US Global Investors Inc (GROW) 2020 Q4 法說會逐字稿

Good morning and thank you for joining us today for our webcast announcing U.S. Global Investors' results for fiscal year 2020. I'm Holly Schoenfeldt.

Before we begin today's presentation, I would like to ask for a brief moment of silence to remember the lives lost on September 11, 2001.

(Operator Instructions) The presenters for today's program are Frank Holmes, U.S. Global Investors CEO and Chief Investment Officer; Lisa Callicotte, Chief Financial Officer; and myself, Holly Schoenfeldt, Marketing and Public Relations manager.

During this webcast, we may make forward-looking statements about our relative business outlook. Any forward-looking statements and all other statements made during this webcast that don't pertain to historical facts are subject to risks and uncertainties that may materially affect actual results. Please refer to our press release and corresponding Form 10-K filing for more detail on factors that could cause actual results to differ materially from any described today in forward-looking statements. Any such statements are made as of today, and U.S. Global accepts no obligation to update them in the future.

On Slide 4, you'll see a quick overview of U.S. Global Investors. We are an innovative investment manager with vast experience in global markets and specialized sectors. Founded as an investment

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the following day, nonstop. So let's jump into this good news, where our strengths are. We strive to be a go-to stock for exposure in emerging markets, resources, gold and digital. It's come through the sort of wave, where we have found that our stock was highly correlated as a company through our gold assets and global resources and then it was emerging markets. And then it was through a high investment, which I'll comment on the digital currencies. And now it appears to be airlines because the Jets ETF, which I'll talk about, is our largest asset.

So we have a strong balance sheet that reflects the cost structure and a monthly dividend and return on equity discipline. The next visual, I want to thank Perritt and the Royce Funds, who have been long-term loyal shareholders and Heartland Advisors, Bill Nasgovitz, who recently came down in June to visit us in San Antonio and they have a position in our company and Financial & Investment Management Group, Paul Sutherland, he's been with us a long time and they're very loyal. So it's great to see they've been here all along. And BlackRock with their index fund and the asset management company business.

Let's go to the next one. Next page. For the past 11 years, we have consistently been paying a dividend, a monthly dividend. The yield is -- look so tiny, but I can tell you, it's much higher than a money fund and it has the capacity to grow. So let's talk on the next one. Next visual is the Board approved a repurchase of up to $2.75 million of outstanding common shares from the open market during the 3 months ended June 30, the company repurchased 32,000 Class A shares using cash of a modest $39,000. We could just suspend this any time that we deem necessary, but we've maintained this position that we buy in down days. It's an algorithm and for the best interest, there's always -- only when you get a big move on the downside, the algorithm picks up the stock. So we've seen that since the bottom in March, there's predominantly been drafts on the upside. You could say statistically, either kurtosis or a skewing, and we're seeing that the markets are definitely skewing to a bias on the upside.

This next visual shows you our quarterly assets under management. As you can see, in the June quarter, our year-end quarter, but the second quarter of this year, for 2020, the fourth quarter for our year-end, we had a big surge in the (inaudible) assets. What's interesting to share with everyone is that it says $1.2 billion for June 30. Since then, we've gone through another $1 billion. So I think, Lisa, we're $2.2 billion approximately?

Yes.

This is easy for anyone to calculate. I know some people just download every day from Bloomberg to take a look at the overall asset size. And that relates to the next page because there are many investors that we know of that I speak to, et cetera, they coveted simple excel sheet to look at the total assets, and they do a calculation. And so basically, when you have ETFs, the average expense ratio, which is going to be revenue for us, is 60 basis points. So it's $600,000 of revenue on an annualize basis or $50,000 a month comes in from having $100 million of assets. And at the beginning of March, that's basically the 2 ETFs we had, would be close to that $100 million because they were all getting beaten up with the corona crisis. And that revenue coming to us plus $600,000. We're now with over $2 billion in assets. And if we go to the lower source of revenue, our revenue is up to $12 million on a run rate.

Now this is very volatile. This is just to recognize that. The airline industry is volatile. Gold assets are volatile. So these numbers are volatile. But to give you the magnitude is that, that revenue for the adviser is up -- for ETF business, is up about 20 fold from the lows. And this is totally unexpected. And I'm going to try to walk through unprecedented factors that have taken place. And we just thank God every day that investors discovered JETS and GOAU. We've always appreciated the thesis that gold is an important asset class and has finally gone through $100 million. But the fact that this audience of big ecosystem of investors and traders came in to just right at the bottom. So I'll talk a little bit more of that throughout this presentation.

The next is the balance sheet strength. The balance sheet gets whipped around because of investments that we've tried to make long-term, but Lisa comment the questions come on it. Since a year ago, mark-to-market interpretation, every quarter, our long-term investment is always going to be mark-to-market. And that's really increasing our volatility for our earnings statement.

The next page is showing you that the earnings per share for the last 4 fiscal years. And as you can see, 2019 and '20, in particular, going into this predominantly from a lot of investments. And it's nice to see some of these investments are -- have really improved dramatically this summer in our company. And they're public. We let people know investors that we made investors, the Thunderbird Entertainment Group, which is just fantastic company, winning Emmy's, revenue growth, has spectacular cash flow and is so inexpensive and has finally been sort of recognized for its great positioning. And especially during this lockdown, more and more people need content entertainment. And this is a company doing over $120 million in revenue. And they started to -- their whole policy is to all sort of look for dividends as a way to capture the hearts of investors and the discipline internally for financial companies.

The next visual shows you that the earnings per share on a quarterly basis, which is a real shocker that we would have during COVID, go from losing money basically to profits going up. And a lot of that has to do with the asset growth in JETS and GOAU. We've also been able to making changes, which has been a really enduring experience of trying to, in a mutual fund world and the ETF world, where the only fund, like JETS is the only product out there, and it's the only -- it was the first of our smart beta 2, they call it, as both stock picking factors we use and portfolio -- unique portfolio structure and our retail rates every quarter. We said we needed to have a product, which was -- no one else has one. And we started this process of converting the Holmes Fund into Luxury. The MEGA trade has changed its name to USLUX. This provides investors access to companies around the world that are involved in the design, manufacturing and sale of products and services. They're not considered to be essential but are highly desired with a culture of society.

And it's interesting, the largest holding there has been Tesla. And Nike shows up. So it's interesting to me that it's a lot of consumer discretionary stocks and staple stocks that are in this particular fund.

So the next visuals I'm trying to walk you through that at the time to rethink luxury during the pandemic, and some of the investments like Home Depot have managed a spectacular run. Lowe's competition and Lowe's itself is showing up in the IBD 50 as being a hot growth stock. Everyone stuck at home, all of a sudden started noticing the renovations need to be done. And those who had access to capital, higher end of the families, they mainly started spending a lot of money. Contract workers working on homes were allowed to work through the pandemic. So the homes, the Home Depot parking lot and right across from our building is Lowe's. And both those parking lots were packed. So it just gives you an idea of the activity, and that's what we're thinking of. But I hope that this particular product, I think, will -- is unique. It's the only place where you'd be able to buy high luxury goods as a product, unless you go to Europe, which you can't do.

But the real exciting growth here is JETS. Jets ETF is just a spectacular growth in assets. And this is another visual showing that in early March, Bloomberg did an interview with Eric Balchunas, and it was the cheapest ETFs in the world are Nigeria and coal and JETS and they understood why no one wants to buy coal ETF or Nigeria as being a country risk, but what about JETS.

And for me, it was really fascinating to see the ecosystem of JETS attracting tactical traders, all the millennials you could think of, Robinhood and online at Schwab and TD Waterhouse, Scottrade, et cetera. And you also started to see those were shorting. They were shorting American Airlines because they had a high debt-to-equity ratio, but they want to try to mitigate that risk.

So they were going along JETS. And I thought, to me, that was most fascinating to watch and to see different reasons and different people making decisions, but the airline industry had fallen by 50%, and the thought process early in the game was that the government will do everything to support this part of the economy because something like 9% of jobs in America are directly or indirectly related to the airline industry, and they did. And so it's now becoming a new sure sentiment factor.

But we're thrilled to share with you that the Jets ETF, the quant approach to smart beta 2.0 has outperformed the bogey. When we created this product, it was to beat the New York Stock Exchange Arca Global Airline Index. And we spent thousands of hours working on seeing how these airlines did during crises and bankruptcies, et cetera, which factors worked the best. And then we've created a product that was both structurally unique from waiting -- that related to how many people are being flown across the country, to also the factors that are best for picking airline stocks. And even after fees, JETS has outperformed the New York Stock Exchange, which has no fees, Arca Global Airline Index. So this concept of a smart beta or a quant approach does work. That's what's important for investors. But there's no past performance, no guarantee of future results. But we did know from our back testing, had a high probability of working, touchwood, it's over 5 years old, and it's done exactly what we thought it would do.

The next visual is important for anyone that's been trading the airlines, understand that is now our biggest asset class is in mid-March, the TSA started publishing the number of people that cleared the board of commercial flight in the U.S. and also people landing from abroad. And I thought it was really interesting that a year ago, it was, on average, 2.7 million people were traveling in America. Domestically, it was about 2 million people that the TSA was clearing. And then it collapsed in April to just under 90,000 people a day. Now when this data point started being published, all of a sudden, quant fund started coming in, and that's another important part, as you can see the 50-day moving average and every time it makes a new high on the daily number of people that JETS airline sentiment drives it higher.

So there's 2 things driving the sentiment and the volatility of the airlines industry. One is a vaccine. Any positive news in a vaccine and the airlines all of a sudden surge; and two, is just the number of people that are clearing to travel. And last week on Friday, a week ago, was a new record high since the March -- since the April lows, I think it was April 14. And we almost got to 1 million people were cleared to fly. And I think that when we get to that 1 million people daily are flying, that will be a part of the services taking place that will -- you'll see higher prices.

Now here is Eric Balchunas. And as he said, the exchange-traded fund that tracks airlines become the hottest theme in ETF history, with bargain-hunting day-traders from sites such as Robinhood taking the other side of the trade with Warren Buffett, who recently sold his stocks. He says that the ETF has added $635 million over 45 straight days. Eric was tweeting about this spectacular growth in March and April and May on a regular basis because of this unprecedented growth that was taking place.

And one of the things that we noticed, as you can see, going on the next visual, is as he says, he stated, "JETS, as you know, I couldn't stay away forever, is getting hot again in August with $200 million, it's its fifth month on a 6 with over $200 million after years in oblivion. Getting boost from rebound in returns. It's now up 26% since Buffett sold and acceptance on wirehouse platforms continues to grow." And that's the next visual. That's very, very important for us. The barriers to entry to getting on these platforms becomes more and more difficult every year. It used to be $50 million, then it was $100 million, then it was $200 million. Each platform, wirehouse platform, is different. And when you go to $1 billion, you basically qualify for all of them.

And what the wirehouses have to be so careful of is that Robinhood and E*TRADE and Interactive Brokers allow people to trade these. So a lot of their clients will just all of a sudden, open an account of these other platforms. And what's interesting is for me, I'll talk a little bit more, Robinhood.

Robinhood allows you -- there's a service that allows you to look at the data of how many people are buying into your ETF. And there's so much negativity and all these millennials becoming day traders. What I share with you is that if you look before the airlines took off in June, the millennials had basically, through Robinhood, had it at, I think it was 25,000 of the accounts had bought JETS.

So that means this huge surge off the bottom, which is, I think, up 50% from its lows, is basically saying they made money, and they made good money. And so when I read all this negative stuff about how bad it is, I see the opposite side of this trade, where they came and a lot of these retail accounts made a lot of money. But we're happy for them, and we're happy for the industry, but most important, it's so good to have new investors coming in, in price discovery. The last time I saw such a huge retail influx was in the '90s going into mutual funds. So now ETF spending captured everyone's imagination, and this is another growth point.

Understand the DNA in volatility, this impacts GROW. As a shareholder in GROW, we should understand that the fact that we own airline stocks and we own gold and gold stocks and investments in HIVE, it does give us greater volatility. And the S&P's volatility is about the same as bullion, over 1 day, 10 days, but Bitcoin is 5x greater, and gold stocks are 3x greater and oil is 5x greater. And oil is important because oil is extremely volatile, just like Bitcoin and Ethereum are, but oil is the biggest expense to the airline industry. And that's the reason why you get this group of investors that go along the airlines when oil is falling, and take profits are short when oil is rising. So because oil is the largest cost structure when looking at the airline industry. So this DNA of volatility for oil shows up in oil stocks -- I'm sorry, not the oil stocks, it shows up in airline stocks as a cost factor.

The next visual is talking about gold, the inverse relationship between gold and real interest rates. I'm still shock noticing this morning that Europe's currency is stronger than the U.S. because the highest concentration of negative real rates around the world is in Europe. The U.S. is still negative, but nothing compared to what Europe is. They're below 0 in raising money. It just shocks me. But this is really driving a lot of interest in gold and flows into gold into the GLD have been unprecedented.

And there's some rational reasons. I still see these talking heads talk negatively about gold and asset class, and they just don't like to hear that long-term gold is up 3x greater than the S&P 500. So the Ray Dalio show their brilliance by always having a 7% to 15% waiting. He's always in and out of the space, but he's always has the exposure to gold. And if gold has far outperformed the S&P 500, there's no doubt it adds to his healthy equation. And he is now, Ray Dalio's Bridgewater, the largest hedge fund in the world.

And I remember when I first started talking about this in Vancouver when the gold prospered, that is the 50-day crossed above the 200-day moving average, which is usually a very positive technical sign of trends, a long-term trend for gold, that mostly were bearish and we saw this in the first part of 2019, except for very smart hedge funds were regularly talking about why gold is appealing to the fundamental reasons, what was driving this move in gold. But as you can see here, you can have big downdrafts. Gold can easily pull back the 200-day moving average short-term and like it did back in April and then surge right back up. And I believe that we're in the secular bull market.

But I also believe more so than ever, as you go to next visual, is that we're in a secular bull market for gold stocks. Gold stocks, for the first time, showing free cash flow yields as an industry. It was end of March when the S&P went negative free cash flow yield. And investors, generalists really like stocks that have a high free cash flow yield. And this quarter for gold stocks, end of September, will have a record free cash flow yield. So with that, during the summer, Berkshire Hathaway took a $565 million of position in Barrick Gold, was sort of a big shocker because Buffett has always been negative on gold, but he bought this gold producer with free cash flow.

But the Oracle of Omaha hasn't always been right. he pulled -- I was too dumb to realize, I did not think Basal could succeed in the scale he has. And Basal continues to impress everyone with the scale that they've grown, and a lot of that is using AI to make decisions. We're also seeing AI being used for Apple stores, how they open and shut stores based on how bad the coronavirus is in the area where their stores are. So it's a new world that we live in and quantamentals and quantamental investing, what drives our ETF structure for both GOAU and with JETS is -- as I'm so happy that we're in that field of using the quant approach.

On CNBC Asia, there's a very long interview recently why gold can reach $4,000. If you just look at the money printing presses of the Federal Reserve in the EU, and their expansion of balance sheet would happen in 2008, 2009, that 3 years later the price of gold went from $800 to $1,900. So if you apply the similar math, it suggests that gold could go to $4,000 in 3 years. So it's me saying that is not outlandish because of the unprecedented money printing and 0 interest rates. And we're seeing real estate in Americas up 10% year-over-year. We're seeing in Toronto, saying it's growing 7%. So I think the negative real interest rates is relating it high under gold, and we're so thrilled that our gold miners, that GOAU crosses above $100 million milestone that starts to throw off free cash flow for us. So where is GOAU available? It's on the wirehouse platforms, Oppenheimer, Jenny, RBC and Stifel; online brokerage firms, Robinhood, E*TRADE, Interactive Brokers; and RIAs, Raymond James, LPL, Cetera, Advisor Group, Commonwealth, Schwab, Fidelity/National Financial, TD Waterhouse and Pershing.

Now let's hop to one of our other investments. We couldn't launch an ETF in the space. So we became the largest crypto miner/investor, and we launched the HIVE [cope] it was basically with other friends I have in Vancouver, HIVE Blockchain Technology (sic) [HIVE Blockchain Technologies.] And it became the first institutional and retail mining Bitcoin and Ethereum. And this visual is here, you can come back to look at it, it shows you that (inaudible) been driving a lot of it. The crypto bear [winter] bottomed when JPMorgan stopped talking negatively about the industry, because in February of 2019, they had launched their own coin. So we're at a bottom of the flux there. And I think that we're going to see this volatility as Bitcoin continues to rise. It did go through a halving last quarter of our year, and that's how the big impact and we're seeing that Bitcoin is increasing.

And we're seeing presentations being made, policies in Europe. Europe is looking to coming up with a crypto digital currency. So I think that we're early in that space. And what drives our biggest investment is in HIVE Blockchain, is Ethereum transaction fee shoot up because of a new form of DeFi financing.

It's extremely volatile. That's all I can tell you in this whole space, would have bore with this but HIVE Blockchain allows us to mine virgin coins, untainted, no AML or KYC risks or issues. We mine these coins, they're brand-new, spick and span clean coins, and then we sell them. We mine them in the cloud.

We get green energy from Sweden. We get green energy in Iceland and in Québec, Canada. We mine them in the cloud and they go to our wallets in Liechenstein, and we sell them. And we keep a portion in HIVE's balance sheet. And the other part, we use a quant approach and we take profits to pay our electricity bills.

But HIVE clearly is the leader in this space. HIVE is a big -- biggest Ethereum producer. So these recent surges in revenue to give you an idea of the run rate we have, it's so easy to figure out at the end of March that our top line could be just under $30 million and it exploded to a high -- now it's corrected but you can see that all of us have run to a run rate of $100 million. That was back to $60 million but still in the quarter, is doubled.

So the revenue from this business model is very volatile. The stocks are volatile. That shows up in -- in U.S. Global's investments as that volatility. So this is just some other facts for you to understand the Ethereum miners generated extra fee revenue because of a new development called DeFi and HIVE itself. The next visual is showing that it has outperformed its competition, both in price and liquidity. HIVE -- the next visual showing you, is correlated 70% of the time with the cryptocurrencies.

And then the next visual is just showing you -- for your own information, you go back and look at sort of the press releases and where we are as we're building out operations in Québec. We're seeing lots of wonderful opportunities to have shown to us. And we're updating our facilities. We finally got in control of Iceland, and we're expanding the operations there, upgrading and then expanding. So it's a very exciting position for HIVE.

Now as we try to wrap down to a sort of our key investments, is Thunderbird moves on to growing its revenue and cash flow. I shared this with earlier with the Emmy's. As you can see, the stock did sell off going into April. They're big businesses, Amazon and Netflix, in particular. So when Netflix is producing content, a lot of these contents is for animation is done by Thunderbird. And so their top line revenue and their cash flow has been exploding. And really now, I think it's just waking up about how unique the stock is. And I think that's above, where the financing with IPO is at $2, it's a wonderful CAGR growth, in both revenue, cash flow and earnings. And so I think you want to stay tuned to Thunderbird. Relative to its peers, it's extremely undervalued on a revenue multiple or cash flow multiple.

And this is another showing, congratulations, Thunderbird. I'm on the Board of Thunderbird. We have an important investment in Thunderbird, but they won many awards for -- in Canadian sitcom to the famous Highway Thru Hell, documentary, you can watch these -- The Weather Station in particular.

And now I'm going to turn it over to the brains of the organization. I'm just a brawn here, and Lisa Callicotte, our CFO, is going to address the financial metrics. But I want to make sure I give you an understanding of the fundamental factors driving what she's going to talk about. Lisa?

Thank you, Frank. Good morning. Now I'll summarize the results of operations for our fiscal year 2020. Beginning on Page 43, we recorded total operating revenues of $4.5 million for the year, which is an increase of $1 million or 29% from the $3.5 million in fiscal year 2019. The increase was primarily due to an increase in assets under management, primarily in our Jets ETF business inflows.

Operating expenses for the year were $6.9 million, an increase of $663,000 or 11%, primarily attributable to an increase in general and administrative expenses related to our Jets ETF, somewhat offset by a decrease in employee compensation and benefits. We see our operating loss for fiscal year 2020 is $2.4 million, which is an improvement from prior year loss of $2.8 million.

On Slide 44, we see that other income was a loss of $2.2 million in the fiscal year. And prior year, it was a loss of $1.5 million. Investment income decreased $629,000 compared to fiscal year 2019, primarily due to higher impairment losses and securities and increases in foreign security losses. Net income attributable to USGI after taxes for the year was $4.7 million or a loss of $0.31 per year, which decreased $1.3 million compared to the net loss of $3.4 million, or a loss of $0.22 per share in fiscal year 2019. But as noted on a previous slide, our earnings per share was positive in the fourth quarter of our fiscal year 2020, and it was mainly due to unrealized gains in securities.

Moving to Slide 46. We see we still have a strong balance sheet, which includes approximately $13.4 million in cash and unrestricted securities that combine to make up 71% of our total assets. Slide 47 notes our liabilities. While on Slide 48, you can see our stockholders' equity retail. The company has a net working capital of $8.5 million and a current ratio of 5.2:1.

With that, I'll turn it over to Holly.

Thank you, Lisa. So as you can see on Slide 50, a majority of our mutual fund assets are in emerging markets and natural resources, while 29% are in domestic equities and fixed income. And as for distribution, more than 3/4 of assets come from retail investors, with 18% coming from institutional investors.

Our sales and marketing efforts have continued to focus on our mutual funds, including those concentrated on gold, natural resources and emerging markets as well as our exchange-traded funds. The company and our funds continue to receive an invaluable amount of viral publicity gained through media interviews. Frank Holmes often shares his insights with financial outlets like Fox Business Television, Bloomberg Radio and Kitco News, just to name a few. We continue to receive recommendations by influential financial newsletter writers as well, along with sharing and syndication of our award-winning original content by third-party publishers. The newsletters have a loyal following and receive millions of visitors each month.

Frank Holmes' CEO blog, Frank Talk, continues to grow in popularity as well. His commentary is often featured by prominent publications, including Forbes, Seeking Alpha, Kitco and equities.com with millions of monthly visitors. Kitco News, the biggest gold website in the world with an audience of over 30 million monthly visitors in partnership with TheStreet.com, continues to feature the gold game film show with Frank Holmes gold market analysis. Since the show's beginning, 186 episodes have aired.

At quarter end, we'd like to look at the most visited Frank Talk blog posts published over the past year. So on this slide, you will see that the most visited articles so far in 2020 are as follows: number one, Explore the World's 10 Busiest Airports; number two, Is The Gold Rally Overdone? Here's What History Says May Come Next; and number three, These U.S. Companies Have the Highest Debt-to-Equity Ratios Right Now. You can sign up for free on our homepage, usfunds.com.

We also keep a close eye on our top referring websites as they drive enormous amounts of traffic back to usfunds.com. So currently, as you see here, these include 321gold.com, Kitco News and ETF Trends. 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 411,000 times from June 2019 to June 2020 by curious investors from all over the world.

U.S. Global is also well-known for timely, balanced and positive market insights and our thought leadership. The company has been awarded numerous Star Awards by the Investment Management Education Alliance over the years for excellence in investor education, and our total now stands at 88 STAR Awards.

Our subscriber base continues to grow organically, and we currently have over 50,000 curious investors subscribed to our investment newsletters and the Frank Talk blog. Investors can sign up at usfunds.com and join these subscribers to receive the award-winning investor alert e-newsletter as well as Frank Talk. We also continue to see a large following across all of our social media platform. So I encourage you all to check us out not only on Facebook and Instagram but also on Pinterest, Twitter and YouTube. And speaking of YouTube, our marketing team has really ramped up production of our video content. We cover things ranging from gold to airlines to even investing basics. So you can go to usfunds.com and use the YouTube icon that's in the top right corner to visit our YouTube page and subscribe.

Lastly, as the pandemic has changed the norm for many industries, including our own, we have continued to share our thought leadership, but simply in a new format. So Frank Holmes was honored to present again this year to the LBMA last month. And just next week, he will give a presentation at the Denver Gold Forum, too. These virtual presentations allow us to continue educating our loyal audience of investors, advisers and shareholders. And as you can see on this slide, here's just a quick snapshot of some of the virtual conferences we've been a part of so far in 2020, and we expect this to continue for quite some time. And we really hope you'll join us when you can.

And as we wrap up today's presentation, we would like to open it up to questions.

(Operator Instructions) You can also submit questions directly to us anytime by emailing info@usfunds.com, and we will be following up with all the questions within a few days.

Just to start, I have a question for Frank. And it says, when do you see airlines fully recovering?

Well, I think that we have to get, like I said earlier, to 1 million people a day flying. That will be the tipping point sense, psychologically. We are seeing a lot of airlines, all of a sudden cutting back on the number of employees. They try to maintain them because I was told that the money that was given by the government was to keep them employed so they didn't have to rehire them. Because if they rehire them, they have to retrain them from day 1 and such a regulator world, the FAA. So it's better to keep everyone being paid even though they weren't flying. So they could turn on a dime.

What's interesting on this cycle is that when we look at 9/11, when the world is shut down on flying also, but it was a much shorter time period like a week, 6 months later, the airline industry was up 80%. And then a couple of years after 2003, SARS broke out in Asia, and after it bottom, 6 months later, the airlines in Asia were up 120%. And when you look at the financial crisis of 2008, '09, that bottomed 6 months, it was up 80%. So the thought process for a lot of speculators is that the airlines can surge between 80% and 120%. I don't think it's going to happen as fast over 6 months. I think it's probably going to take 12 months from its lows. But I have recently flown and the planes' spotless. They almost keep on fumigating that takes place every flight. It is a game changer for me to witness. The seats of spacing on Delta. The airport in both Park City -- sorry, in Salt Lake City and in San Antonio was quiet. There were a fair amount of people, but still very quiet distancing and very, very clean. Going through the TSA, it's a brand-new experience with all the cover and protections taking place.

And we're going to see, like we've seen out of Turkey in Istanbul, it's a public company, which we own in one of our -- which we've owned in our ETF and also our Eastern European fund, they are the most advanced in using heat maps and using UV to clean all credit cards and passports. So if you go to use your credit card or your driver's license or your passport at it, it goes through a scanning process from your hands with UV and destroys these viruses. I think that we're going to see more and more technology that way. Taking people's temperatures is something else they're doing in different locations. So we're going to have a much cleaner world. That's one thing I do see and know. But I think that they're going to use AI going forward to shut down areas, run the shut down a whole country, and weaponized for political election years, et cetera.

And this year is not just an election in U.S. because we live in the U.S., we feel it more than ever. But there's many elections around the world. And so this whole coronavirus thing has become weaponized for political winning. And so that, I think, is disturbing in many ways, but that's the reality of it. And we're going to get through that run of shut down a country, they're going to, like Apple stores do, those just shut down a store. They may have 10 in a city, but they're only going to shut down one because most of the traffic is from a facility where there are lots of people (inaudible) saying they're getting the coronavirus.

And I think we're going to see that the data is going to improve. We notice here in San Antonio, that everyone within 150-mile radius that gets the coronavirus are sent to San Antonio's hospitals, and you get retested again. So now we get double testing. If friends of mine had to go to Houston for MD Anderson, and MD Anderson would not accept the coronavirus testing done here. They have to go down there, they get tested, wait 24 hours before they could go in and get medical treatment. So we're seeing data just being replicated and how much is really reflecting on that, I think a lot of this stuff will get cleaned up by the election in the U.S. this year. It doesn't matter who wins, it's going to be that this is no longer a factor.

That will help the airlines. This is a very important part of the sentiment to drive. And I think the people flying today are going to get benefits, and it's not going to be until April next year, where they're going to start charging for exchange fees or changing your seat or changing your ticket. They're going to do everything to get you to fly.

Great. Thank you. Lisa, I have a question for you as well.

Can you discuss in more detail about the $0.10 earnings per share? And how much was related to the increase in JETS' assets?

Yes. So the $0.10 per share was mainly due to our increase in unrealized gains in our securities. We've been talking about that a few years ago. We were required to implement accounting standard that made us record all of our unrealized gains and losses through income, where before our long-term investments were being reported through equity, and only in income when we realize them. So we've been talking about how that's really caused our income to be volatile. Because quarterly, we are recording that all through our income statement. And for the quarter ending June 30, we saw an increase in the investments that we are in. And that was the main contributor to the $0.10 per share that we recorded for June 30 quarter.

But as far as where JETS' AUM comes in, that really hit our revenue line item. And so we saw a significant increase in our revenue in the quarter ending June 30. Now how it works for us is that we do get those 60 bps that Frank had talked about earlier, but we also pay all of the expenses related to the ETF. So with that, some of the expenses are based on AUM and will increase as AUM increases, plus we have some distribution costs that are related to inflows. And as you know, we had significant inflows during that quarter. So that did increase our expenses. But some of those distribution costs are like onetime costs. So we were seeing that. But in the fourth quarter, our net operating loss actually improved from the quarter before. The quarter ending March 30, we had a operating loss of $979,000, and there was a 75% improvement of that due to this increase in revenue and AUM to a loss of $245,000 in the fourth quarter.

So kind of looking into the future, we do expect that having a higher AUM for an entire quarter, is going to increase our revenue, and it's only going to be somewhat offset by these higher expenses.

But there's much bigger front end expenses in that first -- going through the first $0.5 billion.

Definitely. Yes.

And since then, it's totally changed -- the profit margins expand.

Yes.

Substantially from -- for having $500 million. Would you agree with that?

I would.

Great. Thank you, Lisa. Frank, another question for you really quick.

Do you think the GOAU ETF could take off an AUM just like JETS did this year?

It's much more competitive because people that want to speculate by the triple bull, triple bear leverage the ETFs on GDX and GDXJ and the 30% of the assets in those large -- much larger ETFs are market cap weighted funds. And so you'll see that more speculative. I think what's going to happen is that the steady Eddie person that's doing asset allocation, it's just not going to buy -- they know money is going into good stocks or bad stocks when you buy just the big index.

I think that what we're seeing is that people are shifting out and going into GOAU because each quarter, we -- it's roll out, you get rid of all the weeds in the garden every quarter. So any company that impairs or hurts the revenue, last quarter were for cars and cash flow last 4 quarters, plus in their cash flow returns on invested capital against their peers. We don't want them. We just have to be very -- and it's a much smaller portfolio rather than having 70 names in an ETF gold index, we had 28. And we have the highest concentration in royalty companies. So we recently had money come from a family office overseas, and it's all because of our exposure to royalty companies, that they really like that model. And by buying GOAU, you're really getting that exposure to a superior business model.

Okay. Frank, is there anything else you would like to add before we wrap up?

Yes. I think that the -- overall the mutual funds themselves continue to adjust as the industry not experiencing any great growth. We're hoping that repositioning the luxury, as being the only luxury product, that we'll be able to grow with that because I also think there's going to continue to be a unique industry like the Costcos of the world versus a Dollar Store and hire in from Louis Vuitton to Tesla to Ferrari. These type of companies are unique in their growth and their resiliency, but it doesn't take away from the volatility. But I think being the only space -- player in that space a year from now, we should be able to experience some growth to that.

And we're working on other ideas for ETFs where we are the dominant person. And there's no one else in the space. It's really important when you try to come up -- GOAU, the fact that we got $400 million and so many other ETFs out there, I'm happy about that, it's just continuously slugging.

What investors should realize is that the time line it takes to -- have JETS, it took 5 years. We did over 20 webcasts. These webcasts are costing us, from our own and other partnerships we have, $100,000 a year in just buying that space in time, excluding the marketing efforts we put into them. And it is 5 years, when we launched Eastern European fund, it quickly went to $12 million. Russia defaulted on the sovereign debt, unheard of. All a sudden, it was $4 million, and has stayed there for 40 years until the bottom of 2001, and then it marks up to over $1 billion in assets. So you get these -- you just have to have the vision and at the same time, the persistence in building the brand like JETS did and now GOAU. Go Gold is, will continue, I think, to do well for asset allocators. And I think it's just a less volatile ETF in the gold equity space than the other ones that are out there.

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