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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 11-K

 

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For the Fiscal Year Ended December 31, 2015

or

for the transition period from                      to

Commission File Number 0-13928

(Full title of the plan and the address of the plan,

if different from that of the issuer named below)

 

U.S. GLOBAL INVESTORS, INC.

7900 Callaghan Road

San Antonio, Texas 78229

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

TABLE OF CONTENTS

STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS (Unaudited)

 

		December 31,
		2015				2014
Assets
Investments, at fair value:
Participant-directed investments		$	4,797,182			$	4,866,473
Profit sharing managed pool			—				975,767
Total investments			4,797,182				5,842,240
Cash			14,040				13,139
Receivables:
Participant contributions			—				—
Employer contribution			—				—
Participant loans			56,924				69,337
Interest and dividends			1,097				228
Total receivables			58,021				69,565
Total assets			4,869,243				5,924,944
Liabilities
Due to broker			12,944				13,139
Accrued expenses			6,863				8,413
Total liabilities			19,807				21,552
Net assets available for benefits		$	4,849,436			$	5,903,392

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

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

 

DECEMBER 31, 2015

STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS (Unaudited)

 

		Year ended
		December 31, 2015
Additions:
Interest income on notes receivable from participants		$	3,305
Contributions:
Participants			282,908
Employer			129,269
Total contributions			412,177
Total additions			415,482
Deductions:
Benefits paid to participants			805,508
Administrative expenses			30,963
Total deductions			836,471
Investment income (loss):
Dividend income			32,492
Net depreciation in fair value of investments			(665,459	)
Total investment loss			(632,967	)
Net decrease in net assets available for benefits			(1,053,956	)
Net assets available for benefits:
Beginning of year			5,903,392
End of year		$	4,849,436

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

NOTE 1. DESCRIPTION OF PLAN

 

U.S. Global Investors, Inc. (the “Company” or “USGI”) is a publicly held investment advisory company headquartered in San Antonio, Texas, with less than 100 employees.

 

USGI’s class A common stock trades on NASDAQ under the symbol “GROW.”

 

The following description of the U.S. Global Investors, Inc. 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.

 

General

 

The Plan is a defined contribution plan covering all employees of the Company who have completed 250 hours of service within the three-month time period following employment date, or one year of service (minimum 1,000 hours). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

 

USGI is the Plan sponsor and administrator. BOKF, NA, a wholly owned subsidiary of BOK Financial Corporation, is the trustee, holds the Plan’s investments in trust and performs recordkeeping and certain administrative services for the Plan.

 

Participation

 

Participation in the Plan is voluntary. Eligible employees may enroll on any entry date (January 1, April 1, July 1 or October 1) after meeting the eligibility requirements.

 

Contributions

 

Participants may contribute a percentage of their compensation up to annual limitations set by law. The limitation for 2015 was $18,000 with an additional $6,000 catch-up contribution for participants age 50 or older. These contributions are withheld from a participant’s payroll and contributed to the Plan as a salary deferral. There are two types of salary deferrals: regular 401(k) deferrals and Roth 401(k) deferrals.

 

The Plan operates as a “safe harbor 401(k) plan.” As such, the Company will make a matching contribution equal to 100% of the salary deferrals that do not exceed 3% of a participant’s compensation plus 50% of the salary deferrals between 3% and 5% of the participant’s compensation. The Company match is calculated and funded each pay period; it is allocated at the time of remittance according to each participant’s investment selections.

 

The Plan has an automatic enrollment feature whereby, upon eligibility, the Company will withhold 2% of a participant’s compensation each payroll period to contribute to the Plan on a pre-tax basis. The default investment is the Fidelity Balanced Fund. A participant may elect at any time to select an alternative deferral amount or investment or not to defer.

 

The Company may also make a discretionary profit-sharing contribution to the Plan that would be allocated to each eligible employee based on compensation. A participant must be actively employed on the last day of the Plan year to be eligible to receive a share of the profit-sharing contribution. The Company did not make a discretionary contribution for 2014 or 2015.

 

Any participant can make rollover contributions to the Plan.

 

*  Fund is in the U.S. Global Investors Funds series managed by USGI.

 

With the exception of the MAP Target Date Funds, the Stock Fund and the Self-Directed Account Option, all investment options are open-end mutual funds.

 

The MAP Target Date Funds are common trust funds. BOKF, NA, a wholly owned subsidiary of BOK Financial Corporation, is trustee and custodian of these funds. A subsidiary of BOKF, NA is the adviser of Cavanal Hill Cash Management Fund.

 

In July 2015, the FASB issued ASU No. 2015-12, Plan Accounting: Defined Benefit Pension Plans (Topic 960) Defined Contribution Pension Plans (Topic 962) Health and Welfare Benefit Plans (Topic 965): (Part I) Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient (“ASU 2015-12”). Part I and Part III are not applicable to the Plan. Part II simplifies the investment disclosures required for employee benefit plans, including eliminating the requirements to disclose: (a) individual investments that represent 5% or more of net assets available for benefits, (b) net appreciation (depreciation) by individual investment type, and (c) investment information disaggregated based on the nature, characteristics and risks. The requirement to disaggregate participant-directed investments within a self-directed brokerage account has also been eliminated. Self-directed brokerage accounts should be reported as a single type of investment. ASU 2015-12 is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. The Plan elected to retrospectively early adopt the applicable parts of this ASU as of December 31, 2015.

 

NOTE 3. PLAN TRUSTEE

 

BOKF, NA is the Plan trustee and holds the Plan’s investments in trust. It also performs recordkeeping and certain administrative services for the Plan. BOKF, NA receives compensation in the form of quarterly administrative fees from the Company or the Plan for its services and certain transaction fees from participants.

 

NOTE 4. INVESTMENTS

 

The Plan’s investments, which are set forth in the following table, are held in a bank-administered trust.

 

 

^*  Nonparticipant-directed. See Note 5.

 

 

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

DECEMBER 31, 2015

NOTES TO FINANCIAL STATEMENTS (Unaudited)

NOTE 5. NONPARTICIPANT-DIRECTED INVESTMENTS

 

The Profit Sharing Managed Pool was a nonparticipant-directed investment managed by the Company. Information about the net assets and the significant components of the changes in net assets relating to the Profit Sharing Managed Pool is as follows:

 

 

On May 13, 2015, the Profit Sharing Managed Pool was closed and each participant’s balance was transferred into the identical investment as the asset allocation model used by the Profit Sharing Managed Pool. Participants may now direct these investments.

 

NOTE 6. FAIR VALUE MEASUREMENTS

 

The Plan’s financial instruments consist primarily of mutual funds, target date funds organized as common trust funds, the Company Stock Fund and a self-directed account option. As discussed in Note 5, there was also a profit sharing managed pool until May 2015. Three levels of inputs are used to measure the fair value of Plan investments:

 

•	Level 1 – Quoted prices in active markets for identical assets or liabilities.

•	Level 2 – Significant observable inputs (including quoted prices for similar assets and liabilities in active markets).

•	Level 3 – Significant unobservable inputs (for example, cash flow modeling inputs based on assumptions). As of December 31, 2015, and 2014, the Plan did not hold any Level 3 investments.

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¹ Mutual fund investments of the Profit Sharing Managed Pool consisted of funds identified as managed by USGI in Note 1.

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

DECEMBER 31, 2015

NOTES TO FINANCIAL STATEMENTS (Unaudited)

Following is a description of the valuation methodologies used for assets measured at fair value by the Plan. There have been no changes in the methodologies used at December 31, 2015, and 2014, except that the methodology for the self-directed account option was added as there are now assets in that investment.

 

Mutual funds: Valued at the net asset value (“NAV”) of shares held. The funds are traded on an active market. The net asset value of the mutual fund’s shares is the closing price as quoted on the exchange where the fund is traded and, therefore, classified as Level 1 within the valuation hierarchy.

 

Common trust funds: Valued using the NAV provided by the trustee of the fund. The NAV is based on the value of the underlying assets owned by the fund, less its liabilities, and then divided by the number of units outstanding. Underlying assets consist of investments traded on active markets. These funds permit daily redemption of units. Common trust funds are classified as Level 2 within the valuation hierarchy.

 

Stock Fund: Valued using quoted market price of stock, plus the value of any cash equivalent. The Stock Fund is classified as Level 1 within the valuation hierarchy.

 

Self-directed account option: Accounts consist of mutual funds and common stocks that are valued on the basis of readily determinable market prices.

 

Profit Sharing Managed Pool: Valued at the NAV of shares in mutual funds held at year-end, plus the value of any cash equivalent. The Profit Sharing Managed Pool was classified as Level 1 within the valuation hierarchy.

 

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain instruments could result in a different fair value measurement at the reporting date.

 

The following table sets forth the Plan’s investments at fair value by level, within the fair value hierarchy, as of December 31, 2015, and 2014. Classification within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.

 

		Investment Assets at Fair Value as of December 31, 2015
		Level 1				Level 2				Level 3				Total
Mutual funds		$	3,170,711			$	-			$	-			$	3,170,711
Common trust funds			-				701,855				-				701,855
Stock fund			286,175				-				-				286,175
Self-directed account option			638,441				-				-				638,441
Total		$	4,095,327			$	701,855			$	-			$	4,797,182

 

		Investment Assets at Fair Value as of December 31, 2014
		Level 1				Level 2				Level 3				Total
Mutual funds		$	3,082,464			$	-			$	-			$	3,082,464
Common trust funds			-				1,059,167				-				1,059,167
Stock fund			724,842				-				-				724,842
Profit Sharing Managed Pool			975,767				-				-				975,767
Total		$	4,783,073			$	1,059,167			$	-			$	5,842,240

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

DECEMBER 31, 2015

NOTES TO FINANCIAL STATEMENTS (Unaudited)

There were no transfers in or out of Levels 1, 2 or 3 during the periods.

 

There are no Plan liabilities required to be recorded at fair value at December 31, 2015, and 2014.

 

NOTE 7. PARTIES-IN-INTEREST TRANSACTIONS

 

Parties-in-interest are defined under Department of Labor regulations as any fiduciary of the Plan, any party rendering service to the Plan, the employer and certain others.

 

The Plan allows for transactions with certain parties who may perform services or have fiduciary responsibilities to the Plan, including the Company. Certain Plan investments are shares of mutual funds managed by USGI. Because USGI is the Plan administrator as defined by the Plan and the Plan sponsor, these transactions qualify as party-in-interest transactions. The Plan does not pay explicit fees for investment management services. Fees and expenses paid by the mutual funds are reflected as a reduction of the return earned on each fund.

 

The Stock Fund includes class A common stock of USGI. Since USGI is the Plan administrator and sponsor, investments involving USGI stock qualify as party-in-interest transactions. The market value of USGI class A common stock held in the Stock Fund at December 31, 2015, was $269,123 (230,020 shares). The Stock Fund received $12,076 in dividends from USGI stock in 2015.

 

Participant loans are also considered party-in-interest transactions.

 

Cavanal Hill Cash Management Fund, a money market fund, is an investment option in the Plan. In addition, a portion of the Stock Fund is, and the Profit Sharing Managed Pool was, invested in this fund. This fund is managed by Cavanal Hill Investment Management, Inc., a wholly owned subsidiary of BOKF, NA, so these transactions qualify as party-in-interest transactions. The Plan does not pay explicit fees for investment in this mutual fund. Fees and expenses paid by the mutual fund are reflected as a reduction of the return earned on the fund.

 

BOKF, NA is the trustee and custodian for the MAP target date funds; transactions in these common trust funds also qualify as party-in-interest transactions. The Plan does not pay explicit fees for investment in the MAP funds. Fees and expenses paid by the common trust funds are reflected as a reduction of the return earned on each fund.

 

NOTE 8. PLAN TERMINATION

 

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA.

 

NOTE 9. TAX STATUS

 

The Plan is qualified and the trust established under the Plan is exempt from federal income taxes as provided by the appropriate sections of the Internal Revenue Code (“IRC”). The Plan has adopted the BOKF, NA Volume Submitter Profit Sharing Plan with CODA, which has received a favorable opinion letter from the IRS dated September 30, 2014, stating that the prototype is designed in accordance with the applicable sections of the IRC. The Plan administrator and management believe that the Plan is designed and is currently being operated in compliance with applicable requirements of the IRC and that the Plan and related trust continue to be tax exempt. Therefore, no provision for income taxes has been recorded.

U.S. GLOBAL INVESTORS, INC. 401(k) PLAN

DECEMBER 31, 2015

NOTES TO FINANCIAL STATEMENTS (Unaudited)

Accounting principles generally accepted in the United States of America require plan management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by taxing authorities. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2015, there are no uncertain positions taken or are expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions; however, there are currently no audits for any tax periods in progress. The Plan administrator believes it is no longer subject to tax examinations for years prior to 2012.

 

NOTE 10. RISKS AND UNCERTAINTIES

 

The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, credit, and overall market volatility risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect participants’ account balances and amounts reported in the Statements of Net Assets Available for Benefits.

 

NOTE 11. SUBSEQUENT EVENTS

 

In January 2016, the Company filed a post-effective amendment with the Securities and Exchange Commission to deregister any and all securities previously registered under the Plan that remained unsold.

 

The Plan has evaluated for disclosure any subsequent events through the date these financial statements were issued.

Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator of the U.S. Global Investors, Inc. 401(k) Plan has duly caused this annual report to be signed on behalf of the U.S. Global Investors, Inc. 401(k) Plan by the undersigned, thereunto duly authorized.