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

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

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

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.

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).

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.

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).

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable ~~date.~~date: 1,380,746 shares outstanding at April 30, 2019

	March 31			September 30			March 31			September 30
	2018			2017			2019			2018
ASSETS
Current assets
Cash and cash equivalents	$	7,224,000		$	3,384,000		$	5,782,000		$	9,301,000
Marketable securities at fair value, including common stocks of $217,803,000 at March 31, 2018, and common stocks of $220,973,000 and bonds of $8,292,000 at September 30, 2017		217,803,000			229,265,000
Accounts receivable, less allowance for doubtful accounts of $200,000 at March 31, 2018 and September 30, 2017		4,239,000			5,358,000
Marketable securities at fair value								192,153,000			212,296,000
Accounts receivable, less allowance for doubtful accounts of $200,000								7,342,000			4,803,000
Inventories		46,000			40,000			43,000			46,000
Prepaid expenses and other current assets		612,000			798,000			389,000			512,000
Income tax receivable		854,000			909,000			263,000			270,000
Total current assets		230,778,000			239,754,000			205,972,000			227,228,000

Property, plant and equipment, at cost
Land, buildings and improvements		16,409,000			16,396,000			16,472,000			16,422,000
Furniture, office equipment and computer software		2,752,000			2,724,000			2,911,000			2,877,000
Machinery and equipment		1,818,000			1,799,000			1,749,000			1,749,000
		20,979,000			20,919,000			21,132,000			21,048,000
Less accumulated depreciation		(9,584,000	)		(9,292,000	)		(10,132,000	)		(9,828,000	)
		11,395,000			11,627,000			11,000,000			11,220,000
Intangibles, net		1,248,000			3,058,000
Goodwill		13,400,000			13,400,000			13,400,000			13,400,000
Deferred income taxes - Federal		7,622,000			10,652,000			12,087,000			9,269,000
Deferred income taxes - State		2,299,000			2,217,000			1,004,000			2,881,000
	$	266,742,000		$	280,708,000		$	243,463,000		$	263,998,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,898,000		$	3,049,000		$	4,571,000		$	2,820,000
Accrued liabilities		2,932,000			3,112,000			4,328,000			4,402,000
Note payable collateralized by real estate		118,000			115,000			123,000			121,000
Deferred subscriptions		3,117,000			3,284,000			2,978,000			3,174,000
Deferred installation contracts		4,342,000			5,072,000			2,428,000			2,554,000
Deferred maintenance agreements and others		8,998,000			9,442,000			14,535,000			14,186,000
Total current liabilities		22,405,000			24,074,000			28,963,000			27,257,000

Long term liabilities
Investment margin account borrowings		29,493,000			29,493,000			29,493,000			29,493,000
Note payable collateralized by real estate		1,896,000			1,956,000			1,773,000			1,835,000
Deferred maintenance agreements		492,000			759,000			47,000			176,000
Accrued liabilities		135,000			135,000			180,000			170,000
Deferred income taxes		42,369,000			64,550,000			36,606,000			42,151,000
Total long term liabilities		74,385,000			96,893,000			68,099,000			73,825,000

Commitments and contingencies (Notes 10 and 11)		---			---
Commitments and contingencies (Notes 9 and 10)								---			---

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 March 31, 2018 and September 30, 2017		14,000			14,000
Common stock, $.01 par value, 5,000,000 shares authorized; 1,805,053 shares issued, including 424,307 treasury shares, at March 31, 2019 and September 30, 2018								14,000			14,000
Additional paid-in capital		1,755,000			1,755,000			1,755,000			1,755,000
Retained earnings		51,667,000			57,150,000			144,632,000			45,361,000
Accumulated other comprehensive income		116,516,000			100,822,000			---			115,786,000
Total shareholders' equity		169,952,000			159,741,000			146,401,000			162,916,000
	$	266,742,000		$	280,708,000		$	243,463,000		$	263,998,000

Three months
ended March 31

2018

2017

Revenues

Advertising
$ 2,209,000 $ 2,123,000
Circulation
1,356,000 1,424,000
Advertising service fees and other
659,000 695,000
Licensing and maintenance fees
3,981,000 3,882,000
Consulting fees
212,000 1,310,000
Other public service fees
921,000 845,000
9,338,000 10,279,000

Costs and expenses

Salaries and employee benefits
8,555,000 8,097,000
Outside services
1,044,000 1,087,000
Postage and delivery expenses
216,000 285,000
Newsprint and printing expenses
191,000 230,000
Depreciation and amortization
899,000 1,389,000
Other general and administrative expenses
2,806,000 2,457,000
13,711,000 13,545,000
Loss from operations
(4,373,000 ) (3,266,000 )
Other income (expense)

Dividends and interest income
1,024,000 1,368,000
Gain on sale of bonds
3,180,000 ---
Other income
10,000 6,000
Interest expense on note payable collateralized by real estate
(24,000 ) (25,000 )
Interest expense on margin loans
(149,000 ) (96,000 )
Reversal of accrued interest and penalty expense for uncertain and unrecognized tax benefits
--- 752,000
Loss before income taxes
(332,000 ) (1,261,000 )
Benefit from income taxes
100,000 4,240,000
Net (loss) income
$ (232,000 ) $ 2,979,000

Weighted average number of common shares outstanding - basic and diluted
1,380,746 1,380,746
Basic and diluted net (loss) income per share
$ (0.17 ) $ 2.16

Comprehensive (loss) income

Net (loss) income
$ (232,000 ) $ 2,979,000
Net (decrease) increase in unrealized appreciation of marketable securities (net of taxes)
(13,861,000 ) 4,638,000
$ (14,093,000 ) $ 7,617,000

	Six months ended March 31						Three months ended March 31
	2018			2017			2019			2018

Revenues
Advertising	$	4,325,000		$	4,433,000		$	2,108,000		$	2,209,000
Circulation		2,719,000			2,873,000			1,273,000			1,356,000
Advertising service fees and other		1,261,000			1,333,000			624,000			659,000
Licensing and maintenance fees		8,331,000			7,848,000			4,640,000			3,981,000
Consulting fees		1,207,000			2,158,000			399,000			212,000
Other public service fees		1,747,000			1,624,000			1,668,000			921,000
		19,590,000			20,269,000			10,712,000			9,338,000

Costs and expenses
Salaries and employee benefits		16,752,000			15,738,000			8,791,000			8,555,000
Outside services		2,083,000			2,067,000			1,244,000			1,238,000
Postage and delivery expenses		433,000			563,000			205,000			216,000
Newsprint and printing expenses		403,000			439,000			186,000			191,000
Depreciation and amortization		2,117,000			2,781,000			150,000			899,000
Equipment maintenance and software								410,000			401,000
Credit card merchant discount fees								375,000			261,000
Rent expenses								257,000			250,000
Accounting and legal fees								396,000			187,000
Other general and administrative expenses		5,620,000			4,800,000			1,369,000			1,513,000
		27,408,000			26,388,000			13,383,000			13,711,000
Loss from operations		(7,818,000	)		(6,119,000	)		(2,671,000	)		(4,373,000	)
Other income (expense)
Dividends and interest income		2,507,000			2,539,000			1,141,000			1,024,000
Gains on sales of bonds and capital asset		3,182,000			---
Other income		19,000			21,000
Gain on sale of bonds								---			3,180,000
Other income and capital gains								9,000			10,000
Net unrealized gains on investments								8,497,000			---
Interest expense on note payable collateralized by real estate		(48,000	)		(51,000	)		(22,000	)		(24,000	)
Interest expense on margin loans		(285,000	)		(175,000	)		(219,000	)		(149,000	)
Reversal of accrued interest and penalty expense for uncertain and unrecognized tax benefits		---			743,000
Loss before income taxes		(2,443,000	)		(3,042,000	)
Benefit from income taxes		16,950,000			4,550,000
Net income	$	14,507,000		$	1,508,000
Income (loss) before income taxes								6,735,000			(332,000	)
(Provision for) benefit from income taxes								(1,717,000	)		100,000
Net income (loss)							$	5,018,000		$	(232,000	)

Weighted average number of common shares outstanding - basic and diluted		1,380,746			1,380,746			1,380,746			1,380,746
Basic and diluted net income per share	$	10.51		$	1.09
Basic and diluted net income (loss) per share							$	3.63		$	(0.17	)

Comprehensive income
Net income	$	14,507,000		$	1,508,000
Net (decrease) increase in unrealized appreciation of marketable securities (net of taxes)		(1,743,000	)		19,657,000
Comprehensive income (loss)
Net income (loss)							$	5,018,000		$	(232,000	)
Net decrease in unrealized appreciation of marketable securities (net of taxes)								---			(13,861,000	)
	$	12,764,000		$	21,165,000		$	5,018,000		$	(14,093,000	)

	Six months ended March 31
	2019			2018

Revenues
Advertising	$	4,300,000		$	4,325,000
Circulation		2,611,000			2,719,000
Advertising service fees and other		1,293,000			1,261,000
Licensing and maintenance fees		9,430,000			8,331,000
Consulting fees		940,000			1,207,000
Other public service fees		2,566,000			1,747,000
		21,140,000			19,590,000

Costs and expenses
Salaries and employee benefits		17,446,000			16,752,000
Outside services		2,402,000			2,489,000
Postage and delivery expenses		409,000			433,000
Newsprint and printing expenses		362,000			403,000
Depreciation and amortization		303,000			2,117,000
Equipment maintenance and software		753,000			688,000
Credit card merchant discount fees		645,000			503,000
Rent expenses		515,000			487,000
Accounting and legal fees		799,000			558,000
Other general and administrative expenses		2,698,000			2,978,000
		26,332,000			27,408,000
Loss from operations		(5,192,000	)		(7,818,000	)
Other income (expense)
Dividends and interest income		2,671,000			2,507,000
Gains on sales of bonds		---			3,180,000
Other income and capital asset		19,000			21,000
Net unrealized losses on investments		(20,143,000	)		---
Interest expense on note payable collateralized by real estate		(45,000	)		(48,000	)
Interest expense on margin loans		(425,000	)		(285,000	)
Loss before income taxes		(23,115,000	)		(2,443,000	)
Benefit from income taxes		6,600,000			16,950,000
Net (loss) income	$	(16,515,000	)	$	14,507,000

Weighted average number of common shares outstanding - basic and diluted		1,380,746			1,380,746
Basic and diluted net (loss) income per share	$	(11.96	)	$	10.51

Comprehensive (loss) income
Net (loss) income	$	(16,515,000	)	$	14,507,000
Net decrease in unrealized appreciation of marketable securities (net of taxes)		---			(1,743,000	)
	$	(16,515,000	)	$	12,764,000

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

Balance at September 30, 2017		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	57,150,000		$	100,822,000		$	159,741,000
Net income		---		---		---			---			---		14,739,000			---			14,739,000
Unrealized gains on investments, net		---		---		---			---			---		---			12,118,000			12,118,000
Balance at December 31, 2017		1,805,053		18,000		(424,307	)		(4,000	)		1,755,000		71,889,000			112,940,000			186,598,000
Stranded tax effects reclassification resulted from Tax Cuts and Jobs Act		---		---		---			---			---		(19,990,000	)		19,990,000			---
Net income		---		---		---			---			---		(232,000	)		---			(232,000	)
Realized gains on bond investment, net of taxes																	(2,553,000	)		(2,553,000	)
Unrealized losses on investments, net		---		---		---			---			---		---			(13,861,000	)		(13,861,000	)
Balance at March 31, 2018		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	51,667,000		$	116,516,000		$	169,952,000



Balance at September 30, 2018		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	45,361,000		$	115,786,000		$	162,916,000
Adoption of new accounting pronouncement		---		---		---			---			---		115,786,000			(115,786,000	)		---
Net loss		---		---		---			---			---		(21,533,000	)		---			(21,533,000	)
Balance at December 31, 2018		1,805,053	$	18,000		(424,307	)		(4,000	)	$	1,755,000		139,614,000			---			141,383,000
Net income		---		---		---			---			---		5,018,000			---			5,018,000
Balance at March 31, 2019		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	144,632,000		$	---		$	146,401,000

	Six months ended March 31						Six months ended March 31
	2018			2017			2019			2018
Cash flows from operating activities
Net income	$	14,507,000		$	1,508,000
Adjustments to reconcile net income to net cash used in operations
Net (loss) income							$	(16,515,000	)	$	14,507,000
Adjustments to reconcile net (loss) income to net cash used in operations
Depreciation and amortization		2,117,000			2,781,000			304,000			2,117,000
Net unrealized losses on investments								20,143,000			---
Deferred income taxes		(17,012,000	)		(2,115,000	)		(6,486,000	)		(17,012,000	)
Gains on sale of bonds		(3,180,000	)		---			---			(3,180,000	)
Discounts earned on bonds		---			(1,000	)
Changes in operating assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		1,119,000			(578,000	)		(2,539,000	)		1,119,000
Inventories		(6,000	)		(9,000	)		3,000			(6,000	)
Prepaid expenses and other assets		186,000			55,000			123,000			186,000
Income tax receivable		55,000			240,000			7,000			55,000
Increase (decrease) in liabilities
Accounts payable		(151,000	)		514,000			1,751,000			(151,000	)
Accrued liabilities		(180,000	)		(773,000	)		(64,000	)		(180,000	)
Income taxes		---			(2,723,000	)
Deferred subscriptions		(167,000	)		(122,000	)		(196,000	)		(167,000	)
Deferred maintenance agreements and others		(711,000	)		511,000			220,000			(711,000	)
Deferred installation contracts		(730,000	)		(1,388,000	)		(126,000	)		(730,000	)
Net cash used in operating activities		(4,153,000	)		(2,100,000	)		(3,375,000	)		(4,153,000	)

Cash flows from investing activities
Sales (purchases) of marketable securities		8,125,000			(5,013,000	)
Sales of marketable securities								---			8,125,000
Purchases of property, plant and equipment		(75,000	)		(194,000	)		(84,000	)		(75,000	)
Net cash provided by (used in) investing activities		8,050,000			(5,207,000	)
Net cash (used in) provided by investing activities								(84,000	)		8,050,000

Cash flows from financing activities
Payment of real estate loan principal		(57,000	)		(54,000	)		(60,000	)		(57,000	)
Net cash used in financing activities		(57,000	)		(54,000	)		(60,000	)		(57,000	)

Increase (decrease) in cash and cash equivalents		3,840,000			(7,361,000	)
(Decrease) increase in cash and cash equivalents								(3,519,000	)		3,840,000

Cash and cash equivalents
Beginning of period		3,384,000			11,411,000			9,301,000			3,384,000
End of period	$	7,224,000		$	4,050,000		$	5,782,000		$	7,224,000

Interest paid during period	$	329,000		$	220,000		$	470,000		$	329,000
Net income taxes paid during period	$	6,000		$	16,000
Net income taxes (refunded) paid during period							$	(121,000	)	$	6,000

Note 1 - The Corporation and Operations

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

Journal Technologies, Inc. (“Journal Technologies”), a wholly-owned subsidiary, 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 and a website to pay traffic citations online, and bar members. These products are licensed to more than 500 organizations in 42 states and internationally.

Essentially all of the Company’s operations are based in California, Arizona, Colorado and Utah.

Note 2 - Basis of Presentation

In the opinion of the Company, the accompanying interim unaudited consolidated financial statements contain all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of its financial position as of March 31, ~~2018,~~ 2019, its results of operations for the ~~three~~~~- and~~ ~~six~~~~-month~~three-and six-months periods ended March 31, 2019 and 2018, its consolidated statements of shareholders’ equity as of March 31, 2019 and ~~2017~~2018 and cash flows for the ~~six~~ ~~months~~six-month ended March 31, 2019 and 2018. The results of operations for the six months ended March 31, ~~2018~~ 2019 are not necessarily indicative of the results to be expected for the full year.

The consolidated financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K10-K for the fiscal year ended September 30, ~~2017.~~2018.

Certain reclassifications of previously reported amounts have been made to conform to the current year’s presentation.

Note 3 - Accounting Standards Adopted in Fiscal ~~2018~~2019 and Recent Accounting Pronouncements

Accounting Standards Adopted in Fiscal ~~2018~~2019

In ~~November 2015,~~ On October 1, 2018, the ~~Financial Accounting Standards Board (FASB) issued~~Company adopted Accounting Standards Update ~~(ASU)~~ (“ASU”) No.~~2015~~-~~17,~~ 2016-01, ~~Income Taxes (Topic~~ ~~740~~)Financial Instruments – Overall (Subtopic 825-10): ~~Balance Sheet Classification~~Recognition and Measurement of ~~Deferred Taxes~~Financial Assets and Financial Liabilities. This ~~update~~ASU requires ~~deferred tax~~an entity that holds financial assets or owes financial liabilities to, among other things, measure equity investments at fair value 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~~recognize unrealized gains (losses) through net income (loss). Accordingly, the Company’s ~~financial condition, results~~net loss of ~~operations or disclosures because it is simply a reclassification~~$16,515,000 for the six months ended March 31, 2019, included net unrealized losses on investments 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~~-~~09,~~~~Revenue from Contracts with Customers (ASC Topic~~ ~~606~~) which requires that revenues be recognized 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.~~

~~The Company has concluded that the adoption of the ASC Topic~~ ~~606~~ ~~in fiscal~~ ~~2018~~ ~~has~~ no ~~significant impact on the Company’s financial condition or results of operations.~~$20,143,000. For the Company’s traditional publishing business (the “Traditional 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.~~

~~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.~~

~~In mid-~~ ~~February,~~ ~~the FASB issued an amendment to ASC Subtopic~~ ~~220~~-~~10,~~~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~ (“~~AOCI~~”). This amendment permits entities to reclassify stranded tax effects resulting from tax rate changes related to the Tax Cuts and Jobs Act (Tax Act), from AOCI to retained earnings. The guidance is effective for fiscal years beginning after ~~December 15, 2018,~~ ~~and interim periods within those fiscal years. Early adoption is permitted. The election can be applied as of the~~ ~~first~~ ~~day of the interim~~year’s period, ~~in which it is adopted or retroactively to the~~ ~~first~~ ~~interim period in which the tax effects of the Act were recognized. The Company elected to adopt this amendment as of~~ ~~January 1, 2018.~~ ~~Pursuant to this amendment, the Company can only reclassify the stranded tax effects resulting from the Tax Act and~~ ~~not~~ ~~those relative to the previous California/State apportionment. As such,~~ the Company recorded ~~a reclassification~~net unrealized gains for its available-for-sale marketable securities in other comprehensive income. In addition, ASU 2016-01 prohibits the restatement of ~~stranded tax effects~~prior year financial statements but requires that the Company reclassify net after-tax unrealized gains on investments of ~~$19,960,000~~ ~~between AOCI and retained earnings. This represented a decrease~~$115,786,000 on adoption day from “accumulated other comprehensive income” to ~~retained earnings and an increase to AOCI,~~“retained earnings”, both of which are listed under the “Shareholders’ equity” section of the Company’s Consolidated Balance Sheets. This represented an increase to retained earnings and a decrease to accumulated other comprehensive income.

Other Recent Accounting Pronouncements

The Company will continue to evaluate the other new accounting pronouncements as detailed in its Annual Report on Form 10-K10-K for the year ended September 30, ~~2017.~~2018.

Note 4 – 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)., which it adopted effective October 1, 2017, using the modified retrospective method.

For the Company’s 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.

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 updates and 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. ~~(Also 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 cases and pay traffic citations and other fees.

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

Since the Company recognizes revenues when it can invoice the customer pursuant to the contract for the value of completed performance, as a practical expedient and because reliable estimates cannot be made, it has elected not to include the transaction price allocated to unsatisfied performance obligations. Also, as a practical expedient, the Company has elected not to include its evaluation of variable consideration of certain ~~usage based fees (i.e.~~usage-based public service ~~fees)~~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 6 - 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 March 31, ~~2018~~ ~~and~~ ~~September 30, 2017,~~ 2019, there were net unrealized gains of ~~$159,354,000~~$138,264,000 with these investments. With the adoption of ASU No. 2016-01, Subtopic 825-10, as stated in Note 3, the Company recorded and ~~$165,872,000,~~ ~~respectively,~~included in its net loss the net unrealized losses on investments of $20,143,000 for the six months ended March 31, 2019. At September 30, 2018, net unrealized gains of $158,407,000 were recorded ~~before taxes of~~ ~~$42,369,000~~ ~~and~~ ~~$64,550,000,~~ ~~respectively,~~ in ~~“Accumulated~~the accumulated other comprehensive ~~income”~~income in the accompanying Consolidated Balance Sheets. Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

Investments in equity securities ~~and securities with fixed maturity~~ as of March 31, ~~2018~~ 2019 and September 30, ~~2017~~ 2018 are summarized below.

March 31, 2018

September 30, 2017

(Unaudited)

Aggregate
fair value

Amortized/
Adjusted
cost basis

Pretax
unrealized
gains

Aggregate
fair value

Amortized/
Adjusted
cost basis

Pretax
unrealized
gains

Marketable securities

Common stocks
$ 217,803,000 $ 58,449,000 $ 159,354,000 $ 220,973,000 $ 58,449,000 $ 162,524,000
Bonds
--- --- --- 8,292,000 4,944,000 3,348,000
$ 217,803,000 $ 58,449,000 $ 159,354,000 $ 229,265,000 $ 63,393,000 $ 165,872,000

Investments in Financial Instruments

~~All investments are classified as “Current assets” because they are available for sale at any time. In~~ ~~February 2018,~~ ~~the Company sold its bond investments for~~ ~~$8,125,000~~ ~~with a gain of approximately~~ ~~$3,180,000~~ ~~and simultaneously reclassified a previously lodged tax effect of~~ ~~$30,000~~ from accumulated other comprehensive income to retained earnings. This represented a decrease to retained earnings and an increase to accumulated other comprehensive income. (The Company uses an “individual security approach” to release stranded tax effects for its available-for-sale securities when sold or extinguished.)

	March 31, 2019						September 30, 2018
	Aggregate fair value		Amortized/Adjusted cost basis		Pretax net unrealized gains		Aggregate fair value		Amortized/Adjusted cost basis		Pretax net unrealized gains

Marketable securities	$	192,153,000	$	53,889,000	$	138,264,000	$	212,296,000	$	53,889,000	$	158,407,000

As of March 31, ~~2018,~~ 2019, 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 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 March 31, ~~2018,~~ 2019, the unrealized loss related to an equity security it owns was temporary.

~~Note~~ 7 ~~- Intangible Assets~~

Intangible Assets

March 31, 2018

September 30, 2017

Customer Relationships

Developed Technology

Total

Customer Relationships

Developed Technology

Total

Gross intangibles
$ 21,950,000 $ 2,525,000 $ 24,475,000 $ 21,950,000 $ 2,525,000 $ 24,475,000
Accumulated amortization
(20,812,000 ) (2,415,000 ) (23,227,000 ) (19,174,000 ) (2,243,000 ) (21,417,000 )
$ 1,138,000 $ 110,000 $ 1,248,000 $ 2,776,000 $ 282,000 $ 3,058,000

~~These intangible assets are being amortized over~~ ~~five~~ ~~years for financial statement purposes due to the short life cycle of technology on which customer relationships depend and over~~ 15 ~~years on a straight-line basis for tax purposes. The intangible amortization expenses were~~ ~~$1,810,000~~ ~~for the~~ ~~six~~~~-month period ended~~ ~~March 31, 2018,~~ ~~as compared with~~ ~~$2,447,000~~ ~~in the prior year period, primarily because the intangible assets of~~ ~~one~~ ~~of the~~ ~~two~~ ~~acquisitions in fiscal~~ ~~2013~~ ~~were fully amortized during the~~ ~~first~~ ~~quarter of fiscal~~ ~~2018.~~

Note 87 – Goodwill

The Company accounts for goodwill in accordance with Accounting Standards Codification (ASC) 350, Intangibles — Goodwill and Other. Goodwill, which is not amortized for financial statement purposes, is amortized over a 15~~-year~~15-year period for tax purposes, but 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 with respect to Journal Technologies include, among other things, the current year’s business profitability before intangible amortization, fluctuations of revenues, changes in the marketplace, the status of deferred installation contracts and new business.

In addition, ASU ~~2011~~-~~08,~~2011-08, Intangible – Goodwill and Others -- Testing Goodwill for Impairment, allows for the option of performing a qualitative assessment before calculating the fair value of a reporting unit. If it is determined based on qualitative factors that there is no impairment to goodwill, then the fair value of a reporting unit is not needed. If a quantitative analysis is required and the unit’s carrying amount exceeds its fair value, then the second step is performed to measure the amount of potential impairment. The Company’s annual goodwill impairment analysis in fiscal ~~2017~~2018 did not result in an impairment charge based on the qualitative assessment. There was no indicator of impairment during the ~~six~~~~-month~~six-month periods ended March 31, ~~2018~~ 2019 and ~~2017.~~2018.

Note 98 - Income Taxes

For the six months ended March 31, 2019, the Company recorded an income tax benefit of $6,600,000 on a pretax loss of $23,115,000. This was the net result of applying the effective tax rate anticipated for fiscal 2019 to the pretax loss for the six months ended March 31, 2019. The effective tax rate was greater than the statutory rate primarily due to the dividends received deduction and state tax benefits.

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

~~For~~Consequently, on a pretax loss of $2,443,000 for the six months ended March 31, 2018, the Company recorded an income tax benefit of ~~$16,950,000~~ ~~on pretax loss of~~ ~~$2,443,000.~~$16,950,000. The income tax benefit was also the result of applying the effective tax rate anticipated for fiscal 2018 to the pretax loss for the ~~six~~~~-month~~six-month period ended March 31, 2018. The effective tax rate (before the discrete ~~Tax Act~~ item discussed above) was greater than the statutory rate primarily due to the dividends received deduction which increases the loss for tax purposes.

~~During~~ The Company’s effective tax rate was 29% for the six months ended March 31, 2019 as compared with 694% in the prior ~~fiscal~~ year ~~on pretax loss of~~ ~~$3,042,000~~ ~~for the~~ ~~six~~ ~~months ended~~ ~~March 31, 2017,~~ ~~the Company recorded an income tax benefit of~~ ~~$4,550,000~~ ~~which was the net result of applying~~period. The difference in the effective tax rate ~~anticipated for fiscal~~ ~~2017~~was primarily due to ~~pretax loss for~~ the ~~six~~ ~~months ended~~ ~~March 31, 2017~~ ~~and included a reversal of an accrued liability of approximately~~ ~~$2,665,000~~ ~~for uncertain and unrecognized tax benefits relating to an acquisition in fiscal~~ ~~2013.~~ ~~The Internal Revenue Service concluded its examination~~effect of the ~~Company’s fiscal~~ ~~2014~~ ~~income~~ tax ~~return with~~ no ~~proposed changes to the tax position that gave rise to this liability. As a result, this liability was reversed along with the related accrued interest and penalty expense of~~ ~~$743,000.~~ ~~In addition, a deferred tax liability,~~cuts in the ~~amount of~~ ~~$352,000,~~ relating to temporary differences that would only exist if the uncertain tax position was never recognized, was reversed. The effective tax rate (before the discrete IRS item) was greater than the statutory rate mainly resulting from the dividends received deduction. prior year period as discussed above.

~~The Company’s effective tax rate was~~ ~~694%~~ ~~and~~ ~~150%~~ ~~for the~~ ~~six~~ ~~months ended~~ ~~March 31, 2018~~ ~~and~~ ~~2017,~~ ~~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.

Note 109 - 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. The interest rate for these investment margin account borrowings fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly. The interest rate as of March 31, ~~2018~~ 2019 was 2%3%. These investment margin account borrowings do not mature.

In ~~fiscal~~ 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 by 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 a fixed interest rate of 4.66% and is repayable in equal monthly installments of about ~~$17,600~~$17,600 through 2030. This loan is secured by the Logan facility and can be paid off at any time without prepayment penalty. This real estate loan had a balance of approximately ~~$2.01~~$1.9 million as of March 31, ~~2018.~~2019.

The Company also owns its facilities in Los Angeles and leases space for its other offices under operating leases which expire at various dates through fiscal 2021. During fiscal 2014, the Company renewed its office lease for its San Francisco office for five years ~~(expiring in~~ to end on October ~~2019)~~ 31, 2019 with a current monthly rent of approximately ~~$25,000~~$28,000 for about 6,200 square feet. InBeginning in fiscal 2017, the Company leased approximately 9,800 square feet of office space (expiring in August 2020) in Englewood, ~~Colorado.~~Colorado, for a monthly rent of approximately $21,000.

The Company is responsible for a portion of maintenance, insurance and property tax expenses relating to the leased properties. Rental expenses were ~~$487,000~~$515,000 for the ~~six~~~~-month~~six-month period ended March 31, ~~2018,~~ 2019, as compared with ~~$356,000~~$487,000 in the prior year period.

Note 1211 - Operating Segments

The Company’s reportable segments are: (i) the Traditional Business and (ii) Journal Technologies. All inter-segment transactions were eliminated. Summarized financial information regarding the Company’s reportable segments is shown in the following table:

	Reportable Segments												Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total			Traditional Business			Journal Technologies			Corporate income and expenses			Total
Six months ended March 31, 2018
Six months ended March 31, 2019
Revenues
Advertising	$	4,325,000		$	---		$	---		$	4,325,000		$	4,300,000		$	---		$	---		$	4,300,000
Circulation		2,719,000			---			---			2,719,000			2,611,000			---			---			2,611,000
Advertising service fees and other		1,261,000			---			---			1,261,000			1,293,000			---			---			1,293,000
Licensing and maintenance fees		---			8,331,000			---			8,331,000			---			9,430,000			---			9,430,000
Consulting fees		---			1,207,000			---			1,207,000			---			940,000			---			940,000
Other public service fees		---			1,747,000			---			1,747,000			---			2,566,000			---			2,566,000
Operating expenses		8,507,000			18,901,000			---			27,408,000			8,348,000			17,984,000			---			26,332,000
Loss from operations		(202,000	)		(7,616,000	)		---			(7,818,000	)		(144,000	)		(5,048,000	)		---			(5,192,000	)
Dividends and interest income		---			---			2,507,000			2,507,000			---			---			2,671,000			2,671,000
Gains on sales of bonds and capital asset		---			---			3,182,000			3,182,000
Other income		---			---			19,000			19,000			---			---			19,000			19,000
Net unrealized losses on investments														---			---			(20,143,000	)		(20,143,000	)
Interest expenses on note payable collateralized by real estate		(48,000	)		---			---			(48,000	)		(45,000	)		---			---			(45,000	)
Interest expenses on margin loans		---			---			(285,000	)		(285,000	)		---			---			(425,000	)		(425,000	)
Pretax (loss) income		(250,000	)		(7,616,000	)		5,423,000			(2,443,000	)		(189,000	)		(5,048,000	)		(17,878,000	)		(23,115,000	)
Income tax benefit (expense)		(785,000	)		(935,000	)		18,670,000			16,950,000			115,000			1,300,000			5,185,000			6,600,000
Net income (loss)		(1,035,000	)		(8,551,000	)		24,093,000			14,507,000			(74,000	)		(3,748,000	)		(12,693,000	)		(16,515,000	)
Total assets		22,347,000			26,592,000			217,803,000			266,742,000			17,399,000			31,710,000			194,354,000			243,463,000
Capital expenditures		75,000			---			---			75,000			50,000			34,000			---			84,000
Amortization of intangible assets		---			1,810,000			---			1,810,000

	Reportable Segments												Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total			Traditional Business			Journal Technologies			Corporate income and expenses			Total
Six months ended March 31, 2017
Six months ended March 31, 2018
Revenues
Advertising	$	4,433,000		$	---		$	---		$	4,433,000		$	4,325,000		$	---		$	---		$	4,325,000
Circulation		2,873,000			---			---			2,873,000			2,719,000			---			---			2,719,000
Advertising service fees and other		1,333,000			---			---			1,333,000			1,261,000			---			---			1,261,000
Licensing and maintenance fees		---			7,848,000			---			7,848,000			---			8,331,000			---			8,331,000
Consulting fees		---			2,158,000			---			2,158,000			---			1,207,000			---			1,207,000
Other public service fees		---			1,624,000			---			1,624,000			---			1,747,000			---			1,747,000
Operating expenses		8,863,000			17,525,000			---			26,388,000			8,507,000			18,901,000			---			27,408,000
Loss from operations		(224,000	)		(5,895,000	)		---			(6,119,000	)		(202,000	)		(7,616,000	)		---			(7,818,000	)
Dividends and interest income		---			---			2,539,000			2,539,000			---			---			2,507,000			2,507,000
Other income		21,000			---			---			21,000
Gains on sales of bonds														---			---			3,180,000			3,180,000
Other income and capital asset														---			---			21,000			21,000
Interest expenses on note payable collateralized by real estate		(51,000	)		---			---			(51,000	)		(48,000	)		---			---			(48,000	)
Interest expenses on margin loans		---			---			(175,000	)		(175,000	)		---			---			(285,000	)		(285,000	)
Interest and penalty expense reversal for uncertain and unrecognized tax benefits		---			743,000			---			743,000
Pretax (loss) income		(254,000	)		(5,152,000	)		2,364,000			(3,042,000	)		(250,000	)		(7,616,000	)		5,423,000			(2,443,000	)
Income tax (expense) benefit		(75,000	)		5,120,000			(495,000	)		4,550,000
Income tax benefit (expense)														(785,000	)		(935,000	)		18,670,000			16,950,000
Net income (loss)		(329,000	)		(32,000	)		1,869,000			1,508,000			(1,035,000	)		(8,551,000	)		24,093,000			14,507,000
Total assets		15,618,000			35,763,000			203,778,000			255,159,000			22,347,000			26,592,000			217,803,000			266,742,000
Capital expenditures		160,000			34,000			---			194,000			75,000			---			---			75,000
Amortization of intangible assets		---			2,447,000			---			2,447,000			---			1,810,000			---			1,810,000

	Reportable Segments												Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total			Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended March 31, 2018
Three months ended March 31, 2019
Revenues
Advertising	$	2,209,000		$	---		$	---		$	2,209,000		$	2,108,000		$	---		$	---		$	2,108,000
Circulation		1,356,000			---			---			1,356,000			1,273,000			---			---			1,273,000
Advertising service fees and other		659,000			---			---			659,000			624,000			---			---			624,000
Licensing and maintenance fees		---			3,981,000			---			3,981,000			---			4,640,000			---			4,640,000
Consulting fees		---			212,000			---			212,000			---			399,000			---			399,000
Other public service fees		---			921,000			---			921,000			---			1,668,000			---			1,668,000
Operating expenses		4,193,000			9,518,000			---			13,711,000			4,140,000			9,243,000			---			13,383,000
Income (loss) from operations		31,000			(4,404,000	)		---			(4,373,000	)
Loss from operations														(135,000	)		(2,536,000	)		---			(2,671,000	)
Dividends and interest income		---			---			1,024,000			1,024,000			---			---			1,141,000			1,141,000
Gains on sales of bonds and capital asset		---			---			3,180,000			3,180,000
Other income		---			---			10,000			10,000			---			---			9,000			9,000
Net unrealized gains on investments														---			---			8,497,000			8,497,000
Interest expenses on note payable collateralized by real estate		(24,000	)		---			---			(24,000	)		(22,000	)		---			---			(22,000	)
Interest expenses on margin loans		---			---			(149,000	)		(149,000	)		---			---			(219,000	)		(219,000	)
Pretax (loss) income		7,000			(4,404,000	)		4,065,000			(332,000	)
Pretax income (loss)														(157,000	)		(2,536,000	)		9,428,000			6,735,000
Income tax benefit (expense)		(105,000	)		1,250,000			(1,045,000	)		100,000			35,000			715,000			(2,467,000	)		(1,717,000	)
Net income (loss)		(98,000	)		(3,154,000	)		3,020,000			(232,000	)
Net (loss) income														(122,000	)		(1,821,000	)		6,961,000			5,018,000
Total assets		22,347,000			26,592,000			217,803,000			266,742,000			17,399,000			31,710,000			194,354,000			243,463,000
Capital expenditures		41,000			---			---			41,000			---			---			---			---
Amortization of intangible assets		---			748,000			---			748,000

	Reportable Segments												Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total			Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended March 31, 2017
Three months ended March 31, 2018
Revenues
Advertising	$	2,123,000		$	---		$	---		$	2,123,000		$	2,209,000		$	---		$	---		$	2,209,000
Circulation		1,424,000			---			---			1,424,000			1,356,000			---			---			1,356,000
Advertising service fees and other		695,000			---			---			695,000			659,000			---			---			659,000
Licensing and maintenance fees		---			3,882,000			---			3,882,000			---			3,981,000			---			3,981,000
Consulting fees		---			1,310,000			---			1,310,000			---			212,000			---			212,000
Other public service fees		---			845,000			---			845,000			---			921,000			---			921,000
Operating expenses		4,463,000			9,082,000			---			13,545,000			4,193,000			9,518,000			---			13,711,000
Loss from operations		(221,000	)		(3,045,000	)		---			(3,266,000	)
Income (loss) from operations														31,000			(4,404,000	)		---			(4,373,000	)
Dividends and interest income		---			---			1,368,000			1,368,000			---			---			1,024,000			1,024,000
Other income		6,000			---			---			6,000
Gains on sales of bonds														---			---			3,180,000			3,180,000
Other income and capital asset														---			---			10,000			10,000
Interest expenses on note payable collateralized by real estate		(25,000	)		---			---			(25,000	)		(24,000	)		---			---			(24,000	)
Interest expenses on margin loans		---			---			(96,000	)		(96,000	)		---			---			(149,000	)		(149,000	)
Interest and penalty expense reversal for uncertain and unrecognized tax benefits		---			752,000			---			752,000
Pretax (loss) income		(240,000	)		(2,293,000	)		1,272,000			(1,261,000	)
Income tax (expense) benefit		(75,000	)		4,345,000			(30,000	)		4,240,000
Net income (loss)		(315,000	)		2,052,000			1,242,000			2,979,000
Pretax income (loss)														7,000			(4,404,000	)		4,065,000			(332,000	)
Income tax benefit (expense)														(105,000	)		1,250,000			(1,045,000	)		100,000
Net (loss) income														(98,000	)		(3,154,000	)		3,020,000			(232,000	)
Total assets		15,618,000			35,763,000			203,778,000			255,159,000			22,347,000			26,592,000			217,803,000			266,742,000
Capital expenditures		---			7,000			---			7,000			41,000			---			---			41,000
Amortization of intangible assets		---			1,223,000			---			1,223,000			---			748,000			---			748,000

During the six months ended March 31, ~~2018,~~ 2019, the Traditional Business had total revenues of ~~$8,305,000~~$8,204,000 of which ~~$5,586,000~~$5,593,000 were recognized, at a point of time, after services were provided and ~~$2,719,000~~$2,611,000 were recognized ratably over the subscription terms. Total revenues for the Company’s software business were ~~$11,285,000~~$12,936,000 of which ~~$3,353,000~~$4,035,000 were recognized upon completion of services with customer acceptance while ~~$7,932,000~~$8,901,000 were recognized ratably over the subscription periods.

During the three months ended March 31, ~~2018,~~ 2019, the Traditional Business had total revenues of ~~$4,224,000~~$4,005,000 of which ~~$2,868,000~~$2,732,000 were recognized, at a point of time, after services were provided and ~~$1,356,000~~$1,273,000 were recognized ratably over the subscription terms. Total revenues for the Company’s software business were ~~$5,114,000~~$6,707,000 of which ~~$1,289,000~~$2,100,000 were recognized upon completion of services with customer acceptance while ~~$3,825,000~~$4,607,000 were recognized ratably over the subscription periods.

Approximately ~~55%~~63% and ~~58%~~61% of the Company’s revenues during the ~~three~~~~- and~~ ~~six~~~~-month~~three-and six-month periods ended March 31, ~~2018,~~ ~~respectively,~~2019 were derived from Journal Technologies, as compared with ~~59%~~55% and ~~57%~~58% in the prior year ~~periods.~~period. In addition, the Company’s revenues have been primarily from the United States with approximately 1% from foreign countries. Journal Technologies’ revenues are all from governmental agencies.

The following table sets forth certain deferred obligations from October 1, ~~2017~~ 2018 through March 31, ~~2018:~~2019:

Item 2. MANAGEMENT’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 and a website to pay traffic citations online, and bar members. These products are licensed to more than 500 organizations in 42 states and internationally.

~~Comprehensive income includes net income and unrealized net (losses) gains on investments, net of taxes, as summarized below:~~

Comparable ~~six~~~~-month~~six-month periods ended March 31, ~~2018~~2019 and ~~2017~~2018

Consolidated revenues were ~~$19,590,000~~$21,140,000 and ~~$20,269,000~~$19,590,000 for the six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. This ~~decrease~~increase of ~~$679,000~~$1,550,000 (8%) was primarily from decreased Journal Technologies’ consulting fees of $951,000, which are recognized upon project go-lives, and the reduction in The Traditional Business’s trustee sale notice and its related service fee revenues of $109,000, commercial advertising and Conference revenues of $40,000, and circulation revenues of $154,000, partially offset by increased (i) Journal Technologies’ license and maintenance fees of ~~$483,000~~$1,099,000 and public service fees of ~~$123,000.~~$819,000 and (ii) the Traditional Business’ government notices and agency commission revenues of $80,000, partially offset by a reduction in Journal Technologies’ consulting fees of $267,000 due to fewer go-lives, and the reduction in the Traditional Business’ trustee sale notice advertising revenues of $100,000 and circulation revenues of $108,000. The Company’s revenues derived from Journal Technologies’ operations constituted about ~~58%~~61% and ~~57%~~58% of the Company’s total revenues for the six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Consolidated operating expenses ~~increased~~decreased by ~~$1,020,000~~$1,076,000 (4%) to $26,332,000 from $27,408,000, mainly because all intangible assets for Journal Technologies were fully amortized at last year-end. Total salaries and employee benefits increased by $694,000 (4%) to $17,446,000 from ~~$26,388,000,~~$16,752,000 primarily resulting from additional personnel costs ~~and services~~ for Journal Technologies. ~~Total personnel costs increased~~Outside services decreased by ~~$1,014,000 (6%~~$87,000 (3%) to ~~$16,752,000~~$2,402,000 from ~~$15,738,000. Postage and delivery expenses~~$2,489,000 mainly because of decreased ~~by $130,000 (23%) to $433,000 from $563,000, primarily due to reduced subscriptions and delivery service fees.~~contractor costs for Journal Technologies. Depreciation and amortization costs, which included primarily the amortization of Journal Technologies’ intangible assets of $0 and $1,810,000 for the six months ended March 31, 2019 and 2018, respectively, decreased by ~~$664,000~~$1,814,000 to ~~$2,117,000~~$303,000 from ~~$2,781,000~~$2,117,000. Credit card merchant discount fees, which represent fees paid to credit card service providers to process payments for the public service fee revenues, increased by $142,000 (28%) to $645,000 from $503,000 mainly resulting from increased efilings. Accounting and legal fees increased by $241,000 (43%) to $799,000 from $558,000 primarily because ~~the intangible assets~~ of ~~one of the two acquisitions in fiscal 2013 were fully amortized during the first quarter of fiscal 2018.~~additional legal fees to review and negotiate Journal Technologies’ contracts with customers. Other general and administrative expenses ~~increased~~decreased by ~~$820,000 (17%~~$280,000 (9%) to ~~$5,620,000~~$2,698,000 from ~~$4,800,000~~$2,978,000 mainly ~~because of increased~~resulting from reduced miscellaneous office equipment ~~and software maintenance fees for Journal Technologies.~~purchases.

The Company’s non-operating income, net of expenses, ~~increased by $2,298,000 (75%)~~decreased to ~~$5,375,000~~a loss of $17,923,000 from ~~$3,077,000~~income of $5,375,000 primarily because of the recording of the net unrealized losses on investments of $20,143,000 and increases in the interest rates on the two acquisition margin loans, as compared with a capital ~~gains~~gain of $3,180,000 from the sale of bonds ~~partially offset by~~during the prior ~~year’s reversal of accrued interest and penalty expenses of $743,000 for uncertain and unrecognized tax benefits.~~year period.

During the six months ended March 31, ~~2018,~~2019, consolidated pretax loss was ~~$2,443,000,~~$23,115,000, as compared with ~~$3,042,000~~$2,443,000 in the prior year period. There was a consolidated net loss of $16,515,000 (-$11.96 per share) after tax benefits for the six months ended March 31, 2019, as compared with net income of $14,507,000 ($10.51 per share) ~~after tax benefits, primarily from tax cuts, for the six months ended March 31, 2018, as compared with $1,508,000 ($1.09 per share)~~ in the prior year ~~period. (See~~ ~~Taxes~~.)period mainly resulting from the prior year’s adjustments relative to the benefits related to the December 2017 Tax Cuts and Job Act.

At March 31, ~~2018,~~2019, the aggregate fair market value of the Company’s marketable securities was ~~$217,803,000.~~$192,153,000. These securities had approximately ~~$159,354,000~~$138,264,000 of net unrealized gains before taxes of ~~$42,369,000~~$36,606,000, and generated approximately ~~$2,507,000~~$2,671,000 in dividends ~~and interest~~ income during the six months ended March 31, ~~2018,~~2019, which lowers the Company’s effective income tax rate because of the dividends received deduction. Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

Additional detail about each of the Company’s reportable segments, and its corporate income and expenses, is set forth below:

The Traditional Business segment’s pretax loss decreased by ~~$4,000~~$61,000 (24%) to ~~$250,000~~$189,000 from ~~$254,000.~~$250,000.

Advertising revenues decreased by ~~$108,000~~$25,000 to $4,300,000 from $4,325,000, ~~from $4,433,000,~~ primarily ~~resulting from the declines in~~because of reduced trustee sale notice advertising ~~fee~~ revenues of ~~$80,000~~$100,000 and classified advertising revenues of $107,000, partially offset by more conference revenues of $117,000 and net ~~commercial~~display advertising ~~and Conference~~ revenues of ~~$40,000.~~$22,000.

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 ~~13%~~15% during the six months ended March 31, ~~2018~~2019 as compared to the prior 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 infor all of fiscal ~~2018,~~2019, 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% of the total public notice advertising revenues in the six months ended March 31, ~~2018.~~2019. Public notice advertising revenues and related advertising and other service fees constituted about ~~21%~~20% and 22% of the Company’s total revenues for the six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, 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~~was recently implemented in Arizona for one notice ~~type.~~type that had represented approximately $500,000 in annual revenues for the Company. 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.

The Daily Journals accounted for about ~~89%~~90% of The Traditional Business’ total circulation revenues, which declined by ~~$154,000~~$108,000 (4%) to ~~$2,719,000~~$2,611,000 from ~~$2,873,000.~~$2,719,000. The court rule and judicial profile services generated about 8% 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 by ~~$356,000 (4%~~$159,000 (2%) to ~~$8,507,000~~$8,348,000 from ~~$8,863,000,~~$8,507,000, primarily due to decreased personnel costs and outside contract printing and distributing costs.

Journal Technologies’ business segment pretax loss ~~increased~~decreased by ~~$2,464,000 (48%~~$2,568,000 (34%) to $5,048,000 from $7,616,000, ~~from $5,152,000,~~ after including the amortization costs of intangible assets of ~~$1,810,000~~$0 and ~~$2,447,000~~$1,810,000 for the six months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Revenues ~~decreased~~increased by ~~$345,000 (3%~~$1,651,000 (15%) to ~~$11,285,000~~$12,936,000 from ~~$11,630,000~~$11,285,000 in the prior year period. Licensing and maintenance fees increased by ~~$483,000 (6%~~$1,099,000 (13%) to ~~$8,331,000~~$9,430,000 from ~~$7,848,000.~~$8,331,000. Consulting fees decreased by ~~$951,000 (44%~~$267,000 (22%) to $940,000 from $1,207,000 due to fewer go-lives. Deferred revenues on installation contracts primarily represent the fair value of advances from ~~$2,158,000 because consulting fees~~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 maintenance period. Other public service fees increased by ~~$123,000 (8%~~$819,000 (47%) to ~~$1,747,000~~$2,566,000 from ~~$1,624,000~~$1,747,000 primarily due to ~~an increase in the number of traffic tickets processed online for the public to pay traffic citations.~~additional efiling fee revenues.

Operating expenses ~~increased~~decreased by ~~$1,376,000 (8%~~$917,000 (5%) to $17,984,000 from $18,901,000, ~~from $17,525,000,~~ primarily ~~due to~~because the amortization costs of intangible assets were fully amortized at last year-end, partially offset by increased ~~personnel costs~~salaries and ~~computer services.~~employee benefit costs.

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 life 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 ~~asset~~ 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 six-month periods ended March 31, ~~2018~~2019 and ~~2017.~~2018. Journal Technologies is continuing to update and upgrade its software products. These costs are expensed as incurred and will impact earnings at least through the foreseeable future.

For the six months ended March 31, 2019, the Company recorded an income tax benefit of $6,600,000 on a pretax loss of $23,115,000. This was the net result of applying the effective tax rate anticipated for fiscal 2019 to the pretax loss for the six months ended March 31, 2019. The effective tax rate was greater than the statutory rate primarily due to the dividends received deduction and state tax benefits.

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

~~For~~Consequently, on a pretax loss of $2,443,000 for the six months ended March 31, 2018, the Company recorded an income tax benefit of ~~$16,950,000 on pretax loss of $2,443,000.~~$16,950,000. The income tax benefit was also the result of applying the effective tax rate anticipated for fiscal 2018 to the pretax loss for the six-month period ended March 31, 2018. The effective tax rate (before the discrete ~~Tax Act~~ item discussed above) was greater than the statutory rate primarily due to the dividends received deduction which increases the loss for tax purposes.

~~During the prior fiscal year, on pretax loss of $3,042,000~~The Company’s effective tax rate was 29% for the six months ended March 31, ~~2017,~~2019 as compared with 694% in the ~~Company recorded an income tax benefit of $4,550,000 which was the net result of applying~~prior year period. The difference in the effective tax rate ~~anticipated for fiscal 2017~~was primarily due to ~~pretax loss for~~ the six months ended March 31, 2017 and included a reversal of an accrued liability of approximately $2,665,000 for uncertain and unrecognized tax benefits relating to an acquisition in fiscal 2013. The Internal Revenue Service concluded its examinationeffect of the ~~Company’s fiscal 2014 income~~ tax return with no proposed changes to the tax position that gave rise to this liability. As a result, this liability was reversed along with the related accrued interest and penalty expense of $743,000. In addition, a deferred tax liability,cuts in the amount of $352,000, relating to temporary differences that would only exist if the uncertain tax position was never recognized, was reversed. The effective tax rate (before the discrete IRS item) was greater than the statutory rate mainly resulting from the dividends received deduction. prior year period as discussed above.

~~The Company’s effective tax rate was 694% and 150% for the six months ended March 31, 2018 and 2017, 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.

Comparable three-month periods~~three~~~~-month periods~~ ended March 31, ~~2018~~2019 and ~~2017~~2018

Consolidated revenues were ~~$9,338,000~~$10,712,000 and ~~$10,279,000~~$9,338,000 for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively. This ~~decrease~~increase of ~~$941,000~~$1,374,000 (15%) was primarily from decreased Journal Technologies’ consulting fees of $1,098,000, which are recognized upon project go-lives, and the reduction in The Traditional Business’s trustee sale notice and its related service fee revenues of $52,000, partially offset by increased Journal Technologies’ license and maintenance fees of ~~$99,000~~$659,000 and public service fees of ~~$76,000.~~$747,000. The Company’s revenues derived from Journal Technologies’ operations constituted about ~~55%~~63% and ~~59%~~55% of the Company’s total revenues for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

Consolidated operating expenses decreased by $328,000 (2%) to $13,383,000 from $13,711,000, mainly because all intangible assets for Journal Technologies were fully amortized at last year-end. Total salaries and employee benefits increased by ~~$166,000 (1%~~$236,000 (3%) to ~~$13,711,000~~$8,791,000 from ~~$13,545,000,~~$8,555,000 primarily resulting from additional personnel costs for Journal Technologies. Total personnel costs increased by $458,000 (6%) to $8,555,000 from $8,097,000. Postage and delivery expenses decreased by $69,000 (24%) to $216,000 from $285,000 primarily due to reduced subscriptions and delivery service fees. Depreciation and amortization costs, which included primarily the amortization of Journal Technologies’ intangible assets of $0 and $748,000 for the three months ended March 31, 2019 and 2018, respectively, decreased by ~~$490,000 (35%~~$749,000 (83%) to ~~$899,000~~$150,000 from ~~$1,389,000~~$899,000. Credit card merchant discount fees, which represent fees paid to credit card service providers to process payments for the public service fee revenues, increased by $114,000 (44%) to $375,000 from $261,000 mainly resulting from increased efilings. Accounting and legal fees increased by $209,000 (112%) to $396,000 from $187,000 primarily because ~~the intangible assets~~ of ~~one of the two acquisitions in fiscal 2013 were fully amortized.~~additional legal fees to review and negotiate Journal Technologies’ contracts with customers. Other general and administrative expenses ~~increased~~decreased by ~~$349,000 (14%~~$144,000 (10%) to ~~$2,806,000~~$1,369,000 from ~~$2,457,000~~$1,513,000 mainly ~~because of increased~~resulting from reduced miscellaneous office equipment ~~and software maintenance fees for Journal Technologies.~~purchases.

The Company’s non-operating income, net of expenses, increased by ~~$2,036,000~~$5,365,000 to ~~$4,041,000~~$9,406,000 from ~~$2,005,000~~$4,041,000 primarily because of the recording of the net unrealized gains on investments of $8,497,000, as compared with a capital ~~gains~~gain of $3,180,000 from the sale of bonds ~~partially offset by~~during the prior ~~year’s reversal of accrued interest and penalty expenses of $752,000 for uncertain and unrecognized tax benefits.~~year period.

During the three months ended March 31, ~~2018,~~2019, consolidated pretax ~~loss~~income was ~~$332,000,~~$6,735,000, as compared with ~~$1,261,000~~a pretax loss of $332,000 in the prior year period. There was a consolidated net ~~loss~~income of ~~$232,000 (-$.17~~$5,018,000 ($3.63 per share) after tax benefits for the three months ended March 31, ~~2018,~~2019, as compared with net ~~income~~loss of ~~$2,979,000 ($2.16~~$232,000 (-$0.17 per share) in the prior year ~~period primarily because of the reversal of the tax liability for uncertain and unrecognized tax benefits. (See~~ ~~Taxes~~.)period.

During the six months ended March 31, ~~2018,~~2019, the Company’s cash and cash equivalents and marketable security positions decreased by ~~$7,622,000 to $225,027,000 after the sale~~$23,662,000, including unrealized losses on investments of ~~the bonds for $8,125,000 with a capital gain of $3,180,000.~~$20,143,000. Cash and cash equivalents were used for the purchase of capital assets of ~~$75,000~~$84,000 and operating activities of ~~$4,153,000,~~$3,375,000 which included net decreases of ~~$1,608,000~~$102,000 in deferred subscriptions, deferred installation contracts and deferred maintenance agreements and others.

The investments in marketable securities, which had an adjusted cost basis of approximately ~~$58,449,000~~$53,889,000 and a market value of about ~~$217,803,000~~$192,153,000 at March 31, ~~2018,~~2019, generated approximately ~~$2,507,000~~$2,671,000 in dividends income. Beginning in fiscal 2019, changes in unrealized gains (losses) on investments are included in the Company’s net income (loss) and ~~interest income.~~thus may have a significant impact depending on the fluctuations of the market prices of the invested securities.

Cash flows from operating activities ~~decreased~~increased by ~~$2,053,000~~$778,000 during the six months ended March 31, ~~2018~~2019 as compared to the prior year period, primarily ~~resulting~~due to increased net accounts payable and accrued liabilities of $2,018,000 because of additional efiling fees to be remitted to the courts and increased deferred income tax liabilities of $10,526,000, of which $5,545,000 related to the net unrealized losses on investments. This was partially offset by (i) decreases in net income of $7,699,000 to $3,628,000 from ~~(i) gains~~$11,327,000, excluding the non-cash unrealized losses on investments of $20,143,000, which was recorded in year-to-date earnings versus in accumulated other comprehensive income in the prior year, and the prior year period’s gain on sale of bonds of $3,180,000 which relates to in the investment activities, and (ii) increases in ~~deferred income taxes~~accounts receivable of ~~$14,897,000 mainly because of~~$3,658,000 resulting from more billings for the discrete tax items mentioned above, partially offset by increases in net income of $12,999,000 and income tax payable of $2,723,000. Cash flows from investing activities increased by $13,257,000 primarily because of the sale of bond investments of $8,125,000 in February 2018 versus the purchases of marketable securities of $5,013,000 during the prior year period.efilings.

As of March 31, ~~2018,~~2019, the Company had working capital of ~~$208,373,000,~~$177,009,000, including the liabilities for deferred subscriptions, deferred installation and maintenance agreements and others of ~~$16,457,000.~~$19,941,000.

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 against its marketable securities. The Company also may entertain additional business acquisition opportunities. Any excess cash flows could be used to reduce 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.

Such investments may include additional securities of the companies in which the Company has already 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 as 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 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 continue to play an important role in monitoring existing investments and selecting any future investments.

As of March 31, ~~2018,~~2019, the investments were concentrated in just six 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 comprehensive income statement.~~net income.

The Company’s financial statements and accompanying notes are prepared in accordance with U.S. generally accepted accounting principles. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Management believes that revenue recognition, accounting for software costs, fair value measurement and disclosures (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’s critical accounting policies are detailed in its Annual Report on Form 10-K for the year ended September 30, ~~2017.~~2018. 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 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; 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; 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 of fewer foreclosures; 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;~~officer, who has reduced his work schedule due to a health issue; 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.~~2018.

For information regarding the Company’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.~~2018. There have been no material changes to the Company’s market risk exposures since September 30, ~~2017.~~2018.

~~Changes~~ In light of the material weaknesses in ~~Internal Control over Financial Reporting~~

~~During this quarter,~~ the Company continued to improve its internal control over its Information Technology function by using Jira ticketing system to track changes made to its legal advertising system. Management believes this addressed another aspect of a material weakness previously identified. Management will continue to assess the effectiveness of its remediation efforts in connection with management's future evaluations ofCompany’s internal control over financial ~~reporting.~~

~~Based on the evaluation performed under the supervision and with the participation of~~reporting discussed in the Company’s ~~management, including Gerald L. Salzman, its Chief Executive Officer and Chief Financial Officer, of~~Form 10-K for the ~~effectiveness of the design and operation of the Company’s disclosure controls and procedures as of March 31,~~fiscal year ended September 30, 2018, ~~Mr. Salzman~~management concluded that the Company’s disclosure controls and procedures were ~~effective.~~

~~In April 2018, Gerald L. Salzman, Chief Executive Officer, President, Chief Financial Officer and Treasurer~~not effective as of March 31, 2019. There were no material changes in the Company, suffered a Transient Ischemic Attack (TIA) stroke. Mr. Salzman was released from the hospital after one night and is currently working from home, performing his executive roles with the Company while he undergoes physical therapy. He has reduced his work scheduleCompany’s internal control over financial reporting or in other factors reasonably likely to ~~a more sustainable level and has begun and will continue to delegate certain of his duties to other managers.~~

~~The information reported under this Item 5 was not required to be disclosed by the Company in a report on Form 8-K~~affect its internal control over financial reporting during the period covered by this Form 10-Q. The information reported by the Company under this Item 5 is provided because the Company deems it to be of importance to its shareholders and would have otherwise reported such information under Item 8.01 of Form 8-K, “Other Events.”quarter ended March 31, 2019.

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

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

	~~For the quarterly period ended March 31, 2018~~

or

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

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

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

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

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

~~Class~~ Title of each class	Trading Symbol(s)		~~Outstanding at~~ ~~April 30, 2018~~Name of each exchange on which registered
Common Stock, par value ~~$ .01~~$.01 per share	DJCO	~~1,380,746 shares~~The NASDAQ Stock Market

			~~Page Nos.~~

PART I Financial Information

	Item 1. Financial Statements

		Consolidated Balance Sheets - March 31, ~~2018~~2019 and September 30, ~~2017~~2018	3

		Consolidated Statements of Comprehensive Income (Loss) - Three months ended March 31, ~~2018~~2019 and ~~2017~~2018	4

		Consolidated Statements of Comprehensive (Loss) Income - Six months ended March 31, ~~2018~~2019 and ~~2017~~ 2018	5

Consolidated Statements of Shareholders’ Equity - Six months ended March 31, 2019 and 2018	6

Consolidated Statements of Cash Flows - Six months ended March 31, ~~2018~~2019 and ~~2017~~2018	6

	~~Notes to Consolidated Financial Statements~~		7

Notes to Consolidated Financial Statements	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16

	Item 3. Quantitative and Qualitative Disclosures about Market Risk		23

	Item 4. Controls and Procedures		23

	~~Item 5. Other Information~~		23

Part II Other Information

	Item 6. Exhibits		24

	Beginning Balance		Addition		Recognized			Ending Balance		Beginning Balance		Addition		Recognized			Ending Balance

Deferred subscriptions	$	3,284,000	$	2,552,000	$	(2,719,000	)	$	3,117,000	$	3,174,000	$	2,415,000	$	(2,611,000	)	$	2,978,000
Deferred installation contracts		5,072,000		2,623,000		(3,353,000	)		4,342,000		2,554,000		1,343,000		(1,469,000	)		2,428,000
Deferred maintenance agreements and others		10,201,000		7,221,000		(7,932,000	)		9,490,000		14,362,000		9,121,000		(8,901,000	)		14,582,000

Comprehensive Income
	Six months ended March 31
	2018			2017

Net income	$	14,507,000		$	1,508,000
Net (decrease) increase in unrealized appreciation of marketable securities (net of taxes)		(1,743,000	)		19,657,000
	$	12,764,000		$	21,165,000

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

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

	Reportable Segments
	Traditional Business						Journal Technologies						Corporate income and expenses						Total
	2019			2018			2019			2018			2019			2018			2019			2018
Revenues
Advertising	$	4,300		$	4,325		$	---		$	---		$	---		$	---		$	4,300		$	4,325
Circulation		2,611			2,719			---			---			---			---			2,611			2,719
Advertising service fees and other		1,293			1,261			---			---			---			---			1,293			1,261
Licensing and maintenance fees		---			---			9,430			8,331			---			---			9,430			8,331
Consulting fees		---			---			940			1,207			---			---			940			1,207
Other public service fees		---			---			2,566			1,747			---			---			2,566			1,747
Total revenues		8,204			8,305			12,936			11,285			---			---			21,140			19,590
Operating expenses
Salaries and employee benefits		5,203			5,188			12,243			11,564			---			---			17,446			16,752
Amortization of intangible assets		---			---			---			1,810			---			---			---			1,810
Others		3,145			3,319			5,741			5,527			---			---			8,886			8,846
Total operating expenses		8,348			8,507			17,984			18,901			---			---			26,332			27,408
Loss from operations		(144	)		(202	)		(5,048	)		(7,616	)		---			---			(5,192	)		(7,818	)
Dividends and interest income		---			---			---			---			2,671			2,507			2,671			2,507
Other income and capital gains		---			---			---			---			19			3,201			19			3,201
Net unrealized losses on investments		---			---			---			---			(20,143	)		---			(20,143	)		---
Interest expenses on note payable collateralized by real estate		(45	)		(48	)		---			---			---			---			(45	)		(48	)
Interest expenses on margin loans		---			---			---			---			(425	)		(285	)		(425	)		(285	)
Pretax (loss) income	$	(189	)	$	(250	)	$	(5,048	)	$	(7,616	)	$	(17,878	)	$	5,423		$	(23,115	)	$	(2,443	)

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

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

	101.SCH**	XBRL Taxonomy Extension Schema

	**
	** 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)~~


	~~/s/ Gerald L. Salzman~~

	~~Chief Executive Officer~~
	~~President~~
	~~Chief Financial Officer~~
	~~Treasurer~~
	~~(Principal Executive Officer,~~
	~~Principal Financial Officer and~~
	DAILY JOURNAL CORPORATION (Registrant) /s/ Gerald L. Salzman Chief Executive Officer President Chief Financial Officer Treasurer (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

	101.CAL**
	101.CAL**	XBRL Taxonomy Extension Calculation

	101.DEF**
	101.DEF**	XBRL Taxonomy Extension Definition

	101.LAB**
	101.LAB**	XBRL Taxonomy Extension Labels