U.S. Global Investors, Inc.

Good morning and thank you for joining us today for our webcast announcing U.S. Global Investors results for first quarter 2021. I'm Holly Schoenfeldt. If you have any questions during the webcast, you can enter them in the questions area of the control panel sidebar, or you can email them to info at usfunds.com after the presentation. The presenters for today's program are Frank Holmes, U.S. Global Investors CEO and Chief Investment Officer, Lisa Callicotte, Chief Financial Officer, and myself, Holly Schoenfeldt, Marketing and Public Relations Manager. During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during the webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10Q filing for more detail on factors that could cause actual results to differ materially from any described today and in forward-looking statements. Any such statements are made as of today. U.S. Global accepts no obligation to update them in the future. Real quick, as you're watching today, we are pleased to offer you a Jets or go a U-Hat. All you have to do is send an email to info at usfunds.com and we are happy to get those out to you and just include your mailing address. On slide five, you'll see a quick overview of U.S. Global Investors. We are an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the company became a registered investment advisor in 1968 and has a longstanding history of global investing and launching first-of-their-kind investment products. including the first no-load gold fund. U.S. Global is well known for expertise in gold and precious metals, natural resources, and emerging markets. Grow Strengths, we strive to be the go-to stock for exposure to emerging markets, resources, gold, airlines, and digital currencies. We have a strong balance sheet with a reflexive cost structure and a monthly dividend and return on equity discipline. Now let's go to Frank Holmes for an overview of the period. Frank.

Thank you, Holly. And thank you, Sarah, for helping out in this today. And then we're going to have Lisa. Lisa Callicotte, our CFO, will also be speaking and addressing financial questions. But I really wanted to say here, thank you, everyone, in particular, very loyal shareholders at Parrot Capital Management. who have a wonderful micro-cap fund, the Royce Funds who have been long-term, both of them long-term, loyal shareholders, and same thing with Bill Naskiewicz and his team at Heartland Advisors who have recently come in and taken a substantial position in our company, that they have the confidence of our vision, and BlackRock and Vanguard, which are more index funds related, but in particular the other fund managers, So as you see here, the dividends are paid monthly. We've been doing this since 2007. The current yield is 1.13%, a little better than what you're going to get in a money fund. We do maintain the share repurchase policy. Program in motion. The board has approved to purchase up to 2.75 million shares of the outstanding common stock in the open market through December this year of 2020 during three months end of September 30th. The company repurchased 1,000 Class A shares using cash of approximately $2,000. This may be suspended. And what's important for investors, it's an algorithm that buys whenever it seems gold. Whenever it grows at a big correction, it's just been correlated to gold. So that volatility on those big down days, the model, the algorithm kicks in and buys stuff back, shares. What's been fortunate is that most of the process today is that we're seeing in this sort of secular bull market now we've entered into, in particular for many of our asset classes, we're benefiting from. As you can see here, the NASDAQ grow. We had a little higher than 266 as we surged yesterday. But I think what's really important for investors is the operating revenue and how correlated it is to the assets, in particular the ETF assets, which will continue to surge. Our operating revenues increased Q over Q 73% year over year, 300%. And our net income increased by 32% Q over Q and year over year, 150%. We have $2 billion in average assets, and that's a 61% Q over Q growth and a 290% year over year. I think it's just really important that investors recognize as we said in our press release that we've not had these assets this level since almost going back 2011-12 era and at that time we had Three times the number of employees. And so we are very lean. We have a very lean structure. And so a lot of those functions that we had before have been outsourced. So now we predominantly have the accounting and financial aspect, the investment team, and the marketing team to run this business. A lot of the operations have been outsourced. We are able to see profit margin expansion with this growth in assets. As you can see here, the assets have exploded on a relative basis. This visual does not go back to 2011-12 when we were at that level. I think the stock was also substantially higher, but back then we had higher returns. More employees, but we had higher funds, offshore funds, which had higher fees. Today, the structure is very simple to calculate with the ETF business and the other mutual funds. But we're very happy with what we're able to do. Now we're busy rebuilding our balance sheet and income statement and starting to pile the cash. So this is another nice visual to show you the turnaround in growth, 10%, 10 cents growth, and then we had 13 cents growth in some back-to-back quarters. And I just think the future looks very, very promising for that. There's been some demographic studies that I've talked about that's changed what's taken place for our company. But what's important is that we have definitely, in my eyes, seen the turn of the corner. We still want to go through a few more quarters of showing that growth of cash and building that book value back up again. And with that, then we can consider what people have always been sending me and asking me, will you buy back more stock? Will you increase the dividend? And I think that we've weathered just a horrible, horrible long winter in resources. And they've turned and we spent five years building the brand and ETF business before it exploded. So it costs a lot of money, and we lost money during that period building out and investing in the building of the brand of jets. But as you can see here, it's a blow-up quarter for Grow Revenue. And the next visual is how we've done against our peers. The orange is Grow and against other companies. Fund groups such as T. Will Price, Franklin. Franklin has a lot of emerging market funds like ourselves. Wisdom Tree is focused on ETFs, period. And Invesco's biggest fund is the QQQ. It's an ETF. But we ourselves have been able to turn and actually be more reflexive and participate in this surge that's taken place. and what shocked me was the sort of the sell-off we've experienced the past couple of months while the assets have continued to grow. I think it's more of a function of a lot of small cap stocks seem to, and small cap funds start to lag and there's sort of a negative sentiment going into the election. But after yesterday, seeing how much gold was up and some of the other assets, the airlines ETF, they were up substantial. It's a big, big swing for us in overall assets. The next visual is highlighting just ETF since total assets higher. It truly is. It's the only airlines ETF. We spent a lot of time building this, not only the brand, but we spent a lot of time in building that model. And it's very much, I share with you, a unique quant model. It's not just factors for picking stocks. are factors of how the portfolio recalibrates and rebalances every quarter. So it's a dynamic process. Demands for the airline ETF continues. And what we've seen is the daily, when you look at the daily volatility of the airlines ETF, it's very much like the airlines industry, like gold stocks. They have a big daily volatility. And what we've attracted is which I think is so key for price discovery is tens of thousands of young millennial traders They love the airline industry. They follow the airline industry and they trade it. They're looking for the next big surge. A vaccine comes out. This really recent bounce in COVID will sort of slow it down in Europe. But the U.S. continues to chug along in a positive way. So I think positive news of Delta coming out and saying that they expect by the first quarter that they probably turn the corner and along with Southwest Airlines. These are very positive statements. The fundamentals of the airlines, they're still losing money, but at a lot less rate. And I'll try to explain. So some of the factors that we're trying to monitor, if you're trying to monitor the health of the revenue line of the airlines, it's best to follow the TSA daily report that shows you how many people they've cleared. But demand continues to improve. And as you can see here, for anyone that's... and many more. Next is a visual showing you Seeking Alpha, the following investors describing the JET's updates on Seeking Alpha. This continues to grow, which is very positive and constructive. Here's the magic visual. This here is what quant funds use, and quant funds are No doubt in the hedge funds that are short airlines or long airlines, they want a big reposition, so they go long or short jets. We've seen big trading volume in our options on jets, so it's becoming a very liquid vehicle. Basically, for simple math, going from 35,000 shares a day traded to 3.5 million. And that has been very important in attracting investors. Thank you for joining us. They believe that the wind at the tunnel is much brighter in the next six months. If you recall, a year ago, the TSA was clearing about 2.7 million people. And then by mid-April, it had fallen to less than 90,000 people a day. As the U.S. shut down, the busiest airport in the world was Anchorage. moving medical equipment from Asia over to North America and Europe. This has all changed, especially domestically, what we're seeing in the U.S. And the airlines, the business travel hasn't picked up, but tourism has. And you're seeing the airlines use quant models. And it reminds me a lot of what Apple's been doing. If a COVID area has a significant breakout, Apple will shut down a store. Thank you for joining us. At the beginning of October, Southwest Airlines all of a sudden started flying from Phoenix to Cabo San Lucas in Mexico. And so this is all, to me, amazing to see that tourism is an important part of that travel and the airlines are able to adapt quickly. Previously, airlines flew predominantly through their hubs throughout America, and then they went on to their second path. Today, they're doing direct flights from these smaller areas, and they pivot. They move much more quickly. The next visual is CEO Ed Bastian of Delta, and he says they feel they'll be breaking even by the spring of 2021. Very positive for the industry. Southwest Airlines has also articulated that. What happens in these new ETFs that you come out with, you really can't get on platforms until you get through $50 million. And then once you get through $100 billion, it expands greatly to how many platforms you can get onto. and then the next threshold is $500 million and then it's a billion. So you're seeing that some of these big wire houses that they're very slow to move to put you on their system and their due diligence but what we've seen is a big breakthrough and in particular UBS which has a much higher book of business they're showing up as a major player in the space. Raymond James and no doubt The minnows, the E-Trade, the Interactive Brokers, and Robinhood, they're very important for the ecosystem. As day traders are increasing the volume, it makes hedge funds much more interested in going short or long, the ETF itself, particularly going long and shorting airline stocks. and many more. and I want to thank everyone at those firms and all those gatekeepers that help Tadous get a fast track that we get as a head wholesaler to get on those platforms and making sure that they have access to our research and what we're covering. And the other part that's important we've shown in previous visuals is that the day traders exploded when they went to zero commissions, in particular Robinhood and Acorn. But this expanded with TD Waterhouse and now Schwab. So you're seeing that more of the groups are doing it, and they make their money from deposits, cash deposits, and then do margin lending, and they make their money from securities lending. To me, it's really interesting how different paths you can go to make money in this industry, and commissions become a de minimis number. But before you want to come and trade this or invest in this sector or grow, I highly recommend that you respect the DNA of volatility of different asset classes. Gold bullion and the S&P 500 have almost the same DNA of volatility over 10 days and over one day. It's 1% on a daily basis. It's a non-event. 7% of the time, they go up or down 1%. And as you can see, gold stocks are much higher than gold. and you can see Bitcoin is massively greater over five days or 10 days. And oil, no doubt, you can see here that oil is very volatile. The one day volatility is shocking years to 10%. And that impacts the airlines because the cost of energy is their second biggest line item. and so you get a whole community of traders that as oil is trending higher, they're out of jets. As oil starts to correct and fall, they start buying jets. And so that to me just adds to that ecosystem that we just don't want to have a bunch of whales owning the ETF or any of our products. We want to have tunas, dolphins, Baracuda, Sharks, Minnows, Groupers. We want it all. We want this robust ecosystem and just clearly showing that and GoEU is getting that traction too where its volume is up dramatically and it's gone through the $100 million level. And we're seeing family offices come into it because of GoAU, when we talk about that specifically because of its orientation towards royalty companies. Here is something that shocks, and I go on the media, and particularly New York just sees always to have this propensity, a high probability of being negative gold. Gold's been up greatly, well, it's gone too much. Gold starts to correct, I told you it's going to go lower. Not recognizing in this century that Gold has outperformed the S&P 500 threefold. That's 300% difference. And it's at 26% over this year. It's outperformed the S&P. So gold is a significant and critical asset class. And that's why the largest hedge fund in the world has a weighting in gold quite often to be over 10%. And he recalibrates. That's Ray Dalio's Bridgewater. The next visual is YouTube. This production we've been putting out is educational pieces. They're two minutes. It's CPI fake news. What does it mean for gold? And I highly recommend that you click through and you subscribe to U.S. Global's information that we're putting out in research. And what we tried to show in that two-minute clip was inflation is closer to 8% than reported 1% if you use the algorithm correctly. and many more. Inflation is running more like 8%. So that's published by John Williams Shadow Statistics. And I think that people have to realize is that the report of CPI, it's amazing. Housing is up 10% to 15% across America. And some places, like I said, 15%. That's big inflation. Gas pump inflation is up. Everyone driving to work during the day. It's surged. But inflation at 1.3%, I don't think so. So I think it's important for investors to be educated, and that's a key value driver for gold and smart hedge fund managers like Ray Dalio. Gold has benefited from excessive money printing. I've written about this. If you're not a subscriber to Frank Talk, I highly recommend it. The marketing team puts together great information. The investment team helps write the investor alert every week. And clearly, the marketing team and the editorial board that we have there puts lipstick on everything we do and checks for compliance, et cetera. But we really try to be faster than what brokerage firms publish. and right now what you've seen with this excessive regulations come out of Europe for the past 15 years now this MIFIC 2 really hurts investors getting information that they used to be able to get even from major firms like Deutsche Bank you have to be MIFIC compliant for me to go listen to a webinar so this is a new world so we try to be a provider a timely insightful informative provider and what this visual is showing you that there's a correlation between the amount of money printing and money supply year over year and the gold prices. And if you go back and you can see this sort of trend, the other part of that is negative real interest rates. So when you add money printing and negative real interest rates, it's a great barometer and tool for navigating gold markets. Let's talk back about the products that generate the revenue to pay the salaries and allow us to pay dividends and buy back our stock. GoAU has expanded its availability with assets over $100 million. We're tickled by this. We're excited about it. And we'll continue to tell that story like we did this week. And we had a huge response. I think almost a record number signed up to listen to The World of Gold. And the next visual is... Our investments. We couldn't launch an ETF in the space of Bitcoin. Still, many people have tried, spent a lot of money. Nothing's happened. U.S. Global Investors went out and co-invested and launched high blockchain technology. We own 10 million shares. We mine Ethereum and Bitcoin using green energy. We mine Ethereum in Iceland and Sweden. and we mine Bitcoin in Quebec. So it's been an incredible rollercoaster ride. Hive itself is an investment from our seed of $0.30 to $6 and back down to $0.10 and then back up. It's just really important for investors to recognize. It correlates with the price of Ethereum. and this year is about the major events moving the price of Bitcoin. The winter of Bitcoin and Ethereum digital money bottomed. It bottomed in the winter, what they call the winter season, was about 18 months, not 18, just 14 months. and it bought them when JP Morgan stopped trash-talking the digital world and they launched their own stable coin. Then it exploded when Facebook launched the Libra, then the world backlashed against Libra, it sold off and now it's pivoting up on its own. Today it's hit $16,000. So I think the Bitcoin and the Ethereum space Thank you for joining us. and Ethereum, as you can see in the next visual. There's a picture of myself with John Malden of Malden Economics. I went to visit the Icelandic facilities. This is almost two years ago. But the Ethereum miners are gaining big traction with the huge movement and decentralized finance. So often they use Ethereum algorithm as their backbone, and so therefore they need Ethereum. And we've seen Ethereum prices explode on the upside. And this year, Hive increases next-generation Bitcoin mining powered at Green Energy in Quebec. In September, we reported record Ethereum mining production driven by the DeFi demand. Then in October, we reported the first quarter financial results. And the next one is the exciting part. The correlation is extremely high. with Ethereum. It's more than 70% correlation. On a daily basis, if you do the taping on it, it's more like 90%. We also made an investment several years ago, which we're really thrilled about, is in Thunderbird Entertainment. And that's a company that Tim Gamble and Frank Giustra had created. And if you recall, if you know the history of Lionsgate Entertainment, was created basically by those two individuals. And this is a company that's exploding in success of the animation. And they just recently won an Emmy for The Last Kids on Earth. Their revenue is surged above $100 million. They have free cash flow. They have rising cash flow, rising revenue per share of growth. This is just a sweet undervalued company. They're producing a lot of content for... Amazon, for Netflix, for even Walt Disney, their animation team will be contracted out. So this is an investment and itself has had a great run this year because of COVID, the need for content. The need for new content. We have more people working from home, staying from home. Entertainment has come from home. So we know in our funds, one of the things we bought early was the Home Depot because the Home Depot stayed open during the whole lockdown and everyone was busy, stuck at home. So they started repairing their houses. and parking lots for Home Depot were packed where everyone else was empty. So it's interesting to see that certain companies have truly benefited from COVID just like we have. We've been the recipients. And one of the biggest and most important parts is the unleashing of the millennials. And I haven't seen this until the 90s, I recall, when all of a sudden baby boomers discovered mutual funds and tech stocks. And we had a super cycle, the unleashing by President Clinton of the Internet. and many, many more. and so on. At that time, the baby boomers my age were just jumping all over this space for 401ks. They came up with the Roth IRA and there's a huge growth. Well, today it's ETFs and today it's millennials. The largest wealth transfer from baby boomers to millennials is because numbers are bantering around like $10 trillion. And so now they've discovered, and they're predominantly using YouTube and podcasts to get their information because it's harder and harder to get research from the brokerage firms. and the coverage and they're very caught up in the speculation of microcap stocks. So I think that you remain very bullish and constructive on overall the economy and the stock market and stay tuned for the second leg of the airlines industry. Vaccine is discovered or is implemented that works. You're going to see a huge explosion in travel again in the airline industry. Now, I want to turn it over to hardworking Lisa Callicotte, who has been busy throughout this whole bear winter cycle that Grow has experienced until the recent takeoff of our ETFs. She's been managing the process, and I thank her. And so now we're going to talk about the results and growth.

Thank you, Frank. Good morning. First, I'll start with our financial highlights. We had a very strong quarter. And as we noted previously, we felt that this quarter would really demonstrate the results of the inflows into our Jet CTF. And this is reflected in the fact that our quarterly average assets under management and our operating revenues increased approximately 300% compared to the same quarter last year. And our quarterly net income was $1.9 million. Quarterly operating revenues are the highest they've been in six years, and quarterly net income is the highest it's been in the last nine years. And now we'll review more details of the financial statements for the quarter ending September 30th, 2020. Beginning on page 40, we see we recorded total operating revenues of 3.2 million for the quarter, which is an increase of 2.4 million, or 304%, from the 804,000 in the same quarter last year. The increase is primarily due to the increase in our average assets under management related to our Smart Beta JETS ETF. And this is while operating expenses only increased 57%. And that was mainly due to higher ETF fund expenses and higher bonuses due to fund performance. We see our operating income for the quarter ending September 30th, 2020 is $937,000 compared to an operating loss the same time last year. On slide 41, we see other income for the quarter is a million dollars, and this is mainly related to unrealized gains on our investments compared to unrealized losses for the quarter ending September 30th, 2019. Net income attributable to USGI after taxes for the quarter is 1.9 million or 13 cents per share, which is an improvement of 5.5 million compared to the net loss of 3.6 million or a loss of 24 cents per share the same quarter for fiscal year 2020. Moving to page 43, we see we still have a strong balance sheet, includes a high level of cash and marketable securities that make up 73% of our total assets. Slide 44 notes our liabilities, which are relatively consistent with June 30th, 2020. and slide 45, you can see our stockholders equity detail. Our company has a networking capital of 9.3 million and a current ratio of 4.5, 5.4 to one. With that, I'll turn it over to Holly.