DJCO

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 e-filing and a website to pay traffic citations and fees online. These products are licensed or subscribed to in approximately 37 states and internationally. Reportable Segments The Company’s Traditional Business is one reportable segment and the other is Journal Technologies, which includes Journal Technologies, Inc. and Journal Technologies (Canada) Inc. All inter-segment transactions were eliminated. Additional details about each of the reportable segments and the Company’s corporate income and expenses for the nine months ended June 30, 2026 and 2025, are set forth below (in thousands): Comparison of the nine months ended June 30, 2026 to the nine months ended June 30, 2025 For the nine months ended June 30, Reportable Segments Traditional Business Journal Technologies Corporate Total 2026 2025 2026 2025 2026 2025 2026 2025 Revenues Advertising $ 10,395 $ 10,156 $ — $ — $ — $ — $ 10,395 $ 10,156 Circulation 3,274 3,196 — — — — 3,274 3,196 Licensing and maintenance fees — — 26,277 22,990 — — 26,277 22,990 Consulting fees — — 14,238 11,792 — — 14,238 11,792 Other public service fees — — 15,047 11,152 — — 15,047 11,152 Total operating revenues 13,669 13,352 55,562 45,934 — — 69,231 59,286 Operating expenses Personnel 7,233 8,260 34,717 31,312 (540 ) — 41,410 39,572 Other segment items* 7,028 4,855 11,093 9,930 967 — 19,088 14,785 Total operating expenses 14,261 13,115 45,810 41,242 427 — 60,498 54,357 Income (loss) from operations (592 ) 237 9,752 4,692 (427) — 8,733 4,929 Dividends and interest income — — — — 5,536 6,158 5,536 6,158 Net unrealized gains (losses) on marketable securities — — — — (87,032 ) 84,320 (87,032 ) 84,320 Interest expense — — — — (692 ) (1,077 ) (692 ) (1,077 ) Other — — — — 365 66 365 66 Pretax income (loss) (592 ) 237 9,752 4,692 (82,250 ) 89,467 (73,090 ) 94,396 Income tax benefit (expense) (40 ) (60 ) (2,286 ) (1,255 ) 21,910 (23,095 ) 19,584 (24,410 ) Net income (loss) $ (632 ) $ 177 $ 7,466 $ 3,437 $ (60,340 ) $ 66,372 $ (53,506 ) $ 69,986 *Other segment items within net income (loss) include rental income, net unrealized gains on non-qualified compensation plan, interest expense on note payable collateralized by real estate, agency commissions, outside services, postage and delivery expenses, newsprint and printing expenses, depreciation and amortization, equipment maintenance and software, credit card merchant discount fees, rent expenses, accounting and legal fees, and other general and administrative expenses. 22 Table of Contents Consolidated Financials Comparison Consolidated revenues were $69.2 million and $59.3 million for the nine months ended June 30, 2026 and 2025, respectively. This increase of $9.9 million (16.8%) was primarily from increases in Journal Technologies’ other public service fees of $3.9 million, license and maintenance fees of $3.3 million, and consulting fees of $2.4 million, and the Traditional Business’ advertising revenues of $0.2 million. Approximately 80% and 77% of our revenues during the nine months ended June 30, 2026 and 2025, respectively, were derived from Journal Technologies. In addition, our revenues during the nine months ended June 30, 2026 were primarily from the United States, with approximately $6.3 million (9.1%) from foreign countries and U.S. territories. Almost all of Journal Technologies’ revenues are from governmental agencies. Consolidated operating expenses increased by $6.1 million (11.3%) to $60.5 million from $54.4 million. Total salaries and employee benefits increased by $1.8 million (4.6%) to $41.4 million from $39.6 million primarily due to annual salary adjustments and the hiring of additional staff members to strengthen operational efficiencies, conduct product development and address technical debt, and bolster teams working on our installation projects. Outside services increased by $0.4 million (8.4%) to $5.8 million from $5.3 million mainly because of additional contractor services and increased third-party hosting fees which were billed to clients. Other general and administrative expenses increased by $4.4 million (104.0%) to $8.7 million from $4.3 million, primarily driven by a $1.5 million increase in accounting and legal fees, including higher accounting costs associated with efforts to remediate previously identified material weaknesses in internal control over financial reporting and higher legal and service provider expenses related to proxy solicitation and stockholder outreach activities, as well as a $0.4 million increase in costs related to the adoption and implementation of software and related process changes supporting the Company’s modernization initiatives. The Company expects these costs to remain elevated in the near term as these initiatives continue. Other income (expense) for the nine months ended June 30, 2026 decreased by $171.3 million, resulting in $81.8 million of other expense, compared with $89.5 million of other income for the nine months ended June 30, 2025. This change was primarily driven by unrealized losses on marketable securities of $87.0 million, compared with unrealized gains of $84.3 million in the prior-year period. During the nine months ended June 30, 2026 and 2025, consolidated pretax loss was $73.1 million and pretax income was $94.4 million, respectively, and consolidated net loss was $53.5 million and net income was $70.0 million, respectively. As of June 30, 2026, the aggregate fair market value of the Company’s marketable securities was $406.0 million. These securities had approximately $266.9 million of cumulative unrealized gains before estimated taxes of $68.7 million. Most of the unrealized gains were in the common stocks of three U.S. financial institutions and one foreign manufacturer. Taxes During the nine months ended June 30, 2026, the Company recorded an income tax benefit of $19.6 million on the pretax loss of $73.1 million. The income tax benefit and expense consisted primarily of tax benefit of $22.4 million related to unrealized losses on marketable securities, and tax expense of $3.2 million on income from U.S. operations and dividend income. Consequently, the overall effective tax rate for the nine months ended June 30, 2026 was 26.8% after including the taxes on the unrealized losses on marketable securities. For the nine months ended June 30, 2025, the Company recorded an income tax provision of $24.4 million on pretax income of $94.4 million. The income tax provision consisted of $22.0 million related to unrealized gains on marketable securities, $2.5 million related to income from U.S. operations and dividend income, and a tax provision of $0.2 million for the effect of a change in state apportionment on the beginning of the year’s deferred tax liability. These tax liabilities were partially offset by a tax benefit of $0.3 million for the dividends received deduction and other permanent book and tax differences. Consequently, the overall effective tax rate for the nine months ended June 30, 2025 was 25.9%, after including the taxes on the unrealized gains on marketable securities. The Company files consolidated federal income tax returns, with its domestic subsidiary, in the United States and with various state jurisdictions and is no longer subject to examinations for fiscal years before fiscal year 2022 with regard to federal income taxes and fiscal year 2021 for state income taxes. The Canadian subsidiary files a federal and provincial tax return in Canada. Journal Technologies For the nine months ended June 30, 2026, Journal Technologies’ pretax income increased by $5.1 million to $9.8 million, compared to $4.7 million for the nine months ended June 30, 2025. The increase was primarily attributable to higher revenues of $9.6 million, partially offset by increased operating expenses of $4.6 million. 23 Table of Contents Revenues increased by $9.6 million (21.0%) to $55.6 million from $45.9 million during the prior-year period. Licensing and maintenance fees increased by $3.3 million (14.3%) to $26.3 million, while other public service fees increased by $3.9 million (34.9%) to $15.0 million, primarily due to increased e-filing revenues. Consulting fees increased by $2.4 million (20.7%) to $14.2 million, primarily due to the timing of project go-lives and deferred revenue recognition. Operating expenses increased by $4.6 million (11.1%) to $45.8 million, primarily due to higher accounting and consulting fees, increased personnel costs, higher contractor utilization, and increased hosting costs billed to customers. Traditional Business For the nine months ended June 30, 2026, the Traditional Business reported a pretax loss of $0.6 million, compared to pretax income of $0.2 million for the nine months ended June 30, 2025. This decrease was primarily attributable to increased accounting and consulting fees and other operating expenses. Total revenues increased by $0.3 million (2.4%) to $13.7 million from $13.4 million in the prior-year period. Advertising revenues increased by $0.2 million (2.4%) to $10.4 million, while circulation revenues increased by $0.1 million (2.4% ). The Daily Journals accounted for approximately 95% of the Traditional Business’ total circulation revenues, which remained consistent year-over-year. The Traditional Business segment operating expenses increased by $1.2 million (8.7%) to $14.3 million from $13.1 million, primarily resulting from increased merchant discount fees, additional promotional expenses, and accounting advisory fees primarily associated with the remediation of material weaknesses in our internal controls and higher legal and service provider expenses associated with proxy solicitation and stockholder outreach activities, partially offset by decreased personnel costs. Comparison of the three months ended June 30, 2026 to the three months ended June 30, 2025 For the three months ended June 30, Reportable Segments ​ ​ ​ ​ Traditional Business Journal Technologies Corporate Total 2026 2025 2026 2025 2026 2025 2026 2025 Revenues ​ ​ ​ ​ ​ ​ ​ ​ Advertising $ 3,753 $ 3,812 $ — $ — $ — $ — $ 3,753 $ 3,812 Circulation 1,087 1,069 — — — — 1,087 1,069 Licensing and maintenance fees — — 9,239 7,964 — — 9,239 7,964 Consulting fees — — 7,164 6,529 — — 7,164 6,529 Other public service fees — — 5,733 4,032 — — 5,733 4,032 Total operating revenues 4,840 4,881 22,136 18,525 — — 26,976 23,406 Operating expenses ​ ​ ​ ​ ​ ​ ​ ​ Personnel 2,151 3,871 13,044 11,505 176 — 15,371 15,376 Other segment items* 2,180 1,944 3,554 2,862 604 — 6,338 4,806 Total operating expenses 4,331 5,815 16,598 14,367 780 — 21,709 20,182 Income (loss) from operations 509 (934 ) 5,538 4,158 (780 ) — 5,267 3,224 Dividends and interest income — — — — 2,931 3,796 2,931 3,796 Net unrealized gains (losses) on marketable securities — — — — (24,145 ) 11,521 (24,145 ) 11,521 Interest expense — — — — (229 ) (332 ) (229 ) (332 ) Other — — — — 187 22 187 22 Pretax income (loss) 509 (934 ) 5,538 4,158 (22,036 ) 15,007 (15,989 ) 18,231 Income tax benefit (expense) 230 255 (1,280 ) (1,070 ) 6,150 (2,995 ) 5,100 (3,810 ) Net income (loss) $ 739 $ (679 ) $ 4,258 $ 3,088 $ (15,886 ) $ 12,012 $ (10,889 ) $ 14,421 *Other segment items within net income (loss) include rental income, net unrealized gains on non-qualified compensation plan, interest expense on note payable collateralized by real estate, agency commissions, outside services, postage and delivery expenses, newsprint and printing expenses, depreciation and amortization, equipment maintenance and software, credit card merchant discount fees, rent expenses, accounting and legal fees, and other general and administrative expenses. 24 Table of Contents Consolidated Financials Comparison Consolidated revenues were $27.0 million and $23.4 million for the three months ended June 30, 2026 and 2025, respectively. This increase of $3.6 million (15.3%) was primarily from increases in Journal Technologies’ consulting fees of $0.6 million, other public service fees of $1.7 million, and license and maintenance fees of $1.3 million. Approximately 82% and 79% of our revenues during the three months ended June 30, 2026 and 2025 were derived from Journal Technologies. In addition, our revenues during the three months ended June 30, 2026 were primarily from the United States, with approximately $3.0 million (11.0%) from foreign countries and U.S. territories. Consolidated operating expenses increased by $1.5 million (7.6%) to $21.7 million from $20.2 million. Total salaries and employee benefits remained essentially flat at $15.4 million, as increased Journal Technologies personnel costs were offset by decreased Traditional Business personnel costs. Outside services decreased by $0.3 million (14.7%) to $1.5 million from $1.7 million. Other general and administrative expenses increased by $1.8 million (123.7%) to $3.3 million from $1.5 million, primarily due to higher accounting and consulting fees associated with remediation of material weaknesses in internal controls. Other income (expense) for the three months ended June 30, 2026 was $21.3 million of other expense, compared with $15.0 million of other income for the three months ended June 30, 2025. This change was primarily driven by unrealized losses on marketable securities of $24.1 million, compared with unrealized gains of $11.5 million in the prior-year quarter. During the three months ended June 30, 2026 and 2025, consolidated pretax loss was $16.0 million and pretax income was $18.2 million, respectively, and consolidated net loss was $10.9 million and net income was $14.4 million, respectively. 25 Table of Contents Journal Technologies For the three months ended June 30, 2026, Journal Technologies’ pretax income was $5.5 million compared to $4.2 million for the three months ended June 30, 2025. The increase was primarily attributable to higher revenues of $3.6 million, partially offset by increased operating expenses of $2.2 million. Revenues increased by $3.6 million (19.5%) to $22.1 million from $18.5 million during the prior-year quarter. Licensing and maintenance fees increased by $1.3 million (16.0%) to $9.2 million, while other public service fees increased by $1.7 million (42.2%) to $5.7 million, primarily due to increased e-filing revenues. Consulting fees increased by $0.6 million (9.7%) to $7.2 million, primarily due to the timing of project go-lives and deferred revenue recognition. Operating expenses increased by $2.2 million (15.5%) to $16.6 million, primarily due to increased personnel costs, higher contractor utilization, and increased hosting costs billed to customers. Traditional Business For the three months ended June 30, 2026, the Traditional Business reported a pretax income of $0.5 million, compared to pretax loss of $0.9 million for the three months ended June 30, 2025. This increase was primarily attributable to decreased operating expenses, driven by lower personnel costs. Total revenues decreased by less than $0.1 million (0.8%) to $4.8 million from $4.9 million in the prior-year quarter. Advertising revenues decreased by $0.1 million (1.5%), while circulation revenues increased by less than $0.1 million (1.7%). The Traditional Business segment operating expenses decreased by $1.5 million (25.5%) to $4.3 million from $5.8 million, primarily resulting from decreased personnel costs, partially offset by increased merchant discount fees, additional promotional expenses, accounting advisory fees primarily associated with the remediation of material weaknesses in our internal controls, and higher legal expenses. Liquidity and Capital Resources During the nine months ended June 30, 2026, our cash and cash equivalents, restricted cash, and marketable securities decreased by $76.4 million, reflecting net pretax unrealized losses on marketable securities of $87.0 million. The investments in marketable securities, which had an adjusted cost basis of approximately $139.1 million and a market value of approximately $406.0 million as of June 30, 2026, generated approximately $5.5 million in dividends and interest income during the nine months ended June 30, 2026. These securities had approximately $266.9 million of cumulative unrealized gains before estimated taxes of $68.7 million which will become due only when we sell securities in which there is realized appreciation. No marketable securities were sold during the nine months ended June 30, 2026. The margin loan principal balance was paid down by $2.0 million using excess cash from operations. The loan balance was $20.0 million and $22.0 million as of June 30, 2026 and September 30, 2025, respectively. As of June 30, 2026, we had working capital of $424.1 million, including the liabilities for deferred revenue of $17.9 million. We believe that we will be able to fund our operations for the foreseeable future through our cash flows from operations and our current working capital, and we expect that any such cash flows will be invested in our businesses. We may or may not have the ability to borrow additional amounts against our marketable securities and, among other possibilities, we may be required to consider selling assets to generate cash if needed to fund ongoing operations. The amount available for borrowing is based on the market value of our investment portfolio and fluctuates depending on the value of the underlying securities. In addition, we could be subject to margin calls should the value of the investments decrease significantly. 26 Table of Contents Cash Flows The following table sets forth the primary sources and uses of cash and cash equivalents for each of the periods presented below (in thousands): June 30, 2026 June 30, 2025 Change Net cash provided by: Operating activities $ 12,927 $ 8,810 $ 4,117 Investing activities (151 ) — (151 ) Financing activities (2,126 ) (2,623 ) 497 Effect of exchange rate changes on cash and cash equivalents (26) — (26) Net increase in cash and cash equivalents $ 10,624 $ 6,187 $ 4,437 Operating Activities For the nine months ended June 30, 2026, net cash provided by operating activities was $12.9 million. Cash provided by operating activities consisted of a net loss of $53.5 million, adjusted for non-cash items of $65.1 million, and increased by cash provided by working capital of $1.3 million. Adjustments for non-cash items consisted primarily of $87.0 million of net unrealized losses on marketable securities, and partially offset by $22.2 million of deferred income tax benefit. The cash provided by changes in operating assets and liabilities was primarily attributable to a $3.1 million decrease in accounts receivable, reflecting improved collections, a $3.0 million increase in accounts payable, a $1.6 million increase in income taxes payable, and a $0.5 million increase in deferred revenue, partially offset by a $4.5 million decrease in accrued liabilities, including non-qualified deferred compensation, and a $2.4 million increase in prepaid expenses and other assets. For the nine months ended June 30, 2025, net cash provided by operating activities was $8.8 million. Cash provided by operating activities consisted of net income of $70.0 million, reduced by adjustments for non-cash items of $61.2 million and increased by cash provided by working capital of less than $0.1 million. Adjustments for non-cash items consisted primarily of $84.3 million of net unrealized gains on marketable securities, partially offset by $22.8 million of deferred income tax expense, as well as $0.2 million of depreciation and amortization and $0.1 million of stock-based compensation. The cash provided by changes in operating assets and liabilities was primarily attributable to a $2.3 million increase in accounts payable, a $1.6 million increase in income taxes payable, and a $0.9 million increase in accrued liabilities, including non-qualified deferred compensation, partially offset by a $4.0 million decrease in deferred revenue and a $0.3 million increase in accounts receivable. Investing Activities For the nine months ended June 30, 2026 and 2025, net cash used in investing activities was negligible or nil. Financing Activities For the nine months ended June 30, 2026, net cash used in financing activities totaled $2.1 million, consisting primarily of a $2.0 million repayment on the outstanding balance of the Company’s investment margin loan. For the nine months ended June 30, 2025, net cash used in financing activities totaled $2.6 million, consisting primarily of a $2.5 million repayment on the outstanding balance of the Company’s investment margin loan. Critical Accounting Policies and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts. Changes in estimates are reflected in reported results for the period in which they become known. Actual results may differ materially from these estimates under different assumptions or conditions. There were no material changes to our critical accounting policies in the three months ended June 30, 2026 from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report. 27 Table of Contents