-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VrEiH+atQIuaOTNZ8YIrdh0TFOGTgaHBVMMlVp7KmMZsN3bvUjQ6mLcoZk7L5KWr sxDfy/DDOA/UJiJk08KPjQ== 0000754811-00-500007.txt : 20010706 0000754811-00-500007.hdr.sgml : 20010706 ACCESSION NUMBER: 0000754811-00-500007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: U S GLOBAL INVESTORS INC CENTRAL INDEX KEY: 0000754811 STANDARD INDUSTRIAL CLASSIFICATION: 6282 IRS NUMBER: 741598370 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13928 FILM NUMBER: 769173 BUSINESS ADDRESS: STREET 1: 7900 CALLAGHAN RD CITY: SAN ANTONIO STATE: TX ZIP: 78229 BUSINESS PHONE: 2103081234 MAIL ADDRESS: STREET 1: 7900 CALLAGHAN ROAD CITY: SAN ANTONIO STATE: TX ZIP: 78229 FORMER COMPANY: FORMER CONFORMED NAME: UNITED SERVICES ADVISORS INC /TX/ DATE OF NAME CHANGE: 19950321 10-Q/A 1 qsept2000amd.txt AMENDMENT TO 10-Q REPORT PERIOD ENDING 9/30/00 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2000 OR [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from ________ to _________ ---------------------------------------------------- Commission File Number 0-13928 U.S. GLOBAL INVESTORS, INC. (Exact name of registrant as specified in its charter) ---------------------------------------------------- TEXAS 74-1598370 (State Or Other Jurisdiction Of (IRS Employer Identification Number) Incorporation Or Organization) 7900 CALLAGHAN ROAD 78229-1234 San Antonio, Texas (Zip Code) (Address Of Principal Executive Offices) (210) 308-1234 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) Not Applicable (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES [x] NO [x] On November 10, 2000, there were 6,299,474 shares of Registrant's class A common stock issued and 6,034,794shares of Registrant's class A common stock issued and outstanding, no shares of Registrant's class B non-voting common shares outstanding and 1,496,800 shares of Registrant's class C common stock issued and outstanding. I N D E X PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Consolidated Balance Sheets -- September 30, 2000, (Unaudited) and June 30, 2000 ................................. 3 Consolidated Statements of Operations and Comprehensive Income (Unadited) -- Three-Month Period Ended September 30, 2000 and 1999 ................................... 5 Consolidated Statements of Cash Flows (Unaudited) -- Three-Month Period Ended September 30, 2000 and 1999 .......... 6 Notes to Consolidated Financial Statements (Unaudited) ........... 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS .............................. 8 ITEM 3. MARKET RISK DISCLOSURES ....................................... 9 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K .............................. 10 SIGNATURES ............................................................... 11 EXHIBIT 11 -- SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE ............ 12 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS ASSETS SEPTEMBER 30, JUNE 30, 2000 2000 ---------- ---------- (UNAUDITED) CURRENT ASSETS Cash and cash equivalents $1,895,908 $1,356,903 Trading securities, at fair value 1,584,036 1,424,120 Receivables: Mutual funds 95,531 779,809 Other 613,385 447,548 Prepaid expenses 274,814 350,729 Deferred tax asset 173,299 215,077 ---------- ---------- TOTAL CURRENT ASSETS 4,636,973 4,574,186 ---------- ---------- NET PROPERTY AND EQUIPMENT 2,244,791 2,278,744 ---------- ---------- OTHER ASSETS Restricted investments 240,000 240,000 Long-term deferred tax asset 796,317 836,056 Investment securities available-for-sale, at fair value 1,045,857 1,159,042 Other 30,596 30,596 ---------- ---------- TOTAL OTHER ASSETS 2,112,770 2,265,694 ---------- ---------- TOTAL ASSETS $8,994,534 $9,118,624 ========== ========== The accompanying notes are an integral part of these statements. 3 LIABILITIES AND SHAREHOLDERS' EQUITY SEPTEMBER 30, JUNE 30, 2000 2000 ------------ ------------ (UNAUDITED) CURRENT LIABILITIES Accounts payable $ 280,390 $ 498,632 Accrued compensation and related costs 238,831 298,826 Current portion of notes payable 1,120,644 68,257 Current portion of annuity and contractual obligation 8,487 8,487 Other accrued expenses 518,227 561,975 ------------ ------------ TOTAL CURRENT LIABILITIES 2,166,579 1,436,177 ------------ ------------ Notes payable-net of current portion -- 1,066,705 Annuity and contractual obligations 129,189 131,256 ------------ ------------ TOTAL NON-CURRENT LIABILITIES 129,189 1,197,961 ------------ ------------ TOTAL LIABILITIES 2,295,768 2,634,138 ------------ ------------ SHAREHOLDERS' EQUITY Common stock (Class A) - $.05 par value; non-voting; authorized, 7,000,000 shares 314,974 314,974 Common stock (Class C) - $.05 par value; voting; authorized, 1,750,000 shares 74,840 74,840 Additional paid-in-capital 10,590,919 10,578,419 Treasury stock, class A shares at cost; 264,680 and 282,350 shares at September 30, 2000 and June 30, 2000, respectively (598,951) (637,298) Accumulated other comprehensive gain (loss), net of tax 18,722 (51,771) Accumulated deficit (3,701,738) (3,794,678) ------------ ------------ TOTAL SHAREHOLDERS' EQUITY 6,698,766 6,484,486 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,994,534 $ 9,118,624 ============ ============ The accompanying notes are an integral part of these statements. 4 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, -------------------------- 2000 1999 ---------- ----------- REVENUE Investment advisory fees $1,605,629 $ 1,466,242 Transfer agent fees 681,204 760,166 Custodial and administrative fees 89,250 129,373 Investment income (loss) 361,705 (58,877) Other 111,872 95,592 ---------- ----------- 2,849,660 2,392,496 ---------- ----------- EXPENSES General and administrative 2,602,145 2,209,363 Depreciation and amortization 71,335 88,194 Interest expense 29,850 13,468 ---------- ----------- 2,703,330 2,311,025 ---------- ----------- INCOME BEFORE EQUITY INTEREST AND INCOME TAXES 146,330 81,471 ---------- ----------- Equity In Net Income of Affiliate -- 51,739 ---------- ----------- INCOME BEFORE INCOME TAXES 146,330 133,210 PROVISION FOR FEDERAL INCOME TAXES Tax Expense 45,203 23,773 ---------- ----------- NET INCOME $ 101,127 $ 109,437 Other comprehensive income (loss), net of tax: Unrealized gains (losses) on available-for-sale securities 70,493 (12,233) ---------- ----------- COMPREHENSIVE INCOME $ 171,620 $ 97,204 ========== =========== BASIC AND DILUTED NET INCOME PER SHARE $ 0.01 $ 0.02 ========== =========== The accompanying notes are an integral part of these statements. 5 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) THREE MONTHS ENDED SEPTEMBER 30, -------------------------- 2000 1999 ---------- ----------- CASH FLOW FROM OPERATING ACTIVITIES: Net income $ 101,127 $ 109,437 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 71,335 88,194 Net gain on sales of available-for-sale securities (32,662) -- Provision for deferred taxes 45,203 23,773 Changes in assets and liabilities, impacting cash from operations: Accounts receivable 518,441 (275,547) Prepaid expenses and other 75,915 91,000 Trading securities (14,742) (32,708) Accounts payable and accrued expenses (321,985) (65,360) ---------- ----------- Total adjustments 341,505 (170,648) ---------- ----------- NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 442,632 (61,211) ---------- ----------- CASH FLOW FROM INVESTING ACTIVITIES: Purchase of property and equipment (37,382) (34,349) Proceeds from redemption of equity affiliate -- 100,000 Purchase of available-for-sale securities (130,134) -- Proceeds on sale of available-for-sale securities 237,614 -- ---------- ----------- NET CASH PROVIDED BY INVESTING ACTIVITIES 70,098 65,651 ---------- ----------- CASH FLOW FROM FINANCING ACTIVITIES: Payments on annuity (2,067) (1,928) Payments on note payable (14,318) (11,931) Proceeds from issuance or exercise of stock, warrants, and options 42,660 38,263 Purchase of treasury stock -- (1,741) ---------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 26,275 22,663 ---------- ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 539,005 27,103 BEGINNING CASH AND CASH EQUIVALENTS 1,356,903 1,025,247 ---------- ----------- ENDING CASH AND CASH EQUIVALENTS $1,895,908 $ 1,052,350 ========== =========== Supplemental Disclosures of Cash Flow Information: Cash paid for interest $ 29,850 $ 13,468 The accompanying notes are an integral part of these statements. 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. BASIS OF PRESENTATION The financial information included herein is unaudited; however, such information reflects all adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of results for the interim periods presented. U.S. Global Investors, Inc. (the Company or U.S. Global) has consistently followed the accounting policies set forth in the Notes to the Consolidated Financial Statements in the Company's Form 10-K for the year ended June 30, 2000. The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, United Shareholder Services, Inc. (USSI), Security Trust & Financial Company (STFC), A&B Mailers, Inc. (A&B), U.S. Global Investors (Guernsey) Limited (USGG), U.S. Global Brokerage, Inc. (USGB), and U.S. Global Administrators, Inc. (USGA). All significant inter-company balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes. The results of operations for the three-month period ended September 30, 2000, are not necessarily indicative of the results to be expected for the entire year. NOTE 2. INVESTMENTS The Company accounts for its investment securities in accordance with SFAS 115, Accounting for Certain Investments in Debt and Equity Securities. Accordingly, the cost of investments classified as trading at September 30, 2000, and June 30, 2000, was $1,875,886 and $1,832,282, respectively. The market value of investments classified as trading at September 30, 2000, and June 30, 2000, was $1,584,036 and $1,424,120, respectively. The net change in unrealized holding gains (losses) on trading securities held at September 30, 2000, and 1999, which has been included in income for the quarter is $116,312 and ($80,914), respectively. Sales of trading securities generated realized gains of $183,027 and $0 for the quarter ended September 30, 2000, and 1999, respectively. The cost of investments in securities classified as available-for-sale, which may not be readily marketable at September 30, 2000, and June 30, 2000, was $1,017,491 and $1,237,483, respectively. These investments are reflected as non-current assets on the consolidated balance sheet at their fair value at September 30, 2000, and June 30, 2000, of $1,045,857 and $1,159,042, respectively, with $18,722 and ($51,771), respectively, net of tax, in unrealized gains (losses) being recorded as a separate component of shareholders' equity. These investments are in private placements, which are restricted for sale as of the balance sheet dates. Due to corporate actions during the quarter ended September 30, 2000, certain securities, which were formerly classified as available-for-sale, were converted into different securities, which were classified as trading. A transfer of $145,173 in cost basis from the available-for-sale to trading category occurred as a result. NOTE 3. INVESTMENT ADVISORY, TRANSFER AGENT AND OTHER FEES The Company serves as investment adviser to U.S. Global Investors Funds (USGIF) and U.S. Global Accolade Funds (USGAF) and receives a fee based on a specified percentage of net assets under management. The Company also serves as transfer agent to USGIF and USGAF and receives a fee based on the number of shareholder accounts. Additionally, the Company provides in-house legal services to USGIF and USGAF, and the Company also receives certain miscellaneous fees directly from USGIF and USGAF shareholders. Fees for providing services to USGIF and USGAF continue to be the Company's primary revenue source. The Company receives additional revenue from several sources including custodian and administrative fee revenues, revenues from miscellaneous transfer agency activities including lockbox functions, mailroom operations from A&B, as well as gains on marketable securities transactions. The Company has voluntarily waived or reduced its advisory fee and/or has agreed to pay expenses on several USGIF funds through June 30, 2001, or such later date as the Company determines. The aggregate amount of fees waived and expenses borne by the Company for the three-month period ended September 30, 2000, and 1999, was $547,812 and $530,442, respectively. The investment advisory and related contracts between the Company and USGIF will expire on February 28, 2001, and the contracts between the Company and USGAF will expire on March 8, 2001, respectively. Management anticipates the board of trustees of both USGIF and USGAF will renew the contracts. NOTE 4. BORROWINGS The Company has a note payable to a bank which is secured by land, an office building and related improvements. As of September 30, 2000, the balance on the note was $1,117,656. The loan is currently amortizing over a twenty-year period with payments of both principal and interest due monthly based on a floating rate of Bank OneTexas Prime plus 0.25%. The current monthly payment is $11,750, and matures on July 1, 2001. Under this agreement, the Company must maintain certain financial covenants. The Company is in full compliance with its financial covenants at September 30, 2000. Effective July 1, 2000, the note payable was moved entirely into current liabilities. The Company is currently in the process of negotiating an extension to the note. Additionally, the Company believes it has adequate cash, cash equivalents, and equity in the underlying asset to retire the obligation if necessary. NOTE 5. INCOME TAXES Provisions for income taxes include deferred taxes for temporary differences in the bases of assets and liabilities for financial and tax purposes, resulting from the use of the liability method of accounting for income taxes. For federal income tax purposes at September 30, 2000, the Company has net operating losses (NOLs) of approximately $1.4 million, which will expire in fiscal 2007 and 2010, charitable contribution carry-overs of approximately $209,000 expiring between 2000 and 2005, and alternative minimum tax credits of $132,128 with indefinite expirations. Certain changes in the Company's ownership may result in a limitation on the amount of NOLs that could be utilized under Section 382 of the Internal Revenue Code. If certain changes in the Company's ownership occur subsequent to September 30, 2000, there could be an annual limitation on the amount of NOLs that could be utilized. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. Management included a valuation allowance of approximately $278,000 and $293,000 at September 30, 2000, and June 30, 2000,respectively, providing for the utilization of NOLs, charitable contributions, and investment tax credits against future taxable income. NOTE 6. FINANCIAL INFORMATION BY BUSINESS SEGMENT The Company operates principally in two business segments: providing mutual fund investment management services to its clients, and investing for its own account in an effort to add growth and value to its cash position. The following schedule details total revenues and income (loss) by business segment: INVESTMENT MANAGEMENT CORPORATE CONSOLI- SERVICES INVESTMENT DATED ----------- ----------- ---------- THREE MONTHS ENDED SEPTEMBER 30, 2000: Net revenues $ 2,517,659 $ 332,001 $2,849,660 =========== =========== ========== Net income (loss) before income taxes $ (185,671) $ 332,001 $ 146,330 =========== =========== ========== Depreciation and amortization $ 71,335 $ -- $ 71,335 =========== =========== ========== Interest expense $ 29,850 $ -- $ 29,850 =========== =========== ========== Capital expenditures $ 37,383 $ -- $ 37,383 =========== =========== ========== Gross identifiable assets at September 30, 2000 $ 5,375,737 $ 2,658,259 $8,033,996 Deferred tax asset 979,260 Accumulated other comprehensive gain (18,722) ---------- Consolidated total assets at September 30, 2000 $8,994,534 ========== INVESTMENT MANAGEMENT CORPORATE CONSOLI- SERVICES INVESTMENT DATED ----------- ----------- ---------- THREE MONTHS ENDED SEPTEMBER 30, 1999: Net revenues $ 2,473,410 $ (80,914) $2,392,496 =========== =========== ========== Income (loss) before income taxes and equity interest $ 162,385 $ (80,914) $ 81,471 Equity in net loss of affiliate -- 51,739 51,739 ----------- ----------- ---------- Net income (loss) before income taxes $ 162,385 $ (29,175) $ 133,210 =========== =========== ========== Depreciation and amortization $ 88,194 $ -- $ 88,194 =========== =========== ========== Interest expense $ 13,468 $ -- $ 13,468 =========== =========== ========== Capital expenditures $ 34,349 $ -- $ 34,349 =========== =========== ========== Gross identifiable assets at September 30, 1999 $ 5,658,770 $ 1,790,244 $7,449,014 Deferred tax asset 1,002,170 Accumulated other comprehensive loss 87,171 ---------- Consolidated total assets at September 30, 1999 $8,538,356 ========== 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company has made forward-looking statements concerning the Company's performance, financial condition, and operations in this quarterly 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, (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. BUSINESS SEGMENTS U.S. Global Investors, Inc. (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 Company generates substantially all its operating revenues from the investment management of products and services for the U.S. Global Investors Funds (USGIF) and U.S. Global Accolade Funds (USGAF). Notwithstanding that the Company generates the majority of its revenues from this segment, the Company holds a significant amount of its total assets in investments. The following is a brief discussion of the Company's two business segments. INVESTMENT MANAGEMENT PRODUCTS AND SERVICES As noted above, the Company generates substantially all of its revenues from managing and servicing USGIF and USGAF. 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 funds' asset levels, thereby, affecting income and results of operations. During the quarter ended September 30, 2000, assets under management in USGIF averaged $1.08 billion versus $1.20 billion for the quarter ended September 30, 1999. This decline was primarily due to declines in gold-related and money market assets. Assets under management in USGAF averaged $265 million for the quarter ended September 30, 2000 versus $146 million for the quarter ended September 30, 1999. This increase was primarily attributable to growth in the Bonnel Growth Fund. 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. These activities are reviewed and monitored by Company compliance personnel and various reports are provided to investment advisory clients. On September 30, 2000, the Company held approximately $2.6 million in investment securities. The value of these investments is approximately 29 percent of total assets and 39 percent of shareholders' equity at period end. Investment income from these investments includes realized gains and losses, unrealized gains and losses on trading securities, and dividend and interest income. This source of revenue does not remain at a consistent level and is dependent on market fluctuations, the Company's ability to participate in investment opportunities, and timing of transactions. For the quarter ended September 30, 2000, the Company had realized gains of approximately $216,000 compared with no gains or losses for the quarter ended September 30, 1999. The Company expects that gains will continue to fluctuate in the future. 8 RESULTS OF OPERATIONS - QUARTER ENDED SEPTEMBER 30, 2000 AND 1999 The Company posted net after-tax income of $101,127 ($0.01 income per share) for the quarter ended September 30, 2000, compared to net income of $109,437 ($0.02 income per share) for the quarter ended September 30, 1999. Net income remained relatively flat as an increase in investment income of $421,000 was offset by increased general and administrative expenses of $393,000. REVENUES Total consolidated revenues for the quarter ended September 30, 2000, increased approximately $457,000, or 19%, compared to the quarter ended September 30, 1999. This was primarily due to the increase in investment income discussed above. During the quarter ended September 30, 2000, the Company also experienced an increase in investment advisory fees of $139,000, or 10%, compared to the quarter ended September 30, 1999. The growth in assets of the Bonnel Growth Fund is responsible for this increase, though it was offset somewhat by declines in gold-related and money market assets. Transfer agent fees for the quarter ended September 30, 2000, decreased $79,000, or 10%, compared to the quarter ended September 30, 1999. This is due to a decline in the consolidated number of shareholder accounts. EXPENSES Total consolidated expenses for the quarter ended September 30, 2000, increased approximately $392,000, or 17 percent, compared to the quarter ended September 30, 1999. This increase, as noted above, was largely due to increased general and administrative expenses. Specifically, the Company saw increases in sub-advisory fees ( which grew proportionately with the asset growth in the Bonnel Growth Fund), health insurance costs, and consulting fees. INCOME TAXES Provisions for income taxes include deferred taxes for temporary differences in the bases of assets and liabilities for financial and tax purposes, resulting from the use of the liability method of accounting for income taxes. For federal income tax purposes at September 30, 2000, the Company has net operating losses (NOLs) of approximately $1.4 million, which will expire in fiscal 2007 and 2010, charitable contribution carry-overs of approximately $209,000 expiring between 2000 and 2001, and alternative minimum tax credits of $131,128 with indefinite expirations. Certain changes in the Company's ownership may result in a limitation on the amount of NOLs that could be utilized under Section 382 of the Internal Revenue Code. If certain changes in the Company's ownership occur, there could be an annual limitation on the amount of NOLs that could be utilized. A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. As such, management has continued to include a valuation allowance of approximately $278,000 at September 30, 2000, providing for the utilization of NOLs, charitable contributions, and investment tax credits against future taxable income. LIQUIDITY AND CAPITAL STRUCTURE LIQUIDITY At September 30, 2000, the Company had net working capital (current assets minus current liabilities) of approximately $2.5 million and a current ratio of 2.1 to 1. With approximately $1.9 million in cash and cash equivalents and approximately $2.6 million in marketable securities, the Company has adequate liquidity to meet its current debt obligations. Total shareholders' equity was approximately $6.7 million and cash, cash equivalents, and marketable securities comprise 50.0% of total assets. With the exception of operating expenses, the Company=s only material commitment is the mortgage on its corporate headquarters. During the first quarter, this obligation became a current liability. The Company is in the process of negotiating an extension to the mortgage. The Company's cash flow is expected to be sufficient to cover current expenses, including debt service. The investment advisory and related contracts between the Company and USGIF and USGAF, will expire on February 28, 2001, and March 8, 2001, respectively. Management anticipates the board of trustees of both USGIF and USGAF will renew the contracts. Management believes current cash reserves, financing obtained and/or available, and cash flow from operations will be sufficient to meet foreseeable cash needs or capital necessary for the above mentioned activities and allow the Company to take advantage of investment opportunities whenever available. CAPITAL STRUCTURE The Company has three classes of common equity - class A, class B, and class C common stock, par value $0.05 per share. There is no established public trading market for the Company's class B and class C common stock. The Company's class A common stock is traded over-the-counter and is quoted daily under the Nasdaq Small Cap Issues. Trades are reported under the symbol "GROW." The Company's current capital structure, as of November 10, 2000, included 6,299,474 shares of class A common stock issued and 6,034,794 shares of class A common stock issued and outstanding; no shares of class B common stock issued and outstanding; and 1,496,800 shares of class C common stock issued and outstanding. ITEM 3. MARKET RISK DISCLOSURES The Company's balance sheet includes assets whose fair value is subject to market risks. Due to the Company's investments in equity securities, equity price fluctuations represent a market risk factor affecting the Company's consolidated financial position. The carrying values of investments subject to equity price risks are based on quoted market prices or management's estimate of fair value as of the balance sheet date. Market prices fluctuate, and the amount realized in the subsequent sale of an investment may differ significantly from the reported market value. The Company's investment activities are reviewed and monitored by Company compliance personnel and various reports are provided to investment advisory clients. The table below summarizes the Company's equity price risks at September 30, 2000, and shows the effects of a hypothetical 25% increase and a 25% decrease in market prices. ESTIMATED INCREASE FAIR VALUE (DECREASE) FAIR VALUE AT HYPOTHETICAL AFTER IN SEPTEMBER 30, PERCENTAGE HYPOTHETICAL SHAREHOLDERS' 2000 CHANGE PERCENT CHANGE EQUITY ---------- ------------ ---------- --------- Trading Securities $1,584,036 25% increase $1,980,045 $ 261,366 25% decrease $1,188,027 $(261,366) Available-for-Sale $1,045,857 25% increase $1,307,321 $ 172,566 25% decrease $ 784,393 $(172,566) The selected hypothetical change does not reflect what could be considered best- or worst-case scenarios. Results could be significantly worse due to both the nature of equity markets and the concentration of the Company=s investment portfolio. 9 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 1. Exhibits 11 Statement re: Computation of Per Share Income 27 Financial Data Schedule 2. Reports on Form 8-K None 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. U.S. GLOBAL INVESTORS, INC. DATED: November 14, 2000 BY: /s/ Frank E. Holmes --------------------------- Frank E. Holmes Chief Executive Officer DATED: November 14, 2000 BY: /s/ Susan B. McGee --------------------------- Susan B. McGee President General Counsel DATED: November 14, 2000 BY: /s/ Tracy C. Peterson --------------------------- Tracy C. Peterson Chief Accounting Officer 11 EXHIBIT 11 - SCHEDULE OF COMPUTATION OF NET INCOME PER SHARE THREE MONTHS ENDED SEPTEMBER 30, --------------------------- 2000 1999 ---------- ---------- Net income $ 101,127 $ 109,437 ========== ========== BASIC Weighted average number shares outstanding during the year 7,516,777 7,078,439 Basic income per share $ 0.01 $ 0.02 ========== ========== DILUTED Weighted average number shares outstanding during the year 7,516,777 7,078,439 Effect of dilutive securities: Common stock equivalent shares (determined using the "treasury stock" method) representing shares issuable upon exercise of preferred or common stock options 6,633 -- ---------- ---------- Weighted average number of shares used in calculation of diluted earnings per share 7,523,410 7,078,439 ========== ========== Diluted income per share $ 0.01 $ 0.02 ========== ========== 12 EX-27 2 fdstemplate1.xfd FINANCIAL DATA STATEMENT PERIOD ENDING 9/30/00
5 This schedule contains summary financial information extracted from the consolidated balance sheet and consolidated statement of operations of this quarterly report on Form 10-Q and is qualified in its entirety by reference to such financial statements. 3-MOS Jul-01-2000 Jun-30-2001 Sep-30-2000 1,895,908 2,629,893 708,916 0 0 4,636,973 8,550,836 (6,306,045) 8,994,534 2,166,579 0 0 0 389,814 6,308,952 8,994,534 2,737,788 2,849,660 0 2,703,330 2,673,480 0 29,850 146,330 45,203 101,127 0 0 0 101,127 0.01 0.01
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