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Good morning, and thank you for joining us today for our webcast announcing U.S. Global Investors Results for Fiscal Year 2020. I’m Holly Schoenfeldt. Before we begin today’s presentation, I would like to ask for a brief moment of silence to remember the lives lost on September 11, 2001. If you have any questions during the webcast, you can enter them in the questions area of the control panel side bar, which is normally to the right of your screen. Also, you may download a PDF of today’s slides by clicking on the red handout button. 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 this 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 10-K filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and U.S. Global accepts no obligation to update them in the future. On Slide 4, 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 [Technical Difficulty]

…the following day nonstop. So let’s jump into this good news, where our strengths are. We strive to be the go-to stock for exposure in emerging markets, resources, gold and digital. And it’s constantly sort of wave, where we have found that our stock was highly correlated as a company to our gold assets and gold resources in the emerging markets. And then it was through a HIVE investment, so I’ll comment on the digital currencies. And now it appears to be at airlines, because the JETS ETF, which I’ll talk about, is our largest asset. So we have a strong balance sheet that reflects our cost structure and a multi-dividend return equity discipline. The next visual, I want to thank Perritt and Royce Funds, who have been long-term loyal shareholders. And Heartland Advisors, Bill Nasgovitz, who recently came down in June to visit us in San Antonio and they have a position in our company. And Financial & Investment Management Group, Paul Sutherland, has been with us a long time and very loyal. So it’s great to see the midyear all along and BlackRock with their index fund in their asset management company business. Let’s go to the next one, next page. For the past 11 years, we have consistently been paying a dividend, monthly dividend. The yield has looked so tiny, but I can tell you, it’s much higher than a money fund and it has the capacity to grow. So let’s talk on the next one. Next visual is the Board approved to repurchase of up to 2.75 million of outstanding common shares from the open market during the three months ended June 30. The company repurchased 32,000 Class A Shares using cash of a modest $39,000. We could just suspend this any time that we deemed necessary, but we’ve maintained this position that we buy in down days. It’s an algorithm. And for the best interest, it’s always only when you get a big move on the downside, the algorithm picks up the stock. So we’ve seen that. Since the bottom in March, there has predominantly been drafts on the upside. It could say statistically, either kurtosis or a skewing. And we’re seeing that the markets are definitely skewing to a bias on the upside. This next visual shows you our quarterly sort of management, as you can see in the June quarter, our year-end quarter, but the second quarter of this year for 2020. The fourth quarter for our year-end, we had a big surge in those assets. And what’s interesting to share with everyone is that says $1.2 billion for June 30. And since then, we’ve gone through another $1 billion. So I think, Lisa, we’re at $2.2 billion, proximately?

Yes.

This is easy for anyone to calculate. I know some people just download everyday from Bloomberg to take a look at the overall asset size. And that relates to the next page, because there are many investors that we know of that I speak to, et cetera, they have a simple Excel sheet, look at the total assets, and they do a calculation. And so basically, when you have ETFs, the average expense ratio, which is going to be revenue for us, is 60 basis points. So $600,000 of revenue on an annualized basis, or $50,000 a month comes in from having $100 million of assets. And at the beginning of March, that’s basically the two ETFs we had would be close to that $100 million, because they’re all getting beaten up with a corona crisis. And that revenue coming to us was $600,000. We now have over $2 billion in assets. And if we go to lower sources of revenue, our revenue is up to $12 million on a run rate. Now, this is very volatile to recognize that. Airlines industry is volatile, gold assets are volatile. So these numbers are volatile. But giving the magnitude is about revenue for the advisor is up about – for ETF business is up about 20-fold from the lows. And this is totally unexpected. I mean, I try to walk through, unprecedented factors that have taken place. And we just thank God everyday that then investors discovered JETS and GOAU, we’ve always appreciated of the thesis that gold is an important asset class and has finally gone through $100 million. But the fact that this audience of a big ecosystem of investors and traders came into just right at the bottom. So I’ll talk a little bit more about that throughout this…

Thank you, Frank. Good morning. Now, I’ll summarize the results of operations for our fiscal year 2020. Beginning on Page 43, we recorded total operating revenues of $4.5 million for the year, which is an increase of $1 million, or 29% from the $3.5 million in fiscal year 2019. The increase was primarily due to an increase in assets under management, primarily in our JETS ETF is inflows. Operating expenses for the year were $6.9 million, an increase of $663,000, or 11%, primarily attributable to an increase in general and administrative expenses related to our JETS ETFs, somewhat offset by a decrease in employee compensation and benefits. We see our operating loss for fiscal year 2020 is $2.4 million, which is an improvement from prior year loss of $2.8 million. On Slide 44, we see that other income was a loss of $2.2 million in the fiscal year. In prior year, it was a loss of $1.5 million. Investment income decreased $629,000 compared to the fiscal year 2019, primarily due to higher impairment losses and securities and increases in foreign security losses. Net income attributable to USGI after taxes for the year was $4.7 million, or a loss of $0.31 per year, which decreased $1.3 million compared to the net loss of $3.4 million, or a loss of $0.22 per share in fiscal year 2019. But as noted on our previous slide, our earnings per share was positive in the fourth quarter of our fiscal year 2020, and it was mainly due to unrealized gains and securities. Moving to Slide 46, we see we still have a strong balance sheet, which includes approximately $13.4 million in cash and unrestricted securities that combined to make up 71% of our total assets. Slide 47 notes our liabilities. While on Slide 48, you can see our stockholders’ equity detail. The company has a net working capital of $8.5 million and a current ratio of 5.2 to 1. With that, I’ll turn it over to Holly.

Thank you, Lisa. So as you can see on Slide 50, a majority of our mutual fund assets are in emerging markets and natural resources, while 29% are in domestic equities and fixed income. And as for distribution, more than three quarters of assets come from retail investors, with 18% coming from institutional investors. Our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets, as well as our exchange-traded funds. That company and our funds continue to receive an invaluable amount of viral publicity gained through media interviews. Frank Holmes often shares his insights with financial outlets like Fox Business Television, Bloomberg Radio and Kitco News, just to name a few. We continue to receive recommendations by influential financial newsletter writers as well, along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have a loyal following and received millions of visitors each month. Frank Holmes’ CEO blog Frank Talk continues to grow in popularity. His commentary is often featured by prominent publications, including Forbes, Seeking Alpha, Kitco and Equities.com, with millions of monthly visitors. Kitco News, the biggest gold website in the world, with an audience of over 30 million monthly visitors, in partnership with the street.com, continues to feature the Gold Game Film Show with Frank Holmes Gold Market Analysis. Since the show’s beginning, 186 episodes have aired. At quarter-end, we like to look at the most visited Frank Talk Blog post published over the past year. On this slide, you will see that the most visited articles so far in 2020 are as follows: number one, Explore the World’s 10 Busiest Airport; number two, Is The Gold Rally Overdone? Here’s What History Says May Come Next; and number three,…

Well, I think that we have to get, like I said earlier, to a million people a day flying that will be the tipping point sense psychologically. We are seeing a lot of airlines all of a sudden cutting back on the number of employees. They try to maintain them, because I was told that, that the money was given by the government was to keep them employed, so they didn’t have to rehire them, because when we hire them, they have to retrain them from day one and it’s such a regulated world to FAA. So it’s better to keep everyone being paid, even though they weren’t flying. So they could turn on a dime. What’s interesting on this cycle is that, when we look at 9/11 with a world just shutdown in flying also, but it was a much shorter time period, like a week. Six months later, the airline industry was up 80% and then a couple of years after 2003, SARS broke out in Asia. And after it bottomed six months later, the airlines in Asia were up 120%. And we look at the financial crisis of 2008, 2009, that bottomed six months, there was up 80%. So the thought process for a lot of speculators is that, the airlines can surge between 80% and 120%. I don’t think it’s going to happen as fast over six months. I think is probably going to take 12 months from its lows. But I have recently flown and the plane spotless. It’s almost like the fumigating that takes place every flight is a game changer for me to witness the seats of spacing on Delta. The airport in both Park City – sorry, in Salt Lake City and in San Antonio was quiet. There are a fair amount…

Great. Thank you. Lisa, I have a question for you as well. Can you discuss more detail about the $0.10 earnings per share and how much was related to the increase in just assets?

Yes. So the $0.10 per share was mainly due to our increase in unrealized gains in our securities. But we’ve been talking about that a few years ago. We were required to implement accounting standard that made us record all of our unrealized gains and losses through income, where before our long-term investments were being recorded through equity, and only an income when we realized them. So we’ve been talking about how that’s really caused our income to be volatile, because quarterly, we are recording that all through our income statement. And for the quarter ending June 30, we saw an increase in the investments that we are in, and that was the main contributor to the $0.10 per share that we recorded for June 30 a quarter. But the – as far as where JETS AUM comes in, that really hit our revenue line item. And so we saw a significant increase in our revenue in the quarter ending June 30. Now, how it works for us is that, we do get those 60 bps that Frank had talked about earlier, but we also pay all of the expenses related to the ETF. So with that, some of the expenses are based on AUM and will increase as AUM increases, plus we have some distribution costs that are related to inflows. And as you know, we had significant inflows during that quarter. So that did increase our expenses. But some of those distribution costs are like one-time costs, so we were seeing that. But in the fourth quarter, our net operating loss actually improved from the quarter before. The quarter ending March 30, we had a operating loss of $979,000. And there was a 75% improvement of that due to this increase in revenue and AUM to a loss of $245,000 in the fourth quarter. So kind of looking into the future, we do expect that having a higher AUM for an entire quarter is going to increase our revenue and it’s only going to be somewhat offset by these higher expenses.

But there’s a much bigger front-end expenses in the first – going through the first-half of $1 billion.

Definitely, yes.

And since then it’s totally changed, the profit margins expand…

Yes.

…substantially from having $500 million. Do you read that?

I read.

Yes.

Great. Thank you, Lisa. Frank, another question for you really quick. Do you think that GOAU ETF could take off an AUM, just like JETS did this year?

It’s much more competitive, because people that want to speculate by the triple ball, triple bear leveraged ETFs on GDX, GDXJ and the 30% of the assets and those large – much larger ETFs are market-cap weighted funds. And so you’ll see that more speculative. I think what’s going to happen is that the steady-eddie persons doing asset allocation is just not going to buy – they know money is going into good stocks or bad stocks when you buy just a big index. I think that what we’re seeing is that people are shifting out and going into GOAU, because each quarter we throw out. We can get rid of all the weeds in the garden every quarter. So any company that impairs or hurts the revenue last quarter report cards and cash flow last quarter report cards drops in their cash flow returns on invested capital against their peers. We don’t want to – we just have to be very – it is a much smaller portfolio, rather than having 70 names in an ETF gold index. We have 28, and we have the highest concentration in royalty companies. So we recently had money come from a family office overseas. And it’s all because of our exposure for royalty companies that they really like that model and by buying GOAU, you’re really getting exposure to a superior business model.

Okay. Is there anything else you’d like to add before we wrap up?

Yes. I think that overall, the mutual funds themselves continued just as an industry, not experienced any great growth. We’re hoping that repositioning luxuries being the only luxury product that we’ll be able to grow without, because I also think it’s going to continue to be a unique industry like the Cosmos of the world versus the Dollar Store and higher-end from Louis Vuitton to Tesla to Ferrari. These these type of companies are unique in their growth and the resiliency. But it doesn’t take away from the volatility. But I think being the only space – player in that space that a year from now, we should be able to experience some growth in that. And we’re working on other ideas for ETFs where we are the dominant person, and there’s no one else in the space. It’s really important when you try to come up with GOAU, actually, we’ve got $400 million in so many other ETFs out there. I’m happy about that. It’s just continuously slugging. What investors who realize is that, the timeline it takes to have JETS, it took five years. We did over 20 webcasts. These webcasts are costing us from our own and other partnerships we have, 100 grand a year in just buying that space and time, excluding the marketing efforts we put into them. And it is five years. When we launched Eastern European fund, it quickly went to $12 million. Russia defaulted on the sovereign debt unheard off. All of a sudden it was $4 million, and it stayed there for four years until the bottom of 2001. And then in March to October, $1 billion of assets. So you get these – you just have to have their vision. At the same time the persistence in building the brand like JETS did and now GOAU, GO GOLD is – will continue, I think, to do well for asset allocators. And I think it’s just a less volatile ETF in the gold equity space than the other ones that are out there.

Great. Thank you, Frank. All right. This concludes U.S. Global Investors webcast for fiscal year 2020. This presentation will be available on our website at usfunds.com. Thank you all for your participation today.