To analyze Daily Journal Corp. (NASDAQ: DJCO ) with the necessary rigor, I first need to define what the company is today. While it is impossible to ignore its legacy asWith a degree in Finance and Accounting and previous experience in financial advisory, I use The Sharpe Quest to share my path as an independent investor and market analyst. My approach mixes long-term conviction holdings with tactical sector rotations, driven by the belief that investing isn’t about being right, it’s about making money. I f ...

Core Viewpoint - Daily Journal Corporation (DJCO) experienced a mixed financial performance in the quarter ended June 30, 2025, with significant revenue growth but a notable decline in net income compared to the previous year [1][2][7]. Financial Performance - DJCO reported quarterly revenues of $23.4 million, a 34% increase from $17.5 million in the prior-year quarter, driven by strong performances in licensing, consulting services, and public service fees [2][3]. - Net income decreased to $10.47 per share, down 38% from $16.96 a year earlier, reflecting lower gains on the securities portfolio [1][2]. Segment Performance - The Journal Technologies segment was the primary growth driver, contributing approximately 79% of total revenues, with segment revenues climbing 44% to $18.5 million from $13.1 million a year ago [3]. - The Traditional Business segment generated $4.9 million in revenues, a modest increase from $4.4 million, but pretax income turned negative, recording a $0.9 million loss due to higher personnel costs [4][6]. Management Insights - Management highlighted that growth was largely due to successful customer project execution at Journal Technologies, focusing on product upgrades and operational efficiencies, although increased staffing and contractor costs pressured operating margins [5][6]. Investment Portfolio Impact - The decline in net income was significantly influenced by the company's investment portfolio, with unrealized securities gains dropping to $11.5 million from $28 million a year earlier, reducing non-operating income contributions [7]. - Operating expenses rose 23% year over year to $20.2 million, primarily due to salary adjustments and increased legal costs, impacting operating income, which grew to $3.2 million from $1.1 million in the previous year [8]. Other Developments - DJCO continued to decrease its reliance on margin borrowings, with the investment margin loan balance at $25 million as of June 30, 2025, down from $27.5 million at the end of fiscal year 2024 [9].

Core Viewpoint - Daily Journal Corporation is addressing allegations from Buxton Helmsley USA, Inc. regarding improper accounting practices related to software development costs, asserting that it has complied with accounting standards [1][2]. Group 1: Allegations and Responses - Buxton Helmsley USA, Inc. claims that Daily Journal Corporation should capitalize its software development costs instead of expensing them, suggesting this change would unlock shareholder value [2]. - The Audit Committee of Daily Journal Corporation reviewed the allegations and confirmed that the company is correctly accounting for its software development costs in accordance with ASC 950-20 [3]. Group 2: Accounting Standards Explanation - Historically, software companies followed ASC 985-20, which allows capitalization of development costs only after technological feasibility is established and before general release [4]. - The evolution of software development practices, particularly the adoption of agile methodologies, has shortened the capitalization window, making it rare for companies to incur significant costs eligible for capitalization [6]. - Companies developing software as a service (SaaS) may capitalize costs under ASC 350-40, which has a longer development window compared to ASC 985-20 [7]. Group 3: Misunderstandings and Clarifications - Buxton Helmsley USA, Inc. appears to have misunderstood the accounting practices of other companies, as they likely use different standards for capitalizing costs [8]. - Daily Journal Corporation emphasizes that it will continue to expense development costs when appropriate and capitalize them when justified, ensuring transparency in reporting R&D costs [9]. Group 4: Call for Resolution - Daily Journal Corporation urges Mr. Parker to cease his unfounded attacks and allow the company to focus on creating actual business value for shareholders [11].

Financial Performance - Daily Journal Corporation reported consolidated revenues of $59,286,000 for the nine months ended June 30, 2025, an increase of $9,228,000 from $50,058,000 in the prior year period, driven by higher license and maintenance fees, consulting fees, and public service fees from Journal Technologies, as well as increased advertising revenues from the Traditional Business [1] - The Traditional Business' pretax income decreased by $1,364,000 to $237,000, primarily due to increased expenses of $2,290,000, despite a revenue increase of $926,000 [2] - Journal Technologies' pretax income increased by $3,947,000 to $4,692,000, attributed to increased operating revenues of $8,302,000, partially offset by increased operating expenses of $4,355,000 [2] - Consolidated pretax income was $94,396,000, compared to $68,195,000 in the prior fiscal year period, with consolidated net income of $69,986,000 ($50.81 per share) for the nine months ended June 30, 2025, up from $51,385,000 ($37.32 per share) in the prior year [5] Marketable Securities - As of June 30, 2025, the Company held marketable securities valued at $443,011,000, including net pretax unrealized gains of $303,917,000, with a deferred tax liability of $79,260,000 for estimated income taxes due upon the sale of appreciated securities [3] Non-Operating Income - The Company's non-operating income, net of expenses, increased by $23,618,000 to $89,467,000, primarily due to net unrealized gains on marketable securities of $84,320,000, compared to realized and unrealized gains of $62,472,000 in the prior fiscal year [4] - There was also an increase in dividends and interest income of $301,000 to $6,158,000 from $5,857,000 [4] Tax Provision - For the nine months ended June 30, 2025, the Company recorded an income tax provision of $24,410,000 on the pretax income of $94,396,000, resulting in an overall effective tax rate of 25.9% [6]

PART I - Financial Information [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements, including balance sheets, income statements, equity, cash flows, and notes for periods ended June 30, 2025, and September 30, 2024 [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets%20-%20June%2030%2C%202025%20and%20September%2030%2C%202024) Total assets increased to **$494.7 million** at June 30, 2025, from **$403.8 million** at September 30, 2024, driven by marketable securities, with shareholders' equity also rising Consolidated Balance Sheets (000) | Metric | June 30, 2025 (000) | September 30, 2024 (000) | | :----------------------------------- | :-------------------- | :----------------------- | | Cash and cash equivalents | $18,705 | $12,986 | | Marketable securities at fair value | $443,011 | $358,691 | | Total current assets | $485,716 | $394,495 | | Total assets | $494,721 | $403,763 | | Total current liabilities | $39,121 | $38,443 | | Total long-term liabilities | $106,718 | $86,536 | | Total shareholders' equity | $348,882 | $278,784 | [Consolidated Statements of Income and Comprehensive Income (Three Months)](index=6&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20-%20Three%20months%20ended%20June%2030%2C%202025%20and%202024) Q3 2025 total revenues rose **34%** to **$23.4 million**, but net income fell **38.3%** to **$14.4 million** due to lower unrealized gains on marketable securities Consolidated Statements of Income and Comprehensive Income (Three Months, 000) | Metric | Three months ended June 30, 2025 (000) | Three months ended June 30, 2024 (000) | Change (%) | | :----------------------------------- | :------------------------------------- | :------------------------------------- | :--------- | | Total revenues | $23,406 | $17,494 | 34.0% | | Income from operations | $3,224 | $1,090 | 195.8% | | Net realized and unrealized gains on marketable securities | $11,521 | $28,018 | -58.9% | | Income before income taxes | $18,231 | $31,835 | -42.7% | | Net income | $14,421 | $23,355 | -38.3% | | Basic and diluted net income per share | $10.47 | $16.96 | -38.3% | [Consolidated Statements of Income and Comprehensive Income (Nine Months)](index=7&type=section&id=Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income%20-%20Nine%20months%20ended%20June%2030%2C%202025%20and%202024) Nine months ended June 30, 2025, total revenues increased **18.4%** to **$59.3 million**, and net income rose **36.2%** to **$70.0 million**, driven by higher gains on marketable securities Consolidated Statements of Income and Comprehensive Income (Nine Months, 000) | Metric | Nine months ended June 30, 2025 (000) | Nine months ended June 30, 2024 (000) | Change (%) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | :--------- | | Total revenues | $59,286 | $50,058 | 18.4% | | Income from operations | $4,929 | $2,346 | 110.9% | | Net realized and unrealized gains on marketable securities | $84,320 | $62,472 | 35.0% | | Income before income taxes | $94,396 | $68,195 | 38.4% | | Net income | $69,986 | $51,385 | 36.2% | | Basic and diluted net income per share | $50.81 | $37.32 | 36.1% | [Consolidated Statements of Shareholders' Equity](index=8&type=section&id=Consolidated%20Statements%20of%20Shareholders'%20Equity%20-%20Nine%20months%20ended%20June%2030%2C%202025%20and%202024) Shareholders' equity rose from **$278.8 million** (Sept 30, 2024) to **$348.9 million** (June 30, 2025), driven by net income and stock-based compensation Consolidated Statements of Shareholders' Equity (000) | Metric | June 30, 2025 (000) | September 30, 2024 (000) | | :----------------------- | :------------------ | :----------------------- | | Retained earnings | $346,799 | $276,813 | | Total shareholders' equity | $348,882 | $278,784 | - Stock-based compensation contributed **$23K** in Q3 2025 and **$65K** in Q2 2025 to additional paid-in capital[16](index=16&type=chunk) [Consolidated Statements of Cash Flows](index=9&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20-%20Nine%20months%20ended%20June%2030%2C%202025%20and%202024) Net cash from operations improved to **$8.8 million** (nine months ended June 30, 2025) from a **$3.2 million** use (prior year), with financing cash use decreasing due to lower margin loan payments Consolidated Statements of Cash Flows (000) | Metric | Nine months ended June 30, 2025 (000) | Nine months ended June 30, 2024 (000) | | :----------------------------------- | :------------------------------------ | :------------------------------------ | | Net cash provided from (used in) operating activities | $8,810 | $(3,212) | | Net cash provided from investing activities | $- | $40,568 | | Net cash used in financing activities | $(2,623) | $(47,619) | | Increase (decrease) in cash and restricted cash and cash equivalents | $6,187 | $(10,263) | - Payment to margin loan borrowing decreased significantly to **$2.5 million** in 2025 from **$47.5 million** in 2024[19](index=19&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Provides additional disclosures for financial statements, covering operations, accounting policies, fair value, debt, commitments, contingencies, and segment reporting [Note 1 - The Corporation and Operations](index=10&type=section&id=Note%201%20-%20The%20Corporation%20and%20Operations) Daily Journal Corporation operates 'Traditional Business' (newspapers, info services) and 'Journal Technologies' (case management software for justice agencies in 32 states and internationally) - The Company's 'Traditional Business' publishes newspapers and websites covering California and Arizona and provides specialized information services and public notice advertising[21](index=21&type=chunk) - Journal Technologies, a wholly-owned subsidiary, supplies case management software systems and related products to courts, prosecutor/public defender offices, probation departments, and other justice agencies in approximately **32 states** and internationally[22](index=22&type=chunk) - U.S. operations are primarily based in California, Arizona, and Utah, with an international presence in Australia and British Columbia, Canada[23](index=23&type=chunk) [Note 2 – Summary of Significant Accounting Policies](index=10&type=section&id=Note%202%20%E2%80%93%20Summary%20of%20Significant%20Accounting%20Policies) Outlines basis of presentation for unaudited interim consolidated financial statements, prepared under SEC rules and GAAP, highlighting credit losses and stock-based compensation - The unaudited consolidated financial statements are prepared in accordance with SEC rules and GAAP, with certain information and footnote disclosures condensed or omitted[24](index=24&type=chunk)[25](index=25&type=chunk) Allowance for Credit Losses (000) | Description | Balance at Beginning of Year | Additions charged to Costs and Expenses | Accounts charged off less Recoveries | Balance at End of Year | | :------------------------------------ | :--------------------------- | :-------------------------------------- | :--------------------------------- | :--------------------- | | Fiscal 2025 year-to-date through June 30 | $250 | $9 | $(9) | $250 | | Fiscal 2024 year-to-date through June 30 | $250 | $4 | $(4) | $250 | - The Company has two equity incentive plans for key employees and non-employee directors, with **4,725 shares** available for future grants as of June 30, 2025[30](index=30&type=chunk) - Unrecognized compensation cost related to unvested restricted stock units was approximately **$99,000**, expected to be amortized over approximately **1.05 years**[33](index=33&type=chunk) [Note 3 – New Accounting Pronouncement](index=12&type=section&id=Note%203%20%E2%80%93%20New%20Accounting%20Pronouncement) Reviewed ASU No. 2023-07, 'Segment Reporting,' effective after December 15, 2023, with no expected material effect on financial statements - ASU No. 2023-07, Segment Reporting, improves reportable segment disclosure requirements and is effective for fiscal years beginning after December 15, 2023[35](index=35&type=chunk) - The Company believes that the adoption of ASU No. 2023-07 will not have a material effect on its consolidated financial statements[35](index=35&type=chunk) [Note 4 – Right-of-Use (ROU) Asset and Liabilities](index=12&type=section&id=Note%204%20%E2%80%93%20Right-of-Use%20(ROU)%20Asset%20and%20Liabilities) Current ROU assets and lease liabilities decreased to **$59K** (June 30, 2025) from **$151K** (June 30, 2024), with accrued liabilities including vacation, compensation, and payroll - Current ROU asset and current lease liabilities were approximately **$59,000** at June 30, 2025, down from **$151,000** at June 30, 2024[36](index=36&type=chunk) Accrued Current Liabilities (000) | Item | June 30, 2025 | June 30, 2024 | | :----------------------------------- | :------------ | :------------ | | Accrued vacation | $3,425 | $3,350 | | Current portion of supplemental compensation accrual | $2,910 | $2,280 | | Accrued payroll, including non-qualified compensation and other | $2,535 | $2,887 | [Note 5 – Revenue Recognition](index=13&type=section&id=Note%205%20%E2%80%93%20Revenue%20Recognition) Recognizes revenue per ASC Topic 606; Traditional Business revenue recognized upon service, Journal Technologies allocates revenue based on standalone selling prices for consulting, software, maintenance, and hosting - Traditional Business revenues from subscriptions and other services are recorded as deferred revenue and recognized over the subscription term; advertising service fees are recognized when advertisements are published[39](index=39&type=chunk) - Journal Technologies' contracts include implementation consulting fees, subscription software license, maintenance, support fees, and third-party hosting fees[40](index=40&type=chunk) - Revenue is allocated based on standalone selling price, with consulting fees recognized upon service completion and subscription/maintenance fees recognized ratably[41](index=41&type=chunk) - Approximately **77%** of the Company's revenues for the nine months ended June 30, 2025, were derived from sales of software licenses, annual software licenses, maintenance and support agreements, and consulting services[45](index=45&type=chunk) Changes in total deferred revenues (000) | Description | Balance at Beginning of Year | Addition to the Deferral | Recognition from Deferral | Balance at End of Year | | :-------------------- | :--------------------------- | :----------------------- | :------------------------ | :--------------------- | | As of June 30, 2025 | $24,596 | $33,935 | $(37,978) | $20,553 | | As of June 30, 2024 | $26,539 | $33,247 | $(33,794) | $25,992 | [Note 6 - Treasury Stock and Net Income per Common Share](index=14&type=section&id=Note%206%20-%20Treasury%20Stock%20and%20Net%20Income%20per%20Common%20Share) 3,720 common shares received as a gift in June 2022 were treasury stock; 400 shares granted to CEO in July 2024; net income per share based on **1,377,321** weighted average shares outstanding for nine months ended June 30, 2025 - **3,720 shares** of common stock were received as a gift in June 2022 and accounted for as treasury stock[48](index=48&type=chunk) - In July 2024, **400 shares** were granted to the CEO[48](index=48&type=chunk) Weighted Average Number of Common Shares Outstanding | Period | 2025 | 2024 | | :------------------------------------ | :----------- | :----------- | | Nine months ended June 30 | 1,377,321 | 1,377,026 | | Three months ended June 30 | 1,377,426 | 1,377,026 | [Note 7 - Basic and Diluted Net Income Per Share](index=14&type=section&id=Note%207%20-%20Basic%20and%20Diluted%20Net%20Income%20Per%20Share) Basic and diluted net income per share were essentially the same at June 30, 2025, as common stock and restricted stock units were roughly equivalent to common shares - Basic and diluted net income per share were essentially the same at June 30, 2025, as common stock and restricted stock units were roughly equivalent to common shares[49](index=49&type=chunk) [Note 8 - Fair value of Financial Instruments](index=15&type=section&id=Note%208%20-%20Fair%20value%20of%20Financial%20Instruments) Financial instruments, primarily marketable securities and cash equivalents, are measured at fair value using Level 1 inputs; marketable securities had a fair value of **$443.0 million** at June 30, 2025, with **$303.9 million** in net accumulated pretax unrealized gains - Financial instruments, including marketable securities and cash equivalents, are measured at fair value using **Level 1 inputs** (unadjusted quoted prices for identical instruments in active markets)[53](index=53&type=chunk)[55](index=55&type=chunk) Fair Value of Financial Assets (000) | Item | June 30, 2025 (Level 1) | September 30, 2024 (Level 1) | | :-------------------------- | :---------------------- | :--------------------------- | | Money market funds | $3,846 | $3,945 | | Marketable securities | $443,011 | $358,691 | | Total | $446,857 | $362,636 | - As of June 30, 2025, net accumulated pretax unrealized gains on marketable securities were **$303,917,000**, up from **$219,597,000** at September 30, 2024[56](index=56&type=chunk) - Most gains were in common stocks of three U.S. financial institutions and one foreign manufacturer[56](index=56&type=chunk) - Net unrealized and realized gains on marketable securities for the nine months ended June 30, 2025, were **$84,320,000**, compared to **$62,472,000** in the prior period[57](index=57&type=chunk) - No purchases or sales of marketable securities occurred in the 2025 period, but a portion was sold in March 2024 to reduce the margin loan[58](index=58&type=chunk) [Note 9 - Income Taxes](index=16&type=section&id=Note%209%20-%20Income%20Taxes) Nine-month income tax provision was **$24.4 million** on pretax income of **$94.4 million**, with an effective tax rate of **25.9%**, including significant provisions for unrealized gains on marketable securities Income Tax Provision (000) | Period | Pretax Income | Income Tax Provision | Effective Tax Rate | | :-------------------------- | :------------ | :------------------- | :----------------- | | Nine months ended June 30, 2025 | $94,396 | $24,410 | 25.9% | | Nine months ended June 30, 2024 | $68,195 | $16,810 | 24.65% | - The income tax provision for 2025 included **$21,990,000** on unrealized gains on marketable securities, while for 2024 it included **$3,690,000** on realized gains and **$12,480,000** on unrealized gains[62](index=62&type=chunk)[63](index=63&type=chunk) [Note 10 - Debt and Commitments](index=17&type=section&id=Note%2010%20-%20Debt%20and%20Commitments) Investment margin loan reduced to **$25 million** (June 30, 2025) from **$27.5 million** (Sept 30, 2024) at **5%** interest; real estate loan **$997.3K**; Company sponsors 401(k) and non-qualified deferred compensation plans - The investment margin loan balance was reduced to **$25,000,000** at June 30, 2025, from **$27,500,000** at September 30, 2024, with an interest rate of approximately **5%**[66](index=66&type=chunk)[67](index=67&type=chunk) - A real estate bank loan for the Logan, Utah office building had a balance of approximately **$997,300** as of June 30, 2025, with a fixed interest rate of **3.33%**[68](index=68&type=chunk) - Employer contributions to the 401(k) retirement plan were **$460,000** for the nine months ended June 30, 2025[71](index=71&type=chunk) - Deferred compensation liabilities for the non-qualified plan were approximately **$1,398,000** at June 30, 2025[71](index=71&type=chunk) [Note 11 - Contingencies](index=18&type=section&id=Note%2011%20-%20Contingencies) The Company faces litigation in the normal course of business, but management expects no material adverse effect on financial position, results of operations, or cash flows - The Company is subject to contingencies, including litigation, arising in the normal course of its business[72](index=72&type=chunk) - Management does not believe the ultimate outcome of these matters will have a material adverse effect on the Company's financial position, results of operations, or cash flows[72](index=72&type=chunk) [Note 12 - Operating Segments](index=18&type=section&id=Note%2012%20-%20Operating%20Segments) Operates in two segments: Traditional Business and Journal Technologies; Journal Technologies accounted for **77%** of nine-month revenues and **79%** of three-month revenues (June 30, 2025), primarily from governmental agencies - The Company has two reportable segments: the Traditional Business and Journal Technologies (including Journal Technologies, Inc. and Journal Technologies (Canada) Inc.)[73](index=73&type=chunk) - Approximately **77%** of the Company's revenues for the nine months ended June 30, 2025, and **79%** for the three months ended June 30, 2025, were derived from Journal Technologies[79](index=79&type=chunk) - Journal Technologies' revenues are primarily from governmental agencies[79](index=79&type=chunk) [Note 13 - Subsequent Events](index=20&type=section&id=Note%2013%20-%20Subsequent%20Events) Evaluated all subsequent events through the issuance date of financial statements and found no events requiring recognition or disclosure - No subsequent events occurred through the issuance date of the financial statements that required recognition or disclosure[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=20&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial condition and results for Traditional Business and Journal Technologies (three and nine months ended June 30, 2025), covering liquidity, capital resources, and critical accounting policies [Results of Operations](index=20&type=section&id=Results%20of%20Operations) The Company operates two distinct businesses: Traditional Business (newspaper publishing) and Journal Technologies (case management software for justice agencies in 32 states and internationally) - The Company operates two distinct businesses: the Traditional Business (newspaper publishing and related services) and Journal Technologies (case management software systems for courts and justice agencies)[82](index=82&type=chunk) - Journal Technologies' products are licensed or subscribed to in approximately **32 states** and internationally, offering electronic case management, e-filing, and online payment services[82](index=82&type=chunk) [Reportable Segments (Nine Months)](index=21&type=section&id=Reportable%20Segments%20(Nine%20Months)) Nine-month consolidated revenues rose **18%** (Journal Technologies-driven), operating expenses increased **14%**, and net income grew **36%** due to higher unrealized gains on marketable securities, with Journal Technologies showing substantial pretax income growth [Consolidated Financial Comparison (Nine Months)](index=22&type=section&id=Consolidated%20Financial%20Comparison%20(Nine%20Months)) Nine-month consolidated revenues rose **18%** to **$59.3 million**, operating expenses increased **14%** to **$54.4 million**, and net income grew **36%** to **$70.0 million**, largely due to higher net unrealized gains on marketable securities Consolidated Financial Performance (Nine Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Consolidated revenues | $59,286 | $50,058 | $9,228 | 18.4% | | Consolidated operating expenses | $54,357 | $47,712 | $6,645 | 13.9% | | Non-operating income, net of expenses | $89,467 | $65,849 | $23,618 | 35.9% | | Consolidated net income | $69,986 | $51,385 | $18,601 | 36.2% | | Basic and diluted net income per share | $50.81 | $37.32 | $13.49 | 36.1% | - Revenue increase primarily from Journal Technologies' license and maintenance fees (**$2.4M**), consulting fees (**$1.9M**), and other public service fees (**$4.0M**), as well as Traditional Business' advertising revenues (**$0.7M**)[85](index=85&type=chunk) - Operating expense increase mainly due to a **$4.1 million (12%)** rise in salaries and employee benefits, driven by annual adjustments and additional staff for operational efficiencies, product development, and installation projects[87](index=87&type=chunk) [Taxes (Nine Months)](index=22&type=section&id=Taxes%20(Nine%20Months)) Nine-month income tax provision was **$24.4 million** on pretax income of **$94.4 million**, with an effective tax rate of **25.9%**, including a significant portion for unrealized gains on marketable securities Income Tax Provision (Nine Months, 000) | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Pretax income | $94,396 | $68,195 | | Income tax provision | $24,410 | $16,810 | | Overall effective tax rate | 25.9% | 24.65% | - The 2025 tax provision included **$21,990,000** on unrealized gains on marketable securities[91](index=91&type=chunk) - The 2024 provision included **$3,690,000** on realized gains and **$12,480,000** on unrealized gains[92](index=92&type=chunk) [The Traditional Business (Nine Months)](index=23&type=section&id=The%20Traditional%20Business%20(Nine%20Months)) Traditional Business pretax income decreased **85%** to **$237K** (nine months ended June 30, 2025) due to increased expenses, particularly supplemental compensation accrual, despite a **7.5%** revenue increase Traditional Business Performance (Nine Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Pretax income | $237 | $1,601 | $(1,364) | -85.2% | | Total operating revenues | $13,352 | $12,426 | $926 | 7.5% | | Advertising revenues | $7,642 | $6,939 | $703 | 10.1% | | Advertising service fees and other | $2,514 | $2,204 | $310 | 14.1% | | Circulation revenues | $3,196 | $3,283 | $(87) | -2.7% | - The decrease in pretax income was primarily due to increased expenses of **$2,290,000**, mainly from increases in the long-term supplemental compensation accrual[94](index=94&type=chunk) - Advertising revenue growth was driven by increased commercial advertising (**$380K**), legal notice advertising (**$154K**), trustee sale notice advertising (**$108K**), and government notice advertising (**$61K**)[95](index=95&type=chunk) - The number of foreclosure notices published increased by **12%** during the period[96](index=96&type=chunk) [Journal Technologies (Nine Months)](index=24&type=section&id=Journal%20Technologies%20(Nine%20Months)) Journal Technologies' pretax income surged **530%** to **$4.7 million** (nine months ended June 30, 2025), driven by a **22%** revenue increase, with continued investment in software updates and R&D Journal Technologies Performance (Nine Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Pretax income | $4,692 | $745 | $3,947 | 530.0% | | Revenues | $45,934 | $37,632 | $8,302 | 22.1% | | Licensing and maintenance fees | $22,990 | $20,572 | $2,418 | 11.7% | | Consulting fees | $11,792 | $9,939 | $1,853 | 18.6% | | Other public service fees | $11,152 | $7,121 | $4,031 | 56.6% | | Operating expenses | $41,242 | $36,887 | $4,355 | 11.8% | - Revenue growth was mainly due to increased customer projects being completed, leading to higher consulting fees, and increased e-filing fee revenues[100](index=100&type=chunk) - Operating expense increase was primarily due to increased personnel costs (annual salary adjustments, additional staff for operational efficiencies, product development, technical debt, and installation projects) and increased third-party hosting fees[102](index=102&type=chunk) - Journal Technologies continues to invest in updating and upgrading software products, strengthening product management, quality assurance, user experience, and exploring new possibilities with emerging technologies, expensing these costs as incurred[103](index=103&type=chunk) [Comparable Segments (Three Months)](index=25&type=section&id=Comparable%20Segments%20(for%20the%20three-month%20periods%20ended%20June%2030%2C%202025%20and%202024)) Three-month consolidated revenues rose **34%** (Journal Technologies-driven), but net income fell **38.3%** due to lower non-operating income from marketable securities; Traditional Business incurred a pretax loss, while Journal Technologies saw substantial pretax income growth [Consolidated Financial Comparison (Three Months)](index=25&type=section&id=Consolidated%20Financial%20Comparison%20(Three%20Months)) Three-month consolidated revenues rose **34%** to **$23.4 million**, operating expenses increased **23%** to **$20.2 million**, but non-operating income fell **51%** to **$15.0 million**, leading to a **42.7%** decrease in net income to **$14.4 million**, mainly due to lower net unrealized gains on marketable securities Consolidated Financial Performance (Three Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Consolidated revenues | $23,406 | $17,494 | $5,912 | 33.8% | | Consolidated operating expenses | $20,182 | $16,404 | $3,778 | 23.0% | | Non-operating income, net of expenses | $15,007 | $30,745 | $(15,738) | -51.2% | | Consolidated net income | $14,421 | $23,355 | $(8,934) | -38.3% | | Basic and diluted net income per share | $10.47 | $16.96 | $(6.49) | -38.3% | - Revenue increase primarily from Journal Technologies' consulting fees (**$3.1M**), other public service fees (**$1.6M**), and license/maintenance fees (**$0.8M**), as well as Traditional Business' advertising revenues (**$0.3M**)[106](index=106&type=chunk) - Operating expense increase mainly due to a **$2.7 million (22%)** rise in salaries and employee benefits, driven by annual adjustments and additional staff at Journal Technologies[108](index=108&type=chunk) - Non-operating income decrease primarily due to lower net unrealized gains on marketable securities (**$11.5M** in 2025 vs **$28.0M** in 2024)[109](index=109&type=chunk) [The Traditional Business (Three Months)](index=26&type=section&id=The%20Traditional%20Business%20(Three%20Months)) Traditional Business reported a pretax loss of **$934K** (three months ended June 30, 2025), a significant decrease from a **$740K** profit (prior year), mainly due to increased expenses, particularly a **$1.1 million** increase in supplemental compensation accrual, despite a **10.3%** revenue increase Traditional Business Performance (Three Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Pretax income | $(934) | $740 | $(1,674) | -226.2% |\n| Total operating revenues | $4,881 | $4,427 | $454 | 10.3% | | Advertising revenues | $2,798 | $2,536 | $262 | 10.3% | - The decrease in pretax income was primarily due to increased expenses of **$2,128,000**, mainly from a **$1,145,000** increase in the long-term supplemental compensation accrual[111](index=111&type=chunk) - Advertising revenue growth was driven by increased commercial advertising (**$155K**), legal notice advertising (**$90K**), and trustee sale notice advertising (**$27K**)[112](index=112&type=chunk) [Journal Technologies (Three Months)](index=26&type=section&id=Journal%20Technologies%20(Three%20Months)) Journal Technologies' pretax income dramatically increased **1088%** to **$4.2 million** (three months ended June 30, 2025), driven by a **44%** revenue increase, primarily from consulting and public service fees, with operating expenses rising **13%** Journal Technologies Performance (Three Months, 000) | Metric | 2025 | 2024 | Change ($) | Change (%) | | :----------------------------------- | :----- | :----- | :--------- | :--------- | | Pretax income | $4,158 | $350 | $3,808 | 1088.0% | | Revenues | $18,525 | $13,067 | $5,458 | 41.8% | | Licensing and maintenance fees | $7,964 | $7,161 | $803 | 11.2% | | Consulting fees | $6,529 | $3,438 | $3,091 | 89.9% | | Other public service fees | $4,032 | $2,468 | $1,564 | 63.4% | | Operating expenses | $14,367 | $12,717 | $1,650 | 13.0% | - Revenue growth was mainly due to more customer projects being completed, leading to higher consulting fees, and increased e-filing fee revenues[114](index=114&type=chunk) - Operating expense increase was primarily due to additional contractor services, hiring of additional staff members, and increased third-party hosting fees[115](index=115&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Cash, cash equivalents, restricted cash, and marketable securities increased by **$90.1 million** (nine months ended June 30, 2025), primarily due to net pretax unrealized gains on marketable securities and margin loan reduction; working capital was **$446.6 million** - Cash, cash equivalents, restricted cash, and marketable security positions increased by **$90,097,000** during the nine months ended June 30, 2025, after recording net pretax unrealized gains on marketable securities of **$84,320,000** and a **$2.5 million** margin loan payment[117](index=117&type=chunk) - The marketable securities portfolio had a market value of approximately **$443,011,000** at June 30, 2025, with **$303,917,000** of net unrealized gains before taxes[118](index=118&type=chunk) - The margin loan balance was **$25,000,000**[118](index=118&type=chunk) - Working capital was **$446,595,000** as of June 30, 2025[120](index=120&type=chunk) - The Company believes it can fund operations through cash flows and current working capital but may need to sell additional securities or borrow against its marketable securities portfolio, which is subject to market value fluctuations and potential margin calls[121](index=121&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Identifies revenue recognition, software costs, fair value measurement, and income taxes as critical accounting policies and estimates, with further details in the Annual Report on Form 10-K - Critical accounting policies and estimates include revenue recognition, accounting for software costs, fair value measurement and disclosures, and income taxes[122](index=122&type=chunk) - Further details on these policies are provided in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 2024[123](index=123&type=chunk) [Disclosure Regarding Forward-Looking Statements](index=28&type=section&id=Disclosure%20Regarding%20Forward-Looking%20Statements) Contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, including risks related to software development, reliance on justice agencies, costs, laws, security, accounting, internal control, and market prices of securities - The report includes "forward-looking statements" that involve risks and uncertainties, which may cause actual future events or results to differ materially[125](index=125&type=chunk) - Key factors that could cause differences include risks associated with software development and implementation, disruptive new technologies like AI, reliance on justice agencies, material changes in costs (postage, paper), changes in public notice advertising laws, security breaches, accounting guidance, material weaknesses in internal control, and declines in marketable securities prices[125](index=125&type=chunk) - The Company disclaims any intention or obligation to revise any forward-looking statements[125](index=125&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of June 30, 2025, due to material weaknesses in internal control over financial reporting, with remediation efforts underway - Management concluded that the Company's disclosure controls and procedures were **not effective** as of June 30, 2025, due to material weaknesses in internal control over financial reporting[126](index=126&type=chunk) - Remediation activities include hiring additional finance and accounting personnel, implementing a new consolidated ERP system, enhancing internal review procedures, engaging a third-party consulting firm, and hiring a Director of SEC Reporting[127](index=127&type=chunk)[128](index=128&type=chunk) - These remediation activities are expected to result in additional costs[127](index=127&type=chunk) PART II - Other Information [Item 6. Exhibits](index=29&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with Form 10-Q, including CEO and CFO certifications under Sarbanes-Oxley Act Sections 302 and 906, and various Inline XBRL taxonomy extensions - Exhibits include Certifications by the Chief Executive Officer and Chief Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[132](index=132&type=chunk) - The filing also includes various Inline XBRL (eXtensible Business Reporting Language) taxonomy extensions (Instance, Schema, Calculation, Definition, Labels, Presentation) and the Cover Page Interactive Data File[132](index=132&type=chunk) [SIGNATURE](index=29&type=section&id=SIGNATURE) Report signed by Steven Myhill-Jones (CEO & Chairman) and Tu To (CFO) on behalf of Daily Journal Corporation on August 14, 2025 - The report is signed by Steven Myhill-Jones, Chief Executive Officer and Chairman of the Board, and Tu To, Chief Financial Officer[132](index=132&type=chunk) - The signing date for the report is August 14, 2025[132](index=132&type=chunk)

NEW YORK, Aug. 05, 2025 (GLOBE NEWSWIRE) -- Buxton Helmsley USA, Inc. ("BH"), a New York City- based alternative asset manager whose brand is recognized by Bloomberg as being among the top 15% of activist investors globally (based on number of investor advocacy campaigns), today released an open letter to Baker Tilly US, LLP, as auditor of the Daily Journal Corporation (the "Company" or "DJCO"). The open letter may be viewed at: https://www.buxtonhelmsley.com/djco Whistleblowers may reach the BH Whistleblow ...

Core Viewpoint - Daily Journal Corporation is responding to a proposal from Buxton Helmsley USA, Inc. regarding the accounting treatment of software development costs, which could potentially unlock significant equity value for shareholders [2][3]. Group 1: Proposal and Impact - Buxton Helmsley USA, Inc. suggested that Daily Journal Corporation should capitalize software development costs instead of expensing them, which could "unlock $160+ million in incremental equity value" for shareholders [3]. - The proposal included a request for a consulting engagement that would compensate Mr. Parker with $24 million in equity if the stock price increased accordingly [3]. Group 2: Company’s Accounting Practices - Daily Journal Corporation has been transparent about its practice of expensing software development costs for over a decade, adhering to GAAP and ASC 985-20 accounting rules [5]. - The company believes its accounting for the eSeries® product line development is correct and has been reviewed without issue by three different national accounting firms during annual audits [5]. Group 3: Response to the Proposal - The Board and Audit Committee decided to engage an independent accounting consultant to review the accounting practices, which led to Mr. Parker's subsequent actions [7]. - Following the decision to not engage Buxton Helmsley, Mr. Parker expressed dissatisfaction and reported the company to the SEC [8][9]. Group 4: Communication and Demands - Mr. Parker's correspondence included demands for the immediate resignation of the CEO and CFO, which the company views as an overreach following the decision to consult an independent firm [10]. - The company has offered to discuss its accounting practices with the SEC if they wish to engage [9].

Core Viewpoint - Buxton Helmsley USA, Inc. has expressed concerns regarding the Daily Journal Corporation's compliance with accounting standards and corporate governance, prompting an open letter to the company's directors [1]. Group 1: Company Concerns - The open letter highlights issues related to compliance with accounting standards and securities laws, as well as corporate governance practices at Daily Journal Corporation [1]. - Buxton Helmsley has indicated that it will begin accumulating an interest in DJCO common stock following the public distribution of their concerns [2]. Group 2: Communication and Engagement - DJCO shareholders are encouraged to reach out to Buxton Helmsley for discussions regarding the governance concerns raised in the open letter [3]. - Buxton Helmsley is open to media interviews to further elaborate on their governance concerns and vision for restoring equity value at DJCO [4]. Group 3: Company Background - Buxton Helmsley USA, Inc. is an alternative asset management firm based in New York City, focusing on both active and passive investment strategies across various asset classes, primarily in North America and Europe [6].

NEW YORK, July 25, 2025 (GLOBE NEWSWIRE) -- Buxton Helmsley USA, Inc. (“BH”), a New York City-based alternative asset manager whose brand is recognized by Bloomberg as being among the top 15% of activist investors globally (based on number of investor advocacy campaigns), today released an open letter to shareholders of the Daily Journal Corporation (the “Company” or “DJCO”), about concerns related to: (a) compliance with accounting standards and securities laws; and (b) corporate governance. The open lette ...

Core Insights - Daily Journal Corporation (DJCO) shares increased by 2.8% following the earnings report for the six months ending March 31, 2025, outperforming the S&P 500 index, which declined by 2.5% during the same period [1] - The company reported a significant rise in net income, reaching $40.34 per share, compared to $20.36 per share in the previous year, indicating a strong financial performance [2] Financial Performance - Consolidated revenues for the six months were $35.9 million, a 10.2% increase from $32.6 million year-over-year [2] - Consolidated pretax income more than doubled to $76.2 million from $36.4 million, primarily driven by investment-related gains [2] - Net income surged to $55.6 million, reflecting a 98% year-over-year increase from $28 million [2] Revenue Drivers and Segment Performance - Revenue growth was mainly driven by Journal Technologies, with license and maintenance fees increasing by $1.6 million and public service fees rising by $2.5 million [3] - The Traditional Business segment contributed with a $0.4 million rise in advertising revenues and a $0.1 million increase in other service fees, although consulting fees declined by $1.2 million [3] Segment-Level Profitability - Journal Technologies reported a pretax income of $0.5 million, up from $0.4 million, despite a $2.7 million rise in operating expenses [4] - The Traditional Business segment saw its pretax income grow by $0.3 million to $1.2 million, supported by a modest revenue increase [4] Non-Operating Income Surge - Non-operating income significantly increased to $74.5 million from $35.1 million in the prior year, largely due to net unrealized gains of $72.8 million on marketable securities [5] - Dividend and interest income slightly declined by $0.4 million to $2.4 million [5] Marketable Securities and Tax Impact - As of March 31, 2025, the company held $431.5 million in marketable securities with net pretax unrealized gains of $292.4 million [6] - The income tax provision totaled $20.6 million on pretax income of $76.2 million, with a significant portion stemming from taxes on unrealized gains [7]