Corporation during the period April 2011 to July 2014. Director and Chairman of the Audit Committee of SpendSmart Payments Co. ~~since~~from October ~~2013. Founder and Chief Executive Officer of Music Imaging & Media, Inc. from July 2002~~2013 to ~~January 2010.~~April 2016. Director and Chairman of the Audit Committee of CKE Restaurants from June 2006 to July ~~2010.~~
		2010 and April 2011 to present.
Roy D. Terracina	6870	Director of the Company since December 1994 and Vice Chairman of the Board of Directors since May 1997. Owner of Sunshine Ventures, Inc., a company formed to hold investments, since January 1994. Chairman of the Board of Our Lady of the Lake University since September 2006.

Thomas F. Lydon, Jr.	5556	Director of the Company since June 1997. Chairman of the Board and President of Global Trends Investments since April 1996. Trustee of Rydex/SGI from June 2005 to February 2012. Trustee of Guggenheim Investments since February 2012.

Susan B. McGee	5657	President of the Company since February 1998, General Counsel since March ~~1997.~~1997, and Chief Compliance Officer since January 2016. Since September 1992, Ms. McGee has served and continues to serve in various positions with the Company, its subsidiaries, and the investment companies it sponsors.
Lisa C. Callicotte
~~Lisa C. Callicotte~~	4243	Chief Financial Officer of the Company since July 12, 2013. Controller of the Company from July 2009 until July 2013. Since July 2009, Ms. Callicotte has served and continues to serve in various positions with the Company and its ~~subsidiaries, and the investment companies it sponsors.~~subsidiaries.

None of the directors or executive officers of the Company has a family relationship with any of the other directors or executive officers.

The members of the Board of Directors are elected for one-year terms or until their successors are elected and qualified. The Board of Directors appoints the executive officers of the Company.

Director ~~Independence~~Independence.. The Company’s Board of Directors is currently composed of four members. The Board of Directors has determined that three of the four members meet the definition of an independent director set forth in NASDAQ Rule 5605(a)(2), with the exception being Frank Holmes, who is the Chief Executive Officer and Chief Investment Officer of the Company. In assessing the independence of directors, the Board of Directors considered the business relationships between the Company and its directors or their affiliated businesses, including businesses owned and operated by family members, other than ordinary investment relationships. Furthermore, the Board of Directors has determined that none of the members of the two standing committees of the Board of Directors in existence during the ~~2015~~2016 fiscal year has any material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company) and that each such member is “independent” within the meaning of the independence standards applicable to each such committee.

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The Board of Directors held ~~six~~four meetings over the past fiscal year. Each incumbent director attended at least 75 percent of the board meetings during the last fiscal year. Directors are encouraged to attend the ~~Annual Meeting~~annual meeting of ~~Shareholders. Three~~shareholders. Two of the four directors attended the ~~2014~~ ~~Annual Meeting.~~2015 annual meeting. The standing committees of the Board of Directors currently consist of the Audit Committee and the Compensation Committee. The membership and responsibilities of those committees are described below:



Independent Directors	Audit Committee	Compensation Committee
Roy D. Terracina	Chairman	Member
Thomas F. Lydon, Jr.	Member	Chairman
Jerold H. Rubinstein	Member	Member

Audit Committee. The Company has a separately designated Audit Committee, established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee assists the Board of Directors in monitoring the integrity of the financial statements of the Company; the independent auditor’s qualifications and independence; the performance of the Company’s internal audit function and independent auditors; complaints relating to the Company’s accounting, internal accounting controls and audit matters; and the Company’s accounting and financial reporting processes and audits of the Company’s financial statements. The Board of Directors has determined that Director Roy Terracina qualifies as an “audit committee financial expert” as defined in Item 401(e) of Regulation S-K under the Exchange Act. Mr. Terracina’s pertinent experience, qualifications, attributes, and skills include: a bachelor’s degree and a master’s degree in finance, financial experience as a treasurer of a publicly traded company, managerial experience attained as the owner of a company responsible as a major supplier of baked and packaged goods primarily through the Department of Defense, the knowledge and experience he has attained from service on other boards and the knowledge and experience he has attained from his service on U.S. Global’s Board of Directors. The Audit Committee met seven times during the past fiscal year. Each incumbent committee member attended at least 75 percent of the committee meetings during the last fiscal year.

Report of the Audit Committee.Management is responsible for U.S. Global’s internal controls and financial reporting process. BDO USA, LLP, U.S. Global’s independent registered public accounting firm for the fiscal year ended June 30, ~~2015,~~2016, is responsible for performing an independent audit of U.S. Global’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (“PCAOB”) and to issue its report thereon. The Audit Committee monitors and oversees these processes. The Audit Committee approves the selection and appointment of U.S. Global’s independent registered public accounting firm and recommends the ratification of such selection and appointment to U.S. Global’s Board of Directors.

The Audit Committee has reviewed and discussed U.S. Global’s audited financial statements with management and BDO USA, LLP. The committee has discussed with BDO USA, LLP the matters required to be discussed by the PCAOB auditing standards which relates to the conduct of our audit, including our auditors’ judgment about the quality of the accounting principles applied in our fiscal year ~~2015~~2016 audited consolidated financial statements. The Audit Committee has received the written disclosures and the letter from BDO USA, LLP required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the committee concerning independence and has discussed with BDO USA, LLP that firm’s independence.

Based on the foregoing review and discussions and such other matters the Audit Committee considered relevant and appropriate, the committee recommended to the Board of Directors that the audited financial statements of U.S. Global be included in its Annual Report on Form 10-K for the year ended June 30, ~~2015.~~2016.

Compensation Committee. The Compensation Committee assists the Board of Directors in carrying out its responsibilities with respect to employee qualified benefit plans and employee programs, executive compensation programs, stock option plans and director compensation programs. The Compensation Committee has broad responsibility for assuring that the Company’s executive officers, including the Company’s Chief Executive Officer, are effectively compensated in terms of salaries, supplemental compensation and benefits that are internally equitable and externally competitive. Additional responsibilities include the review and approval of corporate goals and objectives relevant to the Chief Executive Officer. The Compensation Committee reviews all components of compensation, including salaries, cash incentive plans, long-term incentive plans and various employee benefit matters. The Compensation Committee met two times during the past fiscal year. Each incumbent committee member attended at least 75 percent of the committee meetings during the last fiscal year.

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Compensation Committee Interlocks and Insider Participation. During fiscal year ~~2015,~~2016, the Compensation Committee consisted of Roy D. Terracina, Thomas F. Lydon, Jr., and Jerold H. Rubinstein. All members of the Compensation Committee were independent directors, and no member was an employee or former employee. During fiscal year ~~2015,~~2016, none of the Company’s executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on the Company’s Compensation Committee.

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Nomination of Directors. Although the Company does not have a standing nominating committee, the Company’s Corporate Governance Guidelines effectively provide guidance on selection and nomination process whenever a vacancy occurs on the Board of Directors. Due to the longevity of service of the current Board of Directors, those Directors have not participated in consideration of director nominees.

The Company believes generally that its Board of Directors as a whole should encompass a range of talent and expertise enabling it to provide sound guidance with respect to the Company’s operations and interests. Whenever a vacancy occurs on the Board of Directors, the board members are responsible for identifying one or more candidates to fill that vacancy, investigating each candidate and evaluating their suitability for service on the board. The following attributes or qualifications will be considered by the Board of Directors in evaluating a person’s candidacy:

·	Management and leadership experience;

·	Skilled and diverse background; and

·	Integrity and professionalism.

The board members are authorized to use any methods it deems appropriate for identifying candidates for board membership. In addition, candidates recommended by the Company’s stockholders are considered in the same manner as other candidates.

The Company’s policy is to have at least a majority of directors qualify as “independent” under the NASDAQ Listing Rules and the Company’s Corporate Governance Guidelines, which are available at the Company’s website at www.usfunds.com.

~~Code of Ethics for Principal Executive and Senior Financial Officers~~

Director Interaction with Stockholders. The Company’s Corporate Governance Guidelines provide the process by which stockholders and other interested parties may contact the non-management members of the Board. These guidelines are contained on the Company’s website under “About Us,” followed by “Investor Relations.”

Code of Ethics for Principal Executive and Senior Financial Officers

The Company has adopted a Code of Ethics for Principal Executive and Senior Financial Officers that applies to the Company’s principal executive officer and principal financial officer. This code charges these individuals with responsibilities regarding honest and ethical conduct, the preparation and quality of the disclosures in documents and reports the Company files with the SEC, and compliance with applicable laws, rules, and regulations.

Compliance with Section 16(a) of the 1934 Act

~~Compliance with Section 16(a) of the 1934 Act~~

Section 16(a) of the 1934 Act requires directors and officers of the Company and persons who own more than 10 percent of the Company’s class A common stock to file with the SEC initial reports of ownership and reports of changes in ownership of the stock. Directors, officers and more than 10 percent shareholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

Based solely on the Company’s review of the copies of such reports received by the Company and on written representations by the Company’s officers and directors regarding their compliance with the applicable reporting requirements under Section 16(a) of the Exchange Act, the Company believes that, with respect to the fiscal year ended June 30, ~~2015,~~2016, its officers and directors, and all of the persons known to it to own more than 10 percent of its common stock, filed all required reports on a timely ~~basis with the exception of one report for which a Form 4 relating to one transaction was not filed on behalf of Frank Holmes; however a Form 5 was filed.~~basis.

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Item 11. Executive Compensation

Compensation Discussion and Analysis

Overview

The following section provides a discussion and analysis of the basis for the compensation awarded to the CEO, the CFO, and our other most highly compensated executive officer of the Company (“Named Executive Officers” or “NEOs”), as well as our directors in fiscal year ~~2015.~~2016. We provide investment advisory and other services to our clients. Our long-term success depends on our ability to provide superior investment returns and outstanding client service. As such, one of our greatest assets is the collective skill, experience and efforts of our employees. To achieve success, we must be able to attract, retain and motivate professionals within all levels of our Company who are committed to our core values.

We place great significance on our values of performance, teamwork, initiative, responsiveness, focused work ethic, and intellectual curiosity. We believe that adherence to these core values will contribute to the long-term success of the Company and our shareholders.

We compete for talent with a large number of investment management and financial services companies, many of which have significantly larger market capitalization than we do. Our relatively small size within the industry, geographic location, and lean executive management team provide unique challenges.

Setting Executive Compensation

The Compensation Committee of our Board of Directors is responsible for reviewing and approving corporate goals and objectives relevant to the CEO, Frank Holmes; evaluating the CEO’s performance in light of those goals and objectives; and determining and approving the CEO’s compensation level based on this evaluation. In addition, the committee is responsible for reviewing and approving compensation recommended by Mr. Holmes for our other executive officers. The Board of Directors appointed Messrs. Lydon, Terracina, and Rubinstein as members of the Compensation Committee. Mr. Lydon serves as the chairman of the Compensation Committee, and there are no Compensation Committee interlocks to report. The Compensation Committee has a charter that is available for review on our website at www.usfunds.com by clicking “About Us,” followed by “Investor Relations,” then “Policies and Procedures.”

The individuals listed below are the CEO and CFO, plus our other most highly compensated NEO in fiscal year ~~2015.~~2016.



Name		Title
Frank E. Holmes		Chief Executive Officer and Chief Investment Officer
Lisa C. Callicotte		Chief Financial Officer
Susan B. McGee		President, ~~and~~ General Counsel and Chief Compliance Officer

In establishing total annual compensation for Mr. Holmes, the Compensation Committee considers a number of factors. For assistance in determining the appropriate factors to consider, the Compensation Committee consulted in 2005 with Moss Adams LLP, an executive compensation consulting firm. Importantly, the Compensation Committee considers the various functions Mr. Holmes assumes, including the dual role of CEO and Chief Investment Officer (“CIO”). In addition, the Compensation Committee considers various measures of company performance, including profitability and total shareholder return. The Compensation Committee also reviews Mr. Holmes’ performance in managing our corporate investments, in overseeing the management of our client portfolios and the results of our operational earnings.

In addition to his base salary, Mr. Holmes receives a bonus based on operational earnings, which are substantially derived from assets under management, based on a percentage of operational earnings, and capped at a predetermined dollar amount, as computed for financial reporting purposes in accordance with GAAP (before consideration of this fee).

Mr. Holmes also receives a bonus when our investment team meets their performance goals. The bonus is based on calculated fund performance bonuses of the investment team and is in recognition of Mr. Holmes’ creation and oversight of the investment processes and strategy.

In addition, Mr. Holmes receives a percentage of offshore fund management and performance fees in recognition of attracting and managing offshore client accounts and a percentage of realized gains on investments, offset by realized losses and other-than-temporary write-downs, in recognition of his expertise in managing the investments of the company.

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The committee has delegated to Mr. Holmes the responsibility for reviewing the performance of, and recommending the compensation levels for, our other NEOs. The committee does not use rigid formulas with respect to the compensation of NEOs. Mr. Holmes makes a recommendation based on the achievement of qualitative goals that apply to all employees, quantitative goals

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that apply to an executive officer’s specific job responsibilities and other accomplishments, such as expansion in functional responsibility. In forming his recommendations, Mr. Holmes also considers the responsibilities and workload of the executive officer; the explicit and tacit knowledge required to perform these responsibilities, including any professional designations; the profitability of the company; and the cost of living in San Antonio, Texas.

Objectives

Our executive compensation programs are designed to:

·	attract and retain key executives,

·	align executive performance with our long-term interests and those of our shareholders, and

·	link executive pay with performance.

Elements of Executive Compensation

The committee reviews and approves all components of executive officer compensation. The principal elements of executive compensation, other than Mr. Holmes, are:

·	base salary,

·	performance-based cash and stock bonuses,

·	long-term incentive awards, and

·	other compensation and benefits.

Base Salary

Base salaries for NEOs are reviewed annually by the Compensation Committee. Generally, the salaries of NEOs are occasionally adjusted to recognize expansion of an individual’s role, outstanding and sustained performance, or to bring the officer’s pay into alignment with the market. We did not use any benchmarking studies in fiscal year ~~2015~~2016 to obtain market information. In addition, the Compensation Committee did not consider the equity ownership of the Company by Mr. Holmes when setting his compensation. Nor did the committee aim for a specific relationship between Mr. Holmes and the other executive officers. Base salaries paid to NEOs during the fiscal year are shown in the Summary Compensation Table.

Performance-Based Cash Bonuses

Executive officers, except Mr. Holmes, participate in a team performance pay program based on each employee’s annual salary to recognize monthly completion of departmental goals. Additionally, key executive officers are compensated based on individual performance pay arrangements. Discretionary cash bonuses are awarded from time to time for such things as completion of critical projects or outstanding performance.

Mr. Holmes considered a matrix of factors in reviewing the performance of, and compensation for, the CFO, Ms. Lisa Callicotte. Mr. Holmes considered such things as responsibilities, productivity, results of the Company’s actual versus targeted goals, hours of work, profitability of the Company, timely and accurate financial regulatory filings, unqualified ~~S-Ox and~~ audit results and the cost of living in San Antonio. Occasionally, Ms. Callicotte receives discretionary bonuses for the completion of special projects.

In reviewing the performance of and compensation for the President, ~~and~~ General Counsel, and Chief Compliance Officer Susan McGee, Mr. Holmes considers a matrix of factors including responsibilities, productivity, hours of work, profitability of the Company, timely and accurate regulatory filings, completion of regulatory examinations, and the cost of living in San Antonio. In addition to her base salary, Ms. McGee is paid a monthly bonus based on retail assets in recognition of her strategic guidance of the sales personnel. Ms. McGee receives a monthly bonus when certain financial metrics are met. Occasionally, Ms. McGee receives discretionary bonuses for special projects such as completion of regulatory exams or managing significant new business relationships.

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Long-Term Incentive Awards

Long-term incentive awards include stock options and restricted shares. We have utilized option grants to induce qualified individuals to join us, thereby providing the individual with an opportunity to benefit if we have significant growth. Similarly, options have been utilized to reward existing employees, including NEOs, for long and faithful service and to encourage them to stay with us. The Compensation Committee administers the stock option plans. Although the Company has no written policy for allocating between cash and equity, or current and long-term compensation for the CEO and other NEOs, the weighting has generally been in the range of less than 5 percent long-term compensation in the form of options or stock awards, with the remaining compensation in cash.

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Stock Option Plans

In November 1989, the Board of Directors adopted the 1989 Non-Qualified Stock Option Plan (“1989 Plan”) which provides for the granting of options to purchase shares of our class A common stock to directors, officers, and employees. On December 6, 1991, shareholders approved and amended the 1989 Plan to provide provisions to cause the plan and future grants under the plan to qualify under 1934 Act Rule 16b-3. The 1989 Plan is administered by the Compensation Committee consisting of three outside members of the Board of Directors. The maximum number of shares of class A common stock initially approved for issuance under the 1989 Plan is 1,600,000 shares. During the fiscal year ended June 30, ~~2015,~~2016, no stock options were granted. As of June 30, ~~2015,~~2016, under this amended plan, 1,733,400options had been granted, 883,000 options had been exercised, 850,400 options had expired, no options remained outstanding and 717,000 options are available for grant.

In April 1997, the Board of Directors adopted the 1997 Non-Qualified Stock Option Plan (“1997 Plan”), which shareholders approved on April 25, 1997. It provides for the granting of stock appreciation rights (“SARs”) and/or options to purchase shares of our class A common stock to directors, officers and employees. The 1997 Plan expressly requires that all grants under the plan qualify under 1934 Act Rule 16b-3. The 1997 Plan is administered by the Compensation Committee consisting of three outside members of the Board of Directors. The maximum number of shares of class A common stock initially approved for issuance under the 1997 Plan is 400,000 shares. During the fiscal year ended June 30, ~~2015,~~2016, no stock options were granted. As of June 30, ~~2015,~~2016, 581,300 options had been granted; 257,000 shares had been exercised; ~~302,300~~322,300 options had expired; ~~22,000~~2,000 options remained outstanding, and ~~121,000~~141,000 options are available for grant.

2010 Stock Incentive Plan

In October 2010, at the Annual Meeting of Shareholders, the class C shareholders voted to adopt the 2010 Stock Incentive Plan. The 2010 Stock Incentive Plan is intended to promote the interests of the Company by providing eligible persons in the Company’s service with the opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company to align such persons’ interests with those of the Company’s shareholders and as an incentive for them to remain in such service. During fiscal year ~~2015,~~2016, no stock bonuses were awarded to NEOs.

Assessment of Risk

By design, the Company’s compensation program for all employees, including executive officers, does not incentivize excessive risk-taking. The Company’s base salary component of compensation does not encourage risk-taking because it is a fixed amount. Generally, incentive awards have the following risk-limiting characteristics:

·	Awards are made based on a review of a variety of indicators of performance, thus diversifying the risk associated with any single indicator of performance;

For executive officers other than Mr. Holmes (who is a significant U.S. Global shareholder), the majority of the award value is delivered in the form of stock that vests over a multiple years, which aligns the interests of executive officers to long-term shareholder interests; and

·	All participants, including executive officers, in the Employee Stock Purchase Plan are subject to stock ownership and holding guidelines.

Other Compensation and Benefits

Health, Welfare and Retirement Benefits

Health, welfare, and retirement benefits are designed to provide a safety net of protection for employees in the event of illness, disability, or death, and to provide employees an opportunity to accumulate retirement savings.

We offer a range of health and welfare benefits to substantially all employees, including the NEOs. These benefits include medical, dental, vision, prescription drug, short-term disability, long-term disability, group life and accidental death insurance, and tuition ~~reimbursement, and a free health club membership.~~reimbursement.

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401(k) Plan

We offer a 401(k) plan covering substantially all employees, including NEOs. Participants may contribute on a ~~pretax basis,~~portion of their base salary and cash incentive compensation, up to a limit imposed by the Internal Revenue Code, which is $18,000 in calendar year ~~2015~~.2016. An additional “catch-up” pretax contribution of up to ~~$5,500~~$6,000 is allowed for employees over 50. We automatically match 100 percent of the first 3 percent of participating employees’ contributions and 50 percent of the next 2 percent of participating employees’ contributions. We contribute to participants’ accounts at the same time that the employee’s pay deferral is made. Employees are immediately vested in both their 401(k) salary deferral contribution and the matched contributions. Participants in our 401(k) plan may ~~allocate some~~ contribute to Roth and/or ~~all of their contributions to a separate designated Roth account, commonly known as a Roth~~traditional 401(k). accounts.

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Profit Sharing

The 401(k) plan allows for us to make a discretionary profit sharing contribution, as authorized by the Board of Directors. Factors that are considered by the Board of Directors include earnings, cash flows, capital requirements and the general financial condition of the Company. No specific performance thresholds or goals are required by the board to authorize a profit sharing contribution. No profit sharing contributions were made in fiscal years 2016, 2015, ~~2014,~~ or ~~2013.~~2014.

Savings Plans

We also have a program pursuant to which we offer employees an opportunity to participate in savings programs using mutual funds managed ~~investment companies.~~by us. Employee contributions to an Individual Retirement Account are matched to a maximum of $100 per month for certain management-level employees, including NEOs, and a maximum of $30 for all other employees. ~~Similarly, certain management-level employees, including NEOs, may contribute to the Near-Term Tax Free Fund and we will match these contributions up to a maximum of $90 per month.~~ A similar savings plan utilizing UGMA accounts is offered to all employees to save for minor relatives and is matched at a maximum of $15 per month per child. Certain management-level employees, including NEOs, could have contributed to the Near-Term Tax Free Fund; and through December 31, 2015, we matched these contributions up to a maximum of $90 per month.

Employee Stock Purchase Plan

We also have a program whereby eligible employees can purchase treasury shares, at market ~~price, and~~price. Through December 31, 2015, we ~~will~~ automatically ~~match~~matched 100 percent of their contribution up to 3 percent of gross salary. During fiscal years 2016, 2015, ~~2014,~~ and ~~2013,~~2014, employees purchased 39,084; 37,383; ~~52,191;~~ and ~~48,679~~52,191 shares of treasury stock from us, respectively. The purchase price used is the closing stock price on the last business day of each month. All participants, including executive officers, in the Employee Stock Purchase Plan are subject to stock ownership and holding guidelines. We do not restrict the ability of our employees or directors to hedge their position in our shares. In addition, neither the board nor NEOs are required to own or purchase a certain number of shares.

The Summary Compensation Table includes the matched contributions to the plans described above for each NEO.

Perquisites and Other Benefits

We provide certain perquisites that the committee believes are reasonable and consistent with our overall compensation program to a limited number of officers. The perquisites consist of such things as memberships for business entertainment purposes and policies for long-term disability and life insurance. The Summary Compensation Table shows the value of perquisites provided to NEOs in fiscal year ~~2015~~2016 in the “All Other Compensation” column.

Employment Agreements, Termination and Change-in Control Arrangements

We do not have any employment agreements, termination agreements, or change-in control agreements with any of our executive officers.

Compliance with Section 162(m)

Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation greater than $1 million paid during any fiscal year to our CEO and our four other most highly compensated executive officers. However, the statute exempts qualifying performance-based compensation from the deduction limit if certain requirements are met. The Compensation Committee plans to review this matter as appropriate and take action as may be necessary to preserve the deductibility of compensation payments to the extent reasonably practical and consistent with our objectives.

Table of Contents

Compensation of Named Executive Officers

The following table sets forth for the fiscal year ended June 30, ~~2015,~~2016, the compensation reportable for the NEOs, as determined by SEC rules. Columns were omitted if they were not applicable.

Name and Principal										Salary		Bonus		Non-Equity Incentive Plan Compensation		All Other Compensation			Total
Position									Year	($)		($)		($)¹		($)			($)
(dollars in thousands)


Summary Compensation Table
Name and Principal Position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Non-Equity Incentive Plan Compensation ($)¹	All Other Compensation ($)		Total ($)
(dollars in thousands)
Frank E. Holmes	2013	412	6	—	230	123		771	2014		422		4		220		119			765
Chief Executive Officer	2014	422	4	—	220	119		765	2015		422		6		70		118			616
Chief Investment Officer	2015	422	6	—	70	118	²	616	2016		422		7		111		111	²		651
Catherine A. Rademacher	2013	101	49	—	—	18		168
Chief Financial Officer ⁴


Lisa C. Callicotte	2014	135	27	—	—	19		181	2014		135		27		-		19			181
Chief Financial Officer ⁴	2015	135	30	—	—	19	³	184
Chief Financial Officer									2015		135		30		-		19			184
									2016		135		28		-		15	³		178

Susan B. McGee	2013	258	29	—	48	133		468	2014		258		34		23		123			438
President	2014	258	34	—	23	123		438	2015		258		36		12		128			434
General Counsel	2015	258	36	—	12	128	⁵	434	2016		258		43		8		171	⁴		480
Chief Compliance Officer


^1.	Amounts consist of cash incentive compensation awards earned for services. The amounts were paid pursuant to the senior executive bonus programs.


^2.	Represents amounts paid by us on behalf of Mr. Holmes as follows: (i) $57 in insurance, (ii) ~~$33~~$24 in matched contributions, (iii) ~~$18~~$16 in memberships, and (iv) ~~$10~~$14 in miscellaneous items.


^3.	Represents amounts paid by us on behalf of Ms. Callicotte as follows: (i) ~~$17~~$13 in matched contributions, and (ii) $2 in miscellaneous items.


^4.	~~Ms. Callicotte replaced Ms. Rademacher as Chief Financial Officer effective July 12, 2013.~~


^5.	Represents amounts paid by us on behalf of Ms. McGee as follows: (i) ~~$73~~$129 in insurance, (ii) ~~$26~~$19 in matched contributions, (iii) ~~$19~~$11 in memberships, and (iv) ~~$10~~$12 in miscellaneous items.

No stock awards were granted to the named executive officer in fiscal year ~~2015.~~2016.

During fiscal year ~~2015,~~2016, there were no exercises of stock options or vesting of restricted stock. As of June 30, ~~2015,~~2016, Ms. Callicotte held 2,000 fully vested stock options exercisable at a price of $12.31. These options expire on October 7, 2019. No other options were outstanding for any of the named executive officers.

The Outstanding Equity Awards at Fiscal Year-End, Pension Benefits and Nonqualified Deferred Compensation Tables were omitted because they were not applicable.

Table of Contents

Compensation of Directors

The compensation of directors is subject to a minimum of $6,000 in any quarter paid in arrears. We may grant non-employee directors options under our 1989 and 1997 Stock Option Plans. Directors are reimbursed for reasonable travel expenses incurred in attending the meetings held by the Board of Directors. Mr. Rubinstein serves as the Chairman of the Board. The Company grants each director 100 shares of stock per month. Director compensation for the fiscal year ended June 30, ~~2015,~~2016, is detailed in the table below. Columns that were not applicable were omitted.


Director Compensation	Director Compensation							Director Compensation
Name		Fees Earned or Paid in Cash ¹		Stock Awards ²		Total			Fees Earned or Paid in Cash ¹		Stock Awards ²		Total
(dollars in thousands)
Jerold H. Rubinstein		$	109	$	4	$	113		$	105	$	2	$	107
Roy D. Terracina		$	42	$	4	$	46		$	41	$	2	$	43
Thomas F. Lydon, Jr.		$	24	$	4	$	28		$	24	$	2	$	26


^1.	The difference in fees earned was primarily due to Mr. Rubinstein receiving an additional $5,000 per month for added responsibilities as ~~chairman.~~chairman; chairman fees were reduced to $2,500 per month in February 2016.


^2.	Amounts shown represent expense recognized in the consolidated financial statements for stock awards granted to non-employee directors in fiscal year ~~2015.~~2016.

Compensation Committee Report on Executive Compensation

The Compensation Committee is composed entirely of independent directors in accordance with the listing standards of the NASDAQ Stock Market. The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management. Based upon this review and discussion, the committee has recommended to the Board of Directors that the Compensation Discussion and Analysis section be included in this annual report.

Respectfully,

Members of the Compensation Committee

Thomas F. Lydon, Jr., Chairman

Jerold H. Rubinstein

Roy D. Terracina

Table of Contents

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

~~Security Ownership of Certain Beneficial Owners~~

Security Ownership of Certain Beneficial Owners

Class C Common Stock (Voting Stock)

OOnn September ~~4, 2015,~~2, 2016, there were 2,069,127 shares of the Company’s class C common stock outstanding. The following table sets forth, as of such date, information regarding the beneficial ownership of the Company’s class C common stock by each person known by the Company to own 5 percent or more of the outstanding shares of class C common stock.


Name and Address of Beneficial Owner	Class C Common Shares Beneficially Owned	Percent of Class (%)		Class C Common Shares Beneficially Owned		Percent of Class (%)
Frank Holmes	2,064,560	99.78	%		2,064,560		99.78	%
7900 Callaghan Road
San Antonio, TX 78229

Class A Common Stock (Nonvoting Stock)

On September ~~4, 2015,~~2, 2016, there were ~~13,264,590~~13,170,616 shares of the Company’s class A common stock issued and outstanding. The following table sets forth, as of such date, information regarding the beneficial ownership of the Company’s class A common stock by each person known by the Company to own 5 percent or more of the outstanding shares of class A common stock.

Name and Address of Beneficial Owner Class A Common Shares Beneficially Owned
Percent of
Class (%)
Financial & Investment Management Group, Ltd. - Traverse City, MI ¹

2,638,047
¹

19.89 %
Royce & Associates, LLC ²

2,050,954
²

15.46 %

Name and Address of Beneficial Owner	Class A Common Shares Beneficially Owned		Percent of Class (%)
Financial & Investment Management Group, Ltd. – Traverse City, MI ¹		2,544,197		19.32	%
Royce & Associates, LLC – New York, NY ²		1,563,205		11.87	%
Newberg Family Trust – Los Angeles, CA ³		704,811		5.35	%


^1.	Information is from Schedule 13G as of July 31, 2016, filed with the SEC on August 15, 2016.

^2.	Information is from Schedule 13G as of December 31, 2015, filed with the SEC on ~~August 12, 2015.~~January 28, 2016.


^2.3.	Information is from Schedule ~~13F~~13G/A as of ~~June 30,~~December 31, 2015, filed with the SEC on ~~August~~February 10, ~~2015.~~2016.

Security Ownership of Management

The following table sets forth, as of September ~~4, 2015,~~2, 2016, information regarding the beneficial ownership of the Company’s class A and class C common stock by each director and named executive officer and by all directors and executive officers as a group. Except as otherwise indicated in the notes below, each person owns directly the number of shares indicated in the table and has sole voting power and investment power with respect to all such shares.

	Class C Common Stock					Class A Common Stock
Beneficial Owner	Number of Shares		%			Number of Shares		%
Frank E. Holmes, CEO, Director		2,064,560		99.78	%		452,282		3.43	%
Lisa C. Callicotte, CFO		-		-			15,644		0.12	%
Susan B. McGee, President, General Counsel, Chief Compliance Officer		-		-			102,305		0.78	%
Jerold H. Rubinstein, Director		-		-			2,100		0.02	%
Roy D. Terracina, Director		-		-			56,900		0.43	%
Thomas F. Lydon, Jr., Director		-		-			10,600		0.08	%
All directors and executive officers as a group (six persons)		2,064,560		99.78	%		639,831		4.86	%

Class C
Common Stock

Class A
Common Stock
Beneficial Owner
Number of
Shares

%
Number of
Shares

%
Frank E. Holmes, CEO, Director
2,064,560
99.78 %
415,321
3.13 %
Lisa C. Callicotte, CFO
—
—

12,803
0.10 %
Susan B. McGee, President, General Counsel
—
—

96,927
0.73 %
Jerold H. Rubinstein, Director
—
—

900
0.01 %
Roy D. Terracina, Director
—
—

55,700
0.42 %
Thomas F. Lydon, Jr., Director
—
—

9,400
0.07 %
All directors and executive officers as a group (six persons)
2,064,560

99.78 %
591,051

4.46 %

Table of Contents

Equity Compensation Plan Information


					Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)	Weighted-average exercise price of outstanding options, warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)	(a)		(b)		(c )
Equity compensation plans approved by security holders	N/A	N/A		N/A		N/A		N/A		N/A
Equity compensation plans not approved by security holders
1989 Stock Option Plan ¹	—	—		717,000		-----		-----		717,000
1997 Non-Qualified Stock Option Plan ²	22,000	$	18.72	121,000		2,000	$	12.31		141,000
Employee Stock Purchase Plan ³	N/A	N/A		121,369		N/A		N/A		125,446
2010 Stock Incentive Plan ⁴	N/A	N/A		81,400		N/A		N/A		75,400
Total	22,000			1,040,769		2,000				1,058,846


^1.	Stock options under this plan may be granted to directors, officers, and employees of the Company from authorized but unissued shares or treasury shares.


^2.	Stock options under this plan may be granted to directors, executives, and key salaried employees of the Company from authorized but unissued shares or treasury shares. The term of the option periods must be less than ten years.

^3.

The Company has adopted a stock purchase plan to provide eligible employees of the Company an opportunity to purchase common stock of the Company. There are authorized shares of treasury stock reserved for issuance under the plan for which a registration statement ~~was~~has not been filed. ~~The~~Through December 2015, the Company ~~contributes~~contributed on behalf of each participant an amount equal to lesser of (i) the aggregate amount of the participant’s payroll deductions the purchase period, or (ii) 3% of the participant’s base compensation during the purchase period.


^4.	The Company has adopted a stock incentive plan to provide eligible persons in the Company’s service an opportunity to acquire common stock of the Company. There are authorized shares of treasury stock reserved for issuance under the plan for which a registration statement has not been filed.

Item 13. Certain Relationships and Related Transactions, and Director Independence

U.S. Global is invested in several of the mutual funds it manages. See Note 1819 Related Party Transactions to the Consolidated Financial Statements of this Annual Report inon Form 10-K, which incorporates the information of the relationships and related transaction for this Item 13. Refer to Item 10 for information regarding director independence.

Table of Contents

Item 14. Principal Accounting Fees and Services

The following table represents fees for professional audit services for the audit of the Company’s annual financial statements for the fiscal years ended June 30, ~~2015,~~2016, and ~~2014,~~2015, respectively, rendered by BDO USA, LLP.


	Fiscal year ended June 30,				Fiscal year ended June 30,
(dollars in thousands)	2015		2014		2016		2015
Audit fees ¹	$	245	$	296	$	230	$	245
Audit-related fees ²	10		10			-		10
Tax fees ³	39		29			19		39
Total fees	$	294	$	335	$	249	$	294



Large accelerated filer o☐	Accelerated filer o☐	Non-accelerated filer x☐	Smaller Reporting Company ~~Small~~☒
		(Do not check if a smaller reporting ~~company~~ ocompany)



Part I of Annual Report on Form 10-K	1
Item 1. Business	1
Item 1A. Risk Factors	7
Item 1B. Unresolved Staff Comments	11 10
Item 2. Properties	11 10
Item 3. Legal Proceedings	11 10
Item 4. Mine Safety Disclosures	11 10
Part II of Annual Report on Form 10-K	12 11
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities	12 11
Item 6. Selected Financial Data	15 13
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16 14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk	30 28
Item 8. Financial Statements and Supplementary Data	31 30
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	60 62
Item 9A. Controls and Procedures	60 62
Item 9B. Other Information	60 62
Part III of Annual Report on Form 10-K	61 63
Item 10. Directors, Executive Officers and Corporate Governance	61 63
Item 11. Executive Compensation	64 66
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	70 72
Item 13. Certain Relationships and Related Transactions, and Director Independence	71 73
Item 14. Principal Accounting Fees and Services	71 74
Part IV of Annual Report on Form 10-K	73 75
Item 15. Exhibits, Financial Statement Schedules	73 75
Signatures	75
~~Exhibit 10.16 - Modification dated May 14, 2015, to Line of Credit Note dated February 26, 2009~~
~~Exhibit 10.18 - Credit agreement dated June 29, 2015~~
~~Exhibit 14.02 - Code of Ethics, adopted June 28, 1989, and amended April 29, 2015~~	77
Exhibit 21 — Subsidiaries of the Company, Jurisdiction of Incorporation, and Percentage of Ownership
Exhibit 23.1 — BDO USA, LLP consent
Exhibit 31.1 — Rule 13a – 14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.1 — Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002)


Assets Under Management (“AUM”)
Assets Under Management (“AUM”)						Assets Under Management (“AUM”)
Fund	Ticker	June 30, 2015		June 30, 2014			Ticker	June 30, 2016		June 30, 2015
(dollars in thousands)
U.S. Global Investors Funds
Natural Resources
Global Resources	PSPFX/PIPFX	$	135,732	$	349,945		PSPFX/PIPFX	$	100,049	$	135,732
World Precious Minerals	UNWPX/UNWIX	94,897		166,993			UNWPX/UNWIX		179,593		94,897
Gold and Precious Metals	USERX	64,021		97,339			USERX		132,061		64,021
Total Natural Resources		294,650		614,277					411,703		294,650
International Equity
Emerging Europe	EUROX	58,225		102,065			EUROX		42,332		58,225
China Region	USCOX	22,000		23,380			USCOX		16,391		22,000
Total International Equity		80,225		125,445					58,723		80,225
Fixed Income
U.S. Government Securities Ultra-Short Bond	UGSDX	58,332		68,576			UGSDX		58,277		58,332
Near-Term Tax Free	NEARX	90,251		61,984			NEARX		118,965		90,251
Total Fixed Income		148,583		130,560					177,242		148,583
Domestic Equity
Holmes Macro Trends	MEGAX	46,368		51,980			MEGAX		37,012		46,368
All American Equity	GBTFX	21,000		23,666			GBTFX		18,340		21,000
Total Domestic Equity		67,368		75,646					55,352		67,368
Total U.S. Global Investors Funds		590,826		945,928					703,020		590,826
U.S Global Jets ETF	JETS	39,200		—
U.S. Global Jets ETF							JETS		43,430		39,200
Offshore Advisory Clients		11,527		20,012					13,777		11,527
		641,553		965,940					760,227		641,553
Total Canada AUM (see separate discussion)		150,718		267,210					122,844		150,718
Total AUM		$	792,271	$	1,233,150			$	883,071	$	792,271


1.	Investment Management Services, through which the Company offers, through U.S. Global Investors Funds (“USGIF” or the “Fund(s)”), offshore clients, and an exchange traded fund (“ETF”) client, a range of investment management products and services to meet the needs of individual and institutional investors;


2.	Investment Management Services - Canada, through which, as of June 1, 2014, the Company owns a 65% controlling interest in Galileo Global Equity Advisors Inc. (“Galileo”), a privately held Toronto-based asset management firm which offers investment management products and services in Canada; and


3.	Corporate Investments, through which the Company invests for its own account in an effort to add growth and value to its cash position. Although the Company generates the majority of its revenues from its investment advisory segments, the Company holds a significant amount of its total assets in investments.


^1.	The mutual funds managed by Galileo ~~Funds~~(“Galileo Funds”) are Canadian registered mutual funds and are not available in the United States.



(dollars in thousands, except price data)
Period	Total Number of Shares Purchased ¹	Total Amount Purchased		Average Price Paid Per Share ²		Total Number of Shares Purchased as Part of Publicly Announced Plan ³	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
04-01-15 to 04-30-15	—	—		n/a		—	2,689
05-01-15 to 05-31-15	400	1		2.83		400	2,688
06-01-15 to 06-30-15	8,601	24		2.82		8,601	2,664
Total	9,001	$	25	$	2.82	9,001



	Fiscal Year-End Date
	2010		2011		2012		2013		2014		2015
U.S. Global Investors, Inc. class A (GROW)	$	10,000	$	10,529	$	6,622	$	3,323	$	5,655	$	4,550
S&P 500 Index	$	10,000	$	12,385	$	13,060	$	15,750	$	19,626	$	21,082
Russell 2000 Index	$	10,000	$	12,676	$	12,413	$	15,417	$	19,062	$	20,298
NYSE Arca Gold BUGS Index	$	10,000	$	11,579	$	9,620	$	5,219	$	5,592	$	3,525



(dollars in thousands)	Fair Value		Hypothetical Percentage Change	Estimated Fair Value After Hypothetical Price Change		Increase (Decrease) in Shareholders’ Equity, Net of Tax
Trading securities ¹	$	15,640	25% increase	$	19,550	$	3,910
			25% decrease	11,730		(3,910		)
Available-for-sale ²	4,263		25% increase	5,329		1,066
			25% decrease	3,197		(1,066		)



(dollars in thousands)
Fair value of acquisition components
Current assets	$	1,788
Property and equipment	149
Intangible asset re: non-compete agreement	90
Other noncurrent assets	13
Current liabilities	(278		)
Non-controlling interest in subsidiary	(617		)
Gain on purchase of 15%	(129		)
	$	1,016

Fair value of consideration as of June 1, 2014
Fair value of March 31, 2013 initial investment for 50% of stock	$	836
June 1, 2014 acquisition for 15% of stock for cash	180
	$	1,016



	June 30, 2015
	Fair Value Measurement using
(dollars in thousands)	Quoted Prices (Level 1)		Significant Other Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Trading securities
Offshore fund	$	—	$	481	$	—	$	481
Mutual funds - Fixed income	14,754		—		—		14,754
Mutual funds - Domestic equity	405		—		—		405
Other	—		—		—		—
Total trading securities	15,159		481		—		15,640

Available-for-sale securities
Common stock - Domestic	842		—		—		842
Common stock - International	965		—		—		965
Corporate debt	—		77		539		616
Mutual funds - Fixed income	1,214		—		—		1,214
Mutual funds - Domestic equity	463		—		—		463
Other	163		—		—		163
Total available-for-sale securities	3,647		77		539		4,263

Total	$	18,806	$	558	$	539	$	19,903

	June 30, 2014
	Fair Value Measurement using
(dollars in thousands)	Quoted Prices (Level 1)		Significant Other Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
Trading securities
Offshore fund	$	—	$	998	$	—	$	998
Mutual funds - Fixed income	16,333		—		—		16,333
Mutual funds - Domestic equity	459		—		—		459
Other	27		—		—		27
Total trading securities	16,819		998		—		17,817

Available-for-sale securities
Common stock - Domestic	1,118		—		—		1,118
Common stock - International	1,406		3		—		1,409
Corporate debt	292		1,090		250		1,632
Mutual funds - Fixed income	1,247		—		—		1,247
Mutual funds - Domestic equity	550		—		—		550
Other	240		—		—		240
Total available-for-sale securities	4,853		1,093		250		6,196

Total	$	21,672	$	2,091	$	250	$	24,013



(dollars in thousands)	Amortization Expense
2016	$	41
2017	—
2018	—
2019	—
2020	—



~~Lines of Business~~

(dollars in thousands)
Fiscal Year	Amount
2017	$	196
2018		193
2019		72
2020		-
2021		-
Total	$	461

(dollars in thousands, except price data)	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (net of tax)
Outstanding June 30, 2013		29,000		$	17.03
Granted		-			n/a
Exercised		-			n/a
Forfeited		(7,000	)	$	11.74
Outstanding June 30, 2014		22,000		$	18.72
Granted		-			n/a
Exercised		-			n/a
Forfeited		-			n/a
Outstanding June 30, 2015		22,000		$	18.72
Granted		-			n/a
Exercised		-			n/a
Forfeited		(20,000	)	$	19.36
Outstanding June 30, 2016		2,000		$	12.31	3.27	$ 12



(dollars in thousands, except price data)	Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life in Years	Aggregate Intrinsic Value (net of tax)
Outstanding June 30, 2012	29,000	$	17.03
Granted	—	n/a
Exercised	—	n/a
Forfeited	—	n/a
Outstanding June 30, 2013	29,000	$	17.03
Granted	—	n/a
Exercised	—	n/a
Forfeited	7,000	$	11.74
Outstanding June 30, 2014	22,000	$	18.72
Granted	—	n/a
Exercised	—	n/a
Forfeited	—	n/a
Outstanding June 30, 2015	22,000	$	18.72	2.44	$	165



	Options Outstanding					Options Exercisable
	Date of Option Grant	Number Outstanding	Remaining Life in Years	Weighted Average Exercise Price ($)		Number Exercisable	Weighted Average Option Price ($ )
1997 Plan Class A	10/3/2007	20,000	2.25	$	19.36	20,000	$	19.36
	10/7/2009	2,000	4.27	$	12.31	2,000	$	12.31
		22,000	2.44	$	18.72	22,000	$	18.72


^1.	Amounts reclassified from unrealized gains (losses) on available-for-sale investments, net of tax, were recorded in investment income (loss) on the Consolidated Statements of Operations.


¹	~~Includes operating revenues from USGIF of $7,208, $11,011 and $17,000 in fiscal years 2015, 2014, and 2013, respectively.~~


²	~~Includes operating revenues from Galileo Funds of $1,638, $184 and $0; and other advisory clients of $354, $48~~



Name and Address of Beneficial Owner	Class A Common Shares Beneficially Owned		Percent of Class (%)
Financial & Investment Management Group, Ltd. - Traverse City, MI ¹	2,638,047	¹	19.89	%
Royce & Associates, LLC ²	2,050,954	²	15.46	%


^1.	Audit fees consist of fees for professional services rendered by the principal accountant for the audit of the Company’s annual financial statements and review of the financial statements included in the Company’s Form 10-Q and for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.


^2.	Audit-related fees consist primarily of fees for assurance and related services by the accountant that are reasonably related to the performance of the audit or review of the Company’s financial statements and fees related to the audit of the Employee Stock Purchase Plan.


^3.	Tax fees include the preparation of federal tax returns as well as tax planning and consultation on new tax legislation, regulations, rulings, and developments.



3.1		Fourth Restated and Amended Articles of Incorporation of Company, incorporated by reference to the Company’s Form 10-Q for the quarterly report ended March 31, 2007 (EDGAR Accession Number 000095134-07-010817).
3.2		Amended and Restated By-Laws of Company, incorporated by reference to Exhibit 3.02 of the Company’s Form 8-K filed on November 8, 2006, (EDGAR Accession Number 0000754811-06-000076).
10.1		Advisory Agreement with U.S. Global Investors Funds, dated October 1, 2008, incorporated by reference to Post-Effective Amendment 100 filed October 1, 2008 (EDGAR Accession No. 0000950134-08-017422).
10.2		~~Amended and Restated Transfer Agency~~ Distribution Agreement dated ~~January 15, 2010,~~December 10, 2015, by and between U.S. Global Investors Funds and ~~United Shareholder~~Foreside Fund Services, ~~Inc.,~~LLC, incorporated by reference to ~~Post-Effective Amendment 105~~the Company’s Form 10-Q for the quarter ended December 31, 2015, filed February ~~26, 2010~~12, 2016 (EDGAR Accession No. ~~0000950123-10-018191)~~0001185185-16-003686).
10.3		Distribution Services Agreement dated December 10, 2015, by and between U.S. Global Investors, Inc. and Foreside Fund Services, LLC, incorporated by reference to the Company’s Form 10-Q for the quarter ended December 31, 2015, filed February 12, 2016 (EDGAR Accession No. 0001185185-16-003686).
10.4		Amended and Restated Administrative Services Agreement dated December 9, ~~2013,~~2015, by and between U.S. Global Investors Funds and U.S. Global Investors, Inc., incorporated by reference to ~~Exhibit 10.3 of~~ the Company’s ~~Quarterly Report on~~ Form 10-Q for the ~~quarterly period~~quarter ended December 31, ~~2013~~2015, filed February 12, 2016 (EDGAR Accession No. ~~0000754811-14-000019)~~0001185185-16-003686).
~~10.4~~10.5		~~Amended and Restated~~ Distribution Plan Pursuant to Rule 12b-1 ~~Plan, dated January 15, 2010,~~adopted December 9, 2015 by ~~and between~~the Board of Trustees of U.S. Global Investors Funds, ~~and U.S. Global Brokerage, Inc.,~~ incorporated by reference to ~~Post-Effective Amendment 105~~the Company’s Form 10-Q for the quarter ended December 31, 2015, filed February ~~26, 2010~~12, 2016 (EDGAR Accession No. ~~0000950123-10-018191)~~0001185185-16-003686).
~~10.5~~10.6		Amended and Restated Distribution Agreement dated March 4, 2010, by and between U.S. Global Investors Funds and U.S. Global Brokerage, Inc., incorporated by reference to Post-Effective Amendment 107 filed April 30, 2010 (EDGAR Accession No. 0001104659-10-024038).
~~10.7~~		United Services Advisors, Inc. 1989 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 4(a) of the Company’s Registration Statement No. 33-3012, Post-Effective Amendment No. 2, filed on Form S-8 with the Commission on April 23, 1997 (EDGAR Accession No. 0000754811-97-000004).
~~10.8~~10.7		U.S. Global Investors, Inc. 1997 Non-Qualified Stock Option Plan, incorporated by reference to Exhibit 4 of the Company’s Registration Statement No. 333-25699 filed on Form S-8 with the Commission on April 23, 1997 (EDGAR Accession No. 0000754811-97-000003).
~~10.9~~10.8		Line of Credit Note dated June 3, 2005, between the Company and JP Morgan Chase Bank N.A., incorporated by reference to Exhibit 10.10 of the Company’s Form 10-K for fiscal year ended June 30, 2006 (EDGAR Accession No. 0000950134-06-017619).
~~10.10~~		2010 Stock Incentive Plan, incorporated by reference to the Company’s Form 10-K for the period ended June 30, 2011, filed on September ~~26,~~6, 2011 (EDGAR Accession No. 0000950123-11-082564).
~~10.11~~		~~Reserved~~
~~10.12~~		Amendment dated February 26, 2009 to Credit Agreement dated June 3, 2005, and Line of Credit Note dated February 26, 2009 by and between the Company and JP Morgan Chase Bank N.A., incorporated by reference, filed on September 10, 2009 (EDGAR Accession No. 0000950123-09-042459).
~~10.13~~		Registration statement for the U.S. Global Investors, Inc. Employee Stock Purchase Plan, as amended May 9, 2005, incorporated by reference, filed July 8, 2008 (EDGAR Accession No. 0000950134-08-012469).
~~10.14~~		~~Registration statement for the U.S. Global Investors, Inc. 401(k) Plan, as amended January 1, 2007, incorporated by reference, filed July 8, 2008 (EDGAR Accession No. 0000950134-08-012468).~~



~~10.15~~		Registration statement for the U.S. Global Investors, Inc. Employee Stock Purchase Plan, as amended April 28, 2009, incorporated by reference, filed April 30, 2009 (EDGAR Accession No. 0000950134-09-008950).
~~10.16~~		~~Note Modification Agreement dated May 14, 201, by and between the Company and JPMorgan Chase Bank, N.A., included herein.~~
~~10.17~~		Amended and Restated Administrative Services Agreement, dated August 14, 2014, and effective as of November 1, 2014, by and between U.S. Global Investors Funds and U.S. Global Investors, Inc., (EDGAR Accession No. 0001104659-14-062160).
~~10.18~~		~~Line of Credit Note dated June 29, 2015, between the Company and JP Morgan Chase Bank N.A., included herein.~~
14.01		Code of Ethics for Principal Executive and Senior Financial Officers, adopted December 15, 2003, and amended February ~~23, 2009,~~17, 2016, incorporated by reference to the Company's Form 10-Q for the quarter ended March 31, 2016, filed on ~~September 10, 2009~~May 12, 2016 (EDGAR Accession No. ~~0000950123-09-042459)~~0001185185-16-004512).
14.02		Code of Ethics, adopted June 28, 1989, and amended February 23, 2016, incorporated by reference to U.S. Global Investors Funds Post-Effective Amendment 125 filed April 29, ~~2015, included herein.~~2016 (EDGAR Accession No. 0001398344-16-012463).
21		List of Subsidiaries of the Company, included herein.
23.1		BDO USA, LLP consent of independent registered public accounting firm for Form 10-K for U.S. Global Investors, Inc., included herein.
24		Power of Attorney, incorporated by reference to Annual Report on Form 10-K for fiscal year ended June 30, 2001 (EDGAR Accession No. 0000754811-01-500016).
31.1		Rule 13a-14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002), included herein.
32.1		Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002), included herein.
101.INS		INS XBRL Instance Document.
101.SCH		SCH XBRL Taxonomy Extension Schema Document.
101.CAL		CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		DEF XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		LAB XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE		PRE XBRL Taxonomy Extension Presentation Linkbase Document.



				U.S. G~~LOBAL~~ I~~NVESTORS, I~~NC.
				Global Investors, Inc.
			~~By:~~
Date: September 14, 2016	By:	/s/ Frank E. Holmes
		Frank E. Holmes
		Chief Executive Officer
			F~~RANK~~ ~~E. HOLMES~~
~~Date:~~	~~September 16, 2015~~		~~Chief Executive Officer~~


Signature	Capacity in which signed		Date
S~~IGNATURE~~		C~~APACITY~~IN~~WHICHSIGNED~~	D~~ATE~~/s/ Frank E. Holmes

~~/s/~~ Frank E. Holmes
F~~RANK~~ ~~E. HOLMES~~		Chief Executive Officer Chief Investment Officer Director	September ~~16, 2015~~14, 2016

* /s/ Thomas F. Lydon, Jr.
T~~HOMAS~~Thomas F. L~~YDON, J~~R.	Lydon, Jr.	Director	September ~~16, 2015~~14, 2016

* /s/ Jerold H. Rubinstein
J~~EROLD~~Jerold H. R~~UBINSTEIN~~	Rubinstein	Chairman, Board of Directors	September ~~16, 2015~~14, 2016

* /s/ Roy D. Terracina
ROYRoy D. T~~ERRACINA~~	Terracina	Director	September ~~16, 2015~~14, 2016

/s/ Lisa C. Callicotte
L~~ISA~~Lisa C. C~~ALLICOTTE~~	Callicotte	Chief Financial Officer	September ~~16, 2015~~14, 2016

*BY: /s/ Susan B. McGee
Susan B. McGee Attorney-in-Fact under Power of Attorney dated September 26, 2001				September ~~16, 2015~~14, 2016