U.S. Global Investors, Inc. (GROW) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today for our webcast announcing U.S. Global Investors' results for the third quarter of 2021, I'm Holly Schoenfeldt. At the end of today's webcast, we will be addressing questions that were sent in prior to today's call. If you have any additional questions during the webcast please send those to [email protected] after the presentation, and we will get back to you as soon as possible. Now as seen on Slide #2, the presenters for today's program are Frank Holmes, U.S. Global Investors' CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer; and myself, Holly Schoenfeldt, Marketing and Public Relations Manager. On to Slide #3. As always, we would love to offer anyone tuned in today one of our JETS, GOAU or HIVE pads, all you have to do is send us an e-mail with your mailing address, and we are more than happy to get one over to you. On Slide #4. During this webcast, we may make forward-looking statements about our relative business outlooks. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10-Q filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and U.S. Global Investors accepts no obligation to update them in the future. Now on Slide #5, you will see a quick overview of U.S. Global. We are an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment club, the company became a registered investment adviser in 1968, and has a long-standing history of global investing and launching first of their kind investment products, including the first no load gold fund. U.S. Global is well-known for expertise in gold and precious metals, natural resources, airlines and emerging markets. Now on Slide #6, I would like to hand it over to Frank Holmes, CEO and CIO, for an overview of the period and what is driving the stock. Frank?

Thank you, Holly, and thank you to all the shareholders and new and old loyal shareholders for being with us through the ups and downs. And it's been even -- the past year has been an amazing roller coaster. But what seems to be nicely consistent has been growth in assets in the crypto space. And I think in that introduction, Holly, we forgot to say that we couldn't launch a blockchain crypto ETF, but we were able to launch HIVE and that has been an important part of our overall success. In addition to the airline recovery, the vaccine rollout, we've benefited dramatically from the anticipation of the vaccine and then the vaccine rollout has led to spectacular growth in JETS. And I hope in this presentation, we're going to walk you through that. We don't believe it's over. We believe that Canada's just coming out of the thaw. Europe has still not thawed yet, but they're doing everything to get to the level where America is, and I think we're going to get more growth in the airline industry around the world. And that has all helped driving surging assets under management. Next, please. So our top institutional shareholders, Perritt Capital Management is at 5.52%, Diametric Capital at 5.3%, Heartland Advisers, Bill Nasgovitz and team at 4.81%, the Royce Funds, who have been really with us up and down through the whole period, at one-time, owning 15% when we were predominantly -- had the motion of being known for gold. And it's interesting to see how we've evolved with that. But thank you for being such loyal shareholders and Vanguard, which is basically an indexed product that we have. The 5 names own about 20% of the company. Next, please. Myself, I own about 16% of the company through Class A and C, and I own 100% of the C, which is voting stock. And when you add that, compare that to the A, overall, 16% of the company. Next, please. Growing dividends. We've been paying them monthly. The company has paid a monthly dividend since June 2007, the current yield at $8.19 as of May 3 was $0.73. Monthly dividend payments of $0.005 approved monthly. So I think as you can see, they're approved through June 21 and I think based on our financial strength, we should be able to maintain that. Next, please. So the shareholder repurchase program, the Board approved a repurchase of up to 2.75 million shares of its outstanding common stock in the open market through December 31, '21. And during the 3 months ended March 31, the company repurchased 19,900 shares of Class A shares using cash for approximately 127,000. What's important here is that it's an algorithm that buys only in down days. So it's been useful, and I think the average price lease was $6 and change that we paid for those 19,900 shares we purchased back. But as the Board has, at any time, may suspend or discontinue at any time this program, but so far, we've kept it on for a long period of time. Next, please. So you can see the share repurchased another visual looking at it, and it's been a great way to accumulate stock on the down days and down periods. Next, please. Gross share prices see steady growth. This is the share price over 12 months ended March 31. We had a super search that doubled and then pulled off, try to explain to you what's driving some of that volatility. But over the past year, it is up more than sevenfold. Next, please. That's right. Our P/E ratio is extremely low. When you compare us, and I'd like to use a classic example that Invesco, excellent fund family group of 40% of their assets are in the QQQ, and they trade at 15.4x. Wisdomtree's, 100% are ETFS, and they trade at 21.3% and GlobeTrade's at 4.4% and 80% of our operating revenue comes from the ETF space. So it's -- I think that globe has the potential for much more upside as we continue to show Q-over-Q and year-over-year growth in revenue, cash flow and assets. Next, please. So Global surges past its competition, as you can see here, because of the delta change, we just had faster growth in revenue per share than Invesco or Wisdomtree, and we had faster EBITDA per share growth in these, particularly because of JETS as an asset class than our peers. And that's what drives the stock price. Next, please. Nice, simple. I like the spic and span clean, grow just the other day, close to $8.19. The average assets, about $4 billion. What's important to hear is that they grew 38% Q-over-Q and 632% year-over-year. This translates into revenue of $6.4 million, which is a 23% increase Q-over-Q, and revenue year-over-year grew 595%. So that helps drive the stock price and the income, $14.2 million, up from a loss of $1.6 million a year earlier. What's really key here is the growth in JETS has been the most significant. We had GOAU for the first 9 months of last year, while Gold was surging and has tapered off, but JETS has continued to be tracking with how vaccines are growing. Total assets under management as of the end of March 31 were $4.6 billion. Next, please. So gold is growing faster than the money supply and inflation. It's an important factor when you're looking at it. So how do you grow inflation? And there's no way inflation is only 1.7%, 1.8%. And the reason why that CPI number is so understated is because it excludes food and inflation. So inflation is probably running more like 9% and money supply is growing at a huge number, as you can see, 25%. So I think that Global has done a good job, mainly because we've been able to attract assets and also some of our key investments have grown in the past year faster than the amount of money being printed. Next, please. This is the quarterly average assets under management. As you can see, a nice climb from March of last year when the pandemic hit and was the all-time low, and we see a rise in June, September, December and March. Balance sheet is now reflected, also very strong. We did a strategic investment in HIVE blockchain. When we launched the HIVE blockchain, which was the first public company ever to be mining cryptocurrencies, starting off with Ethereum and then mining Bitcoin. HIVE had a wonderful year last year. We crystallized gains in December. We reinvested HIVE, so it could grow its asset base at a very rapid rate and to a convertible 8% paid monthly convertible, and we have the ability to get back or either convert it into common stock or get paid out every quarter a portion of our principal. You can see equities investments, and you can see the cash is growing. So our balance sheet remains much stronger than it has, in fact, probably going back like 10 years. Next, please. Earnings per share quarterly, mainly due to the indirect investment in HIVE, as you can see, back in 2018, during the winter of crypto, '17 was the big launch of HIVE. It boomed and then it falls and tracks with Ethereum and Bitcoin. And then during that period of 2018, it was the winter for crypto, it was also a winter for gold stocks. Gold stocks really didn't bottom until, in 2019 and didn't take off until 2020. But what we had last year was the constellation of the stars looking up, were perfect for us. We're blessed. We're really, we're blessed. All the pavement work we hit for 5 years selling the story of JETS came to fruition, GOAU after 3 years of pounding the turf during the winter for gold stocks had paid off. So we're thrilled. So we had witnessed JETS and GOAU taking off, in particular, JETS, and then the crypto investment in high blockchain, it came back last year and generated a return that was far greater than new highs the company's made. So it's been a wonderful ride for the shareholders that had the patience. Next, please. Operating revenue has been trending upward. Nice way of looking at the quarterly revenue in millions of dollars, as you can see here. Next, please. And actually, what's interesting about the fund business, and we're so transparent. It's so easy to -- we know people that just basically look at our ETFs every day and the total assets and multiply times 0.6, and it gives you an idea what our revenue is going to look like, and then what did our key investments like HIVE close at, and that affects our P&L on the balance sheet and income statement, so you can see that as the assets were in the ETF business, $100 million was throwing off $600,000 of revenue low over a year ago. For the same quarter, March closed then of JETS and GOAU. And now having $4 billion in assets, that says that those assets are throwing off $24 million in revenue and having $4.5 billion, we're pushing close to $60 million in operating revenue from the fund -- $30 million, sorry, from the operating revenue which is a huge change from the previous year, and that is showing up on a per share basis, which is helping drive the stock. Next, please. Well, I love these 2 guys. They're 2 sweet and very rich old men. But thank you, millennial investors. Their ideas to invest in weren't as significant as the millennials that came through Robinhood and Fidelity and came through TD Waterhouse and Schwab, I'm going to thank them because they're price action. Next visual, please. It was very significant, I talked about it last year that there was a whole forecast, 25,000 Robinhood investors bought JETS between $12 and $13. Buffett comes out in June and says he sold all of his airlines, and he's very pessimistic about the options for a vaccine and the growth at turnaround of the economy and the airline started taking off. It was basically the bottom. And JETS went from the $12 range to $28 in that run. So when they say millennial investors aren't very smart, I disagree. I know that the data was showing at the time, 25,000 had invested in JETS prior to a Buffett disclosing that he had bailed on the industry as it took off. What's important here is that a lot of these early investors were speculating that in previous crises that were global, the airlines fell 60% to 70% and then they rebounded at 80% to 120%. So they're very accurate because that's what it's done. It's doubled -- more than doubled from its lows. But a lot of that growth of JET's price action really took place as vaccines, as more and more people got their first vaccine, and that's what we saw in the first quarter. Many of the airlines had spectacular runs in the first quarter. 92 days until 70% of the population is vaccinated against COVID-19, and the United States is doing well. And I think what you'll see, that as 70% gets to that number and we get a higher number for double vaccines, that is, the double shots, the airline industry will get business travel. That's a more profitable part of the business. But in the interim, it looks very, very strong that by August, we'll have 70%, at least having one needle. This is an interesting time to herd, that comes out and on a regular basis, and you can track how many days, based on collection of each data that -- and the rollout is taking place. The country that we look at, it was interesting, and it's a small population basis, Israel. Israel with less than 10 million people has pushed something like 83% of the people have already received their first vaccine. But as America's over $300 million it's just more work. But those states that have had the biggest penetration and getting people vaccinated have enjoyed the greatest business boom. Next, please. Record inflows in the JETS. Another way looking at it, by each quarter, it varies. But here, you can see the dollar amounts traded in the billions was just remarkable. To see that we traded 40,000 shares a day, and it goes to $8 million. Next, please. Something that really was important last year that came out in March was by the PSA, discussing how many people, and given the data that they allowed to fly, they precleared. Give the big macro data point, prior to COVID, the PSA was basically approving 2.7 million people a day, 2 million Americans we're flying daily, 700,000 were inbound from Asia, Europe, Canada and Latin America. That collapsed until April of last year to a number of just under 90,000 people a day were flying, now we're over 1.5 million people and most of that is tourism, not so much business travel to the degree. And the business travel, as I said, the data suggests that, when we get 70% of the people vaccinated, more than 50% of the people double vaccinated, that business travel will then pick up again. But I remain very bullish on the travel recovery, I believe that the first big, 2 surges we've had in JETS that we're getting ready, we corrected from the highs, and when we get ready for probably the next, third wave for the JETS to possibly go back and make new highs as Europe comes back on stream. And we have to realize is that there's so much pent-up demand for people to just fly and travel, but for goods and services all over the world. Friends of mine who were in Vegas recently said, everything is sold out in the shops, you have to basically go in the shop and buy online. So I think that we're going to be so well surprised when we look at the growth and purchasing manufacturers' index. We strongly suggest a huge boom for the next 6 months and GDP numbers are being forecasted between 6% and 9% growth rates. So I think there's lots of upside still in the airlines industry. Next, please. Airline recovery optimism, another wave of travel is expected. Next, please. But never forget the D&A volatility. I highly recommend you look at this and you study it, the D&A volatility of the gold market, bullion is plus -- 70% of the time, it goes up or down 1% a day, over 10 days, it's 3%. So anytime it jumps 6% in 10 days, take profits anytime it falls more than 6%. It's usually the time to just start accumulating. The S&P is 2x gold over 1 day, in over 10 days of slightly, at plus or minus 5%. So it's more volatile. Most people think of the talking heads on CNBC, that gold is more volatile than the S&P 500. When in fact, it's more stable, and it's been proven itself to be a good asset class for the largest hedge fund in the world, Ray Dalio, having a 10% weighting and rebalancing. And this time last year, it was on the tear on the upside, with all the money printing, state 10-year government bonds went from 50 basis points low and surged to 1.8%. That run basically took the wind out of the sails for gold as corrected. But it doesn't -- I think it really gives you a great opportunity to be buying gold and gold stocks on that collection because the amount of money printed by the U.S., China and Europe is $17 trillion. So as that comes through the economic engine, there's another reason for the JETS and another reason why I think gold will have another big run. But that ignited last year, the Bitcoin and Ethereum, and as you can see, the volatility there is impacting our stock price. Because behind every share of growth, there's almost 0.7 shares of HIVE. So HIVE down a day, we're now finding -- all of a sudden it goes down. But from an operating cash flow and revenue, it's a -- people have to recognize that the operating cash flow really -- most of that pretty is directed from basis points fees we earned from managing the EPS and mutual funds. And the investment in HIVE predominantly shows up in many assets on the balance sheet and it's the P&L comes from investments and that's much more volatile factor that drives it. But our new convertible really creates much more stability in that as an investment, which we have. And so I think that the opportunities when we sell off, the investors are not really capturing and why we're training at such a low multiple. The huge embedded value of the ATF business we're in. And I think that's going forward, this is going to be unlocked. But Tesla is more volatile than Bitcoin, always shocks people. But Ethereum's the most volatile, Ethereum is a very significant investment in HIVE, HIVE is the only crypto company mining Ethereum. And it's a huge asset to them and both on revenue and cash flow and in assets they huddle, they have a big investment during itself. Next, please. So GOAU index has outperformed the New York Stock Exchange Arca Gold Index. Since we launched this, we -- or since we looked in the past year, as you can see, that the quant approach to picking gold stocks is just better than just buying on market cap. And that's the big difference. We have a smaller portfolio, higher percentage in the royalty companies. And that -- this index shows. And I just think it's the -- it's a much smarter way, and that's what the GOAU ETF tracks, this particular index, and it's just a better way for investors. Next, please. So passing on from GOAU, I want to jump into HIVE, which was a strategic investment we made 3 years ago -- over 3 years ago, in fact. And it was because we were trying to launch an ETF in big point there, and we quickly recognized that the regulatory bodies, both in Canada and the U.S. were quite concerned about anti-money laundering laws. And they just weren't going to let that happen, that some hacker got some Bitcoins and then you sold them into a New York Stock exchange-listed ETF. It was just bad news. So we had all this knowledge and friends of mine invited me to explore it, and they were doubting that crypto mining was for the long-term, but I was in a much more bullish stance to it. And I put up the first institutional money, the $5 million, up to $30 million around, and so had a go as a chairman, just like I was launching a GOAU ETF or I was launching JETS. And this was going to be our proxy into something I thought was really cutting edge, and there was huge future growth potential for it. That was the sort of genesis of us investing in high blockchain. It was the first crypto mining company and it ushered in and attracted over $1 billion of other companies emulating what we've done. But we've always been in the forefront, we have the strongest ESG footprint, only using green energy. We've also been first to go out and buy our own data centers and also to do share swaps, to build out what we think is a very important investment. But let me walk you through the incredible roller coaster ride of HIVE blockchain technology. So U.S. global investors in HIVE. Well, we recently sold 10 million shares of HIVE in December, locking in gains. But it was strategic, not only locking in gains, but more important was to build up the cash position to reinvest in HIVE, so it can maintain its growth momentum. I didn't sell any shares personally, and I think that's important for investors to realize the proceeds were reinvested via private placement in unsecured convertible debentures which were very attractive at the time for the company and extremely attractive for U.S. Global, because we maintained our position. So behind every share of grow is about 0.71 shares of high blockchain. The debentures mature in 5 years. They have quarterly principal payments, and they bear interest at 8% but paid monthly. Now what's also important is, in this concept, when you look at crypto mining and why HIVE is such a raving success is because, not only did we mine Ethereum and Bitcoin, but we hold on for dear Life, that is keep what you believe and keep it on your balance sheet. So we keep and have always kept Ethereum, and then Bitcoin on our balance sheet, and this attracted a huge audience of investors from September 2017 when we first launched it. And so for investors in grow, which you recognize is that HIVE is our model, it's our way to play the crypto phenomenon that's taking place globally. Here is a 30-second comprehensive, but concise sort of introduction to who HIVE is. [Presentation]

HIVE invests in these data centers and builds the moat. And I want to make sure you get the seed -- the next video, and it's a minute. It's longer than 30 seconds, but it really helps you on the sheer size and the magnitude that HIVE is the largest Ethereum miner in the world. [Presentation]

So HIVE blockchain continues its strong performance. The total return 12-month period through March 31, it was up 2,500% and the U.S. global shareholders benefit from the spectacular growth in HIVE. HIVE also, because of its investments in Bitcoin and Ethereum, at the end of December was the most profitable of all the crypto mining companies. I think we also probably will have that by the end of March. There's more machines coming on stream with other mining companies in Bitcoin mining this quarter in June. So maybe that'll change, but I still think we're the most profitable crypto mining company. Next, please. So HIVE not only was it a spectacular performer, it attracted the imagination as Ethereum and Bitcoin rallied, and we traded 1.7 billion shares in Canada and over-the-counter of 1.8 billion in the U.S., we traded foreign -- almost 60 million shares, and in Germany, 20 million shares. So overall, it traded 2.4 billion shares of stock as it appreciated almost 2,500%. Next, please. So I'm often asked, what is the difference between Bitcoin and Ethereum? And I hope this 1 minute information video helps you understand the difference. [Presentation]

Thank you. Well, HIVE is the most liquid PS that is in Canada, traded stock, traded 1.7 billion shares in 2020. And then over-the-counter in the U.S., the pink sheets as it used to be known, named #4, in best 50 stocks, established the market equity program to accelerate its growth during this period and it still has run-up and more than doubled all the crypto stocks took off in the first quarter. And what's interesting about this is that we traded more than Grayscales Bitcoin Trust. Next, please. So here's the numbers. HIVE far outperformed the competition, and I share with you is that when we were trying to launch over 4 years ago at Bitcoin ETF, we did all this research and realized it just wasn't going to go anywhere, due to the concerns of anti-money laundering laws by the SEC and the Material Securities Commission and KYC. But crypto mining, you basically validate a transaction and you get paid brand-new cryptocurrency for that. So they're untouched. You don't have an AML concern. That investment was an important investment. We invested virtually $5 million, and it was a heck of a roller coaster. It went up to worth $100 million. It fell back to worth about $3 million. And today, it's worth much more than $30 million. So it's probably to the tune of more like about $45 million. So it's an interesting exercise that crypto mining, as Ethereum and Bitcoin prices rallied was a better investment, and it outperformed everything else. Next, please. So last year, everyone talks about bitcoin up 800%, but Ethereum was up 1,300%. And in February of this year Ethereum started trading on the futures market, you see a [indiscernible] they're able to buy. But HIVE, it's up 2,500%. So I really think that the mining has been a better investment. Now, there are reasons that are driving this price that I wanted to share with you is Metcalfe's law, and it's very simple. May of last year, they have the number of Bitcoins that you would get every 10 minutes, from 12.5% down to 6.25%. So supply gets restricted. We all know that it's capped at 21 million coins, but more and more people are buying. And they're now able to buy through PayPal and PayPal allows you to buy a fraction. You can't buy an ETF on PayPal, you can't buy a stock, but you can buy Bitcoin. And you could turn around and then sell that Bitcoin and use the proceeds and go to Amazon or go to Best Buy and buy a new TV because you bought it at $10,000, it's now $57,000. It's remarkable. What that does is, and what it says is, Metcalfe's law says, that if you have a limited supply and more people adopt bitcoin as an asset class to protect you against excessive money printing, then it grows exponentially, and that is why it's been driving it. Supply, we all know that Ethereum and Bitcoin is much more limited and that attracts more buyers, Mastercard, Visa, they're all jumping in on this space and more and more institutional money. So HIVE has been benefiting because of the new interest in Ethereum and blockchain, and the video is here to explain to you how Metcalfe's law works. [Presentation]

Well, thank you very much for the patience for watching that for a couple of minutes. Now I want to talk to -- listen -- to have you to listen to hard-working, our CFO, Mrs. Dynamite, Lisa Callicotte.

Thank you, Frank. First, I'd like to start with our financial highlights on Slide 43. We had another very strong quarter. Operating revenues have continued to increase and were up approximately 23% compared to the previous quarter and 595% compared to the same quarter a year ago. Our quarterly net income was $14.2 million compared to the previous quarter loss of $1.6 million. Average assets under management were $4 billion, up for the quarter, 38% from the previous quarter and 632% in the same quarter a year ago. Now I'll review more details of our operations for the quarter ending March 31, 2021. Beginning on Slide 44, we recorded total operating revenues of $6.4 million for the quarter, which was an increase of $5.4 million or 595% from $914,000 the same quarter last year. The increase is primarily due to increases in assets under management, especially in our JET CTS. Operating expenses for the quarter were $3 million, an increase of $1.1 million to 59%, primarily for the following reasons: employee compensation and benefits increased $667,000 or 93%, primarily due to increased bonuses due to improved company and fund performance. General and administrative expenses increased $437,000 or 40%, primarily due to increased ETF fund expenses, and that was due to the ETF AUM increase. We see our operating income for the quarter ending March 31, 2021, is $3.4 million or an improvement of $4.3 million compared to the same quarter for fiscal year 2020, which was a loss of $979,000. On Slide 45, we see that other income for the quarter was $15.5 million and was primarily related to unrealized gains on investments. I want to remind everybody about HIVE and the new investment we have in it. We actually have a couple of pieces. One is the warrants which are fair valued, and the change in that value hits our income statement, which would be kind of included in this $15.5 million. Then the debt portion that we had is also fair value, but the change in that value goes through other comprehensive income. So again, that's not on our income statement, but it is hitting our balance sheet. Also, as you would expect, our -- as our net income goes up, our expenses -- our tax expense goes up, and that did increase $4.6 million for the quarter. Net income attributable to USGI after taxes for the quarter was $14.2 million. And as you can see on Slide 46, this equates to $0.94 per share, and it's compared to a loss of $0.06 per share with the same quarter last year. Moving to Slide 47, we see our balance sheet is also improving. It includes high levels of cash and debt and equity securities at fair value and they combine to make up over 80% of our total assets. As you see on Page 48, we still have no long-term debt, and the only long-term liabilities we have are deferred taxes and lease obligations. The company has a net working capital of $14.1 million and a current ratio of 3.4:1. With that, I'll turn it over to Holly.

Thank you, Lisa. All right. As you can see on Slide 61, a majority of our mutual fund assets are in emerging markets and natural resources, while 27% are in global equities and fixed income, and as for distribution, more than 3/4 of assets come from retail investors, with 17% coming from institutional investors. On Slide 62, our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets as well as our exchange-traded funds. More recently, we have expanded our media presence in the cryptocurrency space as well, with Frank being interviewed by Cointelegraph and Coin Desk, just to name a few. The company and our funds continue to receive an invaluable amount of viral publicity gained through these media interviews. And then on Slide 63, you can see that grow our funds and HIVE continues to be highlighted by influential financial newsletter writers as well, along with the sharing and syndication of our award-winning original content by third-party publishers. The newsletters have loyal followings and receive millions of visitors each month. Frank Holmes' CEO blog, Frank Talk, continues to grow in popularity as seen on Slide 64. And in fact, Frank Talk celebrated 14 years of publication this April. Frank's commentary is often featured by prominent publications, including Forbes, Seeking Alpha, Kitco and Equities.com, each one with millions of monthly visitors. On to Slide 55, Kitco News, the biggest gold website in the world, with an audience of over 30 million monthly visitors, continues to feature the Gold Game Film Show with Frank Holmes' gold market analysis and now crypto analysis. And in addition, Frank has become a frequent guest and commentator on both gold and digital currencies on Stansberry Research with host Daniela Cambone. Now if we take a look at Slide #56, at quarter end, we like to look at the most visited Frank Talk blog posts published over the past year. And on this slide, you will see the most visited articles were as follows: #1, a new commodity super cycle could be powering up after a long freeze; #2, inflation is coming for your wealth. Here's what investors can do about it; and #3, gold's still attractive as the bond selloff looks overdone. You can sign up for the Frank Talk blog for free, as always, on our homepage, which is usfunds.com. On Slide 57, all of this coverage helps us leverage our brand by reaching millions of readers, viewers and potential investors. Our website, usfunds.com, was visited over 480,000 times from March of 2020 to March of 2021 by curious investors from all over the world. U.S. Global Investors is well-known for its timely, balanced and positive market insights and our thought leadership. So as you can see on Slide #58, the company has been awarded numerous Star Awards by the Investment Management Education Alliance over the years for its excellence in investor education, and our total stands at 90 awards. On Slide #59, our subscriber base continues to grow organically, and we currently have over 100,000 curious investors following our investment newsletters, social channels, and the Frank Talk blog, and investors can sign up on our website and join these subscribers who receive the award-winning Investor Alert E newsletter as well as Frank talk. Now on to Slide #60. We also continue to see a large following across all of our social media platforms, and I encourage you all to check us out not only on Facebook and Instagram, but also on Pinterest, Twitter and even YouTube. And now as we wrap up today's presentation, we will address some questions that were sent in by shareholders. And just as a reminder to our audience this morning, if you have additional questions for us. Please do not hesitate to e-mail those to [email protected].

And Frank, I'd like to start the Q&A with a question for you, which says JET is a significant source of AUM for the firm. What is the company doing to ensure its continued success and/or handle any direct competition that may come up for JETS?

Well, I think the first part of that, Holly, is that our -- the structure of it, the unique smart beta 2.0 is not just some factors for picking stocks. It's the overall structure, to try to capture 65% of the people that fly, the 2 million people that were flying in America and then how it's expanded globally. We've made adjustments as the fund grew to be more dynamic and fluid which we to stick with the prospectus. So we're very cut up in trying to monitor that. We can go beat the original bogey we set out to be, and that was the New York Stock Exchange Global Airline Index. And so I think that we've got to make sure we're telling that story. It's harder to knock it off because it's not just factors or picking stocks as a portfolio structure. And then it's now getting the story told in different geographic locations around the world and getting it listed. So I was thrilled to see we're able to get -- this is in Mexico, and there's other opportunities in Latin America. And just so -- we will continue, hopefully, to get it in Asia too, so this unique product. And we think there's another big wave of opportunity in the airlines industry as the world becomes vaccinated.

Perfect. Thanks, Frank. Lisa, here is a question for you. It says, can you please explain operating margin changes over the last few quarters?

Yes. So -- and I think this is a question that we've had often because our quarterly operating margin for September 2020 was 29%. And then in December, it was 10%. And then at -- for March 2021 quarter, it was 54%. So I know a lot of people are curious about why there was a decrease for that December quarter. And I do want to remind people that, that really is related to a bonus that was paid within that quarter, related to realized gains on investments, about $1.8 million. And so bonuses are part of our compensation expense that's included in operating expenses. But realized gains are included in investment income, which is not included in operating income. So we're seeing that expense and are operating even though the income is not included in operating income. So if we remove that bonus from our operating expenses, then the operating margin for December would be approximately 45%. So I think that is more in line with what people are expecting and is more as a better representative of what our operation margin is, which would be 29% for September, 45% in December and 54% for this last March quarter. So we are seeing that as revenues are rising, our expenses are rising, too, but not at the same rate, causing us to be able to have that increased operating margin.

Thank you, Lisa. Frank, this is another question for you. It says, what is the long-term strategy for HIVE? And more specifically, how HIVE relates to U.S. Global Investors. Do you plan to continue overseeing both of these companies?

Yes, I am, as Executive Chairman and that we've looked at CEOs and the issue there is to get someone who can manage the process, knowing capital markets and data centers. So far, we've not been able to do that, but it's not hurt us. It's -- we have a great CFO, outstanding. The 2 of us are basically involved in the turnaround. We have Tobias Ebel from Europe who's been also critical with that. And then we've expanded. Now that we have the GP one, not only buying 50 megawatts capacity in New Brunswick and having our own data center, we noticed that we did that deal for less than $300,000 a megawatt, and then a pure mining crypto mining company, paid $2 million. So we think that we're on the cutting-edge of that and the importance of having a data center, and we can do that now because I have, as an Executive Chairman, a phenomenal team that meets every morning, and takes a lot of stress off me on where we're growing, what we're doing, because we have technically 6 people that have come on with tremendous engineering expertise to -- accounting expertise in the crypto space and running data centers. So I think the company is still lean and mean. I've still not taken a salary for it because I look at it as being one of our trust products just -- and trying to manage it from that end. So I'm thrilled about where we're positioned for the next leg. The vision is a ticket to a $10 billion company. If all of our equipment that we've ordered was producing today, we'd be doing $300 million and have an EBITDA of $200 million. But that equipment has experienced delays and disappointments coming back from China. The whole world is experiencing and complaining about lack of chips from cars. You hear the most than then even Apple. And so we've had our own share of securing a pipeline of upgraded technical equipment, but we think that we'll be able to triple what we were doing. And if you looked at our hashing power today, you can easily see that this is a company that's come from doing $50 million in revenue, now with a run rate of $160 million going to $180 million then going to $300 million. So I think it's a potential for a $10 billion company.

Thank you, Frank. We have one more question today. So what opportunities do you believe lie ahead in terms of making money for GROW shareholders? What can we look forward to in the second half of the year, for example?

Well, we're working on, I think, an excellent new product that fits up to our expertise in global natural resources and would be the only product out there. So we're fast-tracking the execution of that. So we can also tell the story, and we think it's a great product for investors for many reasons, from retail to institutional, and we can actually stay lean and mean. We have less than 25 employees. That's really important for us to stay lean and flexible and outsourced. We have outsourced some talents that we have to have, but we basically want to stay very nimble in how we're running the business, expand the footprint of JETS around the world. I think that, that's a huge growth opportunity. And I think that JETS can be a $6 billion to $7 billion product for investors. So that bodes itself as very attractive. I think we're going to get another wave where gold's going to take off, and I think there's going to be a greater appreciation for GOAU. What we have found is that it takes about 5 years and $5 million to really build a brand, a name. And that's what we did with some of our funds, and then they took off. That's what happened with JETS, took 5 years. GOAU's been around for 3. But I think on this next leg when gold resurfaces as that important inflationary hedge asset class that the gold stocks themselves are much more profitable than ever, that these shares will explode on the upside. So there are the -- the opportunities. I think that, that's a billion-dollar product. It should be more like about $3 billion or $4 billion when I compared to how superior it is to any other gold ETF that's out there. So I remain very committed, bullish, and we're going to educate investors why we're undervalued at trading at less than 5x earnings. I think we should be trading closer to 20x earnings and that means that GROW is huge on the upside. Huge potential.

And there are some questions about HIVE, which is one of the most important and exciting portion of this GROW earnings webcast. Frank, if you could address a few of these. The first one you addressed at the beginning as far as the holding strategy goes. Can you maybe go into detail about how much you are holding?

Well, when you look at our holding this year, we've been predominantly just mining and banking all of our coins, it's been a big win for us. We have just close to $100 million in predominantly Ethereum and Bitcoin, but the major portion because we're the biggest Ethereum purse in the world is Ethereum. So -- and then you add on cash under that, that we're close to USD 140 million in liquidity.

Great. And another question about HIVE is asking, what is the strategy right now for listing in the U.S.?

Well, we've talked about it before. It's a process of a 20-F, 40-F. So we are going with a 40-F filing. We originally thought it was going to be a 20-F, but we've gone to a 40F. We've reached out to the NASDAQ and so we're in the process now, and hopefully, we can get this locked up very, very shortly.

Perfect. One last question then, in terms of HIVE, what is your run rate today? And what is the expected revenue growth over the next 12 months?

Well, based on Ethereum and Bitcoin prices today, and some Ethereum classic also, we put a month ago when Ethereum classic was $20, some of our machines that were -- that had not been upgraded onto mining Ethereum classic at $20, and it went to $150. So we are making a ton of money in Ethereum classic, which we've been selling to use to pay the electrical bill and totaling the rest of our Bitcoin and Ethereum production. And so from that end, we have a run rate today of about $450,000 a day and close to over $160 million a year. We have been public in that we are going to go out and basically buy a lot of Bitcoin machines, ASIC machines, the mine bitcoin, that would take our total complex up to about 3.2 extra hash. That means that our run rate would be over $300 million in 12 months from now. And on our pro forma, would be making $200 million. Naturally, there's always going to be bumps and disappointments to this process because I just find it incredibly volatile, first mover advantage. Everyone is so aggressive in trying to secure equipment, get it delivered on time, get data centers, et cetera. So we're very busy, but what's really important for the investors is the acquisition of GP One brought in the brain trust that I feel I needed to scale this to a $10 billion company.

Perfect. Thanks, so much Frank. And thank you, everyone, for tuning in this morning. This concludes U.S. Global Investors' webcast for the third quarter of 2021. And again, if you have any remaining questions, send those into [email protected]. Thank you.