UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended ~~March 31,~~September 30, 2023

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ____________ to ____________.

Commission File Number 0-13928

U.S. GLOBAL INVESTORS, INC.

(Exact name of registrant as specified in its charter)

Texas	74-1598370
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

7900 Callaghan Road San Antonio, Texas	78229 (Zip Code)
(Address of principal executive offices)

(210) 308-1234

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

Class A common stock,

$0.025 par value per share

GROW

NASDAQ Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

On ~~June 15,~~December 8, 2023, there were 13,866,999 shares of Registrant’s class A nonvoting common stock issued and ~~12,509,775~~12,187,354 shares of Registrant’s class A nonvoting common stock issued and outstanding; no shares of Registrant’s class B nonvoting common shares outstanding; and 2,068,549 shares of Registrant’s class C voting common stock issued and outstanding.

Table of Contents

TABLE OF CONTENTS

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED BALANCE SHEETS

	*March 31, 2023*			*June 30, 2022*			*September 30, 2023*			*June 30, 2023*
(dollars in thousands)	(unaudited)						(unaudited)
Assets
Current Assets
Cash and cash equivalents	$	24,947		$	22,314		$	26,849		$	25,401
Restricted cash		1,000			1,000			1,000			1,000
Investments in equity securities at fair value, current		11,701			12,138			10,793			11,642
Accounts and other receivables		1,327			1,796
Accounts and other receivables (net of allowance for credit losses of $0, and $0, respectively)								1,109			1,245
Tax receivable		99			384			421			576
Prepaid expenses		566			400			337			510
Total Current Assets		39,640			38,032			40,509			40,374

Net Property and Equipment		1,198			1,370			1,136			1,138

Other Assets
Deferred tax asset		1,659			872			2,287			1,920
Investments in equity securities at fair value, non-current		1,483			2,162			1,127			1,563
Investments in available-for-sale debt securities at fair value		7,649			10,625
Investments in held-to-maturity debt securities		1,000			1,000
Investments in available-for-sale debt securities at fair value (amortized cost: $7,414 and $7,729, respectively) (net of allowance for credit losses of $0, and $0, respectively)								6,343			7,008
Investments in held-to-maturity debt securities at amortized cost								1,000			1,000
Less: Allowance for credit losses								(205	)		-
Investments in held-to-maturity debt securities, net of allowance for credit losses								795			1,000
Other investments		2,827			3,992			1,613			2,388
Financing lease, right of use assets		72			93			60			65
Other assets, non-current		217			216			222			217
Total Other Assets		14,907			18,960			12,447			14,161
Total Assets	$	55,745		$	58,362		$	54,092		$	55,673
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	133		$	73		$	-		$	143
Accrued compensation and related costs		820			1,864			1,197			1,165
Dividends payable		332			337			324			329
Financing lease liability, short-term		28			27			30			28
Other accrued expenses		1,369			1,831			1,277			1,274
Taxes payable		96			-
Total Current Liabilities		2,778			4,132			2,828			2,939

Long-Term Liabilities
Deferred tax liability		2			-			1			4
Reserve for uncertain tax positions								530			496
Financing lease liability, long-term		45			66			32			38
Total Long-Term Liabilities		47			66			563			538
Total Liabilities		2,825			4,198			3,391			3,477

Commitments and Contingencies (Note 12)
Commitments and Contingencies (Note 13)

Shareholders’ Equity
Common stock (class A) - $0.025 par value; nonvoting; 28,000,000 shares authorized; 13,866,999 shares issued at March 31, 2023, and June 30, 2022; 12,582,905 and 12,888,950 shares outstanding at March 31, 2023, and June 30, 2022, respectively		347			347
Common stock (class A) - $0.025 par value; nonvoting; 28,000,000 shares authorized; 13,866,999 shares issued at September 30, 2023, and June 30, 2023; 12,303,955 and 12,496,674 shares outstanding at September 30, 2023, and June 30, 2023, respectively								347			347
Common stock (class B) - $0.025 par value; nonvoting; 4,500,000 shares authorized; no shares issued		-			-			-			-
Convertible common stock (class C) - $0.025 par value; voting; 3,500,000 shares authorized; 2,068,549 shares issued and outstanding at March 31, 2023, and June 30, 2022		52			52
Convertible common stock (class C) - $0.025 par value; voting; 3,500,000 shares authorized; 2,068,549 shares issued and outstanding at September 30, 2023, and June 30, 2023								52			52
Additional paid-in-capital		16,442			16,438			16,444			16,442
Treasury stock, class A shares at cost; 1,284,094 shares and 978,049 shares at March 31, 2023, and June 30, 2022, respectively		(3,499	)		(2,599	)
Treasury stock, class A shares at cost; 1,563,044 shares and 1,370,325 shares at September 30, 2023, and June 30, 2023, respectively								(4,342	)		(3,740	)
Accumulated other comprehensive income, net of tax		1,659			3,624			1,134			1,348
Retained earnings		37,919			36,302			37,066			37,747
Total Shareholders’ Equity		52,920			54,164			50,701			52,196
Total Liabilities and Shareholders’ Equity	$	55,745		$	58,362		$	54,092		$	55,673

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

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U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

	*Nine Months Ended*						*Three Months Ended*					*Three Months Ended*
	*March 31,*						*March 31,*					*September 30,*
(dollars in thousands, except per share data)	*2023*			*2022*			*2023*		*2022*			*2023*			*2022*
Operating Revenues
Advisory fees	$	11,663		$	19,124		$	3,591	$	6,129		$	3,103		$	4,377
Administrative services fees		101			146			33		46			30			35
		11,764			19,270			3,624		6,175			3,133			4,412
Operating Expenses
Employee compensation and benefits		3,569			4,973			1,264		1,319			1,274			1,175
General and administrative		4,489			5,504			1,477		2,140			1,501			1,504
Advertising		297			305			91		138			81			86
Depreciation		183			165			61		61			61			61
Interest		3			-			1		-			1			1
		8,541			10,947			2,894		3,658			2,918			2,827
Operating Income		3,223			8,323			730		2,517			215			1,585
Other Income (Loss)
Investment income (loss)		(189	)		(1,950	)		1,155		(3,495	)
Loss from equity method investments		-			(206	)		-		(173	)
Net investment income (loss)													(513	)		(1,460	)
Other income		184			174			61		59			57			61
		(5	)		(1,982	)		1,216		(3,609	)		(456	)		(1,399	)
Income (Loss) Before Income Taxes		3,218			6,341			1,946		(1,092	)		(241	)		186
Provision for Income Taxes
Tax expense (benefit)		602			1,207			306		(246	)		(65	)		133
Net Income (Loss)	$	2,616		$	5,134		$	1,640	$	(846	)	$	(176	)	$	53

Earnings Per Share
Basic Net Income (Loss) per share	$	0.18		$	0.34		$	0.11	$	(0.06	)	$	(0.01	)	$	0.00
Diluted Net Income (Loss) per share	$	0.18		$	0.34		$	0.11	$	(0.06	)	$	(0.01	)	$	0.00

Basic weighted average number of common shares outstanding		14,862,893			15,020,920			14,747,537		15,010,630			14,465,510			14,948,688
Diluted weighted average number of common shares outstanding		14,863,188			15,021,943			14,747,637		15,011,582			14,465,701			14,949,275

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

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U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

	*Nine Months Ended*						*Three Months Ended*						*Three Months Ended*
	*March 31,*						*March 31,*						*September 30,*
(dollars in thousands)	*2023*			*2022*			*2023*			*2022*			*2023*			*2022*
Net Income (Loss)	$	2,616		$	5,134		$	1,640		$	(846	)	$	(176	)	$	53
Other Comprehensive Loss
Unrealized gains (losses) on available-for-sale securities arising during period, net of tax		(939	)		(428	)		80			(141	)		51			(115	)
Less: reclassification adjustment for gains included in net income, net of tax		(1,026	)		(1,339	)		(311	)		(414	)
Less: reclassification adjustment for gains included in net income (loss), net of tax														(265	)		(371	)
Net change from available-for-sale securities		(1,965	)		(1,767	)		(231	)		(555	)		(214	)		(486	)
Foreign currency translation adjustment		-			(13	)		-			(3	)
Less: reclassification adjustment for foreign currency gains included in net income		-			(10	)		-			(10	)
Net change from foreign currency translations		-			(23	)		-			(13	)
Other Comprehensive Loss		(1,965	)		(1,790	)		(231	)		(568	)		(214	)		(486	)
Total Comprehensive Income (Loss)	$	651		$	3,344		$	1,409		$	(1,414	)
Total Comprehensive Loss													$	(390	)	$	(433	)

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

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Table of Contents

U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)

Common Stock

Convertible Common Stock

Treasury Stock

Accumulated

(class A)

(class C)

Additional

Other

(dollars in thousands,

Paid-in

Comprehensive

Retained

except share data)

Shares

Par Value

Shares

Par Value

Capital

Shares

Cost

Income (Loss)

Earnings

Total

Balance at June 30, 2022
13,866,999 $ 347 2,068,549 $ 52 $ 16,438 978,049 $ (2,599 ) $ 3,624 $ 36,302 $ 54,164
Repurchases of shares of Common Stock (class A)
- - - - - 39,965 (133 ) - - (133 )
Issuance of stock under ESPP of shares of Common Stock (class A)
- - - - 3 (3,983 ) 10 - - 13
Share-based compensation, adjustment for forfeitures, net of tax
- - - - (1 ) - - - - (1 )
Dividends declared
- - - - - - - - (335 ) (335 )
Other comprehensive loss, net of tax
- - - - - - - (486 ) - (486 )
Net income
- - - - - - - - 107 107
Balance at September 30, 2022
13,866,999 $ 347 2,068,549 $ 52 $ 16,440 1,014,031 $ (2,722 ) $ 3,138 $ 36,074 $ 53,329
Repurchases of shares of Common Stock (class A)
- - - - - 87,407 (249 ) - - (249 )
Issuance of stock under ESPP of shares of Common Stock (class A)
- - - - 1 (4,898 ) 13 - - 14
Dividends declared
- - - - - - - - (335 ) (335 )
Other comprehensive loss, net of tax
- - - - - - - (1,248 ) - (1,248 )
Net income
- - - - - - - - 869 869
Balance at December 31, 2022
13,866,999 $ 347 2,068,549 $ 52 $ 16,441 1,096,540 $ (2,958 ) $ 1,890 $ 36,608 $ 52,380
Repurchases of shares of Common Stock (class A)
- - - - - 193,040 (556 ) - - (556 )
Issuance of stock under ESPP of shares of Common Stock (class A)
- - - - 1 (5,486 ) 15 - - 16
Dividends declared
- - - - - - - - (329 ) (329 )
Other comprehensive loss, net of tax
- - - - - - - (231 ) - (231 )
Net income
- - - - - - - - 1,640 1,640
Balance at March 31, 2023
13,866,999 $ 347 2,068,549 $ 52 $ 16,442 1,284,094 $ (3,499 ) $ 1,659 $ 37,919 $ 52,920

~~Page 4~~

~~Table of Contents~~

	*Common Stock*				*Convertible Common Stock*						*Treasury Stock*						*Accumulated*
	*(class A)*				*(class C)*				*Additional*								*Other*
									*Paid-in*								*Comprehensive*			*Retained*
(dollars in thousands)	*Shares*		*Par Value*		*Shares*		*Par Value*		*Capital*		*Shares*			*Cost*			*Income (Loss)*			*Earnings*			*Total*
Balance at June 30, 2023		13,866,999	$	347		2,068,549	$	52	$	16,442		1,370,325		$	(3,740	)	$	1,348		$	37,747		$	52,196
Impact of ASU 2016-13 adoption, net of tax (Note 2)		-		-		-		-		-		-			-			-			(183	)		(183	)
Balance at June 30, 2023 (as adjusted for change in accounting principle)		13,866,999	$	347		2,068,549	$	52	$	16,442		1,370,325		$	(3,740	)	$	1,348		$	37,564		$	52,013
Repurchases of shares of Common Stock (class A), including excise tax		-		-		-		-		-		198,213			(617	)		-			-			(617	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-		-		2		(5,494	)		15			-			-			17
Dividends declared		-		-		-		-		-		-			-			-			(322	)		(322	)
Other comprehensive loss, net of tax		-		-		-		-		-		-			-			(214	)		-			(214	)
Net loss		-		-		-		-		-		-			-			-			(176	)		(176	)
Balance at September 30, 2023		13,866,999	$	347		2,068,549	$	52	$	16,444		1,563,044		$	(4,342	)	$	1,134		$	37,066		$	50,701

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

~~CONSOLIDATED STATEMENTS OF SHAREHOLDERS~~’ ~~EQUITY (CONTINUED) (UNAUDITED)~~

	Common Stock				Convertible Common Stock						Treasury Stock						Accumulated									*Common Stock*				*Convertible Common Stock*							*Treasury Stock*						*Accumulated*
	(class A)				(class C)				Additional								Other									*(class A)*				*(class C)*				*Additional*									*Other*
(dollars in thousands,									*Paid-in*								*Comprehensive*			*Retained*
except share data)	*Shares*		*Par Value*		*Shares*		*Par Value*		*Capital*		*Shares*			*Cost*			*Income (Loss)*			*Earnings*			*Total*
Balance at June 30, 2021		13,866,913	$	347		2,068,635	$	52	$	15,677		898,953		$	(2,172	)	$	6,587		$	33,833		$	54,324
																																		*Paid-in*									*Comprehensive*			*Retained*
(dollars in thousands)																										*Shares*		*Par Value*		*Shares*		*Par Value*		*Capital*			*Shares*			*Cost*			*Income (Loss)*			*Earnings*			*Total*
Balance at June 30, 2022																											13,866,999	$	347		2,068,549	$	52	$	16,438			978,049		$	(2,599	)	$	3,624		$	35,923		$	53,785
Repurchases of shares of Common Stock (class A)		-		-		-		-		-		13,647			(82	)		-			-			(82	)		-		-		-		-		-			39,965			(133	)		-			-			(133	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-		-		8		(2,228	)		6			-			-			14			-		-		-		-		3			(3,983	)		10			-			-			13
Share-based compensation, net of tax		-		-		-		-		388		-			-			-			-			388			-		-		-		-		(1	)		-			-			-			-			(1	)
Dividends declared		-		-		-		-		-		-			-			-			(338	)		(338	)		-		-		-		-		-			-			-			-			(335	)		(335	)
Other comprehensive loss, net of tax		-		-		-		-		-		-			-			(635	)		-			(635	)		-		-		-		-		-			-			-			(486	)		-			(486	)
Net income		-		-		-		-		-		-			-			-			2,390			2,390			-		-		-		-		-			-			-			-			53			53
Balance at September 30, 2021		13,866,913	$	347		2,068,635	$	52	$	16,073		910,372		$	(2,248	)	$	5,952		$	35,885		$	56,061
Repurchases of shares of Common Stock (class A)		-		-		-		-		-		10,457			(54	)		-			-			(54	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-		-		7		(2,542	)		5			-			-			12
Share-based compensation, net of tax		-		-		-		-		345		-			-			-			-			345
Dividends declared		-		-		-		-		-		-			-			-			(338	)		(338	)
Other comprehensive loss, net of tax		-		-		-		-		-		-			-			(587	)		-			(587	)
Net income		-		-		-		-		-		-			-			-			3,590			3,590
Balance at December 31, 2021		13,866,913	$	347		2,068,635	$	52	$	16,425		918,287		$	(2,297	)	$	5,365		$	39,137		$	59,029
Repurchases of shares of Common Stock (class A)		-		-		-		-		-		19,487			(97	)		-			-			(97	)
Issuance of stock under ESPP of shares of Common Stock (class A)		-		-		-		-		7		(2,470	)		6			-			-			13
Dividends declared		-		-		-		-		-		-			-			-			(337	)		(337	)
Other comprehensive loss, net of tax		-		-		-		-		-		-			-			(568	)		-			(568	)
Net loss		-		-		-		-		-		-			-			-			(846	)		(846	)
Balance at March 31, 2022		13,866,913	$	347		2,068,635	$	52	$	16,432		935,304		$	(2,388	)	$	4,797		$	37,954		$	57,194
Balance at September 30, 2022																											13,866,999	$	347		2,068,549	$	52	$	16,440			1,014,031		$	(2,722	)	$	3,138		$	35,641		$	52,896

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

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U.S. GLOBAL INVESTORS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	*Nine Months Ended March 31,*						*Three Months Ended September 30,*
(dollars in thousands)	*2023*			*2022*			*2023*			*2022*
Cash Flows from Operating Activities:
Net income	$	2,616		$	5,134
Adjustments to reconcile net income to net cash provided by operating activities:
Net income (loss)							$	(176	)	$	53
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation, amortization and accretion		(198	)		(333	)		(38	)		(77	)
Net recognized loss on disposal of fixed assets		3			-			-			3
Net realized gains on securities		(1,286	)		(3,542	)
Net realized (gains) losses on securities								482			(469	)
Unrealized losses on securities		2,504			6,996			522			1,930
Investment basis adjustment		(5	)		-
Net loss from equity method investment		-			206
Foreign currency transaction gain		-			(10	)
Provision for deferred taxes		(265	)		(1,823	)		(265	)		(371	)
Share-based compensation expense		-			733
Allowance for credit losses								(27	)		-
Changes in operating assets and liabilities:
Accounts and other receivables		754			2,445			291			508
Prepaid expenses and other assets		(146	)		(206	)		172			78
Accounts payable and accrued expenses		(1,348	)		(452	)
Accounts payable and other accrued liabilities								(77	)		(480	)
Total adjustments		13			4,014			1,060			1,122
Net cash provided by operating activities		2,629			9,148			884			1,175
Cash Flows from Investing Activities:
Purchase of property and equipment		(14	)		(213	)		(59	)		(14	)
Purchase of equity securities at fair value, non-current		-			(123	)
Purchase of other investments		(663	)		(573	)		-			(477	)
Proceeds from sale of equity method investment		-			85
Proceeds on sale of equity securities at fair value, current		350			-
Proceeds on sale of equity securities at fair value, non-current		-			2,850			800			-
Proceeds from principal paydowns of available-for-sale debt securities at fair value		2,250			2,250			750			750
Return of capital on other investments								-			2
Net cash provided by investing activities		1,923			4,276			1,491			261
Cash Flows from Financing Activities:
Principal payments on financing lease		(20	)		-			(7	)		(7	)
Issuance of common stock		43			39			17			13
Repurchases of common stock		(938	)		(233	)		(611	)		(133	)
Dividends paid		(1,004	)		(901	)		(326	)		(336	)
Net cash used in financing activities		(1,919	)		(1,095	)		(927	)		(463	)
Net increase in cash, cash equivalents, and restricted cash		2,633			12,329			1,448			973
Beginning cash, cash equivalents, and restricted cash		23,314			15,436			26,401			23,314
Ending cash, cash equivalents, and restricted cash	$	25,947		$	27,765		$	27,849		$	24,287

Supplemental Disclosures of Non-Cash Investing and Financing Activities
Dividends declared but not paid	$	332		$	338		$	324		$	336
Fair value of assets acquired	$	-		$	228
Unsettled purchases of other investments	$	186		$	-

Supplemental Disclosures of Cash Flow Information
Cash paid for income taxes	$	470		$	2,126
Excise tax liability accrued on stock repurchases							$	6		$	-
Unsettled class A common stock repurchases							$	-		$	10

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

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U.S. GLOBAL INVESTORS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1. REVISION OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of its Consolidated Financial Statements for the fiscal year ended June 30, 2023, the Company determined that its previously issued Consolidated Financial Statements as of and for the three months ended September 30, 2022, contained an error. Specifically, the Company did not record certain liabilities as required by FASB Interpretation No.48 “Accounting for Uncertainty in Income Taxes” (codified under ASC 740-10). Based on management’s evaluation of the accounting error under the SEC Staff’s Accounting Bulletins Nos. 99 and 108 and interpretations thereof, the Company concluded the error is not material, on an individual or aggregate basis, to the Company’s previously reported financial statements. The Company has corrected this accounting error in the accompanying Consolidated Financial Statements as of and for the three months ended September 30, 2022, as a revision to those financial statements.

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

	*Three Months Ended September 30, 2022*
	As
	*Previously*		*Immaterial*			As
(dollars in thousands, except per share data)	*Reported*		*Revisions*			*Revised*
Tax expense	$	79	$	54		$	133
Net Income	$	107	$	(54	)	$	53

Earnings Per Share
Basic Net Income per Share	$	0.01	$	(0.01	)	$	-
Diluted Net Income per Share	$	0.01	$	(0.01	)	$	-

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

NOTE 2.BASIS OF PRESENTATION AND CONSOLIDATION

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) has prepared the ~~consolidated financial statements~~Consolidated Financial Statements pursuant to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The financial information included herein reflects all adjustments (consisting solely of normal recurring adjustments), which are, in management’s opinion, necessary for a fair presentation of results for the interim periods presented. The Company has consistently followed the accounting policies set forth in the notes to the ~~consolidated financial statements~~Consolidated Financial Statements in the Company’s Form 10~~-K/A-~~2-K for the fiscal year ended June 30, ~~2022~~2023 ("Form 10~~-K/A-~~2"-K")., except for the adoption of the new accounting pronouncement discussed below.

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

There are two primary consolidation models in U.S. GAAP, the variable interest entity (“VIE”) and voting interest entity models. The Company’s evaluation for consolidation includes whether entities in which it has an interest or from which it receives fees are VIEs and whether the Company is the primary beneficiary of any VIEs identified in its analysis. A VIE is an entity in which either (a) the equity investment at risk 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 lack certain characteristics of a controlling financial interest. The primary beneficiary is the entity that has the obligation to absorb a majority of the expected losses or the right to receive the majority of the residual returns and consolidates the VIE on the basis of having a controlling financial interest.

The Company holds variable interests in, but is not deemed to be the primary beneficiary of, certain funds it advises, specifically, certain funds in U.S. Global Investors Funds (“USGIF” or the “Funds”). The Company’s interests in these VIEs consist of the Company’s direct ownership therein and any fees earned but uncollected. See further information about these funds in Notes 23 and 34. 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 Note 34 for 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 VIEs is limited to the carrying value of its investments in, and fees receivable from, the entities. The Company is not deemed to be the primary beneficiary because it does not have the obligation to absorb a majority of the expected losses or the right to receive the majority of the residual returns. The Company does not consolidate these VIEs because it is not the primary beneficiary. The Company’s total exposure to unconsolidated VIEs, consisting of the carrying value of investment securities and receivables for fees, was ~~$12.5~~$11.5 million at ~~March 31,~~September 30, 2023, and ~~$12.8~~$12.5 million at June 30, ~~2022~~2023.

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

	*Carrying Value and Maximum Exposure to Loss*				*Carrying Value and Maximum Exposure to Loss*
(dollars in thousands)	*March 31, 2023*		*June 30, 2022*		*September 30, 2023*		*June 30, 2023*
Investments in securities at fair value, current	$	11,701	$	12,138	$	10,793	$	11,642
Investments in equity securities at fair value, non-current		745		623		702		785
Other receivables		34		21		44		45
Total VIE assets, maximum exposure to loss		12,480		12,782	$	11,539	$	12,472
Other accrued expenses		-		110
Total carrying amount	$	12,480	$	12,672

Since the Company is not the primary beneficiary of the above funds it advises, the Company evaluated if it should consolidate under the voting interest entity model. Under the voting interest model, for legal entities other than partnerships, the usual condition for control is ownership, directly or indirectly, of more than 50 percent of the outstanding voting shares over an entity. The Company does not have control of any of the above funds it advises; therefore, the Company does not consolidate any of these funds.

~~During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~~~, the Company held a variable interest in a fund organized as a limited partnership, but this entity did~~ ~~not~~ ~~qualify as a VIE. Since it was~~ ~~not~~ a VIE, the Company evaluated if it should consolidate it under the voting interest entity model. Under the voting interest model, for legal entities other than partnerships, the usual condition for control is ownership, directly or indirectly, of more than 50 ~~percent of the outstanding voting shares over an entity. The Company did~~ ~~not~~ ~~have control of the entity and, therefore, does~~ ~~not~~ consolidate it. However, the Company was considered to have the ability to exercise significant influence. Thus, the investment had been accounted for under the equity method of accounting. During fiscal ~~2022,~~ ~~this entity was dissolved. See further information about this investment in Note~~ 2.

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes. Certain quarterly amounts may not add to the year-to-date amount due to rounding. The results of operations for the interim periods disclosed herein are not necessarily indicative of the results the Company may expect for the fiscal year ending June 30, ~~2023~~2024 (“fiscal ~~2023”~~2024”).

The unaudited interim financial information in these ~~consolidated financial statements~~Consolidated Financial Statements should be read in conjunction with the ~~consolidated financial statements~~Consolidated Financial Statements contained in the Company’s annual report on Form 10~~-K/A-~~2;-K; interim disclosures generally do not repeat those in the annual statements.

Use of Estimates

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

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~~Recent~~

Adoption of New Accounting ~~Pronouncements~~Standard

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, and has subsequently issued several amendments (collectively, “ASU 2016-13”). ASU 2016-13 adds to U.S. GAAP an impairment model (known as the current expected credit loss ~~model)~~model, or "CECL") that is based on expected losses rather than incurred ~~losses.~~losses for most financial assets and certain other instruments. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses. ~~ASU~~ ~~2016~~-13 ~~will be effective~~It also modifies the impairment model for ~~smaller reporting companies, including U.S. Global, for~~available-for-sale debt securities; the concept of "other-than-temporary" impairment was replaced by a determination of whether any impairment is a result of a credit loss or other factors. To adopt the standard, entities are required to make a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal ~~years beginning after~~ ~~December 15, 2022.~~ ~~Earlier application~~year in which the guidance is ~~permitted only for fiscal years beginning after~~ ~~December 15, 2018,~~ ~~including interim periods within those fiscal years.~~effective. The Company ~~is currently evaluating if this guidance will have a material effect to its consolidated financial statements.~~

In ~~December 2019,~~ ~~the FASB issued ASU~~ ~~2019~~-~~12,~~~~Simplifying the Accounting for Income Taxes~~ ~~(“ASU~~ ~~2019~~-~~12”~~~~). ASU~~ ~~2019~~-12 ~~enhances and simplifies various aspects of the income tax accounting guidance. The amendments in ASU~~ ~~2019~~-12 ~~are effective for public business entities for fiscal years beginning after~~ ~~December 15, 2020,~~ ~~including interim periods therein. Early adoption of~~adopted the standard ~~is permitted. The standard became effective~~using the modified-retrospective approach for ~~the Company~~all financial assets measured at amortized cost on July 1, ~~2021.~~2023, and recognized an initial allowance for credit losses of $232,000 for one held-to-maturity debt security. The ~~adoption~~cumulative-effect adjustment to beginning retained earnings, net of the ~~standard did~~ ~~not~~ ~~have~~related tax effect, was a ~~material impact on the Company’s consolidated financial statements or disclosures.~~decrease of $183,000.

Recent Accounting Pronouncement

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”). The FASB issued ASU 2022-03 (1) to clarify the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security, (2) to amend a related illustrative example, and (3) to introduce new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. ASU 2022-03 will be effective for fiscal years beginning after December 15, 2023. Early adoption is permitted for both interim and annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the ~~new~~ guidance and does not expect the adoption of the new standard to have a material impact on its ~~consolidated financial statements.~~Consolidated Financial Statements.

Significant Accounting Policies

As a result of the adoption of an accounting pronouncement during the current period, the following accounting policies have been updated. For a complete listing of the Company's significant accounting policies, please refer to the Annual Report on Form 10-K for the year ended June 30, 2023.

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

Allowance for Credit Losses (Held-to-Maturity Debt Securities). For held-to-maturity debt securities, the Company is required to utilize the CECL methodology to estimate expected credit losses. Securities are evaluated on an individual basis. The individual assessment and determination of expected credit losses is generally based on the discounted cash flow method. Under the discounted cash flow method, the allowance for credit losses reflects the difference between the amortized cost basis and the present value of the expected cash flows. The Company adjusts the discount rate utilized to determine the present value of the expected cash flows quarterly for subsequent fluctuations in market interest rates. Changes in the present value attributable to the passage of time are those solely due to changes in the present value of the expected cash flows as the instrument approaches maturity rather than expectations of cash flow timing or amounts, and are included in interest income within net investment income (loss) on the Consolidated Statements of Operations. Changes in the allowance attributable to expectations of cash flow timing or amounts are recorded as a provision (or release) for credit losses and are included within other income (loss) on the Consolidated Statements of Operations. Held-to-maturity debt securities, or portions thereof, are charged against the allowance when management believes the uncollectible status of a held-to-maturity security is confirmed. Accrued interest receivable is excluded from the allowance for credit losses. See Note 3, Investments, for more information about held-to-maturity debt securities.

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Allowance for Credit Losses (Available-for-Sale Debt Securities). The impairment model for available-for-sale debt securities differs from the CECL methodology applied for held-to-maturity debt securities because available-for-sale debt securities are measured at fair value rather than amortized cost. For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or it is more likely than not that it will be required to sell, the security before recovery of its amortized cost basis. If either criterion is met, the security’s amortized cost basis is written down to fair value through earnings. For available-for-sale debt securities where neither of the criteria is met, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the credit rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited to the amount that the fair value is less than the amortized cost basis. Any remaining discount that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as a provision (or release) for credit losses and are included within other income (loss) on the Consolidated Statements of Operations. Losses are charged against the allowance when management believes the uncollectible status of an available-for-sale security is confirmed or when either of the criteria regarding intent or requirement to sell is met. Accrued interest receivable is excluded from the allowance for credit losses. See Note 3, Investments, for more information about available-for-sale debt securities.

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

Receivables and Allowance for Credit Losses. Receivables consist primarily of advisory and other fees owed to the Company by clients. The Company records an expense based on a forward-looking current expected credit loss model to maintain an allowance for credit losses. When determining the allowance for receivables, the probability of recoverability of the receivable based on past experience, taking into account current collection trends and general economic factors, including bankruptcy rates, is considered. The Company also considers future economic trends to estimate expected credit losses over the lifetime of the asset. Credit risks are assessed based on historical write-offs, net of recoveries, as well as an analysis of the aged accounts receivable balances with allowances generally increasing as the receivable ages. Accounts receivable may be fully reserved for when specific collection issues are known to exist, such as pending bankruptcies. Due to the short-term nature, the Company had no allowance for credit losses related to receivables as of September 30, 2023, or June 30, 2023.

Dividends and Interest. Dividends are recorded on the ex-dividend date, and interest income is recorded on an accrual basis. Debt investments are placed on a non-accrual status when they are past due 180 days or more as to contractual obligations or when other circumstances indicate that collection is not probable. When a debt investment is placed on a non-accrual status, any interest accrued but not received is reversed against interest income. Any discount between the cost and the principal amount of debt investments is amortized to interest income using the effective interest method. When the discounted cash flow method is utilized to estimate expected credit losses for held-to-maturity debt securities, any changes in the allowance for credit losses that are attributable to the passage of time are recognized in interest income. Both dividends and interest income are included within net investment income (loss) on the Consolidated Statements of Operations.

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NOTE 2.3. INVESTMENTS

As of ~~March 31,~~September 30, 2023, the Company held investments carried at fair value on a recurring basis of ~~$20.8~~$18.3 million and a cost basis of ~~$27.6~~$26.2 million. The fair value of these investments is approximately ~~37.4~~33.8 percent of the Company’s total assets at ~~March 31,~~September 30, 2023. In addition, the Company held other investments of approximately ~~$2.8~~$1.6 million and held-to-maturity debt investments, net of ~~$1.0 million.~~allowance for credit losses, of $795,000.

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

Concentrations of Credit Risk

A significant portion of the Company’s investments carried at fair value on a recurring basis is investments in USGIF, which were ~~$12.4~~$11.5 million and ~~$12.8~~$12.4 million as of ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023, respectively, and investments in HIVE ~~Blockchain~~Digital Technologies Ltd. (“HIVE”), which were warrants and convertible debentures valued at ~~$7.9~~$6.3 million at ~~March 31,~~September 30, 2023, and ~~$11.1~~$7.3 million at June 30, ~~2022~~2023. For these investments, the maximum amount of loss due to credit risk the Company could incur is the fair value of the financial instruments.

Fair Value Hierarchy

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

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

Level 1 – Inputs represent unadjusted quoted prices for identical assets exchanged in active markets.

Level 2 – Inputs include directly or indirectly observable inputs (other than Level 1 inputs) such as quoted prices for similar assets exchanged in active or inactive markets; quoted prices for identical assets exchanged in inactive markets; other inputs that may be considered in fair value determinations of the assets, such as interest rates and yield curves; and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Inputs include unobservable inputs used in the measurement of assets. The Company is required to use its own assumptions regarding unobservable inputs because there is little, if any, market activity in the assets and it may be unable to corroborate the related observable inputs. Unobservable inputs require management to make certain projections and assumptions about the information that would be used by market participants in valuing assets.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Because of the inherent uncertainties of valuation, the values reflected may materially differ from the values received upon actual sale of those investments.

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

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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. The fair value of a security that has a restriction is based on the quoted price for an otherwise identical unrestricted instrument that trades in a public market, adjusted for the estimated effect of the restriction. Mutual funds, which include open- and closed-end funds and exchange-traded funds, are valued at net asset value or closing price, as applicable.

For common share purchase warrants not traded on an exchange, the estimated fair value is determined using the Black-Scholes option-pricing model. This sophisticated model utilizes a number of assumptions in arriving at its results, including the estimated life, the risk-free interest rate, and historical volatility of the underlying common stock. The Company may change the assumption of the risk-free interest rate and utilize the yield curve for instruments with similar characteristics, such as credit ratings and jurisdiction, or change the expected volatility. The effects of changing any of the assumptions or factors employed by the Black-Scholes model may result in a significantly different valuation.

Certain convertible debt securities not traded on an exchange are valued by an independent ~~valuation firm~~third party using a binomial lattice model based on factors such as yield, quality, maturity, coupon rate, type of issuance, individual trading characteristics of the underlying common shares and other market data. The model utilizes a number of assumptions in arriving at its results. The effects of changing any of the assumptions or factors utilized in the binomial lattice model, including expected volatility, credit adjusted discount rates, and discounts for lack of marketability, may result in a significantly different valuation for the securities.

For other securities included in the fair value hierarchy with unobservable inputs, the Committee considers a number of factors in determining a security’s fair value, including the security’s trading volume, market values of similar class issuances, investment personnel’s judgment regarding the market experience of the issuer, financial status of the issuer, the issuer’s management, and back testing, as appropriate. The fair values may differ from what may have been used had a broader market for these securities existed. The Committee reviews inputs and assumptions and reports material items to the Board of Directors. Securities which do not have readily determinable fair values are also periodically reviewed by the Committee.

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The following tables summarize the major categories of investments with fair values adjusted on a recurring basis as of ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023, and other investments with fair values adjusted on a nonrecurring basis, with fair values shown according to the fair value hierarchy.

	*March 31, 2023*								*September 30, 2023*
			*Significant*		*Significant*						*Significant*		*Significant*
	*Quoted*		*Other*		*Unobservable*				*Quoted*		*Other*		*Unobservable*
	*Prices*		*Inputs*		*Inputs*				*Prices*		*Inputs*		*Inputs*
(dollars in thousands)	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Total*		*(Level 1)*		*(Level 2)*		*(Level 3)*		*Total*
Investments carried at fair value on a recurring basis:
Investments in equity securities:
Equities - International	$	516	$	-	$	222	$	738	$	421	$	-	$	4	$	425
Mutual funds - Fixed income		11,701		-		-		11,701		10,793		-		-		10,793
Mutual funds - Global equity		745		-		-		745		702		-		-		702
Total investments in equity securities:	$	12,962	$	-	$	222	$	13,184	$	11,916	$	-	$	4	$	11,920
Investments in debt securities:
Available-for-sale - Convertible debentures		-		-		7,649		7,649		-		-		6,343		6,343
Total investments carried at fair value on a recurring basis:	$	12,962	$	-	$	7,871	$	20,833	$	11,916	$	-	$	6,347	$	18,263
Investments carried at fair value on a nonrecurring basis:
Other investments ⁽¹⁾	$	-	$	-	$	1,634	$	1,634	$	-	$	-	$	435	$	435

^1.

Other investments include equity securities without readily determinable fair values that were adjusted as a result of the measurement alternative on dates during the ~~nine~~three months ended ~~March 31,~~September 30, 2023. These securities are classified as level 3 due to the infrequency of the observable price changes and/or restrictions on the shares.

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June 30, 2022

Significant

Significant

Quoted Other Unobservable

Prices

Inputs

Inputs

(dollars in thousands)

(Level 1)

(Level 2)

(Level 3)

Total

Investments carried at fair value on a recurring basis:

Investments in equity securities:

Equities - International
$ 1,024 $ - $ 515 $ 1,539
Mutual funds - Fixed income
12,138 - - 12,138
Mutual funds - Global equity
623 - - 623
Total investments in equity securities:
$ 13,785 $ - $ 515 $ 14,300
Investments in debt securities:

Available-for-sale - Convertible debentures
- - 10,625 10,625
Total investments carried at fair value on a recurring basis:
$ 13,785 $ - $ 11,140 $ 24,925
Investments carried at fair value on a nonrecurring basis:

Other investments ⁽¹⁾
$ - $ - $ 781 $ 781

	*June 30, 2023*
			*Significant*		*Significant*
	*Quoted*		*Other*		*Unobservable*
	*Prices*		*Inputs*		*Inputs*
(dollars in thousands)	*(Level 1)*		*(Level 2)*		*(Level 3)*		*Total*
Investments carried at fair value on a recurring basis:
Investments in equity securities:
Equities - International	$	488	$	-	$	290	$	778
Mutual funds - Fixed income		11,642		-		-		11,642
Mutual funds - Global equity		785		-		-		785
Total investments in equity securities:	$	12,915	$	-	$	290	$	13,205
Investments in debt securities:
Available-for-sale - Convertible debentures		-		-		7,008		7,008
Total investments carried at fair value on a recurring basis:	$	12,915	$	-	$	7,298	$	20,213
Investments carried at fair value on a nonrecurring basis:
Other investments ⁽¹⁾	$	-	$	-	$	1,786	$	1,786

^1.

Other investments include equity securities without readily determinable fair values that were adjusted as a result of the measurement alternative on dates during the fiscal year ended June 30, ~~2022~~2023. These securities are classified as level 3 due to the infrequency of the observable price changes and/or restrictions on the shares.

The securities classified as Level 3 and carried at fair value on a recurring basis in the preceding tables are investments in HIVE, ~~Blockchain Technologies Ltd. (“HIVE”),~~ which were warrants and convertible debentures valued at ~~$7.9~~$6.3 million at ~~March 31,~~September 30, 2023, and ~~$11.1~~$7.3 million at June 30, ~~2022~~2023. The Company utilizes an independent third-party to estimate the fair values of the investments in HIVE.

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 ~~nine~~three months ended ~~March 31,~~September 30, 2023.

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

	*Nine Months Ended March 31, 2023*						*Three Months Ended September 30, 2023*
	*Investments in*			*Investments in*			*Investments in*			*Investments in*
(dollars in thousands)	*equity securities*			*debt securities*			*equity securities*			*debt securities*
Beginning Balance	$	515		$	10,625		$	290		$	7,008
Principal repayments		-			(2,250	)		-			(750	)
Amortization of day one premium		-			(196	)		-			(51	)
Accretion of bifurcation discount		-			577			-			150
Total unrealized gains or losses included in:
Investment Income (Loss)		(293	)		1,381
Total gains or losses included in:
Net Investment Income (Loss)								(286	)		257
Other Comprehensive Loss		-			(2,488	)		-			(271	)
Ending Balance	$	222		$	7,649		$	4		$	6,343

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During January 2021, the Company purchased convertible securities of HIVE, a company that is headquartered in Canada with cryptocurrency mining facilities in Iceland, Sweden, and Canada, for $15.0 million. The convertible securities are comprised of 8.0% interest-bearing unsecured convertible debentures, payable in quarterly installments with a final maturity in January 2026, and 5 million common share purchase warrants in the capital of HIVE. Under the original terms, the principal amount of each debenture was convertible into common shares in the capital of HIVE at a conversion rate of $2.34, and each whole warrant, expiring in January 2024, entitled the Company to acquire one common share at a price of $3.00 (Canadian). Under the current terms, which reflect a reverse stock split, the principal amount of each debenture is convertible into common shares in the capital of HIVE at a conversion rate of $11.70, and each five whole warrants entitles the Company to acquire one common share at a price of $15.00 (Canadian). The remaining principal amount was ~~$8.3~~$6.8 million as of ~~March 31,~~September 30, 2023. Cryptocurrency markets and related securities have been, and are expected to continue to be, volatile. There has been significant volatility in the market price of HIVE, which has materially impacted the value of the investments included on the ~~consolidated balance sheets,~~Consolidated Balance Sheets, unrealized gain (loss) recognized in net investment income (loss), and unrealized gain (loss) recognized in other comprehensive income (loss). The investments did not represent ownership in HIVE as of ~~March 31,~~September 30, 2023, or June 30, ~~2022~~2023. The securities are subject to Canadian securities regulations. Frank Holmes serves on the board as executive chairman of HIVE and held shares and options at ~~March 31,~~September 30, 2023. From August 2018 through January 2023, Mr. Holmes was Interim ~~CEO. Effective~~ ~~December 22, 2020,~~ ~~Mr. Holmes became the Executive Chairman~~CEO of HIVE.

The Company recorded the warrants at the estimated fair value of $5.9 million on the purchase date. The debentures were recorded at the estimated fair value of $16.0 million on purchase date, and an unrealized gain of $6.9 million was recognized in other comprehensive income (loss), which will be realized in net investment income (loss) ratably using the effective interest method until maturity, conversion, or other disposition. During the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,and 2022, ~~$394,000~~$336,000 and ~~$1.3 million,~~$469,000, respectively, was realized in ~~investment income (loss). During the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~~~, $524,000 and $1.7 million, respectively, was realized in~~net investment income (loss). The fair value of the warrants and debentures was ~~$222,000~~$4,000 and ~~$7.6~~$6.3 million, respectively, at ~~March 31,~~September 30, 2023, and ~~$515,000~~$290,000 and ~~$10.6~~$7.0 million, respectively, at June 30, ~~2022~~2023.

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The Company currently considers the fair value measurements of HIVE convertible securities to contain Level 3 inputs. The following is quantitative information as of ~~March 31,~~September 30, 2023, with respect to the securities measured and carried at fair value on a recurring basis with the use of significant unobservable inputs (Level 3).

March 31, 2023

(dollars in thousands)

Fair Value

Principal Valuation Techniques

Unobservable Inputs

Investments in equity securities:

Common share purchase warrants
$ 222
Option pricing model

Volatility
101.5 %

Investments in debt securities:

Available-for-sale - Convertible debentures
$ 7,649
Binomial lattice model

Volatility
99.8 %

Credit Adjusted Discount Rate
15.0 %

~~During the fiscal year ended~~ ~~June 30, 2022,~~ ~~the Company sold its investment in Thunderbird Entertainment Group Inc. (“Thunderbird”), a company headquartered and traded in Canada. During the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022,~~ ~~the Company realized gains on sales of this investment in the amount of $1.9 million. Frank Holmes served on the board of this company as a director from~~ ~~June 2014~~ to ~~March 2021.~~

	*September 30, 2023*
(dollars in thousands)	*Fair Value*		*Principal Valuation Techniques*	*Unobservable Inputs*
Investments in equity securities:
Common share purchase warrants	$	4	Option pricing model	Volatility	90.0	%
				Risk-Free Rate	5.1	%
Investments in debt securities:
Available-for-sale - Convertible debentures	$	6,343	Binomial lattice model	Volatility	90.0	%
				Credit Spread	10.4	%
				Risk-Free Rate	4.7	%

Equity Investments at Fair Value

Investments in equity securities with readily determinable fair values are carried at fair value, and changes in unrealized gains or losses are reported in the current period's earnings.

The following details the components of the Company’s equity investments carried at fair value as of ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023.

	*March 31, 2023*							*September 30, 2023*
(dollars in thousands)	*Cost*		*Unrealized Gains (Losses)*			*Fair Value*		*Cost*		*Unrealized Gains (Losses)*			*Fair Value*
Equity securities at fair value
Equities - International	$	6,679	$	(5,941	)	$	738	$	6,680	$	(6,255	)	$	425
Equities - Domestic		45		(45	)		-		45		(45	)		-
Mutual funds - Fixed income		11,948		(247	)		11,701		11,097		(304	)		10,793
Mutual funds - Global equity		929		(184	)		745		929		(227	)		702
Total equity securities at fair value	$	19,601	$	(6,417	)	$	13,184	$	18,751	$	(6,831	)	$	11,920

	*June 30, 2022*							*June 30, 2023*
(dollars in thousands)	*Cost*		*Unrealized Gains (Losses)*			*Fair Value*		*Cost*		*Unrealized Gains (Losses)*			*Fair Value*
Equity securities at fair value
Equities - International	$	6,680	$	(5,141	)	$	1,539	$	6,679	$	(5,901	)	$	778
Equities - Domestic		45		(45	)		-		45		(45	)		-
Mutual funds - Fixed income		12,313		(175	)		12,138		11,947		(305	)		11,642
Mutual funds - Global equity		929		(306	)		623		930		(145	)		785
Total equity securities at fair value	$	19,967	$	(5,667	)	$	14,300	$	19,601	$	(6,396	)	$	13,205

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Debt Investments

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

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Investment gains and losses on available-for-sale debt securities are recorded when the securities are sold, as determined on a specific identification basis, and recognized in current period earnings. Changes in unrealized gains on available-for-sale debt securities are reported net of tax in accumulated other comprehensive income (loss). For debt securities in an unrealized loss position, a loss in earnings is recognized for the excess of amortized cost over fair value if the Company intends to sell before the price recovers. Otherwise, the Company evaluates as of the balance sheet date whether the unrealized losses are attributable to credit losses or other factors. The severity of the decline in value, creditworthiness of the issuer and other relevant factors are considered. The portion of unrealized loss the Company believes is related to a credit loss is recognized in earnings, and the portion of unrealized loss the Company believes is not related to a credit loss is recognized in other comprehensive income (loss).

~~The following details the components of the Company’s available-for-sale debt investments as of~~ ~~March 31, 2023~~~~, and~~ ~~June 30, 2022~~.

March 31, 2023

(dollars in thousands)

Amortized Cost

Gross Unrealized Gains in Other Comprehensive Income (Loss)

Gross Unrealized Losses in Investment Income (Loss)

Fair Value

Available-for-sale - Convertible debentures ⁽¹⁾
$ 8,006 $ 2,100 $ (2,457 ) $ 7,649

June 30, 2022

(dollars in thousands)

Amortized Cost

Gross Unrealized Gains in Other Comprehensive Income (Loss)

Gross Unrealized Losses in Investment Income (Loss)

Fair Value

Available-for-sale - Convertible debentures ⁽¹⁾
$ 8,576 $ 4,588 $ (2,539 ) $ 10,625

1.	Changes in unrealized gains and losses are included in the consolidated statements of comprehensive income (loss), except for embedded derivatives. Changes in unrealized gains and losses for embedded derivatives are included in investment income (loss) in the consolidated statements of operations.

~~The following details the components of the Company’s held-to-maturity debt investments as of~~ ~~March 31, 2023~~~~, and~~ ~~June 30, 2022~~.

March 31, 2023

(dollars in thousands)

Amortized Cost

Gross Unrecognized Holding Gains

Gross Unrecognized Holding Losses

Fair Value

Held-to-maturity - Debentures ⁽¹⁾
$ 1,000 $ - $ (245 ) $ 755

June 30, 2022

(dollars in thousands)

Amortized Cost

Gross Unrecognized Holding Gains

Gross Unrecognized Holding Losses

Fair Value

Held-to-maturity - Debentures ⁽¹⁾
$ 1,000 $ - $ (133 ) $ 867

1.	~~Held-to-maturity debt investments are carried at amortized cost, and the fair value is classified as Level~~ 2 ~~according to the fair value hierarchy.~~

At ~~March 31, 2023~~~~, and~~ ~~June 30, 2022~~~~, the Company held $1.0 million in~~ ~~one~~ ~~security classified as held-to-maturity. The security had an estimated fair value that was lower than the carrying value by $245,000 at~~ ~~March 31, 2023~~~~, and $133,000 at~~ ~~June 30, 2022~~~~. We have evaluated the unrealized loss on the security at~~ ~~March 31, 2023~~~~, and determined it to be of a temporary nature and caused by fluctuations in market interest rates,~~ ~~not~~ ~~by concerns about the ability of the issuer to meet their obligations.~~

~~The following summarizes the net carrying amount and estimated fair value of debt securities at~~ ~~March 31, 2023~~~~, by contractual maturity dates. Actual maturities~~ ~~may~~ ~~differ from final contractual maturities due to principal repayment installments or prepayment rights held by issuers.~~

March 31, 2023

Available-for-sale

Held-to-maturity

debt securities

debt securities

Convertible

Due after one year

(dollars in thousands)

debentures (1)

through five years

Amortized Cost
$ 8,006 $ 1,000
Fair Value
$ 7,649 $ 755

1.	~~Principal payments of $750,000 are due quarterly with a final maturity date in~~ ~~January 2026.~~

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Certain derivatives embedded in other financial instruments, such as the conversion option in a convertible bond, are reported at fair value, and changes in fair value are recorded through earnings within net investment income (loss). The host contract continues to be accounted for in accordance with the appropriate accounting standard. The embedded derivative and the related host contract represent one legal contract and are combined on the ~~consolidated balance sheets~~Consolidated Balance Sheets and the ~~preceding tables.~~tables below. The Company held one financial instrument classified as available-for-sale containing an embedded derivative, which represents an investment in HIVE, at ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023. As of September 30, 2023, the unrealized loss position in the available-for-sale security was related to changes in the fair value of the embedded derivatives and not the result of credit losses; therefore, an allowance for credit losses was not recorded.

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

	*September 30, 2023*
(dollars in thousands)	*Amortized Cost*		*Gross Unrealized Gains in Other Comprehensive Income (Loss)*		*Gross Unrealized Losses in Other Comprehensive Income (Loss)*		*Gross Unrealized Losses in Net Investment Income (Loss) (1)*			*Fair Value*		*Allowance for Credit Losses*
Available-for-sale - Convertible debentures	$	7,414	$	1,436	$	-	$	(2,507	)	$	6,343	$	-

	*June 30, 2023*
(dollars in thousands)	*Amortized Cost*		*Gross Unrealized Gains in Other Comprehensive Income (Loss)*		*Gross Unrealized Losses in Other Comprehensive Income (Loss)*		*Gross Unrealized Losses in Net Investment Income (Loss) (1)*			*Fair Value*		*Allowance for Credit Losses*
Available-for-sale - Convertible debentures	$	7,729	$	1,707	$	-	$	(2,428	)	$	7,008	$	-

1.	Represents changes in unrealized gains and losses related to embedded derivatives included within net investment income (loss) on the Consolidated Statements of Operations.

The following table summarizes the fair values of embedded derivatives on the ~~consolidated balance sheets,~~Consolidated Balance Sheets, categorized by risk exposure, at ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023.

March 31, 2023

June 30, 2022

September 30, 2023

June 30, 2023

Other Assets

Other Assets

Investments in

Investments in

available-for-sale

available-for-sale

(dollars in thousands)

debt securities

debt securities

Embedded Derivatives:

Equity price risk exposure

114

The following table presents the effect of embedded derivatives on the ~~consolidated statements~~Consolidated Statements of ~~operations,~~Operations, categorized by risk exposure, for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, and 2022.

Nine Months Ended

Three Months Ended

March 31,

September 30,

2023

2022

2023

2022

2023

2022

Other Income (Loss)

(dollars in thousands)

Investment Income (Loss)

Net Investment Income (Loss)

Embedded Derivatives:

Equity price risk exposure

(2,050

)

(1,491

)

(79

)

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At September 30, 2023, and June 30, 2023, the Company held one debt security classified as held-to-maturity. The security had an estimated fair value that was lower than the carrying value by $205,000 at September 30, 2023, and $232,000 at June 30, 2023. The security has been in a continuous unrealized loss position for over twelve months. We have evaluated the unrealized loss on the security at September 30, 2023, and determined it to be of a temporary nature and caused by fluctuations in market interest rates, not by concerns regarding the ability of the issuer to meet their obligations.

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

	*September 30, 2023*
(dollars in thousands)	*Amortized Cost*		*Gross Unrecognized Holding Gains*		*Gross Unrecognized Holding Losses*			*Fair Value*		*Allowance for Credit Losses*
Held-to-maturity - Debentures ⁽¹⁾	$	1,000	$	-	$	(205	)	$	795	$	205

	*June 30, 2023*
(dollars in thousands)	*Amortized Cost*		*Gross Unrecognized Holding Gains*		*Gross Unrecognized Holding Losses*			*Fair Value*		*Allowance for Credit Losses*
Held-to-maturity - Debentures ⁽¹⁾	$	1,000	$	-	$	(232	)	$	768	$	-

1.	Held-to-maturity debt investments are carried at amortized cost, net of allowance for credit losses, and the fair value is classified as Level 2 according to the fair value hierarchy.

On July 1, 2023, the Company adopted ASU 2016-13, which replaced the incurred loss methodology for determining our allowance for credit losses and related provision for credit losses with an expected loss methodology that is referred to as the Current Expected Credit Losses ("CECL") model. CECL is a significant accounting estimate used in the preparation of the Company's Consolidated Financial Statements. Upon adoption of ASU 2016-13, the Company replaced the incurred loss impairment model that recognizes losses when it becomes probable that a credit loss will be incurred, with a requirement to recognize lifetime expected credit losses immediately when a financial asset is originated or purchased. CECL is a valuation account that is deducted from the amortized cost basis of held-to-maturity debt securities to present the net amount expected to be collected on the securities. Held-to-maturity debt securities, or portions thereof, are charged against the allowance when they are deemed uncollectible. Arriving at an appropriate level of credit losses involves a high degree of judgment. While management uses available information to recognize losses, changing economic conditions and the economic prospects of the issuers may necessitate future additions or reductions to the allowance.

The Company monitors the credit quality of debt securities through credit ratings from various rating agencies. Credit ratings express opinions about the credit quality of a security and are utilized by the Company to make informed decisions. Investment grade securities are rated BBB-/Baa3 or higher and generally considered by the rating agencies and market participants to be of low credit risk. Conversely, securities rated below investment grade are considered to have distinctively higher credit risk than investment grade securities. For securities without credit ratings, the Company utilizes other financial information indicating the financial health of the underlying organization. As of September 30, 2023, the held-to-maturity debt investment held by the Company did not have a credit rating.

Since the held-to-maturity debt security does not have a credit rating, management has determined that the discounted cash flow method provides the best basis for its assessment and determination of expected credit losses. The Company has elected to reflect the change in the allowance solely attributable to the passage of time in interest income. Changes attributable to the passage of time are those solely due to changes in the present value of the expected cash flows as the instrument approaches maturity rather than expectations of cash flow timing or amounts. For the three months ended September 30, 2023, the change in allowance attributable to the passage of time and included as an increase in interest income within net investment income (loss) on the Consolidated Statements of Operations was $27,000.

The following table presents the activity in the allowance for credit losses for the held-to-maturity debt investment. There was no allowance at June 30, 2023.

(dollars in thousands)	*September 30, 2023*
Beginning Balance, prior to adoption of ASU 2016-13	$	-
Impact of ASU 2016-13 adoption		232
Provision for credit losses - reversal ⁽¹⁾		(27	)
Ending Balance	$	205

1.	Represents the change in present value attributable to the passage of time included in interest income.

The following summarizes the net carrying amount and estimated fair value of debt securities at September 30, 2023, by contractual maturity dates. Actual maturities may differ from final contractual maturities due to principal repayment installments or prepayment rights held by issuers.

	*September 30, 2023*
	*Available-for-sale*		*Held-to-maturity*
	*debt securities*		*debt securities*
	*Convertible*		*Due after one year*
(dollars in thousands)	debentures ⁽¹⁾		*through five years*
Amortized Cost	$	7,414	$	1,000
Fair Value	$	6,343	$	795

1.	Principal payments of $750,000 are due quarterly with a final maturity date in January 2026.

As of September 30, 2023, none of the Company's investments in debt securities were delinquent or in a non-accrual status.

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Other Investments

Other investments consist of equity investments in entities over which the Company is unable to exercise significant influence and which do not have readily determinable fair values. For these securities, the Company generally elects to value using the measurement alternative, under which such securities are measured at cost, less impairment, if any. If the Company identifies observable price changes for identical or similar securities of the same issuer, the equity security is measured at fair value as of the date the observable transaction occurred, with such changes recorded in net investment income (loss).

The carrying value of equity securities without readily determinable fair values was approximately ~~$4.0~~$2.4 million as of June 30, ~~2022~~2023. The following table presents the carrying value of equity securities without readily determinable fair values held as of ~~March 31,~~September 30, 2023, and 2022, that are measured under the measurement alternative and the related adjustments recorded during the periods presented for those securities with observable price changes or impairments. These securities are included in the nonrecurring fair value hierarchy tables when applicable price changes are observable, or when impairments occur.

	*Nine Months Ended*					*Three Months Ended*				*Three Months Ended*
	*March 31,*					*March 31,*				*September 30,*
(dollars in thousands)	*2023*			*2022*		*2023*		*2022*		*2023*			*2022*
Other Investments
Carrying value	$	2,827		$	4,208	$	2,827	$	4,208	$	1,613		$	2,630
Upward carrying value changes	$	14		$	187	$	9	$	187	$	-		$	-
Downward carrying value changes/impairment	$	(1,841	)	$	-	$	-	$	-	$	(775	)	$	(1,839	)

The period-end carrying values reflect cumulative purchases and sales in addition to upward and downward carrying value changes. The cumulative amount of upward adjustments to all equity securities without readily determinable fair values total $2.5 million since their respective acquisitions through ~~March 31,~~September 30, 2023. The cumulative amount of impairments and other downward adjustments, which include return of capital distributions and observable price changes, to all equity securities without readily determinable fair values total ~~$3.3~~$4.5 million since their respective acquisitions through ~~March 31,~~September 30, 2023.

The Company has an investment in The Sonar Company (“Sonar”), a company headquartered in the United States, at a cost of $175,000. The investment had a carrying value of approximately $362,000 at ~~March 31,~~September 30, 2023, and at June 30, ~~2022~~2023. Roy D. Terracina, Director and Vice Chairman of the Board of Directors for U.S. Global, has served as the CEO of Sonar since July 2021, and the Company’s ownership of Sonar was approximately 2.8 percent as of ~~March 31,~~September 30, 2023.

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~~Investments Classified as Equity Method~~

~~The Company had an equity method investment in Galileo New Economy Fund LP through its dissolution date, which occurred during the~~ ~~third~~ ~~quarter of fiscal~~ ~~2022.~~ The Company owned approximately 22 percent of the LP prior to dissolution, and the Company was considered to have the ability to exercise significant influence. Thus, the investment was accounted for under the equity method of accounting. Included in other income (loss) for the ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~, is $173,000 and $206,000, respectively, of equity method losses for this investment. Upon dissolution, the Company received a distribution, which included cash of $85,000, and common shares of an investment held in the LP, which had a fair value of approximately $228,000 when received. Frank Holmes also directly held an investment in the LP and received dissolution proceeds related to his direct investment.

Net Investment Income (Loss)

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

	●	realized gains and losses on sales of securities;
	●	realized gains and losses on principal payment proceeds;
	●	unrealized gains and losses on securities at fair value;
	●	impairments and observable price changes on equity investments without readily determinable fair values;
	●	dividend and interest income; and
	●	realized foreign currency gains and losses.

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

Nine Months Ended

Three Months Ended

(dollars in thousands)

March 31,

March 31,

Investment income (loss)

2023

2022

2023

2022

Realized gains (losses) on equity securities
$ (13 ) 1,848 $ (13 ) $ (5 )
Realized gains on debt securities
1,299 1,694 394 524
Unrealized gains (losses) on equity securities
(2,586 ) (4,946 ) 283 (3,044 )
Unrealized gains (losses) on embedded derivatives
82 (2,050 ) 55 (1,491 )
Dividend and interest income
1,321 1,545 421 441
Realized foreign currency gains (losses)
(292 ) (41 ) 15 80
Total Investment Income (Loss)
$ (189 ) $ (1,950 ) $ 1,155 $ (3,495 )

	*Three Months Ended*
(dollars in thousands)	*September 30,*
Net Investment Income (Loss)	*2023*			*2022*
Realized losses on equity securities	$	(818	)	$	-
Realized gains on debt securities		336			469
Unrealized losses on equity securities		(443	)		(1,930	)
Unrealized losses on embedded derivatives		(79	)		-
Unrealized losses on cash equivalents		(1	)		-
Dividend and interest income		582			418
Realized foreign currency losses		(90	)		(417	)
Total Net Investment Income (Loss)	$	(513	)	$	(1,460	)

For the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,~~, realized gains on principal payment proceeds in the amount of $394,000 and $1.3 million, respectively, were released from other comprehensive income (loss). For the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 2022, realized gains on principal payment proceeds in the amount of ~~$524,000~~$336,000 and ~~$1.7 million,~~$469,000, respectively, were released from other comprehensive income (loss).

The following table presents unrealized gains and losses recognized during the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,, and 2022, on equity investments still held at each respective date.

	*Nine Months Ended*						*Three Months Ended*						*Three Months Ended*
	*March 31,*						*March 31,*						*September 30,*
(dollars in thousands)	*2023*			*2022*			*2023*			*2022*			*2023*			*2022*
Net gains and losses recognized during the period on equity securities	$	(2,599	)	$	(3,098	)	$	270		$	(3,049	)	$	(1,261	)	$	(1,930	)
Less: Net gains and losses recognized during the period on equity securities sold during the period		(13	)		179			(13	)		(5	)		(43	)		-
Unrealized gains and losses recognized during the reporting period on equity securities still held at the reporting date (1)	$	(2,586	)	$	(3,277	)	$	283		$	(3,044	)	$	(1,218	)	$	(1,930	)

^1.

Includes $775,000 and $1.8 million of net losses for the ~~nine~~three months ended ~~March 31,~~September 30, 2023,and 2022, respectively, as a result of the measurement alternative. ~~There were no net gains (losses) as a result of the measurement alternative for the~~ ~~three~~ ~~months ended~~ ~~March 31, 2023~~~~, and $187,000 of net gains for the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~.

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

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NOTE 3.4. INVESTMENT MANAGEMENT AND OTHER FEES

The following table presents operating revenues disaggregated by performance obligation.

	*Nine Months Ended*					*Three Months Ended*						*Three Months Ended*
	*March 31,*					*March 31,*						*September 30,*
(dollars in thousands)	*2023*			*2022*		*2023*			*2022*			*2023*			*2022*
ETF advisory fees	$	10,360		$	16,140	$	3,142		$	5,372		$	2,709		$	3,913
USGIF advisory fees		1,693			2,775		558			877			506			610
USGIF performance fees earned (paid)		(390	)		209		(109	)		(120	)
USGIF performance fees paid													(112	)		(146	)
Total Advisory Fees		11,663			19,124		3,591			6,129			3,103			4,377
USGIF administrative services fees		101			146		33			46			30			35
Total Operating Revenue	$	11,764		$	19,270	$	3,624		$	6,175		$	3,133		$	4,412

The Company serves as investment advisor to three U.S.-based exchange-traded funds (ETFs): U.S. Global Jets ETF (ticker JETS), U.S. Global GO GOLD and Precious Metal Miners ETF (ticker GOAU), and U.S. Global Sea to Sky Cargo ETF (ticker SEA). The Company receives a unitary management fee of 0.60 percent of average net assets of the ETFs, and has agreed to bear all expenses of the ETFs, except the U.S. Global Sea to Sky Cargo ~~ETF.~~ETF ("SEA"). The Company has agreed to contractually limit the expenses of ~~the U.S. Global Sea to Sky Cargo ETF~~SEA through April ~~2023.~~2024. The aggregate fees waived, and expenses borne by the Company for SEA were $35,000 and $48,000 for the three months ended September 30, 2023, and 2022, respectively. The Company also serves as investment advisor to one European-based ETF, the U.S. Global Jets UCITS ETF. The Company receives a unitary management fee of 0.65 percent of average net assets and has agreed to bear all expenses of the ETF.

The Company serves as investment adviser to USGIF and receives a fee based on a specified percentage of average assets under management. The advisory agreement for the equity funds within USGIF provides for a base advisory fee that is adjusted upwards or downwards by 0.25 percent when there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling 12 months.

The Company has agreed to contractually limit the expenses of the Near-Term Tax Free Fund and the Global Luxury Goods Fund through April ~~2023.~~ 2024. The Company has voluntarily waived or reduced its fees and/or agreed to pay expenses on the remaining USGIF funds. These caps will continue on a voluntary basis at the Company’s discretion. The aggregate fees waived and expenses borne by the Company for USGIF were ~~$299,000 and $822,000~~$253,000 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ compared with ~~$147,000 and $465,000,~~$220,000, for the corresponding ~~periods~~period in the prior fiscal year. Management cannot predict the impact of future waivers due to the number of variables and the range of potential outcomes.

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

As of ~~March 31,~~September 30, 2023, the Company had ~~$1.2~~$914,000 in receivables from fund clients, of which $122,000 was from USGIF and $792,000 was from the ETFs. As of June 30, 2023, the Company had $1.1 million in receivables from fund clients, of which ~~$145,000~~$126,000 was from USGIF and $1.0 ~~million was from the ETFs. As of~~ ~~June 30, 2022~~~~, the Company had $1.6 million in receivables from fund clients, of which $188,000 was from USGIF and $1.4~~ million was from ETFs.

NOTE 4.5. RESTRICTED AND UNRESTRICTED CASH

The Company maintains its cash deposits with established commercial banks. At times, balances may exceed federally insured limits. We have not experienced any losses in such accounts and do not believe that we are exposed to any significant credit risk associated with our cash deposits. Restricted cash represents cash invested in a money market account as collateral for credit facilities that is not available for general corporate use.

A reconciliation of cash, cash equivalents, and restricted cash reported from the ~~consolidated balance sheets~~Consolidated Balance Sheets to the ~~consolidated statements~~Consolidated Statements of ~~cash flows~~Cash Flows is shown below.

(dollars in thousands)	*March 31, 2023*		*June 30, 2022*		*September 30, 2023*		*June 30, 2023*
Cash and cash equivalents	$	24,947	$	22,314	$	26,849	$	25,401
Restricted cash		1,000		1,000		1,000		1,000
Total cash, cash equivalents, and restricted cash	$	25,947	$	23,314	$	27,849	$	26,401

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NOTE 5.6. LEASES

The Company has lease agreements for office equipment that expire in the fiscal year 2026. Lease expenses included in general and administrative expense on the ~~consolidated statements~~Consolidated Statements of ~~operations~~Operations totaled ~~$32,000~~$33,000 and ~~$86,000~~$22,000 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,~~, respectively, and $41,000 and $130,000 for the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 2022, respectively.

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The following table presents the components of lease cost.

	*Nine Months Ended*				*Three Months Ended*				*Three Months Ended*
	*March 31,*				*March 31,*				*September 30,*
(dollars in thousands)	*2023*		*2022*		*2023*		*2022*		*2023*		*2022*
Finance lease cost:
Amortization of right-of-use assets	$	22	$	-	$	7	$	-	$	8	$	7
Interest on lease liabilities		3		-		1		-		1		1
Total finance lease cost		25		-		8		-		9		8
Operating lease cost		-		40		-		13
Short-term lease cost		64		90		25		28		25		15
Total lease cost	$	89	$	130	$	33	$	41	$	34	$	23

Supplemental information related to the Company's leases follows.

	*Nine Months Ended*				*Three Months Ended*				*Three Months Ended*
	*March 31,*				*March 31,*				*September 30,*
(dollars in thousands)	*2023*		*2022*		*2023*		*2022*		*2023*		*2022*
Operating cash flows from operating leases included in lease liabilities	$	-	$	40	$	-	$	13
Lease liabilities obtained from new ROU assets - operating	$	-	$	-	$	-	$	-
Operating cash flows from financing leases included in lease liabilities	$	3	$	-	$	1	$	-	$	1	$	1
Financing cash flows from financing leases included in lease liabilities	$	20	$	-	$	7	$	-	$	7	$	7
Lease liabilities obtained from new ROU assets - financing	$	-	$	-	$	-	$	-

Additional qualitative information concerning the Company’s leases follows.

	*March 31, 2023*			*June 30, 2022*			*September 30, 2023*			*June 30, 2023*
Weighted-average remaining lease term - operating leases (years)		-			-
Weighted-average discount rate - operating leases		-			-
Weighted-average remaining lease term - financing leases (years)		2.50			3.25			2.00			2.25
Weighted-average discount rate - financing leases		4.75	%		4.75	%		4.75	%		4.75	%

The following table presents the maturities of lease liabilities as of ~~March 31,~~September 30, 2023.

(dollars in thousands)
Fiscal Year	*Finance Leases*			*Finance Leases*
2023 (excluding the nine months ended March 31, 2023)	$	8
2024		31
2024 (excluding the three months ended September 30, 2023)				$	24
2025		31			33
2026		8			8
2027		-
Total lease payments		78			65
Less imputed interest		(5	)		(3	)
Total	$	73		$	62

The Company is the lessor of certain areas of its owned office building under operating leases expiring in various months through fiscal year 2025. At the commencement of an operating lease, no income is recognized; subsequently, lease payments received are recognized on a straight-line basis. Lease income included in other income on the ~~consolidated statements~~Consolidated Statements of ~~operations~~Operations was ~~$31,000~~$27,000 and ~~$96,000~~$34,000 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,~~, respectively. Lease income included in other income on the consolidated statements of operations was $29,000 and $84,000 for the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 2022, respectively. The cost of obtaining lessor contracts, which is included in other assets on the ~~consolidated balance sheets,~~Consolidated Balance Sheets, was ~~$5,000 and $9,000~~$4,000 at ~~March 31,~~September 30, 2023, and June 30, ~~2022~~2023~~, respectively.~~.

The following is a summary analysis of annual undiscounted cash flows to be received on leases as of ~~March 31,~~September 30, 2023.

(dollars in thousands)

Fiscal Year

Operating Leases

2023 (excluding the nine months ended March 31, 2023)
$ 10
2024
42
2025
36
2026
-
2027
-
Thereafter
-
Total lease payments
$ 88

(dollars in thousands)
Fiscal Year	*Operating Leases*
2024 (excluding the three months ended September 30, 2023)	$	31
2025		36
Total lease payments	$	67

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

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NOTE 6.7. BORROWINGS

The Company has access to a $1 million credit facility for working capital purposes. The credit agreement requires the Company to maintain certain covenants; the Company has been in compliance with these covenants during the current fiscal year. The credit agreement expires on May 31, ~~2023,~~ 2024, and the Company intends to renew annually. The credit facility is collateralized by approximately $1 million at ~~March 31,~~September 30, 2023, included in restricted cash on the ~~consolidated balance sheets,~~Consolidated Balance Sheets, held in deposit in a money market account at the financial institution that provided the credit facility. As of ~~March 31,~~September 30, 2023, the credit facility remains unutilized by the Company.

NOTE 7.8. STOCKHOLDERS’ EQUITY

Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. The dividend rate per share was ~~$0.0050 per month for~~ ~~July 2021~~ ~~through~~ ~~September 2021,~~ ~~and~~ $0.0075 per month for fiscal year ~~October 2021~~ 2023 and through ~~March~~September 2023.

In ~~March~~September 2023, the Board authorized the continuance of the monthly dividend of $0.0075 per share from ~~April~~October through ~~June~~December 2023, at which time it will be considered for continuation by the Board.

The Company has a share repurchase program, approved by the Board of Directors, authorizing the Company to annually purchase up to $5.0 million of its outstanding common shares, as market and business conditions warrant, on the open market in compliance with Rule 10b-18 and Rule 10b5-1 of the Securities Exchange Act of 1934. The repurchase program has been in place since December 2012, and the Board of Directors has annually renewed the repurchase program each calendar year. The Company announced on February 25, 2022, that the Board of Directors of the Company approved an increase to the limit of its annual share buyback program from $2.75 million to $5.0 million. The acquired shares may be used for corporate purposes, including shares issued to employees in the Company’s stock-based compensation programs. For the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, the Company repurchased ~~193,040 and 320,412~~198,213 class A shares using cash of ~~$556,000 and $938,000, respectively.~~$611,000. For the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2022, the Company repurchased ~~19,487 and 43,591~~39,965 class A shares using cash of ~~$97,000 and $233,000, respectively.~~$133,000.

In August 2022, the Inflation Reduction Act (IRA) was signed into law, which made a number of changes to the Internal Revenue Code, including adding a 1% excise tax on stock buybacks by publicly traded corporations, effective on January 1, 2023. Any excise tax incurred is recognized as part of the cost basis of the shares acquired in the Consolidated Statements of Shareholders' Equity. The impact of these provisions was $6,000 for the three months ended September 30, 2023.

The Company’s stock option plans provide for the granting of class A shares as either incentive or nonqualified stock options to employees and non-employee directors. Options are subject to terms and conditions determined by the Compensation Committee of the Board of Directors. At ~~March 31,~~September 30, 2023,and 2022, there were 229,000 ~~options outstanding and exercisable under the~~ ~~1989~~ ~~Plan at a weighted average exercise price of $6.05, and 2,000 options outstanding and exercisable under the~~ ~~1997~~ ~~Plan at a weighted average exercise price of $2.74. At~~ ~~March 31, 2022~~~~, there were 231,000~~ options outstanding and exercisable under the 1989 Plan at a weighted average exercise price of $6.05, and 2,000 options outstanding and exercisable under the 1997 Plan at a weighted average exercise price of $2.74. There were no options granted or exercised for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, or 2022. There were ~~2,000 options forfeited during the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2023~~~~, and~~ no options forfeited during the three months ended ~~March 31,~~September 30, 2023, orand 2,000 options forfeited during the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2022.

Stock-based compensation expense is measured at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the award’s vesting period. There was no stock-based compensation expense for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, or for the three months ended ~~March 31,~~September 30, 2022. ~~For the~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~~~, $733,000 was recognized as expense on the consolidated statements of operations.~~ As of ~~March 31,~~September 30, 2023, and 2022, there was no unrecognized share-based compensation cost related to share-based awards granted under the plans.

NOTE 8.9. EARNINGS PER SHARE

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

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

	*Nine Months Ended*				*Three Months Ended*					*Three Months Ended*
	*March 31,*				*March 31,*					*September 30,*
(dollars in thousands, except per share data)	*2023*		*2022*		*2023*		*2022*			*2023*			*2022*
Net Income (Loss)	$	2,616	$	5,134	$	1,640	$	(846	)	$	(176	)	$	53

Weighted average number of outstanding shares
Basic		14,862,893		15,020,920		14,747,537		15,010,630			14,465,510			14,948,688
Effect of dilutive securities
Stock options		295		1,023		100		952			191			587
Diluted		14,863,188		15,021,943		14,747,637		15,011,582			14,465,701			14,949,275

Earnings Per Share
Basic Net Income (Loss) per share	$	0.18	$	0.34	$	0.11	$	(0.06	)	$	(0.01	)	$	0.00
Diluted Net Income (Loss) per share	$	0.18	$	0.34	$	0.11	$	(0.06	)	$	(0.01	)	$	0.00

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The diluted EPS calculation excludes the effect of stock options when their exercise prices exceed the average market price for the period, as their inclusion would be anti-dilutive. For the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,and 2022, employee stock options for 229,000 were excluded from diluted EPS. ~~For the~~ ~~three~~ ~~and~~ ~~nine~~ ~~months ended~~ ~~March 31, 2022~~~~, employee stock options for 231,000 were excluded from diluted EPS.~~

During the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023, and 2022, the Company repurchased class A shares on the open market. Upon repurchase, these shares are classified as treasury shares and are deducted from outstanding shares in the earnings per share calculation.

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NOTE 9.10. INCOME TAXES

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

Income tax expense for the quarter is based upon the estimated annual ordinary income in each jurisdiction in which the Company operates. The tax effects of discrete items are recognized in the tax provision in the period they occur in accordance with U.S. GAAP. Due to various factors, such as the item’s significance in relation to total ordinary income and the rate of tax, discrete items in any quarter can materially impact the reported effective tax rate. The effective tax rate for the three months ended ~~March 31,~~September 30, 2023, and 2022, was materially impacted by ordinary income and losses in each jurisdiction, permanent items and the income tax impact of discrete items.

For U.S. federal income tax purposes at ~~March 31,~~September 30, 2023, the Company has no U.S. federal net operating loss carryovers and no capital loss carryovers. For Canadian income tax purposes, USCAN has ~~$46,000~~$108,000 net operating loss carryovers expiring in fiscal ~~year~~years 2043 through 2044 and no capital loss carryovers.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. At ~~March 31, 2023~~~~, a~~A valuation allowance of ~~$12,000~~$29,000 and $24,000 was included to fully reserve for Canadian net operating loss ~~carryovers. There was no valuation allowance~~carryovers atSeptember 30, 2023, and June 30, ~~2022~~2023., respectively.

The Company maintains a reserve for uncertain tax positions for income tax matters. The Company believes the reserve for uncertain tax positions, including interest and penalties, and net of federal benefits, of $530,000 adequately covers open tax years and uncertain tax positions up to and including September 30, 2023, for major taxing jurisdictions. As of September 30, 2023, the entire $530,000 of unrecognized tax benefits, if recognized, would impact the Company's effective income tax rate.

NOTE ~~10.~~11. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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

(dollars in thousands)	*Unrealized gains (losses) on available-for-sale investments*			*Foreign currency translation adjustment (1)*			*Total*			Unrealized gains (losses) on available-for-sale investments			Total
Nine Months Ended March 31, 2023
Three Months Ended September 30, 2023
Balance at June 30, 2023										$	1,348		$	1,348
Other comprehensive income before reclassifications											65			65
Tax effect											(14	)		(14	)
Amount reclassified from AOCI											(336	)		(336	)
Tax effect											71			71
Net other comprehensive loss											(214	)		(214	)
Balance at September 30, 2023										$	1,134		$	1,134

Three Months Ended September 30, 2022
Balance at June 30, 2022	$	3,624		$	-		$	3,624		$	3,624		$	3,624
Other comprehensive loss before reclassifications		(1,189	)		-			(1,189	)		(146	)		(146	)
Tax effect		250			-			250			31			31
Amount reclassified from AOCI		(1,299	)		-			(1,299	)		(469	)		(469	)
Tax effect		273			-			273			98			98
Net other comprehensive loss		(1,965	)		-			(1,965	)		(486	)		(486	)
Balance at March 31, 2023	$	1,659		$	-		$	1,659

Nine Months Ended March 31, 2022
Balance at June 30, 2021	$	6,564		$	23		$	6,587
Other comprehensive loss before reclassifications		(542	)		(13	)		(555	)
Tax effect		114			-			114
Amount reclassified from AOCI		(1,694	)		(10	)		(1,704	)
Tax effect		355			-			355
Net other comprehensive loss		(1,767	)		(23	)		(1,790	)
Balance at March 31, 2022	$	4,797		$	-		$	4,797
Balance at September 30, 2022										$	3,138		$	3,138

^1.

~~Amounts do~~ ~~not~~ ~~include tax expense or benefit.~~

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NOTE ~~11.~~12. FINANCIAL INFORMATION BY BUSINESS SEGMENT

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

(dollars in thousands)	*Investment Management Services*		*Corporate Investments*			*Consolidated*			*Investment Management Services*		*Corporate Investments*			*Consolidated*
Nine Months Ended March 31, 2023
Three Months Ended September 30, 2023
Net operating revenues	$	11,764	$	-		$	11,764		$	3,133	$	-		$	3,133
Investment loss	$	-	$	(189	)	$	(189	)
Net investment loss									$	-	$	(513	)	$	(513	)
Other income	$	184	$	-		$	184		$	57	$	-		$	57
Income (loss) before income taxes	$	3,461	$	(243	)	$	3,218		$	288	$	(529	)	$	(241	)
Depreciation	$	183	$	-		$	183		$	61	$	-		$	61
Gross identifiable assets at March 31, 2023	$	25,056	$	29,030		$	54,086
Gross identifiable assets at September 30, 2023									$	26,954	$	24,851		$	51,805
Deferred tax asset						$	1,659							$	2,287
Consolidated total assets at March 31, 2023						$	55,745
Nine Months Ended March 31, 2022
Consolidated total assets at September 30, 2023														$	54,092
Three Months Ended September 30, 2022
Net operating revenues	$	19,270	$	-		$	19,270		$	4,412	$	-		$	4,412
Investment loss	$	-	$	(1,950	)	$	(1,950	)
Loss from equity method investments	$	-	$	(206	)	$	(206	)
Net investment loss									$	-	$	(1,460	)	$	(1,460	)
Other income	$	174	$	-		$	174		$	61	$	-		$	61
Income (loss) before income taxes	$	8,750	$	(2,409	)	$	6,341		$	1,661	$	(1,475	)	$	186
Depreciation	$	165	$	-		$	165		$	61	$	-		$	61
Gross identifiable assets at March 31, 2022	$	27,652	$	34,863		$	62,515
Three Months Ended March 31, 2023
Net operating revenues	$	3,624	$	-		$	3,624
Investment income	$	-	$	1,155		$	1,155
Other income	$	61	$	-		$	61
Income before income taxes	$	815	$	1,131		$	1,946
Depreciation	$	61	$	-		$	61
Three Months Ended March 31, 2022
Net operating revenues	$	6,175	$	-		$	6,175
Investment loss	$	-	$	(3,495	)	$	(3,495	)
Loss from equity method investments	$	-	$	(173	)	$	(173	)
Other income	$	59	$	-		$	59
Income (loss) before income taxes	$	2,612	$	(3,704	)	$	(1,092	)
Depreciation	$	61	$	-		$	61
Gross identifiable assets at September 30, 2022									$	23,607	$	32,005		$	55,612
Deferred tax asset														$	1,373
Consolidated total assets at September 30, 2022														$	56,985

Net operating revenues from investment management services includes operating revenues from ~~USGIF~~ETF clients of ~~$482,000~~$2.7 million and ~~$1.4~~$3.9 million for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,~~, respectively, and $803,000 and $3.1 million for the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 2022, respectively. Net operating revenues from investment management services also include operating revenues from ~~ETF clients~~USGIF of ~~$3.1 million~~$424,000 and ~~$10.4 million~~$499,000 for the three ~~and~~ ~~nine~~months ended ~~March 31,~~September 30, 2023,~~, respectively, and $5.4 million and $16.1 million for the~~ ~~three~~and ~~nine~~ ~~months ended~~ ~~March 31,~~ 2022, respectively.

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NOTE ~~12.~~13. CONTINGENCIES AND COMMITMENTS

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

During the normal course of business, the Company may be subject to various claims, legal proceedings, and other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters 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~~Consolidated Financial Statements of the Company. Excluding reserves for uncertain tax positions, the Company recorded no accruals for contingencies as of September 30, 2023, or June 30, 2023.

The Board has authorized a monthly dividend of $0.0075 per share through ~~June~~December 2023, at which time it will be considered for continuation by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions. The total amount of cash dividends expected to be paid to class A and class C shareholders from ~~April~~October to ~~June~~December 2023 is approximately ~~$332,000.~~$324,000.

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

NOTE ~~13.~~14. SUBSEQUENT EVENTS

In ~~June~~December 2023, the Board authorized the continuance of the monthly dividend of $0.0075 per share from ~~July~~January through ~~September 2023~~March 2024, at which time it will be considered for continuation by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions.

~~Additionally, the Company's credit agreement discussed in Note~~ 6~~, Borrowings, expired on~~ ~~May 31, 2023;~~ ~~the Company intends to renew the agreement. Further, as discussed in Note~~ 3, Investment Management and Other Fees, the Company has agreed to contractually limit the expenses of the U.S. Global Sea to Sky Cargo ETF, the Near-Term Tax Free Fund and the Global Luxury Goods Fund. These agreements have been extended through ~~April 2024.~~

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) has made forward-looking statements concerning the Company’s performance, financial condition, and operations in this report. The Company from time to time may also make forward-looking statements in its public filings and press releases. Such forward-looking statements are subject to various known and unknown risks and uncertainties and do not guarantee future performance. Actual results could differ materially from those anticipated in such forward-looking statements due to a number of factors, some of which are beyond the Company’s control, including: (i) the volatile and competitive nature of the investment management industry, (ii) changes in domestic and foreign economic conditions, including significant economic disruptions from COVID-19 or other epidemics, pandemics or outbreaks and the actions taken in connection therewith, (iii) the effect of government regulation on the Company’s business, and (iv) market, credit, and liquidity risks associated with the Company’s investment management activities. Due to such risks, uncertainties, and other factors, the Company cautions each person receiving such forward-looking information not to place undue reliance on such statements. All such forward-looking statements are current only as of the date on which such statements were made.

FACTORS AFFECTING OUR BUSINESS

The rapid spread of COVID-19 and actions taken in response had a significant detrimental effect on the global and domestic economies and financial markets. Market declines affect the Company’s assets under management, and thus its revenues and also the valuation of the Company’s corporate investments. Should this emerging macro-economic risk reoccur and continue for an extended period, there could be an adverse material financial impact to the Company’s business and investments, including a material reduction in its results of operations.

COVID-19-related circumstances (e.g., remote work arrangements) did not adversely affect the Company’s ability to maintain operations, including financial reporting systems, internal controls over financial reporting, and disclosure controls and procedures.

Since May 2022, market volatility in the prices of digital assets has been elevated due to a variety of factors, including, but not limited to, the macroeconomic environment (high inflation and rising interest rates) as well as the ‘crypto credit crisis’ brought on by the collapse and bankruptcy of a number of key players in the sector (cryptocurrency Luna collapse, hedge fund Three Arrows Capital default on loans and filing for bankruptcy, crypto-lending platform Celsius freezing all withdraws, cryptocurrency lender Voyager Digital filing for bankruptcy, crypto platform FTX filing for bankruptcy, crypto platform BlockFi filing for bankruptcy among others). The Company does not have direct exposure to any of the foregoing firms affected by the recent crypto credit crisis. Although the Company has no current intention of directly investing in cryptocurrencies, the Company has indirect exposure to cryptocurrencies by investing in securities of issuers with exposure to the cryptocurrency industry. There has been significant volatility in the market price of the securities, which has had a material impact, and may continue to have a material impact, on the investment values included on the ~~consolidated balance sheets~~Consolidated Balance Sheets and unrealized gain (loss) recognized in net investment income.

BUSINESS SEGMENTS

The Company, with principal operations located in San Antonio, Texas, manages two business segments: (1) the Company offers a broad range of investment management products and services to meet the needs of individual and institutional investors, and (2) the Company invests for its own account in an effort to add growth and value to its cash position.

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

Investment Management Services

The Company provides advisory services for three U.S.-based exchange-traded fund (“ETF”) clients and receives monthly advisory fees based on the net asset values of the funds. Information on the U.S.-based ETFs can be found at www.usglobaletfs.com, including the prospectus, performance and holdings. The Company also serves as investment advisor to one European-based ETF and receives a monthly advisory fee based on the net asset value of the fund. The European-based ETF is not available to U.S. investors. The ETFs’ authorized participants are not required to give advance notice prior to redemption of shares in the ETFs, and the ETFs do not charge a redemption fee.

The Company also generates operating revenues from managing and servicing U.S. Global Investors Funds (“USGIF” or the “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 asset levels of the Funds, thereby affecting income and results of operations. Detailed information regarding the 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. The mutual fund shareholders in USGIF are not required to give advance notice prior to redemption of shares in the Funds.

At ~~March 31,~~September 30, 2023, total assets under management, including ETF and USGIF clients, were approximately $1.8 billion versus $2.3 billion ~~versus $4.1 billion~~ at ~~March 31,~~September 30, 2022, a decrease of ~~$1.8~~$0.5 billion, or ~~43.9~~23.8 percent. During the ~~nine~~three months ended ~~March 31,~~September 30, 2023, average assets under management, including ETF and USGIF clients, were ~~$2.6~~$2.1 billion, versus ~~$4.0~~$2.9 billion during the ~~nine~~three months ended ~~March 31,~~September 30, 2022. At June 30, ~~2022,~~2023, the Company’s prior fiscal year end, total assets under management, including ETF and USGIF clients, were approximately ~~$2.9~~$2.4 billion, and has decreased ~~$626.1 million,~~$0.6 billion, or ~~21.5~~26.1 percent, during the ~~nine~~three months ended ~~March 31,~~September 30, 2023.

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The following tables summarize the changes in assets under management for USGIF for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, and 2022.

Changes in Assets Under Management

Three Months Ended March 31,

2023

2022

(dollars in thousands)

Equity

Fixed Income

Total

Equity

Fixed Income

Total

Beginning Balance
$ 278,037 $ 64,995 $ 343,032 $ 388,834 $ 73,392 $ 462,226
Market appreciation (depreciation)
18,763 542 19,305 14,385 (1,633 ) 12,752
Dividends and distributions
- (394 ) (394 ) - (56 ) (56 )
Net shareholder redemptions
(5,889 ) (3,042 ) (8,931 ) (13,109 ) (3,639 ) (16,748 )
Ending Balance
$ 290,911 $ 62,101 $ 353,012 $ 390,110 $ 68,064 $ 458,174

Average investment management fee
0.79 % 0.00 % 0.65 % 0.94 % 0.00 % 0.79 %
Average net assets
$ 289,682 $ 63,337 $ 353,019 $ 377,400 $ 70,638 $ 448,038

	Changes in Assets Under Management																		Changes in Assets Under Management
	Nine Months Ended March 31,																		Three Months Ended September 30,
	2023									2022									2023									2022
(dollars in thousands)	Equity			Fixed Income			Total			Equity			Fixed Income			Total			Equity			Fixed Income			Total			Equity			Fixed Income			Total
Beginning Balance	$	286,367		$	71,161		$	357,528		$	433,380		$	75,842		$	509,222		$	265,329		$	63,110		$	328,439		$	286,367		$	71,161		$	357,528
Market appreciation (depreciation)		22,292			323			22,615			(11,610	)		(1,828	)		(13,438	)		(21,320	)		285			(21,035	)		(19,826	)		(758	)		(20,584	)
Dividends and distributions		(11,329	)		(931	)		(12,260	)		(61,309	)		(225	)		(61,534	)		(983	)		(458	)		(1,441	)		-			(129	)		(129	)
Net shareholder purchases (redemptions)		(6,419	)		(8,452	)		(14,871	)		29,649			(5,725	)		23,924
Net shareholder redemptions																				(21,929	)		(3,350	)		(25,279	)		(6,527	)		(3,467	)		(9,994	)
Ending Balance	$	290,911		$	62,101		$	353,012		$	390,110		$	68,064		$	458,174		$	221,097		$	59,587		$	280,684		$	260,014		$	66,807		$	326,821

Average investment management fee		0.81	%		0.00	%		0.65	%		0.94	%		0.00	%		0.79	%		0.80	%		0.00	%		0.64	%		0.86	%		0.00	%		0.69	%
Average net assets	$	281,745		$	65,978		$	347,723		$	391,976		$	73,194		$	465,170		$	251,200		$	61,749		$	312,949		$	282,446		$	69,040		$	351,486

The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 6564 basis points for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, and 7969 basis points for the same ~~periods~~period in the prior year. The average investment management fee for the equity funds was ~~79 basis points and 81~~80 basis points for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, ~~respectively,~~ and 9486 basis points for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022. The Company has agreed to contractually or voluntarily limit the expenses of the Funds. Therefore, the Company waived or reduced its fees and/or agreed to pay expenses of the Funds. Due to fee waivers, the average investment management fee for the fixed income funds was minimal.

Investment Activities

Management believes it can more effectively manage the Company’s cash position by broadening the types of investments used in cash management and continues to believe that such activities are in the best interest of the Company. 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. This source of revenue does not remain consistent and is dependent on market fluctuations, the Company’s ability to participate in investment opportunities, and timing of transactions.

As of ~~March 31,~~September 30, 2023, the Company held investments carried at fair value of ~~$20.8~~$18.3 million and a cost basis of ~~$27.6~~$26.2 million. The fair value of these investments is approximately ~~37.4~~33.8 percent of the Company’s total assets at ~~March 31,~~September 30, 2023. In addition, the Company held other investments of approximately ~~$2.8~~$1.6 million and held-to-maturity debt investments, net of ~~$1.0 million.~~allowance for credit losses, of $795,000.

Investments recorded at fair value on a recurring basis were approximately ~~$20.8~~$18.3 million at ~~March 31,~~September 30, 2023, compared to approximately ~~$24.9~~$20.2 million at June 30, ~~2022,~~2023, the Company’s prior fiscal year end, which is a decrease of approximately ~~$4.1~~$2.0 million. See Note 2,3, Investments, in the Notes to Consolidated Financial Statements of this Quarterly Report on Form 10-Q, for further information regarding investment activities.

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RESULTS OF OPERATIONS – Three months ended ~~March 31,~~September 30, 2023, and 2022

The Company ~~posted~~recorded a net ~~income~~loss of ~~$1.6 million~~$176,000 ($~~0.11~~(0.01) per share) for the three months ended ~~March 31,~~September 30, 2023, compared to a net ~~loss~~income of ~~$846,000~~$53,000 ($~~(0.06)~~0.00 per share) for the three months ended ~~March 31,~~September 30, 2022, a change of approximately ~~$2.5 million.~~$229,000. The change is primarily due to ~~an increase in investment income and~~ a decrease in operating ~~expenses~~revenues compared to the same period in the prior year, offset by a decrease in ~~operating revenue~~net investment losses compared to the same period in the prior year, and ~~an increase~~a tax benefit in the current period compared to a tax expense ~~compared to~~in the same period in the prior year, as discussed further below.

Operating Revenues

Total consolidated operating revenues for the three months ended ~~March 31,~~September 30, 2023, decreased ~~$2.6~~$1.3 million, or ~~41.3~~29.0 percent, compared with the three months ended ~~March 31,~~September 30, 2022. This decrease was primarily attributable to the following:

•	Advisory fees decreased by ~~$2.5~~$1.3 million, or ~~41.4~~29.1 percent, primarily as a result of lower average assets under management in the ETFs and a decrease in base management fees received. Advisory fees are comprised of two components: base management fees and performance fees.

•

Base management fees decreased ~~$2.5~~$1.3 million. The majority of this decrease was from ETF unitary management fees, which decreased ~~$2.2~~$1.2 million as the result of a decrease in ETF average assets under management, primarily for the Jets ETF.

•

Performance fees for USGIF paid in the current period were ~~$(109,000)~~$112,000 compared to ~~$(120,000)~~$146,000 in the corresponding period in the prior year, a ~~decrease~~favorable change of ~~$11,000.~~$34,000. The performance fee, which applies to the USGIF equity funds only, 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.

Operating Expenses

Total consolidated operating expenses for the three months ended ~~March 31,~~September 30, 2023, ~~decreased $764,000,~~increased $91,000, or ~~20.9~~3.2 percent, compared with the three months ended ~~March 31,~~September 30, 2022. The ~~decrease~~increase in operating expenses was primarily attributable to an increase in employee compensation of $99,000, or 8.4 percent; offset by a decrease in advertising of $5,000, or 5.8 percent; and a decrease in general and administrative expenses of ~~$663,000,~~$3,000, or ~~31.0 percent, primarily due to lower fund expenses and lower consulting and professional fees; a decrease in employee compensation~~0.2 percent.

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Table of ~~$55,000, or 4.2 percent; and a decrease in advertising of $47,000, or 34.1 percent. Advertising was higher in the same quarter in the prior year primarily due to the launch of a new ETF product.~~

Contents

Other Income (Loss)

Total consolidated other ~~income~~loss for the three months ended ~~March 31,~~September 30, 2023, was ~~$1.2 million,~~$456,000, compared to ~~a loss of $3.6~~$1.4 million for the three months ended ~~March 31,~~September 30, 2022, a change of approximately ~~$4.8 million.~~$943,000. This change was primarily due to the following factors:

•

~~Investment income~~Net investment loss was ~~$1.2 million~~$513,000 for the three months ended ~~March 31,~~September 30, 2023, as compared ~~to an investment~~with loss of ~~$3.5~~$1.5 million for the ~~three months ended March 31, 2022,~~comparable prior period, a ~~change~~favorable decrease of ~~approximately $4.7 million.~~$947,000. This ~~change was primarily due to~~decrease in net investment loss is comprised of a decrease in unrealized ~~gains~~losses on equity securities of ~~$283,000 for the three months ended March 31, 2023,~~$1.5 million and a decrease in foreign currency losses of $327,000 as compared to ~~$3.0 million~~the same quarter in the prior year. These favorable decreases were offset by realized losses on equity securities of ~~unrealized~~$818,000 in the current period, primarily related to an impairment, whereas there were no realized losses on equity securities for the same quarter in the prior year, a change of $3.3 million; and unrealized gains on embedded derivatives of $55,000 for the three months ended March 31, 2023, compared to unrealized losses on embedded derivatives of $1.5 million for the same quarter in the prior year.

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Provision for Income Taxes

A tax ~~expense~~benefit of ~~$306,000~~$65,000 was recorded for the three months ended ~~March 31,~~September 30, 2023, compared to a tax ~~benefit~~expense of ~~$246,000~~$133,000 for the three months ended ~~March 31,~~September 30, 2022, a change of ~~$552,000.~~$198,000. The change was primarily the result of an increase in the unrealized gains of certain investments in the current quarter, whereas the same quarter in the prior year had unrealized losses on corporate investments.

~~RESULTS OF OPERATIONS~~ – ~~Nine months ended March 31, 2023, and 2022~~

The Company posted net income of $2.6 million ($0.18 per share) for the nine months ended March 31, 2023, compared to $5.1 million ($0.34 per share) for the nine months ended March 31, 2022, a decrease of approximately $2.5 million. The decrease is primarily due to a decrease in operating revenue compared to the same period in the prior year, somewhat offset by decreases in operating expenses, investment losses, and tax expenses compared to the same period in the prior year, as discussed further below.

~~Operating Revenues~~

Total consolidated operating revenues for the nine months ended March 31, 2023, decreased $7.5 million, or 39.0 percent, compared with the nine months ended March 31, 2022. This decrease was primarily attributable to the following:

•	Advisory fees decreased by $7.5 million, or 39.0 percent, primarily as a result of lower average assets under management in the ETFs and a decrease in base management fees received. Advisory fees are comprised of two components: base management fees and performance fees.

•

Base management fees decreased $6.9 million. The majority of this decrease was from ETF unitary management fees, which decreased $5.8 million as the result of a decrease in ETF average assets under management, primarily for the Jets ETF.

•

Performance fees for USGIF paid in the current period were $(390,000) compared to $209,000 in performance fees received in the corresponding period in the prior year, a change of $599,000. The performance fee, which applies to the USGIF equity funds only, 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.

~~Operating Expenses~~

Total consolidated operating expenses for the nine months ended March 31, 2023, decreased $2.4 million, or 22.0 percent, compared with the nine months ended March 31, 2022. The decrease in operating expenses was primarily attributable to a decrease in employee compensation of $1.4 million, or 28.2 percent, primarily as a result of a decrease in bonuses in the current period and amortization expense of employee stock options in the same period of the prior year. General and administrative expenses decreased by $1.0 million, or 18.4 percent, primarily due to lower fund expenses; lower ETF expenses, primarily due to lower average net assets in the current period; and lower directors’ fees and expenses, primarily due to amortization expense of stock options in the same period of the prior year.

~~Other Income (Loss)~~

Total consolidated other loss for the nine months ended March 31, 2023, was $5,000, compared to $2.0 million for the nine months ended March 31, 2022, a change of approximately $2.0 million. This change was primarily due to the following factors:

•

Investment loss was $189,000 for the nine months ended March 31, 2023, compared to $2.0 million for the nine months ended March 31, 2022, a change of approximately $1.8 million. This was primarily due to unrealized losses on equity securities of $2.6 million for the nine months ended March 31, 2023, compared to $4.9 million for the same period in the prior year, a decrease of $2.4 million. Unrealized gains on embedded derivatives were $82,000 for the nine months ended March 31, 2023, compared to unrealized losses on embedded derivatives of $2.1 million for the same period in the prior year, a change of $2.1 million. These changes were somewhat offset by realized losses on equity securities of $13,000 for the nine months ended March 31, 2023, compared to realized gains on sales of equity securities of $1.8 million in the same period in the prior year. Additionally, realized gains on debt securities decreased by $395,000, dividend and interest income decreased by $224,000, and foreign currency losses increased by $251,000 compared to the same period in the prior year.

•	Losses from equity method investments for the nine months ended March 31, 2022, was $206,000. As discussed in Note 2, Investments, the Company’s equity method investment was dissolved as of March 31, 2022.

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~~Provision for Income Taxes~~

~~A tax expense of $602,000 was recorded for the nine months ended March 31, 2023, compared to $1.2 million for the nine months ended March 31, 2022. The decrease~~ was primarily the result of lower operating income compared to the same period in the prior ~~year, somewhat offset by an increase~~year. In the comparable prior period, the tax expense percentage was high in ~~unrealized gains of certain investments compared~~comparison to pre-tax income primarily due to discrete foreign currency losses for which the ~~same period in the prior year.~~Company cannot claim a tax benefit.

LIQUIDITY AND CAPITAL RESOURCES

At ~~March 31,~~September 30, 2023, the Company had net working capital (current assets minus current liabilities) of approximately ~~$36.9~~$37.7 million, an increase of ~~$3.0 million,~~$246,000, or ~~8.7~~0.7 percent, since June 30, ~~2022,~~2023, and a current ratio (current assets divided by current liabilities) of 14.3 to 1. With approximately ~~$24.9~~$26.8 million in cash and cash equivalents, an increase of ~~$2.6~~$1.4 million, or ~~11.8~~5.7 percent since June 30, ~~2022,~~2023, and ~~$13.0~~$11.9 million in securities carried at fair value on a recurring basis, excluding convertible securities, which together comprise approximately ~~68.0~~71.7 percent of total assets, the Company has adequate liquidity to meet its current obligations.

The increase in cash, and accordingly, net working capital, was primarily due to net cash provided by operating activities of ~~$2.6 million,~~$884,000, proceeds from principal paydowns of ~~$2.3 million,~~$750,000, and proceeds from sales of corporate investments of ~~$350,000;~~$800,000; offset by dividends paid of ~~$1.0 million,~~$326,000, and repurchases of the Company's common stock of ~~$938,000, and purchases of corporate investments of $663,000.~~$611,000. Consolidated shareholders’ equity at ~~March 31,~~September 30, 2023, was ~~$52.9~~$50.7 million, a decrease of ~~$1.2~~$1.5 million, or ~~2.3~~2.9 percent since June 30, ~~2022.~~2023. The decrease was primarily due to ~~other comprehensive loss of $2.0 million, dividends declared of $1.0 million,~~ repurchases of the Company's common stock of ~~$938,000, somewhat offset by~~$611,000, dividends declared of $322,000, the impact of ASU 2016-13 adoption of $183,000, other comprehensive loss of $214,000, and a net ~~income~~loss of ~~$2.6 million,~~$176,000, for the ~~nine~~three months ended ~~March 31,~~September 30, 2023.

The Company also has access to a $1 million credit facility, which can be utilized for working capital purposes. The credit agreement requires the Company to maintain certain covenants; the Company has been in compliance with these covenants during the current fiscal year. The credit agreement expires on May 31, ~~2023,~~2024, and the Company intends to renew annually. The credit facility is collateralized by approximately $1 million, included in restricted cash on the ~~consolidated balance sheets,~~Consolidated Balance Sheets, held in deposit in a money market account at the financial institution that provided the credit facility. As of ~~March 31,~~September 30, 2023, 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 and USGIF have been renewed through September ~~2023.~~2024. The advisory agreement for the U.S.-based ETFs has been renewed through ~~September 2023.~~July 2024.

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, 2023, but may be suspended or discontinued at any time. Cash and securities recorded at fair value on a recurring basis, excluding convertible securities, of approximately ~~$37.9~~$38.8 million are available to fund current activities.

Management believes current cash reserves, investments, and financing available will be sufficient to meet foreseeable cash needs for operating activities.

CRITICAL ACCOUNTING ESTIMATES

For a discussion of other critical accounting policies that the Company follows, please refer to the notes to the ~~consolidated financial statements~~Consolidated Financial Statements included in the Annual Report on Form ~~10-K/A-2~~10-K for the year ended June 30, ~~2022.~~2023. There have been no material changes to our critical accounting policies, except for the Company's adoption of a new accounting standard as discussed in Item 1, Financial Statements at Note 2, Basis of Presentation and Consolidation, of this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COVID-19 had an adverse effect on global and domestic financial markets, which may reoccur and continue for an undetermined period. This may adversely affect assets under management and thus the Company’s revenues and operating results. Market declines also affect the valuation of the Company’s corporate investments, which also adversely affects the Company’s balance sheet and results of operations.

Macroeconomic declines, including inflation; negative political developments, including volatile market conditions due to investor concerns regarding inflation, and ~~potential hostilities between Russia~~the Russia-Ukraine and ~~Ukraine;~~Israel-Palestine conflicts; adverse market conditions, including cryptocurrency market disruptions; and catastrophic events may cause a decline in the Company’s revenue, an increase in the Company’s costs, negatively affect the Company’s operating results, adversely affect the Company’s cash flow, and could result in a decline in the Company’s stock price.

Investment Management and Administrative Services Fees

Revenues are generally based upon a percentage 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 services fees section above. For the three ~~and nine~~ months ended ~~March 31,~~September 30, 2023, the Company realized a decrease of ~~$(109,000) and $(390,000), respectively,~~$112,000 in its USGIF base advisory fee, and for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2022, a decrease of ~~$(120,000) and an increase of $209,000, respectively,~~$146,000 due to these performance adjustments.

Corporate Investments

The Company’s ~~consolidated balance sheets~~Consolidated Balance Sheets include substantial amounts of assets whose fair values are subject to market risk. The market risks are primarily associated with equity prices and foreign currency exchange rates. The fair values of corporate investments with exposure to the cryptocurrency industry are subject to considerable volatility.

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.

Equity price risk

Due to the Company’s investments in securities carried at fair value, equity price fluctuations represent a market risk factor affecting the Company’s consolidated financial position. The carrying values of investments subject to equity 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 fair value.

The following table summarizes the Company’s equity price risks in securities recorded at fair value on a recurring basis as of ~~March 31,~~September 30, 2023, and shows the effects of a hypothetical 25 percent increase and a 25 percent decrease in market prices.

				Estimated Fair Value		Estimated Increase						Estimated Fair Value		Estimated Increase
	Fair Value at		Hypothetical	After Hypothetical		(Decrease) in			Fair Value at		Hypothetical	After Hypothetical		(Decrease) in
(dollars in thousands)	March 31, 2023		Percentage Change	Price Change		Net Income (Loss) (1)			September 30, 2023		Percentage Change	Price Change		Net Income (Loss) ⁽¹⁾
Equity securities at fair value	$	13,184	25% increase	$	16,480	$	2,604		$	11,920	25% increase	$	14,900	$	2,354
			25% decrease	$	9,888	$	(2,604	)			25% decrease	$	8,940	$	(2,354	)
Embedded derivatives at fair value ⁽²⁾	$	85	25% increase	$	106	$	17		$	35	25% increase	$	44	$	7
			25% decrease	$	64	$	(17	)			25% decrease	$	26	$	(7	)

^1.

Changes in unrealized gains and losses on embedded derivatives and equity securities at fair value are included in earnings in the ~~consolidated statements~~Consolidated Statements of ~~operations.~~Operations. The estimated increase (decrease) is after income taxes at the statutory rate in effect as of the balance sheet date.

^2.

An embedded derivative and its related host contract represent one legal contract and are combined within the investments in available-for-sale debt securities on the ~~consolidated balance sheets.~~Consolidated Balance Sheets.

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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 markets and the concentration of the Company’s investment portfolio.

COVID-19 had an effect on volatility in global and domestic financial markets, which may reoccur and continue for an undetermined period. This may not only adversely affect the Company’s assets under management but also the valuation of the Company’s corporate investments.

A portion of the equity securities recorded at fair value in the above table subject to equity price risk are investments in common share purchase warrants of HIVE ~~Blockchain~~Digital Technologies Ltd. (“HIVE”), which were valued at ~~$222,000~~$4,000 at ~~March 31,~~September 30, 2023. Also, the embedded derivatives shown in the above table, which were valued at ~~$85,000~~$35,000 at ~~March 31,~~September 30, 2023, are related to HIVE convertible debentures. HIVE is discussed in more detail in Note 2,3, Investments, in the notes to ~~consolidated financial statements~~Consolidated Financial Statements of this Quarterly Report on Form 10-Q. HIVE is a company that is headquartered in Canada with cryptocurrency mining facilities in Iceland, Sweden and Canada. Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile. There is potential for significant volatility in the market price of HIVE, which could materially impact the investment’s value included on the ~~consolidated balance sheets~~Consolidated Balance Sheets and unrealized gain (loss) recognized in net investment ~~income.~~income (loss).

Interest rate risk

Due to the Company’s investments in debt securities carried at fair value, interest rate fluctuations represent a market risk factor affecting the Company’s consolidated financial position. Debt securities may fluctuate in value due to changes in interest rates. Typically, investments subject to interest rate risk will decrease in value when interest rates rise and increase in value when interest rates decline. Fluctuations in interest rates could ~~materially~~have a material impact on the Company’s investments in debt securities ~~carried at fair value~~ included on the ~~consolidated balance sheets~~Consolidated Balance Sheets, and unrealized gains (losses) and interest income recognized in net investment ~~income.~~income (loss).

Foreign currency risk

A portion of cash and certain corporate investments are held in foreign currencies, primarily Canadian. Adverse changes in foreign currency exchange rates would lower the value of those cash accounts and corporate investments. Certain assets under management also have exposure to foreign currency fluctuations in various markets, which could have an impact on their valuation and thus the revenue received by the Company.

Indirect exposure to cryptocurrencies risk

Cryptocurrencies (also referred to as “virtual currencies” and “digital currencies”) are digital assets that are designed to act as a medium of exchange. Although the Company has no current intention of directly investing in cryptocurrencies, the Company has indirect exposure to cryptocurrencies by investing in securities of issuers with exposure to the cryptocurrency industry. Cryptocurrencies (some of the most well-known include Bitcoin, Dogecoin and Ethereum) are not backed by any government, corporation, or other identified body. Trading markets for cryptocurrencies are often unregulated and may be more exposed to operational or technical issues as well as the potential for fraud or manipulation than established, regulated exchanges for securities, derivatives and traditional currencies.

Cryptocurrencies have been subject to significant fluctuations in value. The value of a cryptocurrency may significantly fluctuate precipitously (including declining to zero) and unpredictably for a variety of reasons, including, but not limited to: investor perceptions and expectations; regulatory changes; general economic conditions; adoption and use in the retail and commercial marketplace; public opinion regarding the environmental impact of the creation (“minting” or “mining”) of cryptocurrency; confidence in, and the maintenance and development of, its network and open-source software protocols such as blockchain for ensuring the integrity of cryptocurrency transactional data; and general risks tied to the use of information technologies, including cybersecurity risks.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of ~~March 31,~~September 30, 2023, was conducted under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were not effective as of ~~March 31,~~September 30, 2023, due to the existence of the material ~~weakness~~weaknesses in internal control over financial reporting described below (which we view as an integral part of our disclosure controls and procedures).

The material ~~weakness~~weaknesses in internal controls over financial reporting that ~~was~~were disclosed in our annual report on Form ~~10-K/A-2~~10-K as of and for the year ended June 30, ~~2022, was~~2023, were also present as of ~~March 31,~~September 30, 2023. ~~Based on~~Notwithstanding the ~~completion of the fair value measurements,~~material weaknesses, we believe that the ~~consolidated financial statements~~Consolidated Financial Statements included in this quarterly report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows as of the date, and for the period, presented, in conformity with U.S. GAAP.

Management is in the process of designing a remediation plan intended to address this material weakness, which will include taking steps to enhance its evaluation of the qualifications of third-party specialists, more accurately define the scope of work to be performed by such specialists, and improve the review process for work products prepared by specialists. Management, under the supervision of the Audit Committee, will develop a comprehensive remediation plan, including a detailed plan and timetable for implementation, and will report regularly to the Audit Committee regarding the status of the implementation activities.

Other than as described above, there has been no change in the Company’s internal control over financial reporting that occurred during the three months ended ~~March 31,~~September 30, 2023, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1A. RISK FACTORS

For a discussion of risk factors which could affect the Company, please refer to Item 1A, “Risk Factors” in the Annual Report on Form ~~10-K/A-2~~10-K for the year ended June 30, ~~2022.~~2023. There have been no material changes since the fiscal year end to the risk factors listed therein.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

(dollars in thousands, except price data)
	Total Number						Total Number of Shares		Approximate Dollar Value		Total Number						Total Number of Shares		Approximate Dollar Value
	of Shares		Total Amount		Average Price		Purchased as Part of		of Shares that May Yet Be		of Shares		Total Amount		Average Price		Purchased as Part of		of Shares that May Yet Be
Period	Purchased (1)		Purchased		Paid Per Share (2)		Publicly Announced Plan(3)		Purchased Under the Plan		Purchased ⁽¹⁾		Purchased		Paid Per Share ⁽²⁾		Publicly Announced Plan⁽³⁾		Purchased Under the Plan
01-01-23 to 01-31-23		75,612	$	230	$	3.04		75,612	$	4,071
02-01-23 to 02-28-23		34,502		108	$	3.13		34,502	$	3,963
03-01-23 to 03-31-23		82,926		218	$	2.63		82,926	$	3,745
07-01-23 to 07-31-23												61,989	$	197	$	3.17		61,989	$	3,990
08-01-23 to 08-31-23												81,638		251	$	3.08		81,638	$	3,739
09-01-23 to 09-30-23												54,586		163	$	2.99		54,586	$	3,576
Total		193,040	$	556	$	2.88		193,040				198,213	$	611	$	3.08		198,213

^1.

The Board of Directors of the company approved on December 7, 2012, and has renewed annually, repurchases of up to $2.75 million in each of calendar years 2013 through 2022 of its outstanding class A common stock from time to time on the open market in accordance with all applicable rules and regulations. On February 25, 2022, the Company announced that the Board of Directors of the Company approved an increase to the limit of its annual share buyback program from $2.75 million to $5.0 million.

^2.

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

^3.

The total amount of shares that may be repurchased in 2023 under the program is $5.0 million.

Page 2825

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ITEM 6. EXHIBITS

1. Exhibits –
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	Inline XBRL Instance Document
101.SCH	Inline XBRL Taxonomy Extension Schema Document
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

Page 2926

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

		U.S. GLOBAL INVESTORS, INC.

DATED:	~~June 22,~~December 14, 2023	BY: /s/ Frank E. Holmes
		Frank E. Holmes
		Chief Executive Officer

DATED:	~~June 22,~~December 14, 2023	BY: /s/ Lisa C. Callicotte
		Lisa C. Callicotte
		Chief Financial Officer

Page 3027

PART I. FINANCIAL INFORMATION	1

ITEM 1. FINANCIAL STATEMENTS	1
CONSOLIDATED BALANCE SHEETS (UNAUDITED)	1
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)	2
CONSOLIDATED STATEMENTS COMPREHENSIVE INCOME (LOSS) (UNAUDITED)	3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (UNAUDITED)	4
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)	65
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	76
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2120
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	2623
ITEM 4. CONTROLS AND PROCEDURES	2724

PART II. OTHER INFORMATION	2825

ITEM 1A. RISK FACTORS	2825
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	2825
ITEM 6. EXHIBITS	2926

SIGNATURES	3027

	March 31, 2023
(dollars in thousands)	Fair Value		Principal Valuation Techniques	Unobservable Inputs
Investments in equity securities:
Common share purchase warrants	$	222	Option pricing model	Volatility	101.5	%

Investments in debt securities:
Available-for-sale - Convertible debentures	$	7,649	Binomial lattice model	Volatility	99.8	%
				Credit Adjusted Discount Rate	15.0	%

	Changes in Assets Under Management
	Three Months Ended March 31,
	2023									2022
(dollars in thousands)	Equity			Fixed Income			Total			Equity			Fixed Income			Total
Beginning Balance	$	278,037		$	64,995		$	343,032		$	388,834		$	73,392		$	462,226
Market appreciation (depreciation)		18,763			542			19,305			14,385			(1,633	)		12,752
Dividends and distributions		-			(394	)		(394	)		-			(56	)		(56	)
Net shareholder redemptions		(5,889	)		(3,042	)		(8,931	)		(13,109	)		(3,639	)		(16,748	)
Ending Balance	$	290,911		$	62,101		$	353,012		$	390,110		$	68,064		$	458,174

Average investment management fee		0.79	%		0.00	%		0.65	%		0.94	%		0.00	%		0.79	%
Average net assets	$	289,682		$	63,337		$	353,019		$	377,400		$	70,638		$	448,038