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What changed in U S GLOBAL INVESTORS INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of U S GLOBAL INVESTORS INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+118 added−129 removedSource: 10-K (2024-09-10) vs 10-K (2023-11-16)

Top changes in U S GLOBAL INVESTORS INC's 2024 10-K

118 paragraphs added · 129 removed · 104 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

15 edited+2 added−1 removed35 unchanged
Biggest changeThe administrative services agreement with USGIF is subject to renewal on an annual basis and is terminable upon 60 days' notice. In September 2023, the Board of Trustees of USGIF approved the annual renewal of the advisory agreement. Corporate Investments Investment Activities.
Biggest changeAdministrative Services. The Company also manages, supervises and conducts certain other affairs of USGIF, subject to the control of the Funds’ Board of Trustees pursuant to an administrative services agreement. The administrative services agreement with USGIF is subject to renewal on an annual basis and is terminable upon 60 days' notice.
This list may be updated from time to time. https://www.facebook.com/USFunds https://twitter.com/USFunds https://twitter.com/USGlobalETFs https://www.linkedin.com/company/u-s-global-investors https://www.instagram.com/usglobal https://pinterest.com/usfunds https://www.youtube.com/c/usglobalinvestorssanantonio https://www.youtube.com/channel/UCDkX1zvbWPyWc99esHOhwRQ Information contained on our website or on social media channels is not deemed part of this report. 4 Table of Contents
This list may be updated from time to time. https://www.facebook.com/USFunds https://twitter.com/USFunds https://twitter.com/USGlobalETFs https://www.linkedin.com/company/u-s-global-investors https://www.instagram.com/usglobal https://pinterest.com/usfunds https://www.youtube.com/c/usglobalinvestorssanantonio https://www.youtube.com/channel/UCDkX1zvbWPyWc99esHOhwRQ https://www.tiktok.com/@usfunds Information contained on our website or on social media channels is not deemed part of this report. 4 Table of Contents
Global considers its relationships with its clients to be good, and management has no reason to believe that the management and service contracts will not be renewed in the future; however, there is no assurance that USGIF and/or the exchange traded fund clients will choose to continue their relationships with the Company. 3 Table of Contents Available Information The Company’s Internet website address is www.usfunds.com.
Global considers its relationships with its clients to be good, and management has no reason to believe that the management and service contracts will not be renewed in the future; however, there is no assurance that USGIF and/or the ETF clients will choose to continue their relationships with the Company. 3 Table of Contents Available Information The Company’s Internet website address is www.usfunds.com.
Additional Segment Information See additional financial information about business segments in Part II, Item 8, Financial Statements and Supplementary Data at Note 16, Financial Information by Business Segment, of this Annual Report on Form 10-K. Human Capital As of June 30, 2023, U.S. Global and its wholly-owned subsidiaries employed 21 full-time employees and 3 part-time employees.
Additional Segment Information See additional financial information about business segments in Part II, Item 8, Financial Statements and Supplementary Data at Note 16, Financial Information by Business Segment, of this Annual Report on Form 10-K. Human Capital As of June 30, 2024, U.S. Global and its wholly-owned subsidiaries employed 23 full-time employees and 3 part-time employees.
In addition to providing advisory services to USGIF, the Company provides advisory services to three U.S.-based ETFs: U.S. Global Jets ETF, U.S. Global GO GOLD and Precious Metal Miners ETF, and the U.S. Global Sea to Sky Cargo ETF. The advisory agreement for the U.S. based ETFs have been renewed through July 2024.
In addition to providing advisory services to USGIF, the Company provides advisory services to three U.S.-based ETF clients: U.S. Global Jets ETF, U.S. Global GO GOLD and Precious Metal Miners ETF, and the U.S. Global Sea to Sky Cargo ETF. The advisory agreement for the U.S. based ETFs have been renewed through July 2025.
If the ability to use soft dollar arrangements were reduced or eliminated as a result of statutory amendments, new regulations or a change in business practices, the Company’s operating expenses would increase. Relationships with Clients The business of the Company is to a significant degree dependent on its association and contractual relationships with USGIF and exchange traded fund clients.
If the ability to use soft dollar arrangements were reduced or eliminated as a result of statutory amendments, new regulations or a change in business practices, the Company’s operating expenses would increase. Relationships with Clients The business of the Company is to a significant degree dependent on its association and contractual relationships with USGIF and ETF clients.
The Company also posts its Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Principal Executive and Senior Financial Officer and the charters of the audit and compensation committees of its Board of Directors on the Company’s website in the “Policies and Procedures” section of "About Us." The Company’s SEC filings and governance documents are available in print to any stockholder that makes a written request to: Investor Relations, U.S.
The Company also posts its Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for CEO and Principal Financial Officer, Board Diversity Matrix, and the charters of the audit and compensation committees of its Board of Directors on the Company’s website in the “Policies and Procedures” section of "About Us." The Company’s SEC filings and governance documents are available in print to any stockholder that makes a written request to: Investor Relations, U.S.
In the event the advisory or administrative agreements with USGIF or the advisory agreements with exchange traded fund clients are canceled or not renewed pursuant to the terms thereof, the Company would be substantially adversely affected. U.S.
In the event the advisory or administrative agreements with USGIF or the advisory agreements with ETF clients are canceled or not renewed pursuant to the terms thereof, the Company would be substantially adversely affected. U.S.
As required by the Investment Company Act of 1940, as amended (“Investment Company Act”), the advisory agreement with USGIF is subject to annual renewal and is terminable upon a 60 days' notice. In September 2023, the Board of Trustees of USGIF approved the annual renewal of the advisory agreement.
As required by the Investment Company Act of 1940, as amended (“Investment Company Act”), the advisory agreement with USGIF is subject to annual renewal and is terminable upon a 60 days' notice. In September 2023, the Board of Trustees of USGIF approved the annual renewal of the advisory agreement. Management anticipates that the advisory agreement will be renewed.
According to the Investment Company Institute, at the end of 2022 there were approximately 8,800 domestically registered open-end investment companies and approximately 3,000 exchange-traded funds of varying sizes and investment policies, whose shares are being offered to the public in the U.S.
According to the Investment Company Institute, at the end of 2023 there were approximately 8,600 domestically registered open-end investment companies and approximately 3,300 exchange-traded funds of varying sizes and investment policies, whose shares are being offered to the public in the U.S.
Global Investors Funds Gold and Natural Resources Global Resources PSPFX 50,758 57,385 World Precious Minerals UNWPX 47,661 59,075 Gold and Precious Metals USERX 99,697 111,953 Total Gold and Natural Resources 198,116 228,413 Emerging Markets Emerging Europe EUROX 12,274 10,821 China Region USCOX 6,707 7,624 Total Emerging Markets 18,981 18,445 International Equity Global Luxury Goods USLUX 48,232 39,508 Total International Equity 48,232 39,508 Bond U.S.
Global Investors Funds Gold and Natural Resources Gold and Precious Metals USERX 101,515 99,697 Global Resources PSPFX 41,720 50,758 World Precious Minerals UNWPX 41,608 47,661 Total Gold and Natural Resources 184,843 198,116 Emerging Markets Emerging Europe (2) EUROX - 12,274 China Region (2) USCOX - 6,707 Total Emerging Markets - 18,981 International Equity Global Luxury Goods USLUX 48,453 48,232 Total International Equity 48,453 48,232 Bond U.S.
In addition to providing management and advisory services, the Company is actively engaged in investing for its own account. See segment information in the Notes to the Consolidated Financial Statements at Note 16, Financial Information by Business Segment, of this Annual Report on Form 10-K.
See segment information in the Notes to the Consolidated Financial Statements at Note 16, Financial Information by Business Segment, of this Annual Report on Form 10-K.
Global Jets UCITS ETF is not subject to renewal on an annual basis and is terminable upon 6-months' notice. 1 Table of Contents Net assets under management on June 30, 2023, and 2022, are detailed in the following table. Assets Under Management (“AUM”) Fund Ticker June 30, 2023 June 30, 2022 (dollars in thousands) ETF Clients Airline and Cargo U.S.
The Company also serves as investment advisor to one European-based ETF, The Travel UCITS ETF. The advisory services agreement for The Travel UCITS ETF is not subject to renewal on an annual basis and is terminable upon 6-months' notice. 1 Table of Contents Net assets under management on June 30, 2024, and 2023, are detailed in the following table.
Global Jets ETF JETS $ 1,939,144 $ 2,453,268 U.S. Global Jets UCITS ETF JETS 5,893 12,934 U.S. Global Sea to Sky ETF SEA 3,636 7,568 Total Airline and Cargo 1,948,673 2,473,770 Gold and Natural Resources U.S. Global GO GOLD and Precious Metal Miners ETF GOAU 92,980 76,609 Total Gold and Natural Resources 92,980 76,609 Total ETF Clients 2,041,653 2,550,379 U.S.
Global Jets UCITS ETF (1) JETS - 5,893 Total Airline, Travel and Cargo 1,179,878 1,948,673 Gold and Natural Resources U.S. Global GO GOLD and Precious Metal Miners ETF GOAU 94,089 92,980 Total Gold and Natural Resources 94,089 92,980 Total ETF Clients 1,273,967 2,041,653 U.S.
Government Securities Ultra-Short Bond UGSDX 33,214 35,490 Near-Term Tax Free NEARX 29,896 35,671 Total Bond 63,110 71,161 Total U.S. Global Investors Funds 328,439 357,527 Total AUM $ 2,370,092 $ 2,907,906 Administrative Services. The Company also manages, supervises and conducts certain other affairs of USGIF, subject to the control of the Funds’ Board of Trustees pursuant to an administrative services agreement.
Government Securities Ultra-Short Bond UGSDX 30,072 33,214 Near-Term Tax Free NEARX 25,030 29,896 Total Bond 55,102 63,110 Total U.S. Global Investors Funds 288,398 328,439 Total AUM $ 1,562,365 $ 2,370,092 1. During fiscal 2024, the U.S. Global Jets UCITS ETF merged into The Travel UCITS ETF. 2. During fiscal 2024, the Emerging Europe and China Region funds were liquidated.
Removed
The Company also serves as investment advisor to one European-based ETF, the U.S. Global Jets UCITS ETF. The advisory services agreement for the U.S.
Added
Assets Under Management (“AUM”) Fund Ticker June 30, 2024 June 30, 2023 (dollars in thousands) ETF Clients Airline, Travel and Cargo U.S. Global Jets ETF JETS $ 1,152,909 $ 1,939,144 The Travel UCITS ETF (1) TRIP 19,750 - U.S. Global Sea to Sky ETF SEA 7,219 3,636 U.S.
Added
In September 2023, the Board of Trustees of USGIF approved the annual renewal of the administrative services agreement. Management anticipates that the administrative services agreement will be renewed. Corporate Investments Investment Activities. In addition to providing management and advisory services, the Company is actively engaged in investing for its own account.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

11 edited+1 added−3 removed79 unchanged
Biggest changeForeign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than the U.S. and other established markets. Government relationship risks may negatively impact the Company ’ s earnings. The Company manages a fund with significant investments in China-based issuers.
Biggest changeForeign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than the U.S. and other established markets. 8 Table of Contents Risks Related to Our Corporate Investments Investment income and assets may be negatively impacted by fluctuations in the Company ’ s corporate investments.
In addition, the Company has invested in convertible securities and warrants in the cryptocurrency mining industry through its corporate investments. Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile. This volatility may have a material impact on the Company’s financial statements and thus affect the Company’s common stock market price.
In addition, the Company has invested in convertible securities in the cryptocurrency mining industry through its corporate investments. Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile. This volatility may have a material impact on the Company’s financial statements and thus affect the Company’s common stock market price.
If we fail to remediate these material weaknesses in our internal controls, or after having remediated such material weaknesses, thereafter fail to maintain the adequacy of our internal control over financial reporting or our disclosure controls and procedures, we could be subjected to regulatory scrutiny, civil or criminal penalties or shareholder litigation, the defense of any of which could cause the diversion of management’s attention and resources, we could incur significant legal and other expenses, and we could be required to pay damages to settle such actions if any such actions were not resolved in our favor.
If we fail to remediate this material weakness in our internal controls, or after having remediated such material weakness, thereafter fail to maintain the adequacy of our internal control over financial reporting or our disclosure controls and procedures, we could be subjected to regulatory scrutiny, civil or criminal penalties or shareholder litigation, the defense of any of which could cause the diversion of management’s attention and resources, we could incur significant legal and other expenses, and we could be required to pay damages to settle such actions if any such actions were not resolved in our favor.
Global’s insurance policies come up for renewal, the Company may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which would increase the Company’s expenses and reduce net income. 7 Table of Contents We have identified material weaknesses in our internal control over financial reporting.
Global’s insurance policies come up for renewal, the Company may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which would increase the Company’s expenses and reduce net income. 7 Table of Contents We have identified a material weakness in our internal control over financial reporting.
Macroeconomic declines, including inflation; negative political developments, including volatile market conditions due to investor concerns regarding inflation and hostilities between Russia and Ukraine; adverse market conditions; 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.
Macroeconomic declines, including inflation; negative political developments, including volatile market conditions due to investor concerns regarding inflation, and the Russia-Ukraine and Israel-Palestine conflicts; adverse market conditions; 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.
These material weaknesses could continue to adversely affect our ability to report the results of operations and financial condition accurately and in a timely manner.
The material weakness could continue to adversely affect our ability to report the results of operations and financial condition accurately and in a timely manner.
As further described in Item 9A of this Form 10-K, management has concluded that, because of material weaknesses in internal control over financial reporting, our internal control over financial reporting and our disclosure controls and procedures were not effective as of June 30, 2023.
As further described in Item 9A of this Form 10-K, management has concluded that, because of a material weakness in internal control over financial reporting, our internal control over financial reporting and our disclosure controls and procedures were not effective as of June 30, 2024.
Global Jets ETF (83 percent and 86 percent of average net assets for fiscal years 2023 and 2022, respectively). Consequently, the Company’s revenues followed a similar pattern of concentration (84 percent and 82 percent of total operating revenues for fiscal years 2023 and 2022, respectively).
Global Jets ETF (79 percent and 83 percent of average net assets for fiscal years 2024 and 2023, respectively). Consequently, the Company’s revenues followed a similar pattern of concentration (80 percent and 84 percent of total operating revenues for fiscal years 2024 and 2023, respectively).
The ability of the Company to compete and grow is dependent on the relative attractiveness of the types of investment products the Company offers and its investment performance and strategies under prevailing market conditions. Market-specific risks may negatively impact the Company ’ s earnings.
The ability of the Company to compete and grow is dependent on the relative attractiveness of the types of investment products the Company offers and its investment performance and strategies under prevailing market conditions. Market-specific risks may negatively impact the Company ’ s earnings. The Company manages certain funds in the natural resources sector, which is highly cyclical.
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 we receive. 9 Table of Contents Item 1B. Unresolved Staff Comments Not applicable for smaller reporting companies.
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 we receive. 9 Table of Contents
The Company manages certain funds in the emerging market and natural resources sectors, which are highly cyclical. The investments in the funds are subject to significant loss due to political, economic and diplomatic developments, currency fluctuations, social instability, and changes in governmental policies, including trading policies, regulatory requirements, tariffs and other barriers.
The investments in the funds are subject to significant loss due to political, economic and diplomatic developments, currency fluctuations, social instability, and changes in governmental policies, including trading policies, regulatory requirements, tariffs and other barriers.
Removed
While companies in China may be subject to limitations on their business relationships under Chinese law, these laws may not be consistent with certain political and security concerns of the U.S.
Added
This performance adjustment began to be phased out during the fourth quarter of fiscal 2024 and will cease during the fourth quarter of fiscal 2025. During the phase-out period, the adjustment for the performance fee can only be adjusted downward.
Removed
As a result, Chinese companies may have material direct or indirect business relationships with governments that are considered state sponsors of terrorism by the U.S. government, or governments that otherwise have policies in conflict with the U.S. government (an “Adverse Government”).
Removed
If a fund under management invests in companies that have or develop a material business relationship with an Adverse Government, the fund will be subject to the risk that these companies’ reputation and price in the market will be adversely or negatively impacted. 8 Table of Contents Risks Related to Our Corporate Investments Investment income and assets may be negatively impacted by fluctuations in the Company ’ s corporate investments.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+0 added−0 removed5 unchanged
Biggest change(dollars in thousands, except price data) Approximate Dollar Total Number of Value of Shares that Shares Purchased as May Yet Be Total Number of Total Amount Average Price Part of Publicly Purchased Under Period Shares Purchased 1 Purchased Paid Per Share 2 Announced Plan 3 the Plan 04-01-23 to 04-30-23 27,109 $76 $2.81 27,109 $4,368 05-01-23 to 05-31-23 41,114 114 $2.77 41,114 $4,254 06-01-23 to 06-30-23 23,622 67 $2.82 23,622 $4,187 Total 91,845 $257 $2.79 91,845 1.
Biggest change(dollars in thousands, except price data) Approximate Dollar Total Number of Value of Shares that Shares Purchased as May Yet Be Total Number of Total Amount Average Price Part of Publicly Purchased Under Period Shares Purchased 1 Purchased Paid Per Share 2 Announced Plan 3 the Plan 04-01-24 to 04-30-24 66,603 $186 $2.80 66,603 $4,237 05-01-24 to 05-31-24 59,891 160 $2.68 59,891 $4,077 06-01-24 to 06-30-24 35,367 93 $2.61 35,367 $3,984 Total 161,861 $439 $2.71 161,861 1.
Securities authorized for issuance under equity compensation plans Information relating to equity compensation plans under which our stock is authorized for issuance is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.” Purchases of equity securities by the issuer 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 of the Securities Exchange Act of 1934 through December 31, 2023.
Securities authorized for issuance under equity compensation plans Information relating to equity compensation plans under which our stock is authorized for issuance is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.” Purchases of equity securities by the issuer 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 of the Securities Exchange Act of 1934 through December 31, 2024.
The total amount of shares that may be repurchased in 2023 under the program is $5.0 million. Dividends As of June 30, 2023, the Board of Directors has authorized a monthly dividend of $0.0075 per share from July 2023 through September 2023.
The total amount of shares that may be repurchased in 2024 under the program is $5.0 million. Dividends As of June 30, 2024, the Board of Directors has authorized a monthly dividend of $0.0075 per share from July 2024 through September 2024.
The Company may repurchase class A stock from employees; however, none were repurchased from employees during the quarter ended June 30, 2023. The Company did not repurchase any classes B or C common stock during the quarter ended June 30, 2023.
The Company may repurchase class A stock from employees; however, none were repurchased from employees during the quarter ended June 30, 2024. The Company did not repurchase any classes B or C common stock during the quarter ended June 30, 2024.
The total amount of cash dividends to be paid to class A and class C shareholders from July 2023 to September 2023 will be approximately $329,000, which is included as dividends payable in the Consolidated Balance Sheets at June 30, 2023.
The total amount of cash dividends to be paid to class A and class C shareholders from July 2024 to September 2024 will be approximately $313,000, which is included as dividends payable in the Consolidated Balance Sheets at June 30, 2024.
The repurchase program has been in place since December 2012, and the Board of Directors has annually renewed the repurchase program each calendar year. For the quarter ended June 30, 2023, the Company purchased a total of 91,845 class A shares using cash of $257,000.
The repurchase program has been in place since December 2012, and the Board of Directors has annually renewed the repurchase program each calendar year. For the quarter ended June 30, 2024, the Company purchased a total of 161,861 class A shares using cash of $439,000.
Holders On November 8, 2023, there were approximately 189 holders of record of class A common stock, no holders of record of class B common stock, and 19 holders of record of class C common stock.
Holders On August 21, 2024, there were approximately 196 holders of record of class A common stock, no holders of record of class B common stock, and 19 holders of record of class C common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−3 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 21 Report of Independent Registered Public Accounting Firm (Grant Thornton LLP; Dallas, Texas; PCAOB ID# 248) 21 Report of Independent Registered Public Accounting Firm (BDO USA, LLP; Dallas, Texas; PCAOB ID# 243) 23 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 47 Item 9A. Controls and Procedures 47 Item 9B.
Biggest changeChanges in and Disagreements with Accountants on Accounting and Financial Disclosure 47 Item 9A. Controls and Procedures 47
Item 6. [Reserved] 12 Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 12 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19 Item 8.
Item 6. [Reserved] 12 Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations 12 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 19 Item 8. Financial Statements and Supplementary Data 21 Report of Independent Registered Public Accounting Firm (Grant Thornton LLP; Dallas, Texas; PCAOB ID# 248) 21 Item 9.
Removed
Other Information 49 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 49 Part III of Annual Report on Form 10-K 50 Item 10. Directors, Executive Officers and Corporate Governance 50 Item 11. Executive Compensation 51 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 55 Item 13.
Removed
Certain Relationships and Related Transactions, and Director Independence 55 Item 14. Principal Accounting Fees and Services 56 Part IV of Annual Report on Form 10-K 57 Item 15.
Removed
Exhibits, Financial Statement Schedules 57 Signatures 59 Exhibit 21 — Subsidiaries of the Company, Jurisdiction of Incorporation, and Percentage of Ownership Exhibit 23.1 — Consent of Grant Thornton LLP Exhibit 23.2 — Consent of BDO USA, LLP Exhibit 31.1 — Rule 13a – 14(a) Certifications (under Section 302 of the Sarbanes-Oxley Act of 2002) Exhibit 32.1 — Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002) Table of Contents Part I of Annual Report on Form 10-K

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

63 edited+9 added−14 removed36 unchanged
Biggest changeOperating Expenses Year ended June 30, $ % (dollars in thousands) 2023 2022 Change Change Employee compensation and benefits $ 4,798 $ 6,059 $ (1,261 ) (20.8 )% General and administrative 6,122 6,911 (789 ) (11.4 )% Advertising 382 405 (23 ) (5.7 )% Depreciation 243 226 17 7.5 % Interest 4 - 4 n/a Total $ 11,549 $ 13,601 $ (2,052 ) (15.1 )% Total operating expenses decreased $2.1 million, or 15.1 percent, compared with the previous fiscal year.
Biggest changeYear ended June 30, $ % (dollars in thousands) 2024 2023 Change Change Employee compensation and benefits $ 4,802 $ 4,798 $ 4 0.1 % General and administrative 6,059 6,122 (63 ) (1.0 )% Advertising 404 382 22 5.8 % Depreciation 196 243 (47 ) (19.3 )% Interest 3 4 (1 ) (25.0 )% Total $ 11,464 $ 11,549 $ (85 ) (0.7 )% Other Income (Loss) Year ended June 30, $ % (dollars in thousands) 2024 2023 Change Change Net investment income (loss) $ 2,144 $ 316 $ 1,828 578.5 % Other income (loss) 251 242 9 3.7 % Total Other Income (Loss) $ 2,395 $ 558 $ 1,837 329.2 % Total consolidated other income for the year ended June 30, 2024, was $2.4 million, compared to $558,000 for the year ended June 30, 2023, an increase of $1.8 million, or 329.2 percent.
Mutual fund investment advisory fees are also affected by changes in assets under management, which include: ● market appreciation or depreciation; ● the addition of new fund shareholder accounts; ● fund shareholder contributions of additional assets to existing accounts; ● withdrawals of assets from and termination of fund shareholder accounts; ● exchanges of assets between accounts or products with different fee structures; and ● the amount of fees reimbursed. 13 Table of Contents The following tables summarize the changes in assets under management for USGIF for fiscal years 2023 and 2022.
Mutual fund investment advisory fees are also affected by changes in assets under management, which include: ● market appreciation or depreciation; ● the addition of new fund shareholder accounts; ● fund shareholder contributions of additional assets to existing accounts; ● withdrawals of assets from and termination of fund shareholder accounts; ● exchanges of assets between accounts or products with different fee structures; and ● the amount of fees reimbursed. 13 Table of Contents The following tables summarize the changes in assets under management for USGIF for fiscal years 2024 and 2023.
The advisory agreement for the U.S. Global Jets ETF and the U.S. Global GO GOLD and Precious Metal Miners ETF has been renewed through 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.
The advisory agreement for the U.S. Global Jets ETF and the U.S. Global GO GOLD and Precious Metal Miners ETF has been renewed through July 2025. 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.
Investment base advisory fees from USGIF are calculated as a percentage of average net assets, ranging from 0.375 percent to 1.25 percent, and are paid monthly. The base advisory fee on the equity funds within USGIF is adjusted upward or downward based on performance.
Investment base advisory fees from USGIF are calculated as a percentage of average net assets, ranging from 0.375 percent to 1.00 percent, and are paid monthly. The base advisory fee on the equity funds within USGIF is adjusted upward or downward based on performance.
Investment base advisory fees from USGIF are calculated as a percentage of average net assets, ranging from 0.375 percent to 1.25 percent, and are paid monthly. The base advisory fee on the equity funds within USGIF is adjusted upward or downward based on performance.
Investment base advisory fees from USGIF are calculated as a percentage of average net assets, ranging from 0.375 percent to 1.00 percent, and are paid monthly. The base advisory fee on the equity funds within USGIF is adjusted upward or downward based on performance.
The credit facility is collateralized by approximately $1.0 million, included in restricted cash on the Consolidated Balance Sheets, held in deposit in a money market account at the financial institution that provided the credit facility. As of June 30, 2023, this credit facility remained unutilized by the Company.
The credit facility is collateralized by approximately $1.0 million, included in restricted cash on the Consolidated Balance Sheets, held in deposit in a money market account at the financial institution that provided the credit facility. As of June 30, 2024, this credit facility remained unutilized by the Company.
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, and the USGIF funds do not currently charge a redemption fee.
Detailed information regarding the Funds 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, and the USGIF funds do not currently charge a redemption fee.
The stock repurchase plan is approved through December 31, 2023, but may be suspended or discontinued. Cash and securities recorded at fair value, excluding convertible securities, of approximately $38.3 million are available to fund current activities. As of June 30, 2023, the Board of Directors has authorized a monthly dividend of $0.0075 per share from July 2023 through September 2023.
The stock repurchase plan is approved through December 31, 2024, but may be suspended or discontinued. Cash and securities recorded at fair value, excluding convertible securities, of approximately $38.5 million are available to fund current activities. As of June 30, 2024, the Board of Directors has authorized a monthly dividend of $0.0075 per share from July 2024 through September 2024.
The investments shown above include investments at fair value of $12.4 million and $12.8 million, as of June 30, 2023, and 2022, respectively, invested in USGIF, funds the Company advised. 14 Table of Contents Net investment income (loss) from the Company’s investments includes: ● realized gains and losses on sales of securities; ● realized gains on principal payment proceeds; ● unrealized gains and losses on fair valued securities; ● foreign currency gains and losses; ● impairments and observable price changes on equity investments without readily determinable fair values; and ● dividend and interest income.
The investments shown above include investments at fair value of $10.5 million and $12.4 million, as of June 30, 2024, and 2023, respectively, invested in USGIF, funds the Company advised. 14 Table of Contents Net investment income (loss) from the Company’s investments includes: ● realized gains and losses on sales of securities; ● realized gains on principal payment proceeds; ● unrealized gains and losses on fair valued securities; ● foreign currency gains and losses; ● impairments and observable price changes on equity investments without readily determinable fair values; and ● dividend and interest income.
More recently the airline industry has become more significant to our revenue. All these markets are volatile and subject to capital cycles. Reflecting on the significant developments and challenges we have faced over the past year, the impacts and fears of COVID-19 seem to have diminished, as China successfully emerged from the COVID lockdown.
More recently the airline industry has become more significant to our revenue. All these markets are volatile and subject to capital cycles. Reflecting on the significant developments and challenges we have faced over the past year, the impacts, and fears of COVID-19 seem to have diminished, as most countries emerged from the COVID lockdown.
The following summarizes the cost, unrealized gain or loss, and fair value of investments carried at fair value as of June 30, 2023, and 2022.
The following summarizes the cost, unrealized gain or loss, and fair value of investments carried at fair value as of June 30, 2024, and 2023.
The USGIF performance fee, which applies to the 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. 15 Table of Contents Advisory Fees.
The USGIF performance fee, which applies to the 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.
The total amount of cash dividends to be paid to class A and class C shareholders from July 2023 to September 2023 will be approximately $329,000, which is included as dividends payable in the Consolidated Balance Sheets at June 30, 2023.
The total amount of cash dividends to be paid to class A and class C shareholders from July 2024 to September 2024 will be approximately $313,000, which is included as dividends payable in the Consolidated Balance Sheets at June 30, 2024.
While AUM is directly impacted by changes in the financial markets, it is also impacted by cash inflows or outflows due to shareholder activity. Performance fees on certain equity fund products may also impact revenues, either positively or negatively. Various products may have different fees, so changes in our product mix may also affect revenues.
While AUM is directly impacted by changes in the financial markets, it is also impacted by cash inflows or outflows due to shareholder activity. Performance fee adjustments on certain equity fund products may also impact revenues. Various products may have different fees, so changes in our product mix may also affect revenues.
The following is a brief discussion of the Company’s two business segments. Investment Management Services The Company generates operating revenues from managing and servicing the Funds. The Company recorded advisory and administrative services fees from USGIF totaling approximately $1.9 million and $3.8 million in fiscal 2023 and fiscal 2022, respectively.
The following is a brief discussion of the Company’s two business segments. Investment Management Services The Company generates operating revenues from managing and servicing the Funds. The Company recorded advisory and administrative services fees from USGIF totaling approximately $1.6 million and $1.9 million in fiscal 2024 and fiscal 2023, respectively.
As of June 30, 2023, the Company had contractual obligations of $1.1 million for the fiscal years ending June 30, 2024, through 2026. Other contractual obligations consist of agreements to waive or reduce fees and/or pay expenses on certain funds. Future obligations under these agreements are dependent upon future levels of fund assets.
As of June 30, 2024, the Company had contractual obligations of $665,000 for the fiscal years ending June 30, 2025, through 2026. Other contractual obligations consist of agreements to waive or reduce fees and/or pay expenses on certain funds. Future obligations under these agreements are dependent upon future levels of fund assets.
This decrease was primarily attributable to the following: ● Advisory fees decreased by $9.6 million, or 39.1 percent, primarily as the result of lower ETF assets under management. Advisory fees are comprised of two components: a base management fee and a performance fee. ○ Base management fees decreased approximately $9.1 million.
This decrease was primarily attributable to the following: ● Advisory fees decreased by $4.1 million, or 27.2 percent, primarily as the result of lower ETF assets under management. Advisory fees are comprised of two components: a base management fee and a performance fee. ○ Base management fees decreased approximately $4.1 million.
In addition to the investments above, as of June 30, 2023, and 2022, the Company owned other investments of approximately $2.4 million and $4.0 million, respectively, classified as securities without readily determinable fair values.
In addition to the investments above, as of June 30, 2024, and 2023, the Company owned other investments of approximately $1.7 million and $2.4 million, respectively, classified as securities without readily determinable fair values.
This was due to a decrease in the fair value of the Company's investment in convertible debentures in HIVE in the prior year. ○ Also, due to the Company’s investment in convertible debentures in HIVE, there were realized gains on debt securities of $1.7 million for the year ended June 30, 2023, compared to $2.2 million in the prior year ended June 30, 2022, a decrease of $527,000, or 24.1 percent. ○ A significant portion of corporate investments is held in securities of a company in the business of mining cryptocurrency.
This was due to a decrease in the fair value of the Company's investment in convertible debentures in HIVE in the current year. ○ Also, due to the Company’s investment in convertible debentures in HIVE, there were realized gains on debt securities of $1.1 million for the year ended June 30, 2024, compared to $1.7 million in the prior year ended June 30, 2023, a decrease of $524,000, or 31.5 percent. ○ A significant portion of corporate investments is held in securities of a company in the business of mining cryptocurrency.
During fiscal year 2023, average AUM was $2.5 billion compared to $3.9 billion in fiscal year 2022, a decrease of 35.6 percent. The decrease was primarily due to outflows from the Jets ETF. The Jets ETF invests in airline-related stocks, including global airline carriers, airport operators and aircraft manufacturers.
During fiscal year 2024, average AUM was $1.9 billion compared to $2.5 billion in fiscal year 2023, a decrease of 26.9 percent. The decrease was primarily due to outflows from the Jets ETF. The Jets ETF invests in airline-related stocks, including global airline carriers, airport operators and aircraft manufacturers.
The increase in cash and cash equivalents of $3.1 million, and accordingly, net working capital, was primarily due to net cash provided by operating activities of $2.9 million and proceeds from principal paydowns of $3.0 million, offset by $1.2 million for repurchases of common stock and $1.3 million for dividends paid.
The increase in cash and cash equivalents of $2.0 million, and accordingly, net working capital, was primarily due to proceeds from principal paydowns of $3.0 million, sales of corporate investments of $2.2 million, and net cash provided by operating activities of $1.0 million, offset by $2.2 million for repurchases of common stock, $1.3 million for dividends paid, and purchases of corporate investments of $807,000.
ETF unitary management fees decreased due to a decrease in ETF average assets under management, primarily in the Jets ETF.
ETF unitary management fees decreased due to lower ETF average assets under management, primarily in the Jets ETF.
Year Ended June 30, 2023, Compared with Year Ended June 30, 2022 The Company posted net income, as shown in the Consolidated Statements of Operations, of $3.1 million ($ 0.22 per share) for the year ended June 30, 2023, compared with net income of $3.4 million ($ 0.23 per share) for the year ended June 30, 2022, a decrease of approximately $291,000.
Year Ended June 30, 2024, Compared with Year Ended June 30, 2023 The Company posted net income, as shown in the Consolidated Statements of Operations, of $1.3 million ($ 0.09 per share) for the year ended June 30, 2024, compared with net income of $3.1 million ($ 0.22 per share) for the year ended June 30, 2023, a decrease of approximately $1.8 million.
The average investment management fee for the fixed income funds was nil for both fiscal years 2023 and 2022 due to fee waivers on these funds as discussed in Note 5, Investment Management and Other Fees, to the Consolidated Financial Statements of this Annual Report on Form 10-K.
The average investment management fee for the fixed income funds was nil for both fiscal years 2024 and 2023 due to fee waivers on these funds as discussed in Note 5, Investment Management and Other Fees, to the Consolidated Financial Statements of this Annual Report on Form 10-K. The Company serves as investment advisor to three U.S.-based ETF clients: U.S.
Corporate Investments Management believes it can more effectively manage the Company’s cash position by maintaining certain types of investments utilized in cash management and continues to believe that such activities are in the best interest of the Company.
The Travel UCITS ETF is not available to U.S. investors. Corporate Investments Management believes it can more effectively manage the Company’s cash position by maintaining certain types of investments utilized in cash management and continues to believe that such activities are in the best interest of the Company.
The average investment management fee for equity funds in fiscal years 2023 and 2022 was 80 basis points and 93 basis points, respectively.
The average investment management fee for equity funds in fiscal year 2024 and 2023 was 81 basis points and 80 basis points, respectively.
Global GO GOLD and Precious Metal Miners ETF (ticker GOAU), which invests in companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means, and U.S. Global Sea to Sky Cargo ETF (ticker SEA), which concentrates on the global sea shipping and air freight industries.
Global Jets ETF (ticker JETS), which concentrates on the U.S. and international airline industry, the U.S. Global GO GOLD and Precious Metal Miners ETF (ticker GOAU), which invests in companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means, and U.S.
With approximately $25.4 million in cash and cash equivalents and $12.9 million in securities carried at fair value, excluding convertible securities, which together comprise approximately 68.8 percent of total assets, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $52.2 million.
With approximately $27.4 million in cash and cash equivalents and $11.1 million in securities carried at fair value, excluding convertible securities, which together comprise approximately 74.1 percent of total assets, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $49.0 million.
The change was primarily due to the following components and factors: ● Net investment income was $316,000 for the year ended June 30, 2023, compared to a net investment loss of $6.2 million for the year ended June 30, 2022, a change of approximately $6.5 million.
The change was primarily due to the following components and factors: ● Net investment income was $2.1 million for the year ended June 30, 2024, compared to $316,000 for the year ended June 30, 2023, an increase of approximately $1.8 million.
Liquidity and Capital Resources At June 30, 2023, the Company had net working capital (current assets minus current liabilities) of approximately $37.4 million and a current ratio (current assets divided by current liabilities) of 13.7 to 1.
Liquidity and Capital Resources At June 30, 2024, the Company had net working capital (current assets minus current liabilities) of approximately $38.2 million and a current ratio (current assets divided by current liabilities) of 18.6 to 1.
The Company receives a unitary management fee of 0.60 percent of average net assets and has agreed to bear all expenses of the ETFs, except the U.S. Global Sea to Sky Cargo ETF. The Company has agreed to contractually limit the expenses of the U.S. Global Sea to Sky Cargo ETF through April 2024.
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 and has agreed to bear all expenses of the U.S.-based ETFs, except the U.S. Global Sea to Sky Cargo ETF.
The change is primarily due to lower operating revenues, offset by net investment income in the current year compared to net investment losses in the prior year, and lower operating expenses, as discussed further below.
The change is primarily due to lower operating revenues, partially offset by higher net investment income and lower tax expenses, as discussed further below.
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. The Company has agreed to contractually limit the expenses of the U.S. Global Sea to Sky Cargo ETF through April 2024.
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 and has agreed to bear all expenses of the U.S.-based ETFs, except the U.S. Global Sea to Sky Cargo ETF.
Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile, and may be influenced by a wide variety of factors, including speculative activity. Cryptocurrency mining companies face a variety of risks, including, but not limited to, environmental concerns, regulatory factors, and heightened risks of cybersecurity attacks for which there may be no source of recovery.
Cryptocurrency mining companies face a variety of risks, including, but not limited to, environmental concerns, regulatory factors, and heightened risks of cybersecurity attacks for which there may be no source of recovery.
Consolidated shareholders’ equity at June 30, 2023, was $52.2 million, a decrease of $1.6 million, or 3.0 percent since June 30, 2022.
Consolidated shareholders’ equity at June 30, 2024, was $49.0 million, a decrease of $3.0 million, or 5.8 percent since June 30, 2023.
Base fees for USGIF decreased primarily as a result of lower average assets under management due to shareholder redemptions and an increase management fee waivers. ○ Performance fee adjustments for USGIF in the current year resulted in fees paid of $490,000 compared to fees received of $20,000 in the prior year, a change of $510,000.
Base fees for USGIF decreased due to lower average assets under management primarily driven by net shareholder redemptions somewhat offset by a decrease in management fee waivers. ○ Performance fee adjustments for USGIF in the current year resulted in fees paid of $429,000 compared to $490,000 in the prior year, a decrease of $61,000.
The Company cannot determine the long-term impact of COVID-19 on the Company’s business. Should this macro-economic risk reemerge 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.
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 macro-economic risk reemerge 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.
Net investment income (loss) is dependent on market fluctuations and does not remain at a consistent level. ○ The current year ended June 30, 2023, included changes in unrealized losses on equity securities of $2.6 million and realized losses on equity securities of $453,000, whereas the prior year ended June 30, 2022, included changes in unrealized losses on equity securities of $9.4 million and realized gains on sales of equity securities of $1.8 million.
Net investment income (loss) is dependent on market fluctuations and does not remain at a consistent level. ○ Total realized and unrealized losses on equity securities was $1.2 million for the current year ended June 30, 2024, compared to $3.0 million for the prior year ended June 30, 2023, a change of $1.8 million.
Assets Under Management (“AUM”) (dollars in thousands) June 30, 2023 June 30, 2022 Investment Management Services ETF Clients $ 2,041,653 $ 2,550,379 USGIF 328,439 357,527 Total AUM $ 2,370,092 $ 2,907,906 On June 30, 2023, total AUM as of period end was $2.4 billion compared to $2.9 billion on June 30, 2022, a decrease of $537.8 million, or 18.5 percent.
Assets Under Management (“AUM”) (dollars in thousands) June 30, 2024 June 30, 2023 Investment Management Services ETF Clients $ 1,273,967 $ 2,041,653 USGIF 288,398 328,439 Total AUM $ 1,562,365 $ 2,370,092 On June 30, 2024, total AUM as of period end was $1.6 billion compared to $2.4 billion on June 30, 2023, a decrease of $807.7 million, or 34.1 percent.
Year Ended June 30, 2023 (dollars in thousands) Equity Fixed Income Total Beginning Balance $ 286,367 $ 71,161 $ 357,528 Market appreciation 17,540 536 18,076 Dividends and distributions (11,329 ) (1,366 ) (12,695 ) Net shareholder redemptions (27,249 ) (7,221 ) (34,470 ) Ending Balance $ 265,329 $ 63,110 $ 328,439 Average investment management fee 0.80 % 0.00 % 0.65 % Average net assets $ 281,076 $ 65,312 $ 346,388 Year Ended June 30, 2022 (dollars in thousands) Equity Fixed Income Total Beginning Balance $ 433,380 $ 75,842 $ 509,222 Market depreciation (110,465 ) (2,201 ) (112,666 ) Dividends and distributions (61,309 ) (285 ) (61,594 ) Net shareholder purchases (redemptions) 24,761 (2,195 ) 22,566 Ending Balance $ 286,367 $ 71,161 $ 357,528 Average investment management fee 0.93 % 0.00 % 0.78 % Average net assets $ 380,519 $ 71,818 $ 452,337 The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 65 basis points in fiscal year 2023 and 78 basis points in fiscal year 2022.
Year Ended June 30, 2024 (dollars in thousands) Equity Fixed Income Total Beginning Balance $ 265,329 $ 63,110 $ 328,439 Market appreciation (depreciation) 14,541 2,050 16,591 Dividends and distributions (2,235 ) (1,960 ) (4,195 ) Net shareholder purchases (redemptions) (44,339 ) (8,098 ) (52,437 ) Ending Balance $ 233,296 $ 55,102 $ 288,398 Average investment management fee 0.81 % 0.00 % 0.65 % Average net assets $ 232,977 $ 57,935 $ 290,912 Year Ended June 30, 2023 (dollars in thousands) Equity Fixed Income Total Beginning Balance $ 286,367 $ 71,161 $ 357,528 Market appreciation (depreciation) 17,540 536 18,076 Dividends and distributions (11,329 ) (1,366 ) (12,695 ) Net shareholder purchases (redemptions) (27,249 ) (7,221 ) (34,470 ) Ending Balance $ 265,329 $ 63,110 $ 328,439 Average investment management fee 0.80 % 0.00 % 0.65 % Average net assets $ 281,076 $ 65,312 $ 346,388 The average annualized investment management fee rate (total advisory fees, excluding performance fees, as a percentage of average assets under management) was 65 basis points in fiscal year 2024 and 2023.
For fiscal year 2023, the Company had net investment income of $316,000, compared to a $6.2 million net investment loss in fiscal year 2022. Due to market volatility, the Company expects that gains or losses will continue to fluctuate in the future.
For fiscal year 2024, the Company had net investment income of $2.1 million, compared to $316,000 for fiscal year 2023. Due to market volatility, the Company expects that gains or losses will continue to fluctuate in the future. A significant portion of the securities recorded at fair value in the above table is in investments in HIVE Digital Technologies Ltd.
See further discussion of these securities and other investments in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K. ● There was no income or loss from equity method investments for the year ended June 30, 2023, compared to a loss from equity method investments of $206,000 for the year ended June 30, 2022.
See further discussion of these securities and other investments in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K. 16 Table of Contents Provision for Income Taxes A tax expense of $582,000 was recorded for the year ended June 30, 2024, compared to $934,000 for the year ended June 30, 2023, a decrease of $352,000, or 37.7 percent.
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 will expire on May 31, 2024, and the Company intends to renew it annually.
The Company also has access to a $1.0 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 will expire on May 31, 2026, and the Company intends to renew it biennially.
Securities at Fair Value Cost Unrealized Gain in Other Comprehensive Income Unrealized Loss in Net Investment Income (Loss) Fair Value (dollars in thousands) Equity securities at fair value 1 $ 19,601 $ - $ (6,396 ) $ 13,205 Available-for-sale debt securities at fair value 2 7,729 1,707 (2,428 ) 7,008 Total at June 30, 2023 $ 27,330 $ 1,707 $ (8,824 ) $ 20,213 Equity securities at fair value 1 $ 19,967 $ - $ (5,667 ) $ 14,300 Available-for-sale debt securities at fair value 2 8,576 4,588 (2,539 ) 10,625 Total at June 30, 2022 $ 28,543 $ 4,588 $ (8,206 ) $ 24,925 1.
Securities at Fair Value Cost Unrealized Gain (Loss) in Other Comprehensive Income (Loss) Unrealized Gain (Loss) in Investment Income (Loss) Fair Value (dollars in thousands) Trading securities at fair value (1) $ 11,820 $ - $ (727 ) $ 11,093 Available-for-sale debt securities at fair value (2) 6,204 740 (2,530 ) 4,414 Total at June 30, 2024 $ 18,024 $ 740 $ (3,257 ) $ 15,507 Trading securities at fair value (1) $ 19,601 $ - $ (6,396 ) $ 13,205 Available-for-sale debt securities at fair value (2) 7,729 1,707 (2,428 ) 7,008 Total at June 30, 2023 $ 27,330 $ 1,707 $ (8,824 ) $ 20,213 1.
The performance of the S&P 500 was commendable, registering a growth of 17.6% for the trailing twelve months ended June 30, 2023. As we move forward, we will continue to focus on driving sustainable growth, prioritizing innovation, and maintaining a vigilant approach to risk management. Mutual funds in general continued to see outflows compared to other investment alternatives, including ETFs.
As we move forward, we will continue to focus on driving sustainable growth, prioritizing innovation, and maintaining a vigilant approach to risk management. Mutual funds in general continued to see outflows compared to other investment alternatives, including exchange-traded funds (ETFs). The Company has three ETF products listed on the New York Stock Exchange: the U.S.
The Jets ETF invests in airline-related stocks, including global airline carriers, airport operators and aircraft manufacturers. The spread of the global COVID-19 outbreak and actions taken in response have affected 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.
Assets in the Jets ETF were $1.2 billion and $1.9 billion at June 30, 2024, and 2023, respectively. The Jets ETF invests in airline-related stocks, including global airline carriers, airport operators and aircraft manufacturers. The spread of the global COVID-19 outbreak and actions taken in response affected the global and domestic economies and financial markets.
Operating Revenues Year ended June 30, $ % (dollars in thousands) 2023 2022 Change Change ETF advisory fees: Airline and cargo ETFs $ 12,668 $ 20,378 $ (7,710 ) (37.8 )% Gold and natural resources ETF 506 584 (78 ) (13.4 )% Total ETF advisory fees 13,174 20,962 (7,788 ) (37.2 )% Investment advisory fees - USGIF: Gold and natural resources funds $ 1,441 $ 2,851 $ (1,410 ) (49.5 )% Emerging markets funds 16 213 (197 ) (92.5 )% International equity funds 309 499 (190 ) (38.1 )% Bond funds - - - n/a Total investment advisory fees - USGIF 1,766 3,563 (1,797 ) (50.4 )% Total advisory fees 14,940 24,525 (9,585 ) (39.1 )% USGIF administrative services fees 134 189 (55 ) (29.1 )% Total Operating Revenues $ 15,074 $ 24,714 $ (9,640 ) (39.0 )% Total consolidated operating revenues for the year ended June 30, 2023, decreased $9.6 million, or 39.0 percent, compared with the year ended June 30, 2022.
Operating Revenues Year ended June 30, $ % (dollars in thousands) 2024 2023 Change Change ETF advisory fees: Airline, travel and cargo ETFs $ 8,873 $ 12,668 $ (3,795 ) (30.0 )% Gold and natural resources ETF 543 506 37 7.3 % Total ETF advisory fees 9,416 13,174 (3,758 ) (28.5 )% USGIF advisory fees: Gold and natural resources funds 1,062 1,441 (379 ) (26.3 )% International equity funds 391 309 82 26.5 % Emerging markets funds - 16 (16 ) (100.0 )% Bond funds - - - n/a Total USGIF advisory fees 1,453 1,766 (313 ) (17.7 )% Total advisory fees 10,869 14,940 (4,071 ) (27.2 )% USGIF administrative services fees 115 134 (19 ) (14.2 )% Total Operating Revenues $ 10,984 $ 15,074 $ (4,090 ) (27.1 )% Total consolidated operating revenues for the year ended June 30, 2024, decreased $4.1 million, or 27.1 percent, compared with the year ended June 30, 2023.
The decrease was primarily due to other comprehensive loss of $2.3 million, dividends declared of $1.3 million, and repurchases of common stock of $1.2 million; offset by net income of $3.1 million for the year ended June 30, 2023. The Company also has access to a $1.0 million credit facility, which can be utilized for working capital purposes.
The decrease was primarily due to repurchases of common stock of $2.2 million, dividends declared of $1.3 million, other comprehensive loss of $764,000, and the impact of ASU 2016-13 adoption of $183,000; offset by net income of $1.3 million for the year ended June 30, 2024.
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 U.S. Global Jets UCITS ETF is not available to U.S. investors.
Average assets in the ETFs decreased in fiscal year 2024, primarily in the Jets ETF. Information on the U.S.-based ETFs can be found at www.usglobaletfs.com, including the prospectus, performance and holdings. 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.
Advisory fees, the largest component of the Company’s operating revenues, are derived from two sources: exchange-traded fund advisory fees and USGIF advisory fees. In fiscal year 2023, these sources accounted for 87.4 percent and 11.7 percent, respectively, of the Company’s operating revenues.
Advisory fees, the largest component of the Company’s operating revenues, are derived from two sources: ETF advisory fees and USGIF advisory fees. In fiscal year 2024, these sources accounted for 85.7 percent and 13.2 percent, respectively, of the Company’s operating revenues. The Company serves as investment advisor to three U.S.-based ETF clients: U.S. Global Jets ETF (ticker JETS), U.S.
The Company recorded advisory fees from the ETF clients of $13.2 million and $21.0 million in fiscal years 2023 and 2022, respectively.
The Company receives a unitary management fee of 0.69 percent of average net assets and has agreed to bear all expenses of the ETF. The Company recorded advisory fees from the ETF clients of $9.4 million and $13.2 million in fiscal years 2024 and 2023, respectively.
For the years ended June 30, 2023, and 2022, the Company adjusted its base advisory fees downward by $490,000 and upward by $20,000, respectively.
For the years ended June 30, 2024, and 2023, the Company adjusted its base advisory fees downward by $429,000 and $490,000, respectively. USGIF advisory fees in total, including performance adjustments, decreased by approximately $313,000, or 17.7 percent, in fiscal year 2024 compared to fiscal year 2023.
For the years ended June 30, 2023, and 2022, the Company adjusted its base advisory fees downward by $490,000 and upward by $20,000, respectively.
For the years ended June 30, 2024, and 2023, the Company adjusted its base advisory fees downward by $429,000 and $490,000, respectively. USGIF advisory fees in total, including performance adjustments, decreased by approximately $313,000, or 17.7 percent, in fiscal year 2024 compared to fiscal year 2023.
This positive price momentum has been a key driver of revenue for our JETS ETF and airline industry related revenues at large. However, it is worth noting that this year has not been without challenges. We find ourselves still grappling with the highest inflation rates in four decades.
It is worth noting that this year has not been without challenges. We find ourselves still grappling with some of the highest inflation rates in four decades. This inflationary pressure is partly attributable to the Russian-Ukrainian war and increased consumer spending of disposable income.
The decrease was due primarily to lower operating income and lower realized gains on sales of securities, offset by lower unrealized losses on investments. See Note 13 to the Consolidated Financial Statements of this Annual Report on Form 10-K for additional disclosures on income taxes.
The decrease can be mainly attributed to this year’s operating loss, in contrast to last year’s operating income. This was partially mitigated by an increase in net investment income compared to the previous year. See Note 13 to the Consolidated Financial Statements of this Annual Report on Form 10-K for additional disclosures on income taxes.
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 has agreed to contractually limit the expenses of the U.S. Global Sea to Sky Cargo ETF through April 2025. The Company also serves as investment advisor to one European-based ETF, The Travel UCITS ETF (ticker TRIP).
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 has agreed to contractually limit the expenses of the U.S. Global Sea to Sky Cargo ETF through April 2025. The Company also serves as investment advisor to one European-based ETF, The Travel UCITS ETF (ticker TRIP).
For the prior year, a significant amount of the changes in unrealized losses on equity securities were due to a decrease in the fair value of the Company’s investment in warrants of HIVE. ○ The current year ended June 30, 2023, had unrealized gains on embedded derivatives of $111,000, whereas the prior year ended June 30, 2022, had unrealized losses on embedded derivatives of $2.5 million.
This was primarily due to the Company's investment of cash into higher-yielding cash equivalents during the latter part of the prior year. ○ The current year ended June 30, 2024, had unrealized losses on embedded derivatives of $102,000, whereas the prior year ended June 30, 2023, had unrealized gains on embedded derivatives of $111,000, a change of $213,000.
The investments in HIVE are discussed in more detail in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K. HIVE is a company that is headquartered in Canada with cryptocurrency mining facilities in Iceland, Sweden, and Canada. Frank Holmes, CEO, is the executive chairman of HIVE.
(“HIVE”), which were convertible debentures valued at $4.4 million at June 30, 2024, and warrants and convertible debentures valued at $7.3 million at June 30, 2023. The investments in HIVE are discussed in more detail in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K.
This inflationary pressure is partly attributable to the Russian-Ukrainian war and increased consumer spending of disposable income. As always, we continue to closely monitor economic trends to navigate their potential impact on the Company's performance. In the broader market, we observed interesting sectoral dynamics.
As always, we continue to closely monitor economic trends to navigate their potential impact on the Company's performance. In the broader market, we observed interesting sectoral dynamics. The S&P 500 realized strength in all eleven sectors, with Communication Services leading the charge with an impressive 43.6 percent increase.
The Company has one European-based ETF product listed on various exchanges in Europe, the U.S. Global Jets UCITS ETF (ticker JETS), which concentrates on the U.S. and international airline industry. Assets in the Jets ETF were $1.9 billion and $2.5 billion at June 30, 2023, and 2022, respectively.
Global Sea to Sky Cargo ETF (ticker SEA), which concentrates on the global sea shipping and air freight industries. The Company has one European-based ETF product listed on certain exchanges in Europe, The Travel UCITS ETF (ticker TRIP), which concentrates on the travel industry.
For the current year, the change in unrealized losses on equity securities were primarily due to observable price changes for equity investments accounted for under the investment alternative, and the realized losses on equity securities were primarily due to impairments for equity investments accounted for under the investment alternative.
The prior year ended June 30, 2023, included realized losses for impairments of $439,000 and unrealized losses of $1.8 million for observable price changes for equity investments accounted for under the investment alternative. ○ The current year ended June 30, 2024, had dividend and interest income of $2.4 million, compared to $1.8 million in the prior year ended June 30, 2023, an increase of $613,000, or 34.1 percent.
USGIF advisory fees in total, including performance adjustments, decreased by approximately $1.8 million, or 50.4 percent, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of a decrease in average assets under management driven by shareholder redemptions and a change from performance fees received to performance fees paid.
This was primarily a result of a decrease in average net assets under management driven by net shareholder redemptions, somewhat offset by a decrease in performance fees paid.
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With supply chains now open, ports are bustling with activity, allowing us to better navigate the current economic landscape. Throughout the spring and especially during the summer months, we experienced robust travel demand, which in turn drove investor flows into the airline stocks.
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The airline industry saw a significant rebound in demand over the past year ending June 30, 2024. However, the recovery has been uneven across different regions and travel segments. While the industry faces challenges like rising costs and operational disruptions, the overall outlook remains positive, with demand continuing to approach or exceed pre-pandemic levels.
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The S&P 500 saw notable strength in nine of its 11 sectors, with Information Technology leading the charge, boasting an impressive 38.8% increase. Meanwhile, the Real Estate sector faced challenges, experiencing a decline of 7.5%. This illustrates the importance of diversification and thoughtful portfolio management in uncertain market conditions.
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The laggard was the Real Estate sector experiencing a 1.9 percent total return. This illustrates the importance of diversification and thoughtful portfolio management in uncertain market conditions. The performance of the S&P 500 was commendable, registering a growth of 22.7 percent for the trailing twelve months ended June 30, 2024.
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The Company has three ETF products listed on the New York Stock Exchange: the U.S. Global Jets ETF (ticker JETS), which concentrates on the U.S. and international airline industry, the U.S.
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This performance adjustment began to be phased out during the fourth quarter of fiscal 2024 and will cease during the fourth quarter of fiscal 2025. During the phase-out period, the adjustment for the performance fee can only be adjusted downward.
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COVID-19-related circumstances (e.g., remote work arrangements) have not adversely affected the Company’s ability to maintain operations, including financial reporting systems, internal controls over financial reporting, and disclosure controls and procedures.
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The Company receives a unitary management fee of 0.69 percent of average net assets and has agreed to bear all expenses of the ETF. The Company recorded advisory fees from the ETF clients totaling $9.4 million and $13.2 million in fiscal years 2024 and 2023, respectively.
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USGIF advisory fees in total, including performance adjustments, decreased by approximately $1.8 million, or 50.4 percent, in fiscal year 2023 compared to fiscal year 2022, primarily as a result of a decrease in average assets under management driven by redemptions and a change to performance fees paid versus performance fees received.
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HIVE is a company that is headquartered in Canada with cryptocurrency mining facilities in Iceland, Sweden, and Canada. Frank Holmes, CEO, is the executive chairman of HIVE. Cryptocurrency markets and related stocks have been, and are expected to continue to be, volatile, and may be influenced by a wide variety of factors, including speculative activity.
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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).
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This performance adjustment began to be phased out during the fourth quarter of fiscal 2024 and will cease during the fourth quarter of fiscal 2025. During the phase-out period, the adjustment for the performance fee can only be adjusted downward. 15 Table of Contents Advisory Fees.
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The Company recorded advisory fees from the ETF clients totaling $13.2 million and $21.0 million in fiscal years 2023 and 2022, respectively. Average assets in the ETFs decreased in fiscal year 2023, primarily in the Jets ETF. Information on the U.S.-based ETFs can be found at www.usglobaletfs.com, including the prospectus, performance and holdings.
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This performance adjustment began to be phased out during the fourth quarter of fiscal 2024 and will cease during the fourth quarter of fiscal 2025. During the phase-out period, the adjustment for the performance fee can only be adjusted downward.
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A significant portion of the securities recorded at fair value in the above table is in investments in HIVE Digital Technologies Ltd., formerly HIVE Blockchain Technologies Ltd., (“HIVE”), which were warrants and convertible debentures valued at $7.3 million and $11.1 million at June 30, 2023, and 2022, respectively.
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Operating Expenses Total operating expenses decreased $85,000, or 0.7 percent, compared with the previous fiscal year, as shown below.
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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).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeHIVE 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.
Biggest changeHIVE is discussed in more detail in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K. 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.
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 have a material impact on the Company’s investments in debt securities carried at fair value included on the Consolidated Balance Sheets and gains (losses) recognized in net investment income.
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 have a material impact on the Company’s investments in debt securities carried at fair value included on the Consolidated Balance Sheets and gains (losses) recognized in net investment income (loss).
The following table summarizes the Company’s equity price risks in securities carried at fair value as of June 30, 2023, and shows the effects of a hypothetical 25 percent increase and a 25 percent decrease in market prices.
The following table summarizes the Company’s equity price risks in securities carried at fair value as of June 30, 2024, and shows the effects of a hypothetical 25 percent increase and a 25 percent decrease in market prices.
Macroeconomic declines, including inflation; negative political developments, including volatile market conditions due to investor concerns regarding inflation and potential hostilities between Russia and Ukraine; adverse market conditions; 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.
Macroeconomic declines, including inflation; negative political developments, including volatile market conditions due to investor concerns regarding inflation, and the Russia-Ukraine and 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.
As a result, the Company’s revenues are subject to volatility beyond market-based fluctuations discussed in the investment management and administrative fees section above. For the year ended June 30, 2023, the Company realized a decrease in its USGIF base advisory fee of $490,000, and for fiscal year ended June 30, 2022, an increase of $20,000 due to these performance adjustments.
As a result, the Company’s revenues are subject to volatility beyond market-based fluctuations discussed in the investment management and administrative fees section above. For the fiscal years ended June 30, 2024, and 2023, the Company realized a decrease in its USGIF base advisory fee of $429,000, and $490,000, respectively, due to these performance adjustments.
Hypothetical Estimated Fair Value Estimated Increase Fair Value at Percentage After Hypothetical (Decrease) in (dollars in thousands) June 30, 2023 Change Price Change Net Income (Loss) 1 Equity securities at fair value $ 13,205 25% increase $ 16,506 $ 2,608 25% decrease $ 9,904 $ (2,608 ) Embedded derivatives at fair value 2 $ 114 25% increase $ 143 $ 23 25% decrease $ 86 $ (23 ) 1.
Hypothetical Estimated Fair Value Estimated Increase Fair Value at Percentage After Hypothetical (Decrease) in (dollars in thousands) June 30, 2024 Change Price Change Net Income (Loss) 1 Equity securities at fair value $ 11,093 25% increase $ 13,866 $ 2,191 25% decrease $ 8,320 $ (2,191 ) Embedded derivatives at fair value 2 $ 12 25% increase $ 15 $ 2 25% decrease $ 9 $ (2 ) 1.
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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.
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This performance adjustment began to be phased out during the fourth quarter of fiscal 2024 and will cease during the fourth quarter of fiscal 2025. During the phase-out period, the adjustment for the performance fee can only be adjusted downward.
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This may not only adversely affect the Company’s assets under management but also the valuation of the Company’s corporate investments.
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Results could be significantly different due to both the nature of markets and the concentration of the Company’s investment portfolio. The embedded derivatives shown in the above table, which were valued at $12,000 at June 30, 2024, are related to HIVE Digital Technologies Ltd. HIVE (“HIVE”) convertible debentures.
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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 Digital Technologies Ltd. formerly HIVE Blockchain Technologies Ltd., (“HIVE”), which were valued at $290,000 at June 30, 2023.
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Also, the embedded derivatives shown in the above table, which were valued at $114,000 at June 30, 2023, are related to HIVE convertible debentures. HIVE is discussed in more detail in Note 4, Investments, to the Consolidated Financial Statements of this Annual Report on Form 10-K.

Other GROW 10-K year-over-year comparisons