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)

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:

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: