UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(MARK ONE)

for the fiscal year ended September 30, 2023

OR

Commission File No. 0-14665

DAILY JOURNAL CORPORATION

(Exact name of registrant as specified in its charter)

Registrant's telephone number, including area code: (213) 229-5300

Securities registered pursuant to Section 12(b) of the Act:Common Stock,The NASDAQ Stock Market.

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  ☐  No   ☒☑

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  ☐  No   ☒☑

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, and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post 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.

(Check one):

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 by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.      Yes   ☐      No   ☑

Errors:

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

As of March 31, 2017,2023, the aggregate market value of Daily Journal Corporation's voting stock held by non-affiliates was approximately $235,528,000.$379,181,000.

As of November 30, 20172023, there were outstanding 1,380,7461,377,026 shares of Common Stock of Daily Journal Corporation.Stock.

Disclosure Regarding Forward-Looking Statements

This Annual Report on Form 10-K10-K 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;efforts, and disruptive new technologies like artificial intelligence; Journal Technologies’ reliance on professional services engagements with justice agencies, including California courts, for a substantial portion of its revenues;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 further decline in public notice advertising revenues becausethe continuous effects of fewer foreclosures;COVID-19 and the efforts to contain it on the Company’s customers, advertisers and subscribers; a further decline in subscriber and commercial advertising revenues; possible security breaches of the Company’s software or websites; the Company’s reliance on its president and chief executive officer; 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-K, 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.

PART I

The CompanyDaily Journal Corporation (the “Company”) publishes newspapers and web sites coveringwebsites reporting California and Arizona news and produces several specialized information services.publications. It also serves as a newspaper representative specializing in public notice advertising. We often referThis is sometimes referred to this as “The Traditionalthe Company’s “Traditional Business”.

Journal Technologies, Inc. (“Journal Technologies”), a wholly ownedwholly-owned subsidiary of the Company, 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 efilinge-filing and a website to pay traffic citations online, and bar members.fees online. These products are licensed or subscribed to more than 500 organizations in 42approximately 30 states, and internationally. Journal Technologies is the result of the October 1, 2014 merger of the Company’s three technology-related subsidiaries, which were previously separate companies: Sustain Technologies, Inc. (“Sustain”), a wholly owned subsidiary since 2008; New Dawn Technologies, Inc. (“New Dawn”), acquired in December 2012; and ISD Technologies, Inc. (“ISD”), acquired in September 2013.

Essentially all of the Company’sCompany’s U.S. operations are based in California, Arizona Colorado and Utah. The Company also has a presence in Australia where Journal Technologies is working on three software installation projects. In August 2022, the Company established a new wholly-owned subsidiary, Journal Technologies (Canada) Inc., in Victoria BC, Canada. Financial information of the Company, including information about each of the Company’s reportable segments, is set forth in Item 8 (“Financial Statements and Supplementary Data”).

Products and Services

The Traditional Business

Newspapers and related online publications. The Company publishes 10 newspapers of general circulation. Each newspaper, in addition to news of interest to the general public, has a particular area of in-depth focus with regard tofor its news coverage, thereby attracting readers interested in obtaining specific information about that area through a newspaper format. Each of these smaller publications has a website.

The publications are based in the following cities:

The Daily Journals. The Los Angeles Daily Journal and the San Francisco Daily Journal (together, “The Daily Journals”) are each published every weekday except certain holidays and were established in 1888 and 1893, respectively. In addition to covering state and local news of general interest, these newspapers focus particular coverage on law and its impact on society. (The Los Angeles Daily Journal and the San Francisco Daily Journal are referred to collectively herein as ''The Daily Journals''.) Generally, The Daily Journals seek to be of special utilityuse to lawyers and judges and to gain wide multiple readership of newspapers sent to law firm subscribers.judges.

The Daily Journals containshare much material and render many services in a common endeavor.content. The Los Angeles Daily Journal is the largest newspaper published by the Company, both in terms of revenues and circulation. At September 30, 2017,2023, the Los Angeles Daily Journal had approximately 4,8003,591 paid subscribers and the San Francisco Daily Journal had approximately 2,6002,062 paid subscribers as compared with total paid subscriptions for both of The Daily Journals of 7,8005,640 at September 30, 2016.2022. The Daily Journals carry commercial advertising (display and classified) and public notice advertising required or permitted by law to be published in a newspaper of general circulation. The main source of commercial advertising revenue has been local advertisers, law firms and businesses in or wishing to reach the legal professional community. The gross revenues generated directly by The Daily Journals are attributable approximately 59%56% to subscriptions and 41%44% to the sale of advertising and other revenues. Revenues from The Daily Journals constituted approximately 20%11% of the Company's total operating revenues in fiscal 2017 revenues, 20%2023 and 13% in 2016, 18% in 2015, 19% in 2014 and 23% in 2013.

It is the policy of The Daily Journals (1) to take no editorial position on the legal and political controversies of the day but instead to publish well-written editorial views of others on many sides of a controversy and (2) to try to report on factual events with technical competence and with objectivity and accuracy. It is believed that this policy suits a professional readership of exceptional intelligence and education, which is the target readership for the newspapers. Moreover, The Daily Journals believe that they bear a duty to their readership, particularly judges and justices, as a self-imposed public trust, regardless, within reason, of short-term income penalties. The Company believes that this policy of The Daily Journals is in the long-term interest of the Company’s shareholders.fiscal 2022.

The Daily Journals containinclude the Daily Appellate Report, which provides theproviding full text and case summaries of all opinions certified for publication by the California Supreme Court, the California Courts of Appeal, the U.S. Supreme Court, the U.S. Court of Appeals for the Ninth Circuit and the U.S. Bankruptcy Appellate Panel for the Ninth Circuit, the State Bar Court and selected opinions of the U.S. District Courts in California and the Federal Circuit Court of Appeals.Circuit. The Daily Journals also include a monthly court directory in booklet form. This directory includes a comprehensive list of sitting judges in all California courts as well as courtroom assignments, phone numbers and courthouse addresses, plus ''Judicial Transitions'' which listsa list of judicial appointments, elevations, confirmations, resignations, retirements and deaths.

The Daily Journals are distributed by mail and hand delivery, with subscribers in the Los Angeles and San Francisco areas usually receiving copies the same day. Certain subscribers in Los Angeles, San Francisco, Santa Clara, Alameda, Orange, San Diego, Riverside and San Bernardino counties receive copies by hand delivery. The regular yearly subscription rate for each of The Daily Journals is $820.$887 plus tax.

MuchMost of the information containedpublished in The Daily Journals is available to subscribers online at www.dailyjournal.com.

Daily Commerce. Published since 1917, the Daily Commerce is based in Los Angeles in addition to coveringand covers news of general interest, devotes substantial coveragecolumns of interest to items designed to serve real estate investors and brokers, particularly those interestedand information on distressed properties in Southern California distressed properties.Los Angeles County. The nature of the news coverage enhances the effectiveness of public notice advertising inby distributing information about foreclosures to potential buyers at foreclosures. The features of the paperbuyers. Features include default listings and probate estate sales.sale notices. The Daily Commerce carries both public notice and commercial advertising andadvertising. It is published in the afternoon each business day. A subscription includes online access to the Los Angeles County foreclosure listing and public record database.

The Daily Recorder. The Daily Recorder, based in Sacramento, began operations in 1911. It is published each business day. In addition to general news items, it focuses onincludes legal news and columns of interest to the Sacramento legal and real estate communities and on California state government and activities ancillary to it. Among the regular features of The Daily Recorder is news about government leaders and lobbyists, as well ascommunities. It includes the Daily Appellate Report for those who request it. Advertising in The Daily Recorder consists of bothand carries commercial and public notice advertising. A subscription includes online access to the Sacramento County foreclosure listing and public record database.

The Inter-City Express. The Inter-City Express (the ''Express''“Express”) has been published since 1909. It covers general news of local interest and focuses its coverage on news about the real estate and legal communities in the Oakland/San Francisco area. The Express carries both commercial and public notice advertising. Itadvertising and is published each business day. A subscription includes online access to the Alameda County foreclosure listing and public record database.

San Jose Post-Record. The San Jose Post-Record (the ''Post-Record''“Post-Record”) has been published since 1910. In addition to general news of local interest, the Post-Record which is published each business day, focuses on legal and real estate newsnews. It is published every business day and carries commercialpublic notice advertising. A subscription includes online access to the Santa Clara County foreclosure listing and public notice advertising.record database.

Orange County Reporter. The Orange County Reporter (''Orange Reporter''(“Reporter”) has been an adjudicated newspaper of general circulation since 1922. In addition to general news of local interest, the Orange Reporter reportspublishes local and state legal, business and real estate news, and carries primarily public notice advertising. The Orange Reporter is published three days a week. A subscription includes online access to the Orange County foreclosure listing and public record database.

The Daily Transcript. The Daily Transcript (San Diego) is based in San Diego and published five days a week and carrieseach business day. It reports general news of local interestitems and public notice advertisingSan Diego commercial real estate, business and construction news. It has been an adjudicated newspaper of general circulation since 1909. The Daily Transcript also serves legalIt carries commercial and real estate professionals inpublic notice advertising. A subscription includes online access to the San Diego County.County foreclosure listing and public record database.

Business Journal. The Business Journal, established in 1991, publishes news of general interest and provides coverage of the business and professional communities in Riverside County. It also carries public notice advertising and is published each business day. The subscription includes online access to the Riverside/San Bernardino County foreclosure listing and public record database.

The Record Reporter (Arizona). The Record Reporter has been in existence since 1914. In addition to general news of local interest, The Record Reporter, which is published three days a week, focuses on legal news and public record information and carries primarily public notice advertising. The subscription includes online access to the Maricopa and Pinal County public record database.

Information Services. The specialized information services offered by the Company have grown out of its newspaper operations or have evolved in response to a desire for such services primarily fromrequests of its newspaper subscribers.

The Company has several court rules services. One is Court Rules, aservices, including multi-volume, loose-leaf set. Court Rules reproduces court rulessets for certain state and federal courts in California. The Court Rules appear in two versions, one of which covers Northern California courts (nine volumes) and oneset consists of which coversnine volumes. The Southern California courts (eight volumes).set has eight volumes. The Company updates Court Rulesthese court rules on a monthly basis. In addition, the Company publishes a single volume of rules known as Local Rules for major counties of California. Six versions are published for Southern California, each a single bound volume for the rules of: (1) Los Angeles County; (2) Orange County; (3) San Diego County; (4) San Bernardino County; (5) Riverside County; and (6) Ventura, Santa Barbara and San Luis Obispo counties. Also, the Company publishes single-volume rules for the Federal District Court in the Central District of California and California Probate Rules. In Northern California, three versions of the Local Rules appear in loose-leaf books for Santa Clara/San Mateo, Alameda/Contra CostaLos Angeles and San FranciscoDiego counties. The single volumes are normally updated or replaced wheneverwhen there are substantial rule changes.

The Judicial Profiles services containservice contains information concerning nearly all active and retired judges in California. Most of the profiles haveThe Judicial Profiles include an interview-based article previously appearedpublished in The Daily Journals, as part of a regular feature. The Judicial Profiles include biographical data and financial disclosure statements on judges and information supplied by each judge regarding the judge's policies and viewsparticipating judges on various trial and appellatecourtroom procedures and the manner in which appearances are conducted in his or her courtroom.policies. Subscribers may purchase either the ten-volume set for Southern California, or the eight-volume set for Northern California.California or individual profiles online.

The Company also provides online foreclosure information to about 30 customers. This service primarily provides distressed property information, some of which also appears in some of the Company's newspapers, as well as expanded features. Consolidation of both newspapers and online products more effectively utilizes the costs of gathering such information.

Advertising and Newspaper Representative. The Company's publications carry commercial advertising and most also contain public notice advertising. Commercial advertising consists of display and classified advertising and constituted about 7%4% of the Company’s total operating revenues in both fiscal 2017, 7% in 2016, 8% in 2015, 9% in 20142023 and 11% in 2013. Classified advertising has continued to decline primarily due to the continued downturn in the employment advertising marketplace and competition from online employment web sites.2022.

Public notice advertising consists of many different types of legal notices required by law to be published in an adjudicated newspaper of general circulation, including notices of death, fictitious business names, trustee sale notices and notices of governmental hearings. The major types of public notice advertisers are real estate-related businesses and trustees, governmental agencies, attorneys, and businesses or individuals filing fictitious business name statements. Many government agencies use the Company’sCompany’s Internet-based advertising system to produce and send their notices to the Company.Company for publication. A fictitious business name web sitewebsite enables individuals to send their statements to the Company for filing and publication, and another web sitewebsite enables attorneys and individuals to send probate, civil, corporate, public sale and other types of public notices to the Company.  California Newspaper Service Bureau (“CNSB”), a division of the Company, is a statewide newspaper representative (commission-earning selling agent) specializing since 1934 in public notice advertising. CNSB places public notices and other forms of advertising with adjudicated newspapers of general circulation, most of which are not owned by the Company.Company, and produces a legal advertising page for some other newspapers.

Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about 21%14% of the Company's total operating revenues in fiscal 2017, 23%2023 and about 17% in 2016, 22% in 2015, 24% in 2014 and 35% in 2013.fiscal 2022. Most of these revenues were generated by (i) notices published in the Company’s newspapers, (ii) commissions and similar fees received from other publications in which the advertising was placed, and (iii) service fees generated when filingto file notices with government agencies.

TrusteeRecently, the California legislature passed a bill (AB542) to be effective January 1, 2024 that will almost certainly result in a decline in legal advertising revenue by reducing the number of publication days in a newspaper for self-service storage facility lien sales. The existing requirement is to publish the notice once per week for two consecutive weeks. The bill now allows the notice to be published either once per week for two consecutive weeks in a newspaper or once in a newspaper and once on an internet website that customarily conducts or advertises online auctions or sales. Another bill (AB721) relative to school budget hearing notices, was also passed. Effective January 1, 2027 these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper.

For several years, trustee sales legal advertising revenues alone represented about 5% of the Company’s total revenues in fiscal 2017, 5% in 2016, 6% in 2015, 7% in 2014 and 17% in 2013. For several years, these revenues were driven by the large number of foreclosures in California and Arizona, for which public notice advertising is required by law, butlaw. Those revenues declined significantly in more recent years due to an improved economy and then to the number of foreclosures has continued to decline. In addition, in many states, including California and Arizona, legislatures have considered various proposals which would result in the elimination or reductionCOVID-related foreclosure moratoriums. Because those moratoriums were generally lifted during 2023, trustee sales legal advertising revenues represented about 4% of the amount of public notice advertising required by statute, and Arizona recently approved one such proposal for one particular notice type. There is a risk that such laws could changeCompany’s total operating revenues in a manner that would have a significant adverse impact on the Company's public notice advertising revenues.fiscal 2023 as compared to 2% in fiscal 2022.

Other revenues are attributable to service fees from users of an online foreclosure/fictitious business name database, fees from attorneys taking continuing legal education “courses”tests published in the Company’s publicationsThe Daily Journals and online, and other miscellaneous fees.fees including reprint services of articles published in The Daily Journals.

Journal Technologies

Journal Technologies provides case management software and related services to courts and other justice agencies. Its operations constituted about 58%76% of the Company’s total operating revenues in fiscal 2017, 56%2023 and 71% in 2016, 57% in 2015, 53% in 2014 and 37% in 2013.fiscal 2022. Journal Technologies earns revenuerevenues from license, maintenance and maintenancesupport fees paid by customers to use its software products; consulting fees paid by customers for installation, implementation and training services; and fees generated by the use of secure websites through which the general public can pay traffic citations.citations and e-file cases.  Journal Technologies has the following main products:product solutions based on the Company’s core eSeries Framework™ technology:

eCourt®, eProsecutor®eProsecutor™, eDefender®eDefender™ and eProbation® —eSupervision™ (formerly eProbation)™ ― browser-based case processing systems that can be used by courts and other justice agencies for all case types because itsthe screens, data elements, business rules, work queues, searches and alerts are highly configurable. Journal Technologies also supports its prior generation Justice Edition software, which is a Windows-based system that also provides for customizable configurability. 

JustWare® — a family of case management software products for use by courts and other justice agencies.  JustWare® provides a standardized case management system that includes business rules to automate tasks, document and report generation, digital signatures and shortcuts to speed data input.  Journal Technologies also licenses its JusticeWeb® public access software, which allows the public to view certain case information, provides a means to create permission-based access for sensitive data, allows pro se litigants and attorneys to e-file documents and includes a way for case participants to make payments online. offers other, complementary products including:

ICMS™ — a court case management system, which was acquired as part of the acquisition of the ISD assets. Journal Technologies also licenses CASE™ — an automated probation case management system, including juvenile hall detention management features.

eFile™ —eFile-it™ ― a browser-based interface that allows attorneys and the general public to electronically file documents with the court from a personal computer using the Internet at any time.court.

ePayIt™ —ePay-it™ ― a service primarily for the online payment of traffic citations.  Users can pay traffic citations using the Internet at any time with aby credit card and can obtainget information on traffic school and other information.school.

Almost all of Journal Technologies’ customers are government agencies, and most new software installation and licensing projects are subject to competitive bidding procedures. Accordingly, the ability of Journal Technologies to get new customers is highly unpredictable. In addition, budget constraints, especially during stressful economic times, could force governmental agencies to defer or forgo consulting services or even to stop paying their annual software maintenance fees. As a technology-based company, Journal Technologies’ success depends on the continued improvement of its products, which is why the costs to update and upgrade them consistently constitute such a significant portion of the Company’s expenses.

The Company’s revenues from Journal Technologies’ foreign customers were $276,000approximately $3,293,000 in fiscal 2017, $221,0002023 and $4,638,000 in fiscal 2016 and $278,000 in fiscal 2015 and $332,000 in fiscal 2014. All2022. The remainder of the Company’s other revenues in those years were attributable to the United States.

Journal Technologies (Canada)

Journal Technologies (Canada) Inc. was founded in August 2022 as a service company to provide management and advisory services related to corporate leadership, financial management, strategic planning, operational guidance, human resources, project management, software development, professional services, and various other services required by Daily Journal Corporation and Journal Technologies.

Materials and Postage

After personnel costs (included in “Salaries and employee benefits” and in “Outside services” in the accompanying consolidated statements of comprehensive income (loss)), postage and paper costs are typically the Company's next two largest expenses.expenses for The Traditional Business. Paper and postage accounted for approximately 5% of our traditional publishing segment'sthe Traditional Business' operating costs in fiscal 2017, 6%2023 and 4% in 2016, 6% in 2015, 7% in 2014 and 7% in 2013. Paper prices may fluctuate substantially in the future, and periodic postal rate increases could significantly impact income from operations. Further, we may not be able to pass on such increases to our customers.fiscal 2022.

An adequate supply of newsprint and other paper is important to the Company's operations. The Company currently does not have a contract with any paper supplier. The Company has always been able to obtain sufficient newsprint for its operations, although in the past shortages of newsprint have sometimes resulted in higher prices. The price of paper remained unchanged duringDuring fiscal 2017. We anticipate2023, the price of paper will remain unchanged at least through June 2018.newsprint did not increase significantly.

We use the U.S. Postal Service for distribution of a majorityroughly 36% of our newspapers. During the past several years, the Company has instituted changes in an attempt to mitigate higher postage costs. These changes have included contracting for hand delivery in selected sectionsurban areas of the San Francisco, Bay area and in Santa Clara, Alameda, San Diego, Riverside, San Bernardino, Orange and Los Angeles counties, delivering pre-sorted newspapers to the post office on pallets, which facilitates delivery and improves service, and implementing a method of bundling newspapers which reduces the per pieceto reduce per-piece charges. In addition, the Company has an ink jet labeler which eliminates paper labels and enables the Company to receive bar code discounts from the postal service on some of its newspapers.

Postal rates are dependent on the operating efficiency of the U.S. Postal Service and on legislative mandates imposed upon the U.S. Postal Service. During the past several years, the U.S. Postal Service has increased postal rates. There were decreases in the Company’s aggregateDuring fiscal 2023, postage costs during fiscal 2017 primarily dueincreased slightly by $32,000 (7%) to fewer subscribers.$472,000 from $440,000.

Marketing

The Company actively promotes its individual newspapers and its multiple newspaper network as well as its other publications. The Company's staff includes a number of employees whose primary responsibilities include attracting new subscribers and advertisers. The specialization of each publication creates both target subscribers and target advertisers. Subscribers are likely to be attracted because of the nature of the information carried by the particular publication, and likely advertisers are those interested in reaching such consumer groups. In marketing products, the Company also focuses on its ancillary products which can be of service to subscribers, such as its specialized information services.

The Company receives, on a non-exclusive basis, public notice advertising from a number of agencies.service providers. Such agencies ordinarily receive a commission of 15% to 25% on their sales of advertising in Company and other publications. Commercial advertising agencies also place advertising (including nearly 100% of display advertising) in Company publications and receive commissions for advertising sales.

Journal Technologies’ staff includes employees who provideare focused on marketing and consulting services which may also result inwith the intention of growing market share over time, via additional consulting projects and the licensing of products. Most of Journal Technologies’ new projects come from existing customers or from a competitive bidding process, but it is nonetheless important to communicate the Company's offerings to potential customers at trade shows and other channels; understanding what is possible can inform requirements and build confidence over the buying process.

Competition

Competition for readers and advertisers is very intense, both by established publications and by new entries into the market. The Daily Journals face aggressive competition in Los Angeles and San Francisco. All of the Company's business publications and products face strong competition from other publications and service companies. Readers of specialized newspapers focus on the amount and quality of general and specialized news, amount and type of advertising, timely delivery and price. The Company designs its newspapers to fill niches in the news marketplace that are not covered as well by major metropolitan dailies. The in-depth news coverage which the Company's newspapers provide, along with general news coverage, attracts readers who, for personal or professional reasons, desire to keep abreast of topics to which a major newspaper cannot devote significant news space. Other newspapers do provide some of the same subject coverage as does the Company, but the Company believes its coverage, particularly that of The Daily Journals, is more complete and therefore attracts more readers.complete. The Company believes that The Daily Journals are the most important newspapers serving California lawyers on a daily basis.

The Company's court rules publications face competition in both the Southern California and Northern California markets from online court rules servicescase management systems and the courts themselves. Subscriptions to the single and multi-volume Court Rules and Local Rules volumescourt rules continued to decline during fiscal 2016.2023. The Company's Judicial Profile services have direct competition and also indirect competition because some of the same information is available through other sources, including the courts.

The newspaper industry is experiencing significant secular decline, and the Company’s Traditional Business is no exception. The steady decline in recent years in the number of subscriptions to The Daily Journals and the Company’s court rule publications is likely to continue and will certainly impact the Company’s future revenues. The pricing of the Company's products is reviewed every year. Subscription price increases have in recent years exceeded inflation, as have advertising rate increases.

In attracting commercial advertisers, the Company competes with other newspapers and magazines, television, radio and other media, including electronic and online systems for employment-related classified advertising. Factors which may affect competition for advertisers are the cost for such advertising compared with other media, and the size and characteristics of the readership of the Company's publications.

Internet sites devoted to personnel recruitment have become significant competitors of our newspapers and web siteswebsites for classified advertising.

In addition, there has been a steady consolidation of companies serving the legal marketplace, resulting in an ever-smaller group of companies placing display advertising. Consequently, retaining advertising revenues remains a challenge. To reduce costs, the Company has contracted with an outside advertising agency to conduct sales of its display advertising.

The Company competes with anywhere fromat least one serious competitor to many competing newspapers for public notice advertising revenue in alleach of its markets. Large metropolitan general interest newspapers normally do not carry a significant amount of legal advertising, although recently they too have solicited certain types of public notice advertising. CNSB, the Company’s commission-earning selling agent, faces competition from a number of companies based in California, some of which specialize in placing certain types of notices.

There is significant competition among a limited number of companies to provide services and software to the courts and other justice agencies, and some of these companies are much larger and have greater access to capital and other resources than Journal Technologies. Others provide services for a limited number of customers.customers, or in specialized niches. As part of the competitive bidding process, many customers will express a preference for, or even require, larger vendors.vendors or specific domain specialization.

Many customers desire Internet-basedexternally-hosted Software-as-a-Service (SaaS) solutions to centralize operations, facilitate electronic filing, and other interfacesinterface with other justice partners and the public, and publish certain information from case management systems.systems, and simplify provision of these services. Certain Journal Technologies’Technologies’ product lines now provide versions of these services, but there are many uncertainties in the process of courts and other agencies migrating to newer Internet-based systems, including whether Journal Technologies’ versions of case management systems will find general acceptance and whether the update, upgrade and modification of such systems can be done in a cost effective manner.SaaS pattern. The Company competes on a variety of factors, including price, technological capabilities, and services to accommodate the individual requirements of each customer.

Remaining competitive requires periodic investment in technology to ensure modern patterns are followed; Journal Technologies is currently embarking on developing next-generation technology and addressing certain technical debt that exists within current generation offerings.

Employees

The Company hashad approximately 355350 full-time employees and contractors and about 1510 part-time employees as of September 30, 2017. This includes2023, including about 205 full-time243 employees and contractors at Journal Technologies and 3 part-time12 employees ofand contractors at Journal Technologies.Technologies (Canada). The Company is not a party to any collective bargaining agreements. Certain benefits, including medical insurance, are provided to all full-time employees. Management considers its employee relations to be good.

The Company relies heavily on Gerald Salzman, who serves as president, chief executive officer, chief financial officer, treasurer and assistant secretary. If Mr. Salzman’s services were no longer available to the Company, it is unlikely that the Company could find a single replacement to perform all of the duties now handled by him, and it could have a significant adverse effect on the Company’s business. The Company does not carry key man life insurance, nor has it entered into an employment agreement with Mr. Salzman.

Working Capital

Traditionally, theThe Company had generated sufficient cash flow from operations to cover all its needs withoutowns marketable securities with dividends and significant borrowing. However, in fiscal 2017, the Company had negative cash flow primarily due to the expansion of Journal Technologies. The aggregate market value of the securities owned by the Company has increased significantly in recent years (although fiscals 2015 and 2016 were exceptions),appreciation, providing the Company with working capital in addition to its cash flow from operations, subject, of course, to the normal risks associated with owning stocks and bonds.securities. To a considerable extent, the Company also benefits from the fact that subscriptions and some licenses, maintenance and consulting feescustomer support are paid in advance. In 2012,fiscal 2013, the Company borrowed $14 million from its investment margin account to purchase all of the outstanding stock of New Dawn Technologies, Inc., and in 2013, it borrowed another $15.5 million to acquire substantially all of the operating assets and liabilities of ISD Technologies, Inc., in each case pledging its marketable securities to obtain favorable financing. In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million as of September 30, 2023.

The Company believes it has sufficient cash and marketable securities for the foreseeable future. If the Company’sCompany’s overall cash needs exceed cash flow from operations and its current working capital, the Company may still have the ability to borrow against its marketable securities on favorable terms, as it did for the New Dawn and ISD acquisitions, or it may attempt to secure additional financing which may or may not be available on acceptable terms.

The Company extends unsecured credit to most of its advertising customers.customers and some government agencies. The Company maintains a reserve account for estimated losses resulting from the inability of these customers to make required payments, but if the financial conditions of these customers were to deteriorate or the Company’sCompany’s judgments about their abilities to pay are incorrect, additional allowances might be required, and the Company’s cash flows and results of operations could be materially affected.

Inflation

The effects of inflation are not significantly any more or less adverse on the Company's businesses than they are on other publishing and software companies. The Company has experienced the effects of inflation primarily through increases in costs of personnel, newsprint, postage and services.personnel. These costs have generally been offset by increased license, maintenance and support fees, which often contain a periodic price increases for advertisingcost-of-living adjustment.

Also, the Company's investment margin account has an interest rate that fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly. The interest rate as of September 30, 2023 was 6%, and subscriptionthe outstanding balance was $75 million. Because the Federal Reserve has increased interest rates but with frequent exceptions during several years whento help combat inflation and may continue to do so, the CompanyCompany’s interest expense on the margin account has experienced substantial increasesincreased and could increase more in postage and newsprint expenses and additional costs related to acquisitions.the future.

Access to Our Information

We fileThe Company files annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission (“SEC”). These filings are not available on our website, www.dailyjournal.com, which is generally dedicated to the content of our publications.publications and services. We will, however, provide these filings in electronic or paper format free of charge upon request addressed to our Secretary at our principal executive offices. Our SEC filings are also available to the public over the Internet at the SEC’s website at www.sec.gov. The public may also read and copy any document we file at the SEC’s public reference room located at 100 F Street N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.

The foregoing business discussion and the other information included in this Form 10-K should be read in conjunction with the following risks, trends and uncertainties, any of which, either individually or in the aggregate, could materially and adversely affect our business, operating results or financial condition.

Risks Associated with The Traditional Businessa Public Health Event

A continuing reductionThe Company’s business is likely to be materially and adversely affected by the emergence or resurgence of an epidemic or pandemic such as COVID-19, or by a similar event or the fear of such an event, and the measures that governmental authorities implement to address it.

As COVID-19 spread in early 2020, governmental authorities and health officials implemented numerous unprecedented measures to contain the virus, including “stay at home” orders for non-essential workers, travel restrictions, quarantines and business shutdowns. Most of Journal Technologies’ customers, which are primarily courts and governmental agencies in the numberUnited States, Canada and Australia, either closed or significantly scaled back their activities. Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their operations and spending.

The impact on economic activity of residential foreclosures in Californiaa new crisis or a serious mutation of COVID-19 could again threaten the Traditional Business’ advertising and Arizona willsubscription revenues. Most people again working from home and using on-line services would likely to put additional pressure on the newspaper business by impacting circulation numbers that may not be replaced by on-line revenues. Actions restricting travel, requiring non-essential workers to “stay at home” or causing courts and justice agencies to close or cut back operations can impact the ability of Journal Technologies to complete certain projects that are typically done in-person (and for which payment is usually received upon completion), reduce e-filing revenues, affect procurement processes and result in fewer trustee sale noticesoverall payment delays. In addition, the Company relies on its portfolio of marketable securities for dividend income and balance sheet support, and the value of the portfolio can be materially affected by declines in stock prices, particularly among the common stocks of the three U.S. financial institutions and one foreign manufacturer that make up a substantial portion of the portfolio.

Due to the uncertainties associated with the duration and severity of an event like COVID-19, the efforts to contain it, and the changes in business operations and personal behaviors that are likely to follow from it, it is difficult to estimate the magnitude of its impact on the Company’s business in future periods, but it could materially affect the Company’s operations, staffing levels, financial condition, liquidity and cash flows going forward. Also, with new norms established, the majority of Journal Technologies employees continue working from home most days, and the long-term downsides of these new norms on innovation and productivity are still being publisheddetermined.

Risks Associated with the Maturation of Artificial Intelligence (AI) Technologies

The Company’s business may be materially affected—either positively or negatively--by the emergence of disruptive new technologies or approaches enabled by the rapid pace of innovation unfolding in the artificial intelligence space.

Worthwhile new technologies capitalize on eliminating old inefficiencies. Just as the emergence and maturation of the Internet and smartphone technologies had profound implications across many industries, AI has the potential to significantly change key factors related to the Traditional Business, Journal Technologies, and companies in the Company’s newspapers.holdings of marketable securities.

For several years, the revenues of The Traditional Business, were driven bythere may be opportunities to automate or reduce the large numbercost of foreclosurescontent creation, or perhaps allow monetization of existing and/or historic content in California and Arizona, for which public notice advertising is required by law. With improvements in the economy, the number of foreclosures continued to decline in 2017. We expect this trend to continue, and it will significantly adverselynew ways. Likewise, AI may negatively impact the earnings of The Traditional Business because itbusiness in ways that will prove difficult to circumvent.

For Journal Technologies, AI may fundamentally alter or automate key customer workflows over time, obviating the need for its technology. AI will likely also create new and better ways for customers to achieve their mandates. We are allocating certain resources to ensure we have the capacity to recognize and pursue these opportunities, whether through in-house engineering, partnership, or mergers and acquisitions, but whether we will be impractical forsuccessful is uncertain.

The process and approach to engineering software itself may change in notable ways, and this could impact the Companybusiness model of Journal Technologies.  Monitoring potential impacts of AI on companies in our holdings of marketable securities will also require attention.

Mitigating risk and capitalizing on potential opportunity requires active engagement.  The Company’s challenge is to offsetfind and exploit opportunities to ensure change precipitated by AI provides tailwinds and not headwinds, and to do so in a way that is neither too slow, nor premature.

Risks Associated with the expected revenue loss with expense reductions.Traditional Business

Changes in the legal requirement to publish public notice advertising or in the legal ability of our newspapers to publish those notices would have a significant adverse impact on The Traditional Business.

From time to time, the legislatures in California and Arizona (and elsewhere) have considered various proposals that would result in the elimination or reduction of the amount of public notice advertising in printed newspapers required by statute, and Arizona recently approved one such proposal for a particular notice type.type in fiscal 2017.  These proposals typically focus on the availability of alternative means of providing public notices, such as via the Internet.  Some proposals also question the need for public notices at all.  To the extent these proposals become law, particularly in California and Arizona, they could materially affect the revenues of Thethe Traditional Business.

For example, the California legislature recently passed a bill (AB542) to be effective January 1, 2024 that will almost certainly result in a decline in legal advertising revenue by reducing the number of publication days in a newspaper for self-service storage facility lien sales.  The existing requirement is to publish the notice once per week for two consecutive weeks.  The bill now allows the notice to be published either once per week for two consecutive weeks in a newspaper or once in a newspaper and once on an internet website that customarily conducts or advertises online auctions or sales. In time, this has the potential to reduce annual earnings by approximately $150,000 to $200,000 per year. Another bill (AB721) relative to school budget hearing notices, was also passed. Effective January 1, 2027 these notices are to be moved to posting on the school district’s website in lieu of being published in a newspaper.

In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers waswere challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of Thethe Traditional Business.

The Traditional Business faces strong competition in each of its markets.

Competition for readers and advertisers is very intense, both from established publications and from new entrants into the market. The Daily Journals face aggressive competition. The Company’s court rules publications face competition in both Northern and Southern California from document management programs, online court rules services, and the courts themselves. The steady decline in recent years in the number of subscriptions to The Daily Journals and the court rule publications is likely to continue and adversely impact Thethe Traditional Business’ future revenues.

The Traditional Business also competes with anywhere from one serious competitor to many competing newspaperscompetitors for public notice advertising in all of its markets. As the amount of this advertising has decreased due to the reduction in the number of foreclosures discussed above, the competition to publish the remaining public notices has intensified and may result in a further decline in Thethe Traditional Business’ public notice advertising revenues.

The Traditional Business continues to experienceexperience challenges in maintaining its commercial advertising and circulation revenues, particularly due to the growth of Internet sites.

Internet sites devoted to recruitment have become significant competitors of our newspapers and web siteswebsites for classified advertising. In addition, there has been a steady consolidation of companies serving the legal marketplace, resulting in an ever-smaller group of companies placing display advertising. Furthermore, newspapers like ours have been struggling to compete for display advertising generally, given the many other forums (including Internet sites) that compete for advertising dollars. These trends are expected to continue and would adversely affect Thethe Traditional Business.

CirculationDuring fiscal 2023, we had a slight increase of $9,000 in circulation revenues primarily resulting from some promotional sale efforts which we will continue. However, overall industry-wide circulation revenues have continued to decline as more and more information has become available from the internet.online. Law firm mergers have also reduced the number of firms that purchase multiple subscriptions of our newspapers. It is not practical to assume that we will be able to offset the decline in subscriptions with increases in the subscription rate, and we expectcannot anticipate that our circulation revenues will continue to decline.increase.

The Traditional Business is exposed to risks associated with fluctuations in postage and paper costs.

After personnel costs, postage and paper costs are typically the Company’s next two largest expenses. An adequate supply of newsprint and other paper is important to the operations of Thethe Traditional Business. The Company currently does not have a contract with any paper supplier, and in the past, shortages of newsprint have sometimes resulted in higher prices. The priceRecently, there have been consolidations of newsprint suppliers, and paper has remained unchanged since fiscal year 2013, and we expect it to remain unchanged at least through June 2018.prices may fluctuate substantially in the future.

The Traditional Business uses the U.S. Postal Service for distribution of a majority of its newspapers and magazine.products. Postal rates are dependent on the operating efficiency of the U.S. Postal Service and on legislative mandates imposed upon the U.S. Postal Service. During the past several years, postal rates have increased. Postal rates and fees may increase more in the future. Further, we may not be able to pass on increases in paper and postage costs to our customers.

We expect the Traditional Business to continue to suffer from significant secular decline.

The newspaper business has been experiencing significant secular decline for some time, and the Company’s Traditional Business has been no exception. The Company expects its Traditional Business to continue to decline in the years ahead, which could have a material negative impact upon the Company’s revenue, income and future prospects.

Risks Associated with Journal Technologies

The success of Journal Technologies depends in large part on the technological update and upgrade of its software products.

Journal Technologies’ success depends on the continued improvement of its products, and the costs to update and upgrade those products consistently represent a large portion of Journal Technologies’ expenses. There are many uncertainties in the process of courts and other justice agencies migrating to newer case management systems, including whether Journal Technologies’ versions of these systems will find general acceptance and whether the modification of such systems can be done in a cost effectivecost-effective manner. The costs to update and upgrade Journal Technologies’ products are expensed as incurred and will impact earnings at least through the foreseeable future. To build out next-generation technology there is up-front investment required, which is now underway. Likewise, investment is required to improve existing technology to simplify the process of configuring, managing and updating systems. These investments are being made to both improve win rates and maximize the efficiency (ergo reduce costs, and increase margins) of building and deploying customer systems. The intention is to improve profitability, but if this development is not done effectively, it may not yield the expected competitive advantages or intended efficiencies.

Journal Technologies faces significant competition from other case management software vendors.

There is significant competition among a limited number of companies to provide services and software to courts and other justice agencies, and some of these companies are much larger and have greater access to capital and other resources than Journal Technologies. Normally, the vendor is selected through a bidding process, and often the customers will express a preference for, or even require, larger vendors. An inability to successfully compete in this difficult market could materially affect the earnings of Journal Technologies. Likewise, specialized vendors in specific vertical markets may develop or continue to enhance specific solutions for certain customer types that are sufficiently focused and turnkey that Journal Technologies will struggle to compete with them.

The customers of Journal Technologies are public sector entities, which create special issues and risks.

SubstantiallyAlmost all of the customers of Journal Technologies are courts, justice agencies, and other government entities. Accordingly, we face special risks associated with governmental budget constraints, especially during stressful economic times, which could force government entities to defer or forego consulting services or even stop paying their annual software license and maintenance fees. In addition, we encounter risks related to a longer and more complicated sales cycle than exists for commercial customers, political issues related to resource allocation, administration turnover and preferences for internal case management solutions or for a particular vendor, complicated bidding procedures, and fluctuations in the demand for information technology products and services.

Journal Technologies generally recognizes revenues for software installations only upon completion of the applicable services and customer acceptance of the software system.

In most cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live”. Accordingly, we do not recognize revenues for installation services or for most other consulting services until after the services have been performed and accepted; thereaccepted. There are significant risks associated with our ability to complete our services to the satisfaction of our customers and to fulfill the requirements that entitle us to be paid. An inability to realize payment for services performed could materially affect the earnings of Journal Technologies. Additional costs may not be recoverable for historic projects with flexible scopes or scopes that are subject to interpretation, or projects that require adjustments due to technology changes that occur due to the passage of time.

The end-of-life process for legacy products and customer transitions to new products must be handled effectively.

Disruptions that affect long-standing customer relationships can have negative reputational implications for Journal Technologies and that can affect its earnings.

Risks Associated with Our Holdings of Marketable Securities

A large portion of the Company’sCompany’s assets is held in publicly traded securities, and the prices of those securities may decline.

As of September 30, 2017,2023, the Company held marketable securities worth approximately $229,265,000,$303,128,000, with an unrealized gain for financial statement purposes of $165,872,000.$137,716,000. While this portfolio has enabled the Company to borrow on very favorable terms for the New Dawn and ISD acquisitions and to better compete for case management software opportunities that are usually limited to “large” firms, it is unusual for a public company to invest a significant amount of its available cash in the marketable securities of other public companies. The value of these securities could decline, which would adversely affect net income and shareholders’ equity.

Also, as of September 30, 2017,2023, the Company’s holdings of marketable securities were concentrated in just seven companies and included two based in foreign currencies.eight companies. Accordingly, a significant decline in the market value and unfavorable changes in the foreign exchange rates of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings. This concentration of risk may result in a more pronounced effect on net income and shareholders’ equity.

The irreplaceable manager of our marketable securities portfolio passed away in November 2023.

Charles T. Munger, the legendary investor of Berkshire Hathaway fame, has been a director of the Company for many decades, and has long managed the Company’s holdings of marketable securities. Mr. Munger passed away on November 28, 2023. Although the Board will work to ensure that the portfolio remains well-managed, it’s impossible to ever replace Mr. Munger.  Given the loss of Mr. Munger, the Company does not expect the future financial performance of its marketable securities portfolio to rival its past performance.

In certain circumstances, theThe Company may beis required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.

Even ifUnder accounting rules that became effective in fiscal 2019, changes in the Company’sunrealized gains and losses on marketable securities as a whole perform extraordinarily well, for accounting reasons, an “other-than-temporary impairment” in a particular security may result in the need to recognize a loss with respect to that securityare included in the Company’s statements of comprehensivereported net income (loss) in a particular period. This, even though the Company has happened in several previous fiscal years, and it may happen againnot actually realized any gain or loss by selling such marketable securities. Accordingly, changes in the future with respect tomarket prices of the sameCompany’s marketable securities or other securities owned by the Company. This requirement to recognize a loss couldcan have a material effectsignificant impact on the Company’s earnings inreported results for a particular period. Also, atperiod, even though those changes do not bear on the performance of the Company’s operating businesses.

The Company may be subject to fluctuations in foreign currency rates for marketable securities that are not denominated in the United States Dollar.

At times, the Company may hold marketable securities denominated in currencies other than the United States Dollar. When it does, the Company may be at risk for significant fluctuations in the applicable foreign currency exchange rates, which would affect the profitability of such marketable securities. The Company currently owns one such investment that is denominated in Hong Kong Dollars.

General Corporate Risks

The Company relies heavily on the services of Gerald Salzman.

Gerald Salzman, 78, serves as the Company’s president, chief executive officer, chief financial officer, treasurer and assistant secretary. He is also the president, chief executive officer, chief financial officer and secretary of Journal Technologies. If Mr. Salzman’s services were no longer available to the Company, it is unlikely that the Company could find a single replacement to perform all of the duties now handled by him, and it could have a significant adverse effect on the Company’s business. The Company does not carry key man life insurance, nor has it entered into an employment agreement with Mr. Salzman.

Changes in accounting guidance could have a significant effect on the Company’sCompany’s reported financial results.

Preparing consolidated financial statements requires the Company’s management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies and the prevailing accounting guidance. The Company considers fair value measurement and disclosures, revenue recognition, accounting for software costs accounting for business combinations, testing for goodwill and intangible impairments and income taxes to be critical accounting policies and estimates. A change in the accounting guidance with respect to one or more of these areas could materially affect the Company’s reported financial results.

As noted above, beginning in fiscal 2019, changes in unrealized gains (losses) on marketable securities are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company.

We cannot be sure that customer information and systems are fully protected against security breaches.

Journal Technologies’Technologies’ software processes and stores customer information in the conduct of its business, including in some cases by utilizing cloud-based systems supplied by third-party vendors.  Despite our efforts to maintain up-to-date security controls, it is possible that our system could be improperly used to access or misappropriate customer systems or information, including personally identifiable or other confidential information.  A material security breach of this nature could harm our reputation, cause us to lose current and potential customers, require us to allocate more resources to information security, or subject us or our customers to liability, resulting in increased costs, loss of revenue, or both.  The Traditional Business also operates certain websites that process and, in certain cases, store customer information.  A minorMinor security breach wasbreaches were discovered on a websitewebsites operated by Thethe Traditional Business in early fiscal 2015 and again in November 2023, and although it wasboth incidents were remediated without loss of data or revenue, there can be no assurance that there will not be more material breaches in the future.  Also, our insurance may not cover all of the costs that we may incur as a result of a material security breach.    

We haveThe Company has identified certain material weaknesses in ourits internal control over financial reporting that, if not properly remediated, could result in material misstatements in our financial statements in future periods.

reporting.

We have

The Company has identified certain material weaknesses in ourits internal control over financial reporting for the period ended September 30, 2017, under standards established by the Public Company Accounting Oversight Board, or PCAOB. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Ourreporting. The Company’s internal control over financial reporting has been designed to provide our management and the Board of Directors with reasonable assurance regarding the preparation and fair presentation of ourthe Company’s consolidated financial statements. As a small company, we have three long-time knowledgeable managers in our advertising and subscription departments, seven experienced employees in the accounting department and three in the IT department. Accordingly, we are not able to segregate duties to the extent we could if we had more people, and we have not sufficiently designed and documented controls that support an effective assessment of our internal controls relating to the prevention of fraud and possible management override of controls. Further, we dothe Company does not have sufficient technical expertise in assessingan internal audit group, and applying accounting standardshas not engaged an outside firm to complex and/or non-routine transactions, reviewingcomplete the quarterly and annual tax analysis and provision, and assessingdocumentation of its internal control assessment to the adequacy of disclosures inlevel required by the quarterly and annual consolidated financial statements.applicable criteria.

We believe that our overall internal control environment is sufficient for a company of our size. However, the existence of material weaknesses means that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis. If we are not able to correct material weaknesses or deficiencies in internal controls in a timely way, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the SEC’sSEC’s rules and forms will be adversely affected. Such a result could negatively impact the market price and trading liquidity of our securities,stock, weaken investor confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely affect our business and financial condition. For more information regarding the material weaknesses, the mitigating controls we use, and certain remedial steps we have taken or considered, please see Part II. Item 9A Controls and Procedures.

None.

Not applicable.

The main Los Angeles property is comprised of a two-story, 34,000 square foot building constructed in 1990, which is fully occupied by the Company. Approximately 75% of the building is devoted to office space and the remainder to printing and production equipment and facilities. In 2003, the Company finished building an adjacent 37,000 square foot building and parking facilities on properties it acquired in 1996 and 1998. This building provides additional office, production and storage space. The Company andSince a majority of Journal Technologies occupy this building’s first flooremployees are working remotely from home post-COVID or at clients’ sites, the Company intends to consolidate the two offices into one and will completeseek to either sell or lease out the build-out of the second floor as needed.adjacent building in 2024.

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. This office is also currently underutilized and, therefore, a lease to a third party or other approach may be considered at some point in the future.

The Company leases approximately 6,200 square feet of office space (expiring in October 2019) in San Francisco. Journal Technologies leases about 7,100 square feet of office space (expiring in May 2018) in Corona, California; 9,800 square feet of office space (expiring in August 2020) in Englewood, Colorado; and 1,800 square feet of office space (expiring in October 2019) in Englewood, Colorado which has been sublet. In addition, the Company rents facilities in each of the remaining cities where its staff is located on a month-to-month basis or pursuant to leases generally of no longer than three years’ duration. The Company believes that it has adequate office space.

See Note 4 of Notes to Consolidated Financial Statements for information concerning rents payable under leases.

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

Not applicable.

Part II

Item 5. Market for Registrant’s

Item 5.

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

The following table sets forth the sales prices of the Company’s common stock for the periods indicated. Quotations are as reported by the NASDAQ Capital Market.