UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~June 30,~~December 31, 2022

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

For the transition period from _______________ to _____________________

Commission File Number 0-14665

DAILY JOURNAL CORPORATION

(Exact name of registrant as specified in its charter)

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

915 East First Street
Los Angeles, California		90012-4050
(Address of 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: ☒ No:☐

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

Yes: ☒ No:☐

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

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: 1,377,026 shares outstanding at ~~July~~January 31, ~~2022~~2023

DAILY JOURNAL CORPORATION

INDEX

	Page Nos.

PART I Financial Information

Item 1. Financial Statements (Unaudited)

Consolidated Balance Sheets ‑ ~~June 30,~~December 31, 2022 and September 30, ~~2021~~ 2022	3

Consolidated Statements of ~~(Loss)~~ Income and Comprehensive ~~(Loss)~~ Income ‑ Three months ended ~~June 30,~~December 31, 2022 and 2021	4

Consolidated Statements of ~~(Loss) Income and Comprehensive (Loss) Income~~Shareholders’ Equity ‑ ~~Nine~~Three months ended ~~June 30,~~December 31, 2022 and 2021	5

Consolidated Statements of ~~Shareholders’ Equity~~Cash Flows ‑ ~~Nine~~Three months ended ~~June 30,~~December 31, 2022 and 2021	6

Notes to Consolidated Financial Statements ~~of Cash Flows ‑ Nine months ended June 30, 2022 and 2021~~	7

~~Notes to Consolidated Financial Statements~~	8

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	16 13

Item 4. Controls and Procedures	25 20

Part II Other Information

Item 6. Exhibits	26 21

	June 30			September 30			December 31			September 30
	2022			2021			2022			2022
ASSETS
Current assets
Cash and cash equivalents	$	8,879,000		$	12,596,000		$	14,593,000		$	13,423,000
Restricted cash		2,044,000			2,043,000			2,050,000			2,045,000
Marketable securities at fair value -- common stocks		341,855,000			347,573,000			307,151,000			275,529,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at June 30, 2022 and September 30, 2021		10,694,000			9,524,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at December 31, 2022 and September 30, 2022								11,378,000			16,931,000
Inventories		70,000			43,000			81,000			56,000
Income tax receivable		3,950,000			---			1,017,000			451,000
Prepaid expenses and other current assets		552,000			557,000			410,000			1,019,000
Total current assets		368,044,000			372,336,000			336,680,000			309,454,000

Property, plant and equipment, at cost
Land, buildings and improvements		16,330,000			16,499,000			16,362,000			16,330,000
Furniture, office equipment and computer software		1,702,000			1,688,000			1,692,000			1,688,000
Machinery and equipment		1,524,000			1,524,000			1,521,000			1,521,000
		19,556,000			19,711,000			19,575,000			19,539,000
Less accumulated depreciation		(9,947,000	)		(9,706,000	)		(10,061,000	)		(9,986,000	)
		9,609,000			10,005,000			9,514,000			9,553,000
Operating lease right-of-use assets		130,000			215,000			77,000			104,000
Deferred income taxes		6,791,000			8,021,000
	$	384,574,000		$	390,577,000		$	346,271,000		$	319,111,000

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	4,407,000		$	4,239,000		$	5,269,000		$	5,062,000
Accrued liabilities		5,391,000			6,052,000			4,200,000			7,066,000
Income tax payable		---			6,244,000
Note payable collateralized by real estate		152,000			147,000			154,000			146,000
Deferred subscriptions		2,800,000			2,694,000			2,536,000			2,679,000
Deferred consulting fees		6,695,000			5,498,000			7,499,000			6,394,000
Deferred maintenance agreements and others		10,796,000			9,138,000			11,642,000			12,272,000
Total current liabilities		30,241,000			34,012,000			31,300,000			33,619,000

Long term liabilities
Investment margin account borrowings		75,000,000			32,000,000			81,011,000			75,000,000
Note payable collateralized by real estate		1,316,000			1,431,000			1,254,000			1,285,000
Deferred maintenance agreements and others		383,000			995,000			487,000			370,000
Accrued liabilities		3,250,000			3,383,000			4,005,000			4,547,000
Deferred income taxes		50,540,000			64,115,000			31,370,000			25,273,000
Total long term liabilities		130,489,000			101,924,000
Total long-term liabilities								118,127,000			106,475,000

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 and 424,307 treasury shares, at June 30, 2022 and September 30, 2021, respectively		14,000			14,000
Common stock, $.01 par value, 5,000,000 shares authorized; 1,805,053 shares issued, including 428,027 treasury shares at December 31, 2022 and September 30, 2022								14,000			14,000
Additional paid-in capital		1,755,000			1,755,000			1,755,000			1,755,000
Retained earnings		222,075,000			252,872,000			195,075,000			177,248,000
Total shareholders' equity		223,844,000			254,641,000			196,844,000			179,017,000
	$	384,574,000		$	390,577,000		$	346,271,000		$	319,111,000

CONSOLIDATED STATEMENTS OF ~~(LOSS)~~ INCOME AND COMPREHENSIVE ~~(LOSS)~~ INCOME

Three months
ended June 30

2022

2021

Revenues

Advertising
$ 1,989,000 $ 2,195,000
Circulation
1,097,000 1,126,000
Advertising service fees and other
787,000 762,000
Licensing and maintenance fees
4,633,000 5,602,000
Consulting fees
2,267,000 2,100,000
Other public service fees
1,779,000 1,777,000
12,552,000 13,562,000

Costs and expenses

Salaries and employee benefits
9,421,000 8,780,000
Increase to the long-term supplemental compensation accrual
1,985,000 655,000
Outside services
1,074,000 794,000
Postage and delivery expenses
165,000 160,000
Newsprint and printing expenses
174,000 162,000
Depreciation and amortization
73,000 114,000
Equipment maintenance and software
263,000 298,000
Credit card merchant discount fees
429,000 462,000
Rent expenses
64,000 66,000
Accounting and legal fees
206,000 252,000
Other general and administrative expenses
801,000 495,000
14,655,000 12,238,000
(Loss) income from operations
(2,103,000 ) 1,324,000
Other income (expense)

Dividends and interest income
1,263,000 776,000
Gains on sale of land
272,000 ---
Other income
--- 69,000
Net unrealized (losses) gains on marketable securities
(12,666,000 ) 55,686,000
Interest expense on margin loans and others
(281,000 ) (68,000 )
Interest expense on note payable collateralized by real estate
(12,000 ) (14,000 )

(Loss) income before income taxes
(13,527,000 ) 57,773,000
Income tax benefits (provisions)
3,665,000 (15,200,000 )
Net (loss) income
$ (9,862,000 ) $ 42,573,000

Weighted average number of common shares outstanding - basic and diluted
1,380,133 1,380,746
Basic and diluted net (loss) income per share
$ (7.15 ) $ 30.83

Comprehensive (loss) income
$ (9,862,000 ) $ 42,573,000

							Three months ended December 31
	Nine months ended June 30						2022			2021
	2022			2021
Revenues
Advertising	$	5,679,000		$	5,649,000		$	1,990,000		$	2,001,000
Circulation		3,279,000			3,458,000			1,098,000			1,110,000
Advertising service fees and other		2,200,000			1,964,000			699,000			671,000
Licensing and maintenance fees		13,721,000			16,990,000			4,395,000			4,480,000
Consulting fees		4,697,000			4,649,000			2,322,000			1,761,000
Other public service fees		5,221,000			5,242,000			1,797,000			1,713,000
		34,797,000			37,952,000			12,301,000			11,736,000

Costs and expenses
Salaries and employee benefits		26,745,000			25,818,000			9,631,000			8,477,000
(Decrease) increase to the long-term supplemental compensation accrual		(65,000	)		1,410,000
Decrease to the long-term supplemental compensation accrual								(520,000	)		(130,000	)
Agency commissions								211,000			208,000
Outside services		2,912,000			2,236,000			1,089,000			924,000
Postage and delivery expenses		492,000			490,000			167,000			163,000
Newsprint and printing expenses		529,000			469,000			199,000			159,000
Depreciation and amortization		301,000			344,000			75,000			104,000
Equipment maintenance and software		881,000			946,000			303,000			240,000
Credit card merchant discount fees		1,249,000			1,397,000			425,000			411,000
Rent expenses		187,000			228,000			69,000			65,000
Accounting and legal fees		748,000			746,000			273,000			320,000
Other general and administrative expenses		2,492,000			1,554,000			1,095,000			739,000
		36,471,000			35,638,000			13,017,000			11,680,000
(Loss) income from operations		(1,674,000	)		2,314,000			(716,000	)		56,000
Other income (expense)
Dividends and interest income		4,251,000			2,063,000			1,069,000			875,000
Gains on sale of land		272,000			---
Other income		---			69,000
Realized gains on sales of marketable securities		14,249,000			18,478,000			422,000			46,694,000
Net unrealized (losses) gains on marketable securities		(57,075,000	)		131,754,000
Net unrealized gains (losses) on marketable securities								24,025,000			(36,088,000	)
Interest expense on margin loans and others		(517,000	)		(196,000	)		(861,000	)		(86,000	)
Interest expense on note payable collateralized by real estate		(38,000	)		(48,000	)		(12,000	)		(13,000	)
(Loss) income before income taxes		(40,532,000	)		154,434,000
Income tax benefits (provisions)		9,735,000			(40,115,000	)
Net (loss) income	$	(30,797,000	)	$	114,319,000

Income before income taxes								23,927,000			11,438,000
Income tax provisions								(6,100,000	)		(4,560,000	)
Net income							$	17,827,000		$	6,878,000

Weighted average number of common shares outstanding - basic and diluted		1,380,542			1,380,746			1,377,026			1,380,746
Basic and diluted net (loss) income per share	$	(22.31	)	$	82.80
Basic and diluted net income per share							$	12.95		$	4.98

Comprehensive (loss) income	$	(30,797,000	)	$	114,319,000
Comprehensive income							$	17,827,000		$	6,878,000

Additional

Total

Common Stock

Treasury Stock

Paid-in

Retained

Shareholders'

Share

Amount

Share

Amount

Capital

Earnings

Equity

Balance at September 30, 2020
1,805,053 $ 18,000 (424,307 ) $ (4,000 ) $ 1,755,000 $ 139,972,000 $ 141,741,000
Net income
--- --- --- --- --- 59,270,000 59,270,000
Balance at December 31, 2020
1,805,053 18,000 (424,307 ) (4,000 ) 1,755,000 199,242,000 201,011,000
Net income
--- --- --- --- --- 12,476,000 12,476,000
Balance at March 31, 2021
1,805,053 18,000 (424,307 ) (4,000 ) 1,755,000 211,718,000 213,487,000
Net income
--- --- --- --- --- 42,573,000 42,573,000
Balance at June 30, 2021
1,805,053 $ 18,000 (424,307 ) $ (4,000 ) $ 1,755,000 $ 254,291,000 $ 256,060,000

Balance at September 30, 2021
1,805,053 $ 18,000 (424,307 ) $ (4,000 ) $ 1,755,000 $ 252,872,000 $ 254,641,000
Net income
--- --- --- --- --- 6,878,000 6,878,000
Balance at December 31, 2021
1,805,053 18,000 (424,307 ) (4,000 ) 1,755,000 259,750,000 261,519,000
Net loss
--- --- --- --- --- (27,813,000 ) (27,813,000 )
Balance at March 31, 2022
1,805,053 $ 18,000 (424,307 ) (4,000 ) 1,755,000 231,937,000 233,706,000
Receipt of donated treasury stock
--- --- (3,720 ) --- --- --- ---
Net loss
--- --- --- --- --- (9,862,000 ) (9,862,000 )
Balance at June 30, 2022
1,805,053 $ 18,000 (428,027 ) $ (4,000 ) $ 1,755,000 $ 222,075,000 $ 223,844,000

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


Balance at September 30, 2021		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	252,872,000	$	254,641,000
Net income		---		---		---			---			---		6,878,000		6,878,000
Balance at December 31, 2021		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	259,750,000	$	261,519,000

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

	Nine months Ended June 30						Three months Ended December 31
	2022			2021			2022			2021
Cash flows from operating activities
Net (loss) income	$	(30,797,000	)	$	114,319,000
Adjustments to reconcile net (loss) income to net cash (used in) provided from operations
Net income							$	17,827,000		$	6,878,000
Adjustments to reconcile net income to net cash provided from operations
Depreciation and amortization		301,000			344,000			75,000			104,000
Net unrealized losses (gains) on marketable securities		57,075,000			(131,754,000	)
Net unrealized (gains) losses on marketable securities								(24,025,000	)		36,088,000
Realized gains on sales of marketable securities		(14,249,000	)		(18,478,000	)		(422,000	)		(46,694,000	)
Gains on sale of land		(272,000	)		---
Deferred income taxes		(12,345,000	)		38,556,000			6,097,000			(7,967,000	)
Changes in operating assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		(1,170,000	)		(3,288,000	)		5,553,000			2,349,000
Inventories		(27,000	)		(19,000	)		(25,000	)		(12,000	)
Prepaid expenses and other assets		90,000			(16,000	)		68,000			3,000
Income tax receivable		(3,950,000	)		601,000			2,000			---
Increase (decrease) in liabilities
Accounts payable		168,000			96,000			207,000			(535,000	)
Accrued liabilities		(794,000	)		2,080,000			(3,408,000	)		(2,417,000	)
Income tax payable		(6,244,000	)		375,000			---			12,527,000
Deferred subscriptions		106,000			(191,000	)		(143,000	)		(89,000	)
Deferred consulting fees		1,197,000			131,000			1,105,000			906,000
Deferred maintenance agreements and others		1,046,000			(2,734,000	)		(513,000	)		(816,000	)
Net cash (used in) provided from operating activities		(9,865,000	)		22,000
Net cash provided from operating activities								2,398,000			325,000

Cash flows from investing activities
Proceeds from sales of marketable securities		80,570,000			20,002,000			2,826,000			50,020,000
Purchases of marketable securities		(117,678,000	)		(39,995,000	)		(10,001,000	)		(87,125,000	)
Sale of land		381,000			---
Purchases of property, plant and equipment		(14,000	)		(29,000	)		(36,000	)		---
Net cash used in investing activities		(36,741,000	)		(20,022,000	)		(7,211,000	)		(37,105,000	)

Cash flows from financing activities
Payment to margin loan principal		(14,000	)		(14,493,000	)
Borrowing from margin loan account		43,014,000			17,000,000			6,011,000			37,014,000
Payment of real estate loan principal		(110,000	)		(94,000	)		(23,000	)		(36,000	)
Net cash provided from financing activities		42,890,000			2,413,000			5,988,000			36,978,000

Decrease in cash and restricted cash and cash equivalents		(3,716,000	)		(17,587,000	)
Increase in cash and restricted cash and cash equivalents								1,175,000			198,000

Cash and restricted cash and cash equivalents
Beginning of period		14,639,000			28,963,000			15,468,000			14,639,000
End of period	$	10,923,000		$	11,376,000		$	16,643,000		$	14,837,000

Interest paid during period	$	509,000		$	245,000		$	917,000		$	92,000
Net income taxes paid	$	12,801,000		$	580,000		$	---		$	---

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

Journal Technologies, Inc. (“Journal Technologies”), a wholly-owned subsidiary of ~~the Company,~~Daily Journal, supplies case management software systems and related products to courts, prosecutor and public defender offices, probation departments and other justice agencies, including administrative law organizations, city and county governments and bar associations. These organizations use the Journal Technologies family of products to help manage cases and information electronically, to interface with other critical justice partners and to extend electronic services to the public, including efiling and a website to pay traffic citations and fees online. These products are licensed in approximately 30 states and internationally. In August 2022, the Company established a new wholly-owned subsidiary, Journal Technologies (Canada) Inc., in Victoria BC, Canada.

Essentially all of the Company’s U.S. operations are based in California, Arizona and Utah. The Company also has a presence in Australia where Journal Technologies is working on three software installation projects.

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 ~~June 30,~~December 31, 2022, its results of operations for the ~~three~~~~- and~~ ~~nine~~~~-month~~three-month periods ended ~~June 30,~~December 31, 2022 and 2021, its consolidated statements of shareholders’ equity for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and 2021 and cash flows for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and 2021. The results of operations for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 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, ~~2021.~~2022.

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

No new accounting pronouncement issued or effective has had, or is expected to have, a material impact on the Company’s consolidated financial statements.

At ~~June 30,~~December 31, 2022, the Company had a ~~right-of-use~~ROU asset and lease liability of approximately ~~$130,000~~$77,000 for its operating office and equipment leases, including approximately ~~$35,000~~$15,000 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.

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 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, (ii) subscription software license, maintenance (including updates and upgrades) and support fees, and (iii) ~~third~~~~-party~~third-party hosting fees when used. Revenues for consulting are generally recognized at point of delivery (go-live) upon completion of 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. 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 generally 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 as revenues 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~~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.

In June 2022, the Company received from Director Charles T. Munger 3,720 shares of Daily Journal common stock as his gracious personal gift (worth approximately $1 million on the date of the gift) for the purpose of establishing a new senior management equity incentive ~~plan.~~plan, which is still in the process of being set up. These donated shares ~~are now~~were considered treasury stock, and the Company accounted for them using the par method which resulted in an immaterial effected amount on Treasury Stock and Additional Paid-in Capital. In addition, the number of outstanding shares of the Company was reduced by these 3,720 shares to reflect the actual number of outstanding shares of 1,377,026 as of ~~June 30,~~December 31, 2022. The net ~~(loss)~~ income per common share is based on the weighted average number of shares outstanding during ~~the comparable financial periods.~~each year. The shares used in the calculation were ~~1,380,542~~1,377,026 and ~~1,380,133~~1,380,746 for the ~~nine~~~~- and~~ ~~three~~~~-month~~three-month periods ended ~~June 30,~~December 31, 2022 and 2021, respectively. ~~For both~~The Company does not have any common stock equivalents, and therefore basic and diluted net income per share is the ~~nine~~~~- and~~ ~~three~~~~-month periods ended~~ ~~June 30, 2021,~~ ~~the weighted average number of shares outstanding was 1,380,746.~~same.

The Company does not have any common stock equivalents, and therefore basic and diluted net income per share are the same.

All investments are classified as “Current assets” because they are available for sale at any time. These “available-for-sale” marketable securities are stated at fair value. The Company uses quoted prices in active markets for identical assets (consistent with the Level 1 definition in the fair value hierarchy) to measure the fair value of its investments on a recurring basis pursuant to ASC 820,Fair Value Measurement. As of ~~June~~December 31, 2022 and September 30, 2022, ~~and~~ ~~September 30, 2021,~~ there were net accumulated pretax unrealized gains of ~~$187,018,000~~$144,717,000 and ~~$244,093,000,~~$120,692,000, respectively, recorded in the accompanying Consolidated Balance Sheets. Most of the accumulated pretax unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer.

~~For the~~ ~~nine~~ ~~months ended~~ ~~June 30,~~In December 2022, the Company recorded and included in its net income the net unrealized ~~losses~~gains on marketable securities of ~~$57,075,000,~~$24,025,000, as compared with the net unrealized ~~gains~~losses on marketable securities of ~~$131,754,000,~~$36,088,000, in the prior year period.

In December ~~2021~~ ~~and~~ ~~March~~ 2022, the Company sold part of its marketable securities for approximately ~~$80,570,000,~~$2,826,000, realizing net gains of ~~$14,249,000,~~$422,000, and borrowed an additional ~~net $43,000,000~~$6,011,000 from the margin loan account to ~~primarily~~ purchase additional marketable securities with a total cost of approximately ~~$117,678,000.~~$10,001,000.

In December 2021, the Company sold part of its marketable securities for approximately $50,020,000, realizing gains of $46,694,000, and borrowed an additional $37,014,000 from the margin loan account to purchase additional marketable securities with a total cost of approximately $87,125,000.

Investments in marketable securities as of ~~June~~December 31, 2022 and September 30, 2022 ~~and~~ ~~September 30, 2021~~ are summarized below.

For the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Company recorded an income tax ~~benefit~~provision of ~~$9,735,000~~$6,100,000 on the pretax ~~loss~~income of ~~$40,532,000.~~$23,927,000. The income tax ~~benefit~~provision consisted of a tax ~~benefit~~provision of ~~$15,425,000~~$110,000 on the ~~unrealized losses~~realized gains on marketable securities and $6,360,000 on the unrealized gains on marketable securities, partially offset by a tax benefit of ~~$250,000~~$140,000 on loss from operations, $80,000 for the dividends received deduction and other permanent book and tax differences, ~~offset by tax provisions of $3,850,000 on the realized gains on marketable securities, $500,000 on income from operations,~~ and ~~$1,590,000~~$150,000 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 ~~nine~~three months ended ~~June 30,~~December 31, 2022 was ~~24%~~25.49%, after including the taxes on the realized ~~gains~~ and unrealized ~~losses~~gains on marketable securities.

For the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the Company recorded a provision for income taxes of ~~$40,115,000~~$4,560,000 on pretax income of ~~$154,434,000. This was the net result~~$11,438,000. The income tax provision consisted of ~~applying the effective tax rate anticipated for fiscal~~ ~~2021~~ ~~to pretax income before the unrealized and realized gains on marketable securities for the~~ ~~nine~~ ~~months ended~~ ~~June 30, 2021.~~ ~~The effective rate of 21.32%, which was higher than the statutory rate of 21% primarily due to state taxes which were offset by the dividends received deduction, resulted in~~ a tax provision of ~~$896,000~~$230,000 on ~~pretax~~ income ~~before the unrealized and realized gains on marketable securities. In addition, the Company recorded~~from operations, a tax provision of ~~$34,405,000~~$12,612,000 on the ~~unrealized~~realized gains on marketable securities and a tax provision of ~~$4,821,000 on the realized gains on marketable securities, both of which were offset by a tax benefit of $7,000~~$1,556,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax ~~liability.~~liability, partially offset by a tax benefit of $9,747,000 on the unrealized losses on marketable securities, and a tax benefit of $91,000 for the dividends received deduction and other permanent book and tax differences. Consequently, the overall effective tax rate for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 was ~~26%~~39.87%, after including the taxes on the realized gains and unrealized ~~gains~~losses 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 ~~2018~~2019 with regard to federal income taxes and fiscal ~~2017~~2018 for state income taxes.

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29.5 million for two acquisitions, in each case pledging its marketable securities as collateral. There ~~were~~ also have been subsequent borrowings of ~~net $45.5~~$51.5 million to purchase additional marketable securities bringing the margin loan balance up to ~~$75~~$81.0 million as of ~~June 30,~~December 31, 2022. 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 ~~June 30,~~December 31, 2022 was ~~2.25%~~5%. These investment margin account borrowings do not mature.

In November 2015, the Company purchased a 30,700 square foot office building constructed in 1998 on about 3.6 acres in Logan, Utah that had been previously leased by Journal Technologies. The Company paid $1.24 million and financed the balance with a real estate bank loan of $2.26 million which ~~had~~has a fixed interest rate of ~~4.66%~~3.33%. This loan is secured by the Logan facility and can be paid off at any time without prepayment penalty. In ~~October 2020,~~ ~~the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% for the remaining 10 years.~~ This real estate loan had a balance of approximately ~~$1.47~~$1.39 million as of ~~June 30,~~December 31, 2022. Each monthly installment payment is about $16,600. 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, was not affected by the amendment.

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.

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 ~~October 2023.~~January 2024.

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

The Company’s ~~reportable segments are: (i) the~~ 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:

Overall Financial Results (000)																									Overall Financial Results (000)
For the three months ended December 31, 2022 and 2021																									For the three months ended December 31, 2022 and 2021

	Reportable Segments																									Reportable Segments
	Traditional Business						Journal Technologies						Corporate income and expenses						Total							Traditional Business						Journal Technologies						Corporate						Total
	2022			2021			2022			2021			2022			2021			2022			2021				2022			2021			2022			2021			2022			2021			2022			2021
Revenues
Advertising	$	5,679		$	5,649		$	---		$	---		$	---		$	---		$	5,679		$	5,649			$	1,990		$	2,001		$	---		$	---		$	---		$	---		$	1,990		$	2,001
Circulation		3,279			3,458			---			---			---			---			3,279			3,458				1,098			1,110			---			---			---			---			1,098			1,110
Advertising service fees and other		2,200			1,964			---			---			---			---			2,200			1,964				699			671			---			---			---			---			699			671
Licensing and maintenance fees		---			---			13,721			16,990			---			---			13,721			16,990				---			---			4,395			4,480			---			---			4,395			4,480
Consulting fees		---			---			4,697			4,649			---			---			4,697			4,649				---			---			2,322			1,761			---			---			2,322			1,761
Other public service fees		---			---			5,221			5,242			---			---			5,221			5,242				---			---			1,797			1,713			---			---			1,797			1,713
Total revenues		11,158			11,071			23,639			26,881			---			---			34,797			37,952
Total operating revenues																											3,787			3,782			8,514			7,954			---			---			12,301			11,736
Operating expenses
Salaries and employee benefits		6,864			6,687			19,881			19,131			---			---			26,745			25,818				2,218			2,315			7,413			6,162			---			---			9,631			8,477
(Decrease) increase to the long-term supplemental compensation accrual		(25	)		1,410			(40	)		---			---			---			(65	)		1,410
Decrease to the long-term supplemental compensation accrual																											(500	)		(90	)		(20	)		(40	)		---			---			(520	)		(130	)
Others		2,877			2,904			6,914			5,506			---			---			9,791			8,410				1,134			1,051			2,772			2,282			---			---			3,906			3,333
Total operating expenses		9,716			11,001			26,755			24,637			---			---			36,471			35,638				2,852			3,276			10,165			8,404			---			---			13,017			11,680
Income (loss) from operations		1,442			70			(3,116	)		2,244			---			---			(1,674	)		2,314				935			506			(1,651	)		(450	)		---			---			(716	)		56

Dividends and interest income		---			---			---			---			4,251			2,063			4,251			2,063				---			---			---			---			1,069			875			1,069			875
Gains on sale of land		---			---			---			---			272			---			272			---
Other income		---			---			---			---			---			69			---			69
Interest expenses on note payable collateralized by real estate and other		---			---			---			---			(38	)		(48	)		(38	)		(48	)
Interest expenses on margin loans		---			---			---			---			(517	)		(196	)		(517	)		(196	)
Net realized gains on sales of marketable securities		---			---			---			---			14,249			18,478			14,249			18,478
Net unrealized (losses) gains on marketable securities		---			---			---			---			(57,075	)		131,754			(57,075	)		131,754
Interest expense on note payable collateralized by real estate and other																											---			---			---			---			(12	)		(13	)		(12	)		(13	)
Interest expense on margin loans																											---			---			---			---			(861	)		(86	)		(861	)		(86	)
Gains on sales of marketable securities, net																											---			---			---			---			422			46,694			422			46,694
Net unrealized gains (losses) on marketable securities																											---			---			---			---			24,025			(36,088	)		24,025			(36,088	)
Pretax income (loss)		1,442			70			(3,116	)		2,244			(38,858	)		152,120			(40,532	)		154,434				935			506			(1,651	)		(450	)		24,643			11,382			23,927			11,438
Income tax (expense) benefit		(335	)		(15	)		985			(785	)		9,085			(39,315	)		9,735			(40,115	)			(235	)		(205	)		350			250			(6,215	)		(4,605	)		(6,100	)		(4,560	)
Net income (loss)	$	1,107		$	55		$	(2,131	)	$	1,459		$	(29,773	)	$	112,805		$	(30,797	)	$	114,319			$	700		$	301		$	(1,301	)	$	(200	)	$	18,428		$	6,777		$	17,827		$	6,878
Total assets	$	22,091		$	17,894		$	20,814		$	21,498		$	341,669		$	350,108		$	384,574		$	389,500			$	45,288		$	69,925		$	25,202		$	18,925		$	275,781		$	347,157		$	346,271		$	436,007
Capital expenditures	$	4		$	22		$	10		$	7		$	---		$	---		$	14		$	29				32			---			4			---			---			---			36			---

~~Overall Financial Results (~~~~000~~)

~~For the~~ ~~three~~ ~~months ended~~ ~~June 30~~

Reportable Segments

Traditional
Business

Journal
Technologies

Corporate
income and expenses

Total

2022

2021

2022

2021

2022

2021

2022

2021

Revenues

Advertising
$ 1,989 $ 2,195 $ --- $ --- $ --- $ --- $ 1,989 $ 2,195
Circulation
1,097 1,126 --- --- --- --- 1,097 1,126
Advertising service fees and other
787 762 --- --- --- --- 787 762
Licensing and maintenance fees
--- --- 4,633 5,602 --- --- 4,633 5,602
Consulting fees
--- --- 2,267 2,100 --- --- 2,267 2,100
Other public service fees
--- --- 1,779 1,777 --- --- 1,779 1,777
Total revenues
3,873 4,083 8,679 9,479 --- --- 12,552 13,562
Operating expenses

Salaries and employee benefits
2,134 2,081 7,287 6,699 --- --- 9,421 8,780
Increase to the long-term Supplemental compensation accrual
1,985 655 --- --- --- --- 1,985 655
Others
904 929 2,345 1,874 --- --- 3,249 2,803
Total operating expenses
5,023 3,665 9,632 8,573 --- --- 14,655 12,238
Income (loss) from operations
(1,150 ) 418 (953 ) 906 --- --- (2,103 ) 1,324
Dividends and interest income
--- --- --- --- 1,263 776 1,263 776
Gains on land sale
--- --- --- --- 272 --- 272 ---
Other income
--- --- --- --- --- 69 --- 69
Interest expenses on note payable collateralized by real estate and other
--- --- --- --- (12 ) (14 ) (12 ) (14 )
Interest expenses on margin loans
--- --- --- --- (281 ) (68 ) (281 ) (68 )
Net unrealized (losses) gains on marketable securities
--- --- --- --- (12,666 ) 55,686 (12,666 ) 55,686
Pretax (loss) income
(1,150 ) 418 (953 ) 906 (11,424 ) 56,449 (13,527 ) 57,773
Income tax benefit (expense)
225 (175 ) 280 (460 ) 3,160 (14,565 ) 3,665 (15,200 )
Net (loss) income
$ (925 ) $ 243 $ (673 ) $ 446 $ (8,264 ) $ 41,884 $ (9,862 ) $ 42,573
Total assets
$ 22,091 $ 17,894 $ 20,814 $ 21,498 $ 341,669 $ 350,108 $ 384,574 $ 389,500
Capital expenditures
$ 4 $ --- $ 7 $ --- $ --- $ --- $ 11 $ ---

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Traditional Business had total operating revenues of ~~$11,158,000~~$3,787,000 with ~~$7,879,000~~$2,689,000 recognized after services were provided and ~~$3,279,000~~$1,098,000 recognized ratably over the publication subscription terms, as compared with total operating revenues of ~~$11,071,000~~$3,782,000 with ~~$7,613,000~~$2,672,000 recognized after services were provided and ~~$3,458,000~~$1,110,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were ~~$23,639,000~~$8,514,000 with ~~$9,989,000~~$4,121,000 recognized upon completion of services and ~~$13,650,000~~$4,393,000 recognized ratably over the subscription periods, as compared with total operating revenues of ~~$26,881,000~~$7,954,000 with ~~$11,029,000~~$3,476,000 recognized upon completion of services and ~~$15,852,000~~$4,478,000 recognized ratably over the subscription periods in the prior fiscal year period.

~~During the~~ ~~three~~ ~~months ended~~ ~~June 30, 2022,~~ the Traditional Business had total operating revenues of $3,873,000 with $2,776,000 recognized after services were provided and $1,097,000 recognized ratably over the subscription terms, as compared with total operating revenues of $4,083,000 with $2,957,000 recognized after services were provided and $1,126,000 recognized ratably over the subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $8,679,000 with $4,046,000 recognized upon completion of services and $4,633,000 recognized ratably over the subscription periods, as compared with total operating revenues of $9,479,000 with $4,312,000 recognized upon completion of services and $5,167,000 recognized ratably over the subscription periods in the prior fiscal year period.

Approximately ~~68%~~69% of the Company’s revenues during the ~~nine~~~~-month~~three-month period ended ~~June 30,~~December 31, 2022 were derived from Journal Technologies, as compared with ~~71%~~68% in the prior year period. In addition, the Company’s revenues have been primarily from the United States with approximately 5%7% from foreign countries during the ~~nine~~~~-months~~three-months ended ~~June 30,~~December 31, 2022. Journal Technologies’ revenues are primarily from governmental agencies.

The Company has completed an evaluation of all subsequent events through the issuance date of these financial statements and concluded that no subsequent events occurred that required recognition to the financial statements or disclosures in the Notes to Consolidated Financial ~~Statements.~~Statements, except for sponsoring a 401(k) retirement plan and a 409A non-qualified deferred compensation plan for its employees effective January 1, 2023.

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 and fees online. These products are licensed in ~~approximately~~ 30 states and internationally.

On March 13, 2020, the United States declared the outbreak of COVID-19 to be a national emergency, and several states and municipalities also declared public health emergencies. Unprecedented actions were taken by public health and other governmental authorities to contain and combat the spread of COVID-19, including “stay-at-home” orders and similar mandates that restricted the daily activities of individuals and limited the operation of businesses that were deemed “non-essential”. In addition, most of Journal Technologies’ customers, which are primarily courts and governmental agencies in the United States, Canada and Australia, were either closed or significantly scaled back their activities. Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their in-person operations and spending.

Management believes that the COVID-19 pandemic has had, and, with the Delta and Omicron variant cases, and most recently the more contagious BA.4 and BA.5 sub-variant cases, will continue to have, a significant impact on the Company’s business operations. It is also possible that governments may again take actions in response to the pandemic and new variants and sub-variants, such as a renewed closure, or scaling back of operations, of courts and other governmental agencies that are the customers of the Company. Furthermore, even as courts, governmental agencies and other businesses return to more normal operations, there are likely to be changes in those operations and personal behaviors going forward, including limitations on travel and more working from home, which will adversely affect the Company, its financial results and cash flows.

Due to the uncertainties associated with the duration and severity of the COVID-19 pandemic, the efforts to contain it, and the related changes in business operations and personal behaviors, management cannot at this point estimate the magnitude of its impact on the Company’s business operations. In recent years, the newspaper industry, including our Traditional Business, has declined, and we expect this general trend to continue due to the impacts of COVID-19 and its aftermath, including fewer lawyers receiving our newspapers at their offices as they continue to work from home.

For Journal Technologies, there have been several delays or cancellations in government procurement processes. Also, although we have been able to complete some existing projects remotely, we have been 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, receipt of those revenues has been delayed.

Reportable Segments ~~(for the nine months ended June 30, 2022 and 2021)~~

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

~~For~~During the ~~nine~~three months ended ~~June 30~~December 31, 2022, the Traditional Business had 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, as compared with total operating revenues of $3,782,000 with $2,672,000 recognized after services were provided and $1,110,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $8,514,000 with $4,121,000 recognized upon completion of services and $4,393,000 recognized ratably over the subscription periods, as compared with total operating revenues of $7,954,000 with $3,476,000 recognized upon completion of services and $4,478,000 recognized ratably over the subscription periods in the prior fiscal year period.

Consolidated revenues were $34,797,000 and $37,952,000 for the nine months ended June 30, 2022 and 2021, respectively. This decrease of $3,155,000 (8%) was primarily from decreases in (i) Journal Technologies’ license and maintenance fees of $3,269,000 and public service fees of $21,000, and (ii) the Traditional Business’ circulation revenues of $179,000, partially offset by increases in Journal Technologies’ consulting fees of $48,000 and the Traditional Business’ advertising net revenues of $30,000 and advertising service fees and other of $236,000.

Approximately ~~68%~~69% of the Company’s revenues during the ~~nine months~~three-month period ended ~~June 30,~~December 31, 2022 were derived from Journal Technologies, as compared with ~~71%~~68% in the prior ~~fiscal~~ year period. In addition, the Company’s revenues have been primarily from the United States with approximately 5%7% from foreign ~~countries. Almost all of~~countries during the three-months ended December 31, 2022. Journal Technologies’ revenues are primarily from governmental agencies.

Consolidated revenues were $12,301,000 and $11,736,000 for the three months ended December 31, 2022 and 2021, respectively. This increase of $565,000 (5%) was primarily from increases in (i) Journal Technologies’ consulting fees of $561,000 and other public service fees of $84,000 and (ii) the Traditional Business’ advertising service fees and other of $28,000, partially offset by decreases in (i) Journal Technologies’ license and maintenance fees of $85,000 and (ii) the Traditional Business’ advertising revenues of $11,000 and circulation revenues of $12,000.

Consolidated operating expenses increased by ~~$833,000 (2%~~$1,337,000 (11%) to ~~$36,471,000~~$13,017,000 from ~~$35,638,000 for the nine months ended June 30, 2022.~~$11,680,000. Total salaries and employee benefits increased by ~~$927,000 (4%~~$1,154,000 (14%) to ~~$26,745,000~~$9,631,000 from ~~$25,818,000~~$8,477,000 primarily because of ~~(i)~~bigger salary adjustments ~~and some Australian payroll tax accruals.~~due to recent inflation in the compensation market for talent. Outside services increased by ~~$676,000 (30%~~$165,000 (18%) to ~~$2,912,000~~$1,089,000 from ~~$2,236,000~~$924,000 mainly because of increased third-party hosting fees which were billed to clients. Newsprint and printing expenses increased by ~~$60,000 (13%~~$40,000 (25%) to ~~$529,000~~$199,000 from ~~$469,000~~$159,000 primarily resulting from newsprint price increases and additional purchases of printing supplies. Equipment maintenance and software increased by $63,000 (26%) to $303,000 from $240,000 mainly resulting from increased maintenance costs. Accounting and legal fees decreased by $47,000 (15%) to $273,000 from 320,000 primarily from decreased legal fees. Other general and administrative expenses increased by ~~$938,000 (60%~~$356,000 (48%) to ~~$2,492,000~~$1,095,000 from ~~$1,554,000~~$739,000 mainly because there were increased miscellaneous office ~~equipment~~software purchases and business travel expenses as compared to the prior fiscal year period.

The Company’s non-operating income, net of expenses, ~~decreased~~increased by ~~$190,978,000~~$13,261,000 (117%) to ~~a loss of $38,858,000~~$24,643,000 from ~~a gain of $152,120,000~~$11,382,000 in the prior fiscal year period primarily because of (i) the ~~recordings~~recording of ~~(i)~~ net unrealized ~~losses~~gains on marketable securities of ~~$57,075,000~~$24,025,000 during the ~~nine~~three months ended ~~June 30,~~December 31, 2022 as compared with net unrealized ~~gains~~losses of ~~$131,754,000~~$36,088,000 in the prior fiscal year period, and (ii) increases in dividends and interest income of $194,000 (22%) to $1,069,000 from $875,000. These increases were partially offset by (i) the recording of realized net gains on sales of marketable securities of ~~$14,249,000~~$422,000 during the ~~nine~~three months ended ~~June 30,~~December 31, 2022 as compared with ~~$18,478,000~~$46,694,000 in the prior fiscal year ~~period. In addition, there were gains~~period and (ii) increases in interest expenses of ~~$272,000 on a partial land sale associated with~~$774,000 (782%) to $873,000 from $99,000, primarily due to the ~~City of Logan’s street widening project.~~federal rate increases.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Company’s consolidated pretax ~~loss~~income was ~~$40,532,000,~~$23,927,000, as compared to ~~pretax income of $154,434,000~~$11,438,000 in the prior fiscal year period. There was consolidated net ~~loss~~income of ~~$30,797,000 (-$22.31~~$17,827,000 ($12.95 per share) for the ~~nine~~three months ended ~~June 30,~~December 31, 2022, as compared with ~~consolidated net income of $114,319,000~~$6,878,000 ($~~82.80~~4.98 per share) in the prior fiscal year period.

At ~~June 30,~~December 31, 2022, the aggregate fair market value of the Company’s marketable securities was ~~$341,855,000.~~$307,151,000. These securities had approximately ~~$187,018,000~~$144,717,000 of net unrealized gains before taxes of ~~$50,540,000.~~$38,290,000. They generated approximately ~~$4,251,000~~$1,069,000 in dividends income during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, as compared with ~~$2,063,000~~$875,000 in the 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 ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Company recorded an income tax ~~benefit~~provision of ~~$9,735,000~~$6,100,000 on the pretax ~~loss~~income of ~~$40,532,000.~~$23,927,000. The income tax ~~benefit~~provision consisted of a tax ~~benefit~~provision of ~~$15,425,000~~$110,000 on the ~~unrealized losses~~realized gains on marketable securities and $6,360,000 on the unrealized gains on marketable securities, partially offset by a tax benefit of ~~$250,000~~$140,000 on loss from operations, $80,000 for the dividends received deduction and other permanent book and tax differences, ~~offset by tax provisions of $3,850,000 on the realized gains on marketable securities, $500,000 on income from operations,~~ and ~~$1,590,000~~$150,000 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 ~~nine~~three months ended ~~June 30,~~December 31, 2022 was ~~24%~~25.49%, after including the taxes on the realized ~~gains~~ and unrealized ~~losses~~gains on marketable securities.

For the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the Company recorded a provision for income taxes of ~~$40,115,000~~$4,560,000 on pretax income of ~~$154,434,000. This was the net result~~$11,438,000. The income tax provision consisted of applying the effective tax rate anticipated for fiscal 2021 to pretax income before the unrealized and realized gains on marketable securities for the nine months ended June 30, 2021. The effective rate of 21.32%, which was higher than the statutory rate of 21% primarily due to state taxes which were offset by the dividends received deduction, resulted in a tax provision of ~~$896,000~~$230,000 on ~~pretax~~ income ~~before the unrealized and realized gains on marketable securities. In addition, the Company recorded~~from operations, a tax provision of ~~$34,405,000~~$12,612,000 on the ~~unrealized~~realized gains on marketable securities and a tax provision of ~~$4,821,000 on the realized gains on marketable securities, both of which were offset by a tax benefit of $7,000~~$1,556,000 for the effect of a change in state apportionment on the beginning of the year’s deferred tax ~~liability.~~liability, partially offset by a tax benefit of $9,747,000 on the unrealized losses on marketable securities, and a tax benefit of $91,000 for the dividends received deduction and other permanent book and tax differences. Consequently, the overall effective tax rate for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 was ~~26%~~39.87%, after including the taxes on the realized gains and unrealized ~~gains~~losses on marketable securities.

The Traditional Business ~~(for the nine-month periods ended June 30, 2022 and 2021)~~

The Traditional Business’ pretax income increased by ~~$1,372,000~~$429,000 (85%) to ~~$1,442,000~~$935,000 from ~~$70,000~~$506,000 in the prior fiscal year period, primarily resulting from a ~~reduction~~decrease to the long-term supplemental compensation accrual of ~~$25,000 as compared with an increase of $1,410,000~~$410,000 (456%) to $500,000 from $90,000 in the prior fiscal year period.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, the Traditional Business had total operating revenues of ~~$11,158,000,~~$3,787,000, as compared with ~~$11,071,000~~$3,782,000 in the prior fiscal year period. Advertising revenues ~~increased~~decreased by ~~$30,000~~$11,000 (1%) to ~~$5,679,000~~$1,990,000 from ~~$5,649,000,~~$2,001,000, primarily ~~because~~resulting from decreased commercial advertising revenues of ~~increased~~$47,000, legal notice advertising ~~net~~ revenues of ~~$122,000~~$7,000 and government notice advertising revenues of $12,000, partially offset by increased trustee sale notice advertising ~~net~~ revenues of ~~$130,000 primarily resulting from~~$55,000 mainly because of the lifting of ~~the~~Covid-related foreclosure moratoriums relative to the “Eviction and Foreclosure Orders” and lenders’ processing files that were already in the pipeline when the pandemic struck. These increases were offset by decreased government notice advertising net revenues of $149,000 and commercial advertising net revenues of $73,000.on lenders.

Trustee sale notices are very much dependent on the number of California and Arizona foreclosures for which public notice advertising is required by law. The number of foreclosure notices published by the Company increased by ~~63%~~44% during the ~~nine~~three months ended ~~June 30,~~December 31, 2022 as compared to the prior fiscal year ~~period, primarily because of the lifting of foreclosure moratoriums, as discussed above.~~period. The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about ~~87%~~88% of the total public notice advertising revenues during the ~~nine~~three months ended ~~June 30,~~December 31, 2022. Public notice advertising revenues and related advertising and other service fees, including trustee sales legal advertising revenues, constituted about ~~19%~~22% of the Company's total operating revenues for the ~~nine~~three months ended ~~June 30,~~December 31, 2022 and ~~16%~~23% in the prior fiscal year period.

The Daily Journals accounted for about 92% of the Traditional Business’ total circulation revenues, which declined by ~~$179,000 (5%~~$12,000 (1%) to ~~$3,279,000~~$1,098,000 from ~~$3,458,000.~~$1,110,000. The court rule and judicial profile services generated about 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, excluding the adjustments to the long-term supplemental compensation accrual, ~~increased~~decreased by ~~$150,000 (2%)~~$14,000 to ~~$9,741,000~~$3,352,000 from ~~$9,591,000,~~$3,366,000, primarily resulting from ~~the annual salary adjustments.~~reduced legal fees.

Journal Technologies ~~(for the nine-month periods ended June 30, 2022 and 2021)~~

During the ~~nine~~three months ended ~~June 30,~~December 31, 2022, Journal Technologies’ business segment pretax loss increased by ~~$5,360,000~~$1,201,000 (267%) to ~~$3,116,000~~$1,651,000 from ~~pretax income of $2,244,000~~$450,000 in the prior fiscal year period.

Revenues ~~decreased~~increased by ~~$3,242,000 (12%~~$560,000 (7%) to ~~$23,639,000~~$8,514,000 from ~~$26,881,000~~$7,954,000 in the prior fiscal year period. Licensing and maintenance fees decreased by ~~$3,269,000 (19%~~$85,000 (2%) to ~~$13,721,000~~$4,395,000 from ~~$16,990,000~~$4,480,000 primarily resulting from the reduction in legacy software products’ maintenance and support ~~revenues as the Company ended effective July 1, 2021 the maintenance of these legacy software products, so as to focus on supporting the Company’s main eSeries products.~~revenues. Consulting fees increased by ~~$48,000 (1%~~$561,000 (32%) to ~~$4,697,000~~$2,322,000 from ~~$4,649,000.~~$1,761,000 mainly resulting from more project go-lives. Other public service fees ~~decreased~~increased by ~~$21,000~~$84,000 (5%) to ~~$5,221,000~~$1,797,000 from ~~$5,242,000~~$1,713,000 primarily ~~due to decreased traffic citation~~because of increased efiling 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 maintenance period.

Operating expenses increased by ~~$2,118,000 (9%~~$1,761,000 (21%) to ~~$26,755,000~~$10,165,000 from ~~$24,637,000~~$8,404,000 primarily because of (i) increased personnel costs ~~resulting from the~~because of bigger salary adjustments ~~and some Australian payroll tax accruals,~~due to recent inflation in the compensation market for talent, (ii) increased third-party hosting fees which were billed to clients and (iii) additional miscellaneous office ~~equipment~~software license purchases and increased business travel expenses.

Journal Technologies continues to update and upgrade its software products. These costs are expensed as incurred and will impact earnings at least through the foreseeable future.

~~Reportable Segments~~ ~~(for the three-month periods ended June 30, 2022 and 2021)~~

Consolidated revenues were $12,552,000 and $13,562,000 for the three months ended June 30, 2022 and 2021, respectively. This decrease of $1,010,000 (7%) resulted primarily from decreases in Journal Technologies’ license and maintenance fees of $969,000, and the Traditional Business’ advertising net revenues of $206,000 and circulation revenues of $29,000, partially offset by increases in (i) Journal Technologies’ consulting fees of $167,000 and public service fees of $2,000, and (ii) the Traditional Business’ advertising service fees and other of $25,000.

~~Approximately 69% of the Company’s revenues during the three months ended June 30, 2022 were derived from Journal Technologies, as compared with 70% in the prior fiscal year period.~~

Consolidated operating expenses increased by $2,417,000 (20%) to $14,655,000 from $12,238,000 for the three months ended June 30, 2022. Total salaries and employee benefits increased by $641,000 to $9,421,000 from $8,780,000 primarily because of the salary adjustments and some Australian payroll tax accruals. Outside services increased by $280,000 (35%) to $1,074,000 from $794,000 mainly because of increased third-party hosting fees which were billed to clients. Newsprint and printing expenses increased by $12,000 (7%) to $174,000 from $162,000 primarily resulting from newsprint price increases and additional purchases of printing supplies. Other general and administrative expenses increased by $306,000 (62%) to $801,000 from $495,000 mainly because there were increased miscellaneous office equipment purchases and business travel expenses as compared to the prior fiscal year period.

The Company’s non-operating income, net of expenses, decreased by $67,873,000 to a loss of $11,424,000 from a gain of $56,449,000 in the prior fiscal year period primarily because of the recording of net unrealized losses on marketable securities of $12,666,000 during the three months ended June 30, 2022 as compared with net unrealized gains of $55,686,000 in the prior fiscal year period. In addition, there were gains of $272,000 on partial land sale associated with the City of Logan’s street widening project.

During the three months ended June 30, 2022, consolidated pretax loss was $13,527,000, as compared to pretax income of $57,773,000 in the prior fiscal year period. There was consolidated net loss of $9,862,000 (-$7.15 per share) for the three months ended June 30, 2022, as compared with consolidated net income of $42,573,000 ($30.83 per share) in the prior fiscal year period.

~~The Traditional Business (for the three-month periods ended~~ ~~June 30~~~~, 2022 and 2021)~~

The Traditional Business’ pretax loss increased by $1,568,000 to $1,150,000 from pretax income of $418,000 in the prior fiscal year period, primarily resulting from an increase to the long-term supplemental compensation accrual of $1,985,000 as compared with an increase of $655,000 in the prior fiscal year period.

During the three months ended June 30, 2022, the Traditional Business had total operating revenues of $3,873,000, as compared with $4,083,000 in the prior fiscal year period. Advertising revenues decreased by $206,000 (9%) to $1,989,000 from $2,195,000, primarily because of decreased commercial advertising net revenues of $125,000 and government notice advertising net revenues of $123,000. These increases were offset by increased legal notice advertising net revenues of $38,000 and trustee sale notice advertising net revenues of $4,000.

The Traditional Business segment operating expenses, excluding the adjustments to the long-term supplemental compensation accrual, increased by $28,000 (1%) to $3,038,000 from $3,010,000, primarily resulting from the annual salary adjustments.

~~Journal Technologies (for the three-month periods ended June 30, 2022 and 2021)~~

~~During the three months ended June 30, 2022, Journal Technologies’ business segment pretax loss increased by $1,859,000 to $953,000 from pretax income of $906,000 in the prior fiscal year period.~~

Revenues decreased by $800,000 (8%) to $8,679,000 from $9,479,000 in the prior fiscal year period. Licensing and maintenance fees decreased by $969,000 (17%) to $4,633,000 from $5,602,000 primarily resulting from the reduction in legacy software products’ maintenance and support revenues. Consulting fees increased by $167,000 (8%) to $2,267,000 from $2,100,000. Other public service fees increased slightly by $2,000 to $1,779,000 from $1,777,000.

Operating expenses increased by $1,059,000 (12%) to $9,632,000 from $8,573,000 primarily because of (i) increased personnel costs resulting from the salary adjustments and some Australian payroll tax accruals, (ii) increased third-party hosting fees which were billed to clients and (iii) additional miscellaneous office equipment purchases and increased business travel expenses.

For the ~~nine months~~three-months ended ~~June 30,~~December 31, 2022, the Company’s cash and cash equivalents, restricted cash, and marketable security positions ~~decreased~~increased by ~~$9,434,000,~~$32,797,000, after the sales of marketable securities of approximately ~~$80,570,000~~$2,826,000 and additional ~~net~~ borrowing of ~~$43,000,000~~$6,011,000 from the margin loan account, partially offset by the recording of net pretax unrealized ~~losses~~gains on marketable securities of ~~$57,075,000.~~$24,025,000. Cash, cash equivalents, the proceeds from the sales of marketable securities and additional ~~net~~ borrowing were primarily used to purchase additional marketable securities of ~~$117,678,000.~~$10,001,000.

The investments in marketable securities, which had an adjusted cost basis of approximately ~~$154,837,000~~$162,434,000 and a market value of about ~~$341,855,000~~$307,151,000 at ~~June 30,~~December 31, 2022, generated approximately ~~$4,251,000~~$1,069,000 in dividends income during the ~~nine~~three months ended ~~June 30,~~December 31, 2022. These securities had approximately ~~$187,018,000~~$144,717,000 of net unrealized gains before estimated taxes of ~~$50,540,000~~$38,290,000 which will become due only when we sell securities in which there is unrealized appreciation.

Cash flows from operating activities ~~decreased~~increased by ~~$9,887,000~~$2,073,000 during the ~~nine~~three months ended ~~June 30,~~December 31, 2022, as compared to the prior fiscal year period, primarily due to (i) ~~increases in deferred tax assets of $50,901,000 and the Company’s income tax receivable of $4,551,000, (ii)~~ decreases in the Company’s ~~income~~deferred tax ~~payable~~benefit of ~~$6,619,000~~$14,064,000 and ~~(iii) decreases~~its accounts receivable of $3,204,000 mainly resulting from more collections and (ii) increases in ~~net accounts payable and accrued liabilities~~deferred revenues of ~~$2,802,000 (because of the timing difference in remitting efiling fees to the courts).~~$448,000. This was partially offset by (i) ~~increases~~decreases in net income of ~~$47,942,000,~~$2,892,000, excluding the increases in unrealized ~~losses~~gains on marketable securities of ~~$188,829,000~~$60,113,000 and decreases in realized net gains on sales of marketable securities of ~~$4,229,000,~~$46,272,000 and (ii) decreases in the Company’s ~~accounts receivable~~income tax payable of ~~$2,118,000 mainly resulting from more collections,~~$12,527,000 and (iii) ~~increases~~decreases in ~~deferred revenues~~net accounts payable and accrued liabilities of ~~$5,143,000.~~$249,000 (because of the timing difference in remitting efiling fees to the courts)

As of ~~June 30,~~December 31, 2022, the Company had working capital of ~~$337,803,000,~~$305,380,000, including the liabilities for deferred subscriptions, deferred consulting fees and deferred maintenance agreements and others of ~~$20,291,000.~~$21,677,000.

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.~~capital. 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. In addition, the Company could be subject to margin calls should the balance of the investment decrease significantly.

The Company is not a smaller version of Berkshire Hathaway Inc. Instead, it hopes to be a significant software company while it also operates its Traditional Business.

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 the long-term Incentive Plan liabilities) 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, ~~2021.~~2022. 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; 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; the impacts of COVID-19 ~~variants~~ and the efforts to contain it on the Company’s customers, advertisers and subscribers, particularly the closure or scaling back of operations of courts, justice agencies and other businesses; a further decline in subscriber revenues; possible security breaches of the Company’s software or websites; changes in accounting guidance; material weaknesses in the Company’s internal control over financial reporting; and declines in the market prices of the securities owned by the Company. In addition, such statements could be affected by general industry and market conditions, general economic conditions (particularly in California) and other factors. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from those in the forward-looking statements are discussed in this Form 10-Q, including in conjunction with the forward-looking statements themselves. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements is contained from time to time in documents filed by the Company with the Securities and Exchange Commission, including in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, ~~2021.~~2022.

In light of the material weaknesses in the Company’s internal control over financial reporting discussed in the Company’s Form 10-K for the fiscal year ended September 30, ~~2021,~~2022, management concluded that the Company’s disclosure controls and procedures were not effective as of ~~June 30,~~December 31, 2022. 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 ~~June 30,~~December 31, 2022.

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.

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

	101.INS	Inline XBRL Instance

	101.SCH	Inline XBRL Taxonomy Extension Schema

	101.CAL	Inline XBRL Taxonomy Extension Calculation

	101.DEF	Inline XBRL Taxonomy Extension Definition

	101.LAB	Inline XBRL Taxonomy Extension Labels

	101.PRE	Inline XBRL Taxonomy Extension Presentation

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

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

	~~/s/ Tu To~~

	~~Chief Financial Officer~~ ~~(Principal Financial Officer and~~ ~~Principal Accounting Officer)~~	/s/ Tu To

	~~/s/ Steven Myhill-Jones~~	Chief Financial Officer
		(Principal Financial Officer and
		Principal Accounting Officer)


		/s/ Steven Myhill-Jones

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



DATE: February 13, 2023

	Three months ended June 30
	2022			2021

Revenues
Advertising	$	1,989,000		$	2,195,000
Circulation		1,097,000			1,126,000
Advertising service fees and other		787,000			762,000
Licensing and maintenance fees		4,633,000			5,602,000
Consulting fees		2,267,000			2,100,000
Other public service fees		1,779,000			1,777,000
		12,552,000			13,562,000

Costs and expenses
Salaries and employee benefits		9,421,000			8,780,000
Increase to the long-term supplemental compensation accrual		1,985,000			655,000
Outside services		1,074,000			794,000
Postage and delivery expenses		165,000			160,000
Newsprint and printing expenses		174,000			162,000
Depreciation and amortization		73,000			114,000
Equipment maintenance and software		263,000			298,000
Credit card merchant discount fees		429,000			462,000
Rent expenses		64,000			66,000
Accounting and legal fees		206,000			252,000
Other general and administrative expenses		801,000			495,000
		14,655,000			12,238,000
(Loss) income from operations		(2,103,000	)		1,324,000
Other income (expense)
Dividends and interest income		1,263,000			776,000
Gains on sale of land		272,000			---
Other income		---			69,000
Net unrealized (losses) gains on marketable securities		(12,666,000	)		55,686,000
Interest expense on margin loans and others		(281,000	)		(68,000	)
Interest expense on note payable collateralized by real estate		(12,000	)		(14,000	)

(Loss) income before income taxes		(13,527,000	)		57,773,000
Income tax benefits (provisions)		3,665,000			(15,200,000	)
Net (loss) income	$	(9,862,000	)	$	42,573,000

Weighted average number of common shares outstanding - basic and diluted		1,380,133			1,380,746
Basic and diluted net (loss) income per share	$	(7.15	)	$	30.83

Comprehensive (loss) income	$	(9,862,000	)	$	42,573,000

	June 30, 2022						September 30, 2021						December 31, 2022						September 30, 2022
	Aggregate fair value		Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Amortized/ Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	341,855,000	$	154,837,000	$	187,018,000	$	347,573,000	$	103,480,000	$	244,093,000	$	307,151,000	$	162,434,000	$	144,717,000	$	275,529,000	$	154,837,000	$	120,692,000