UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~(Mark~~(Mark One)

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

	~~For the quarterly period ended December 31, 2017~~

For the quarterly period ended December 31, 2023

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

	~~For the transition period from _______________ to _____________________~~

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 incorporation or organization)		(I.R.S. Employer
~~incorporation or organization)~~		Identification No.)

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

(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: X☒ 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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes: X☒ 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: X	☐
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~~defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No: X☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable ~~date.~~date: 1,377,026 shares outstanding at January 31, 2024

~~Class~~		~~Outstanding at January 31, 2018~~
~~Common Stock, par value $ .01 per share~~		~~1,380,746 shares~~

December 31

September 30

2017

2017

ASSETS

Current assets

Cash and cash equivalents
$ 2,508,000 $ 3,384,000
Marketable securities at fair value, including common stocks of $236,387,000 and bonds of $8,547,000 at December 31, 2017 and common stocks of $220,973,000 and bonds of $8,292,000 at September 30, 2017
244,934,000 229,265,000
Accounts receivable, less allowance for doubtful accounts of $200,000 at December 31, 2017 and September 30, 2017
4,192,000 5,358,000
Inventories
40,000 40,000
Prepaid expenses and other current assets
641,000 798,000
Income tax receivable
987,000 909,000
Total current assets
253,302,000 239,754,000

Property, plant and equipment, at cost

Land, buildings and improvements
16,396,000 16,396,000
Furniture, office equipment and computer software
2,724,000 2,724,000
Machinery and equipment
1,818,000 1,799,000
20,938,000 20,919,000
Less accumulated depreciation
(9,433,000 ) (9,292,000 )
11,505,000 11,627,000
Intangibles, net
1,996,000 3,058,000
Goodwill
13,400,000 13,400,000
Deferred income taxes - Federal
7,436,000 10,652,000
Deferred income taxes - States
2,251,000 2,217,000
$ 289,890,000 $ 280,708,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

Accounts payable
$ 2,951,000 $ 3,049,000
Accrued liabilities
2,411,000 3,112,000
Note payable collateralized by real estate
117,000 115,000
Deferred subscriptions
3,135,000 3,284,000
Deferred installation contracts
4,364,000 5,072,000
Deferred maintenance agreements and others
10,040,000 9,442,000
Total current liabilities
23,018,000 24,074,000

Long term liabilities

Investment margin account borrowings
29,493,000 29,493,000
Note payable collateralized by real estate
1,926,000 1,956,000
Deferred maintenance agreements
580,000 759,000
Accrued liabilities
135,000 135,000
Deferred income taxes, net
48,140,000 64,550,000
Total long term liabilities
80,274,000 96,893,000

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 424,307 treasury shares, at December 31, 2017 and September 30, 2017
14,000 14,000
Additional paid-in capital
1,755,000 1,755,000
Retained earnings
71,889,000 57,150,000
Accumulated other comprehensive income
112,940,000 100,822,000
Total shareholders' equity
186,598,000 159,741,000
$ 289,890,000 $ 280,708,000

Three months
ended December 31

2017

2016

Revenues

Advertising
$ 2,116,000 $ 2,310,000
Circulation
1,363,000 1,449,000
Advertising service fees and other
602,000 638,000
Licensing and maintenance fees
4,350,000 3,966,000
Consulting fees
995,000 848,000
Other public service fees
826,000 779,000
10,252,000 9,990,000

Costs and expenses

Salaries and employee benefits
8,197,000 7,641,000
Outside services
1,039,000 980,000
Postage and delivery expenses
217,000 278,000
Newsprint and printing expenses
212,000 209,000
Depreciation and amortization
1,218,000 1,392,000
Other general and administrative expenses
2,814,000 2,343,000
13,697,000 12,843,000
Loss from operations
(3,445,000 ) (2,853,000 )
Other income (expense)

Dividends and interest income
1,483,000 1,171,000
Gain on sale of capital asset
2,000 -
Other income
9,000 15,000
Interest expense on note payable collateralized by real estate
(24,000 ) (26,000 )
Interest expense on margin loans
(136,000 ) (79,000 )
Interest accrual for uncertain and unrecognized tax benefits
- (9,000 )
Loss before income taxes
(2,111,000 ) (1,781,000 )
Benefit from income taxes
16,850,000 310,000
Net income (loss)
$ 14,739,000 $ (1,471,000 )

Weighted average number of common shares outstanding - basic and diluted
1,380,746 1,380,746
Basic and diluted net income (loss) per share
$ 10.67 $ (1.07 )

Comprehensive income

Net income (loss)
$ 14,739,000 $ (1,471,000 )
Net increase in unrealized appreciation of marketable securities (net of taxes)
12,118,000 15,019,000
$ 26,857,000 $ 13,548,000

	December 31			September 30
	2023			2023
ASSETS
Current assets
Cash and cash equivalents	$	14,432,000		$	20,844,000
Restricted cash		2,121,000			2,100,000
Non-qualified deferred compensation plan - trust account asset value		379,000			194,000
Marketable securities at fair value -- common stocks		317,818,000			303,128,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at December 31, 2023 and September 30, 2023		12,742,000			18,687,000
Inventories		58,000			72,000
Income tax receivable		21,000			—
Prepaid expenses and other current assets		411,000			380,000
Total current assets		347,982,000			345,405,000

Property, plant and equipment, at cost
Land, buildings and improvements		16,400,000			16,400,000
Furniture, office equipment and computer software		1,708,000			1,703,000
Machinery and equipment		1,521,000			1,521,000
		19,629,000			19,624,000
Less accumulated depreciation		(10,330,000	)		(10,264,000	)
		9,299,000			9,360,000
Operating lease right-of-use assets		82,000			95,000
	$	357,363,000		$	354,860,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	6,019,000		$	6,643,000
Accrued liabilities		5,032,000			8,789,000
Income tax payable		—			1,069,000
Note payable collateralized by real estate		160,000			158,000
Deferred subscriptions		2,623,000			2,678,000
Deferred consulting fees		5,744,000			5,828,000
Deferred maintenance agreements and others		15,131,000			17,033,000
Total current liabilities		34,709,000			42,198,000

Long term liabilities
Investment margin account borrowings		70,000,000			75,000,000
Note payable collateralized by real estate		1,079,000			1,120,000
Deferred maintenance agreements		714,000			1,000,000
Accrued liabilities		3,841,000			4,274,000
Accrued non-qualified deferred compensation		387,000			200,000
Deferred income taxes		33,549,000			30,599,000
Total long-term liabilities		109,570,000			112,193,000

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 428,027 treasury shares, at December 31, 2023 and September 30, 2023		14,000			14,000
Additional paid-in capital		1,755,000			1,755,000
Retained earnings		211,315,000			198,700,000
Total shareholders' equity		213,084,000			200,469,000
	$	357,363,000		$	354,860,000

	Three months ended December 31
	2023			2022

Revenues
Advertising	$	2,087,000		$	1,990,000
Circulation		1,095,000			1,098,000
Advertising service fees and other		705,000			699,000
Licensing and maintenance fees		6,557,000			4,395,000
Consulting fees		3,302,000			2,322,000
Other public service fees		2,247,000			1,797,000
		15,993,000			12,301,000

Costs and expenses
Salaries and employee benefits		11,347,000			9,631,000
Decrease to the long-term supplemental compensation accrual		(420,000	)		(520,000	)
Agency commissions		243,000			211,000
Outside services		1,667,000			1,230,000
Postage and delivery expenses		176,000			167,000
Newsprint and printing expenses		205,000			199,000
Depreciation and amortization		66,000			75,000
Equipment maintenance and software		376,000			303,000
Credit card merchant discount fees		552,000			425,000
Rent expenses		70,000			69,000
Accounting and legal fees		256,000			273,000
Other general and administrative expenses		832,000			954,000
		15,370,000			13,017,000
Income from operations		623,000			(716,000	)
Other income (expense)
Dividends and interest income		1,569,000			1,069,000
Realized gains on sales of marketable securities		—			422,000
Net unrealized gains on marketable securities		14,690,000			24,025,000
Interest expense on margin loans and others		(1,131,000	)		(861,000	)
Interest expense on note payable collateralized by real estate		(11,000	)		(12,000	)
Income before income taxes		15,740,000			23,927,000
Income tax provisions		(3,125,000	)		(6,100,000	)
Net income	$	12,615,000		$	17,827,000

Weighted average number of common shares outstanding - basic and diluted		1,377,026			1,377,026
Basic and diluted net income per share	$	9.16		$	12.95

Comprehensive income	$	12,615,000		$	17,827,000

	Three months ended December 31						Three months ended December 31
	2017			2016			2023			2022
Cash flows from operating activities
Net income (loss)	$	14,739,000		$	(1,471,000	)
Adjustments to reconcile net income (loss) to net cash used in operations
Net income							$	12,615,000		$	17,827,000
Adjustments to reconcile net income to net cash (used in) provided from operations
Depreciation and amortization		1,218,000			1,392,000			66,000			75,000
Net unrealized gains on marketable securities								(14,690,000	)		(24,025,000	)
Realized gains on sales of marketable securities								—			(422,000	)
Deferred income taxes		(16,778,000	)		(917,000	)		2,950,000			6,097,000
Discounts earned on bonds		(1,000	)		(1,000	)
Changes in operating assets and liabilities
Changes in operating assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		1,166,000			(891,000	)		5,945,000			5,553,000
Inventories		---			(9,000	)		14,000			(25,000	)
Prepaid expenses and other assets		157,000			5,000			(18,000	)		68,000
Income tax receivable		(78,000	)		645,000			(21,000	)		2,000
Increase (decrease) in liabilities
Accounts payable		(98,000	)		18,000			(624,000	)		207,000
Accrued liabilities		(701,000	)		(373,000	)
Income taxes		---			(68,000	)
Deferred subscriptions		(149,000	)		(106,000	)
Accrued liabilities, including non-qualified deferred compensation								(4,003,000	)		(3,408,000	)
Income tax payable								(1,069,000	)		—
Deferred subscriptions								(55,000	)		(143,000	)
Deferred consulting fees								(84,000	)		1,105,000
Deferred maintenance agreements and others		419,000			678,000			(2,188,000	)		(513,000	)
Deferred installation contracts		(708,000	)		(213,000	)
Net cash used in operating activities		(814,000	)		(1,311,000	)
Net cash (used in) provided from operating activities								(1,162,000	)		2,398,000

Cash flows from investing activities
Proceeds from sales of marketable securities								—			2,826,000
Purchases of marketable securities		---			(5,013,000	)		—			(10,001,000	)
Purchases of property, plant and equipment		(34,000	)		(187,000	)		(5,000	)		(36,000	)
Net cash used in investing activities		(34,000	)		(5,200,000	)
Net cash used in investing activities								(5,000	)		(7,211,000	)

Cash flows from financing activities
Proceeds from margin loan borrowing								—			6,011,000
Payment to margin loan borrowing								(5,000,000	)		—
Payment of real estate loan principal		(28,000	)		(27,000	)		(39,000	)		(23,000	)
Net cash used in financing activities		(28,000	)		(27,000	)
Net cash (used in) provided from financing activities								(5,039,000	)		5,988,000

Decrease in cash and cash equivalents		(876,000	)		(6,538,000	)
(Decrease) increase in cash and restricted cash and cash equivalents								(6,206,000	)		1,175,000

Cash and cash equivalents
Cash and restricted cash and cash equivalents
Beginning of period		3,384,000			11,411,000			23,138,000			15,468,000
End of period	$	2,508,000		$	4,873,000		$	16,932,000		$	16,643,000

Interest paid during period	$	169,000		$	111,000		$	1,232,000		$	917,000
Net income taxes paid during period	$	6,000		$	3,000
Net income taxes paid							$	1,265,000		$	—

~~Note~~ 3 - ~~Accounting Standards Adopted in Fiscal~~ ~~2018~~ ~~and Recent Accounting Pronouncements~~

~~Accounting Standards Adopted in Fiscal~~ ~~201~~8

In ~~November 2015,~~ ~~the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)~~ ~~No.~~~~2015~~-~~17,~~~~Income Taxes (Topic~~ ~~740~~~~): Balance Sheet Classification of Deferred Taxes~~~~. This update requires deferred tax liabilities and assets to be classified as noncurrent in the consolidated balance sheet. The Company has adopted this guidance effective~~ ~~October 1, 2017~~ ~~and concluded that it has~~ no significant impact on the Company’s financial condition, results of operations or disclosures because it is simply a reclassification of current deferred taxes to non-current deferred taxes with an itemization of federal and state deferred taxes.

In ~~May 2014,~~ ~~the FASB issued ASU~~ ~~No.~~~~2014~~Note 3 -~~09,~~~~Revenue from Contracts with Customers (ASC Topic~~ ~~606~~) ~~which requires that revenues be recognized~~ Accounting Standards Adopted in an amount reflecting the consideration an entity expects to receive in exchange for those goods or services when a customer obtains control of promised goods or services. The Company elected to adopt early the ASC Topic ~~606~~ ~~effective~~ ~~October 1, 2017~~ ~~using the modified retrospective method.~~Fiscal 2024

On October 1, 2023, the Company adopted Current Expected Credit Losses, acredit loss accounting standard (model) issued by the Financial Accounting Stands Board, requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The ~~Company~~ ~~has concluded~~standard eliminates the threshold for initial recognition in current U.S. GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The adoption of ~~the ASC Topic~~ ~~606~~ ~~in fiscal~~ ~~2018~~this guidance has no ~~significant impact~~ material effect on the Company’s consolidated financial ~~condition or results of operations~~. The Company’s traditional publishing business revenue recognition related to advertising, circulation, and public fees remains unchanged. For the software business, the Company previously utilized the completed performance method of accounting, pursuant to which the Company did ~~not~~ recognize revenues for implementation services or licenses, maintenance, support and hosting services until after the services were performed and accepted by the customer (go-live), due to the fact that the customer’s acceptance was typically unpredictable and reliable estimates of the progress towards completion could ~~not~~ ~~be made. Thus, the Company’s past revenue recognition policy was already in conformity with ASU Topic~~ ~~606,~~ ~~which calls for revenue recognition at the point of delivery when a performance obligation is fulfilled. Consequently, the Company believes there are~~ no required material retrospective or accumulated catch-up adjustments with respect to prior years’ financial figures, as revenues have been recognized consistently in the same manner throughout the comparative reporting periods.statements.

T~~he adoption of 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. The Company incurs an immaterial amount of sales commission costs for its software contracts 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.~~

~~Other Recent Accounting Pronouncements~~

~~The Company will continue to evaluate the other new accounting pronouncements as detailed in its Annual Report on Form~~ 10~~-K for the year ended~~ ~~September 30, 2017.~~

Note 4 – Right-of-Use (ROU) Asset

At December 31, 2023, the Company had a ROU asset and lease liability of approximately $82,000 for its operating office and equipment leases, including approximately $31,000 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.

Note 5 – Revenue Recognition

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

For the ~~Company’s traditional publishing business,~~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 revenues are recognized when advertisements are ~~published and are net of agency commissions.~~published.

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~~one-transaction contracts. These current subscription-type contract revenues include (i) implementation consulting fees to configure the system to ~~go live and~~go-live, (ii) subscription software license, maintenance ~~including~~(including updates and ~~upgrades,~~upgrades) and support fees, and ~~third~~~~-party~~(iii) third-party hosting fees when used. Revenues for consulting are recognized at point of delivery (go-live) upon completion of ~~services and customer acceptance, and subscription fees are recognized ratably (using the output method based on time-elapsed) after the go-live.~~services. These contracts include assurance 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,~~third-parties, and recognizes such revenues on a gross basis. For legacy contracts with perpetual license arrangements, licenses and consulting services are recognized at point of delivery (go-live), and maintenance revenues are recognized ratably after the go-live. ~~(See Note~~ 12 ~~for additional disclosures related to ASC Topic~~ ~~606~~ ~~adoption.)~~

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 ~~efile~~e-file cases and pay traffic citations and other fees.

The adoption of 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~~revenues when it can invoice the customer pursuant to the contract for the value of completed ~~performance. As~~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. ~~Also, as a practical expedient, the Company has elected~~ ~~not~~ ~~to include its evaluation of variable consideration of certain usage based fees (i.e. public service fees) that are included in some contracts.~~ Furthermore, there are no fulfillment costs to be capitalized for the software contracts because these costs do not generate or enhance resources that will be used in satisfying future performance obligations.

Note 68 - Investments in Marketable Securities

~~Investments in~~All investments are classified as “Current assets” because they are available for sale at any time. These “available-for-sale” marketable securities ~~categorized as “available-for-sale”~~ 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 December 31, ~~2017~~ 2023 and September 30, ~~2017,~~ 2023, there were net accumulated pretax unrealized gains of ~~$181,540,000~~$152,406,000 and ~~$165,872,000,~~$137,716,000, respectively, ~~were~~ recorded ~~before taxes of~~ ~~$48,140,000~~ ~~and~~ ~~$64,550,000,~~ ~~respectively, in “Accumulated other comprehensive income”~~ in the accompanying ~~Consolidated Balance Sheets.~~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~~.manufacturer.

~~Investments~~In the three months ended December 31, 2023, the Company recorded and included in ~~equity~~its net income the net unrealized gains on marketable securities of $14,690,000, as compared with the net unrealized gains on marketable securities of $24,025,000, in the prior year period.

In December 2022, the Company sold part of its marketable securities for approximately $2,826,000, realizing net gains of $422,000, and borrowed an additional $6,011,000 from the margin loan account to purchase additional marketable securities with ~~fixed maturity as~~a total cost of approximately $10,001,000. (The Company repaid $11,000 in the subsequent quarter.) There was no purchase or sale of marketable securities during the three months ended December 31, ~~2017~~ ~~and~~ ~~September 30~~, ~~2017~~ ~~are summarized below.~~2023.

December 31, 2017

September 30, 2017

Aggregate
fair value

(Unaudited)
Amortized/
Adjusted
cost basis

Pretax
unrealized
gains

Aggregate
fair value

Amortized/
Adjusted
cost basis

Pretax
unrealized
gains

Marketable securities

Common stocks
$ 236,387,000 $ 58,449,000 $ 177,938,000 $ 220,973,000 $ 58,449,000 $ 162,524,000
Bonds
8,547,000 4,945,000 3,602,000 8,292,000 4,944,000 3,348,000
$ 244,934,000 $ 63,394,000 $ 181,540,000 $ 229,265,000 $ 63,393,000 $ 165,872,000

~~All investments are classified~~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 as ~~“Current assets” because they are available for sale at any time. The bonds mature~~an alternative to near-zero interest rate investments. Following Mr. Munger’s death in ~~2039.~~November 2023, the Company remains committed to using the portfolio as a source of strength in support of its operating businesses, and the Board is in the process of considering ways to ensure the prudent and effective management of these assets in the context of the current market and the needs of the businesses.

AsInvestments in marketable securities as of December 31, ~~2017,~~ the Company performed an evaluation for an equity security with a fair value below cost to determine if the unrealized loss was other-than-temporary. This evaluation considers a number of factors including, but ~~not~~ ~~limited to, the length of time~~2023 and extent to which the fair value has been less than cost, the financial condition and near term prospects of the issuer and the Company’s ability and intent to hold the security until fair value recovers. The assessment of the ability and intent to hold this security to recovery focuses on liquidity needs, asset/liability management objectives and security portfolio objectives. Based on the result of the evaluation, the Company concluded that as of ~~December 31, 2017,~~ ~~the unrealized loss related to an equity security it owns was temporary.~~September 30, 2023 are summarized below.

~~Note~~ 9 ~~- Income Taxes~~

~~The~~ ~~December 2017~~ ~~Tax Cuts and Jobs Act (“Tax Act”) reduced the maximum corporate tax rate from~~ ~~35%~~ to ~~21%~~ ~~effective~~ ~~January 1, 2018.~~ ~~The Company has completed its review of the Tax Act. The impact to its financial statements is as follows: (i) current income tax expense or benefit is calculated on a blended rate of~~ ~~24.28%~~ ~~pursuant to IRC Section~~ ~~15,~~ ~~(ii) deferred tax expense includes a discrete net tax benefit of approximately~~ ~~$16~~ million resulting from a revaluation of deferred tax assets and liabilities to the expected tax rate that will be applied when temporary differences are expected to reverse, (iii) items that are expected to reverse during fiscal ~~2018~~ ~~are valued at the blended rate of~~ ~~24.28%~~ ~~while temporary differences that will reverse after fiscal~~ ~~2018~~ ~~are valued at~~ ~~21%,~~ ~~and (iv) approximately~~ ~~$20~~ million of the revaluation of deferred taxes relates to items that were initially recorded as accumulated other comprehensive income (“AOCI”). This revaluation is recorded as a component of income tax expense or benefit in continuing operations.

~~For the~~ ~~three~~ ~~months ended~~ ~~December 31, 2017,~~ 2023, the Company recorded an income tax ~~benefit~~provision of ~~$16,850,000~~$3,125,000 on the pretax ~~loss~~income of ~~$2,111,000.~~$15,740,000. The income tax provision consisted of tax provisions of $3,765,000 on the unrealized gains on marketable securities, $30,000 on income from foreign operations, and $270,000 on income from US operations and dividend income, partially offset by a tax benefit ~~was the result~~ of ~~applying the effective tax rate anticipated~~$120,000 for ~~fiscal~~ ~~2018~~ ~~to pretax loss for the~~ ~~three~~~~-month period ended~~ ~~December 31, 2017.~~ ~~The effective tax rate (before the discrete item discussed above) was greater than the statutory rate primarily due to~~ the dividends received deduction ~~which increases the loss for~~and other permanent book and tax ~~purposes. On pretax loss~~differences, and a tax benefit of ~~$1,781,000~~$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 three months ended December 31, ~~2016,~~ 2023 was 19.9%, after including the taxes on the unrealized gains on marketable securities.

For the three months ended December 31, 2022, the Company recorded an income tax provision of $6,100,000 on the pretax income of $23,927,000. The income tax provision consisted of a tax provision of $110,000 on the realized gains on marketable securities and $6,360,000 on the unrealized gains on marketable securities, partially offset by a tax benefit of ~~$310,000~~ ~~which was~~$140,000 on loss from operations, $80,000 for the ~~net result~~dividends received deduction and other permanent book and tax differences, and $150,000 for the effect of ~~applying~~a change in state apportionment on the beginning of the year’s deferred tax liability. Consequently, the overall effective tax rate ~~anticipated for fiscal~~ ~~2017~~ ~~to pretax loss~~ for the three months ended December 31, ~~2016.~~ ~~The effective tax rate~~2022 was ~~greater than~~25.49%, after including the ~~statutory rate mainly resulting from~~taxes on the ~~dividends received deduction. The Company’s effective tax rate was~~ ~~798%~~realized and ~~17%~~ ~~for the~~ ~~three~~ ~~months ended~~ ~~December 31, 2017~~ ~~and~~ ~~2016,~~ ~~respectively.~~ 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 ~~2015~~2021 with regard to federal income taxes and fiscal ~~2013~~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~~$29.5 million for two acquisitions, in each case pledging its marketable securities as collateral. There also have been subsequent net borrowings of $40.5 million to purchase additional marketable securities bringing the margin loan balance to $70 million as of December 31, 2023. 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 December 31, ~~2017~~ 2023 was 2%6%. These investment margin account borrowings do not mature.

In ~~fiscal~~ 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 byfor Journal Technologies. The Company paid ~~$1.24~~$1.24 million and financed the balance with a real estate bank loan of ~~$2.26~~$2.26 million which ~~bears~~had a fixed interest rate of 4.66% ~~and is repayable in equal monthly installments of about~~ ~~$17,600~~ ~~through~~ ~~2030.~~. 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 ~~$2.04~~$1.24 million as of December 31, ~~2017.~~2023. Each monthly installment payment is approximately $16,700. In April 2022, the Company sold approximately 17,564 square feet of the land along the front of its Logan building to the City of Logan for approximately $381,000 in connection with the City of Logan’s street widening project. (In October 2022, the Company again amended this real estate loan contract as the bank transferred its index to Secured Overnight Financing Rate from London Interbank Offered Rate which was ceased by the Federal Reserve and the Alternative Reference Rates Committee in the United States. The term of the loan, including the interest rate and the balance, remains unchanged.)

The Company also owns its facilities in Los Angeles andand leases space for its other offices under operating leases which expire at various dates through ~~fiscal~~ ~~2021.~~ ~~During fiscal~~ ~~2014,~~October 2025.

Effective January 1, 2023, the Company ~~renewed its office lease~~began sponsoring a 401(k) retirement plan and a 409(A) non-qualified deferred compensation plan for its ~~San Francisco office for~~ ~~five~~ ~~years (expiring in~~ ~~October 2019)~~ ~~with a current monthly rent~~employees. As of December 31, 2023, there were deferred compensation liabilities of approximately ~~$25,000~~ ~~for about~~ ~~6,200~~ ~~square feet. In fiscal~~ ~~2017,~~ ~~the Company leased approximately~~ ~~9,800~~ ~~square feet~~$387,000, of ~~office space (expiring in~~ ~~August 2020)~~ ~~in Englewood, Colorado.~~

~~The Company is responsible for~~which $379,000 were held under a ~~portion of maintenance, insurance and property tax expenses relating to the leased properties. Rental expenses were~~ ~~$237,000~~trust account for the ~~three~~~~-month period ended~~ ~~December 31, 2017,~~ ~~as compared with~~ ~~$174,000~~ ~~in the prior year period.~~409(A) plan.

Note 1212 - Operating Segments

The ~~Company’s reportable segments are: (i) the~~Company’s Traditional Business is one reportable segment and ~~(ii)~~the other is Journal ~~Technologies.~~Technologies which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc. All inter-segment transactions were eliminated. ~~Summarized financial information regarding~~Additional detail about each of the ~~Company’s~~ reportable segments and its income and expenses is ~~shown in the following table:~~set forth below:

Reportable Segments

Traditional
Business

Journal
Technologies

Corporate income
and expenses

Total

Three months ended December 31, 2017

Revenues

Advertising
$ 2,116,000 $ --- $ --- $ 2,116,000
Circulation
1,363,000 --- --- 1,363,000
Advertising service fees and other
602,000 --- --- 602,000
Licensing and maintenance fees
--- 4,350,000 --- 4,350,000
Consulting fees
--- 995,000 --- 995,000
Other public service fees
--- 826,000 --- 826,000
Operating expenses
4,314,000 9,383,000 --- 13,697,000
Loss from operations
(233,000 ) (3,212,000 ) --- (3,445,000 )
Dividends and interest income
--- --- 1,483,000 1,483,000
Gain on sale of capital asset
--- --- 2,000 2,000
Other income
--- --- 9,000 9,000
Interest expenses on note payable collateralized by real estate
(24,000 ) --- --- (24,000 )
Interest expenses on margin loans
--- --- (136,000 ) (136,000 )
Pretax (loss) income
(257,000 ) (3,212,000 ) 1,358,000 (2,111,000 )
Income tax benefit (expense)
(680,000 ) (2,185,000 ) 19,715,000 16,850,000
Net income (loss)
(937,000 ) (5,397,000 ) 21,073,000 14,739,000
Total assets
18,188,000 26,768,000 244,934,000 289,890,000
Capital expenditures
34,000 --- --- 34,000
Amortization of intangible assets
--- 1,062,000 --- 1,062,000

Reportable Segments

Traditional
Business

Journal
Technologies

Corporate income
and expenses

Total

Three months ended December 31, 2016

Revenues

Advertising
$ 2,310,000 $ --- $ --- $ 2,310,000
Circulation
1,449,000 --- --- 1,449,000
Advertising service fees and other
638,000 --- --- 638,000
Licensing and maintenance fees
--- 3,966,000 --- 3,966,000
Consulting fees
--- 848,000 --- 848,000
Other public service fees
--- 779,000 --- 779,000
Operating expenses
4,400,000 8,443,000 --- 12,843,000
Loss from operations
(3,000 ) (2,850,000 ) --- (2,853,000 )
Dividends and interest income
--- --- 1,171,000 1,171,000
Other income
15,000 --- --- 15,000
Interest expenses on note payable collateralized by real estate
(26,000 ) --- --- (26,000 )
Interest expenses on margin loans
--- --- (79,000 ) (79,000 )
Interest expense accrued for uncertain and unrecognized tax benefits
--- (9,000 ) --- (9,000 )
Pretax income (loss)
(14,000 ) (2,859,000 ) 1,092,000 (1,781,000 )
Income tax (expense) benefit
--- 775,000 (465,000 ) 310,000
Net income (loss)
(14,000 ) (2,084,000 ) 627,000 (1,471,000 )
Total assets
14,294,000 37,981,000 196,486,000 248,761,000
Capital expenditures
160,000 27,000 --- 187,000
Amortization of intangible assets
--- 1,224,000 --- 1,224,000

Overall Financial Results (000)
For the three months ended December 31, 2023 and 2022

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate						Total
	2023			2022			2023			2022			2023			2022			2023			2022
Revenues
Advertising	$	2,087		$	1,990		$	—		$	—		$	—		$	—		$	2,087		$	1,990
Circulation		1,095			1,098			—			—			—			—			1,095			1,098
Advertising service fees and other		705			699			—			—			—			—			705			699
Licensing and maintenance fees		—			—			6,557			4,395			—			—			6,557			4,395
Consulting fees		—			—			3,302			2,322			—			—			3,302			2,322
Other public service fees		—			—			2,247			1,797			—			—			2,247			1,797
Total operating revenues		3,887			3,787			12,106			8,514			—			—			15,993			12,301
Operating expenses
Salaries and employee benefits		2,549			2,218			8,798			7,413			—			—			11,347			9,631
Decrease to the long-term supplemental compensation accrual		(420	)		(500	)		—			(20	)		—			—			(420	)		(520	)
Others		1,471			1,134			2,972			2,772			—			—			4,443			3,906
Total operating expenses		3,600			2,852			11,770			10,165			—			—			15,370			13,017
Income (loss) from operations		287			935			336			(1,651	)		—			—			623			(716	)

Dividends and interest income		—			—			—			—			1,569			1,069			1,569			1,069
Interest expenses on note payable collateralized by real estate and other		—			—			—			—			(11	)		(12	)		(11	)		(12	)
Interest expense on margin loans		—			—			—			—			(1,131	)		(861	)		(1,131	)		(861	)
Gains on sales of marketable securities, net		—			—			—			—			—			422			—			422
Net unrealized gains (losses) on marketable securities		—			—			—			—			14,690			24,025			14,690			24,025
Pretax income (loss)		287			935			336			(1,651	)		15,117			24,643			15,740			23,927
Income tax (expense) benefit		(55	)		(235	)		(250	)		350			(2,820	)		(6,215	)		(3,125	)		(6,100	)
Net income (loss)	$	232		$	700		$	86		$	(1,301	)	$	12,297		$	18,428		$	12,615		$	17,827
Total assets	$	15,483		$	45,288		$	24,062		$	25,202		$	317,818		$	275,781		$	357,363		$	346,271
Capital expenditures	$	5		$	32		$	—		$	4		$	—		$	—		$	5		$	36

During the three months ended December 31, ~~2017,~~ 2023, the Traditional Business had total operating revenues of ~~$4,081,000~~ ~~of which~~ ~~$2,718,000~~ ~~were~~$3,887,000 with $2,792,000 recognized after services were provided and ~~$1,363,000~~ ~~were~~$1,095,000 recognized ratably over the publication subscription ~~terms.~~terms, as compared with total operating revenues of $3,787,000 with $2,689,000 recognized after services were provided and $1,098,000 recognized ratably over the publication subscription terms in the prior year period. Total operating revenues for the Company’s software business were ~~$6,171,000~~ ~~of which~~ ~~$2,064,000~~ ~~were~~$12,106,000 with $5,570,000 recognized upon completion of services ~~with customer acceptance while~~ ~~$4,107,000~~ ~~were~~and $6,536,000 recognized ratably over the subscription ~~periods.~~periods, as compared with total operating revenues of $8,514,000 with $4,121,000 recognized upon completion of services and $4,393,000 recognized ratably over the subscription periods in the prior year period.

Approximately ~~60%~~76% of the Company’s revenues during the ~~three~~~~-month periods~~three-month period ended December 31, ~~2017~~ 2023 were derived from Journal Technologies, as compared with ~~56%~~69% in the prior year period. In addition, the Company’s revenues ~~have been~~during the quarter were primarily from the United States with approximately 1%21% from foreign ~~countries.~~countries during the three-months ended December 31, 2023. Journal Technologies’ revenues are ~~all~~primarily from governmental agencies.

~~The following table sets forth certain deferred obligations from~~ ~~October 1, 2017~~ ~~through~~ ~~December 31, 2017:~~

Beginning Balance

Addition

Recognized

Ending
Balance

Deferred subscriptions
$ 3,284,000 $ 1,214,000 $ (1,363,000 ) $ 3,135,000
Deferred installation contracts
5,072,000 530,000 (1,238,000 ) 4,364,000
Deferred maintenance agreements and others
9,442,000 4,705,000 (4,107,000 ) 10,040,000

Item 2. ~~MANAGEMENT~~’SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 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. ~~(“Journal Technologies”)~~, ~~a wholly-owned subsidiary~~ 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 ~~efiling~~e-filing and a website to pay traffic citations ~~online,~~ and ~~bar members.~~fees online. These products are licensed ~~to more than 500 organizations~~ in 42approximately 30 states and internationally.

Although the World Health Organization has declared an end to the COVID-19 emergency, enduring changes in society resulting from efforts to contain the COVID-19 pandemic may have continuing effects on the Company’s business. For example, for Journal Technologies, although we were able to complete many existing projects remotely, we were delayed in finishing certain implementations and trainings because of our inability to work with clients in-person. Given that we are typically paid for implementation services upon “go-live” of a system, recognition of those revenues has been delayed. This can also create a risk of contract cancellations for in-progress projects, which has not been a common issue to date (there were two in 2023), and Journal Technologies is working to minimize additional cancellations.

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:

~~Comprehensive Income~~Comparable three-month periods ended December 31, 2023 and 2022

~~Comprehensive income includes net income (loss) and unrealized net gains on investments, net of taxes, as summarized below:~~Consolidated Financial Comparison

~~Comparable~~ ~~three~~~~-month periods ended~~ ~~December 31~~~~, 2017 and 2016~~

Consolidated revenues were $~~10,252,000~~$15,993,000 and ~~$9,990,000~~$12,301,000 for the three months ended December 31, ~~2017~~2023 and ~~2016,~~2022, respectively. This increase of ~~$262,000~~$3,692,000 (30%) was primarily from ~~increased~~increases in (i) Journal Technologies’ license and maintenance fees of ~~$384,000,~~$2,162,000, consulting fees of ~~$147,000~~$980,000, and other public service fees of ~~$47,000, partially offset by~~$450,000, and (ii) the ~~reduction in The~~ Traditional ~~Business’s trustee sale notice and its related service fee revenues of $57,000, commercial~~Business’ advertising revenues of ~~$64,000, and circulation revenues of $86,000. The Company’s revenues derived from Journal Technologies’ operations constituted about 60% and 56%~~$97,000.

Approximately 76% of the Company’s ~~total~~ revenues ~~for~~during the three months ended December 31, ~~2017 and 2016, respectively.~~2023 were derived from Journal Technologies, as compared with 69% in the prior fiscal year period. In addition, the Company’s revenues during the quarter were primarily from the United States, with approximately $2,492,000 (21%) from foreign countries. Almost all of Journal Technologies’ revenues are from governmental agencies.

Consolidated operating expenses increased by ~~$854,000 (7%~~$2,353,000 (18%) to ~~$13,697,000~~$15,370,000 from ~~$12,843,000, primarily resulting from additional personnel costs~~$13,017,000. Total salaries and ~~services for Journal Technologies. Total personnel costs~~employee benefits increased by ~~$556,000 (7%~~$1,716,000 (18%) to ~~$8,197,000~~$11,347,000 from ~~$7,641,000.~~$9,631,000 primarily due to annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, product development, and bolster the teams working on the company’s installation projects. Outside services increased by ~~$59,000 (6%~~$437,000 (36%) to ~~$1,039,000~~$1,667,000 from ~~$980,000~~$1,230,000 mainly because of additional contractor services and increased ~~contractor’s~~third-party hosting fees which were billed to clients. Equipment maintenance and software increased by $73,000 (24%) to $376,000 from $303,000 mainly resulting from increased maintenance costs ~~for Journal Technologies. Depreciation~~ and ~~amortization costs, which included primarily the amortization of Journal Technologies’ intangible assets, decreased by $174,000 to $1,218,000 from $1,392,000.~~additional miscellaneous software license purchases. Other general and administrative expenses ~~increased~~decreased by ~~$471,000 (20%~~$122,000 (13%) to ~~$2,814,000~~$832,000 from ~~$2,343,000~~$954,000 mainly because ~~of increased accounting~~there were decreased business travel expenses and ~~legal fees and~~reduced miscellaneous office ~~equipment and software maintenance fees for Journal Technologies.~~supply expenses as compared to the prior fiscal year period.

The Company’s non-operating income, net of expenses, ~~increased~~decreased by ~~$262,000 (24%~~$9,526,000 (39%) to ~~$1,334,000~~$15,117,000 from ~~$1,072,000~~$24,643,000 in the prior fiscal year period primarily because of ~~more dividend income,~~(i) the recording of net unrealized gains on marketable securities of $14,690,000 as compared with $24,025,000 in the prior fiscal year period, (ii) increases in interest expenses of $269,000 (31%) to $1,142,000 from $873,000 primarily due to the federal interest rate increases, and (iii) the recording of realized net gains on sales of marketable securities of $422,000 in the prior fiscal year period. These decreases were partially offset by increases in ~~the~~dividends and interest ~~rate on the two acquisition margin loans.~~income of $500,000 (47%) to $1,569,000 from $1,069,000.

During the three months ended December 31, ~~2017,~~2023, the Company’s consolidated pretax ~~loss~~income was ~~$2,111,000,~~$15,740,000, as compared ~~with $1,781,000~~to $23,927,000 in the prior fiscal year period. There was a consolidated net income of ~~$14,739,000~~$12,615,000 ($~~10.67~~9.16 per share) ~~after tax benefits, primarily due to tax cuts,~~ for the three months ended December 31, ~~2017,~~2023, as compared with ~~net loss of $1,471,000 (-$1.07~~$17,827,000 ($12.95 per share) in the prior fiscal year period. ~~(See~~ ~~Taxes~~.)

At December 31, ~~2017,~~2023, the aggregate fair market value of the Company’s marketable securities was ~~$244,934,000.~~$317,818,000. These securities had approximately ~~$181,540,000~~$152,406,000 of net unrealized gains before taxes of ~~$48,140,000 and~~$39,080,000. They generated approximately ~~$1,483,000~~$1,569,000 in dividends and interest income during the three months ended December 31, ~~2017, which lowers~~2023, as compared with $1,069,000 in the ~~Company’s effective income tax rate because of the dividends received deduction.~~prior fiscal year period. Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

For the three months ended December 31, 2023, the Company recorded an income tax provision of $3,125,000 on the pretax income of $15,740,000. The income tax provision consisted of tax provisions of $3,765,000 on the unrealized gains on marketable securities, $30,000 on income from foreign operations, and $270,000 on income from US operations and dividend income, partially offset by a tax benefit of $120,000 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 ~~Company’s reportable segments, and its corporate income and expenses, is set forth below:~~year’s deferred tax liability. Consequently, the overall effective tax rate for the three months ended December 31, 2023 was 19.9%, after including the taxes on the 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.

The Traditional Business’ pretax income decreased by $648,000 (69%) to $287,000 from $935,000 in the prior fiscal year period, primarily due to increased personnel costs of $331,000 (15%) to $2,549,000 from $2,218,000, and a smaller reduction of $80,000 (16%) to the long-term supplemental compensation accrual to a reduction of $420,000 as compared with a reduction of $500,000 in the prior fiscal year period.

During the three months ended December 31, 2023, the Traditional Business ~~segment’s pretax loss~~had total operating revenues of $3,887,000, as compared with $3,787,000 in the prior fiscal year period. Advertising revenues increased by ~~$243,000~~$97,000 (5%) to ~~$257,000~~$2,087,000 from ~~$14,000.~~

~~Advertising revenues decreased by $194,000 to $2,116,000 from $2,310,000,~~$1,990,000, primarily resulting from ~~the declines in~~increased commercial advertising revenues of $115,000 and trustee sale notice advertising ~~and its related service fee~~ revenues of ~~$57,000 and commercial~~$10,000, partially offset by decreased government notice advertising revenues of ~~$64,000.~~$30,000.

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 decreased by ~~15%~~2% during the three months ended December 31, ~~2017~~2023 as compared to the prior fiscal year period. Because this slowing is expected to continue, the Company expects there will be fewer foreclosure notice and other public notice advertisements and declining revenues in fiscal 2018, and the Company’s print-based earnings will also likely decline significantly because it will be impractical for the Company to offset all revenue losses by expense reduction. The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about ~~88%~~87% of the total public notice advertising revenues induring the three months ended December 31, ~~2017.~~2023. Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about ~~20% and 22%~~14% of the ~~Company’s~~Company's total operating revenues for the three months ended December 31,2023 and 18% for the three months ended December 31, 2017 and 2016, respectively. Because of this concentration, the Company’s revenues would be significantly adversely affected if California and Arizona eliminated the legal requirement to publish public notices in adjudicated newspapers of general circulation, as had been recently implemented in Arizona for one notice type. Also, if the adjudication of one or more of the Company’s newspapers was challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could have a material adverse effect on the Company’s revenues.2022.

The Daily Journals accounted for about ~~89%~~93% of ~~The~~the Traditional Business’ total circulation revenues, which ~~declined~~decreased slightly by ~~$86,000~~$3,000 to ~~$1,363,000~~$1,095,000 from ~~$1,449,000.~~$1,098,000. The court rule and judicial profile services generated about 8%5% 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, ~~decreased~~excluding the adjustments to the long-term supplemental compensation accrual, increased by ~~$86,000 (2%~~$668,000 (20%) to ~~$4,314,000~~$4,020,000 from ~~$4,400,000,~~$3,352,000, primarily ~~due to decreased delivery service costs.~~resulting from the annual salary adjustments.

~~Journal Technologies’ business segment pretax loss increased by $353,000 (12%) to $3,212,000 from $2,859,000, after the amortization costs of intangible assets of $1,062,000 and $1,224,000 for~~During the three months ended December 31, ~~2017 and 2016, respectively.~~2023, Journal Technologies’ business segment pretax income increased by $1,987,000 (120%) to $336,000 from a pretax loss of $1,651,000 in the prior fiscal year period primarily resulting from increased revenues of $3,592,000, partially offset by increased operating expenses of $1,605,000.

Revenues increased by ~~$578,000 (10%~~$3,592,000 (42%) to ~~$6,171,000~~$12,106,000 from ~~$5,593,000~~$8,514,000 in the prior fiscal year period. Licensing and maintenance fees increased by ~~$384,000 (10%~~$2,162,000 (49%) to ~~$4,350,000~~$6,557,000 from ~~$3,966,000.~~$4,395,000. Consulting fees ~~also~~ increased by ~~$147,000 (17%~~$980,000 (42%) to ~~$995,000~~$3,302,000 from ~~$848,000.~~$2,322,000 mainly resulting from more project go-lives (i.e. signoffs by the clients). Other public service fees increased by ~~$47,000 (6%~~$450,000 (25%) to ~~$826,000~~$2,247,000 from ~~$779,000~~$1,797,000 primarily ~~due to an increase in~~because of increased e-filing fee revenues.

Deferred consulting fees primarily represent advances from customers of Journal Technologies for installation services and are recognized upon final project go-lives. Deferred revenues on license and maintenance contracts represent prepayments of annual license and maintenance fees and are recognized ratably over the ~~number of traffic tickets processed online for the public to pay traffic citations.~~maintenance periods.

Operating expenses increased by ~~$940,000 (11%~~$1,605,000 (16%) to ~~$9,383,000~~$11,770,000 from ~~$8,443,000,~~$10,165,000 primarily ~~due to~~because of (i) increased personnel costs because of salary adjustments due to recent inflation in the compensation market for talent, (ii) additional contractor services and ~~computer services for Journal Technologies.~~the hiring of additional staff members to strengthen operational efficiencies, product development, and bolster the teams working on the Company’s installation projects, and (iii) increased third-party hosting fees which were billed to clients.

~~Intangible assets, including customer relationships and developed technology, are being amortized on a straight-line basis over five years for financial statement purposes, due to the short l~~ife cycle of technology on which customer relationships depend and over 15 years for tax purposes. Goodwill, which is not amortized for financial statement purposes, is amortized over 15 years for tax purposes. Goodwill represents the expected synergies in expanding the Company’s software business. Goodwill is evaluated for impairment annually, or whenever events or changes in circumstances indicate that the value may not be recoverable. Considered factors for potential goodwill impairment evaluation include the current year’s operating financial results before intangible amortization, fluctuations of revenues, changes in the market place, the status of installation contracts and new business, among other things. There was no indicator of impairment during the three-month periods ended December 31, 2017 and 2016. Journal Technologies ~~is continuing~~continues to update and upgrade its software products. These costs are expensed as incurred and will impact earnings at least through the foreseeable future.

The December 2017 Tax Cuts and Jobs Act (“Tax Act”) reduced the maximum corporate tax rate from 35% to 21% effective January 1, 2018. The Company has completed its review of the Tax Act. The impact to its financial statements is as follows: (i) current income tax expense or benefit is calculated on a blended rate of 24.28% pursuant to IRC Section 15, (ii) deferred tax expense includes a discrete net tax benefit of approximately $16 million resulting from a revaluation of deferred tax assets and liabilities to the expected tax rate that will be applied when temporary differences are expected to reverse, (iii) items that are expected to reverse during fiscal 2018 are valued at the blended rate of 24.28% while temporary differences that will reverse after fiscal 2018 are valued at 21%, and (iv) approximately $20 million of the revaluation of deferred taxes relates to items that were initially recorded as accumulated other comprehensive income (“AOCI”). This revaluation is recorded as a component of income tax expense or benefit in continuing operations.

For the three months ended December 31, 2017, the Company recorded an income tax benefit of $16,850,000 on pretax loss of $2,111,000. The income tax benefit was the result of applying the effective tax rate anticipated for fiscal 2018 to pretax loss for the three-month period ended December 31, 2017. The effective tax rate (before the discrete item discussed above) was greater than the statutory rate primarily due to the dividends received deduction which increases the loss for tax purposes. On pretax loss of $1,781,000 for the three months ended December 31, 2016, the Company recorded an income tax benefit of $310,000 which was the net result of applying the effective tax rate anticipated for fiscal 2017 to pretax loss for the three months ended December 31, 2016. The effective tax rate was greater than the statutory rate mainly resulting from the dividends received deduction. The Company’s effective tax rate was 798% and 17% for the three months ended December 31, 2017 and 2016, respectively.

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 2015 with regard to federal income taxes and fiscal 2013 for state income taxes.

During the three months ended December 31, ~~2017,~~2023, the Company’s cash and cash equivalents, restricted cash, and marketable security positions increased by ~~$14,793,000 to $247,442,000.~~$8,484,000 after the recording of net pretax unrealized gains on marketable securities of $14,690,000. Cash and cash equivalents were primarily used ~~for~~to pay down the purchase of capital assets of $34,000 and operating activities of $814,000 which included net decreases of $797,000 in deferred subscriptions, deferred installation contracts and deferred maintenance agreements and others.margin loan balance by $5,000,000.

The investments in marketable securities, which had an adjusted cost basis of approximately ~~$63,394,000~~$165,412,000 and a market value of about ~~$244,934,000~~$317,818,000 at December 31, ~~2017,~~2023, generated approximately ~~$1,483,000~~$1,569,000 in dividends and interest ~~income.~~income during the three months ended December 31, 2023. These securities had approximately $152,406,000 of net unrealized gains before estimated taxes of $39,080,000 which 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 $70,000,000 and $75,000,000 at December 31, 2023, and September 30, 2023, respectively.

Cash flows from operating activities ~~increased~~decreased by ~~$497,000~~$3,560,000 during the three months ended December 31, ~~2017~~2023, as compared to the prior fiscal year period, primarily due to (i) increases in the Company’s deferred tax benefit of $3,147,000 and income tax receivable of $23,000, and (ii) decreases in net accounts payable and accrued liabilities of $1,426,000 (because of the timing difference in remitting e-filing fees to the courts), deferred revenues of $2,776,000, and income tax payable of $1,069,000. This was partially offset by (i) decreases in the Company’s accounts receivable of $392,000 mainly resulting from more collections, and (ii) increases in its net income of ~~$16,210,000, partially offset by increases~~$4,545,000, excluding the decreases in ~~deferred income taxes~~unrealized gains on marketable securities of ~~$15,861,000, mainly because~~$9,335,000 and the realized net gains on sales of marketable securities of $422,000 during the ~~discrete tax items mentioned above.~~prior fiscal year period.

As of December 31, ~~2017,~~2023, the Company had working capital of ~~$230,284,000,~~$313,273,000, including the liabilities for deferred subscriptions, deferred ~~installation~~consulting fees and deferred maintenance agreements and others of ~~$17,539,000.~~$23,498,000.

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 some of those 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. ~~The~~In addition, the Company ~~also may entertain additional business acquisition opportunities. Any excess cash flows~~ could be ~~used~~subject to ~~reduce~~margin calls should the balance of the investment ~~margin account liability or note payable collateralized by real estate or invested as management and the Board of Directors deem appropriate at the time.~~decrease significantly.

~~Such investments may include additional securities of the companies in which the~~The Company ~~has alr~~eady invested, securities of other companies, government securities (including U.S. Treasury Notes and Bills) or other instruments. The decision as to particular investments will be driven by the Company’s belief about the risk/reward profile of the various investment choices at the time, and it may utilize government securities asis not a ~~default if attractive opportunities for a better return are not available. The Company’s Chairman of the Board, Charles Munger, is also the vice chairman~~smaller version of Berkshire Hathaway Inc.~~, which maintains a substantial investment portfolio.~~ The Company’s ~~Board of Directors has utilized his judgment and suggestions, as well as those of J.P. Guerin, the Company’s vice chairman, when selecting investments, and both of them will~~goal is simply to continue to ~~play an important role in monitoring existing investments~~develop a successful and ~~selecting any future investments.~~

Asprofitable software business, while continuing to enjoy the benefit of December 31, 2017, the investments were concentrated in just seven companies. Accordingly, a significant decline in the market value of one or more of the Company’s investments may not be offset by the hypothetically better performance of other investments, and that could result in a large decrease in the Company’s shareholders’ equity and, under certain circumstances, in the recognition of impairment losses in the Company’s income statement.its Traditional Business for as long as possible.

The ~~Company~~’sCompany’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 (including ~~for~~ the long-term Incentive Plan liabilities)~~, accounting for business combinations, testing for goodwill impairment~~ and income taxes are critical accounting policies and estimates.

The ~~Company~~’sCompany’s critical accounting policies are detailed in its Annual Report on Form 10-K for the year ended September 30, ~~2017.~~2023. The above discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this report.

This Quarterly Report on Form 10-Q includes “~~forward-looking~~“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 because~~the 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-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, ~~2017.~~2023.

~~For information regarding the Com~~pany’s market risk, refer to Item 7A – Quantitative and Qualitative Disclosures about Market Risk in the Company’s Form 10-K for the fiscal year ended September 30, 2017. There have been no material changes to the Company’s market risk exposures since September 30, 2017.

~~Changes~~In light of the material weaknesses in ~~Internal Control~~the Company’s internal control over ~~Financial Reporting~~

~~During this quarter,~~financial reporting discussed in the ~~Company adopted ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (ASC Topic 606)~~ ~~effective October 2017 which management believes remediated the previously identified material weakness on revenue recognition mentioned in its~~Company’s Form 10-K for the fiscal year ended September 30, ~~2017. (See accompanying Notes 3 and 4 to Consolidated Financial Statements.) In addition,~~2023, management has improved certain internal controls over its Information Technology (IT) function such as maintaining sufficient documentations and records to evidence its review of IT controls, better monitoring IT activities and system change requests, etc. Management believes this addressed certain aspects of this material weakness previously identified. Management will continue to assess the effectiveness of its remediation efforts in connection with management's future evaluations of internal control over financial reporting.

Based on the evaluation performed under the supervision and with the participation of the Company’s management, including Gerald L. Salzman, its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures as of December 31, 2017, Mr. Salzman concluded that the Company’s disclosure controls and procedures were ~~effective.~~not effective as of December 31, 2023. 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 December 31, 2023.

Pursuant to the ~~requirements~~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.

		Page Nos.

PART I Financial Information

	Item 1. Financial Statements (Unaudited)

	Consolidated Balance Sheets -
‑ December 31, ~~2017~~2023 and September 30, ~~2017~~2023	3

	Consolidated Statements of Income and Comprehensive Income -
‑ Three months ended December 31 ~~2017~~2023 and ~~2016~~2022	4

	Consolidated Statements of ~~Cash Flows -~~
Shareholders’ Equity ‑ Three months ended December 31, ~~2017~~2023 and ~~2016~~2022	5

~~Notes to~~	Consolidated ~~Financial~~ Statements of Cash Flows ‑ Three months ended December 31, 2023 and 2022	6

	Notes to Consolidated Financial Statements	7

	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14

~~Item 3. Quantitative and Qualitative Disclosures about Market Risk~~	20

Item 4. Controls and Procedures	20

Part II Other Information

	Item 6. Exhibits	21

	101.INS** 101.SCH	~~XBRL Instance~~

	101.SCH**	Inline XBRL Taxonomy Extension Schema

	104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101
	** XBRL	information is furnished and not filed as a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

		DAILY JOURNAL CORPORATION (Registrant)
	~~(Registrant)~~

/s/ Steven Myhill-Jones

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

/s/ ~~Gerald L. Salzman~~Tu To

Chief Financial Officer		~~Chief Executive Officer~~
		~~President~~
	~~Chief Financial Officer~~
	~~Treasurer~~
	(~~Principal Executive Officer,~~
	Principal Financial Officer and

Principal Accounting Officer)

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

Balance at September 30, 2022		1,805,053	$	18,000		(428,027	)	$	(4,000	)	$	1,755,000	$	177,248,000	$	179,017,000
Net income		—		—		—			—			—		17,827,000		17,827,000
Balance at December 31, 2022		1,805,053	$	18,000		(428,027	)	$	(4,000	)	$	1,755,000	$	195,075,000	$	196,844,000

Balance at September 30, 2023		1,805,053	$	18,000		(428,027	)	$	(4,000	)	$	1,755,000	$	198,700,000	$	200,469,000
Net income		—		—		—			—			—		12,615,000		12,615,000
Balance at December 31, 2023		1,805,053	$	18,000		(428,027	)	$	(4,000	)	$	1,755,000	$	211,315,000	$	213,084,000

	December 31, 2023						September 30, 2023
	Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	317,818,000	$	165,412,000	$	152,406,000	$	303,128,000	$	165,412,000	$	137,716,000

Comprehensive Income
	Three months ended December 31
	2017		2016

Net income (loss)	$	14,739,000	$	(1,471,000	)
Net increase in unrealized appreciation of marketable securities (net of taxes)		12,118,000		15,019,000
	$	26,857,000	$	13,548,000

	32
	32	~~Certification~~Certifications by Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	101.DEF
	~~101.D~~EF**	Inline XBRL Taxonomy Extension Definition

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate income and expenses						Total
	2017			2016			2017			2016			2017			2016			2017			2016
Revenues
Advertising	$	2,116		$	2,310		$	---		$	---		$	---		$	---		$	2,116		$	2,310
Circulation		1,363			1,449			---			---			---			---			1,363			1,449
Advertising service fees and other		602			638			---			---			---			---			602			638
Licensing and maintenance fees		---			---			4,350			3,966			---			---			4,350			3,966
Consulting fees		---			---			995			848			---			---			995			848
Other public service fees		---			---			826			779			---			---			826			779
Total revenues		4,081			4,397			6,171			5,593			---			---			10,252			9,990
Operating expenses
Salaries and employee benefits		2,568			2,565			5,629			5,076			---			---			8,197			7,641
Amortization of intangible assets		---			---			1,062			1,224			---			---			1,062			1,224
Others		1,746			1,835			2,692			2,143			---			---			4,438			3,978
Total operating expenses		4,314			4,400			9,383			8,443			---			---			13,697			12,843
Loss from operations		(233	)		(3	)		(3,212	)		(2,850	)		---			---			(3,445	)		(2,853	)
Dividends and interest income		---			---			---			---			1,483			1,171			1,483			1,171
Gain on sale of capital asset		---			---			---			---			2			---			2			---
Other income (net)		---			15			---			---			9			---			9			15
Interest expenses on note payable collateralized by real estate		(24	)		(26	)		---			---			---			---			(24	)		(26	)
Interest expenses on margin loans		---			---			---			---			(136	)		(79	)		(136	)		(79	)
Interest expenses accrual for uncertain and unrecognized tax benefits		---			---			---			(9	)		---			---			---			(9	)
Pretax (loss) income	$	(257	)	$	(14	)	$	(3,212	)	$	(2,859	)	$	1,358		$	1,092		$	(2,111	)	$	(1,781	)