U S GLOBAL INVESTORS INC (Form: 10-Q, Received: 05/09/2007 11:13:25)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


þ		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2007


o		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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o Accelerated filer þ Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES o NO þ

On April 30, 2007, there were 12,866,898 shares of Registrant’s class A nonvoting common stock issued and 12,191,921 shares of Registrant’s class A nonvoting common stock issued and outstanding, no shares of Registrant’s class B nonvoting common shares outstanding, and 2,992,650 shares of Registrant’s class C common stock issued and outstanding.

Table of Contents


Part I. Financial Information			1

Item 1. Financial Statements			1
Consolidated Balance Sheets (Unaudited)			1
Consolidated Statements of Operations and Comprehensive Income (Unaudited)			3
Consolidated Statements of Cash Flows (Unaudited)			4
Notes To Consolidated Financial Statements (Unaudited)			5
Item 1a. Risk Factors			12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 3. Market Risk Disclosures			16
Item 4. Controls and Procedures			16

Part II. Other Information			17
Item 2. Issuer Purchases of Equity Securities			17
Item 4. Submission of Matters to a Vote of Security Holders			17
Item 6. Exhibits			18

SIGNATURES			19

Exhibit (3)(i) - Fourth Amended and Restated Articles of Incorporation of U.S. Global Investors, Inc.			20

Exhibit 31 - Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002			29

Exhibit 32 - Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002			31
Fourth Amended and Restated Articles of Incorporation
Certifications of CEO and CFO Pursuant to Section 302
Certifications of CEO and CFO Pursuant to Section 906



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 1 of 32

PART I. FINANCIAL INFORMATION

I TEM 1. FINANCIAL STATEMENTS

Consolidated Balance Sheets


	MARCH 31,		JUNE 30,
	2007		2006
	(UNAUDITED)
Assets
Current Assets
Cash and cash equivalents	$	12,798,359	$	10,056,043
Trading securities, at fair value		5,830,740		4,659,824
Receivables
Advisory, net		5,315,792		11,290,240
Employees		5,058		7,669
Other		449,929		184,962
Prepaid expenses and other		1,206,368		580,813


Total Current Assets		25,606,246		26,779,551


Net Property and Equipment		2,228,283		2,122,889


Other Assets
Long-term deferred tax asset		47,038		62,211
Investment securities available-for-sale, at fair value		848,984		82,202

Total Other Assets		896,022		144,413


Total Assets	$	28,730,551	$	29,046,853

The accompanying notes are an integral part of this statement.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 2 of 32


	MARCH 31,			JUNE 30,
	2007			2006
	(UNAUDITED)
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable	$	647,071		$	343,364
Accrued compensation and related costs		995,600			2,961,836
Deferred tax liability		503,104			178,707
Other accrued expenses		2,450,679			5,019,735


Total Current Liabilities		4,596,454			8,503,642


Total Liabilities		4,596,454			8,503,642


Commitments and Contingencies

Shareholders’ Equity
Common stock (class A) — $.025 par value; nonvoting; authorized 28,000,000 shares; issued, 12,865,948 and 12,805,948 at March 31, 2007 and June 30, 2006, respectively		321,649			320,149
Common stock (class B) — $.025 par value; nonvoting; authorized, 4,500,000 shares; no shares issued		—			—
Common stock (class C) — $.025 par value; voting; authorized, 3,500,000 shares; issued, 2,993,600 shares		74,840			74,840
Additional paid-in-capital		12,437,841			11,754,779
Treasury stock, Class A shares at cost; 671,804 and 654,114 shares at March 31, 2007, and June 30, 2006, respectively		(1,526,801	)		(830,330	)
Accumulated other comprehensive income (loss), net of tax		(10,671	)		24,259
Retained earnings		12,837,239			9,199,514


Total Shareholders’ Equity		24,134,097			20,543,211


Total Liabilities and Shareholders’ Equity	$	28,730,551		$	29,046,853

The accompanying notes are an integral part of this statement.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 3 of 32

Consolidated Statements of Operations and Comprehensive Income (Unaudited)


	Nine Months Ended						Three Months Ended
	March 31,						March 31,
	2007			2006			2007			2006
Revenues
Investment advisory fees	$	29,859,339		$	19,860,474		$	10,170,685		$	8,482,770
Transfer agent fees		5,533,812			3,545,385			1,566,580			1,325,893
Investment income		1,214,804			2,349,811			676,043			1,695,269
Other		162,395			136,692			31,054			53,076


		36,770,350			25,892,362			12,444,362			11,557,008

Expenses
Employee compensation and benefits		7,740,655			6,433,094			2,526,898			2,470,860
General and administrative		5,017,991			3,508,338			1,931,148			1,270,690
Subadvisory fees		6,650,293			5,096,173			2,261,348			2,301,638
Omnibus fees		5,606,015			2,868,573			1,786,687			1,256,850
Advertising		359,318			358,546			138,553			118,625
Depreciation		178,695			100,972			62,002			40,042

		25,552,967			18,365,696			8,706,636			7,458,705


Income Before Income Taxes		11,217,383			7,526,666			3,737,726			4,098,303

Provision for Federal Income Taxes		3,864,574			2,712,730			1,325,453			1,547,895

Net Income		7,352,809			4,813,936			2,412,273			2,550,408

Other comprehensive income (loss), net of tax
Unrealized gains (losses) on available-for-sale securities		(34,931	)		(373,257	)		(368,563	)		(283,553	)


Comprehensive Income	$	7,317,878		$	4,440,679		$	2,043,710		$	2,266,855


Basic Net Income per Share	$	0.49		$	0.32		$	0.16		$	0.17

Diluted Net Income per Share	$	0.48		$	0.32		$	0.16		$	0.17


Basic weighted average number of common shares outstanding		15,154,880			14,997,326			15,170,608			15,018,356

Diluted weighted average number of common shares outstanding		15,233,298			15,120,396			15,250,360			15,152,470

The accompanying notes are an integral part of this statement.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 4 of 32

Consolidated Statements of Cash Flows (Unaudited)


	NINE MONTHS ENDED MARCH 31,
	2007			2006
Cash Flows from Operating Activities:
Net income	$	7,352,809		$	4,813,936
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation		178,695			100,972
Net recognized gain on securities		(684,115	)		(751,694	)
Loss on disposal of fixed assets		—			3,189
Provision for deferred taxes		357,566			749,056
Provision for losses on accounts receivable		—			(26,488	)
Changes in assets and liabilities, impacting cash from operations:
Accounts receivable		5,712,092			(2,889,089	)
Prepaid expenses and other		(625,555	)		(277,468	)
Trading securities		(941,189	)		(1,958,499	)
Accounts payable and accrued expenses		(4,696,824	)		2,184,625

Total adjustments		(699,330	)		(2,865,396	)


Net Cash Provided by Operating Activities		6,653,479			1,948,540


Cash Flows from Investing Activities:
Purchase of property and equipment		(284,089	)		(390,394	)
Purchase of available-for-sale securities		(2,072,532	)		(8,419	)
Proceeds on sale of available-for-sale securities		1,707,211			777,787

Net Cash (Used in) Provided by Investing Activities		(649,410	)		378,974


Cash Flow from Financing Activities:
Purchase of treasury stock		(709,231	)		(164,654	)
Treasury stock issued		124,843			83,439
Proceeds from issuance or exercise of stock, warrants, and options		537,089			479,689
Benefit from tax deduction in excess of stock-based compensation cost		465,239			350,451
Adjustment due to SFAS 123R		35,391			17,475
Dividends paid		(3,715,084	)		—

Net Cash (Used in) Provided by Financing Activities		(3,261,753	)		766,400


Net Increase in Cash and Cash Equivalents		2,742,316			3,093,914

Beginning Cash and Cash Equivalents		10,056,043			3,814,178


Ending Cash and Cash Equivalents	$	12,798,359		$	6,908,092

The accompanying notes are an integral part of this statement.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 5 of 32

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1. Basis of Presentation

U.S. Global Investors, Inc. (the “Company” or “U.S. Global”) has prepared the consolidated financial statements pursuant to accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”) that permit reduced disclosure for interim periods. The financial information included herein reflects all adjustments (consisting solely of normal recurring adjustments), which are, in management’s opinion, necessary for a fair presentation of results for the interim periods presented. The Company 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, 2006.

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, United Shareholder Services, Inc. (“USSI”), A&B Mailers, Inc. (“A&B”), U.S. Global Investors (Guernsey) Limited (“USGG”), U.S. Global Brokerage, Inc. (“USGB”), and U.S. Global Investors (Bermuda) Limited (“USBERM”).

All significant intercompany balances and transactions have been eliminated in consolidation. Certain amounts have been reclassified for comparative purposes. The results of operations for the nine months ended March 31, 2007, are not necessarily indicative of the results to be expected for the entire year.

Note 2. Common Stock Split and Dividend

On February 21, 2007, the Company’s shareholders approved the first of two proposed amendments to the Company’s Articles of Incorporation. The first amendment approved an increase in authorized shares that enabled the Company to effectuate a two-for-one stock split of the Company’s outstanding stock. Shareholders of record as of March 19, 2007, received one additional share of class A common stock, par value $0.025 per share, for every outstanding share of class A common stock and one additional share of class C common stock, par value $0.025 per share, for every outstanding share of class C common stock. The amendment provided that the Company issue no fractional shares of common stock, and all shares were rounded up or down to the nearest whole number of shares. Accordingly, all per-share and share data in the accompanying consolidated financial statements and in these accompanying notes has been adjusted to give retroactive effect to this stock split.

On February 22, 2007, shareholders approved the second of two proposed amendments, which modified the relative dividend and liquidation preference rights of the different classes of common stock and permits conversion of class C common stock to class A common stock. As a result of approval of both proposals, shareholders of record on March 19, 2007, received a special cash dividend of $0.25 per share on based on the number of post-split shares held. Both the split and the dividend were distributed on March 29, 2007.

Note 3. Investments

As of March 31, 2007, the Company held investments with a market value of approximately $6.7 million and a cost basis of approximately $6.2 million. The market value of these investments is approximately 23.3 percent of the Company’s total assets.

Investments in securities classified as trading are reflected as current assets on the consolidated balance sheet at their fair market value. Unrealized holding gains and losses on trading securities are included in earnings in the consolidated statements of operations and comprehensive income.

Investments in securities classified as available for sale, which may not be readily marketable, are reflected as non-current assets on the consolidated balance sheet at their fair value. Unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income as a separate component of shareholders’ equity until realized. The following summarizes the market value, cost, and unrealized gain or loss on investments as of March 31, 2007, and June 30, 2006.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 6 of 32


								Unrealized
								holding gains on
								available-for-sale
					Unrealized			securities,
Securities	Market Value		Cost		Gain (Loss)			net of 34% tax
Trading ¹	$	5,830,740	$	5,329,909	$	500,831
Available for sale ²		848,984		865,152		(16,168	)	$	(10,671	)

Total at March 31, 2007	$	6,679,724	$	6,195,061	$	484,663


Trading ¹	$	4,659,824	$	4,011,961	$	647,863
Available for sale ²		82,202		45,444		36,758		$	24,259

Total at June 30, 2006	$	4,742,026	$	4,057,405	$	684,621


¹		Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.

²		Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders’ equity until realized.

Investment income can be volatile and varies depending on market fluctuations, the Company’s ability to participate in investment opportunities, and timing of transactions. A significant portion of the unrealized gains and losses for the nine months ended March 31, 2007, is concentrated in a small number of issuers. The Company expects that gains and losses will continue to fluctuate in the future.

Investment income (loss) from the Company’s investments includes:

	•		realized gains and losses on sales of securities;

	•		unrealized gains and losses on trading securities;

	•		realized foreign currency gains and losses;

	•		other-than-temporary impairments on available-for-sale securities; and

	•		dividend and interest income.

The following summarizes investment income (loss) reflected in earnings for the periods discussed:


	NINE MONTHS ENDED MARCH 31,
	2007			2006
Investment Income (Loss)
Realized gains on sales of available-for-sale securities	$	454,388		$	544,414
Realized gains on sales of trading securities		229,727			235,936
Unrealized gains (losses) on trading securities		(147,032	)		1,420,855
Realized foreign currency gains (losses)		1,900			(13,771	)
Other-than-temporary declines in available-for-sale securities		––			(28,655	)
Dividend and interest income		675,821			191,032


Total Investment Income	$	1,214,804		$	2,349,811



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 7 of 32


	THREE MONTHS ENDED MARCH 31,
	2007			2006
Investment Income (Loss)
Realized gains on sales of available-for-sale securities	$	454,388		$	529,705
Realized gains on sales of trading securities		234,232			147,426
Unrealized gains (losses) on trading securities		(237,036	)		941,404
Realized foreign currency gains (losses)		1,568			(15,118	)
Dividend and interest income		222,891			91,852


Total Investment Income	$	676,043		$	1,695,269

Included in prepaid expenses and other assets on the consolidated balance sheet is a deposit in the amount of $500,000 to purchase shares in the U.S. Global Investors Balanced Natural Resources Fund, Ltd. with a subscription date of April 1, 2007.

Note 4. Investment Management, 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. Three of the four funds within USGAF are sub-advised by third-party managers, who are in turn compensated out of the investment advisory fees received by the Company. 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 for which it is reimbursed and receives certain miscellaneous fees directly from USGAF and USGIF shareholders. Fees for providing investment management and transfer agent services to USGIF and USGAF continue to be the Company’s primary revenue source.

The Company has voluntarily waived or reduced its advisory fees and/or has agreed to pay expenses on several funds within USGIF funds and one USGAF fund through November 1, 2007, and February 28, 2008, respectively, or such later date as the Company determines in order to maintain competitive yields and to allow assets to grow in newer funds. The aggregate fees waived and expenses borne by the Company for the nine months ended March 31, 2007, and March 31, 2006, were $920,149, and $1,029,720, respectively.

The Company provides advisory services for the Meridian Global Gold and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee based on the net asset value of the fund, and a quarterly performance fee, if any, based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $1,076,050 and $873,650 for the nine months ended March 31, 2007, and March 31, 2006, respectively. The Company recorded total fees of $523,786 and $377,661, respectively, for the three months ended March 31, 2007, and March 31, 2006. Frank Holmes, a director and CEO of the Company, is a director of Meridian Fund Managers Ltd., the manager of the fund.

The Company provides advisory services to the U.S. Global Investors Balanced Natural Resources Fund, Ltd., an offshore fund. For these services, the Company is paid a monthly advisory fee based on the net asset value of the fund, and a quarterly performance fee, if any, based on a percentage of return above the high water mark in conjunction with the fund reaching a certain hurdle rate per quarter. The Company recorded fees totaling $132,933 and $99,011 for the nine months ended March 31, 2007, and March 31, 2006, respectively. The Company recorded total fees of $11,767 and $68,711, respectively, for the three months ended March 31, 2007, and March 31, 2006. Frank Holmes is a director of U.S. Global Investors Balanced Natural Resources Fund Ltd.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 8 of 32

The Company provides investment advisory services to Endeavour Mining Capital Corp., an offshore company. The Company is paid a monthly advisory fee based on the net asset value of the portfolio. A performance fee, if any, is paid annually based on a percentage of consolidated net income from operations in excess of a predetermined percentage return on equity when the net asset value of the portfolio at fiscal year end has increased in comparison with the prior fiscal year end. The Company recorded $1,382,486 and $106,230 in monthly advisory fees for the nine months ended March 31, 2007, and March 31, 2006, respectively. (Advisory services for Endeavour began in the third quarter of fiscal year 2006.) The Company recorded total fees of $518,512 and $106,230, respectively, for the three months ended March 31, 2007, and March 31, 2006. Frank Holmes is the Chairman of the Board of Endeavour Mining Capital Corp. The performance fees for this advisory client are calculated and recorded only once a year at the end of each fiscal year in accordance with the terms of the advisory agreement. This and other performance fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control.

The Company provides advisory services for the Meridian Global Energy and Resources Fund Ltd., an offshore fund. The Company receives a monthly advisory fee based on the net asset value of the fund, and a quarterly performance fee, if any, based on the overall increase in value of the net assets in the fund for the quarter. The Company recorded fees totaling $82,484 for the nine months ended March 31, 2007, and $37,692 for the three months ended March 31, 2007.

The Company receives additional revenue from several sources including custodial fee revenues, revenues from miscellaneous transfer agency activities including lockbox functions, mailroom operations from A&B, as well as investment income.

Note 5. Credit Facility

As of March 31, 2007, the Company has no borrowings.

The Company has access to a $1 million credit facility with a one-year maturity for working capital purposes. The Company must maintain certain quarterly financial covenants to access the line of credit. The covenants include: (1) liquidity of $1 million or more in cash, cash equivalents and marketable securities; (2) a debt to equity ratio of .75 or less; and (3) a ratio of current assets to current liabilities of 2.0 or greater. The Company has been in compliance with all financial covenants during the fiscal year. Any use of this credit facility will be secured by the Company’s eligible accounts receivable. As of March 31, 2007, this credit facility remained unutilized by the Company.

Effective April 25, 2007, subsequent to the fiscal quarter end, the credit agreement was renewed with the following amendments: the bank dropped the current ratio requirement, released the Company’s accounts receivable as collateral, and agreed to allow borrowings without any form of borrowing base. The amended credit agreement will expire on February 1, 2008, and will be renewed annually.

Note 6. Stock-Based Compensation

In December 2004, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”). SFAS 123R eliminates the alternative to use the intrinsic value method of accounting that was provided in Accounting Principles Board Opinion No. 25 (APB 25), which generally resulted in no compensation expense recorded in the financial statements related to the issuance of equity awards to employees. SFAS 123R requires that the cost resulting from all share-based payment transactions be recognized in the financial statements. SFAS 123R establishes fair value as the measurement objective in accounting for share-based payment arrangements and requires all companies to apply a fair-value-based measurement method in accounting for generally all share-based payment transactions with employees.

On July 1, 2005 (the first day of the Company’s 2006 fiscal year), the Company adopted SFAS 123R using a modified prospective application, as permitted under SFAS 123R. Accordingly, prior period amounts were not restated. Under this application, the Company is required to record compensation expense for all awards granted after the date of adoption and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 9 of 32

Prior to the adoption of SFAS 123R, the Company applied Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25) to account for stock-based awards. Beginning with the 2006 fiscal year, with the adoption of SFAS 123R, stock-based compensation expense was recorded for the cost of stock options. Stock-based compensation expense for the three months ended March 31, 2007, was $9,855 ($6,504 after tax). As of March 31, 2007, there was approximately $9,855 of total unrecognized share-based compensation cost related to share-based compensation granted under the plans that will be recognized over the remainder of the fiscal year.

Stock compensation plans

The Company’s stock option plans provide for the granting of either incentive or nonqualified stock options to employees and non-employee directors. Options are subject to terms and conditions determined by the Compensation Committee of the Board of Directors. In connection with the two-for-one stock split described in Note 2, the Board of Directors authorized an adjustment to outstanding options so that a proportionate number of shares underlying each option are maintained. Options in the table below have been adjusted to give retroactive effect to the stock split.

The following table summarizes information about our stock option plans for the nine months ended March 31, 2007.


			Weighted Average
	Number of Options		Exercise Price
Options outstanding, beginning of year		146,000	$	1.47
Granted		—		—
Exercised		60,000	$	1.20
Forfeited		—		—

Options outstanding, end of quarter		86,000	$	1.65

Options exercisable, end of quarter		81,000	$	1.28

Note 7. Earnings Per Share

Basic earnings per share (“EPS”) excludes dilution and is computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution of EPS that could occur if options to issue common stock were exercised.

The following table sets forth the computation for basic and diluted earnings per share (EPS):


	NINE MONTHS ENDED MARCH 31,
	2007		2006
Net income	$	7,352,809	$	4,813,936
Weighted average number of outstanding common shares
Basic		15,154,880		14,997,326

Effect of dilutive securities
Employee stock options		78,418		123,070

Diluted		15,233,298		15,120,396


Earnings per share
Basic	$	0.49	$	0.32
Diluted	$	0.48	$	0.32



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 10 of 32


	THREE MONTHS ENDED MARCH 31,
	2007		2006
Net income	$	2,412,273	$	2,550,408

Weighted average number of outstanding shares
Basic		15,170,608		15,018,356

Effect of dilutive securities
Employee stock options		79,752		134,114

Diluted		15,250,360		15,152,470


Earnings per share
Basic	$	0.16	$	0.17
Diluted	$	0.16	$	0.17

Share information has been restated for all periods presented in the table to reflect the two-for-one stock split effectuated on March 29, 2007. The diluted EPS calculation excludes the effect of stock options when their exercise prices exceed the average market price for the period. For the quarter ended March 31, 2007, and 2006, no options were excluded from diluted EPS. The Company has repurchased 25,634 shares of its class A common stock from employees during the nine months ended March 31, 2007. Upon repurchase, these shares are classified as treasury shares and are deducted from outstanding shares in the earnings per share calculation.

Note 8. Income Taxes

The Company and its subsidiaries file a consolidated federal income tax return. 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. The current deferred tax liability primarily consists of temporary differences in the deductibility of prepaid expenses and accrued liabilities, as well as unrealized gains on trading securities. The long-term deferred tax asset is composed primarily of unrealized losses on available-for-sale securities.

A valuation allowance is provided when it is more likely than not that some portion of the deferred tax amount will not be realized. No valuation allowance was included at March 31, 2007, or June 30, 2006, respectively.

Note 9. Financial Information by Business Segment

The Company operates principally in two business segments: providing investment management services to the funds it manages, 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 by business segment:


	Investment
	Management		Corporate
	Services		Investments		Consolidated
Nine months ended March 31, 2007
Revenues	$	36,230,638	$	539,713	$	36,770,351

Income before income taxes	$	10,690,426	$	526,957	$	11,217,383

Depreciation	$	178,695	$	—	$	178,695

Capital expenditures	$	284,089	$	—	$	284,089

Gross identifiable assets at March 31, 2007	$	21,486,756	$	7,196,757	$	28,683,513
Deferred tax asset						47,038

Consolidated total assets at March 31, 2007					$	28,730,551



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 11 of 32


	Investment
	Management		Corporate
	Services		Investments		Consolidated
Nine months ended March 31, 2006
Revenues	$	23,731,754	$	2,160,608	$	25,892,362

Income before income taxes	$	5,388,833	$	2,137,833	$	7,526,666

Depreciation	$	100,972	$	—	$	100,972

Capital expenditures	$	390,394	$	—	$	390,394


Three months ended March 31, 2007
Revenues	$	11,990,856	$	453,509	$	12,444,365

Income before income taxes	$	3,293,948	$	443,780	$	3,737,728

Depreciation	$	62,002	$	—	$	62,002

Capital expenditures	$	69,778	$	—	$	69,778


Three months ended March 31, 2006
Revenues	$	9,952,444	$	1,604,564	$	11,557,008

Income before income taxes	$	2,506,389	$	1,591,914	$	4,098,303

Depreciation	$	40,042	$	—	$	40,042

Capital expenditures	$	214,105	$	—	$	214,105

Note 10. Contingencies and commitments

The Company continuously reviews all investor, employee and vendor complaints, and pending or threatened litigation. The likelihood that a loss contingency exists is evaluated under the criteria of SFAS No. 5, “Accounting for Contingencies,” through consultation with legal counsel, and a loss contingency is recorded if the contingency is probable and reasonably estimable at the date of the financial statements.

During the normal course of business, the Company may be subject to claims, legal proceedings, and other contingencies. These matters are subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably. The Company establishes accruals for matters for which the outcome is probable and can be reasonably estimated. Management believes that any liability in excess of these accruals upon the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial statements of the Company.

Note 11. Items submitted for shareholder approval

On November 8, 2006, the Board of Directors of the Company approved submitting to class A and class C shareholders a proxy to split the shares (two-for-one), increase the number of authorized shares, eliminate the dividend and liquidity preference of class A shareholders, and to allow class C shareholders to convert their shares to class A. The Board also approved paying a $0.25 per share dividend (post-split) in the event the shareholders approve the proposal to amend the articles of incorporation to reflect no dividend or liquidation preference for class A shareholders and to allow the convertibility of class C shares to class A shares. Refer to the proxy filed with the SEC on November 21, 2006, and amended January 16, 2007, and February 1, 2007, for additional details. On February 21, and February 22, 2007, the shareholders approved all proposals submitted. On March 29, 2007, the stock split became effective and shareholders of record were paid a $.25 per share dividend (post-split).



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 12 of 32

ITEM 1a. Risk Factors

For a discussion of risk factors which could affect the Company, please refer to Item 1A. “Risk Factors,” in the Annual Report on Form 10-K for the year ended June 30, 2006.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

U.S. Global Investors, Inc. 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 but not limited to (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

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. Although the Company generates the majority of its revenues from its investment advisory 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

The Company generates substantially all of its operating revenues from managing and servicing USGIF, USGAF and other advisory clients. 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 nine months ended March 31, 2007, SEC-registered mutual fund assets under management averaged $4.57 billion versus $2.99 billion for the same period ended March 31, 2006. This increase was primarily due to significant increase in the natural resource and foreign equity funds under management.

The Company provides advisory services to various offshore clients, namely Meridian Global Gold and Resources Fund Ltd., Meridian Global Energy and Resources Fund Ltd., U.S. Global Investors Balanced Natural Resources Fund, Ltd., and Endeavour Mining Capital Corp. The Company generally receives a monthly advisory fee and a quarterly or annual performance fee, if any, based on an agreed-upon performance measurement. Based on information released by Endeavour Mining Capital, for the first nine months of fiscal 2007, the performance fee to date accruing to U.S. Global totals approximately $3,412,000. The final performance fee payable to U.S. Global, if any, will be determined as of June 30, 2007, based on the financial results of Endeavour Mining Capital for the entire fiscal year. Under the accounting policies adopted by U.S. Global Investors, the performance fees are calculated and recorded only once a year at the end of the fiscal year in accordance with the terms of the advisory agreement. This and other performance fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control. These fluctuations could result in the recording of no performance fees. The contracts between the Company and the offshore clients expire periodically, and management anticipates that its offshore clients will renew the contracts.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 13 of 32

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. Company compliance personnel review and monitor these activities, and various reports are provided to investment advisory clients.

Investment income (loss) from the Company’s investments includes:

	•		realized gains and losses on sales of securities;

	•		unrealized gains and losses on trading securities;

	•		realized foreign currency gains and losses;

	•		other-than-temporary impairments on available-for-sale securities; and

	•		dividend and interest income.

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.

For the nine months ended March 31, 2007, the Company had net realized gains on available-for-sale securities of $454,388 compared with $544,414 for the nine months ended March 31, 2006, and net realized gains on trading securities of $229,727 for the nine months ended March 31, 2007, compared with net realized gains of $235,936 for the nine months ended March 31, 2006. The change in net unrealized holding gains and losses on trading securities held at March 31, 2007, and 2006, which has been included in income for the nine-month period, was ($147,032) and $1,420,855, respectively.

For available-for-sale securities with declines in value that are deemed other than temporary, the cost basis of the securities is reduced accordingly, and the resulting loss is realized in earnings. The Company recorded other than temporary declines of $0 and $28,655 for the nine months ended March 31, 2007, and 2006, respectively.

Dividend and interest income for the nine months ended March 31, 2007, was $675,821 compared with $191,032 for the nine months ended March 31, 2006.

RESULTS OF OPERATIONS – NINE MONTHS ENDED MARCH 31, 2007 AND 2006

The Company posted net income of $7,352,809 ($0.49 income per share) for the nine months ended March 31, 2007, compared with a net income $4,813,936 ($0.32 income per share) for the nine months ended March 31, 2006.

Revenues

Total consolidated revenues for the nine-month period ended March 31, 2007, increased approximately $10,878,000 or 42.0 percent, compared with the nine-month period ended March 31, 2006. This increase was primarily attributable to the following:

	•		Mutual fund investment advisory fees grew by approximately $8,404,000 as a result of increased assets under management;

	•		Transfer agent fees increased by approximately $1,988,000 primarily as a result of growth in the number of shareholder accounts;

	•		Other advisory fees increased by approximately $1,595,000 as a result of the growth and performance of offshore funds the Company advises.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 14 of 32

Expenses

Total consolidated expenses for the nine-month period ended March 31, 2007, increased approximately $7,187,000 or 39.1 percent, compared with the nine-month period ended March 31, 2006. This was largely attributable to the following:

	•		Omnibus fees increased by approximately $2,737,000 due to increased asset flows through broker/dealer platforms;

	•		Consistent with continued growth in the Eastern European Fund, subadvisory fees increased by approximately $1,554,000;

	•		General and administrative expenses increased by approximately $1,510,000 primarily due to consulting fees, audit and accounting fees, legal fees, proxy-related expenses, and travel and entertainment; and

	•		Driven by strong fund performance, compensation expense increased by approximately $1,308,000.

Much of the mutual fund asset growth across all funds has been realized through broker/dealer platforms. These broker/dealers typically charge an asset-based fee for assets held through their platforms. Accordingly, net platform distribution (omnibus) fees have increased as assets have grown through these platforms.

RESULTS OF OPERATIONS – THREE MONTHS ENDED MARCH 31, 2007 AND 2006

The Company posted net income of $2,412,273 ($0.16 income per share) for the three-month period ended March 31, 2007, compared with net income of $2,550,408 ($0.17 income per share) for the three-month period ended March 31, 2006.

Revenues

Total consolidated revenues for the quarter ended March 31, 2007, increased approximately $887,000, or 7.7 percent, compared with the quarter ended March 31, 2006. This increase was primarily attributable to the following:

	•		Mutual fund investment advisory fee grew by approximately $1,149,000 as a result of increased assets under management and growth and performance of offshore funds;

	•		Other advisory fees increased by approximately $539,000 as a result of the growth and performance of offshore funds the Company advises; and

	•		Transfer agent fees increased by approximately $240,000 primarily as a result of growth in the number of shareholder accounts.

Expenses

Total consolidated expenses for the quarter ended March 31, 2007, increased approximately $1,248,000, or 16.7 percent, compared with the quarter ended March 31, 2006. This was largely attributable to the following:

	•		General and administrative expenses increased by approximately $660,000 primarily due to legal and consulting fees, proxy-related expenses, and travel and entertainment; and

	•		Omnibus platform fees increased by approximately $530,000 due to increased mutual fund asset flows through broker/dealer omnibus platforms.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2007, the Company had net working capital (current assets minus current liabilities) of approximately $21.0 million and a current ratio (current assets divided by current liabilities) of 5.6 to 1. With approximately $12.8 million in cash and cash equivalents and approximately $6.7 million in marketable securities, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $24.1 million, with cash, cash equivalents, and marketable securities comprising 67.8% of total assets.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 15 of 32

As of March 31, 2007, the Company has no borrowings. The Company has access to a $1 million credit facility with a one-year maturity for working capital purposes. Any use of this credit facility will be secured by the Company’s eligible accounts receivable. As of March 31, 2007, this credit facility remained unutilized by the Company. The Company’s available working capital and potential cash flow are expected to be sufficient to cover current expenses.

The investment advisory and related contracts between the Company and USGIF and USGAF will expire on February 28, 2008, and May 31, 2008, respectively. Management anticipates the board of trustees of both USGIF and USGAF will renew the contracts. The contracts between the Company and the offshore clients expire periodically and management anticipates that its offshore clients will renew the contracts.

Management believes current cash reserves, financing obtained and/or available, and potential 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 opportunities for growth whenever available.

ACCOUNTING PRONOUNCEMENTS

In June 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109 by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. If a tax position is more likely than not to be sustained upon examination, then an enterprise would recognize in its financial statements the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement of the tax position. FIN 48 will be effective for the fiscal years beginning after December 15, 2006. The provisions of FIN 48 are required to be applied to all tax positions in all open tax years. The Company is in the process of evaluating the impact, if any, of adoption on the Company’s financial position and results of operation.

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“FAS 157”). FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and requires additional disclosures about fair value measurements. FAS 157 applies only to fair value measurements that are already required or permitted by other accounting standards. FAS 157 is effective for fiscal years beginning after November 15, 2007. The Company is currently evaluating the impact that adopting SFAS 157 will have on its financial position and results of operation.

In February, 2007, the FASB issued Statement of Financial Accounting Standards No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an amendment of FASB Statement No. 115” (“FAS 159”). FAS 159 permits companies to measure many financial instruments and certain other items at fair value. The Company is in the process of evaluating the potential future effect of FAS 159 on its financial statements.

CRITICAL ACCOUNTING ESTIMATES

For a discussion of additional critical accounting estimates 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, 2006.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 16 of 32

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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, if not actively traded, 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 Company has in place a code of ethics that requires pre-clearance of any trading activity by the Company. Written procedures are also in place to manage compliance with the code of ethics.

The table below summarizes the Company’s equity price risks as of March 31, 2007, and shows the effects of a hypothetical 25% increase and a 25% decrease in market prices.

SENSITIVITY ANALYSIS


				Estimated		Increase
				Fair Value after		(Decrease) in
			Hypothetical	Hypothetical		Shareholders’
	Fair Value at		Percentage	Percent		Equity, Net
	March 31, 2007		Change	Change		of Tax
Trading Securities ¹	$	5,830,740	25% increase	$	7,288,425	$	962,072
			25% decrease	$	4,373,055	$	(962,072	)
Available-for-Sale ²	$	848,984	25% increase	$	1,061,231	$	140,082
			25% decrease	$	636,738	$	(140,082	)


¹		Unrealized and realized gains and losses on trading securities are included in earnings in the statement of operations.

²		Unrealized gains and losses on available-for-sale securities are excluded from earnings and recorded in other comprehensive income as a separate component of shareholders’ equity until realized.

The selected hypothetical change does not reflect what could be considered best-case 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.

ITEM 4. CONTROLS AND PROCEDURES

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31, 2007, was conducted under the supervision and with the participation of management, including our chief executive officer and chief financial officer. Based on that evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2007.

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter ended March 31, 2007, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 17 of 32

PART II. OTHER INFORMATION

ITEM 2. Issuer Purchases of Equity Securities

The Company may repurchase stock from employees. The following table provides information regarding the Company’s repurchases of shares of its class A common stock during the nine months ended March 31, 2007. There were no repurchases of class B or class C common stock during the period. Share information has been restated for all periods presented in the table to reflect the two-for-one stock split effectuated on March 29, 2007.

Issuer Purchases of Equity Securities

Fiscal Year Ended 6/30/07

Maximum

Number of

Total

Total Number of

Shares that May

Number of

Total

Average

Shares Purchased

Yet Be

Shares

Amount

Price Paid

as Part of Publicly

Purchased

Period

Purchased

Per Share

Announced Plan

Under the Plan

07-01-06 to 07-31-06

—

N/A

08-01-06 to 08-31-06

1,005

11.42

N/A

09-01-06 to 09-30-06

264

4,340

16.44

N/A

10-01-06 to 10-31-06

—

N/A

11-01-06 to 11-30-06

16,082

408,257

25.39

N/A

12-01-06 to 12-31-06

9,130

294,084

32.21

N/A

01-01-07 to 01-31-07

—

N/A

02-01-07 to 02-28-07

1,545

22.07

N/A

03-01-07 to 03-31-07

—

N/A

Total

25,634

709,231

27.67

N/A

Item 4. Submission of Matters to a Vote of Security Holders

The shareholders of the Company voted on two issues at a Special Meeting of Shareholders of the Company held on February 21, 2007, and February 22, 2007, for the following purposes:

	(1)		To act on a proposed amendment to Article Four of the Third Restated and Amended Articles of Incorporation of U.S. Global to increase the number of authorized shares of common stock, par value $0.05 per share of U.S. Global to 36,000,000, of which 28,000,000 have been designated as class A Common Stock, 4,500,000 have been designated as class B Common Stock, and 3,500,000 have been designated as class C Common Stock, in order to effectuate a related two-for-one stock split and complete other minor modifications to the Articles on Incorporation;

	(2)		To act on a proposed amendment to Article Four of the Third Restated and Amended Articles of Incorporation of U.S. Global to eliminate the dividend and liquidation preferences for holders of class A Common Stock in order to facilitate the adoption of a dividend policy and to permit the conversion of class C Common Stock to class A Common Stock.

In total, two matters were voted on and approved at the Special Meeting. A tabulation for each matter is as follows:

Proposal 1 :
For: 4,292,524 shares of class A common stock
For: 1,467,964 shares of class C common stock

Against: 191,893 shares of class A common stock
Against: 30 shares of class C common stock



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 18 of 32

Abstain: 92,073 shares of class A common stock
Abstain: 0 shares of class C common stock

Broker Non-Votes: None

Proposal 2 :
For: 4,057,572 shares of class A common stock
For: 1,467,964 shares of class C common stock

Against: 423,028 shares of class A common stock
Against: 30 shares of class C common stock

Abstain: 114,545 shares of class A common stock
Abstain: 0 shares of class C common stock

Broker Non-Votes: None

ITEM 6. EXHIBITS

1. Exhibits


(3)(i)		Fourth Amended and Restated Articles of Incorporation of U.S. Global Investors, Inc.

31		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act Of 2002

32		Certifications of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act Of 2002



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 19 of 32

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: May 9, 2007	BY:	/s/ Frank E. Holmes
		Frank E. Holmes
		Chief Executive Officer


DATED: May 9, 2007	BY:	/s/ Catherine A. Rademacher
		Catherine A. Rademacher
		Chief Financial Officer



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 20 of 32

Exhibit (3)(i)

FOURTH
AMENDED AND RESTATED ARTICLES
OF INCORPORATION
OF
U.S. GLOBAL INVESTORS, INC.

SECTION I

U.S. Global Investors, Inc. (the “ Corporation ”) pursuant to the provisions of Article 4.07 of the Texas Business Corporation Act, hereby adopts the Fourth Amended and Restated Articles of Incorporation which accurately copy the Articles of Incorporation of the Corporation and all amendments thereto that are in effect to date as reflected in the Third Restated and Amended Articles of Incorporation of the Corporation (“ Old Articles ”) and the further amendments to such Third Restated and Amended Articles of Incorporation as hereinafter set forth (“ New Articles ”) and which contain no other change in any provision thereof.

SECTION II

The Old Articles of the Corporation are amended by the New Articles as follows:

ARTICLE FOUR of the Old Articles is amended by increasing the total number of shares of Common Stock the Corporation is authorized to issue to 36,000,000 shares, which are designated into three classes, of which the number of shares of Class A Common Stock authorized is increased to 28,000,000, the number of shares of Class B Common Stock authorized is increased to 4,500,000 and the number of shares of Class C Common Stock authorized is increased to 3,500,000 (collectively, the “ Common Stock ”). Each class of Common Stock shall have a par value of $0.025 per share.

ARTICLE FOUR of the Old Articles is also amended in Section 2.2(1) of the Old Articles to remove the dividend and liquidation preference currently available to Class A Common Stock.

ARTICLE FOUR of the Old Articles is also amended so as to remove conversion triggers for Class B Common Stock as those triggers occurred in October 1997 and to permit the conversion of Class C Common Stock to Class A Common Stock. Additionally, upon the conversion of a certain number of shares of Class C Common Stock, all remaining outstanding shares of Class C Common Stock shall be mandatorily and automatically converted to Class A Common Stock on a one for one basis.

ARTICLE FOUR of the Old Articles is also amended to delete Section 3.5 of the Old Articles in its entirety.

ARTICLE FOUR is also amended to provide that upon the issuance of these New Articles by the Secretary of State, each share of Common Stock outstanding shall be split and reconstituted into two (2) shares of Common Stock (the “ Stock Split ”); provided, however, that the Corporation shall issue no fractional shares of Common Stock, and all shares shall be



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 21 of 32

rounded up or down to the nearest whole number of shares. No further adjustment of any preference or price set forth in ARTICLE FOUR will be made as a result of the Stock Split, as all share amounts, amounts per share and per share numbers set forth in the New Articles have been appropriately adjusted to reflect the Stock Split. ARTICLE FOUR of the Old Articles is also amended to add a new provision Section 5 of the New Articles to reflect the Stock Split.

ARTICLE FIVE of the Old Articles is deleted in its entirety.

ARTICLE SIX of the Old Articles is hereby redesignated as ARTICLE FIVE.

ARTICLE SEVEN of the Old Articles is hereby redesignated as ARTICLE SIX and is amended to enumerate the number of authorized directors and identify the current members of the Corporation’s Board of Directors.

ARTICLE EIGHT of the Old Articles is deleted in its entirety.

ARTICLE NINE of the Old Articles is amended to provide additional clarity and modernize the indemnification provision and is hereby redesignated as ARTICLE SEVEN and provides that the Corporation is authorized to indemnify the directors and officers of the Corporation to the fullest extent permissible under Texas law.

ARTICLE TEN is hereby redesignated as ARTICLE EIGHT.

ARTICLE ELEVEN is hereby redesignated as ARTICLE NINE and serves to limit the liability of the Corporation’s directors as permitted by the Texas Miscellaneous Corporation Law-Act.

ARTICLE TWELVE is hereby redesignated as ARTICLE TEN. ARTICLE X is amended and is hereby redesignated as ARTICLE VII.

ARTICLE XII of the Old Articles is amended and redesignated as ARTICLE IX and provides that the Board can authorize future splits without consent.

SECTION III

The amendment made by these Fourth Amended and Restated Articles of Incorporation has been effected in conformity with the provisions of the Texas Business Corporation Act, and such amendment was duly adopted by the holders of the Corporation’s Common Stock at meetings of the shareholders held on February 21, 2007 and February 22, 2007.

SECTION IV

This amendment has been approved in the manner required by the Texas Business Corporation Act and the constituent documents of the Corporation.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 22 of 32

SECTION V

This amendment will not effect a change of the stated capital of the Corporation.

SECTION VI

The Old Articles and all amendments and supplements thereto are hereby superseded by the following Amended and Restated Articles of Incorporation, which accurately copy the entire text thereof, and as amended as set forth above.

SECTION VII

This document will become effective on March 19, 2007, which is not more than ninety (90) days from the date of its filing by the Secretary of State.

[REMAINDER OF PAGE INTENTIONALLY BLANK]



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 23 of 32

FOURTH AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
U.S. GLOBAL INVESTORS, INC.

ARTICLE ONE

The name of the corporation is U.S. GLOBAL INVESTORS, INC. (“ Corporation ”).

ARTICLE TWO

The period of its duration is perpetual, unless sooner dissolved according to law.

ARTICLE THREE

The purposes or purpose for which the Corporation is organized are:

1. To serve as an investment advisor and to manage one or more mutual funds and engage in other investment advisory services permitted by the laws of the State of Texas and the United States of America; to engage in the business of advising others directly and through publications and/or writings as to the advisability of investing in, purchasing or selling securities; and to engage in the business of buying and selling securities for its own account.

2. To provide information, pamphlets and data concerning securities.

3. To establish, operate and maintain one or more mutual funds, as permitted by the laws of the State of Texas and the United States of America.

4. To engage in any commercial and industrial enterprises calculated or designed to be profitable to the Corporation and in conformity with the laws of the State of Texas; to engage in any business whatsoever either as principal or as agent or as both, or as a syndicate, which the Corporation may deem convenient or proper in furtherance of any of the purposes hereinabove mentioned or otherwise; to conduct its business in any lawful manner in any place in the State, Nation, or any place or country in the world whenever desired and upon compliance and in accordance with and pursuant to the laws, rules, statutes, treaties, regulations and customs thereof; and to have and to execute all powers authorized by the laws of the State of Texas under which this Corporation is formed, whether expressly set forth in this article or not, as such laws are now in effect, or may at any time hereafter be amended.

ARTICLE FOUR

1. General . The corporation is authorized to issue three classes of Common Stock, one designated Class A Common Stock, one designated Class B Common Stock, and one designated Class C Common Stock (collectively referred to herein as “ Common Stock ”), the total number of shares which the Corporation is authorized to issue is 36,000,000 shares. The number of shares of Class A Common Stock authorized is 28,000,000, and the par value of each



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 24 of 32

such share is $0.025. The number of shares of Class B Common Stock authorized is 4,500,000, and the par value of each such share is $0.025. The number of shares of Class C Common Stock authorized is 3,500,000, and the par value of each such share is $0.025. Except for the voting and conversion rights set forth in paragraphs 2 and 5 of this Article Four, all other rights and preferences of the Class A, Class B and Class C Common Stock are equal.

2. Voting Rights . The holders of shares of Class C Common Stock shall have full voting rights at any annual or special meeting of the shareholders and as provided for in the Texas Business Corporation Act. Except as otherwise expressly provided by law, all voting rights shall be in the Class C Common Stock, and the holders of shares of Class A Common Stock and Class B Common Stock shall have no voting rights at any annual or special meeting of die shareholders. Notwithstanding the foregoing, at such time as there are no longer any shares of Class C Common Stock issued and outstanding, then Class A Common Stock shall have full voting rights at any annual or special meeting of the shareholders and as provided for in the Texas Business Corporation Act. There shall be no cumulative voting.

3. Dividends . The holders of Class A Common Stock, Class B Common Stock, and Class C Common Stock shall then be entitled to receive, when and as declared by the Board of Directors, out of any funds legally available therefor, cash dividends which shall be paid simultaneously to the holders of Class A Common Stock, Class B Common Stock and Class C Common Stock in the same proportionate amounts per share.

4. Purchase . Nothing herein shall limit the right of the Corporation to repurchase any of its outstanding shares of Class A Common Stock, Class B Common Stock or Class C Common Stock in accordance with law, by public or private transaction.

5. Conversion Rights . The shares of Class A Common Stock shall not be convertible into the shares of any other class of stock of the Corporation. The holders of the shares of Class B Common Stock shall have the right to convert Class B Common Stock shares into Class C Common Stock shares on a one-to-one ratio and shall have the right to convert Class B Common Stock shares into shares of Class A Common Stock, on a one-to-one basis. The holders of each share of Class C Common Stock shall have the right to convert any or all of such holder’s Class C Common Stock shares into shares of Class A Common Stock, on a one-to-one basis, at the option of the holder thereof, at any time and from time to time.

Upon the earlier of (A) a date specified by vote or written consent of at least 50% of the holders of the then outstanding shares of Class C Common Stock or (B) such date that less than 200,000 shares of Class C Common Stock remain outstanding (“ Mandatory Conversion Date ”), all outstanding shares of Class C Common Stock shall automatically be converted into shares of Class A Common Stock on a one-to-one basis. Upon the occurrence of a Mandatory Conversion Date, the Corporation shall prepare a notice stating that a Mandatory Conversion Date has occurred and setting forth in detail the facts, and such notice shall forthwith be mailed by first class mail to the holders of the Class C Common Stock at their last known address shown on the stock books of the Corporation.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 25 of 32

Upon transmission by the Corporation of written notice of a Mandatory Conversion Date, each holder of Class C Common Stock shall (i) surrender the certificate or certificates therefor, duly endorsed, at the office of any transfer agent for such Class C Common Stock, or if there is no such transfer agent, then at the principal executive offices of the Corporation and (ii) state in writing therein the name or names in which such holder wishes the certificate or certificates for the Class A Common Stock to be issued. The Corporation shall, as soon as practicable thereafter, issue and deliver at the last known address of each holder of the Class C Common Stock, or to his nominee or nominees, certificates for the number of full shares of Class A Common Stock to which he shall be entitled, as aforesaid, together with cash in lieu of any fraction of a share as hereinafter provided. Such conversion shall be deemed to have been made on the Mandatory Conversion Date, and the person or persons entitled to receive the Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Class A Common Stock on said date. Such shares of Class C Common Stock may not be reissued as shares of such class, and the Corporation may thereafter take such appropriate action (without the need for shareholder action) as may be necessary to reduce the authorized number of shares of Class C Common Stock to zero.

As further provided in paragraph 1 of this Article Four, upon the occurrence of a Mandatory Conversion Date, shares of Class A Common Stock shall have full voting rights.

6. Liquidation , In the event of dissolution, liquidation or winding up of the Corporation (whether voluntary or involuntary), after payment or provision for payment of debts, the assets of the Corporation upon liquidation shall be distributed pro rata among the holders of the shares of Class A Common Stock, Class B Common Stock and Class C Common Stock. None of the following events is a dissolution, liquidation or winding up within the meaning of this paragraph: consolidation, merger, or reorganization of the Corporation with any other corporation or corporations, sale of all or substantially all the assets of the Corporation, or any purchase or redemption by the Corporation of any of its outstanding shares.

7. Denial of Preemptive Rights . No holder of shares of any class of the Corporation, Class A Common Stock, Class B Common Stock or Class C Common Stock, shall have any preemptive right to subscribe for or acquire additional shares of the Corporation of the same or any other class, whether such shares shall be hereby or hereafter authorized; and no holder of shares of any class of the Corporation shall have any right to acquire any shares which may be held in the treasury of the Corporation. All such additional or treasury shares may be sold for such consideration, at such time, and to such person or persons as the Board of Directors may from time to time determine.

8. Common Stock Split . Upon the issuance of these Fourth Amended and Restated Articles of Incorporation by the Secretary of State of the State of Texas, each share of Common Stock, of each class, outstanding shall be split and reconstituted into two (2) shares of Class A Common Stock, Class B Common Stock or Class C Common Stock, respectively; provided, however, that the Corporation shall issue no fractional shares of Common Stock, and all shares shall be rounded up or down to the nearest whole number of shares.



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 26 of 32

ARTICLE FIVE

The post office address of its registered office is 7900 Callaghan Road, San Texas 78229, and the name of its registered agent at such address is Frank E. Holmes.

ARTICLE SIX

The number of directors constituting the present Board of Directors is four, and the names and addresses of those persons who presently serve as directors and who will continue to serve as directors until their successors are elected and qualified are:


NAME		ADDRESS
Frank E. Holmes		7900 Callaghan Road San Antonio, TX 78229

Jerold H. Rubinstein		7900 Callaghan Road San Antonio, TX 7S229

Roy D. Terracina		7900 Callaghan Road San Antonio, TX 78229

Thomas F. Lydon, Jr.		7900 Callaghan Road San Antonio, TX 78229

ARTICLE SEVEN

The Corporation will, to the fullest extent permitted by the Texas Business Corporation Act, as the same exists or may hereafter be amended, indemnify any and all persons who are or were serving as director or officer of the Corporation, or who are or were serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee or employee of another corporation, partnership, limited liability company, joint venture, sole proprietorship, trust, employee benefit plan or other enterprise, from and against any and all of the expenses, liabilities or other matters referred to in or covered by such Act. Such indemnification may be provided pursuant to any Bylaw, agreement, vote of shareholders or disinterested directors or otherwise, both as to action in the capacity of director or officer and as to action in another capacity while holding such office, will continue as to a person who has ceased to be a director or officer and inure to the benefit of the heirs, executors and administrators of such a person.

ARTICLE EIGHT

Any contract or other transaction between the Corporation and one or more of its, directors, or between the Corporation and any firm of which one or more of its directors are members or employees, or in which they are interested, or between the Corporation and any corporation or association of which one or more of its directors are shareholders, members, directors, officers, or in which they are interested, shall be valid for all purposes, notwithstanding



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 27 of 32

the presence of the interested director or directors at the meeting of the Board of Directors of the Corporation that acts upon, or in reference to, the contract or transaction, and notwithstanding his or their participation in the action, if the fact of such interest shall be disclosed or otherwise known to the Board of Directors and the Board of Directors shall nevertheless authorize or ratify the contract or transaction, the interested director or directors to be counted in determining whether a quorum is present and to be entitled to vote on such authorization or ratification, and no director shall be liable to account to the Corporation for any profits realized by reason of interest therein when such contract or other transaction has been authorized or ratified in accordance with the foregoing. This Article Eight shall not be construed to invalidate any contract or transaction which would otherwise be valid in the absence of this provision

ARTICLE NINE

Notwithstanding any provision in Article Nine to the contrary, no director of the Corporation shall be liable to the Corporation or its shareholders for monetary damages or an act or omission in the director’s capacity as a director, except for liability for (i) any breach of a director’s duty of loyalty to the Corporation or its shareholders, (ii) an act or omission not in good faith or which involves intentional misconduct or a knowing violation of law, (iii) any transaction from which as director received an improper benefit, whether or not the benefit resulted from an action taken within the scope of the director’s office, (iv) an act or omission for which the liability of a director is expressly provided for by statute or (v) an act related to an unlawful stock repurchase or payment of a dividend.

If the Texas law is hereafter amended to authorize the further elimination or limitation of the liability of directors, then the liability of a director of the Corporation, in addition to the limitation of personal liability provided herein, shall be limited lo the fullest extent permitted by the amended Texas laws. Any repeal or modification of this paragraph by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

ARTICLE TEN

Any action required by the Texas Business Corporation Act to be taken at any annual or special meeting of shareholders, or any action which may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice, and without a vote provided: (1) a consent or consents in writing, setting forth the action so taken, are signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vole on the action were present and voted; and (2) prompt notice of such action is given to those shareholders entitled to vote who did not consent in writing to the action.

[REMAINDER OF PAGE INTENTIONALLY BLANK]



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 28 of 32

IN WITNESS WHEREOF, the undersigned has executed these Amended and Restated Articles of Incorporation of U.S. Global Investors, Inc. to be effective as of the 19th day of March, 2007.


	U.S. GLOBAL INVESTORS, INC.
	By:	/s/ Susan B. McGee
		Susan B. McGee
		President and General Counsel



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 29 of 32

EXHIBIT 31 — CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Frank E. Holmes, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of U.S. Global Investors, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d — 15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2007


/s/ Frank Holmes
Frank E. Holmes
Chief Executive Officer



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 30 of 32

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Catherine A. Rademacher, certify that:

1.		I have reviewed this quarterly report on Form 10-Q of U.S. Global Investors, Inc.;

2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.		The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d — 15(f)) for the registrant and have:

	(a)		Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)		Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	(c)		Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)		Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 9, 2007


/s/ Catherine A. Rademacher
Catherine A. Rademacher
Chief Financial Officer



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 31 of 32

EXHIBIT 32 — CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), the undersigned officer of U.S. Global Investors, Inc. (the “Company”) does hereby certify, to such officer’s knowledge, that:

The Quarterly Report on Form 10-Q for the quarter ended March 31, 2007, of the Company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of the operations of the Company.



Date: May 9, 2007	/s/ Frank E. Holmes
	Frank E. Holmes
	Chief Executive Officer



U.S. Global Investors, Inc.
March 31, 2007, Quarterly Report on Form 10-Q		Page 32 of 32

Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002



Date: May 9, 2007	/s/ Catherine A. Rademacher
	Catherine A. Rademacher
	Chief Financial Officer