djco20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________ to _____________________

Commission File Number 0-14665

DAILY JOURNAL CORPORATION

(Exact name of registrant as specified in its charter)

South Carolina		95-4133299
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

915 East First Street		90012-4050
Los Angeles, California		(Zip code)
(Address of principal executive offices)

(213) 229-5300

(Registrant's telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	DJCO	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes: ☒ No: ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes: ☒ No: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

	Large Accelerated Filer: ☐	Accelerated Filer: ☐
	Non-accelerated Filer: ☒	Smaller Reporting Company: ☒
		Emerging Growth Company: ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No: ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 1,377,426 shares outstanding at April 30, 2025

DAILY JOURNAL CORPORATION

INDEX

			Page Nos.

PART I Financial Information

	Item 1. Financial Statements (Unaudited)

		Consolidated Balance Sheets March 31, 2025 and September 30, 2024	3

		Consolidated Statements of Income and Comprehensive Income Three months ended March 31, 2025 and 2024	4

		Consolidated Statements of Income and Comprehensive Income Six months ended March 31, 2025 and 2024	5

		Consolidated Statements of Shareholders’ Equity Six months ended March 31, 2025 and 2024	6

		Consolidated Statements of Cash Flows Six months ended March 31, 2025 and 2024	7

	Notes to Consolidated Financial Statements		8

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		18

	Item 4. Controls and Procedures		26

Part II Other Information

	Item 6. Exhibits		27

PART I

Item 1. FINANCIAL STATEMENTS

DAILY JOURNAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited) (000)

	March 31			September 30
	2025			2024
ASSETS
Current assets
Cash and cash equivalents	$	11,770		$	12,986
Restricted cash		2,229			2,191
Non-qualified deferred compensation plan – trust account asset value		980			748
Marketable securities at fair value		431,490			358,691
Accounts receivable, less allowance for doubtful accounts		11,788			19,219
Inventories		18			15
Prepaid expenses and other current assets		597			612
Derivative asset		88			---
Income tax receivable		--			33
Total current assets		458,960			394,495

Property, plant and equipment, at cost
Land, buildings and improvements		16,418			16,418
Furniture, office equipment and computer software		1,723			1,723
Machinery and equipment		1,521			1,521
		19,662			19,662
Less accumulated depreciation		(10,652	)		(10,520	)
Total property, plant and equipment, net		9,010			9,142
Operating lease right-of-use assets		80			126
Total assets	$	468,050		$	403,763

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	5,811		$	6,049
Accrued liabilities		6,408			8,517
Note payable collateralized by real estate		166			164
Income taxes		231			---
Deferred subscriptions		2,382			2,558
Deferred consulting fees		2,454			2,031
Deferred maintenance agreements and others		12,862			19,124
Total current liabilities		30,314			38,443

Long term liabilities
Investment margin account borrowings		25,000			27,500
Note payable collateralized by real estate		872			956
Deferred maintenance agreements		375			883
Accrued liabilities		3,110			3,772
Accrued non-qualified deferred compensation		1,015			784
Deferred income taxes		72,926			52,641
Total long-term liabilities		103,298			86,536

Commitments and contingencies (Notes 10 and 11)

Shareholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued		---			---
Common stock, $.01 par value, 5,000,000 shares authorized; 1,805,053 shares issued, including 427,627 treasury shares, at March 31, 2025 and September 30, 2024		14			14
Additional paid-in capital		2,046			1,957
Retained earnings		332,378			276,813
Total shareholders' equity		334,438			278,784
Total liabilities and shareholders’ equity	$	468,050		$	403,763

See accompanying Notes to Consolidated Financial Statements.

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (000)

	Three months ended March 31
	2025			2024

Revenues
Advertising	$	2,565		$	2,316
Circulation		1,047			1,099
Advertising service fees and other		768			697
Licensing and maintenance fees		7,501			6,854
Consulting fees		2,664			3,199
Other public service fees		3,631			2,406
Total revenues		18,176			16,571

Costs and expenses
Salaries and employee benefits		12,706			11,803
Stock-based compensation		65			---
Decrease to the long-term supplemental compensation accrual		(450	)		(410	)
Agency commissions		385			299
Outside services		1,802			1,791
Postage and delivery expenses		185			183
Newsprint and printing expenses		191			160
Depreciation and amortization		65			67
Equipment maintenance and software		441			336
Credit card merchant discount fees		528			558
Rent expenses		91			71
Accounting and legal fees		267			155
Other general and administrative expenses		937			925
Total costs and expenses		17,213			15,938
Income from operations		963			633
Other income (expense)
Dividends and interest income		1,178			1,217
Rental income		9			---
Increase in fair value of derivative asset		88			---
Net unrealized (losses) gains on non-qualified compensation plan		(3	)		72
Net realized and unrealized gains on marketable securities		59,386			19,764
Interest expense on margin loans and others		(342	)		(1,056	)
Interest expense on note payable collateralized by real estate		(9	)		(10	)
Income before income taxes		61,270			20,620
Income tax provision		(16,600	)		(5,205	)
Net income	$	44,670		$	15,415

Weighted average number of common shares outstanding - basic and diluted		1,377,426			1,377,026
Basic and diluted net income per share	$	32.43		$	11.19

Comprehensive income	$	44,670		$	15,415

See accompanying Notes to Consolidated Financial Statements.

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited) (000)

	Six months ended March 31
	2025			2024
Revenues
Advertising	$	4,844		$	4,403
Circulation		2,127			2,194
Advertising service fees and other		1,500			1,402
Licensing and maintenance fees		15,026			13,411
Consulting fees		5,263			6,501
Other public service fees		7,120			4,653
Total revenues		35,880			32,564

Costs and expenses
Salaries and employee benefits		24,742			23,186
Stock-based compensation		89			---
Decrease to the long-term supplemental compensation accrual		(635	)		(830	)
Agency commissions		684			542
Outside services		3,612			3,422
Postage and delivery expenses		384			359
Newsprint and printing expenses		355			365
Depreciation and amortization		132			133
Equipment maintenance and software		1,043			712
Credit card merchant discount fees		1,093			1,110
Rent expenses		157			141
Accounting and legal fees		587			411
Other general and administrative expenses		1,932			1,757
Total costs and expenses		34,175			31,308
Income from operations		1,705			1,256
Other income (expense)
Dividends and interest income		2,362			2,786
Rental income		9			---
Increase in fair value of derivative asset		88			---
Net unrealized (losses) gains on non-qualified compensation plan		(53	)		72
Net realized and unrealized gains on sales of marketable securities		72,799			34,454
Interest expense on margin loans and others		(727	)		(2,187	)
Interest expense on note payable collateralized by real estate		(18	)		(21	)
Income before income taxes		76,165			36,360
Income tax provision		(20,600	)		(8,330	)
Net income	$	55,565		$	28,030

Weighted average number of common shares outstanding - basic and diluted		1,377,268			1,377,026
Basic and diluted net income per share	$	40.34		$	20.36

Comprehensive income	$	55,565		$	28,030

See accompanying Notes to Consolidated Financial Statements.

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited) (000)

											Additional				Total
	Common Stock				Treasury Stock						Paid-in		Retained		Shareholders'
	Share		Amount		Share			Amount			Capital		Earnings		Equity

Balance at September 30, 2023		1,805,053	$	18,000		(428,027	)	$	(4	)	$	1,755	$	198,700	$	200,469
Net income		---		---		---			---			---		12,615		12,615
Balance at December 31, 2023		1,805,053		18,000		(428,027	)		(4	)		1,755		211,315		213,084
Net income		---		---		---			---			---		15,415		15,415
Balance at March 31, 2024		1,805,053	$	18,000		(428,027	)	$	(4	)	$	1,755	$	226,730	$	228,499

Balance at September 30, 2024		1,805,053	$	18		(427,627	)	$	(4	)	$	1,957	$	276,813	$	278,784
Restricted stock unit cost amortization		---		---		---			---			24		---		24
Net income		---		---		---			---			---		10,895		10,895
Balance at December 31, 2024		1,805,053		18		(427,627	)		(4	)		1,981		287,708		289,703
Restricted stock unit cost amortization		---		---		---			---			65		---		65
Net income		---		---		---			---			---		44,670		44,670
Balance at March 31, 2025		1,805,053	$	18		(427,627	)	$	(4	)	$	2,046	$	332,378	$	334,438

See accompanying Notes to Consolidated Financial Statements.

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited) (000)

	Six months ended March 31
	2025			2024
Cash flows from operating activities
Net income	$	55,565		$	28,030
Adjustments to reconcile net income to net cash provided from (used in) operations
Stock-based compensation		89			---
Depreciation and amortization		132			133
Net realized and unrealized gains on marketable securities		(72,799	)		(34,454	)
Increase in fair value of derivative asset		(88	)		---
Deferred income taxes		20,285			5,047
Changes in operating assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		7,431			3,063
Inventories		(3	)		8
Prepaid expenses and other assets		61			(108	)
Income tax receivable		33			---
Increase (decrease) in liabilities
Accounts payable		(238	)		(573	)
Accrued liabilities, including non-qualified deferred compensation		(2,540	)		(3,279	)
Income tax payable		231			1,481
Deferred subscriptions		(176	)		(116	)
Deferred consulting fees		423			(1,600	)
Deferred maintenance agreements and others		(6,770	)		(2,445	)
Net cash provided from (used in) operating activities		1,636			(4,813	)

Cash flows from investing activities
Proceeds from sales of marketable securities		---			40,579
Purchases of property, plant and equipment		---			(23	)
Net cash provided from investing activities		---			40,556

Cash flows from financing activities
Payment to margin loan borrowing		(2,500	)		(45,579	)
Payment of real estate loan principal		(82	)		(79	)
Net cash used in financing activities		(2,582	)		(45,658	)

Decrease in cash and restricted cash and cash equivalents		(946	)		(9,915	)

Cash and cash equivalents and restricted cash
Beginning of year
Cash and cash equivalents		12,986			20,844
Restricted cash		2,191			2,100
Non-qualified deferred compensation plan – trust account asset value		748			194
End of year	$	14,979		$	13,223

Interest paid during year	$	740		$	2,198
Income taxes paid during year	$	52		$	1,802

See accompanying Notes to Consolidated Financial Statements.

DAILY JOURNAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - The Corporation and Operations

Daily Journal Corporation (“Daily Journal” or “the Company”) publishes newspapers and websites covering California and Arizona and produces several specialized information services. It also serves as a newspaper representative specializing in public notice advertising. This is sometimes referred to as the Company’s “Traditional Business”.

Journal Technologies, Inc. (“Journal Technologies”), a wholly-owned subsidiary of Daily Journal, supplies case management software systems and related products to courts, prosecutor and public defender offices, probation departments and other justice agencies, including administrative law organizations, city and county governments and bar associations. These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed to in approximately 32 states and internationally.

Essentially all of the Company’s U.S. operations are based in California, Arizona and Utah. The Company also has a presence in Australia where Journal Technologies is working on three software installation projects and in British Columbia, Canada, where the Company has a wholly-owned subsidiary, Journal Technologies (Canada) Inc.

Note 2 – Summary of Significant Accounting Policies

In the opinion of the Company, the accompanying interim unaudited consolidated financial statements present fairly the financial position of the Company as of March 31, 2025 and September 30, 2024, its results of operations and consolidated statements of shareholders’ equity for the three- and six-month periods ended March 31, 2025 and 2024, and cash flows for the six-month periods ended March 31, 2025 and 2024. The results of operations for the six-months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission and in accordance with the generally accepted accounting principles in the United States. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Certain reclassifications of previously reported amounts have been made to conform to the current year’s presentation. Financial monetary figures presented in the tables are reported in thousands except for the number of shares and the per share price.

During this quarter, Journal Technologies’ revenues included a reversal of approximately $426,000 consulting fee revenues associated with the previous quarter ended December 31, 2024. These revenues should have been recorded as deferred revenues but were inappropriately recorded as revenues, thus overstating Journal Technologies’ segment profit in the first fiscal quarter by $426,000 and understating its second fiscal quarter by the same amount.

In accordance with U.S. Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 99, Materiality (“SAB 99”), codified in Financial Accounting Standards Boards’ (“FASB”) Accounting Standards Codification (“ASC”) 250, Accounting Changes and Error Corrections (“ASC 250”), the Company evaluated the materiality of such errors from a quantitative and qualitative perspective and concluded that the errors were not material to the Company’s interim financial statements for the periods ended December 31, 2024 and March 31, 2025. The Company has not filed, and does not intend to file, an amendment to the previously filed Quarterly Report on Form 10-Q for the period ended December 31, 2024 but instead has recorded the adjustment in the period ended March 31, 2025.

The change in allowance for doubtful accounts is as follows:

Allowance for Doubtful Accounts (000)

Description	Balance at Beginning of Year		Additions charged to Costs and Expenses		Accounts charged off less Recoveries			Balance at End of Year
Fiscal 2025 year-to-date through March 31
Allowance for doubtful accounts	$	250	$	1	$	(1	)	$	250
Fiscal 2024 year-to-date through March 31
Allowance for doubtful accounts	$	250	$	4	$	(4	)	$	250

Advertising: The Company’s policy is to expense advertising expenses as incurred, if any. There were no advertising expenses during both the six months ended March 31, 2025 and 2024 as the Company advertises itself via its own newspapers and websites.

Stock-based Compensation: The Company has implemented two equity incentive plans, one for key employees and one for non-employee directors, each providing for the grant of incentive stock options, non-qualified stock options, restricted stock units, and other equity-based awards. As of March 31, 2025, there were 4,725 shares available for future grants from the 5,720 shares authorized for grant under the equity incentive plans. Restricted stock unit grants generally vest ratably over two years of continuous services from the date of grant. We account for share-based compensation using the fair market value on the grant day pursuant to ASC 718.

For restricted stock units, we use the closed market price on the date of grant as their fair market value. We have not historically paid any cash dividends on our common stock and as a result do not reduce the grant-date fair value per share by the present value of dividends expected to be paid during the requisite service period for restricted stock units. We amortize the fair value of all awards on a straight-line basis over the requisite service periods, which are generally the vesting periods.

We will recognize the effect of awards for which the requisite service period is not rendered when the award is forfeited. That is, we recognize the effect of forfeitures in compensation cost when they occur. Previously recognized compensation cost for an award is reversed in the period the award is forfeited.

The following table summarized stock unit activity during the periods presented:

	Number of Shares		Weighted Average Grant Date Fair Value per Share
Unvested at December 31, 2023		---	$	---
Granted		995		457.20
Vested		400		463.64
Forfeited		---		---
Unvested at March 31, 2025		595	$	452.88

As of March 31, 2025, we had total unrecognized compensation cost of approximately $122,000 related to unvested restricted stock units which is expected to be amortized over a weighted average amortization period of approximately 1.3 years.

The following table summarizes stock-based compensation expense related to share-based awards which is recorded in the consolidated statements of comprehensive income:

	Fiscal 2025 as of March 31, 2025
Stock-based compensation	$	89
Total stock-based compensation expense		89
Total tax benefit		(24	)
Net decrease in net income	$	65

Note 3 – New Accounting Pronouncement

During November 2023, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU No. 2023-07 improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses on an annual and interim basis. The amendments are intended to enable investors to develop more decision-useful financial analyses. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company believes that the adoption of ASU No. 2023-07 does not have a material effect on its consolidated financial statements.

Note 4 – Right-of-Use (ROU) Asset and Liabilities

ROU: At March 31, 2025, the Company recorded a ROU asset and lease liabilities of approximately $80,000 for its operating office and equipment leases, including approximately $10,000 beyond one year. At March 31, 2024, there were ROU asset and lease liabilities of $69,000 with $21,000 beyond one year. Operating office and equipment leases are included in operating lease ROU assets, current accrued liabilities and long-term accrued liabilities in the Company’s accompanying Consolidated Balance Sheets.

Accrued Liabilities: Accrued current liabilities primarily consisted of (i) accrued vacation of $3,425,000 and $3,325,000 at March 31, 2025 and 2024, respectively, (ii) current portion of the supplemental compensation accrual of $650,000 and $680,000 at March 31, 2025 and 2024, respectively, and (iii) accrued payroll, including non-qualified compensation, and other of $2,333,000 and $2,049,000 at March 31, 2025 and 2024, respectively. Accrued long-term liabilities primarily consist of the long-term portion of the supplemental compensation accruals at March 31, 2025 and 2024, respectively.

Note 5 – Revenue Recognition

The Company recognizes revenues in accordance with the provisions of ASU No. 2014-09, Revenue from Contracts with Customers (ASC Topic 606).

For the Traditional Business, proceeds from the sale of subscriptions for newspapers, court rule books and other publications and other services are recorded as deferred revenue and are included in earned revenue only when the services are provided, generally over the subscription term. Advertising service fees and other revenues, which represent primarily agency commissions received from outside newspapers in which the advertising is placed, are recognized when advertisements are published and are recorded on a net basis.

Journal Technologies contracts may include several products and services, which are generally distinct and include separate transaction pricing and performance obligations. Most are one-transaction contracts. These revenue contracts include (i) implementation consulting fees to configure the system to go-live, (ii) subscription software license, maintenance (including updates and upgrades) and support fees, and (iii) third-party hosting fees when used. For contracts containing multiple performance obligations, the Company allocates the transaction price on the basis of the relative standalone selling price of each distinct good or service, and utilizes the residual approach to estimate the standalone selling price of implementation consulting fees, whereby the standalone selling price is estimated by reference to the total transaction price less the sum of the observable standalone selling prices of its subscription software licenses, maintenance and support fees, and third-party hosting fees. These contracts include assurance-type warranty provisions for limited periods and do not include financing terms. For some contracts, the Company acts as a principal with respect to certain services, such as data conversion, interfaces and hosting that are provided by third parties, and recognizes such revenues and related costs on a gross basis. The Company considers several factors to determine if it controls the good or service and therefore is the principal. These factors include (1) if we have primary responsibility for fulfilling the promise; and (2) if we have discretion in establishing price for the specified good or service. For legacy contracts with perpetual license arrangements, licenses and consulting services are recognized at point of delivery, and maintenance revenues are recognized ratably after the go-live.

The Traditional Business and Journal Technologies issue invoices that have payment terms which require payment within 30 days. Contracts do not have a significant financing component and do not have variable consideration. Amounts that have been invoiced are recorded in accounts receivable and in deferred revenue or revenue, depending on whether the required performance services have been completed. Proceeds from subscription-type revenues, including circulation revenue, license, maintenance and support services, and hosting services, are deferred at the time of sale and are recognized on a pro-rata basis over the terms of the subscriptions or service period, and unearned proceeds are recognized within deferred subscriptions and deferred maintenance agreements and others in the consolidated balance sheets. Proceeds from consulting fees are recognized at point of delivery upon service completion, and unearned consulting fee proceeds are recorded under deferred consulting fees on the consolidated balance sheets. Other public service fees are earned and recognized as revenues when the Company processes credit card payments on behalf of the courts via its websites through which the public can e-file cases and pay traffic citations and other fees.

ASC 606 also requires the capitalization of certain costs of obtaining contracts, specifically sales commissions which are to be amortized over the expected term of the contracts. For its software contracts, the Company incurs an immaterial amount of sales commission costs which have no significant impact on the Company’s financial condition and results of operations. In addition, the Company’s implementation and fulfillment costs do not meet all criteria required for capitalization.

Since the Company recognizes revenues when it can invoice the customer pursuant to the contract for the value of completed performance, as a practical expedient and because reliable estimates cannot be made, it has elected not to include the transaction price allocated to unsatisfied performance obligations. These unallocated prices primarily relate to the eFile-it™ and ePay-it™ transactions for which service fees are collected and recognized when the Company processes credit card payments on behalf of the courts via its websites through which the public e-file cases or pay traffic citations. Furthermore, there are no fulfillment costs that are capitalized for the software contracts.

Approximately 76% of the Company’s revenues for the six months ended March 31, 2025 and 75% for the six months ended in March 31, 2024 were derived from sales of software licenses, annual software licenses, maintenance and support agreements and consulting services that typically include implementation and training.

The changes in total deferred revenues, including the long-term portion, are as follows:

Changes in total deferred revenues (000)

Description	Balance at Beginning of Year		Addition to the Deferral		Recognition from Deferral			Balance at End of Year
As of March 31, 2025
Total deferred revenues	$	24,596	$	15,893	$	(22,416	)	$	18,073
As of March 31, 2024
Total deferred revenues	$	26,539	$	17,945	$	(22,106	)	$	22,378

Note 6 - Treasury Stock and Net Income per Common Share

In June 2022, the Company received from Charles T. Munger 3,720 shares of Daily Journal common stock as his gracious personal gift (worth approximately $1 million on the date of the gift) for the purpose of establishing a new senior management equity incentive plan. These donated shares were considered treasury stock, and the Company accounted for them using the par method which had an immaterial effect on the amount on Treasury Stock and Additional Paid-in Capital. The number of outstanding shares of the Company was reduced by these 3,720 shares to reflect the actual number of outstanding shares of 1,377,026 at September 30, 2022. In July 2024, the Board approved the grant of 400 shares to the Company’s Chief Executive Officer, and these shares were transferred to him in December 2024. The net income per common share is based on the weighted average number of shares outstanding during each year. The shares used in the calculation were 1,377,268 and 1,377,026 for the six months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, the shares used in the calculation were 1,377,426 and 1,377,026, respectively,

Note 7 - Basic and Diluted Net Income Per Share

The Company did not have any common stock equivalents at March 31, 2024. At March 31, 2025, there were shares of common stock, and restricted stock units which were roughly equivalent to shares of common stocks, and, therefore, basic and diluted net income per share were essentially the same.

Note 8 - Investments in Marketable Securities

All investments are classified as “Current assets” because they are available for sale at any time. These marketable securities are stated at fair value. The Company uses quoted prices in active markets for identical assets (consistent with the Level 1 definition in the fair value hierarchy) to measure the fair value of its investments on a recurring basis pursuant to ASC 820, Fair Value Measurement. As of March 31, 2025 and September 30, 2024, there were net accumulated pretax unrealized gains of $292,396,000 and $219,597,000, respectively, recorded in the accompanying consolidated balance sheets. Most of the accumulated pretax unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

During the six months ended March 31, 2025, the Company recorded and included in its net income the net unrealized gains on marketable securities of $72,799,000, as compared with $20,193,000, in the prior fiscal year period. There were no purchases or sales of marketable securities during the three-month period ended March 31, 2025. In March 2024, the Company sold part of its marketable securities for approximately $40,579,000, realizing net gains of $14,261,000.

Our long-serving director and former chairman, Charles T. Munger, had managed the Company’s marketable securities portfolio since the original purchases were made with the Company’s excess cash in 2009. Mr. Munger passed away in November 2023, and the Company remains committed to using the portfolio as a source of strength in support of its operating businesses, just as it has for the past 16 years. The Board continues to work to ensure the prudent and effective management of these assets in the context of the current market and the needs of the businesses, including consultation with outside advisors to which the Board has access. The March 2024 sales of a portion of the portfolio (approximately 10%) to reduce the Company’s margin loan, are aspects of that work.

Investments in marketable securities as of March 31, 2025 and September 30, 2024 are summarized below.

Investment in Financial Instruments (000)

	March 31, 2025						September 30, 2024
	Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	431,490	$	139,094	$	292,396	$	358,691	$	139,094	$	219,597

Note 9 - Income Taxes

For the six months ended March 31, 2025, the Company recorded an income tax provision of $20,600,000 on the pretax income of $76,165,000. The income tax provision consisted of tax provisions of $19,155,000 on the unrealized gains on marketable securities, $35,000 on income from foreign operations, $910,000 on income from US operations and dividend income, and a tax provision of $640,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax liability. These tax liabilities were partially offset by a tax benefit of $140,000 for the dividends received deduction and other permanent book and tax differences. Consequently, the overall effective tax rate for the six months ended March 31, 2025 was 27%, after including the taxes on the unrealized gains on marketable securities.

For the six months ended March 31, 2024, the Company recorded an income tax provision of $8,330,000 on the pretax income of $36,360,000. The income tax provision consisted of tax provisions of $3,660,000 on the realized gains on marketable securities, $5,180,000 on the unrealized gains on marketable securities, $40,000 on income from foreign operations, and $480,000 on income from US operations and dividend income, partially offset by a tax benefit of $210,000 for the dividends received deduction and other permanent book and tax differences, and a tax benefit of $820,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax liability. Consequently, the overall effective tax rate for the six months ended March 31, 2024 was 22.9%, after including the taxes on the realized and unrealized gains on marketable securities.

The Company files consolidated federal income tax returns in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal 2021 with regard to federal income taxes and fiscal 2020 for state income taxes.

Note 10 - Debt and Commitments

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29.5 million for two acquisitions, in each case pledging its marketable securities as collateral. In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million during fiscal 2023. In March 2024, the Company sold a portion of its marketable securities for approximately $40.6 million and used these proceeds and excess cash from operations to pay down the margin loan balance to $27.5 million at last year-end. During the past fiscal quarter ended March 31, 2025, the Company was able to use excess cash from operations to pay down an additional $2.5 million of this margin loan reducing the balance to $25 million.

The interest rate for these investment margin account borrowings fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly. The interest rate as of March 31, 2025 was approximately 5%. These investment margin account borrowings do not mature.

In November 2015, the Company purchased a 30,700 square foot office building constructed in 1998 on about 3.6 acres in Logan, Utah that had been previously leased for Journal Technologies. The Company paid $1.24 million and financed the balance with a real estate bank loan of $2.26 million which had a fixed interest rate of 4.66%. This loan is secured by the Logan facility and can be paid off at any time without prepayment penalty. In October 2020, the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% for the remaining 10 years. This real estate loan had a balance of approximately $1.04 million as of March 31, 2025. Each monthly installment payment is approximately $16,700.

The Company owns its facilities in Los Angeles, California. The Company also leases space for its other offices under operating leases which expire at various dates through May 2026.

The Company is responsible for a portion of maintenance, insurance and property tax expenses relating to the leased properties. Rental expenses, inclusive of these expenses, for the six months ended March 31, 2025 and 2024 were $157,000 and $141,000, respectively. For the three months ended March 31, 2025 and 2024, rental expenses were $91,000 and $71,000, respectively.

Effective January 1, 2023, the Company began sponsoring a 401(k) retirement plan and a non-qualified deferred compensation plan for its employees. The 401(k) retirement plan is a defined contribution plan available to employees meeting minimum service requirements. Eligible employees can contribute up to 100% of their current compensation to the plan subject to certain statutory limitations. The Company matches 50% of the 401(k) contribution up to 4% of total compensation. Employer contributions to the retirement plan were $334,000 and $332,000 for the six months ended March 31, 2025 and 2024, respectively. Employer contributions for the three months ended March 31, 2025 and 2024 were $159,000 and $156,000, respectively. As of March 31, 2025, there were deferred compensation liabilities of approximately $1,015,000 of which $980,000 were held under a trust account for the non-qualified deferred compensation plan. There were deferred compensation liabilities of approximately $509,000 which were all held under a trust account for the non-qualified deferred compensation plan in the prior fiscal year period.

Note 11 - Contingencies

From time to time, the Company is subject to contingencies, including litigation, arising in the normal course of its business. While it is not possible to predict the results of such contingencies, management does not believe the ultimate outcome of these matters will have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Note 12 - Operating Segments

The Company’s Traditional Business is one reportable segment and the other is Journal Technologies which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc. All inter-segment transactions were eliminated. Corporate is presented below as a non-operating segment to reconcile segment results to the Company’s consolidated financial statement line-item totals. Additional detail about each of the reportable segments and its income and expenses is set forth below:

Overall Financial Results (000)
For the six months ended March 31

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate						Total
	2025			2024			2025			2024			2025			2024			2025			2024
Revenues
Advertising	$	4,844		$	4,403		$	---		$	---		$	---		$	---		$	4,844		$	4,403
Circulation		2,127			2,194			---			---			---			---			2,127			2,194
Advertising service fees and other		1,500			1,402			---			---			---			---			1,500			1,402
Licensing and maintenance fees		---			---			15,026			13,411			---			---			15,026			13,411
Consulting fees		---			---			5,263			6,501			---			---			5,263			6,501
Other public service fees		---			---			7,120			4,653			---			---			7,120			4,653
Total operating revenues		8,471			7,999			27,409			24,565			---			---			35,880			32,564
Operating expenses
Salaries and employee benefits		5,010			5,173			19,732			18,013			---			---			24,742			23,186
Stock-based compensation		14			---			75			---			---			---			89			---
Decrease to the long-term supplemental compensation accrual		(635	)		(800	)		---			(30	)		---			---			(635	)		(830	)
Others		2,911			2,765			7,068			6,187			---			---			9,979			8,952
Total operating expenses		7,300			7,138			26,875			24,170			---			---			34,175			31,308
Income from operations		1,171			861			534			395			---			---			1,705			1,256
Dividends and interest income		---			---			---			---			2,362			2,786			2,362			2,786
Rental income		---			---			---			---			9			---			9			---
Interest expense on note payable collateralized by real estate		---			---			---			---			(18	)		(21	)		(18	)		(21	)
Interest expense on margin loans and others		---			---			---			---			(727	)		(2,187	)		(727	)		(2,187	)
Increase in fair value of derivative asset		---			---			---			---			88			---			88			---
Net unrealized (losses) gains on non-qualified compensation plan		---			---			---			---			(53	)		72			(53	)		72
Net realized and unrealized gains on marketable securities		---			---			---			---			72,799			34,454			72,799			34,454
Pretax income		1,171			861			534			395			74,460			35,104			76,165			36,360
Income tax expense		(315	)		(200	)		(185	)		(90	)		(20,100	)		(8,040	)		(20,600	)		(8,330	)
Net income	$	856		$	661		$	349		$	305		$	54,360		$	27,064		$	55,565		$	28,030
Total assets	$	13,519		$	14,807		$	23,041		$	23,937		$	431,490		$	297,003		$	468,050		$	335,747
Capital expenditures	$	--		$	23		$	---		$	---		$	---		$	---		$	---		$	23

Overall Financial Results (000)
For the three months ended March 31

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate						Total
	2025			2024			2025			2024			2025			2024			2025			2024
Revenues
Advertising	$	2,565		$	2,316		$	---		$	---		$	---		$	---		$	2,565		$	2,316
Circulation		1,047			1,099			---			---			---			---			1,047			1,099
Advertising service fees and other		768			697			---			---			---			---			768			697
Licensing and maintenance fees		---			---			7,501			6,854			---			---			7,501			6,854
Consulting fees		---			---			2,664			3,199			---			---			2,664			3,199
Other public service fees		---			---			3,631			2,406			---			---			3,631			2,406
Total operating revenues		4,380			4,112			13,796			12,459			---			---			18,176			16,571
Operating expenses
Salaries and employee benefits		2,520			2,624			10,186			9,179			---			---			12,706			11,803
Stock-based compensation		10			---			55			---			---			---			65			---
Decrease to the long-term supplemental compensation accrual		(450	)		(380	)		---			(30	)		---			---			(450	)		(410	)
Others		1,415			1,294			3,477			3,251			---			---			4,892			4,545
Total operating expenses		3,495			3,538			13,718			12,400			---			---			17,213			15,938
Income from operations		885			574			78			59			---			---			963			633

Dividends and interest income		---			---			---			---			1,178			1,217			1,178			1,217
Rental income		---			---			---			---			9			---			9			---
Interest expenses on note payable collateralized by real estate		---			---			---			---			(9	)		(10	)		(9	)		(10	)
Interest expense on margin loans and other		---			---			---			---			(342	)		(1,056	)		(342	)		(1,056	)
Increase in fair value of derivative asset		---			---			---			---			88			---			88			---
Net unrealized (losses) gains on non-qualified compensation plan		---			---			---			---			(3	)		72			(3	)		72
Net realized and unrealized gains on marketable securities		---			---			---			---			59,386			19,764			59,386			19,764
Pretax income		885			574			78			59			60,307			19,987			61,270			20,620
Income tax expense		(240	)		(145	)		(10	)		160			(16,350	)		(5,220	)		(16,600	)		(5,205	)
Net income	$	645		$	429		$	68		$	219		$	43,957		$	14,767		$	44,670		$	15,415
Total assets	$	13,519		$	14,807		$	23,041		$	23,937		$	431,490		$	297,003		$	468,050		$	335,747
Capital expenditures	$	---		$	18		$	---		$	---		$	---		$	---		$	---		$	18

During the six months ended March 31, 2025, the Traditional Business had total operating revenues of $8,471,000 with $6,344,000 recognized after services were provided and $2,127,000 recognized ratably over the subscription terms, as compared with total operating revenues of $7,999,000 with $5,805,000 recognized after services were provided and $2,194,000 recognized ratably over the subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $27,409,000 with $12,472,000 recognized upon completion of services and $14,937,000 recognized ratably over the subscription periods, as compared with total operating revenues of 24,565,000 with $11,384,000 recognized upon completion of services and $13,181,000 recognized ratably over the subscription periods in the prior fiscal year period.

During the three months ended March 31, 2025, the Traditional Business had total operating revenues of $4,380,000 with $3,333,000 recognized after services were provided and $1,047,000 recognized ratably over the subscription terms, as compared with total operating revenues of $$4,112,000 with $3,013,000 recognized after services were provided and $1,099,000 recognized ratably over the subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $13,796,000 with $6,384,000 recognized upon completion of services and $7,412,000 recognized ratably over the subscription periods, as compared with total operating revenues of $12,459,000 with $5,814,000 recognized upon completion of services and $6,645,000 recognized ratably over the subscription periods in the prior fiscal year period.

Approximately 76% of the Company’s revenues were derived from Journal Technologies during the three months ended March 31, 2025 and 75% during the three months ended March 31, 2024. In addition, the Company’s revenues have been primarily from the United States with approximately 5% from foreign countries during the six-months ended March 31, 2024. Journal Technologies’ revenues are primarily from governmental agencies.

Note 13 - Subsequent Events

The Company has completed an evaluation of all subsequent events through the issuance date of these financial statements and concluded that no subsequent events occurred that required recognition to the financial statements or disclosures in the Notes to Consolidated Financial Statements.

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

Results of Operations

The Company continues to operate as two different businesses: (1) The Traditional Business, being the business of newspaper publishing and related services that the Company had before 1999 when it purchased a software development company, and (2) Journal Technologies, Inc., which supplies case management software systems and related products to courts, prosecutor and public defender offices, probation departments and other justice agencies, including administrative law organizations, city and county governments and bar associations. These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed to in approximately 32 states and internationally.

Reportable Segments

The Company’s Traditional Business is one reportable segment and the other is Journal Technologies which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc. All inter-segment transactions were eliminated. Additional detail about each reportable segment and its income and expenses is set forth below:

Overall Financial Results (000)
For the six months ended March 31

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate						Total
	2025			2024			2025			2024			2025			2024			2025			2024
Revenues
Advertising	$	4,844		$	4,403		$	---		$	---		$	---		$	---		$	4,844		$	4,403
Circulation		2,127			2,194			---			---			---			---			2,127			2,194
Advertising service fees and other		1,500			1,402			---			---			---			---			1,500			1,402
Licensing and maintenance fees		---			---			15,026			13,411			---			---			15,026			13,411
Consulting fees		---			---			5,263			6,501			---			---			5,263			6,501
Other public service fees		---			---			7,120			4,653			---			---			7,120			4,653
Total operating revenues		8,471			7,999			27,409			24,565			---			---			35,880			32,564
Operating expenses
Salaries and employee benefits		5,010			5,173			19,732			18,013			---			---			24,742			23,186
Stock-based compensation		14			---			75			---			---			---			89			---
Decrease to the long-term supplemental compensation accrual		(635	)		(800	)		---			(30	)		---			---			(635	)		(830	)
Others		2,911			2,765			7,068			6,187			---			---			9,979			8,952
Total operating expenses		7,300			7,138			26,875			24,170			---			---			34,175			31,308
Income from operations		1,171			861			534			395			---			---			1,705			1,256
Dividends and interest income		---			---			---			---			2,362			2,786			2,362			2,786
Rental income		---			---			---			---			9			---			9			---
Interest expenses on note payable collateralized by real estate		---			---			---			---			(18	)		(21	)		(18	)		(21	)
Interest expense on margin loans and others		---			---			---			---			(727	)		(2,187	)		(727	)		(2,187	)
Increase in fair value of derivative asset		---			---			---			---			88			---			88			---
Net unrealized (losses) gains on non-qualified compensation plan		---			---			---			---			(53	)		72			(53	)		72
Net realized and unrealized gains on marketable securities		---			---			---			---			72,799			34,454			72,799			34,454
Pretax income		1,171			861			534			395			74,460			35,104			76,165			36,360
Income tax expense		(315	)		(200	)		(185	)		(90	)		(20,100	)		(8,040	)		(20,600	)		(8,330	)
Net income	$	856		$	661		$	349		$	305		$	54,360		$	27,064		$	55,565		$	28,030
Total assets	$	13,519		$	14,807		$	23,041		$	23,937		$	431,490		$	297,003		$	468,050		$	335,747
Capital expenditures	$	---		$	23		$	---		$	---		$	---		$	---		$	---		$	23

Comparable six-month periods ended March 31, 2025 and 2024

Consolidated Financial Comparison

Consolidated revenues were $35,880,000 and $32,564,000 for the six months ended March 31, 2025 and 2024, respectively. This increase of $3,316,000 (10%) was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $1,615,000, and other public service fees of $2,467,000, partially offset by decreased consulting fees of $1,238,000, and (ii) the Traditional Business’ advertising revenues of $441,000 and advertising service fees and other of $98,000.

Approximately 76% of the Company’s revenues during the six months ended March 31, 2025 were derived from Journal Technologies. In addition, the Company’s revenues during the six months ended March 31, 2025 were primarily from the United States, with approximately $1,753,000 (5%) from foreign countries. Almost all of Journal Technologies’ revenues are from governmental agencies.

Consolidated operating expenses increased by $2,867,000 (9%) to $34,175,000 from $31,308,000. Total salaries and employee benefits increased by $1,556,000 (7%) to $24,742,000 from $23,186,000 primarily due to the annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on the Company’s installation projects. Outside services increased by $190,000 (6%) to $3,612,000 from $3,422,000 mainly because of additional contractor services and increased third-party hosting fees which were billed to clients. Equipment and maintenance and software went up by $331,000 (46%) to $1,043,000 from $712,000 primarily because of purchases of additional equipment for new hires. Accounting and legal fees increased by $176,000 (43%) to $587,000 from $411,000 primarily resulting from increased legal fees. Other general and administrative expenses increased by $175,000 (10%) to $1,932,000 from $1,757,000 mainly because there were increased business travel expenses, the purchase of directors and officers insurance and additional accruals for the directors’ stipends.

The Company’s non-operating income, net of expenses, increased by $39,356,000 (112%) to $74,460,000 from $35,104,000 in the prior fiscal year period primarily because of the recording of net unrealized gains on marketable securities of $72,799,000 as compared with realized and unrealized gains on marketable securities of $34,454,000 in the prior fiscal year period. There was also a decrease in dividends and interest income of $424,000 (15%) to $2,362,000 from $2,786,000.

During the six months ended March 31, 2025, the Company’s consolidated pretax income was $76,165,000, as compared to $36,360,000 in the prior fiscal year period. There was consolidated net income of $55,565,000 ($40.34 per share) for the six months ended March 31, 2025, as compared with $28,030,000 ($20.36 per share) in the prior fiscal year period.

At March 31, 2025, the aggregate fair market value of the Company’s marketable securities was $431,490,000. These securities had approximately $292,396,000 of net unrealized gains before taxes of $76,930,000. Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

Taxes

The Traditional Business

The Traditional Business’ pretax income increased by $310,000 (36%) to $1,171,000 from $861,000. This increase was primarily resulted from increased revenues of $472,000.

During the six months ended March 31, 2025, the Traditional Business had total operating revenues of $8,471,000, as compared with $7,999,000 in the prior fiscal year period. Advertising revenues increased by $441,000 (10%) to $4,844,000 from $4,403,000, primarily resulting from increased commercial advertising revenues of $225,000, legal notice advertising revenues of $64,000, trustee sale notice advertising revenues of $81,000, and government notice advertising revenues of $71,000. In addition, advertising service fees and other revenues increased by $98,000 to $1,500,000 from $1,402,000.

Trustee sale notices are very much dependent on the number of California and Arizona foreclosures for which public notice advertising is required by law. The number of foreclosure notices published by the Company increased by 13% during the six months ended March 31, 2025 as compared to the prior fiscal year period. The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about 84% of the total public notice advertising revenues during the six-month period ended March 31, 2025. Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 13% of the Company's total operating revenues for the six months ended March 31, 2025 and 14% for the six months ended March 31, 2024.

The Daily Journals accounted for about 94% of the Traditional Business’ total circulation revenues, which decreased by $67,000 (3%) to $2,127,000 from $2,194,000. The court rule and judicial profile services generated about 4% of the total circulation revenues, with the other newspapers and services accounting for the balance. Advertising service fees and other are Traditional Business segment revenues, which include primarily (i) agency commissions received from outside newspapers in which the advertising is placed, and (ii) fees generated when filing notices with government agencies.

The Traditional Business segment operating expenses, excluding the adjustments to the long-term supplemental compensation accrual, decreased slightly by $3,000 to $7,935,000 from $7,938,000.

Journal Technologies

During the six months ended March 31, 2025, Journal Technologies’ business segment pretax income increased by $139,000 (35%) to $534,000 from $395,000 in the prior fiscal year period primarily resulting from increased operating revenues of $2,844,000, which were partially offset by increased operating expenses of $2,705,000.

Revenues increased by $2,844,000 (12%) to $27,409,000 from $24,565,000 in the prior fiscal year period. Licensing and maintenance fees increased by $1,615,000 (12%) to $15,026,000 from $13,411,000. Consulting fees decreased by $1,238,000 (19%) to $5,263,000 from $6,501,000 mainly due to fewer customer projects being completed during the fiscal 2025 period. Other public service fees increased by $2,467,000 (53%) to $7,120,000 from $4,653,000 primarily because of increased e-filing fee revenues.

Deferred consulting fees primarily represent advances from customers of Journal Technologies for installation services that are recognized upon the completion of service obligations. Deferred revenues on license and maintenance contracts represent prepayments of annual license and maintenance fees and are recognized ratably over the maintenance periods.

Operating expenses increased by $2,705,000 (11%) to $26,875,000 from $24,170,000 primarily because of (i) increased personnel costs because of annual salary adjustments, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients.

Journal Technologies continues to update and upgrade its software products, which includes work deemed necessary by management to strengthen product management and quality assurance/quality control, as well as update aspects like user experience, documentation, regionalization, and ease of ongoing customer upgrades (which the Company believes should correspondingly reduce costs for Journal Technologies over the longer term). These costs are expensed as incurred and will impact earnings at least through the foreseeable future.

Comparable Segments (for the three-month periods ended March 31, 2025 and 2024)

Overall Financial Results (000)
For the three months ended March 31

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate						Total
	2025			2024			2025			2024			2025			2024			2025			2024
Revenues
Advertising	$	2,565		$	2,316		$	---		$	---		$	---		$	---		$	2,565		$	2,316
Circulation		1,047			1,099			---			---			---			---			1,047			1,099
Advertising service fees and other		768			697			---			---			---			---			768			697
Licensing and maintenance fees		---			---			7,501			6,854			---			---			7,501			6,854
Consulting fees		---			---			2,664			3,199			---			---			2,664			3,199
Other public service fees		---			---			3,631			2,406			---			---			3,631			2,406
Total operating revenues		4,380			4,112			13,796			12,459			---			---			18,176			16,571
Operating expenses
Salaries and employee benefits		2,520			2,624			10,186			9,179			---			---			12,706			11,803
Stock-based compensation		10			---			55			---			---			---			65			---
Decrease to the long-term supplemental compensation accrual		(450	)		(380	)		---			(30	)		---			---			(450	)		(410	)
Others		1,415			1,294			3,477			3,251			---			---			4,892			4,545
Total operating expenses		3,495			3,538			13,718			12,400			---			---			17,213			15,938
Income from operations		885			574			78			59			---			---			963			633

Dividends and interest income		---			---			---			---			1,178			1,217			1,178			1,217
Rental income		---			---			---			---			9			---			9			---
Interest expenses on note payable collateralized by real estate		---			---			---			---			(9	)		(10	)		(9	)		(10	)
Interest expense on margin loans and other		---			---			---			---			(342	)		(1,056	)		(342	)		(1,056	)
Increase in fair value of derivative asset		---			---			---			---			88			---			88			---
Net unrealized (losses) gains on non-qualified compensation plan		---			---			---			---			(3	)		72			(3	)		72
Net realized and unrealized gains on marketable securities		---			---			---			---			59,386			19,764			59,386			19,764
Pretax income		885			574			78			59			60,307			19,987			61,270			20,620
Income tax expense		(240	)		(145	)		(10	)		160			(16,350	)		(5,220	)		(16,600	)		(5,205	)
Net income	$	645		$	429		$	68		$	219		$	43,957		$	14,767		$	44,670		$	15,415
Total assets	$	13,519		$	14,807		$	23,041		$	23,937		$	431,490		$	297,003		$	468,050		$	335,747
Capital expenditures	$	---		$	18		$	---		$	---		$	---		$	---		$	---		$	18

Consolidated revenues were $18,176,000 and $16,571,000 for the three months ended March 31, 2025 and 2024, respectively. This increase of $1,605,000 (10%) was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $647,000, and other public service fees of $1,225,000, partially offset by decreased consulting fees of $535,000, and (ii) the Traditional Business’ advertising revenues of $249,000, advertising service fees and other of $71,000, and circulation revenues of $52,000.

Approximately 76% of the Company’s revenues during the three months ended March 31, 2025 were derived from Journal Technologies. In addition, the Company’s revenues during the three months ended March 31, 2025, were primarily from the United States, with approximately $148,000 (1%) from foreign countries. Almost all of Journal Technologies’ revenues are from governmental agencies.

Consolidated operating expenses increased by $1,275,000 (8%) to $17,213,000 from $15,938,000. Total salaries and employee benefits increased by $903,000 (8%) to $12,706,000 from $11,803,000 primarily due to annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on and supporting the Company’s installation projects. Outside services increased by $11,000 (1%) to $1,802,000 from $1,791,000 mainly because of increased third-party hosting fees which were billed to clients. Accounting and legal fees increased by $112,000 (72%) to $267,000 from $155,000 primarily resulting from increased legal fees.

The Company’s non-operating income, net of expenses, increased by $40,320,000 (202%) to $60,039,000 from $19,987,000 in the prior fiscal year period primarily because of the recording of net unrealized gains on marketable securities of $59,386,000 as compared with $19,764,000 in the prior fiscal year period. There was a decrease in dividends and interest income of $39,000 (3%) to $1,178,000 from $1,217,000.

During the three months ended March 31, 2025, the Company’s consolidated pretax income was $61,270,000, as compared to $20,620,000 in the prior fiscal year period. There was consolidated net income of $44,670,000 ($32.43 per share) for the three months ended March 31, 2025, as compared with $15,415,000 ($11.19 per share) in the prior fiscal year period.

The Traditional Business

The Traditional Business’ pretax income increased by $311,000 (54%) to $885,000 from $574,000. This increase primarily resulted from increased revenues of $268,000 and decreased expenses of $43,000.

During the three months ended March 31, 2025, the Traditional Business had total operating revenues of $4,380,000, as compared with $4,112,000 in the prior fiscal year period. Advertising revenues increased by $249,000 (11%) to $2,565,000 from $2,316,000, primarily resulting from increased commercial advertising revenues of $162,000, legal notice advertising revenues of $4,000, trustee sale notice advertising revenues of $5,000, and government notice advertising revenues of $78,000.

Journal Technologies

During the three months ended March 31, 2025, Journal Technologies’ business segment pretax income increased by $19,000 (32%) to $78,000 from $59,000 in the prior fiscal year period primarily resulting from increased operating revenues of $1,337,000, which were partially offset by increased operating expenses of $1,318,000.

During this quarter, Journal Technologies’ revenues included a reversal of approximately $426,000 consulting fee revenues associated with the previous quarter ended December 31, 2024. These revenues should have been recorded as deferred revenues but were inadvertently coded as revenues, thus overstating Journal Technologies’ segment profit in the first fiscal quarter by $426,000 and understating its second fiscal quarterly profit by the same amount as we reflected this change. There was no impact to Journal Technologies’ six-month revenues and its segment profit taken as a whole.

Revenues increased by $1,337,000 (11%) to $13,796,000 from $12,459,000 in the prior fiscal year period. Licensing and maintenance fees increased by $647,000 (9%) to $7,501,000 from $6,854,000. Consulting fees decreased by $535,000 (17%) to $2,664,000 from $3,199,000 mainly due to fewer customer projects being completed. Other public service fees increased by $1,225,000 (51%) to $3,631,000 from $2,406,000 primarily because of increased e-filing fee revenues.

Operating expenses increased by $1,318,000 (11%) to $13,718,000 from $12,400,000 primarily because of (i) increased personnel costs because of annual salary adjustments, (ii) additional contractor services and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on and supporting the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients.

Liquidity and Capital Resources

During the three months ended March 31, 2025, the Company’s cash and cash equivalents, restricted cash, and marketable security positions increased by $71,853,000 after the recording of net pretax unrealized gains on marketable securities of $72,799,000, and a payment of $2.5 million to reduce the margin loan balance to $25 million at March 31, 2025.

The investments in marketable securities, which had an adjusted cost basis of approximately $139,094,000 and a market value of about $431,490,000 at March 31, 2025, generated approximately $2,362,000 in dividends and interest income during the six months ended March 31, 2025. These securities had approximately $292,396,000 of net unrealized gains before estimated taxes of $76,930,000 that will become due only when we sell securities in which there is unrealized appreciation. The balance on the Company’s margin loan secured by the securities portfolio was $25,000,000 at March 31, 2025, as compared to $27,500,000 at September 30, 2024.

Cash flows from operating activities increased by $6,449,000 during the six months ended March 31, 2025, as compared to the prior fiscal year period, primarily due to (i) decreases in the Company’s accounts receivable of $4,368,000, (ii) increases in accounts payable of $335,000, accrued liabilities (which included non-qualified deferred compensation) of $739,000 and deferred income tax payable of $15,238,000. This was partially offset by decreases in income tax payable of $1,250,000, deferred revenues of $2,362,000 and net income of $10,898,000, after excluding the increases in realized and unrealized gains on marketable securities of $38,345,000.

As of March 31, 2025, the Company had working capital of $428,646,000, including the liabilities for deferred subscriptions, deferred consulting fees and deferred maintenance agreements and others of $17,698,000.

The Company believes that it will be able to fund its operations for the foreseeable future through its cash flows from operations and its current working capital and expects that any such cash flows will be invested in its businesses. The Company may or may not have the ability to borrow additional amounts against its marketable securities and, among other possibilities, it may be required to consider selling additional securities to generate cash if needed to fund ongoing operations. The amount available for borrowing is based on the market value of the Company’s investment portfolio and fluctuates depending on the value of the underlying securities. In addition, the Company could be subject to margin calls should the balance of the investment decrease significantly.

Critical Accounting Policies and Estimates

The Company’s financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Management believes that revenue recognition, accounting for software costs, fair value measurement and disclosures, and income taxes are critical accounting policies and estimates.

The Company’s critical accounting policies are detailed in its Annual Report on Form 10-K for the year ended September 30, 2024. The above discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this report.

Disclosure Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Certain statements contained in this document, including but not limited to those in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking” statements that involve risks and uncertainties that may cause actual future events or results to differ materially from those described in the forward-looking statements. Words such as “expects,” “intends,” “anticipates,” “should,” “believes,” “will,” “plans,” “estimates,” “may,” variations of such words and similar expressions are intended to identify such forward-looking statements. We disclaim any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments, or otherwise. There are many factors that could cause actual results to differ materially from those contained in the forward-looking statements. These factors include, among others: risks associated with software development and implementation efforts, and disruptive new technologies like artificial intelligence; Journal Technologies’ reliance on professional services engagements with justice agencies; material changes in the costs of postage and paper; additional possible changes in the law, particularly changes limiting or eliminating the requirements for public notice advertising; possible loss of the adjudicated status of the Company’s newspapers and their legal authority to publish public notice advertising; a decline in subscriber revenues; possible security breaches of the Company’s software or websites; changes in accounting guidance; material weaknesses in the Company’s internal control over financial reporting; and declines in the market prices of the securities owned by the Company. In addition, such statements could be affected by general industry and market conditions, general economic conditions (particularly in California) and other factors. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in this Form 10-Q, including in conjunction with the forward-looking statements themselves. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in documents filed by the Company with the Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2024.

Item 4. CONTROLS AND PROCEDURES

In light of the material weaknesses in the Company’s internal control over financial reporting discussed in the Company’s Form 10-K for the fiscal year ended September 30, 2024, management concluded that the Company’s disclosure controls and procedures were not effective as of March 31, 2025. There were no material changes in the Company’s internal control over financial reporting or in other factors reasonably likely to affect its internal control over financial reporting during the quarter ended March 31, 2025. Management identified that it did not effectively design, implement, or operate certain controls around revenue recognition and associated accounts of deferred revenue. Specifically, there were not sufficient controls to ensure the accurate timing of recognition of revenue associated with certain contracts. Management concluded that this material weakness resulted primarily from the Company's ineffective risk assessment and did not have a sufficient number of accounting personnel that are responsible for the design, operation, and documentation of internal control over financial reporting in the revenue process. The Company is in the process of migrating to a new accounting system as part of its effort to improve its internal controls generally and to remediate the material weaknesses in its internal control over financial reporting.

PART II

Item 6. Exhibits

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

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

101.INS

Inline XBRL Instance

101.SCH

Inline XBRL Taxonomy Extension Schema

101.CAL

Inline XBRL Taxonomy Extension Calculation

101.DEF

Inline XBRL Taxonomy Extension Definition

101.LAB

Inline XBRL Taxonomy Extension Labels

101.PRE

Inline XBRL Taxonomy Extension Presentation

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DAILY JOURNAL CORPORATION
	(Registrant)


	/s/ Steven Myhill-Jones

	Chief Executive Officer
	Chairman of the Board
	(Principal Executive Officer)


	/s/ Tu To

	Chief Financial Officer
	(Principal Financial Officer and
	Principal Accounting Officer)