10-Q

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, 2021

or

☐ 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)	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: 1,380,746 shares outstanding at July 31, 2021

1

DAILY JOURNAL CORPORATION

INDEX

		Page Nos.
PART I	Financial Information
	Item 1.  Financial Statements (Unaudited)
	Consolidated Balance Sheets ‑ June 30, 2021 and September 30, 2020	3
	Consolidated Statements of Income and Comprehensive Income ‑ Three months ended June 30, 2021 and 2020	4
	Consolidated Statements of Income and Comprehensive Income (Loss) ‑ Nine months ended June 30, 2021 and 2020	5
	Consolidated Statements of Shareholders Equity ‑ Nine months ended June 30, 2021 and 2020	6
	Consolidated Statements of Cash Flows ‑Nine months ended June 30, 2021 and 2020	7
	Notes to Consolidated Financial Statements	8
	Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations	15
	Item 4.     Controls and Procedures	23
Part II	Other Information
	Item 6.      Exhibits	24

2

PART I

Item 1. FINANCIAL STATEMENTS

DAILY JOURNAL CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	June 30			September 30
	2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	9,333,000		$	26,922,000
Restricted cash		2,043,000			2,041,000
Marketable securities at fair value -- common stocks		349,593,000			179,368,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at June 30, 2021 and September 30, 2020		10,015,000			6,727,000
Inventories		55,000			36,000
Prepaid expenses and other current assets		629,000			613,000
Income tax receivable	-				601,000
Total current assets		371,668,000			216,308,000
Property, plant and equipment, at cost
Land, buildings and improvements		16,559,000			16,572,000
Furniture, office equipment and computer software		1,788,000			1,782,000
Machinery and equipment		1,524,000			1,524,000
		19,871,000			19,878,000
Less accumulated depreciation		(9,730,000	)		(9,422,000	)
		10,141,000			10,456,000
Operating lease right-of-use assets		171,000			140,000
Deferred income taxes		7,520,000			11,671,000
	$	389,500,000		$	238,575,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable	$	4,022,000		$	3,926,000
Accrued liabilities		5,633,000			5,005,000
Income tax payable		375,000			-
Note payable collateralized by real estate		147,000			133,000
Deferred subscriptions		2,708,000			2,899,000
Deferred consulting fees		4,859,000			4,868,000
Deferred maintenance agreements and others		8,804,000			11,159,000
Total current liabilities		26,548,000			27,990,000
Long term liabilities
Investment margin account borrowings		32,000,000			29,493,000
Note payable collateralized by real estate		1,468,000			1,576,000
Deferred maintenance agreements		211,000			450,000
Accrued liabilities		2,938,000			1,455,000
Deferred income taxes		70,275,000			35,870,000
Total long term liabilities		106,892,000			68,844,000
Debts and 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 June 30, 2021 and September 30, 2020		14,000			14,000
Additional paid-in capital		1,755,000			1,755,000
Retained earnings		254,291,000			139,972,000
Total shareholders' equity		256,060,000			141,741,000
	$	389,500,000		$	238,575,000

See accompanying Notes to Consolidated Financial Statements

3

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

	Three months ended June 30
	2021			2020
Revenues
Advertising	$	2,195,000		$	1,297,000
Circulation		1,126,000			1,259,000
Advertising service fees and other		762,000			575,000
Licensing and maintenance fees		5,602,000			5,531,000
Consulting fees		2,100,000			3,147,000
Other public service fees		1,777,000			1,065,000
		13,562,000			12,874,000
Costs and expenses
Salaries and employee benefits		9,435,000			9,662,000
Outside services		794,000			586,000
Postage and delivery expenses		160,000			151,000
Newsprint and printing expenses		162,000			157,000
Depreciation and amortization		114,000			128,000
Equipment maintenance and software		298,000			276,000
Credit card merchant discount fees		462,000			244,000
Rent expenses		66,000			158,000
Accounting and legal fees		252,000			272,000
Other general and administrative expenses		495,000			647,000
		12,238,000			12,281,000
Income from operations		1,324,000			593,000
Other income (expense)
Dividends and interest income		776,000			1,596,000
Other income		69,000			-
Net unrealized gains on marketable securities		55,686,000			16,489,000
Interest expense on note payable collateralized by real estate		(14,000	)		(20,000	)
Interest expense on margin loans and others		(68,000	)		(64,000	)
Income before income taxes		57,773,000			18,594,000
Income tax provisions		(15,200,000	)		(4,320,000	)
Net income	$	42,573,000		$	14,274,000
Weighted average number of common shares outstanding - basic and diluted		1,380,746			1,380,746
Basic and diluted net income per share	$	30.83		$	10.34
Comprehensive income	$	42,573,000		$	14,274,000

See accompanying Notes to Consolidated Financial Statements.

4

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Nine months ended June 30
	2021			2020
Revenues
Advertising	$	5,649,000		$	5,415,000
Circulation		3,458,000			3,857,000
Advertising service fees and other		1,964,000			1,923,000
Licensing and maintenance fees		16,990,000			16,246,000
Consulting fees		4,649,000			5,065,000
Other public service fees		5,242,000			4,401,000
		37,952,000			36,907,000
Costs and expenses
Salaries and employee benefits		27,228,000			28,227,000
Outside services		2,236,000			2,600,000
Postage and delivery expenses		490,000			552,000
Newsprint and printing expenses		469,000			528,000
Depreciation and amortization		344,000			384,000
Equipment maintenance and software		946,000			1,102,000
Credit card merchant discount fees		1,397,000			1,014,000
Rent expenses		228,000			500,000
Accounting and legal fees		746,000			730,000
Other general and administrative expenses		1,554,000			3,293,000
		35,638,000			38,930,000
Income (loss) from operations		2,314,000			(2,023,000	)
Other income (expense)
Dividends and interest income		2,063,000			4,573,000
Other income		69,000			3,000
Realized gains on sales of marketable securities		18,478,000			-
Net unrealized gains (losses) on marketable securities		131,754,000			(41,191,000	)
Interest expense on note payable collateralized by real estate		(48,000	)		(63,000	)
Interest expense on margin loans and others		(196,000	)		(401,000	)
Income (loss) before income taxes		154,434,000			(39,102,000	)
Income tax (provisions) benefits		(40,115,000	)		11,260,000
Net income (loss)	$	114,319,000		$	(27,842,000	)
Weighted average number of common shares outstanding - basic and diluted		1,380,746			1,380,746
Basic and diluted net income (loss) per share	$	82.80		$	(20.16	)
Comprehensive income (loss)	$	114,319,000		$	(27,842,000	)

See accompanying Notes to Consolidated Financial Statements.

5

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

											Additional					Total
	Common Stock				Treasury Stock						Paid-in		Retained			Shareholders'
	Share		Amount		Share			Amount			Capital		Earnings			Equity
Balance at September 30, 2019		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	135,931,000		$	137,700,000
Net income		-		-		-			-			-		14,210,000			14,210,000
Balance at December 31, 2019		1,805,053		18,000		(424,307	)		(4,000	)		1,755,000		150,141,000			151,910,000
Net loss		-		-		-			-			-		(56,326,000	)		(56,326,000	)
Balance at March 31, 2020		1,805,053		18,000		(424,307	)		(4,000	)		1,755,000		93,815,000			95,584,000
Net income		-		-		-			-			-		14,274,000			14,274,000
Balance at June 30, 2020		1,805,053	$	18,000		(424,307	)	$	(4,000	)	$	1,755,000	$	108,089,000		$	109,858,000
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

See accompanying Notes to Consolidated Financial Statements

6

DAILY JOURNAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended June 30
	2021			2020
Cash flows from operating activities
Net income (loss)	$	114,319,000		$	(27,842,000	)
Adjustments to reconcile net income (loss) to net cash provided from (used in) operations
Depreciation and amortization		344,000			384,000
Increase in bad debt allowance		-			50,000
Net unrealized (gains) losses on marketable securities		(131,754,000	)		41,191,000
Realized gains on sales of marketable securities		(18,478,000	)		-
Deferred income taxes		38,556,000			(10,691,000	)
Changes in operating assets and liabilities
(Increase) decrease in current assets
Accounts receivable, net		(3,288,000	)		(2,366,000	)
Inventories		(19,000	)		(11,000	)
Prepaid expenses and other assets		(16,000	)		(192,000	)
Income tax receivable		601,000			(659,000	)
Increase (decrease) in liabilities
Accounts payable		96,000			(1,062,000	)
Accrued liabilities		2,080,000			401,000
Income tax payable		375,000			-
Deferred subscriptions		(191,000	)		(181,000	)
Deferred consulting fees		131,000			478,000
Deferred maintenance agreements and others		(2,734,000	)		(1,001,000	)
Net cash provided from (used in) operating activities		22,000			(1,501,000	)
Cash flows from investing activities
Proceeds from sales of marketable securities		20,002,000			-
Purchases of marketable securities		(39,995,000	)		-
Purchases of property, plant and equipment		(29,000	)		(168,000	)
Net cash used in investing activities		(20,022,000	)		(168,000	)
Cash flows from financing activities
Payment to margin loan principal		(14,493,000	)		-
Borrowing from margin loan account		17,000,000			1,000,000
Payment of real estate loan principal		(94,000	)		(94,000	)
Net cash provided from financing activities		2,413,000			906,000
Decrease in cash and restricted cash and cash equivalents		(17,587,000	)		(763,000	)
Cash and restricted cash and cash equivalents
Beginning of period		28,963,000			10,630,000
End of period	$	11,376,000		$	9,867,000
Interest paid during period	$	245,000		$	460,000
Net income taxes paid	$	580,000		$	5,000

See accompanying Notes to Consolidated Financial Statements.

7

DAILY JOURNAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1 - The Corporation and Operations

Daily Journal Corporation (the “Company”) publishes newspapers and websites reporting 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, 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 42 states and internationally.

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.

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 June 30, 2021, its results of operations for the three- and nine-month periods ended June 30, 2021 and 2020, its consolidated statements of shareholders’ equity for the nine months ended June 30, 2021 and 2020 and cash flows for the nine months ended June 30, 2021 and 2020. The results of operations for the nine months ended June 30, 2021 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-K for the fiscal year ended September 30, 2020.

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

Note 3 – New Accounting Pronouncement

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

8

 

Note 4 – Right-of-Use (ROU) Asset

At the beginning of fiscal 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) which requires that all leases be recognized by lessees on the balance sheet through a right-of-use (ROU) asset and corresponding lease liability, including today’s operating leases. There has been no significant impact on the Company’s financial condition, results of operations or disclosures. At June 30, 2021, the Company recorded a right-of-use asset and lease liability of approximately $171,000 for its operating office and equipment leases, including approximately $83,000 beyond one year.  Operating office and equipment leases are included in operating lease ROU assets, current accrued liabilities and long-term accrued liabilities in the Company’s accompanying Consolidated Balance Sheets. 

Note 5 – Revenue Recognition

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

9

 

Note 6 - Basic and Diluted Net Income Per Share

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

Note 7 - Investments in Marketable Securities

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 30, 2021 and September 30, 2020, there were net accumulated pretax unrealized gains of $269,347,000 and $137,593,000, 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.

The Company adopted ASU No. 2016-01, Subtopic 825-10 in fiscal 2019. For the nine months ended June 30, 2021, the Company recorded and included in its net income the net unrealized gains on marketable securities of $131,754,000, as compared with the net unrealized losses on marketable securities of $41,191,000, in the prior year period. (For the three months ended June 30, 2021, the Company had net unrealized gains on marketable securities of $55,686,000, as compared with $16,489,000 in the prior year period.)

In January 2021, the Company sold part of its marketable securities for $20,002,000, realizing gains on the sales of those marketable securities of $18,478,000, and simultaneously purchased marketable securities of another company with a total cost of approximately $39,995,000. At June 30, 2021, there were unrealized losses of $2,504,000 related to the newly purchased marketable securities.

Investments in marketable securities as of June 30, 2021 and September 30, 2020 are summarized below.

Investment in Marketable Securities

	June 30, 2021						September 30, 2020
	Aggregate fair value		Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	349,593,000	$	80,246,000	$	269,347,000	$	179,368,000	$	41,775,000	$	137,593,000

Note 8 - Income Taxes

For the nine months ended June 30, 2021, the Company recorded a provision for income taxes of $40,115,000 on pretax income of $154,434,000.   This was the net result 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 on pretax income before the unrealized and realized gains on marketable securities. In addition, the Company recorded a tax provision of $34,405,000 on the unrealized 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 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 months ended June 30, 2021 was 26%, after including the taxes on the realized and unrealized gains on marketable securities.

10

 

For the nine months ended June 30, 2020, the Company recorded an income tax benefit of $11,260,000 on a pretax loss of $39,102,000.   This was the net result of applying the effective tax rate anticipated for fiscal 2020 to the pretax loss, before the unrealized losses on marketable securities, for the nine months ended June 30, 2020.  The effective tax rate was more than the statutory rate primarily due to the dividends received deduction, which increased the taxable loss, and state tax benefits.   In addition, the Company recorded tax benefits of (i) $187,000 resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and (ii) $11,166,000 for the unrealized losses on investments during the nine months ended June 30, 2020.  The effective tax rate for the nine months ended June 30, 2020 was 29%, after including the tax benefits from the CARES Act and the unrealized losses on investments.

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 2017 with regard to federal income taxes and fiscal 2016 for state income taxes. 

Note 9 - Debt and Commitments

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29,493,000 for two acquisitions, in each case pledging its marketable securities as collateral. During the nine months ended June 30, 2021, there was additional net borrowing of $2,507,000 for the purchase of additional marketable securities, bringing this margin loan account balance to $32,000,000 as of June 30, 2021. 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, 2021 was 0.75%. 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 $1,240,000 and financed the balance with a real estate bank loan of $2,260,000, which bore a fixed interest rate of 4.66%. In October 2020, the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% with equal monthly installments of about $16,600 through 2030. This loan is secured by the Logan facility and can be paid off at any time with no penalties. This real estate loan had a balance of approximately $1,615,000 as of June 30, 2021.

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 2023.

Note 10 - Contingencies

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 effect on the Company’s financial position or results of operations or cash flows.

11

 

Note 11 - 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
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2021
Revenues
Advertising	$	5,649,000		$	-		$	-		$	5,649,000
Circulation		3,458,000			-			-			3,458,000
Advertising service fees and other		1,964,000			-			-			1,964,000
Licensing and maintenance fees		-			16,990,000			-			16,990,000
Consulting fees		-			4,649,000			-			4,649,000
Other public service fees		-			5,242,000			-			5,242,000
Operating expenses		11,001,000			24,637,000			-			35,638,000
Income from operations		70,000			2,244,000			-			2,314,000
Dividends and interest income		-			-			2,063,000			2,063,000
Other income		-			-			69,000			69,000
Realized gains on sales of marketable securities		-			-			18,478,000			18,478,000
Net unrealized gains on marketable securities		-			-			131,754,000			131,754,000
Interest expenses on note payable collateralized by real estate		-			-			(48,000	)		(48,000	)
Interest expenses on margin loans and others		-			-			(196,000	)		(196,000	)
Pretax income		70,000			2,244,000			152,120,000			154,434,000
Income tax expense		(15,000	)		(785,000	)		(39,315,000	)		(40,115,000	)
Net income		55,000			1,459,000			112,805,000			114,319,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		22,000			7,000			-			29,000

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2020
Revenues
Advertising	$	5,415,000		$	-		$	-		$	5,415,000
Circulation		3,857,000			-			-			3,857,000
Advertising service fees and other		1,923,000			-			-			1,923,000
Licensing and maintenance fees		-			16,246,000			-			16,246,000
Consulting fees		-			5,065,000			-			5,065,000
Other public service fees		-			4,401,000			-			4,401,000
Operating expenses		11,319,000			27,611,000			-			38,930,000
Loss from operations		(124,000	)		(1,899,000	)		-			(2,023,000	)
Dividends and interest income		-			-			4,573,000			4,573,000
Other income		-			-			3,000			3,000
Net unrealized losses on investments		-			-			(41,191,000	)		(41,191,000	)
Interest expenses on note payable collateralized by real estate		-			-			(63,000	)		(63,000	)
Interest expenses on margin loans and others		-			-			(401,000	)		(401,000	)
Pretax loss		(124,000	)		(1,899,000	)		(37,079,000	)		(39,102,000	)
Income tax benefit		15,000			380,000			10,865,000			11,260,000
Net loss		(109,000	)		(1,519,000	)		(26,214,000	)		(27,842,000	)
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		99,000			69,000			-			168,000

12

 

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2021
Revenues
Advertising	$	2,195,000		$	-		$	-		$	2,195,000
Circulation		1,126,000			-			-			1,126,000
Advertising service fees and other		762,000			-			-			762,000
Licensing and maintenance fees		-			5,602,000			-			5,602,000
Consulting fees		-			2,100,000			-			2,100,000
Other public service fees		-			1,777,000			-			1,777,000
Operating expenses		3,665,000			8,573,000			-			12,238,000
Income from operations		418,000			906,000			-			1,324,000
Dividends and interest income		-			-			776,000			776,000
Other income		-			-			69,000			69,000
Net unrealized losses on marketable securities		-			-			55,686,000			55,686,000
Interest expenses on note payable collateralized by real estate		-			-			(14,000	)		(14,000	)
Interest expenses on margin loans and others		-			-			(68,000	)		(68,000	)
Pretax income		418,000			906,000			56,449,000			57,773,000
Income tax expense		(175,000	)		(460,000	)		(14,565,000	)		(15,200,000	)
Net income		243,000			446,000			41,884,000			42,573,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		-			-			-			-

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2020
Revenues
Advertising	$	1,297,000		$	-		$	-		$	1,297,000
Circulation		1,259,000			-			-			1,259,000
Advertising service fees and other		575,000			-			-			575,000
Licensing and maintenance fees		-			5,531,000			-			5,531,000
Consulting fees		-			3,147,000			-			3,147,000
Other public service fees		-			1,065,000			-			1,065,000
Operating expenses		3,699,000			8,582,000			-			12,281,000
Income (loss) from operations		(568,000	)		1,161,000			-			593,000
Dividends and interest income		-			-			1,596,000			1,596,000
Net unrealized losses on investments		-			-			16,489,000			16,489,000
Interest expenses on note payable collateralized by real estate		-			-			(20,000	)		(20,000	)
Interest expenses on margin loans and others		-			-			(64,000	)		(64,000	)
Pretax (loss) income		(568,000	)		1,161,000			18,001,000			18,594,000
Income tax benefit (expense)		125,000			(545,000	)		(3,900,000	)		(4,320,000	)
Net (loss) income		(443,000	)		616,000			14,101,000			14,274,000
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		-			-			-			-

13

 

During the nine months ended June 30, 2021, the Traditional Business had total operating revenues of $11,071,000 with $7,613,000 recognized after services were provided and $3,458,000 recognized ratably over the publication subscription terms, as compared with total operating revenues of $11,195,000 with $7,338,000 recognized after services were provided and $3,857,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $26,881,000 with $11,029,000 recognized upon completion of services and $15,852,000 recognized ratably over the subscription periods, as compared with total operating revenues of $25,712,000 with $9,889,000 recognized upon completion of services and $15,823,000 recognized ratably over the subscription periods in the prior fiscal year period.

During the three months ended June 30, 2021, the Traditional Business had total operating revenues of $4,083,000 with $2,957,000 recognized after services were provided and $1,126,000 recognized ratably over the publication subscription terms, as compared with total operating revenues of $3,131,000 with $1,872,000 recognized after services were provided and $1,259,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $9,479,000 with $4,312,000 recognized upon completion of services and $5,167,000 recognized ratably over the subscription periods, as compared with total operating revenues of $9,743,000 with $4,258,000 recognized upon completion of services and $5,485,000 recognized ratably over the subscription periods in the prior fiscal year period.

Approximately 71% of the Company’s revenues during the nine-month period ended June 30, 2021 were derived from Journal Technologies, as compared with 70% in the prior year period. In addition, the Company’s revenues have been primarily from the United States with approximately 4% from foreign countries during the nine-months ended June 30, 2021. Journal Technologies’ revenues are primarily from governmental agencies.

Note 12 - Subsequent Events

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.

14

 

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 and fees online. These products are licensed in 42 states and internationally.

Impact of the COVID-19 Pandemic

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 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 recent rise of Delta variant cases, will continue to have, a significant impact on the Company’s business operations. Among other things, dividends from the Company’s securities portfolio have declined and are expected to remain lower than in the past. It is also possible that governments may again take extreme actions in response to the pandemic and the Delta variant, such as the 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, that 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 changes in business operations and personal behaviors that are likely to follow from it, 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 to continue at an accelerated pace due to the impacts of COVID-19 and its aftermath, as advertising and subscription revenues decrease.

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 unable to finish 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. On the other side of the coin, the Company has seen a reduction in operating costs due to less business travel.

15

Comparable nine-month periods ended June 30, 2021 and 2020

The Company’s reportable segments, and its corporate income and expenses, for the nine months ended June 30, 2021 and 2020, are set forth below:

Overall Financial Results (000)
For the nine months ended June 30
	Reportable Segments
	Traditional Business					Journal Technologies					Corporate income and expenses						Total
	2021		2020			2021		2020			2021			2020			2021			2020
Revenues
Advertising	$	5,649	$	5,415		$	-	$	-		$	-		$	-		$	5,649		$	5,415
Circulation		3,458		3,857			-		-			-			-			3,458			3,857
Advertising service fees and other		1,964		1,923			-		-			-			-			1,964			1,923
Licensing and maintenance fees		-		-			16,990		16,246			-			-			16,990			16,246
Consulting fees		-		-			4,649		5,065			-			-			4,649			5,065
Other public service fees		-		-			5,242		4,401			-			-			5,242			4,401
Total revenues		11,071		11,195			26,881		25,712			-			-			37,952			36,907
Operating expenses
Salaries and employee benefits		8,097		7,778			19,131		20,449			-			-			27,228			28,227
Others		2,904		3,541			5,506		7,162			-			-			8,410			10,703
Total operating expenses		11,001		11,319			24,637		27,611			-			-			35,638			38,930
Income (loss) from operations		70		(124	)		2,244		(1,899	)		-			-			2,314			(2,023	)
Dividends and interest income		-		-			-		-			2,063			4,573			2,063			4,573
Other income		-		-			-		-			69			3			69			3
Realized gains on sales of marketable securities		-		-			-		-			18,478			-			18,478			-
Net unrealized gains (losses) on marketable securities		-		-			-		-			131,754			(41,191	)		131,754			(41,191	)
Interest expenses on note payable collateralized by real estate		-		-			-		-			(48	)		(63	)		(48	)		(63	)
Interest expenses on margin loans		-		-			-		-			(196	)		(401	)		(196	)		(401	)
Pretax income (loss)	$	70	$	(124	)	$	2,244	$	(1,899	)	$	152,120		$	(37,079	)	$	154,434		$	(39,102	)

Consolidated revenues were $37,952,000 and $36,907,000 for the nine months ended June 30, 2021 and 2020, respectively. This increase of $1,045,000 (3%) was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $744,000 and public service fees of $841,000 and (ii) the Traditional Business’ legal notice advertising net revenues of $471,000 and government notice advertising net revenues of $173,000, partially offset by reductions in (i) Journal Technologies’ consulting fees of $416,000 and (ii) the Traditional Business’ display advertising net revenues of $44,000, classified advertising net revenues of $31,000, trustee sale notice advertising net revenues of $335,000, and circulation revenues of $399,000. The Company’s revenues derived from Journal Technologies’ operations constituted about 71% and 70% of the Company’s total revenues for the nine months ended June 30, 2021 and 2020, respectively.

Consolidated operating expenses decreased by $3,292,000 (8%) to $35,638,000 from $38,930,000. Total salaries and employee benefits decreased by $999,000 (4%) to $27,228,000 from $28,227,000 primarily resulting from a pandemic-related layoff in April 2020. Outside services decreased by $364,000 (14%) to $2,236,000 from $2,600,000 mainly because of decreased independent contractor costs for Journal Technologies, because many of them became employees in January 2020. Rent expenses decreased by $272,000 (54%) to $228,000 from $500,000 because of the closures of the Colorado office in August 2020 and the Corona, California office in March 2021. Equipment maintenance and software decreased by $156,000 (14%) to $946,000 from $1,102,000 primarily resulted from reduced maintenance and software costs due to the above-mentioned office closures. Other general and administrative expenses decreased by $1,739,000 (53%) to $1,554,000 from $3,293,000 mainly resulting from reduced business travel expenses due to the pandemic.

16

The Company’s non-operating income, net of expenses, increased by $189,199,000 (510%) to a gain of $152,120,000 from a loss of $37,079,000 in the prior fiscal year period primarily because of (i) the realized gains on sales of marketable securities of $18,478,000 and (ii) the recording of net unrealized gains on marketable securities of $131,754,000 during the nine months ended June 30, 2021 as compared with no realized gains and unrealized losses of $41,191,000 during the prior fiscal year period.

During the nine months ended June 30, 2021, consolidated pretax income was $154,434,000, as compared to a pretax loss of $39,102,000 in the prior fiscal year period. There was consolidated net income of $114,319,000 ($82.80 per share) for the nine months ended June 30, 2021, as compared with a net loss of $27,842,000 (-$20.16 per share) in the prior fiscal year period.

During the nine months ended June 30, 2021, the Company’s cash and restricted cash and cash equivalents decreased by $17,587,000 to $11,376,000 from $28,963,000, primarily because of the purchase of additional marketable securities. At June 30, 2021, the aggregate fair market value of the Company’s marketable securities was $349,593,000. These securities had approximately $269,347,000 of net unrealized gains before taxes of $70,275,000. They generated approximately $2,063,000 in dividends income during the nine months ended June 30, 2021, as compared with $4,573,000 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.

Taxes

For the nine months ended June 30, 2021, the Company recorded a provision for income taxes of $40,115,000 on pretax income of $154,434,000.   This was the net result 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 on pretax income before the unrealized and realized gains on marketable securities. In addition, the Company recorded a tax provision of $34,405,000 on the unrealized 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 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 months ended June 30, 2021 was 26%, after including the taxes on the realized and unrealized gains on marketable securities.

For the nine months ended June 30, 2020, the Company recorded an income tax benefit of $11,260,000 on a pretax loss of $39,102,000.   This was the net result of applying the effective tax rate anticipated for fiscal 2020 to the pretax loss, before the unrealized losses on marketable securities, for the nine months ended June 30, 2020.  The effective tax rate was more than the statutory rate primarily due to the dividends received deduction, which increased the taxable loss, and state tax benefits.   In addition, the Company recorded tax benefits of (i) $187,000 resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and (ii) $11,166,000 for the unrealized losses on investments during the nine months ended June 30, 2020.  The effective tax rate for the nine months ended June 30, 2020 was 29%, after including the tax benefits from the CARES Act and the unrealized losses on investments.

17

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 2017 with regard to federal income taxes and fiscal 2016 for state income taxes. 

The Traditional Business (for the nine-months ended June 30, 2021)

The Traditional Business’ pretax income increased by $194,000 (156%) to $70,000 from a pretax loss of $124,000 in the prior fiscal year period. 

Advertising revenues increased by $234,000 (4%) to $5,649,000 from $5,415,000, primarily because of increased legal notice advertising net revenues of $471,000 mainly from fictitious business name publishing (as counties have tried to catch up with their backlogs), and government notice advertising net revenues of $173,000.  The increases were partially offset by decreased display advertising net revenues of $44,000, classified advertising net revenues of $31,000, and trustee sale notice advertising net revenues of $335,000 primarily because of limited foreclosures due to the temporary halt or suspension of mortgage foreclosures in accordance with the federal COVID-19 related “Eviction and Foreclosure Orders” which started in February 2020 and expired in July 2021 although the eviction portion has been extended through the end of September 2021. 

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 56% during the nine months ended June 30, 2021 as compared to the prior fiscal year period, primarily because of limited foreclosures, as discussed above. Management expects there will be fewer foreclosure notice and other public notice advertisements and declining revenues for fiscal 2021. The Company’s smaller newspapers, those other than the Los Angeles and San Francisco Daily Journals (“The Daily Journals”), accounted for about 87% of the total public notice advertising revenues in the nine months ended June 30, 2021. Public notice advertising revenues and related advertising and other service fees constituted about 16% of the Company’s total revenues for both the nine-month periods ended June 30, 2021 and 2020. Accordingly, the Company’s revenues would be adversely affected if California and Arizona eliminated the legal requirement to publish public notices in adjudicated newspapers of general circulation. 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 an adverse effect on the Company’s revenues.

The Daily Journals accounted for about 91% of the Traditional Business’ total circulation revenues, which declined by $399,000 (10%) to $3,458,000 from $3,857,000. The court rule and judicial profile services generated about 7% 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 $318,000 (3%) to $11,001,000 from $11,319,000, primarily resulting from reduced outside contractor services.

18

Journal Technologies (for the nine-months ended June 30, 2021)

During the nine months ended June 30, 2021, Journal Technologies’ business segment pretax income increased by $4,143,000 (218%) to $2,244,000 from a pretax loss of $1,899,000 in the prior fiscal year period.

Revenues increased by $1,169,000 (5%) to $26,881,000 from $25,712,000 in the prior fiscal year period. Licensing and maintenance fees increased by $744,000 (5%) to $16,990,000 from $16,246,000 primarily because there were a few legacy-type projects that expanded and accounted for approximately $1,134,000 in one-time license fee revenues. (To focus on supporting the Company’s main eSeries products, the Company ended effective July 1, 2021 the maintenance of its legacy software products purchased as part of the acquisitions in fiscal 2013. As such, the Company expects a reduction in the legacy software licensing and maintenance revenues in the future.) Consulting fees decreased by $416,000 (8%) to $4,649,000 from $5,065,000 due to fewer go-lives. Other public service fees increased by $841,000 (19%) to $5,242,000 from $4,401,000 primarily due to increased traffic citation fee revenues and 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 decreased by $2,974,000 (11%) to $24,637,000 from $27,611,000 primarily because of decreased personnel costs due to the pandemic-related layoff and reduced 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.

19

Comparable three-month periods ended June 30, 2021 and 2020

The Company’s reportable segments, and its corporate income and expenses, for the three months ended June 30, 2021 and 2020, are set forth below:

Overall Financial Results (000)
For the three months ended June 30
	Reportable Segments
	Traditional Business					Journal Technologies				Corporate income and expenses						Total
	2021		2020			2021		2020		2021			2020			2021			2020
Revenues
Advertising	$	2,195	$	1,297		$	-	$	-	$	-		$	-		$	2,195		$	1,297
Circulation		1,126		1,259			-		-		-			-			1,126			1,259
Advertising service fees and other		762		575			-		-		-			-			762			575
Licensing and maintenance fees		-		-			5,602		5,531		-			-			5,602			5,531
Consulting fees		-		-			2,100		3,147		-			-			2,100			3,147
Other public service fees		-		-			1,777		1,065		-			-			1,777			1,065
Total revenues		4,083		3,131			9,479		9,743		-			-			13,562			12,874
Operating expenses
Salaries and employee benefits		2,736		2,614			6,699		7,048		-			-			9,435			9,662
Others		929		1,085			1,874		1,534		-			-			2,803			2,619
Total operating expenses		3,665		3,699			8,573		8,582		-			-			12,238			12,281
Income (loss) from operations		418		(568	)		906		1,161		-			-			1,324			593
Dividends and interest income		-		-			-		-		776			1,596			776			1,596
Other income		-		-			-		-		69			-			69			-
Net unrealized gains on marketable securities		-		-			-		-		55,686			16,489			55,686			16,489
Interest expenses on note payable collateralized by real estate		-		-			-		-		(14	)		(20	)		(14	)		(20	)
Interest expenses on margin loans		-		-			-		-		(68	)		(64	)		(68	)		(64	)
Pretax (loss) income	$	418	$	(568	)	$	906	$	1,161	$	56,449		$	18,001		$	57,773		$	18,594

Consolidated revenues were $13,562,000 and $12,874,000 for the three months ended June 30, 2021 and 2020, respectively. This increase of $688,000 (5%) was primarily from increases in (i) Journal Technologies’ license and maintenance fees of $71,000 and public service fees of $712,000 and (ii) the Traditional Business’ legal notice advertising net revenues of $605,000, government notice advertising net revenues of $155,000, display advertising net revenues of $177,000 and classified advertising net revenues of $61,000, partially offset by reductions in (i) Journal Technologies’ consulting fees of $1,047,000 and (ii) the Traditional Business’ trustee sale notice advertising net revenues of $100,000, and circulation revenues of $133,000. The Company’s revenues derived from Journal Technologies’ operations constituted about 70% and 76% of the Company’s total revenues for the three months ended June 30, 2021 and 2020, respectively.

Consolidated operating expenses decreased by $43,000 to $12,238,000 from $12,281,000. Total salaries and employee benefits decreased by $227,000 (2%) to $9,435,000 from $9,662,000 primarily resulting from a pandemic-related layoff in April 2020. Outside services increased by $208,000 (35%) to $794,000 from $586,000 mainly because there were reduced contractor costs for Journal Technologies during the prior year’s pandemic closures. Rent expenses decreased by $92,000 (58%) to $66,000 from $158,000 because of the closures of Colorado office in August 2020 and Corona, California office in March 2021. Other general and administrative expenses decreased by $152,000 (23%) to $495,000 from $647,000 mainly resulting from reduced business travel expenses due to the pandemic.

The Company’s non-operating income, net of expenses, increased by $38,448,000 (214%) to $56,449,000 from $18,001,000 primarily because of the recording of net unrealized gains on marketable securities of $55,686,000 during the three months ended June 30, 2021 as compared with $16,489,000 during the prior fiscal year period.

20

During the three months ended June 30, 2021, there was consolidated pretax income of $57,773,000, as compared with $18,594,000 in the prior fiscal year period. There was consolidated net income of $42,573,000 ($30.83 per share) for the three months ended June 30, 2021, as compared with $14,274,000 ($10.34 per share) in the prior fiscal year period.

The Traditional Business (for the three months ended June 30, 2021)

The Traditional Business’ pretax income increased by $986,000 (174%) to pretax income of $418,000 from a pretax loss of $568,000 in the prior fiscal year period.

Advertising revenues increased by $898,000 (69%) to $2,195,000 from $1,297,000, primarily because of increased legal notice advertising net revenues of $605,000 primarily for fictitious business name publishing (as the courts have tried to catch up with their backlogs), government notice advertising net revenues of $155,000, display advertising net revenues of $177,000 and classified advertising net revenues of $61,000, partially offset by a reduction in trustee sale notice advertising net revenues of $100,000 primarily because of limited foreclosures, as discussed above.

The Traditional Business segment operating expenses decreased by $34,000 to $3,665,000 from $3,699,000

Journal Technologies (for the three months ended June 30, 2021)

During the three months ended June 30, 2021, Journal Technologies’ business segment pretax income decreased by $255,000 (22%) to $906,000 from $1,161,000 in the prior fiscal year period.

Revenues decreased by $264,000 (3%) to $9,479,000 from $9,743,000 in the prior fiscal year period. Licensing and maintenance fees increased by $71,000 (1%) to $5,602,000 from $5,531,000 primarily because there were a few legacy-type projects that expanded and accounted for approximately $444,000 in one-time license fee revenues, partially offset by decreased legacy software maintenance revenues as the Company ended the maintenance of its legacy software products effective July 1, 2021. Consulting fees decreased by $1,047,000 (33%) to $2,100,000 from $3,147,000 due to fewer go-lives. Other public service fees increased by $712,000 (67%) to $1,777,000 from $1,065,000 primarily due to increased traffic citation fee revenues and efiling fee revenues.

Operating expenses decreased by $9,000 to $8,573,000 from $8,582,000.

21

Liquidity and Capital Resources

During the nine months ended June 30, 2021, the Company’s cash, restricted cash, cash equivalents and marketable security positions increased by $152,638,000, after additional net borrowing of $2,413,000 and net pretax unrealized gains on marketable securities of $131,754,000. Cash, cash equivalents and the proceeds from the sales of marketable securities were primarily used to purchase additional marketable securities of $39,995,000 and pay the real estate loan principal of $94,000.

The investments in marketable securities, which had an adjusted cost basis of approximately $80,246,000 and a market value of about $349,593,000 at June 30, 2021, generated approximately $2,063,000 in dividends income during the nine months ended June 30, 2021. These securities had approximately $269,347,000 of net unrealized gains before estimated taxes of $70,275,000 which will become due only when we sell securities in which there is unrealized appreciation. Beginning in fiscal 2019, changes in unrealized gains (losses) on marketable securities are now included in the Company’s net income (loss) and thus may have a significant impact on the Company’s financial statements depending on the fluctuations of the market prices of the invested securities.

Cash flows from operating activities increased by $1,523,000 during the nine months ended June 30, 2021 as compared to the prior fiscal year period, primarily due to (i) decreases in income tax receivable of $1,260,000 and deferred tax assets of $49,247,000 and (ii) increases in income tax payable of $375,000; accounts payable and accrued liabilities of $1,427,000 (because of the timing difference in remitting efiling fees to the courts) and the additional accrual to the long-term supplemental compensation accrual of $1,410,000. This was partially offset by (i) a decrease in net income of $49,262,000, excluding the additional realized gains on sales of marketable securities of $18,478,000 and increases in unrealized gains on marketable securities of $172,945,000, (ii) a net decrease in deferred revenues of $2,090,000 and (iii) an increase in accounts receivable of $922,000 primarily resulting from more billings. Cash provided from operating activities of $22,000 included net decreases of $2,794,000 in total current and long-term deferred revenues of $16,582,000.

As of June 30, 2021, the Company had working capital of $345,120,000, including the liabilities for deferred subscriptions, deferred consulting fees and deferred maintenance agreements and others of $16,371,000.

The Company believes that it will be able to fund its operations for the foreseeable future through its cash flows from operations and its current working capital and expects that any such cash flows will be invested in its businesses. The Company may or may not have the ability to borrow additional amounts against its marketable securities and, among other possibilities, it may be required to consider selling some of those securities to generate cash if needed to fund ongoing operations. The amount available for borrowing is based on the market value of the Company’s investment portfolio and fluctuates depending on the value of the underlying securities.  In addition, the Company could be subject to margin calls should the balance of the investment decrease significantly. 

As of June 30, 2021, the investments were concentrated in just nine 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 net income.

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.

22

Critical Accounting Policies and Estimates

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) 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, 2020. The above discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and notes thereto included in this report.

Disclosure Regarding Forward-Looking Statements

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 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 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, 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, 2020.

Item 4. CONTROLS AND PROCEDURES

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, 2020, management concluded that the Company’s disclosure controls and procedures were not effective as of June 30, 2021.  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, 2021.

23

PART II

Item 6. Exhibits

31	Certification by Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32	Certification by Chief Executive Officer and Chief Financial 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

SIGNATURE

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.

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)   

DATE: August 12, 2021

24

EX-31

Exhibit 31

CERTIFICATIONS BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Gerald L. Salzman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Daily Journal Corporation;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.  I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 12, 2021

/s/ Gerald L. Salzman                            

Gerald L. Salzman

Chief Executive Officer, President,

Chief Financial Officer and Treasurer

EX-32

Exhibit 32

CERTIFICATION BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of Daily Journal Corporation (the "Company") for the period ended June 30, 2021 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Gerald L. Salzman, President, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Gerald L. Salzman                                                               

Gerald L. Salzman
Chief Executive Officer, President,
Chief Financial Officer and Treasurer

August 12, 2021

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, and is not being filed as part of the Report or as a separate disclosure document.

XML

Document And Entity Information - shares	9 Months Ended
	Jun. 30, 2021	Jul. 31, 2021
Document Information [Line Items]
Entity Central Index Key	0000783412
Entity Registrant Name	DAILY JOURNAL CORPORATION
Amendment Flag	false
Current Fiscal Year End Date	--09-30
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2021
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Document Transition Report	false
Entity File Number	0-14665
Entity Incorporation, State or Country Code	SC
Entity Tax Identification Number	95-4133299
Entity Address, Address Line One	915 East First Street
Entity Address, City or Town	Los Angeles
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	90012-4050
City Area Code	213
Local Phone Number	229-5300
Title of 12(b) Security	Common Stock
Trading Symbol	DJCO
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		1,380,746

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2021	Sep. 30, 2020
Current assets
Cash and cash equivalents	$ 9,333,000	$ 26,922,000
Restricted cash	2,043,000	2,041,000
Marketable securities at fair value -- common stocks	349,593,000	179,368,000
Accounts receivable, less allowance for doubtful accounts of $250,000 at June 30, 2021 and September 30, 2020	10,015,000	6,727,000
Inventories	55,000	36,000
Prepaid expenses and other current assets	629,000	613,000
Income tax receivable		601,000
Total current assets	371,668,000	216,308,000
Property, plant and equipment, at cost
Land, buildings and improvements	16,559,000	16,572,000
Furniture, office equipment and computer software	1,788,000	1,782,000
Machinery and equipment	1,524,000	1,524,000
Property, Plant and Equipment, Gross, Ending Balance	19,871,000	19,878,000
Less accumulated depreciation	(9,730,000)	(9,422,000)
Property, Plant and Equipment, Net, Ending Balance	10,141,000	10,456,000
Operating lease right-of-use assets	171,000	140,000
Deferred income taxes	7,520,000	11,671,000
Assets, Total	389,500,000	238,575,000
Current liabilities
Accounts payable	4,022,000	3,926,000
Accrued liabilities	5,633,000	5,005,000
Income tax payable	375,000	0
Note payable collateralized by real estate	147,000	133,000
Total current liabilities	26,548,000	27,990,000
Long term liabilities
Investment margin account borrowings	32,000,000	29,493,000
Note payable collateralized by real estate	1,468,000	1,576,000
Deferred maintenance agreements	211,000	450,000
Accrued liabilities	2,938,000	1,455,000
Deferred income taxes	70,275,000	35,870,000
Total long term liabilities	106,892,000	68,844,000
Debts and commitments and contingencies (Notes 9 and 10)
Shareholders' equity
Preferred stock, $.01 par value, 5,000,000 shares authorized and no shares issued	0	0
Common stock, $.01 par value, 5,000,000 shares authorized; 1,805,053 shares issued, including 424,307 treasury shares, at June 30, 2021 and September 30, 2020	14,000	14,000
Additional paid-in capital	1,755,000	1,755,000
Retained earnings	254,291,000	139,972,000
Total shareholders' equity	256,060,000	141,741,000
Liabilities and Equity, Total	389,500,000	238,575,000
Subscription and Circulation [Member]
Current liabilities
Deferred revenue	2,708,000	2,899,000
Professional Fees [Member]
Current liabilities
Deferred revenue	4,859,000	4,868,000
License and Maintenance [Member]
Current liabilities
Deferred revenue	$ 8,804,000	$ 11,159,000

XML

Consolidated Balance Sheets (Unaudited) (Parentheticals) - USD ($)	Jun. 30, 2021	Sep. 30, 2020
Accounts receivable, allowance for doubtful accounts	$ 250,000	$ 250,000
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	5,000,000	5,000,000
Common stock, shares issued (in shares)	1,805,053	1,805,053
Common stock, treasury shares (in shares)	424,307	424,307

XML

Consolidated Statements of Income and Comprehensive Income (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues
Revenue from Contract with Customer, Including Assessed Tax	$ 13,562,000	$ 12,874,000	$ 37,952,000	$ 36,907,000
Costs and expenses
Salaries and employee benefits	9,435,000	9,662,000	27,228,000	28,227,000
Outside services	794,000	586,000	2,236,000	2,600,000
Postage and delivery expenses	160,000	151,000	490,000	552,000
Newsprint and printing expenses	162,000	157,000	469,000	528,000
Depreciation and amortization	114,000	128,000	344,000	384,000
Equipment maintenance and software	298,000	276,000	946,000	1,102,000
Credit card merchant discount fees	462,000	244,000	1,397,000	1,014,000
Rent expenses	66,000	158,000	228,000	500,000
Accounting and legal fees	252,000	272,000	746,000	730,000
Other general and administrative expenses	495,000	647,000	1,554,000	3,293,000
Total operating expenses	12,238,000	12,281,000	35,638,000	38,930,000
Income from operations	1,324,000	593,000	2,314,000	(2,023,000)
Other income (expense)
Dividends and interest income	776,000	1,596,000	2,063,000	4,573,000
Other income	69,000	0	69,000	3,000
Net unrealized gains on marketable securities	55,686,000	16,489,000	131,754,000	(41,191,000)
Interest expense on debt	(68,000)		(196,000)
Income before income taxes	57,773,000	18,594,000	154,434,000	(39,102,000)
Income tax provisions	(15,200,000)	(4,320,000)	(40,115,000)	11,260,000
Net income	$ 42,573,000	$ 14,274,000	$ 114,319,000	$ (27,842,000)
Weighted average number of common shares outstanding - basic and diluted (in shares)	1,380,746	1,380,746	1,380,746	1,380,746
Basic and diluted net income per share (in dollars per share)	$ 30.83	$ 10.34	$ 82.80	$ (20.16)
Comprehensive income	$ 42,573,000	$ 14,274,000	$ 114,319,000	$ (27,842,000)
Realized gains on sales of marketable securities			18,478,000	0
Net unrealized gains (losses) on marketable securities		16,489,000	131,754,000	(41,191,000)
Real Estate Bank Loan Secured by Logan Office [Member]
Other income (expense)
Interest expense on debt	(14,000)	(20,000)	(48,000)	(63,000)
Margin Account [Member]
Other income (expense)
Interest expense on debt	(68,000)	(64,000)	(196,000)	(401,000)
Advertising [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	2,195,000	1,297,000	5,649,000	5,415,000
Subscription and Circulation [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	1,126,000	1,259,000	3,458,000	3,857,000
Advertising Service Fees and Other [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	762,000	575,000	1,964,000	1,923,000
License and Maintenance [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	5,602,000	5,531,000	16,990,000	16,246,000
Consulting Fees [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	2,100,000	3,147,000	4,649,000	5,065,000
Service, Other [Member]
Revenues
Revenue from Contract with Customer, Including Assessed Tax	$ 1,777,000	$ 1,065,000	$ 5,242,000	$ 4,401,000

XML

Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($)	Common Stock [Member]	Treasury Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Balance (in shares) at Sep. 30, 2019	1,805,053	(424,307)
Balance at Sep. 30, 2019	$ 18,000	$ (4,000)	$ 1,755,000	$ 135,931,000	$ 137,700,000
Net income (loss)	$ 0	$ 0	0	14,210,000	14,210,000
Balance (in shares) at Dec. 31, 2019	1,805,053	(424,307)
Balance at Dec. 31, 2019	$ 18,000	$ (4,000)	1,755,000	150,141,000	151,910,000
Balance (in shares) at Sep. 30, 2019	1,805,053	(424,307)
Balance at Sep. 30, 2019	$ 18,000	$ (4,000)	1,755,000	135,931,000	137,700,000
Net income (loss)					(27,842,000)
Balance (in shares) at Jun. 30, 2020	1,805,053	(424,307)
Balance at Jun. 30, 2020	$ 18,000	$ (4,000)	1,755,000	108,089,000	109,858,000
Balance (in shares) at Dec. 31, 2019	1,805,053	(424,307)
Balance at Dec. 31, 2019	$ 18,000	$ (4,000)	1,755,000	150,141,000	151,910,000
Net income (loss)	$ 0	$ 0	0	(56,326,000)	(56,326,000)
Balance (in shares) at Mar. 31, 2020	1,805,053	(424,307)
Balance at Mar. 31, 2020	$ 18,000	$ (4,000)	1,755,000	93,815,000	95,584,000
Net income (loss)	$ 0	$ 0	0	14,274,000	14,274,000
Balance (in shares) at Jun. 30, 2020	1,805,053	(424,307)
Balance at Jun. 30, 2020	$ 18,000	$ (4,000)	1,755,000	108,089,000	109,858,000
Balance (in shares) at Sep. 30, 2020	1,805,053	(424,307)
Balance at Sep. 30, 2020	$ 18,000	$ (4,000)	1,755,000	139,972,000	141,741,000
Net income (loss)	$ 0	$ 0	0	59,270,000	59,270,000
Balance (in shares) at Dec. 31, 2020	1,805,053	(424,307)
Balance at Dec. 31, 2020	$ 18,000	$ (4,000)	1,755,000	199,242,000	201,011,000
Balance (in shares) at Sep. 30, 2020	1,805,053	(424,307)
Balance at Sep. 30, 2020	$ 18,000	$ (4,000)	1,755,000	139,972,000	141,741,000
Net income (loss)					114,319,000
Balance (in shares) at Jun. 30, 2021	1,805,053	(424,307)
Balance at Jun. 30, 2021	$ 18,000	$ (4,000)	1,755,000	254,291,000	256,060,000
Balance (in shares) at Dec. 31, 2020	1,805,053	(424,307)
Balance at Dec. 31, 2020	$ 18,000	$ (4,000)	1,755,000	199,242,000	201,011,000
Net income (loss)	$ 0	$ 0	0	12,476,000	12,476,000
Balance (in shares) at Mar. 31, 2021	1,805,053	(424,307)
Balance at Mar. 31, 2021	$ 18,000	$ (4,000)	1,755,000	211,718,000	213,487,000
Net income (loss)	$ 0	$ 0	0	42,573,000	42,573,000
Balance (in shares) at Jun. 30, 2021	1,805,053	(424,307)
Balance at Jun. 30, 2021	$ 18,000	$ (4,000)	$ 1,755,000	$ 254,291,000	$ 256,060,000

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net income (loss)	$ 114,319,000	$ (27,842,000)
Adjustments to reconcile net income (loss) to net cash provided from (used in) operations
Depreciation and amortization	344,000	384,000
Increase in bad debt allowance	0	50,000
Net unrealized (gains) losses on marketable securities	(131,754,000)	41,191,000
Realized gains on sales of marketable securities	(18,478,000)	0
Deferred income taxes	38,556,000	(10,691,000)
(Increase) decrease in current assets
Accounts receivable, net	(3,288,000)	(2,366,000)
Inventories	(19,000)	(11,000)
Prepaid expenses and other assets	(16,000)	(192,000)
Income tax receivable	601,000	(659,000)
Increase (decrease) in liabilities
Accounts payable	96,000	(1,062,000)
Accrued liabilities	2,080,000	401,000
Income tax payable	375,000	0
Net cash provided from (used in) operating activities	22,000	(1,501,000)
Cash flows from investing activities
Proceeds from sales of marketable securities	20,002,000	0
Purchases of marketable securities	(39,995,000)	0
Purchases of property, plant and equipment	(29,000)	(168,000)
Net cash used in investing activities	(20,022,000)	(168,000)
Cash flows from financing activities
Payment to margin loan principal	(14,493,000)	0
Borrowing from margin loan account	17,000,000	1,000,000
Payment of real estate loan principal	(94,000)	(94,000)
Net cash provided from financing activities	2,413,000	906,000
Decrease in cash and restricted cash and cash equivalents	(17,587,000)	(763,000)
Cash and restricted cash and cash equivalents
Beginning of period	28,963,000	10,630,000
End of period	11,376,000	9,867,000
Interest paid during period	245,000	460,000
Net income taxes paid	580,000	5,000
Subscription and Circulation [Member]
Increase (decrease) in liabilities
Deferred revenue arrangements	(191,000)	(181,000)
Professional Fees [Member]
Increase (decrease) in liabilities
Deferred revenue arrangements	131,000	478,000
License and Maintenance [Member]
Increase (decrease) in liabilities
Deferred revenue arrangements	$ (2,734,000)	$ (1,001,000)

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Note 1 - The Corporation and Operations

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

Note 1 - The Corporation and Operations

Daily Journal Corporation (the “Company”) publishes newspapers and websites reporting 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, 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 42 states and internationally.

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.

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Note 2 - Basis of Presentation

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Basis of Accounting [Text Block]

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 June 30, 2021, its results of operations for the three- and nine-month periods ended June 30, 2021 and 2020, its consolidated statements of shareholders’ equity for the nine months ended June 30, 2021 and 2020 and cash flows for the nine months ended June 30, 2021 and 2020. The results of operations for the nine months ended June 30, 2021 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-K for the fiscal year ended September 30, 2020.

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

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Note 3 - New Accounting Pronouncement

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Accounting Standards Update and Change in Accounting Principle [Text Block]

Note 3 – New Accounting Pronouncement

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

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Note 4 - Right-of-use (ROU) Asset

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

Note 4 – Right-of-Use (ROU) Asset

At the beginning of fiscal 2020, the Company adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) which requires that all leases be recognized by lessees on the balance sheet through a right-of-use (ROU) asset and corresponding lease liability, including today’s operating leases. There has been no significant impact on the Company’s financial condition, results of operations or disclosures. At June 30, 2021, the Company recorded a right-of-use asset and lease liability of approximately $171,000 for its operating office and equipment leases, including approximately $83,000 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. 

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Note 5 - Revenue Recognition

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

Note 5 – Revenue Recognition

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

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Note 6 - Basic and Diluted Net Income Per Share

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Earnings Per Share [Text Block]

Note 6 - Basic and Diluted Net Income Per Share

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

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Note 7 - Investments in Marketable Securities

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

Note 7 - Investments in Marketable Securities

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 30, 2021 and September 30, 2020, there were net accumulated pretax unrealized gains of $269,347,000 and $137,593,000, 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.

The Company adopted ASU No. 2016-01, Subtopic 825-10 in fiscal 2019. For the nine months ended June 30, 2021, the Company recorded and included in its net income the net unrealized gains on marketable securities of $131,754,000, as compared with the net unrealized losses on marketable securities of $41,191,000, in the prior year period. (For the three months ended June 30, 2021, the Company had net unrealized gains on marketable securities of $55,686,000, as compared with $16,489,000 in the prior year period.)

In January 2021, the Company sold part of its marketable securities for $20,002,000, realizing gains on the sales of those marketable securities of $18,478,000, and simultaneously purchased marketable securities of another company with a total cost of approximately $39,995,000. At June 30, 2021, there were unrealized losses of $2,504,000 related to the newly purchased marketable securities.

Investments in marketable securities as of June 30, 2021 and September 30, 2020 are summarized below.

Investment in Marketable Securities

	June 30, 2021						September 30, 2020
	Aggregate fair value		Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	349,593,000	$	80,246,000	$	269,347,000	$	179,368,000	$	41,775,000	$	137,593,000

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Note 8 - Income Taxes

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Income Tax Disclosure [Text Block]

Note 8 - Income Taxes

For the nine months ended June 30, 2021, the Company recorded a provision for income taxes of $40,115,000 on pretax income of $154,434,000.   This was the net result 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 on pretax income before the unrealized and realized gains on marketable securities. In addition, the Company recorded a tax provision of $34,405,000 on the unrealized 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 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 months ended June 30, 2021 was 26%, after including the taxes on the realized and unrealized gains on marketable securities.

For the nine months ended June 30, 2020, the Company recorded an income tax benefit of $11,260,000 on a pretax loss of $39,102,000.   This was the net result of applying the effective tax rate anticipated for fiscal 2020 to the pretax loss, before the unrealized losses on marketable securities, for the nine months ended June 30, 2020.  The effective tax rate was more than the statutory rate primarily due to the dividends received deduction, which increased the taxable loss, and state tax benefits.   In addition, the Company recorded tax benefits of (i) $187,000 resulting from the Coronavirus Aid, Relief and Economic Security (“CARES”) Act and (ii) $11,166,000 for the unrealized losses on investments during the nine months ended June 30, 2020.  The effective tax rate for the nine months ended June 30, 2020 was 29%, after including the tax benefits from the CARES Act and the unrealized losses on investments.

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 2017 with regard to federal income taxes and fiscal 2016 for state income taxes. 

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Note 9 - Debt and Commitments

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Commitments Disclosure [Text Block]

Note 9 - Debt and Commitments

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29,493,000 for two acquisitions, in each case pledging its marketable securities as collateral. During the nine months ended June 30, 2021, there was additional net borrowing of $2,507,000 for the purchase of additional marketable securities, bringing this margin loan account balance to $32,000,000 as of June 30, 2021. 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, 2021 was 0.75%. 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 $1,240,000 and financed the balance with a real estate bank loan of $2,260,000, which bore a fixed interest rate of 4.66%. In October 2020, the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% with equal monthly installments of about $16,600 through 2030. This loan is secured by the Logan facility and can be paid off at any time with no penalties. This real estate loan had a balance of approximately $1,615,000 as of June 30, 2021.

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 2023.

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Note 10 - Contingencies

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

Note 10 - Contingencies

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 effect on the Company’s financial position or results of operations or cash flows.

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Note 11 - Operating Segments

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note 11 - 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
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2021
Revenues
Advertising	$	5,649,000		$	-		$	-		$	5,649,000
Circulation		3,458,000			-			-			3,458,000
Advertising service fees and other		1,964,000			-			-			1,964,000
Licensing and maintenance fees		-			16,990,000			-			16,990,000
Consulting fees		-			4,649,000			-			4,649,000
Other public service fees		-			5,242,000			-			5,242,000
Operating expenses		11,001,000			24,637,000			-			35,638,000
Income from operations		70,000			2,244,000			-			2,314,000
Dividends and interest income		-			-			2,063,000			2,063,000
Other income		-			-			69,000			69,000
Realized gains on sales of marketable securities		-			-			18,478,000			18,478,000
Net unrealized gains on marketable securities		-			-			131,754,000			131,754,000
Interest expenses on note payable collateralized by real estate		-			-			(48,000	)		(48,000	)
Interest expenses on margin loans and others		-			-			(196,000	)		(196,000	)
Pretax income		70,000			2,244,000			152,120,000			154,434,000
Income tax expense		(15,000	)		(785,000	)		(39,315,000	)		(40,115,000	)
Net income		55,000			1,459,000			112,805,000			114,319,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		22,000			7,000			-			29,000

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2020
Revenues
Advertising	$	5,415,000		$	-		$	-		$	5,415,000
Circulation		3,857,000			-			-			3,857,000
Advertising service fees and other		1,923,000			-			-			1,923,000
Licensing and maintenance fees		-			16,246,000			-			16,246,000
Consulting fees		-			5,065,000			-			5,065,000
Other public service fees		-			4,401,000			-			4,401,000
Operating expenses		11,319,000			27,611,000			-			38,930,000
Loss from operations		(124,000	)		(1,899,000	)		-			(2,023,000	)
Dividends and interest income		-			-			4,573,000			4,573,000
Other income		-			-			3,000			3,000
Net unrealized losses on investments		-			-			(41,191,000	)		(41,191,000	)
Interest expenses on note payable collateralized by real estate		-			-			(63,000	)		(63,000	)
Interest expenses on margin loans and others		-			-			(401,000	)		(401,000	)
Pretax loss		(124,000	)		(1,899,000	)		(37,079,000	)		(39,102,000	)
Income tax benefit		15,000			380,000			10,865,000			11,260,000
Net loss		(109,000	)		(1,519,000	)		(26,214,000	)		(27,842,000	)
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		99,000			69,000			-			168,000

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2021
Revenues
Advertising	$	2,195,000		$	-		$	-		$	2,195,000
Circulation		1,126,000			-			-			1,126,000
Advertising service fees and other		762,000			-			-			762,000
Licensing and maintenance fees		-			5,602,000			-			5,602,000
Consulting fees		-			2,100,000			-			2,100,000
Other public service fees		-			1,777,000			-			1,777,000
Operating expenses		3,665,000			8,573,000			-			12,238,000
Income from operations		418,000			906,000			-			1,324,000
Dividends and interest income		-			-			776,000			776,000
Other income		-			-			69,000			69,000
Net unrealized losses on marketable securities		-			-			55,686,000			55,686,000
Interest expenses on note payable collateralized by real estate		-			-			(14,000	)		(14,000	)
Interest expenses on margin loans and others		-			-			(68,000	)		(68,000	)
Pretax income		418,000			906,000			56,449,000			57,773,000
Income tax expense		(175,000	)		(460,000	)		(14,565,000	)		(15,200,000	)
Net income		243,000			446,000			41,884,000			42,573,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		-			-			-			-

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2020
Revenues
Advertising	$	1,297,000		$	-		$	-		$	1,297,000
Circulation		1,259,000			-			-			1,259,000
Advertising service fees and other		575,000			-			-			575,000
Licensing and maintenance fees		-			5,531,000			-			5,531,000
Consulting fees		-			3,147,000			-			3,147,000
Other public service fees		-			1,065,000			-			1,065,000
Operating expenses		3,699,000			8,582,000			-			12,281,000
Income (loss) from operations		(568,000	)		1,161,000			-			593,000
Dividends and interest income		-			-			1,596,000			1,596,000
Net unrealized losses on investments		-			-			16,489,000			16,489,000
Interest expenses on note payable collateralized by real estate		-			-			(20,000	)		(20,000	)
Interest expenses on margin loans and others		-			-			(64,000	)		(64,000	)
Pretax (loss) income		(568,000	)		1,161,000			18,001,000			18,594,000
Income tax benefit (expense)		125,000			(545,000	)		(3,900,000	)		(4,320,000	)
Net (loss) income		(443,000	)		616,000			14,101,000			14,274,000
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		-			-			-			-

During the nine months ended June 30, 2021, the Traditional Business had total operating revenues of $11,071,000 with $7,613,000 recognized after services were provided and $3,458,000 recognized ratably over the publication subscription terms, as compared with total operating revenues of $11,195,000 with $7,338,000 recognized after services were provided and $3,857,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $26,881,000 with $11,029,000 recognized upon completion of services and $15,852,000 recognized ratably over the subscription periods, as compared with total operating revenues of $25,712,000 with $9,889,000 recognized upon completion of services and $15,823,000 recognized ratably over the subscription periods in the prior fiscal year period.

During the three months ended June 30, 2021, the Traditional Business had total operating revenues of $4,083,000 with $2,957,000 recognized after services were provided and $1,126,000 recognized ratably over the publication subscription terms, as compared with total operating revenues of $3,131,000 with $1,872,000 recognized after services were provided and $1,259,000 recognized ratably over the publication subscription terms in the prior fiscal year period. Total operating revenues for the Company’s software business were $9,479,000 with $4,312,000 recognized upon completion of services and $5,167,000 recognized ratably over the subscription periods, as compared with total operating revenues of $9,743,000 with $4,258,000 recognized upon completion of services and $5,485,000 recognized ratably over the subscription periods in the prior fiscal year period.

Approximately 71% of the Company’s revenues during the nine-month period ended June 30, 2021 were derived from Journal Technologies, as compared with 70% in the prior year period. In addition, the Company’s revenues have been primarily from the United States with approximately 4% from foreign countries during the nine-months ended June 30, 2021. Journal Technologies’ revenues are primarily from governmental agencies.

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Note 12 - Subsequent Events

9 Months Ended

Jun. 30, 2021

Notes to Financial Statements

Subsequent Events [Text Block]

Note 12 - Subsequent Events

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.

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Note 7 - Investments in Marketable Securities (Tables)

9 Months Ended

Jun. 30, 2021

Notes Tables

Schedule of Available-for-sale Securities Reconciliation [Table Text Block]

	June 30, 2021						September 30, 2020
	Aggregate fair value		Adjusted cost basis		Pretax unrealized gains		Aggregate fair value		Adjusted cost basis		Pretax unrealized gains
Marketable securities
Common stocks	$	349,593,000	$	80,246,000	$	269,347,000	$	179,368,000	$	41,775,000	$	137,593,000

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Note 11 - Operating Segments (Tables)

9 Months Ended

Jun. 30, 2021

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2021
Revenues
Advertising	$	5,649,000		$	-		$	-		$	5,649,000
Circulation		3,458,000			-			-			3,458,000
Advertising service fees and other		1,964,000			-			-			1,964,000
Licensing and maintenance fees		-			16,990,000			-			16,990,000
Consulting fees		-			4,649,000			-			4,649,000
Other public service fees		-			5,242,000			-			5,242,000
Operating expenses		11,001,000			24,637,000			-			35,638,000
Income from operations		70,000			2,244,000			-			2,314,000
Dividends and interest income		-			-			2,063,000			2,063,000
Other income		-			-			69,000			69,000
Realized gains on sales of marketable securities		-			-			18,478,000			18,478,000
Net unrealized gains on marketable securities		-			-			131,754,000			131,754,000
Interest expenses on note payable collateralized by real estate		-			-			(48,000	)		(48,000	)
Interest expenses on margin loans and others		-			-			(196,000	)		(196,000	)
Pretax income		70,000			2,244,000			152,120,000			154,434,000
Income tax expense		(15,000	)		(785,000	)		(39,315,000	)		(40,115,000	)
Net income		55,000			1,459,000			112,805,000			114,319,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		22,000			7,000			-			29,000

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Nine months ended June 30, 2020
Revenues
Advertising	$	5,415,000		$	-		$	-		$	5,415,000
Circulation		3,857,000			-			-			3,857,000
Advertising service fees and other		1,923,000			-			-			1,923,000
Licensing and maintenance fees		-			16,246,000			-			16,246,000
Consulting fees		-			5,065,000			-			5,065,000
Other public service fees		-			4,401,000			-			4,401,000
Operating expenses		11,319,000			27,611,000			-			38,930,000
Loss from operations		(124,000	)		(1,899,000	)		-			(2,023,000	)
Dividends and interest income		-			-			4,573,000			4,573,000
Other income		-			-			3,000			3,000
Net unrealized losses on investments		-			-			(41,191,000	)		(41,191,000	)
Interest expenses on note payable collateralized by real estate		-			-			(63,000	)		(63,000	)
Interest expenses on margin loans and others		-			-			(401,000	)		(401,000	)
Pretax loss		(124,000	)		(1,899,000	)		(37,079,000	)		(39,102,000	)
Income tax benefit		15,000			380,000			10,865,000			11,260,000
Net loss		(109,000	)		(1,519,000	)		(26,214,000	)		(27,842,000	)
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		99,000			69,000			-			168,000

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2021
Revenues
Advertising	$	2,195,000		$	-		$	-		$	2,195,000
Circulation		1,126,000			-			-			1,126,000
Advertising service fees and other		762,000			-			-			762,000
Licensing and maintenance fees		-			5,602,000			-			5,602,000
Consulting fees		-			2,100,000			-			2,100,000
Other public service fees		-			1,777,000			-			1,777,000
Operating expenses		3,665,000			8,573,000			-			12,238,000
Income from operations		418,000			906,000			-			1,324,000
Dividends and interest income		-			-			776,000			776,000
Other income		-			-			69,000			69,000
Net unrealized losses on marketable securities		-			-			55,686,000			55,686,000
Interest expenses on note payable collateralized by real estate		-			-			(14,000	)		(14,000	)
Interest expenses on margin loans and others		-			-			(68,000	)		(68,000	)
Pretax income		418,000			906,000			56,449,000			57,773,000
Income tax expense		(175,000	)		(460,000	)		(14,565,000	)		(15,200,000	)
Net income		243,000			446,000			41,884,000			42,573,000
Total assets		17,894,000			21,498,000			350,108,000			389,500,000
Capital expenditures		-			-			-			-

	Reportable Segments
	Traditional Business			Journal Technologies			Corporate income and expenses			Total
Three months ended June 30, 2020
Revenues
Advertising	$	1,297,000		$	-		$	-		$	1,297,000
Circulation		1,259,000			-			-			1,259,000
Advertising service fees and other		575,000			-			-			575,000
Licensing and maintenance fees		-			5,531,000			-			5,531,000
Consulting fees		-			3,147,000			-			3,147,000
Other public service fees		-			1,065,000			-			1,065,000
Operating expenses		3,699,000			8,582,000			-			12,281,000
Income (loss) from operations		(568,000	)		1,161,000			-			593,000
Dividends and interest income		-			-			1,596,000			1,596,000
Net unrealized losses on investments		-			-			16,489,000			16,489,000
Interest expenses on note payable collateralized by real estate		-			-			(20,000	)		(20,000	)
Interest expenses on margin loans and others		-			-			(64,000	)		(64,000	)
Pretax (loss) income		(568,000	)		1,161,000			18,001,000			18,594,000
Income tax benefit (expense)		125,000			(545,000	)		(3,900,000	)		(4,320,000	)
Net (loss) income		(443,000	)		616,000			14,101,000			14,274,000
Total assets		17,752,000			24,667,000			155,545,000			197,964,000
Capital expenditures		-			-			-			-

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Note 4 - Right-of-use (ROU) Asset (Details Textual)	Jun. 30, 2021 USD ($)
Office Lease Obligations Beyond One Year	$ 83,000
Accrued Liabilities, Current and Noncurrent [Member]
Operating Lease, Liability, Total	$ 171,000

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Note 7 - Investments in Marketable Securities (Details Textual) - USD ($)	1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 31, 2021	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2019
Marketable Securities, Accumulated Unrealized Gain (Loss)		$ 269,347,000		$ 269,347,000		$ 137,593,000
Marketable Securities, Unrealized Gain (Loss), Total		$ 55,686,000	$ 16,489,000	131,754,000	$ (41,191,000)
Proceeds from Sale and Maturity of Debt Securities, Available-for-sale, Total	$ 20,002,000			20,002,000	0
Marketable Securities, Realized Gain (Loss), Total	18,478,000			18,478,000	0
Payments to Acquire Marketable Securities, Total	$ 39,995,000			39,995,000	$ (0)
Newly Purchased Marketable Securities [Member]
Marketable Securities, Unrealized Gain (Loss), Total				$ (2,504,000)

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Note 7 - Investments in Marketable Securities - Summary of Investments (Details) - Common Stock [Member] - USD ($)	Jun. 30, 2021	Sep. 30, 2020
Aggregate fair value	$ 349,593,000	$ 179,368,000
Amortized/adjusted cost basis	80,246,000	41,775,000
Pretax net unrealized gains	$ 269,347,000	$ 137,593,000

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Note 8 - Income Taxes (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Income Tax Expense (Benefit), Total	$ 15,200,000	$ 4,320,000	$ 40,115,000	$ (11,260,000)
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Noncontrolling Interest, Total			$ 154,434,000	$ (39,102,000)
Effective Income Tax Rate Reconciliation before Realized and Unrealized Gains of Marketable Securities, Percent			21.32%
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate, Percent			21.00%
Effective Income Tax Rate Reconciliation, Deduction, Dividends, Amount			$ 896,000
Effective Income Tax Rate Reconciliation, Unrealized Gains on Marketable Securities, Amount			34,405,000
Effective Income Tax Rate Reconciliation, Realized Gains on Marketable Securities, Amount			4,821,000
Effective Income Tax Rate Reconciliation, Tax Contingency, State and Local, Amount			$ 7,000
Effective Income Tax Rate Reconciliation, Percent, Total			26.00%	29.00%
Income Tax Expense (Benefit) from CARES Act				$ (187,000)
Income Tax Expense (Benefit) from Unrealized Losses on Investments				$ (11,166,000)
Domestic Tax Authority [Member]
Open Tax Year			2017 2018 2019 2020 2021
State and Local Jurisdiction [Member]
Open Tax Year			2016 2017 2018 2019 2020 2021

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Note 9 - Debt and Commitments (Details Textual)			3 Months Ended		9 Months Ended		12 Months Ended
	Oct. 31, 2020 USD ($)	Nov. 30, 2015 USD ($) ft² a	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($)	Jun. 30, 2020 USD ($)	Sep. 30, 2013 USD ($)	Sep. 30, 2020 USD ($)
Investment Margin Account			$ 32,000,000		$ 32,000,000			$ 29,493,000
Payments to Acquire Property, Plant, and Equipment, Total			0	$ 0	29,000	$ 168,000
Loans Payable to Bank, Total			1,615,000		1,615,000
UTAH | Building [Member]
Area of Real Estate Property (Square Foot) | ft²		30,700
UTAH | Land [Member]
Area of Land (Acre) | a		3.6
Payments to Acquire Property, Plant, and Equipment, Total		$ 1,240,000
Margin Account [Member]
Proceeds from Issuance of Debt					2,507,000		$ 29,493,000
Investment Margin Account			$ 32,000,000		$ 32,000,000
Margin Account [Member] | Fed Funds Rate [Member]
Debt Instrument, Basis Spread on Variable Rate							0.50%
Debt Instrument, Interest Rate, Effective Percentage			0.75%		0.75%
Real Estate Bank Loan Secured by Logan Office [Member]
Loans Payable to Bank, Total		$ 2,260,000
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate	3.33%	4.66%
Debt Instrument, Periodic Payment, Total	$ 16,600

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Note 11 - Operating Segments (Details Textual) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenue from Contract with Customer, Including Assessed Tax	$ 13,562,000	$ 12,874,000	$ 37,952,000	$ 36,907,000
Revenue Benchmark [Member] | Product Concentration Risk [Member] | Non-US [Member]
Concentration Risk, Percentage			4.00%
Traditional Business [Member]
Revenue from Contract with Customer, Including Assessed Tax	4,083,000	3,131,000	$ 11,071,000	11,195,000
Traditional Business [Member] | Transferred at Point in Time [Member]
Revenue from Contract with Customer, Including Assessed Tax	2,957,000	1,872,000	7,613,000	7,338,000
Traditional Business [Member] | Transferred over Time [Member]
Revenue from Contract with Customer, Including Assessed Tax	1,126,000	1,259,000	3,458,000	3,857,000
Journal Technologies [Member]
Revenue from Contract with Customer, Including Assessed Tax	9,479,000	9,743,000	$ 26,881,000	$ 25,712,000
Journal Technologies [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member]
Concentration Risk, Percentage			71.00%	70.00%
Journal Technologies [Member] | Transferred at Point in Time [Member]
Revenue from Contract with Customer, Including Assessed Tax	4,312,000	4,258,000	$ 11,029,000	$ 9,889,000
Journal Technologies [Member] | Transferred over Time [Member]
Revenue from Contract with Customer, Including Assessed Tax	$ 5,167,000	$ 5,485,000	$ 15,852,000	$ 15,823,000

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Note 11 - Operating Segments - Summarized Financial Information for Reportable Segments (Details) - USD ($)	1 Months Ended	3 Months Ended						9 Months Ended
	Jan. 31, 2021	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2020
Revenue from Contract with Customer, Including Assessed Tax		$ 13,562,000			$ 12,874,000			$ 37,952,000	$ 36,907,000
Operating expenses		12,238,000			12,281,000			35,638,000	38,930,000
Income from operations		1,324,000			593,000			2,314,000	(2,023,000)
Dividends and interest income		776,000			1,596,000			2,063,000	4,573,000
Other income		69,000			0			69,000	3,000
Realized gains on sales of marketable securities	$ 18,478,000							18,478,000	0
Net unrealized gains on marketable securities		55,686,000			16,489,000			131,754,000	(41,191,000)
Interest expense on debt		(68,000)						(196,000)
Pretax income		57,773,000			18,594,000			154,434,000	(39,102,000)
Income tax provisions		(15,200,000)			(4,320,000)			(40,115,000)	11,260,000
Net income (loss)		42,573,000	$ 12,476,000	$ 59,270,000	14,274,000	$ (56,326,000)	$ 14,210,000	114,319,000	(27,842,000)
Total assets		389,500,000			197,964,000			389,500,000	197,964,000	$ 238,575,000
Capital expenditures		0			0			29,000	168,000
Other income		69,000			0			69,000	3,000
Net unrealized gains (losses) on marketable securities					16,489,000			131,754,000	(41,191,000)
Pretax loss		57,773,000			18,594,000			154,434,000	(39,102,000)
Real Estate Bank Loan Secured by Logan Office [Member]
Interest expense on debt		(14,000)			(20,000)			(48,000)	(63,000)
Margin Account [Member]
Interest expense on debt		(68,000)			(64,000)			(196,000)	(401,000)
Advertising [Member]
Revenue from Contract with Customer, Including Assessed Tax		2,195,000			1,297,000			5,649,000	5,415,000
Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,126,000			1,259,000			3,458,000	3,857,000
Advertising Service Fees and Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		762,000			575,000			1,964,000	1,923,000
License and Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax		5,602,000			5,531,000			16,990,000	16,246,000
Consulting Fees [Member]
Revenue from Contract with Customer, Including Assessed Tax		2,100,000			3,147,000			4,649,000	5,065,000
Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,777,000			1,065,000			5,242,000	4,401,000
Traditional Business [Member]
Revenue from Contract with Customer, Including Assessed Tax		4,083,000			3,131,000			11,071,000	11,195,000
Journal Technologies [Member]
Revenue from Contract with Customer, Including Assessed Tax		9,479,000			9,743,000			26,881,000	25,712,000
Operating Segments [Member] | Traditional Business [Member]
Operating expenses		3,665,000			3,699,000			11,001,000	11,319,000
Income from operations		418,000			(568,000)			70,000	(124,000)
Dividends and interest income		0			0			0	0
Other income		0						0	0
Realized gains on sales of marketable securities								0
Net unrealized gains on marketable securities		0						0
Interest expense on debt		0						0
Pretax income		418,000			(568,000)			70,000	(124,000)
Income tax provisions		(175,000)			125,000			(15,000)	15,000
Net income (loss)		243,000			(443,000)			55,000	(109,000)
Total assets		17,894,000			17,752,000			17,894,000	17,752,000
Capital expenditures		0			0			22,000	99,000
Other income		0						0	0
Net unrealized gains (losses) on marketable securities					0				0
Pretax loss		418,000			(568,000)			70,000	(124,000)
Operating Segments [Member] | Traditional Business [Member] | Real Estate Bank Loan Secured by Logan Office [Member]
Interest expense on debt		0			0			0	0
Operating Segments [Member] | Traditional Business [Member] | Margin Account [Member]
Interest expense on debt					0				0
Operating Segments [Member] | Traditional Business [Member] | Advertising [Member]
Revenue from Contract with Customer, Including Assessed Tax		2,195,000			1,297,000			5,649,000	5,415,000
Operating Segments [Member] | Traditional Business [Member] | Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,126,000			1,259,000			3,458,000	3,857,000
Operating Segments [Member] | Traditional Business [Member] | Advertising Service Fees and Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		762,000			575,000			1,964,000	1,923,000
Operating Segments [Member] | Traditional Business [Member] | License and Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Traditional Business [Member] | Consulting Fees [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Traditional Business [Member] | Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Journal Technologies [Member]
Operating expenses		8,573,000			8,582,000			24,637,000	27,611,000
Income from operations		906,000			1,161,000			2,244,000	(1,899,000)
Dividends and interest income		0			0			0	0
Other income		0						0	0
Realized gains on sales of marketable securities								0
Net unrealized gains on marketable securities		0						0
Interest expense on debt		0						0
Pretax income		906,000			1,161,000			2,244,000	(1,899,000)
Income tax provisions		(460,000)			(545,000)			(785,000)	380,000
Net income (loss)		446,000			616,000			1,459,000	(1,519,000)
Total assets		21,498,000			24,667,000			21,498,000	24,667,000
Capital expenditures		0			0			7,000	69,000
Other income		0						0	0
Net unrealized gains (losses) on marketable securities					0				0
Pretax loss		906,000			1,161,000			2,244,000	(1,899,000)
Operating Segments [Member] | Journal Technologies [Member] | Real Estate Bank Loan Secured by Logan Office [Member]
Interest expense on debt		0			0			0	0
Operating Segments [Member] | Journal Technologies [Member] | Margin Account [Member]
Interest expense on debt					0				0
Operating Segments [Member] | Journal Technologies [Member] | Advertising [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Journal Technologies [Member] | Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Journal Technologies [Member] | Advertising Service Fees and Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Operating Segments [Member] | Journal Technologies [Member] | License and Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax		5,602,000			5,531,000			16,990,000	16,246,000
Operating Segments [Member] | Journal Technologies [Member] | Consulting Fees [Member]
Revenue from Contract with Customer, Including Assessed Tax		2,100,000			3,147,000			4,649,000	5,065,000
Operating Segments [Member] | Journal Technologies [Member] | Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		1,777,000			1,065,000			5,242,000	4,401,000
Corporate, Non-Segment [Member]
Operating expenses		0			0			0	0
Income from operations		0			0			0	0
Dividends and interest income		776,000			1,596,000			2,063,000	4,573,000
Other income		69,000						69,000	3,000
Realized gains on sales of marketable securities								18,478,000
Net unrealized gains on marketable securities		55,686,000						131,754,000
Interest expense on debt		(68,000)						(196,000)
Pretax income		56,449,000			18,001,000			152,120,000	(37,079,000)
Income tax provisions		(14,565,000)			(3,900,000)			(39,315,000)	10,865,000
Net income (loss)		41,884,000			14,101,000			112,805,000	(26,214,000)
Total assets		350,108,000			155,545,000			350,108,000	155,545,000
Capital expenditures		0			0			0	0
Other income		69,000						69,000	3,000
Net unrealized gains (losses) on marketable securities					16,489,000				(41,191,000)
Pretax loss		56,449,000			18,001,000			152,120,000	(37,079,000)
Corporate, Non-Segment [Member] | Real Estate Bank Loan Secured by Logan Office [Member]
Interest expense on debt		(14,000)			(20,000)			(48,000)	(63,000)
Corporate, Non-Segment [Member] | Margin Account [Member]
Interest expense on debt					(64,000)				(401,000)
Corporate, Non-Segment [Member] | Advertising [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Corporate, Non-Segment [Member] | Subscription and Circulation [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Corporate, Non-Segment [Member] | Advertising Service Fees and Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Corporate, Non-Segment [Member] | License and Maintenance [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Corporate, Non-Segment [Member] | Consulting Fees [Member]
Revenue from Contract with Customer, Including Assessed Tax		0			0			0	0
Corporate, Non-Segment [Member] | Service, Other [Member]
Revenue from Contract with Customer, Including Assessed Tax		$ 0			$ 0			$ 0	$ 0