UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

		x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year Ended June 30, 2011

or

		o Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from _____ to _____

U.S. GLOBAL INVESTORS, INC.

Incorporated in the State of Texas

IRS Employer Identification No. 74-1598370

Principal Executive Offices:
7900 Callaghan Road
San Antonio, Texas 78229
Telephone Number: 210-308-1234

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:
Class A common stock
($0.025 par value per share)

Registered: NASDAQ Capital Market

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act.

Indicate by check mark whether the Company (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.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. 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.

Large accelerated filer o		Accelerated filer x		Non-accelerated filer o		Small reporting company o

Indicate by check mark whether the registrant is a shell company, (as defined in Rule 12b-2 of the Act).

The aggregate market value of the 10,168,102 shares of nonvoting class A common stock held by nonaffiliates of the registrant was $82,666,669, based on the last sale price quoted on NASDAQ as of December 31, 2010, the last business day of the registrant’s most recently completed second fiscal quarter. Registrant’s only voting stock is its class C common stock, par value of $0.025 per share, for which there is no active market. The aggregate value of the 8,543 shares of the class C common stock held by nonaffiliates of the registrant on December 31, 2010 (based on the last sale price of the class C common stock in a private transaction) was $2,135.75. For purposes of this disclosure only, the registrant has assumed that its directors, executive officers, and beneficial owners of 5% or more of the registrant’s common stock are affiliates of the registrant.

On August 19, 2011, there were 13,862,445 shares of Registrant’s class A nonvoting common stock issued and 13,355,353 shares of Registrant’s class A nonvoting common stock issued and outstanding, no shares of Registrant’s class B nonvoting common stock outstanding, and 2,073,103 shares of Registrant’s class C voting common stock issued and outstanding.

Documents incorporated by reference: None

 

 

 

Part I of Annual Report on Form 10-K			1
Item 1. Business			1
Item 1A. Risk Factors			7
Item 1B. Unresolved Staff Comments			10
Item 2. Properties			10
Item 3. Legal Proceedings			10
Item 4. Removed and Reserved			10
Part II of Annual Report on Form 10-K			11
Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities			11
Item 6. Selected Financial Data			13
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations			14
Item 7A. Quantitative and Qualitative Disclosures About Market Risk			26
Item 8. Financial Statements and Supplementary Data			27
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure			51
Item 9A. Controls and Procedures			51
Item 9B. Other Information			52
Part III of Annual Report on Form 10-K			53
Item 10. Directors, Executive Officers and Corporate Governance			53
Item 11. Executive Compensation			57
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			64
Item 13. Certain Relationships and Related Transactions, and Director Independence			66
Item 14. Principal Accounting Fees and Services			67
Part IV of Annual Report on Form 10-K			68
Item 15. Exhibits, Financial Statement Schedules			68
Signatures			71
Exhibit 10.10 — 2010 Stock Incentive Plan
Exhibit 21 — Subsidiaries of the Company, Jurisdiction of Incorporation, and Percentage of Ownership
Exhibit 23.1 — BDO USA, LLP consent
Exhibit 31.1 — Rule 13a — 14(a) Certifications ( under Section 302 of the Sarbanes-Oxley Act of 2002)
Exhibit 32.1 — Section 1350 Certifications (under Section 906 of the Sarbanes-Oxley Act of 2002)

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Part I of Annual Report on Form 10-K

Item 1. Business

This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, U.S. Global Investors, Inc. and its subsidiaries (collectively, “U.S. Global” or the “Company”) may make other written and oral communications from time to time that contain such statements. Forward-looking statements include statements as to industry trends, future expectations of the Company and other matters that do not relate strictly to historical facts and are based on certain assumptions by management. These statements are often identified by the use of words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate” or “continue,” and similar expressions or variations. These statements are based on the beliefs and assumptions of Company management based on information currently available to management. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, among others, the risks described in Part I, Item 1A, Risk Factors, and elsewhere in this report and other documents filed or furnished by U.S. Global from time to time with the U.S. Securities and Exchange Commission (“SEC”). U.S. Global cautions readers to carefully consider such factors. Furthermore, such forward-looking statements speak only as of the date on which such statements are made. Except to the extent required by applicable law, U.S. Global undertakes no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.

U.S. Global, a Texas corporation organized in 1968, is a registered investment adviser under the Investment Advisers Act of 1940, as amended (“Advisers Act”). The Company and its subsidiaries are principally engaged in the business of providing investment advisory and other services to U.S. Global Investors Funds (“USGIF” or the “Funds”), a Delaware statutory trust, as well as offshore clients. USGIF is an investment company offering shares of thirteen mutual funds on a no-load basis. Prior to October 1, 2008, the thirteen funds were in two separate Massachusetts business trusts, USGIF and U.S. Global Accolade Funds (“USGAF”). On October 1, 2008, USGIF and USGAF were merged into a single Delaware statutory trust under the name USGIF.

As part of the mutual fund management business, the Company provides: (1) investment advisory services; (2) transfer agency and record keeping services; (3) distribution services; and (4) administrative services, through its wholly owned broker-dealer, to mutual funds advised by the Company. The fees from investment advisory and transfer agent services, as well as investment income, are the primary sources of the Company’s revenue.

Investment Advisory Services. The Company furnishes an investment program for each of the clients it manages and determines, subject to overall supervision by the applicable board of trustees of the clients, the clients’ investments pursuant to an advisory agreement (the “Advisory Agreement”). Consistent with the investment restrictions, objectives and policies of the particular client, the portfolio team for each client determines what investments should be purchased, sold and held and makes changes in the portfolio deemed necessary or appropriate. In the Advisory Agreement, the Company is

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charged with seeking the best overall terms in executing portfolio transactions and selecting brokers or dealers.

As required by the Investment Company Act of 1940, as amended (“Investment Company Act”), the Advisory Agreement with USGIF is subject to annual renewal and is terminable upon 60-day notice. This agreement has been renewed through September 2012.

In addition to providing advisory services to USGIF, the Company provides advisory services to two offshore clients.

Net assets under management at June 30, 2011, and 2010, are detailed in the following table.

Assets Under Management (AUM)
						AUM at				AUM at
						June 30, 2011				June 30, 2010
Fund		Ticker				(in thousands)				(in thousands)
U.S. Global Investors Funds
Natural Resources
Global Resources		PSPFX/PIPFX				$	903,926			$	627,868
World Precious Minerals		UNWPX/UNWIX					602,347				622,034
Gold and Precious Metals		USERX					238,164				235,017
Total Natural Resources							1,744,437				1,484,919
International Equity
Eastern European		EUROX					346,590				371,876
China Region		USCOX					42,501				47,626
Global MegaTrends		MEGAX/MEGIX					19,094				19,603
Global Emerging Markets		GEMFX					11,979				11,761
Total International Equity							420,164				450,866
Fixed Income
U.S. Government Securities		UGSXX					188,886				228,242
U.S. Treasury Securities		USTXX					96,000				105,273
Near-Term Tax Free		NEARX					31,823				26,411
Tax Free		USUTX					20,084				22,136
Total Fixed Income							336,793				382,062
Domestic Equity
Holmes Growth		ACBGX					42,758				34,199
All American Equity		GBTFX					18,370				15,219
Total Domestic Equity							61,128				49,418
Total SEC-Registered Funds							2,562,522				2,367,265
Other Advisory Clients							40,526				33,962
Total AUM						$	2,603,048			$	2,401,227

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Transfer Agent and Other Services. The Company’s wholly-owned subsidiary, United Shareholder Services, Inc. (“USSI”), is a transfer agent registered under the Securities Exchange Act of 1934 (“Exchange Act”), providing transfer agency, printing and mailing services to investment company clients. The transfer agency utilizes a third-party external system providing the Company’s fund shareholder communication network with computer equipment and software designed to meet the operating requirements of a mutual fund transfer agency.

The transfer agency’s duties encompass, but are not limited to, the following: (1) acting as servicing agent in connection with dividend and distribution functions; (2) performing shareholder account and administrative agent functions in connection with the issuance, transfer and redemption, or repurchase of shares; (3) maintaining such records as are necessary to document transactions in the Funds’ shares; (4) acting as servicing agent in connection with mailing of shareholder communications, including reports to shareholders, dividend and distribution notices and proxy materials for shareholder meetings; and (5) investigating and answering all shareholder account inquiries.

The transfer agency agreements provide that USSI will receive, as compensation for services rendered as transfer agent, certain annual and activity-based fees and will be reimbursed for out-of-pocket expenses. In connection with obtaining/providing administrative services to the beneficial owners of fund shares through institutions that provide such services and maintain an omnibus account with USSI, each fund pays a monthly fee based on the value of the shares of the fund held in accounts at the institution.

The transfer agency agreement with USGIF is subject to renewal on an annual basis and is terminable upon 60-day notice. This agreement has been renewed through September 2012.

Distribution Services. The Company has registered its wholly-owned subsidiary, U.S. Global Brokerage, Inc. (“USGB”), with the Financial Industry Regulatory Authority (“FINRA”), the SEC and appropriate state regulatory authorities as a limited-purpose broker-dealer for the purpose of distributing Fund shares. The distribution agreement with USGIF is subject to annual renewal and is terminable upon 60-day notice. This agreement has been renewed through September 2012.

Administrative Services. The Company also manages, supervises and conducts certain other affairs of USGIF, subject to the control of the Funds’ board of trustees pursuant to an administrative agreement (the “Administrative Services Agreement”). It provides office space, facilities and certain business equipment as well as the services of executive and clerical personnel for administering the affairs of the Funds. U.S. Global and its affiliates compensate all personnel, officers, directors and interested trustees of the Funds if such persons are also employees of the Company or its affiliates. The Administrative Services Agreement with USGIF is subject to renewal on an annual basis and is terminable upon 60-day notice. This agreement has been renewed through September 2012.

Investment Activities. In addition to providing management and advisory services, the Company is actively engaged in trading for its own account. See segment information in the notes to the financial statements at Note 14 Financial Information by Business Segment.

As of June 30, 2011, U.S. Global and its subsidiaries employed 82 full-time employees and 6 part-time employees; as of June 30, 2010, it employed 79 full-time employees and 4 part-time employees. The Company considers its relationship with its employees to be good.

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The mutual fund industry is highly competitive. According to the Investment Company Institute, at the end of 2010 there were approximately 8,500 domestically registered open-end investment companies of varying sizes and investment policies, whose shares are being offered to the public worldwide. Generally, there are two types of mutual funds: “load” and “no-load.” In addition, there are both load and no-load funds that have adopted Rule 12b-1 plans authorizing the payment of distribution costs of the funds out of fund assets. USGIF is a trust with no-load funds that have adopted 12b-1 plans. Load funds are typically sold through or sponsored by brokerage firms, and a sales commission is charged on the amount of the investment. No-load funds, such as the USGIF funds, however, may be purchased directly from the particular mutual fund organization or through a distributor, and no sales commissions are charged.

In addition to competition from other mutual fund managers and investment advisers, the Company and the mutual fund industry are in competition with various investment alternatives offered by insurance companies, banks, securities broker-dealers and other financial institutions. Many of these institutions are able to engage in more liberal advertising than mutual funds and may offer accounts at competitive interest rates, which may be insured by federally chartered corporations such as the Federal Deposit Insurance Corporation.

A number of mutual fund groups are significantly larger than the funds managed by U.S. Global, offer a greater variety of investment objectives and have more experience and greater resources to promote the sale of investments therein. However, the Company believes it has the resources, products and personnel to compete with these other mutual funds. In particular, the Company is known for its expertise in the gold mining and exploration, natural resources and emerging markets. Competition for sales of fund shares is influenced by various factors, including investment objectives and performance, advertising and sales promotional efforts, distribution channels and the types and quality of services offered to fund shareholders.

Success in the investment advisory and mutual fund distribution businesses is substantially dependent on each fund’s investment performance, the quality of services provided to shareholders and the Company’s efforts to market the funds effectively. Sales of fund shares generate management, distribution and administrative services fees (which are based on assets of the funds) and transfer agent fees (which are based on the number of fund accounts and the activity in those accounts). Costs of distribution and compliance continue to put pressure on profit margins for the mutual fund industry.

Despite the Company’s expertise in gold mining and exploration, natural resources and emerging markets, the Company faces the same obstacle many advisers face, namely uncovering undervalued investment opportunities as the markets face further uncertainty and increased volatility. In addition, the growing number of alternative investments, especially in specialized areas, has created pressure on the profit margins and increased competition for available investment opportunities.

The Company, USSI, USGB and the clients the Company manages and administers operate under certain laws, including federal and state securities laws, governing their organization, registration, operation, legal, financial and tax status. Among the potential penalties for violation of the laws and regulations applicable to the Company and its subsidiaries are fines, imprisonment, injunctions, revocation of registration and certain additional administrative sanctions. Any determination that the Company or its management has violated applicable laws and regulations could have a material adverse effect on the business of the Company. Moreover, there is no assurance that changes to existing laws, regulations, or rulings promulgated by governmental entities having jurisdiction over the Company and the Funds will not have a material adverse effect on the Company’s business. The Company has no control over regulatory rulemaking or the consequences it may have on the mutual fund and investment advisory industry.

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Recent and accelerating regulatory pronouncements and oversight have significantly increased the burden of compliance infrastructure with respect to the mutual fund industry and the capital markets. This momentum of new regulations has contributed significantly to the costs of managing and administering mutual funds.

U.S. Global is registered as an investment adviser with the SEC. As a registered investment adviser, it is subject to the requirements of the Advisers Act, and the SEC’s regulations thereunder, as well as to examination by the SEC’s staff. The Advisers Act imposes substantive regulation on virtually all aspects of the Company’s business and relationships with the Company’s clients. Applicable rules relate to, among other things, fiduciary duties to clients, transactions with clients, effective compliance programs, conflicts of interest, advertising, recordkeeping, reporting and disclosure requirements. The Funds for which the Company acts as the investment adviser are registered with the SEC under the Investment Company Act. The Investment Company Act imposes additional obligations, including detailed operational requirements for both funds and their advisers. Moreover, an investment adviser’s contract with a registered fund may be terminated by the fund on not more than 60 days’ notice and is subject to annual renewal by the fund’s board after an initial two-year term. Both the Advisers Act and the Investment Company Act regulate the “assignment” of advisory contracts by the investment adviser. The SEC is authorized to institute proceedings and impose sanctions for violations of the Investment Advisers Act and the Investment Company Act, ranging from fines and censures to termination of an investment adviser’s registration. The failure of the Company, or the funds which the Company advises, to comply with the requirements of the SEC could have a material adverse effect on the Company. The Company is also subject to federal and state laws affecting corporate governance, including the Sarbanes-Oxley Act of 2002 (“S-Ox Act”), as well as rules adopted by the SEC.

USGB is subject to regulation by the SEC under the Exchange Act and regulation by FINRA, a self-regulatory organization composed of other registered broker-dealers. U.S. Global, USSI and USGB are required to keep and maintain certain reports and records, which must be made available to the SEC and FINRA upon request.

The businesses of the Company are, to a very significant degree, dependent on their associations and contractual relationships with the Funds. In the event the advisory, administrative or transfer agent services agreements with USGIF are canceled or not renewed pursuant to the terms thereof, the Company would be substantially adversely affected. U.S. Global, USSI and USGB consider their relationships with the Funds to be good, and they have no reason to believe that their management and service contracts will not be renewed in the future; however, there is no assurance that USGIF will choose to continue its relationship with the Company, USSI or USGB.

In addition, the Company is also dependent on its relationships with its offshore clients. Even though the Company views its relationship with its offshore clients as stable, the Company could be adversely affected if these relationships ended.

Available Information. The Company’s Internet website address is www.usfunds.com. Information contained on the Company’s website is not part of this annual report on Form 10-K. The Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed with (or furnished to) the SEC are available through a link on the Company’s Internet website, free of charge, soon after such material is filed or furnished. (The link to the Company’s SEC filings can be found at www.usfunds.com by clicking “About Us,” followed by “Investor Relations,” followed by “SEC Filings.”) The Company routinely posts important information on its website.

The Company also posts its Corporate Governance Guidelines, Code of Business Conduct, Code of Ethics for Principal Executive and Senior Financial Officers and the charters of the audit and

5

compensation committees of its Board of Directors on the Company’s website in the “Policies and Procedures” section. The Company’s SEC filings and governance documents are available in print to any stockholder that makes a written request to: Director of Communications, U.S. Global Investors, Inc., 7900 Callaghan Road, San Antonio, Texas 78229.

The Company files reports electronically with the SEC via the SEC’s Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”) may be accessed through the Internet. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, at www.sec.gov.

The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

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Item 1A. Risk Factors

The Company faces a variety of significant and diverse risks, many of which are inherent in the business. Described below are certain risks that could materially affect the Company. Other risks and uncertainties that the Company does not presently consider to be material, or of which the Company is not presently aware, may become important factors that affect it in the future. The occurrence of any of the risks discussed below could materially and adversely affect the business, prospects, financial condition, results of operations or cash flow.

The investment management business is intensely competitive.
Competition in the investment management business is based on a variety of factors, including:

	•		Investment performance;
	•		Investor perception of an investment team’s drive, focus and alignment of interest with them;
	•		Quality of service provided to, and duration of relationships with, clients and shareholders;
	•		Business reputation; and
	•		Level of fees charged for services.

The Company competes with a large number of investment management firms, commercial banks, broker-dealers, insurance companies and other financial institutions. Competitive risk is heightened by the fact that some competitors may invest according to different investment styles or in alternative asset classes which the markets may perceive as more attractive than the Company’s investment approach. If the Company is unable to compete effectively, revenues and earnings may be reduced and the business could be materially affected.

Poor investment performance could lead to a decline in revenues.

Success in the investment management industry is largely dependent on investment performance relative to market conditions and the performance of competing products. Good relative performance generally attracts additional assets under management, resulting in additional revenues. Conversely, poor performance generally results in decreased sales and increased redemptions with a corresponding decrease in revenues. Therefore, poor investment performance relative to the portfolio benchmarks and to competitors could impair the Company’s revenues and growth. Effective October 2009, a performance fee was implemented for the nine equity Funds whereby the base advisory fee is adjusted upwards or downwards by 0.25 percent if there is a performance difference of 5 percent or more between a Fund’s performance and that of its designated benchmark index over the prior rolling 12 months.

Investment advisory fees are a significant portion of revenue and may be negatively affected by decreases in assets under management.

Changes which may negatively impact assets under management, and thus, the Company’s revenue, profitability and ability to grow, include market depreciation, redemptions from shareholder accounts and terminations of client accounts.

The Company’s clients can terminate their agreements with the Company on short notice, which may lead to unexpected declines in revenue and profitability.

The Company’s investment advisory agreements are generally terminable on short notice and subject to annual renewal. The Company’s clients can terminate their relationships with us, or reduce the aggregate amount of assets under management, for a number of reasons, including investment performance, financial market performance, or to shift their funds to competitors who may charge lower advisory fee rates, or for no stated reason. Poor performance relative to that of other investment management firms tends to result in decreased investments in the funds managed by the Company, increased withdrawals from the funds and the loss of shareholders in the funds. If the Company’s investment advisory agreements are terminated, which may occur in a short time frame, the Company may experience a decline in revenues and profitability.

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Difficult market conditions can adversely affect the Company by reducing the market value of the assets we manage or causing shareholders to make significant redemptions.

Changes in economic or market conditions may adversely affect the profitability, performance of and demand for the Company’s investment products and services. Under the Company’s advisory fee arrangements, the fees received are primarily based on the market value of assets under management. Accordingly, a decline in the price of securities held in the funds would be expected to cause revenues and net income to decline, which would result in lower advisory fees; or cause increased shareholder redemptions in favor of investments they perceive as offering greater opportunity or lower risk, which redemptions would also result in lower advisory fees. The ability of the Company to compete and grow is dependent on the relative attractiveness of the types of investment products the Company offers and its investment performance and strategies under prevailing market conditions.

Market-specific risks may negatively impact the Company’s earnings.

The Company manages certain funds in the emerging market and natural resource sectors, which are highly cyclical. The investments in the Funds are subject to significant loss due to political, economic and diplomatic developments, currency fluctuations, social instability and changes in governmental policies. Foreign trading markets, particularly in some emerging market countries, are often smaller, less liquid, less regulated and significantly more volatile than the U.S. and other established markets.

In addition, yields on government securities, and the investment products investing in them, have decreased to record lows. Thus, the Company has voluntarily waived fees and/or reimbursed the USGIF money market funds to maintain each fund’s yield at a certain level as determined by the Company. These waivers could increase in the future. Such increases in fee waivers could be significant and would negatively affect the Company’s net income.

The market price and trading volume of the Company’s class A common stock may be volatile, which could result in rapid and substantial losses for the Company’s stockholders.

The market price of the Company’s class A common stock may be volatile and the trading volume may fluctuate, causing significant price variations to occur. If the market price of the Company’s class A common stock declines significantly, stockholders may be unable to sell their shares at or above their purchase price. The Company cannot assure that the market price of its class A common stock will not fluctuate or decline significantly in the future. Some of the factors that could negatively affect the price of the Company’s class A common stock, or result in fluctuations in price or trading volume, include:

	•		Decreases in assets under management;
	•		Variations in quarterly and annual operating results;
	•		Publication of research reports about the Company or the investment management industry;
	•		Departures of key personnel;
	•		Adverse market reactions to any indebtedness the Company may incur, acquisitions or disposals the Company may make, or securities the Company may issue in the future;
	•		Changes in market valuations of similar companies;
	•		Changes or proposed changes in laws or regulations, or differing interpretations thereof, affecting the business, or enforcement of these laws and regulations, or announcements relating to these matters;
	•		Adverse publicity about the asset management industry, generally, or individual scandals, specifically; and
	•		General market and economic conditions.

The market price of the Company’s class A common stock could decline due to the large number of shares of the Company’s class C common stock eligible for future sale upon conversion to class A shares.

The market price of the Company’s class A common stock could decline as a result of sales of a large number of shares of class A common stock eligible for future sale upon the conversion of class C shares, or the perception that such sales could occur. These sales, or the possibility that these sales may occur, also might make it more difficult for the Company to raise additional capital by selling equity securities in the future, at a time and price the Company deems appropriate.

Failure to comply with government regulations could result in fines, which could cause the Company’s earnings and stock price to decline.

The Company and its subsidiaries are subject to a variety of federal securities laws and agencies, including, but not limited to, the Advisers Act, the Investment Company Act, the S-Ox Act, the Gramm-Leach-Bliley Act of 1999, the Bank Secrecy Act of 1970, as amended, the USA PATRIOT Act of 2001, the SEC, FINRA and NASDAQ. Moreover, financial reporting requirements, and the processes, controls and procedures that have been put in place to address them, are comprehensive and complex. While management has focused attention and resources on compliance policies and procedures, non-compliance with applicable laws or regulations could result in fines, sanctions or censures which could affect the Company’s reputation, and thus its revenues and earnings.

Our business is subject to substantial risk from litigation, regulatory investigations and potential securities laws liability.

Many aspects of U.S. Global’s business involve substantial risks of litigation, regulatory investigations and/or arbitration. The Company is exposed to liability under federal and state securities laws, other federal and state laws and court decisions, as well as rules and regulations promulgated by the SEC, FINRA and other regulatory bodies. U.S. Global, its subsidiaries, and/or officers could be named as parties in legal actions, regulatory investigations and proceedings. An adverse resolution of any lawsuit, legal or regulatory proceeding or claim against the Company could result in substantial costs or reputational harm to the Company, and have a material adverse effect on the Company’s business, financial condition or results of operations, which, in turn, may negatively affect the market price of the Company’s common stock and U.S. Global’s ability to pay dividends. In addition to these financial costs and risks, the defense of litigation or arbitration may divert resources and management’s attention from operations.

Insurance coverage risks.

While U.S. Global carries insurance in amounts and under terms that it believes are appropriate, the Company cannot assure that its insurance will cover most liabilities and losses to which it may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees. U.S. Global is subject to regulatory and governmental inquiries and civil litigation. An adverse outcome of any such proceeding could involve substantial financial penalties. From time to time, various claims against us arise in the ordinary course of business, including employment-related claims. There has been increased incidence of litigation and regulatory investigations in the financial services industry in recent years, including customer claims and class action suits alleging substantial monetary damages. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As U.S. Global’s insurance policies come up for renewal, the Company may need to assume higher deductibles or co-insurance liabilities, or pay higher premiums, which would increase the Company’s expenses and reduce net income.

Increased regulatory and legislative actions and reforms could increase costs and negatively impact the Company’s profitability and future financial results.

During the past nine years, the federal securities laws have been substantially augmented and made significantly more complex by the S-Ox Act and the USA PATRIOT Act of 2001. With new laws and changes in interpretations and enforcement of existing requirements, the associated time the Company must dedicate to, and related costs the Company must incur in, meeting the regulatory complexities of the business have increased. In order to comply with these new requirements, the Company has had to expend additional time and resources, including substantial efforts to conduct evaluations required to ensure compliance with the S-Ox Act.

The Company is subject to financial services laws, regulations, corporate governance requirements, administrative actions and policies. During 2009 and 2010, as many emergency government programs slowed or wound down, global regulatory and legislative focus generally moved to a second phase of broader reform and a restructuring of financial institution regulation. On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act"), which fundamentally changes the U.S. financial regulatory landscape. The full scope of the regulatory changes imposed by the Dodd-Frank Act will only be determined once extensive rules and regulations have been proposed and become effective, which may result in significant changes in the manner in which the Company’s operations are regulated.

Further, adverse results of regulatory investigations of mutual fund, investment advisory and financial services firms could tarnish the reputation of the financial services industry generally, and mutual funds and investment advisers more specifically, causing investors to avoid further fund investments or redeem their balances. Redemptions would decrease the Company’s assets under management, which would reduce its advisory revenues and net income.

The Company intends to pay regular dividends to its stockholders, but the ability to do so is subject to the discretion of the Board of Directors.

The Company intends to pay cash dividends on a monthly basis, but the Board of Directors, at its discretion, may decrease the level or frequency of dividends or discontinue payment of dividends entirely based on earnings, operations, capital requirements, general financial condition of the Company, and general business conditions.

One person beneficially owns substantially all of our voting stock and controls the outcome of all matters requiring a vote of stockholders, which may influence the value of our publicly traded non-voting stock.

Frank Holmes, CEO, is the beneficial owner of over 99% of our class C voting convertible common stock and controls the outcome of all issues requiring a vote of stockholders. All of our publicly traded stock is nonvoting stock. Consequently, except to the extent provided by law, stockholders other than Frank Holmes have no vote with respect to the election of directors or any other matter requiring a vote of stockholders. This lack of voting rights may adversely affect the market value of the publicly traded class A nonvoting common stock.

The loss of key personnel could negatively affect the Company’s financial performance.

The success of the Company depends on key personnel, including the portfolio managers, analysts and executive officers. Competition for qualified, motivated and skilled personnel in the asset management industry remains significant. As the business grows, the Company will likely need to increase the number of employees. Moreover, in order to retain certain key personnel, the Company may be required to increase compensation to such individuals, resulting in additional expense. The loss of key personnel or the Company’s failure to attract replacement personnel could negatively affect its financial performance.

The Company could be subject to losses if it fails to properly safeguard sensitive and confidential information.

As part of the Company’s normal operations, it maintains and transmits confidential information about the Company and the Funds’ clients as well as proprietary information relating to its business operations. These systems could be victimized by unauthorized users or corrupted by computer viruses or other malicious software code, or authorized persons could inadvertently or intentionally release confidential or proprietary information. Such a breach could subject the Company to liability for a failure to safeguard client data, result in the termination of relationships with our existing customers, require significant capital and operating expenditures to investigate and remediate the breach and subject the Company to regulatory action.

Item 1B. Unresolved Staff Comments

None

Item 2. Properties

The Company presently owns and occupies an office building as its headquarters in San Antonio, Texas. The office building is approximately 46,000 square feet on approximately 2.5 acres of land.

Item 3. Legal Proceedings

There are no material legal proceedings in which the Company is involved.

Item 4. Removed and Reserved

Part II of Annual Report on Form 10-K

Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities

The Company has three classes of common equity: class A, class B and class C common stock, par value $0.025 per share.

The Company’s class A common stock is traded over-the-counter and is quoted daily under NASDAQ’s Capital Markets. Trades are reported under the symbol “GROW.”

There is no established public trading market for the Company’s class B and class C common stock.

The Company’s class A and class B common stock have no voting privileges.

The following table sets forth the range of high and low sales prices of “GROW” from NASDAQ for the fiscal years ended June 30, 2011, and 2010. The quotations represent prices between dealers and do not include any retail markup, markdown, or commission.

		Sales Price
		2011								2010
		High ($)				Low ($)				High ($)				Low ($)
First quarter (9/30)			6.93				5.26				14.50				7.67
Second quarter (12/31)			9.38				6.28				14.66				9.05
Third quarter (3/31)			8.44				7.00				12.75				8.82
Fourth quarter (6/30)			10.47				6.72				10.48				5.37

On August 19, 2011, there were approximately 184 holders of record of class A common stock, no holders of record of class B common stock and 44 holders of record of class C common stock.

The Company declared cash dividends of $0.02 per share per month in fiscal 2011 and 2010 on all classes of common stock. A monthly dividend of $0.02 is authorized through December 2011 and will be considered for continuation at that time by the Board. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company and general business conditions.

Information relating to equity compensation plans under which our stock is authorized for issuance is set forth in Item 12 of Part III of this Form 10-K under the heading “Equity Compensation Plan Information.”

The Company may repurchase stock from employees. There were no repurchases of classes A, B or C common stock during the fiscal year ended June 30, 2011.

The following graph compares the cumulative total return for the Company’s class A common stock (GROW) to the cumulative total return for the S&P 500 Index, the Russell 2000 Index and the NYSE Arca Gold BUGS Index for the Company’s last five fiscal years. The graph assumes an investment of $10,000 in the class A common stock and in each index as of June 30, 2006, and that all dividends are reinvested. The historical information included in this graph is not necessarily indicative of future performance and the Company does not make or endorse any predictions as to future stock performance.

		Fiscal Year-End Date
		2006				2007				2008				2009				2010				2011
U.S. Global Investors, Inc., class A (GROW)		$	10,000			$	21,560			$	16,125			$	9,243			$	5,680			$	7,623
S&P500 Index		$	10,000			$	12,059			$	10,477			$	7,730			$	8,846			$	11,561
Russell 2000 Index		$	10,000			$	11,643			$	9,758			$	7,317			$	8,889			$	12,215
NYSE Arca Gold BUGS Index		$	10,000			$	9,871			$	13,546			$	10,298			$	14,490			$	16,010

Item 6. Selected Financial Data

The following selected financial data is qualified by reference to, and should be read in conjunction with, the Company’s Consolidated Financial Statements and related notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in this Form 10-K. The selected financial data as of June 30, 2007, through June 30, 2011, and the years then ended, is derived from the Company’s audited Consolidated Financial Statements. Earnings per share have been restated for prior years to reflect the stock split that occurred in March 2007 and for all other information included throughout the document.

Selected		Year Ended June 30,
Financial Data		2011				2010				2009				2008				2007
Revenues		$	41,933,626			$	35,030,153			$	23,140,269			$	56,039,247			$	58,603,637
Expenses			29,903,607				26,521,396				26,750,817				39,457,020				37,257,889
Income (loss) before income taxes			12,030,019				8,508,757				(3,610,548	)			16,582,227				21,345,748
Income tax expense (benefit)			4,197,372				3,159,472				(1,372,969	)			5,745,417				7,586,499
Net income (loss)		$	7,832,647			$	5,349,285			$	(2,237,579	)		$	10,836,810			$	13,759,249
Basic income (loss) per share			0.51				0.35				(0.15	)			0.71				0.91
Working capital			32,366,289				28,323,885				27,363,133				35,309,228				27,925,318
Total assets			45,966,603				40,983,698				37,153,846				45,494,619				39,793,113
Dividends per common share			0.24				0.24				0.24				0.21				0.26
Shareholders’ equity			41,057,447				36,191,872				34,627,994				39,233,744				31,095,202
Net cash provided by operating activities			7,718,529				7,632,350				3,040,931				14,309,886				8,867,278
Net cash used in investing activities			(845,601	)			(739,266	)			(4,386,782	)			(1,180,602	)			(746,787	)
Net cash used in financing activities			(3,502,511	)			(3,359,199	)			(3,485,630	)			(2,848,629	)			(3,322,114	)
Average assets under management (in billions)			2.82				2.56				2.53				5.44				4.85

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This discussion reviews and analyzes the consolidated results of operations for the past three fiscal years and other factors that may affect future financial performance. This discussion should be read in conjunction with the Consolidated Financial Statements, Notes to the Consolidated Financial Statements and Selected Financial Data.

Recent Trends in Financial Markets

During the fiscal year ended June 30, 2011, the performance of the securities markets generally improved as the global economy emerged from the severe downturn in the global financial markets and moved toward recovery. Although the global financial markets demonstrated indications of stabilization, volatility remained throughout the year, as was evidenced by the sovereign debt crisis in Europe. General macro-economic concerns, such as the possibility of deflation, double-dip recession, the European debt situation and the recent U.S. debt ceiling debate have caused investors to remain risk averse. As a consequence of these events, mutual funds, in general, have seen asset flows directed towards investments such as fixed income and cash.

The volatility in the Company revenue is correlated to the price swings in natural resources and emerging markets, which represent roughly 80 percent of assets under management. For the past 10 years, the one-year normal volatility of one standard deviation has been 20 percent for the S&P 500, approximately 30 percent for the MSCI emerging markets and nearly 40 percent for gold equities. To manage expenses, the Company maintains a flexible structure for one of its largest costs, compensation expense, by setting relatively lower base salaries with bonuses that are related to average assets under management and fund performance. Thus, our expense model expands and contracts with asset swings and performance.

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 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.

Detailed information regarding the SEC-registered funds managed by the Company can be found on the Company’s website, www.usfunds.com, including performance information for each fund for various time periods, assets under management as of the most recent month end and inception date of each fund.

SEC-registered mutual fund shareholders are not required to give advance notice prior to redemption of shares in the funds; however, the equity funds charge a redemption fee if the fund shares have been held for less than the applicable periods of time set forth in the funds’ prospectuses. The fixed income

and money market funds charge no redemption fee. Detailed information about redemption fees can be found in the funds’ prospectus, which is available on the Company’s website, www.usfunds.com.

The Company provides advisory services for two offshore clients and receives monthly advisory fees based on the net asset values of the clients and quarterly performance fees, if any, based on the overall increase in net asset values. In fiscal 2011, the Company recorded advisory and performance fees from these clients totaling $431,493 and $955,865, respectively, and $352,419 and $48,244, respectively, in fiscal 2010. The performance fees for these clients are calculated and recorded quarterly in accordance with the terms of the advisory agreements. These fees may fluctuate significantly from year to year based on factors that may be out of the Company’s control. Frank Holmes, CEO, serves as a director of the offshore clients.

At June 30, 2011, total assets under management as of period-end, including both SEC-registered funds and offshore clients, were $2.603 billion versus $2.401 billion at June 30, 2010, an increase of 8.4 percent. During fiscal 2011, average assets under management were $2.819 billion versus $2.561 billion in fiscal 2010. The increase was primarily due to an increase in market appreciation in the natural resources funds under management.

The following table summarizes the changes in assets under management for the SEC-registered funds for fiscal years 2011, 2010 and 2009:

		Changes in Assets Under Management
		Year Ended June 30,
		2011
						Money Market
						and
(Dollars in Thousands)		Equity				Fixed Income				Total
Beginning Balance		$	1,985,203			$	382,062			$	2,367,265
Market appreciation/(depreciation)			528,737				1,493				530,230
Dividends and distributions			(144,176)				(1,488)				(145,664)
Net shareholder purchases/(redemptions)			(144,035)				(45,274)				(189,309)
Ending Balance		$	2,225,729			$	336,793			$	2,562,522
Average investment management fee			1.00%				0.00%				0.87%
Average net assets		$	2,418,615			$	358,121			$	2,776,736

		Changes in Assets Under Management
		Year Ended June 30,
		2010
						Money Market
						and
(Dollars in Thousands)		Equity				Fixed Income				Total
Beginning Balance		$	1,757,012			$	439,942			$	2,196,954
Market appreciation/(depreciation)			515,383				2,543				517,926
Dividends and distributions			(24,873)				(1,379)				(26,252)
Net shareholder purchases/(redemptions)			(262,319)				(59,044)				(321,363)
Ending Balance		$	1,985,203			$	382,062			$	2,367,265
Average investment management fee			0.99%				0.01%				0.83%
Average net assets		$	2,117,843			$	408,254			$	2,526,097

		Changes in Assets Under Management
		Year Ended June 30,
		2009
						Money Market
						and
(Dollars in Thousands)		Equity				Fixed Income				Total
Beginning Balance		$	4,808,038			$	590,146			$	5,398,184
Market appreciation/(depreciation)			(2,344,130)				4,594				(2,339,536)
Dividends and distributions			(169,954)				(4,538)				(174,492)
Net shareholder purchases/(redemptions)			(536,942)				(150,260)				(687,202)
Ending Balance		$	1,757,012			$	439,942			$	2,196,954
Average investment management fee			0.82%				0.14%				0.69%
Average net assets		$	1,930,347			$	512,780			$	2,443,127

As shown above, both average and period-end assets under management increased in total in fiscal 2011 compared to fiscal 2010 and in fiscal 2010 compared to fiscal 2009. The increase in assets under management in fiscal 2011 and fiscal 2010 was driven by market appreciation in the equity funds, primarily in the natural resources category. Money market and fixed income funds experienced a net decrease in both comparative periods as shareholders sought alternatives to low yields.

Stock market performance was marked by wide swings in 2010 and into 2011 after the financial markets somewhat rebounded in 2009 from the global financial crisis. Equities linked to gold and broader natural resources, where most of the assets managed by the Company are invested, were also volatile. The global financial crisis and subsequent volatility in markets, combined with fund performance, were significant factors in the shareholder activity shown in all periods.

The average annualized investment management fee rate (total mutual fund advisory fees, excluding performance fees, as a percentage of average assets under management) was 87 basis points in fiscal 2011, compared to 83 basis points in fiscal 2010. The average investment management fee for equity funds has remained relatively stable for fiscal 2011 and 2010 at 100 and 99 basis points, respectively. The increase in the average equity management fee rate from 82 basis points in fiscal 2009 to 99 basis points in fiscal 2010 was due to a modification of the agreement to waive fees and/or reduce expenses of the funds. The agreement changed from a contractual to a voluntary agreement effective October 1, 2009, and expense caps on the equity funds were increased. The average investment management fee for the fixed income funds was nil or close to nil for fiscal 2011 and 2010 and 14 basis points in fiscal 2009. This is due to voluntary fee waivers on these funds as discussed in Note 4 to the financial statements, including a voluntary agreement to support the yields for the money market funds.

Investment Activities

Management believes it can more effectively manage the Company’s cash position by maintaining certain types of investments utilized in cash management and continues to believe that such activities are in the best interest of the Company.

The following summarizes the market value, cost and unrealized gain or loss on investments as of June 30, 2011, and June 30, 2010.

														Unrealized holding gains
										Unrealized Gain				on available-for-sale
Securities		Market Value				Cost				(Loss)				securities, net of tax
Trading 1		$	5,703,916			$	5,963,272			$	(259,356	)			N/A
Available-for-sale 2			4,660,928				3,081,439				1,579,489			$	1,042,462
Total at June 30, 2011		$	10,364,844			$	9,044,711			$	1,320,133
Trading 1		$	5,072,724			$	5,963,272			$	(890,548	)			N/A
Available-for-sale 2			3,028,034				2,186,591				841,443			$	555,352
Total at June 30, 2010		$	8,100,758			$	8,149,863			$	(49,105	)

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.

As of June 30, 2011, and 2010, the Company held approximately $2.3 million and $1.8 million, respectively, in investments other than the clients the Company advises. 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.

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.

Investment income can be volatile and may vary 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 is concentrated in a small number of issuers. For fiscal years 2011, 2010, and 2009, the Company had net recognized gains (losses) on sales or other-than-temporary impairment of securities of $135,759, $(60,182) and $(2,456,618), respectively. Due to market volatility, the Company expects that gains or losses will continue to fluctuate in the future.

The following is a discussion of the consolidated results of operations of the Company and a detailed discussion of the Company’s revenues and expenses.

		2011				2010				% Change				2010				2009				% Change
Net income (loss) (in thousands)		$	7,833			$	5,349				46.4%			$	5,349			$	(2,238	)			339.0%
Net income (loss) per share
Basic		$	0.51			$	0.35				45.7%			$	0.35			$	(0.15	)			333.3%
Diluted		$	0.51			$	0.35				45.7%			$	0.35			$	(0.15	)			333.3%
Weighted average shares outstanding (in thousands)
Basic			15,384				15,339								15,339				15,276
Diluted			15,384				15,342								15,342				15,276

For the year ended June 30, 2009, no options were included in the computation of diluted earnings per share because they would be antidilutive due to the net loss.

The Company posted net income of $7,832,647 ($0.51 per share) for the year ended June 30, 2011, compared with net income of $5,349,285 ($0.35 per share) for the year ended June 30, 2010. This increase in profitability is primarily attributable to the following factors:

Revenues

Total consolidated revenues for the year ended June 30, 2011, increased $6,903,473, or 19.7%, compared with the year ended June 30, 2010. This increase was primarily attributable to the following:

	•		Mutual fund advisory fees increased by $5,408,091, or 25.6%, as a result of higher assets under management. Of that increase, mutual fund management fees contributed $3,196,017, primarily as a result of market appreciation in the natural resource funds, while mutual fund performance fees contributed $2,212,074. Mutual fund performance fees are paid when there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling 12 months. (See Note 4 for additional information regarding performance fees.)
	•		Offshore fund advisory fees increased by $986,695, or 246.3%. Of that increase, offshore fund management fees contributed $79,074 while offshore fund performance fees contributed $907,621. (See Note 4 for additional information regarding performance fees.)
	•		Distribution fees increased by $695,538, or 13.1%, in fiscal 2011 as a result of higher average net assets upon which these fees are based.

Expenses

Total consolidated expenses for the year ended June 30, 2011, increased by $3,382,211, or 12.8%, compared with the prior year and was primarily attributable to the following:

	•		General and administrative expenses increased $1,899,909, or 27.7%, primarily due to sales-related conference and consulting fees and implementation of new investment management and trading software.
	•		Platform fees increased by $720,876, or 12.9%, primarily due to increased assets held through broker-dealer platforms.
	•		Advertising increased $624,250, or 48.3%, as a result of increased marketing and sales activity.
	•		Employee compensation expense increased by $554,928, or 4.7%, primarily due to higher performance-based bonuses.

The Company posted net income of $5,349,285 ($0.35 per share) for the year ended June 30, 2010, compared with a net loss of $2,237,579 ($0.15 loss per share) for the year ended June 30, 2009. The increase in profitability in fiscal year 2010 primarily resulted from an increase in investment income of $5.6 million resulting from a rebound in the market value of trading securities as well as an increase in mutual fund advisory fees of $4.4 million due to higher assets under management. Expenses declined by 0.9% in fiscal 2010, including a $1.9 million decrease in subadvisory fees due to a change in a subadvisory contract in fiscal 2009 and a decrease in general and administrative expenses of $1.8 million due to prior year proxy-related costs. These expense decreases were offset by an increase in employee compensation of $1.9 million due to higher performance-based bonuses.

										%												%
(Dollars in Thousands)		2011				2010				Change				2010				2009				Change
Investment advisory fees:
Natural resource funds		$	20,341			$	15,264				33.3%			$	15,264			$	8,990				69.8%
International equity funds			5,735				5,567				3.0%				5,567				6,749				(17.5%)
Domestic equity funds			495				299				65.6%				299				295				1.4%
Fixed income funds			-				33				(100.0%)				33				730				(95.5%)
Total mutual fund advisory fees			26,571				21,163				25.6%				21,163				16,764				26.2%
Other advisory fees			1,387				401				245.9%				401				924				(56.6%)
Total investment advisory fees			27,958				21,564				29.7%				21,564				17,688				21.9%
Transfer agent fees			5,011				5,350				(6.3%)				5,350				5,942				(10.0%)
Distribution fees			5,988				5,293				13.1%				5,293				2,867				84.6%
Administrative services fees			1,922				1,797				7.0%				1,797				1,215				47.9%
Investment income (loss)			1,009				979				3.1%				979				(4,616	)			121.2%
Other revenues			46				47				(2.1%)				47				44				6.8%
Total		$	41,934			$	35,030				19.7%			$	35,030			$	23,140				51.4%

Investment Advisory Fees. Investment advisory fees, the largest component of the Company’s revenues, are derived from two sources: SEC-registered mutual fund advisory fees, which in fiscal 2011 accounted for 95% of the Company’s total advisory fees, and offshore investment advisory fees, which accounted for 5% of total advisory fees.

SEC-registered mutual fund investment advisory fees are calculated as a percentage of average net assets, ranging from 0.375% to 1.375%, and are paid monthly. These advisory fees increased by

approximately $5.4 million, or 25.6%, in fiscal 2011 over fiscal 2010 primarily as a result of increased assets under management in the natural resource funds as well as lower equity fund expense reimbursements resulting from the implementation of higher expense caps in October 2009.

Mutual fund investment advisory fees are also affected by changes in assets under management, which include:

	•		market appreciation or depreciation;
	•		the addition of new client accounts;
	•		client contributions of additional assets to existing accounts;
	•		withdrawals of assets from and termination of client accounts;
	•		exchanges of assets between accounts or products with different fee structures; and
	•		the amount of fees voluntarily reimbursed.

The nine equity USGIF funds include a base advisory fee that is adjusted upwards or downwards by 0.25 percent if there is a performance difference of 5 percent or more between a fund’s performance and that of its designated benchmark index over the prior rolling 12 months. For the year ended June 30, 2011, the Company adjusted its base advisory fees upwards by $2,380,608. For the year ended June 30, 2010 (the first fiscal year in which these performance fees were recorded), the Company adjusted its base advisory fees upwards by $168,534.

Transfer Agent Fees. United Shareholder Services, Inc., a wholly owned subsidiary of the Company, provides transfer agency and mailing services for Company clients. The Company receives an annual fee per account as well as transaction- and activity-based fees as compensation for services rendered as transfer agent and is reimbursed for out-of-pocket expenses associated with processing shareholder information. In addition, the Company collects custodial fees on IRAs and other types of retirement plans invested in USGIF. Transfer agent fees are, therefore, significantly affected by the number of client accounts. The Company also receives shareholder servicing fees based on the value of funds held through broker-dealer platforms.

Transfer agent fees decreased by $339,029 and $592,129 in fiscal 2011 and 2010, respectively, primarily as a result of a decline in the number of shareholder accounts and number of transactions.

Distribution Fees. The funds pay USGB a distribution fee, at an annual rate of 0.25 percent of the average daily net assets of the Investor Class of each of the nine equity USGIF funds.

Administrative Services Fees. The funds pay the Company compensation at an annual rate of 0.08 percent of the average daily net assets of each Fund for administrative services provided by the Company to the funds.

Investment Income. 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 is dependent on market fluctuations and does not remain at a consistent level. Timing of transactions and the Company’s ability to participate in investment opportunities largely affect this source of revenue.

Investment income was essentially flat, increasing by $29,453 in fiscal 2011 compared to fiscal 2010.

Investment income increased by $5,595,637 in fiscal 2010 compared to fiscal 2009, primarily as a result of a rebound from the prior year’s declines in the market value of trading securities as well as other-than-temporary impairments in the comparable period.

Included in investment income were other-than-temporary impairments of $3,699 in fiscal 2011, $1,606 in fiscal 2010 and $2,456,618 in fiscal 2009.

										%												%
(Dollars in Thousands)		2011				2010				Change				2010				2009				Change
Employee compensation and benefits		$	12,468			$	11,913				4.7	%		$	11,913			$	10,017				18.9	%
General and administrative			8,749				6,849				27.7	%			6,849				8,696				(21.2	%)
Platform fees			6,304				5,583				12.9	%			5,583				4,946				12.9	%
Advertising			1,916				1,292				48.3	%			1,292				407				217.4	%
Depreciation			292				321				(9.0	%)			321				270				18.9	%
Subadvisory fees			175				563				(68.9	%)			563				2,415				(76.7	%)
Total		$	29,904			$	26,521				12.8	%		$	26,521			$	26,751				(0.9	%)

Employee Compensation and Benefits. Employee compensation and benefits increased by $554,928, or 4.7%, in fiscal 2011, and $1,896,037, or 18.9%, in fiscal 2010 compared to the prior year. The increases in both years were primarily due to higher performance-based bonuses.

Subadvisory Fees. Through September 2010, subadvisory fees were calculated as a percentage of average net assets of the two funds that are subadvised by a third-party manager. From October 2010 to June 30, 2011, subadvisory fees were adjusted to a flat fee per month. The decrease in subadvisory fees of $388,041, or 68.9%, in fiscal 2011 and $1,851,476, or 76.7%, in fiscal year 2010 is due to the restructured responsibilities of the third-party manager, as well as a decline in assets under management.

General and Administrative. The increase in general and administrative expense of $1,899,909, or 27.7%, in fiscal 2011 was primarily attributable to sales-related conferences and consulting fees and implementation of new investment management and trading software. The decrease in general and administrative expenses in fiscal 2010 of $1,846,310, or 21.2%, resulted primarily from proxy-related costs associated with the merger of the USGIF and USGAF trusts in fiscal 2009.

Platform Fees. Broker-dealers typically charge an asset-based fee for assets held in their platforms. Platform fees increased by $720,876, or 12.9%, in fiscal 2011, and by $636,377, or 12.9%, in fiscal 2010 due to an increase in assets held through the broker-dealer platforms. The incremental assets received through the broker-dealer platforms are not as profitable as those received from direct shareholder accounts due to margin compression resulting from paying platform fees on those assets.

Advertising. Advertising increased by $624,250, or 48.3%, in fiscal 2011 and by $884,869, or 217.4%, in fiscal 2010 as a result of increased marketing and sales activity.

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 basis of assets and liabilities for financial and tax purposes, resulting from the use of the liability method of accounting for income taxes.

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 no valuation allowance at June 30, 2011.

Off Balance Sheet Arrangements

The Company does not have any off balance sheet arrangements.

A summary of contractual obligations of the Company as of June 30, 2011, is as follows:

		Payments due by period
						Less than				1-3				4-5				More than
Contractual Obligations		Total				1 year				years				years				5 years
Operating lease obligations		$	415,447			$	198,282			$	217,165			$	–			$	–
Contractual obligations			1,535,386				978,643				556,743				–				–
Total		$	1,950,833			$	1,176,925			$	773,908			$	–			$	–

Operating leases consist of office and mailroom equipment leased from several vendors. Contractual obligations include educational and charitable organization pledges, commitments to fund a venture capital investment and agreements for services used in daily operations.

The Board has authorized a monthly dividend of $0.02 per share through December 2011, at which time the Board will consider continuation of the dividend. Payment of cash dividends is within the discretion of the Company’s Board of Directors and is dependent on earnings, operations, capital requirements, general financial condition of the Company and general business conditions. The total amount of cash dividends to be paid to class A and class C shareholders from July 2011 to December 2011 will be approximately $1,850,000.

At fiscal year end, the Company had net working capital (current assets minus current liabilities) of approximately $32.4 million and a current ratio (current assets divided by current liabilities) of 7.6 to 1. With approximately $27.2 million in cash and cash equivalents and $10.4 million in marketable securities, the Company has adequate liquidity to meet its current obligations. Total shareholders’ equity was approximately $41.1 million, with cash, cash equivalents and marketable securities comprising 81.7% of total assets.

The Company has no long-term debt; thus, the Company’s only material commitment going forward is for operating expenses. The Company also has access to a $1 million credit facility, which can be utilized for working capital purposes. The Company’s available working capital and projected cash flow are expected to be sufficient to cover current expenses.

The investment advisory and related contracts between the Company and USGIF will expire on September 30, 2012. With respect to offshore advisory clients, the contracts between the Company and the clients expire periodically and management anticipates that its offshore clients will renew the contracts.

Management believes current cash reserves, available financing and projected 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.

The discussion and analysis of financial condition and results of operations are based on the Company’s financial statements, which have been prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of these financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses. Management reviews these estimates on an ongoing basis. Estimates are based on experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. While recent accounting policies are described in more detail in Note 2 to the consolidated

financial statements, the Company believes the accounting policies that require management to make assumptions and estimates involving significant judgment are those relating to valuation of investments, income taxes and valuation of stock-based compensation.

Investments. The Company accounts for its investments in securities in accordance with ASC 320 Investments — Debt and Equity Securities (formerly SFAS No. 115, Accounting for Certain Investments in Debt and Equity Securities). The Company classifies its investments in equity and debt securities based on intent. Management determines the appropriate classification of securities at the time of purchase and reevaluates such designation as of each reporting period date.

Securities that are purchased and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value. Unrealized gains and losses on these securities are included in earnings.

Investments in debt securities or mortgage-backed securities that are purchased with the intent and ability to hold until maturity are classified as held-to-maturity and measured at amortized cost. The Company currently has no investments in debt securities or mortgage-backed securities.

Investments classified as neither trading securities nor held-to-maturity securities are classified as available-for-sale securities and reported at fair value. Unrealized gains and losses on these available-for-sale securities are excluded from earnings, reported net of tax as a separate component of shareholders’ equity and recorded in earnings when realized.

The Company evaluates its investments for other-than-temporary declines in value on a periodic basis. This may exist when the fair value of an investment security has been below the current value for an extended period of time. When a security in the Company’s investment portfolio has an unrealized loss in fair value that is deemed to be other than temporary, the Company reduces the book value of such security to its current fair value, recognizing the credit related decline as a realized loss in the Consolidated Statements of Operations and Comprehensive Income and a revised GAAP cost basis for the security is established. For available-for-sale securities with declines in value deemed other than temporary, the unrealized loss recorded net of tax in accumulated other comprehensive income is realized as a charge to net income.

The Company records security transactions on trade date. Realized gains or losses from security transactions are calculated on the first-in/first-out cost basis, unless otherwise identifiable, and are recorded in earnings on the date of sale.

Securities traded on a securities exchange are valued at the last sale price. Securities for which over-the-counter market quotations are available, but for which there was no trade on or near the balance sheet date, are valued at the mean price between the last price bid and last price asked. Securities for which quotations are not readily available are valued at management’s estimate of fair value.

Income Taxes. The Company’s annual effective income tax rate is based on the mix of income and losses in its U.S. and non-U.S. entities which are part of the Company’s Consolidated Financial Statements, statutory tax rates and tax-planning opportunities available to the Company in the various jurisdictions in which it operates. Significant judgment is required in evaluating the Company’s tax positions.

Tax law requires certain items to be included in the tax return at different times from when these items are reflected in the Company’s Consolidated Income Statement. As a result, the effective tax rate reflected in the Consolidated Financial Statements is different from the tax rate reported on the Company’s consolidated tax return. Some of these differences are permanent, such as expenses that are not deductible in the tax return, and some differences reverse over time, such as depreciation expense. These timing differences create deferred tax assets and liabilities. Deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and the tax basis of assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the

years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment dates. In addition, excess tax benefits associated with stock option exercises also create a difference between the tax rate used in the consolidated tax return and the effective tax rate in the Company’s Consolidated Income Statement.

The Company assesses uncertain tax positions in accordance with ASC 740 Income Taxes (formerly FIN 48, Accounting for Uncertainty in Income Taxes). Judgment is used to identify, recognize and measure the amounts to be recorded in the financial statements related to tax positions taken or expected to be taken in a tax return. A liability is recognized to represent the potential future obligation to the taxing authority for the benefit taken in the tax return. These liabilities are adjusted, including any impact of the related interest and penalties, in light of changing facts and circumstances such as the progress of a tax audit. A number of years may elapse before a particular matter for which a reserve has been established is audited and finally resolved. The number of years with open tax audits varies depending on the tax jurisdiction.

Judgment is used in classifying unrecognized tax benefits as either current or noncurrent liabilities in the Company’s Consolidated Balance Sheets. Settlement of any particular issue would usually require the use of cash. A liability associated with unrecognized tax benefits will generally be classified as a noncurrent liability because there will usually be a period of several years between the filing of the tax return and the final resolution of an uncertain tax position with the taxing authority. Favorable resolutions of tax matters for which reserves have been established are recognized as a reduction to income tax expense when the amounts involved become known.

Assessing the future tax consequences of events that have been recognized in the Company’s Consolidated Financial Statements or tax returns requires judgment. Variations in the actual outcome of these future tax consequences could materially impact the Company’s financial position, results of operations or cash flows.

Stock-Based Compensation. Stock-based compensation expense is measured at the grant date based on the fair value of the award, and the cost is recognized as expense ratably over the award’s vesting period. The Company measured the fair value of stock options granted in fiscal 2010 on the date of grant using a Black-Scholes option-pricing model. No options were granted in fiscal 2009 or fiscal 2011.

The Company believes that the estimates related to stock-based compensation expense are critical accounting estimates because the assumptions used could significantly impact the timing and amount of stock-based compensation expense recorded in the Company’s Consolidated Financial Statements.

Item 7A. 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 certain investment advisory clients. Written procedures are in place to manage compliance with the code of ethics and other policies affecting the Company’s investment practices.

The table below summarizes the Company’s equity price risks as of June 30, 2011, and shows the effects of a hypothetical 25% increase and a 25% decrease in market prices.

										Estimated Fair
										Value After				Increase (Decrease) in
		Fair Value at				Hypothetical				Hypothetical Price				Shareholders' Equity,
		June 30, 2011				Percentage Change				Change				Net of Tax
Trading securities 1			$5,703,916			25% increase					$7,129,895				$941,146
						25% decrease					$4,277,937				($941,146	)
Available-for-sale 2			$4,660,928			25% increase					$5,826,160				$769,053
						25% decrease					$3,495,696				($769,053	)

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

The selected hypothetical changes do not reflect what could be considered best- or worst-case scenarios. Results could be significantly different due to both the nature of equity markets and the concentration of the Company’s investment portfolio.

Item 8. Financial Statements and Supplementary Data

Board of Directors and Stockholders
U.S. Global Investors, Inc.
San Antonio, Texas

We have audited U.S. Global Investors, Inc.’s (the “Company”) internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying “Item 9A, Management’s Report on Internal Control Over Financial Reporting.” Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2011, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balances sheets of U.S. Global Investors, Inc. as of June 30, 2011 and 2010, and the related consolidated statements of operations and comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended June 30, 2011 and our report dated September 6, 2011, expressed an unqualified opinion thereon.

Board of Directors and Stockholders
U.S. Global Investors, Inc.
San Antonio, Texas

We have audited the accompanying consolidated balance sheets of U.S. Global Investors, Inc. (the “Company”) as of June 30, 2011 and 2010 and the related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows for each of the three years in the period ended June 30, 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of U.S. Global Investors, Inc. at June 30, 2011 and 2010, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2011, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), U.S. Global Investors, Inc.’s internal control over financial reporting as of June 30, 2011, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated September 6, 2011, expressed an unqualified opinion thereon.

U.S. GLOBAL INVESTORS, INC.
CONSOLIDATED BALANCE SHEETS

		June 30,				June 30,
Assets		2011				2010
Current Assets
Cash and cash equivalents		$	27,207,896			$	23,837,479
Trading securities, at fair value			5,703,916				5,072,724
Receivables
Mutual funds			3,259,251				3,065,100
Offshore clients			33,828				29,070
Income tax			244,149				-
Employees			2,200				1,885
Other			7,391				152,930
Prepaid expenses			816,814				756,394
Deferred tax asset			-				200,129
Total Current Assets			37,275,445				33,115,711
Net Property and Equipment			3,547,303				3,906,712
Other Assets
Deferred tax asset, long-term			482,927				933,241
Investment securities available-for-sale, at fair value			4,660,928				3,028,034
Total Other Assets			5,143,855				3,961,275
Total Assets		$	45,966,603			$	40,983,698
Liabilities and Shareholders’ Equity
Current Liabilities
Accounts payable		$	55,181			$	174,690
Accrued compensation and related costs			1,734,267				1,701,255
Deferred tax liability			77,432				-
Dividends payable			924,672				921,514
Other accrued expenses			2,117,604				1,994,367
Total Current Liabilities			4,909,156				4,791,826
Commitments and Contingencies
Shareholders’ Equity
Common stock (class A) - $0.025 par value; nonvoting; authorized, 28,000,000 shares; issued, 13,862,445 shares at June 30, 2011, and June 30, 2010			346,561				346,561
Common stock (class B) - $0.025 par value; nonvoting; authorized, 4,500,000 shares; no shares issued			-				-
Convertible common stock (class C) - $0.025 par value; voting; authorized, 3,500,000 shares; issued, 2,073,103 shares at June 30, 2011, and June 30, 2010			51,828				51,828
Additional paid-in-capital			15,267,231				15,136,537
Treasury stock, class A shares at cost; 526,583 and 573,764 shares at June 30, 2011, and June 30, 2010, respectively			(1,232,929	)			(1,343,397	)
Accumulated other comprehensive income, net of tax			1,042,462				555,352
Retained earnings			25,582,294				21,444,991
Total Shareholders’ Equity			41,057,447				36,191,872
Total Liabilities and Shareholders’ Equity		$	45,966,603			$	40,983,698

The accompanying notes are an integral part of these financial statements.

U.S. GLOBAL INVESTORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

		Year Ended June 30,
		2011				2010				2009
Revenues
Mutual fund advisory fees		$	26,571,094			$	21,163,003			$	16,764,376
Transfer agent fees			5,010,913				5,349,942				5,942,071
Distribution fees			5,988,167				5,292,629				2,867,040
Administrative services fees			1,921,630				1,797,063				1,214,624
Other advisory fees			1,387,358				400,663				924,363
Investment income (loss)			1,008,568				979,115				(4,616,522	)
Other			45,896				47,738				44,317
			41,933,626				35,030,153				23,140,269
Expenses
Employee compensation and benefits			12,467,966				11,913,038				10,017,001
General and administrative			8,749,365				6,849,456				8,695,766
Platform fees			6,303,503				5,582,627				4,946,250
Advertising			1,916,074				1,291,824				406,955
Subadvisory fees			174,994				563,035				2,414,511
Depreciation			291,705				321,416				270,334
			29,903,607				26,521,396				26,750,817
Income (Loss) Before Income Taxes			12,030,019				8,508,757				(3,610,548	)
Provision for Federal Income Taxes
Tax expense (benefit)			4,197,372				3,159,472				(1,372,969	)
Net Income (Loss)			7,832,647				5,349,285				(2,237,579	)
Other comprehensive income (loss), net of tax:
Unrealized gains on available-for-sale securities arising during period			552,605				203,018				677,731
Less: reclassification adjustment for gains included in net income			(65,495	)			-				-
Comprehensive Income (Loss)		$	8,319,757			$	5,552,303			$	(1,559,848	)
Basic Net Income (Loss) per Share		$	0.51			$	0.35			$	(0.15	)
Diluted Net Income (Loss) per Share		$	0.51			$	0.35			$	(0.15	)
Basic weighted average number of common shares outstanding			15,384,435				15,339,038				15,275,962
Diluted weighted average number of common shares outstanding			15,384,435				15,341,820				15,275,962

The accompanying notes are an integral part of these financial statements.

U.S. GLOBAL INVESTORS, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

																		Accumulated
		Common				Common				Additional								Other
		Stock				Stock				Paid-in				Treasury				Comprehensive				Retained
		(class A)				(class C)				Capital				Stock				Income (Loss)				Earnings				Total
Balance at June 30, 2008 (13,817,269 shares of class A; 2,094,279 shares of class C)		$	345,432			$	52,357			$	14,114,178			$	(1,562,419	)		$	(325,397	)		$	26,609,593			$	39,233,744
Purchases of stock under ESPP of 27,900 shares of Common Stock (class A)			-				-				114,161				73,659				-				-				187,820
Conversion of 2,404 shares of class C common stock for class A common stock			60				(60	)			-				-				-				-				-
Dividends paid			-				-				-				-				-				(3,673,450	)			(3,673,450	)
Stock bonuses			-				-				74,260				39,636				-				-				113,896
Stock based compensation expense			-				-				325,832				-				-				-				325,832
Unrealized gain on securities available-for-sale (net of tax)			-				-				-				-				677,731				-				677,731
Net loss			-				-				-				-				-				(2,237,579	)			(2,237,579	)
Balance at June 30, 2009 (13,819,673 shares of class A; 2,091,875 shares of class C)			345,492				52,297				14,628,431				(1,449,124	)			352,334				20,698,564				34,627,994
Purchases of stock under ESPP of 21,556 shares of Common Stock (class A)			-				-				154,926				50,470				-				-				205,396
Conversion of 18,772 shares of class C common stock for class A common stock			469				(469	)			-				-				-				-				-
Exercise of 24,000 options for Common Stock (class A)			600				-				116,149				-				-				-				116,749
Dividends declared			-				-				-				-				-				(4,602,858	)			(4,602,858	)
Stock bonuses			-				-				183,640				55,257				-				-				238,897
Stock-based compensation expense			-				-				53,391				-				-				-				53,391
Unrealized gain on securities available-for-sale (net of tax)			-				-				-				-				203,018				-				203,018
Net income			-				-				-				-				-				5,349,285				5,349,285
Balance at June 30, 2010 (13,862,445 shares of class A; 2,073,103 shares of class C)			346,561				51,828				15,136,537				(1,343,397	)			555,352				21,444,991				36,191,872
Purchases of stock under ESPP of 25,781 shares of Common Stock (class A)			-				-				129,311				60,363				-				-				189,674
Dividends declared			-				-				-				-				-				(3,695,344	)			(3,695,344	)
Stock bonuses			-				-				119,379				50,105				-				-				169,484
Stock based compensation expense			-				-				(117,996	)			-				-				-				(117,996	)
Unrealized gain on securities available for sale (net of tax)			-				-				-				-				487,110				-				487,110
Net income			-				-				-				-				-				7,832,647				7,832,647
Balance at June 30, 2011 (13,862,445 shares of class A; 2,073,103 shares of class C)		$	346,561			$	51,828			$	15,267,231			$	(1,232,929	)		$	1,042,462			$	25,582,294			$	41,057,447