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.





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 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, 2022, total assets under management, including ETF and USGIF
clients, were approximately $4.1 billion versus $4.6 billion at March 31, 2021,
a decrease of $537.0 million, or 11.7 percent. During the nine months ended
March 31, 2022, average assets under management, including ETF and USGIF
clients, were $4.0 billion versus $3.0 billion during the nine months ended
March 31, 2021. At June 30, 2021, the Company's prior fiscal year end, total
assets under management, including ETF and USGIF clients, were approximately
$4.2 billion, and has decreased $161.8 million, or 3.8 percent, during the nine
months ended March 31, 2022.



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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, 2022, and 2021.





                                                   Changes in Assets Under Management
                                                      Three Months Ended March 31,
                                           2022                                           2021
(dollars in
thousands)               Equity        Fixed Income        Total        Equity        Fixed Income        Total
Beginning Balance       $ 388,834     $       73,392     $ 462,226     $ 427,794     $       82,024     $ 509,818
Market appreciation
(depreciation)             14,385             (1,633 )      12,752       (24,074 )             (234 )     (24,308 )
Dividends and
distributions                   -                (56 )         (56 )           -                (98 )         (98 )
Net shareholder
redemptions               (13,109 )           (3,639 )     (16,748 )      (2,116 )           (2,255 )      (4,371 )
Ending Balance          $ 390,110     $       68,064     $ 458,174     $ 401,604     $       79,437     $ 481,041

Average investment
management fee               0.94 %             0.00 %        0.79 %        0.95 %             0.00 %        0.79 %
Average net assets      $ 377,400     $       70,638     $ 448,038     $ 417,345     $       81,905     $ 499,250




                                                   Changes in Assets Under Management
                                                       Nine Months Ended March 31,
                                           2022                                           2021
(dollars in
thousands)               Equity        Fixed Income        Total        Equity        Fixed Income        Total
Beginning Balance       $ 433,380     $       75,842     $ 509,222     $ 343,214     $       82,683     $ 425,897
Market appreciation
(depreciation)            (11,610 )           (1,828 )     (13,438 )      66,319                120        66,439
Dividends and
distributions             (61,309 )             (225 )     (61,534 )     (16,243 )             (316 )     (16,559 )
Net shareholder
purchases
(redemptions)              29,649             (5,725 )      23,924         8,314             (3,050 )       5,264
Ending Balance          $ 390,110     $       68,064     $ 458,174     $ 401,604     $       79,437     $ 481,041

Average investment
management fee               0.94 %             0.00 %        0.79 %        0.92 %             0.00 %        0.76 %

Average net assets $ 391,976 $ 73,194 $ 465,170 $ 402,921 $ 83,881 $ 486,802






As shown above, USGIF period-end assets under management were lower at March 31,
2022, compared to March 31, 2021. Average net assets for the three and nine
months in the current fiscal year were lower than the same periods in the
previous fiscal year. The equity funds had net market appreciation for the three
months ended March 31, 2022, and net market depreciation for the three months
ended March 31, 2021. The fixed income funds had net market depreciation for the
three months ended March 31, 2022, and 2021. Both the equity funds and fixed
income funds had net market depreciation for the nine months ended March 31,
2022, and net market appreciation for the nine months ended March 31, 2021. In
total, there were net shareholder redemptions for the three months ended March
31, 2022, and 2021. There were net shareholder purchases for the equity funds,
and net shareholder redemptions for the fixed income funds for the nine months
ended March 31, 2022, and 2021.



The average annualized investment management fee rate (total advisory fees,
excluding performance fees, as a percentage of average assets under management)
was 79 basis points for the nine months ended March 31, 2022, and 76 basis
points for the same period in the prior year. The average investment management
fee for the equity funds was 94 basis points for the nine months ended March 31,
2022, and 92 basis points for the same period in the prior year. 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 for both periods.



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, 2022, the Company held investments carried at fair value of
$25.2 million and a cost basis of $22.4 million. The fair value of these
investments is approximately 40.3 percent of the Company's total assets at March
31, 2022. In addition, the Company held other investments of approximately $4.2
million and held-to-maturity debt investments of $1.0 million.



Investments recorded at fair value on a recurring basis were approximately $25.2
million at March 31, 2022, compared to approximately $35.3 million at June 30,
2021, the Company's prior fiscal year end, which is a decrease of approximately
$10.1 million. See Note 2, Investments, to the 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, 2022, and 2021





The Company posted a net loss of $846,000 ($0.06 per share) for the three months
ended March 31, 2022, compared with net income of $8.6 million ($0.57 per share)
for the three months ended March 31, 2021, a decrease in net income of
approximately $9.5 million. The change is primarily due to a decrease in
unrealized investment gain (loss) on corporate investments in the current
quarter compared to the same quarter last year, as discussed further below.



Operating Revenues



Total consolidated operating revenues for the three months ended March 31, 2022,
decreased $180,000, or 2.8 percent, compared with the three months ended March
31, 2021. This decrease was primarily attributable to the following:



•      Advisory fees decreased by $175,000, or 2.8 percent, primarily as a
result of lower average assets under management USGIF and a decrease in base
management fees received, and a change from performance fees earned to
performance fees paid. Advisory fees are comprised of two components: base
management fees and performance fees.

•     Base management fees increased $101,000. The majority of this increase was
from ETF unitary management fees, which increased $202,000 as the result of an
increase in ETF average assets under management, primarily for the Jets ETF, and
the addition of the Jets ETF UCITS product in Europe and the Sea to Sky Cargo
ETF. This increase was offset by a decrease in USGIF management fees, which
decreased $101,000 as the result of a decrease in USGIF average assets under
management.

•         Performance fees for USGIF paid in the current quarter were $120,000
compared to $156,000 earned in the corresponding quarter in the prior year, an
unfavorable change of $276,000. 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, 2022,
increased $595,000, or 19.4 percent, compared with the three months ended March
31, 2021. The increase in operating expenses was primarily attributable to an
increase in general and administrative expenses of $612,000, or 40.1 percent,
compared to prior quarter, primarily due to increased fund expenses and higher
consulting and professional fees, somewhat offset by a decrease in employee
compensation of $123,000, or 8.5 percent. Advertising costs increased $94,000
primarily due to the launch of two new ETF products.



Other Income (Loss)



Total consolidated other loss for the three months ended March 31, 2022, was
$3.6 million, compared to other income of $8.4 million for the three months
ended March 31, 2021, an unfavorable change of approximately $12.0 million, or
143.0 percent. This change was primarily due to the following factors:



•     Investment loss was $3.5 million for the three months ended March 31,
2022, compared to investment income of $8.4 million for the three months ended
March 31, 2021, a change of approximately $11.9 million. This was primarily due
to unrealized losses of $4.5 million in the current quarter. The same quarter in
the prior year had unrealized gains of $7.1 million and realized gains on sales
of securities of $563,000. This change was somewhat offset by an increase in
dividends and interest income of $235,000.

•     There was $173,000 in losses from equity method investments for the three
months ended March 31, 2022, compared to $64,000 in losses for the three months
ended March 31, 2021, an increase of $109,000. The Company's equity method
investment was dissolved as of March 31, 2022.

•     There was $59,000 in other income for the three months ended March 31,
2022, compared to $33,000 in other income for the three months ended March 31,
2021, an increase of $26,000. The increase was primarily due to consulting fees
earned in the amount of $30,000 from HIVE Blockchain Technologies Ltd. ("HIVE")
for the three months ended March 31, 2022. There were no consulting fees earned
from HIVE for the three months ended March 31, 2021. Frank Holmes serves on the
board as executive chairman of HIVE and held shares and options at March 31,
2022. Effective August 31, 2018, Mr. Holmes was named Interim CEO and Interim
Executive Chairman of HIVE. Effective December 22, 2020, Mr. Holmes became the
Executive Chairman of HIVE.



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Provision for Income Taxes



A tax benefit of $246,000 was recorded for the three months ended March 31,
2022, compared to tax expense of $3.1 million for the three months ended March
31, 2021. The tax benefit in the current quarter was primarily the result of
unrealized losses on corporate investments. The tax expense in the same quarter
in the prior year was primarily the result of realized gains on sales of
securities and an increase in valuation of certain investments, which increased
the related deferred tax liability.

RESULTS OF OPERATIONS - Nine months ended March 31, 2022, and 2021





The Company posted net income of $5.1 million ($0.34 per share) for the nine
months ended March 31, 2022, compared with net income of $27.2 million ($1.81
per share) for the nine months ended March 31, 2021, a decrease in net income of
approximately $22.1 million. The change is primarily due to a decrease in
realized and unrealized investment gains in the current period compared to the
same period last year, offset by an increase in operating income compared to the
same period last year, as discussed further below.



Operating Revenues



Total consolidated operating revenues for the nine months ended March 31, 2022,
increased $4.9 million, or 34.6 percent, compared with the nine months ended
March 31, 2021. This increase was primarily attributable to the following:



•      Advisory fees increased by $5.0 million, or 35.0 percent, primarily as a
result of higher average assets under management in the ETFs and an increase in
base management fees received. Advisory fees are comprised of two components:
base management fees and performance fees.

•     Base management fees increased $5.0 million. The majority of this increase
was from ETF unitary management fees, which increased $5.0 million as the result
of an increase in ETF average assets under management, primarily for the Jets
ETF.

•         Performance fees for USGIF earned in the current period were $209,000
compared to $280,000 in the corresponding period in the prior year, a decrease
of $71,000. 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, 2022,
increased $930,000, or 9.3 percent, compared with the nine months ended March
31, 2021. The increase in operating expenses was primarily attributable to an
increase in general and administrative expenses of $1.4 million, or 35.4
percent, primarily due to higher consulting and professional fees, increased
fund expenses, and higher directors' fees and expenses, primarily due to
amortization of stock options. This is offset by a decrease in employee
compensation of $669,000, or 11.9 percent, primarily as a result of a decrease
in bonuses, somewhat offset by amortization of employee stock options. Bonuses
in same period last year related to realized investment gains and positive
company and fund performance.



Other Income (Loss)



Total consolidated other loss for the nine months ended March 31, 2022, was $2.0
million, compared to $31.1 million in income for the nine months ended March 31,
2021, a change of approximately $33.1 million, or 106.4 percent. This change was
primarily due to the following factors:



•     Investment loss was $2.0 million for the nine months ended March 31, 2022,
compared to investment income of $30.1 million for the nine months ended March
31, 2021, a change of approximately $32.1 million. This was primarily due to
unrealized losses on equity securities of $4.9 million and realized gains on
sales of securities of $1.8 million in the current period, whereas the same
period in the prior year had unrealized gains of $13.6 million on equity
securities and realized gains on sales of securities of $15.6 million.

•     There was $206,000 in losses from equity method investments for the nine
months ended March 31, 2022, compared to $420,000 in income for the nine months
ended March 31, 2021, a change of $626,000. The Company's equity method
investment was dissolved as of March 31, 2022.

•     For the nine months ended March 31, 2021, there was a gain of $444,000,
due to extinguishment of debt related to forgiveness of the Paycheck Protection
Program ("PPP") loan and accrued interest. See further information on the PPP
loan in Note 6, Borrowings, to the Consolidated Financial Statements of this
Quarterly Report on Form 10-Q.

•     There was $174,000 in other income for the nine months ended March 31,
2022, compared to $92,000 in other income for the three months ended March 31,
2021, an increase of $82,000. The increase was primarily due to consulting fees
earned in the amount of $90,000 from HIVE Blockchain Technologies Ltd. ("HIVE")
for the nine months ended March 31, 2022. There were no consulting fees earned
from HIVE for the nine months ended March 31, 2021. Frank Holmes serves on the
board as executive chairman of HIVE and held shares and options at March 31,
2022. Effective August 31, 2018, Mr. Holmes was named Interim CEO and Interim
Executive Chairman of HIVE. Effective December 22, 2020, Mr. Holmes became the
Executive Chairman of HIVE.



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Provision for Income Taxes



A tax expense of $1.2 million was recorded for the nine months ended March 31,
2022, compared to tax expense of $8.2 million for the nine months ended March
31, 2021. The tax expense in the current period was primarily the result of
operating income, offset by a decrease in valuation of certain investments,
which decreased the related deferred tax liability. The tax expense in the same
period in the prior year was primarily the result of realized gains on sales of
securities and an increase in valuation of certain investments, which increased
the related deferred tax liability.

LIQUIDITY AND CAPITAL RESOURCES





At March 31, 2022, the Company had net working capital (current assets minus
current liabilities) of approximately $31.8 million, an increase of $10.2
million, or 47.2 percent, since June 30, 2021, and a current ratio (current
assets divided by current liabilities) of 7.6 to 1. With approximately $26.8
million in cash and cash equivalents, an increase of $12.3 million, or 85.4
percent since June 30, 2021, and $7.7 million in securities carried at fair
value on a recurring basis, excluding convertible securities, which together
comprise approximately 55.2 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 $9.1 million, proceeds on sales of
investments of $2.9 million, and proceeds from principal paydowns of $2.3
million. Consolidated shareholders' equity at March 31, 2022, was $57.2 million,
an increase of $2.9 million, or 5.3 percent since June 30, 2021. The increase
was primarily due to net income of $5.1 million for the nine months ended March
31, 2022, offset by a decrease in other comprehensive income (loss) of $1.8
million, and dividends declared of $1.0 million.



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 will expire on
May 31, 2022, and the Company intends to renew annually. The credit facility is
collateralized by approximately $1 million, included in restricted cash on the
balance sheet, held in deposit in a money market account at the financial
institution that provided the credit facility. As of March 31, 2022, 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 2022. The advisory agreement for
the U.S.-based ETFs has been renewed through September 2022.



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, 2022, 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 $34.5
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.





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.



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 included in
the Annual Report on Form 10-K for the year ended June 30, 2021.



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