Note 4 - Debt and Commitments

12 Months Ended

Sep. 30, 2023

Notes to Financial Statements

Commitments Disclosure [Text Block]

4. DEBTS AND COMMITMENTS

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29.5 million for two acquisitions, in each case pledging its marketable securities as collateral. In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million as of September 30, 2023.

The 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 September 30, 2023 was 6%, and it may increase in the future, particularly if the Federal Reserve continues to increase interest rates to help combat inflation. 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 for Journal Technologies. The Company paid $1.24 million and financed the balance with a real estate bank loan of $2.26 million which had a fixed interest rate of 4.66%. This loan is secured by the Logan facility and can be paid off at any time without prepayment penalty. In October 2020, the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% for the remaining 10 years. This real estate loan had a balance of approximately $1.28 million as of September 30, 2023. Each monthly installment payment is approximately $16,700. In April 2022, the Company sold approximately 17,564 square feet of the land along the front of its Logan building to the City of Logan for approximately $381,000 in connection with the City of Logan’s street widening project. (In October 2022, the Company again amended this real estate loan contract as the bank transferred its index to Secured Overnight Financing Rate from London Interbank Offered Rate which was ceased by the Federal Reserve and the Alternative Reference Rates Committee in the United States. The term of the loan, including the interest rate and the balance, remains unchanged.)

The Company also owns its facilities in Los Angeles and leases space for its other offices under operating leases which expire at various dates through October 2025.

The Company is responsible for a portion of maintenance, insurance and property tax expenses relating to the leased properties. Rental expenses, inclusive of these expenses, for fiscal years 2023 and 2022 were $289,000 and $249,000, respectively.

Effective January 1, 2023, the Company began sponsoring a 401(k) retirement plan and a 409(A) non-qualified deferred compensation plan for its employees. As of September 30, 2023, there were deferred compensation liabilities of approximately $200,000 of which $162,000 were held under a trust account for the 409(A) plan.

The following table represents the Company’s future obligations:

	Payments due by Fiscal Year
	2024		2025		2026		2027		2028		2029 and after		Total
Real estate loan	$	158,000	$	164,000	$	169,000	$	175,000	$	181,000	$	431,000	$	1,278,000
Obligations under operating leases		107,000		37,000		3,000		---		---		---		147,000
Non-qualified deferred compensation 409(A) plan		---		200,000		---		---		---		---		200,000
Long-term accrued liabilities*		---		1,747,000		758,000		746,000		426,000		553,000		4,230,000
	$	265,000	$	2,148,000	$	930,000	$	921,000	$	607,000	$	984,000	$	5,855,000

* The long-term accrued liabilities for the Management Incentive Plan are discounted to the present value using a discount rate of 6%.