The foregoing business discussion and the other information included in this Form 10-K should be read in conjunction with the following risks, trends and uncertainties, any of which, either individually or in the aggregate, could materially and adversely affect our business, operating results or financial condition.
−Removed: Risks Associated with The Traditional Business
−Removed: A continuing reduction in the number of residential foreclosures in California and Arizona will result in fewer trustee sale notices being published in the Company’s newspapers.
+Added: Risks Associated with Coronavirus (COVID-19) Pandemic
+Added: The Company’s business is likely to be materially and adversely affected by an epidemic or pandemic such as COVID-19, or by a similar event or the fear of such an event, and the measures that governmental authorities implement to address it.
+Added: As COVID-19 began to spread in March and April 2020, and again more recently, governmental authorities and health officials implemented numerous unprecedented measures to contain the virus, including “stay at home”
+Added: orders for non-essential workers, travel restrictions, quarantines and business shutdowns.
+Added: Most of Journal Technologies’
+Added: customers, which are primarily courts and governmental agencies in the United States, Canada and Australia, either closed or significantly scaled back their activities.
+Added: Similarly, many law firms and companies from which the Traditional Business derives advertising and subscription revenues also curtailed their operations and spending.
+Added: The impact on economic activity of these actions or similar actions in the future are likely to significantly impact the Traditional Business’
+Added: advertising and subscription revenues.
+Added: The trend of working from home and using on-line services is also likely to put additional pressure on the newspaper business by impacting circulation numbers that may not be replaced by on-line revenues.
+Added: Actions restricting travel, requiring non-essential workers to “stay at home”
+Added: or causing courts and justice agencies to close or cut back operations can impact the ability of Journal Technologies to complete certain projects that are typically done in-person (and for which payment is usually received upon completion), reduce efiling revenues, affect procurement processes and result in overall payment delays.
+Added: In addition, the Company relies on its portfolio of marketable securities for dividend income and balance sheet support, and the value of the portfolio can be materially affected by declines in stock prices, particularly among the common stocks of the three U.S.
+Added: financial institutions that make up a substantial portion of the portfolio.
+Added: Due to the uncertainties associated with the duration and severity of an event like COVID-19, the efforts to contain it, and the changes in business operations and personal behaviors that are likely to follow from it, it is difficult to estimate the magnitude of its impact on the Company’s business in future periods, but it could materially affect the Company’s operations, staffing levels, financial condition, liquidity and cash flows going forward.
+Added: Also, while the vast majority of the Company’s employees are currently working from home effectively, a resurgence in serious COVID-19 infections could cause the Company to experience a lack of availability of employees to perform key job functions at particular points in time. 
+Added: Risks Associated with t he Traditional Business
+Added: A continuing reduction in the number of residential foreclosures in California and Arizona will result in fewer trustee sale notices being published in the Company’s newspapers.
For several years, the revenues of The Traditional Business were driven by the large number of foreclosures in California and Arizona, for which public notice advertising is required by law.
6 unchanged sentences
To the extent these proposals become law, particularly in California and Arizona, they could materially affect the revenues of The Traditional Business.
−Removed: In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of The Traditional Business.
+Added: In addition, if the adjudication, which is what gives publishers the legal ability to publish public notice advertising, of one or more of the Company’s newspapers were challenged and revoked, those newspapers would no longer be eligible to publish public notice advertising, and it could materially affect the revenues of The Traditional Business.
The Traditional Business faces strong competition in each of its markets.
1 unchanged sentence
The Daily Journals face aggressive competition.
−Removed: The Company’s court rules publications face competition in both Northern and Southern California from document management programs, online court rules services, and the courts themselves.
−Removed: The steady decline in recent years in the number of subscriptions to The Daily Journals and the court rule publications is likely to continue and adversely impact The Traditional Business’ future revenues.
−Removed: The Traditional Business also competes with anywhere from one serious competitor to many competing newspapers for public notice advertising in all of its markets.
−Removed: As the amount of this advertising has decreased due to the reduction in the number of foreclosures discussed above, the competition to publish the remaining public notices has intensified and may result in a further decline in The Traditional Business’ public notice advertising revenues.
+Added: The Company’s court rules publications face competition in both Northern and Southern California from document management programs, online court rules services, and the courts themselves.
+Added: The steady decline in recent years in the number of subscriptions to The Daily Journals and the court rule publications is likely to continue and adversely impact The Traditional Business’
+Added: future revenues.
+Added: The Traditional Business also competes with serious competitors for public notice advertising in all of its markets.
+Added: As the amount of this advertising has decreased due to the reduction in the number of foreclosures discussed above, the competition to publish the remaining public notices has intensified and may result in a further decline in The Traditional Business’
+Added: public notice advertising revenues.
The Traditional Business continues to experience challenges in maintaining its commercial advertising and circulation revenues, particularly due to the growth of Internet sites.
3 unchanged sentences
These trends are expected to continue and would adversely affect The Traditional Business.
−Removed: Circulation revenues have continued to decline as more and more information has become available from the Internet.
+Added: Circulation revenues have continued to decline as more and more information has become available online.
Law firm mergers have also reduced the number of firms that purchase multiple subscriptions of our newspapers.
1 unchanged sentence
The Traditional Business is exposed to risks associated with fluctuations in postage and paper costs.
−Removed: After personnel costs, postage and paper costs are typically the Company’s next two largest expenses.
+Added: After personnel costs, postage and paper costs are typically the Company’s next two largest expenses.
An adequate supply of newsprint and other paper is important to the operations of The Traditional Business.
11 unchanged sentences
The success of Journal Technologies depends in large part on the technological update and upgrade of its software products.
−Removed: Journal Technologies’ success depends on the continued improvement of its products, and the costs to update and upgrade those products consistently represent a large portion of Journal Technologies’ expenses.
−Removed: There are many uncertainties in the process of courts and other justice agencies migrating to newer case management systems, including whether Journal Technologies’ versions of these systems will find general acceptance and whether the modification of such systems can be done in a cost effective manner.
−Removed: The costs to update and upgrade Journal Technologies’ products are expensed as incurred and will impact earnings at least through the foreseeable future.
+Added: Journal Technologies’
+Added: success depends on the continued improvement of its products, and the costs to update and upgrade those products consistently represent a large portion of Journal Technologies’
+Added: There are many uncertainties in the process of courts and other justice agencies migrating to newer case management systems, including whether Journal Technologies’
+Added: versions of these systems will find general acceptance and whether the modification of such systems can be done in a cost effective manner.
+Added: The costs to update and upgrade Journal Technologies’
+Added: products are expensed as incurred and will impact earnings at least through the foreseeable future.
Journal Technologies faces significant competition from other case management software vendors.
7 unchanged sentences
Journal Technologies generally recognizes revenues for software installations only upon completion of the applicable services and customer acceptance of the software system.
−Removed: In most cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live”.
+Added: In most cases, installation fees are not due until the customer has indicated its satisfaction with the installed system, and it has “gone live”.
Accordingly, we do not recognize revenues for installation services or for most other consulting services until after the services have been performed and accepted.
2 unchanged sentences
Risks Associated with Our Holdings of Marketable Securities
−Removed: A large portion of the Company’s assets is held in publicly traded securities, and the prices of those securities may decline.
+Added: A large portion of the Company’s assets is held in publicly traded securities, and the prices of those securities may decline.
As of September 30, 2020, the Company held marketable securities worth approximately $179,368,000, with an unrealized gain for financial statement purposes of $137,593,000.
−Removed: While this portfolio has enabled the Company to borrow on very favorable terms for acquisitions and to better compete for case management software opportunities that are usually limited to “large” firms, it is unusual for a public company to invest a significant amount of its available cash in the marketable securities of other public companies.
−Removed: The value of these securities could decline, which would adversely affect net income and shareholders’ equity.
−Removed: Also, as of September 30, 2019, the Company’s holdings of marketable securities were concentrated in just six companies and included two based in foreign currencies.
−Removed: Accordingly, a significant decline in the market value and unfavorable changes in the foreign exchange rates of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings.
−Removed: This concentration of risk may result in a more pronounced effect on net income and shareholders’ equity.
+Added: While this portfolio has enabled the Company to borrow on very favorable terms for acquisitions and to better compete for case management software opportunities that are usually limited to “large”
+Added: firms, it is unusual for a public company to invest a significant amount of its available cash in the marketable securities of other public companies.
+Added: The value of these securities could decline, which would adversely affect net income and shareholders’
+Added: Also, as of September 30, 2020, the Company’s holdings of marketable securities were concentrated in just five companies and included one based in foreign currency.
+Added: Accordingly, a significant decline in the market value and unfavorable changes in the foreign exchange rates of one or more of the Company’s holdings may not be offset by hypothetically better performance of other holdings.
+Added: This concentration of risk may result in a more pronounced effect on net income and shareholders’
The Company is required to recognize losses in a particular security for financial statement purposes even though the Company has not actually sold the security.
−Removed: Under new accounting rules that became effective in fiscal 2019, changes in the unrealized gains and losses on investments are now included in the Company’s reported net income (loss), even though the Company has not actually realized any gain or loss by selling such investments.
−Removed: Accordingly, changes in the market prices of the Company’s marketable securities can have a significant impact on the Company’s reported results for a particular period, even though those changes do not bear on the performance of the Company’s operating businesses.
+Added: Under new accounting rules that became effective in fiscal 2019, changes in the unrealized gains and losses on investments are now included in the Company’s reported net income (loss), even though the Company has not actually realized any gain or loss by selling such investments.
+Added: Accordingly, changes in the market prices of the Company’s marketable securities can have a significant impact on the Company’s reported results for a particular period, even though those changes do not bear on the performance of the Company’s operating businesses.
The Company may be subject to fluctuations in foreign currency rates for marketable securities that are not denominated in the United States Dollar.
3 unchanged sentences
The Company relies heavily on the services of Gerald Salzman.
−Removed: Gerald Salzman, 80, serves as the Company’s president, chief executive officer, chief financial officer, treasurer and assistant secretary.
+Added: Gerald Salzman, 81, serves as the Company’s president, chief executive officer, chief financial officer, treasurer and assistant secretary.
He is also the president, chief executive officer, chief financial officer and secretary of Journal Technologies.
−Removed: Salzman’s services were no longer available to the Company, it is unlikely that the Company could find a single replacement to perform all of the duties now handled by him, and it could have a significant adverse effect on the Company’s business.
+Added: Salzman has started delegating certain of his duties to other managers, it is unlikely that the Company could find a single replacement to perform the rest of the duties now handled by him, and it could have a significant adverse effect on the Company’s business.
The Company does not carry key man life insurance, nor has it entered into an employment agreement with Mr.
−Removed: In April 2018, Mr.
−Removed: Salzman suffered a Transient Ischemic Attack (TIA) stroke.
−Removed: He was released from the hospital after one night and has since been working mostly from home, performing his executive roles with the Company while continuing to undergo physical therapy.
−Removed: He has reduced his work schedule to a more sustainable level and has delegated certain of his duties to other managers.
−Removed: Changes in accounting guidance could have a significant effect on the Company’s reported financial results.
−Removed: Preparing consolidated financial statements requires the Company’s management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses.
−Removed: These estimates and assumptions are affected by management’s application of accounting policies and the prevailing accounting guidance.
−Removed: The Company considers fair value measurement and disclosures, revenue recognition, accounting for software costs, accounting for business combinations, testing for intangible impairments and income taxes to be critical accounting policies and estimates.
−Removed: (In fiscal 2019, the Company wrote off the entire goodwill of $13,400,000 recorded at the time of its acquisitions of New Dawn Technologies, Inc.
−Removed: and ISD Technologies, Inc.
−Removed: in fiscal 2013.) A change in the accounting guidance with respect to one or more of these areas could materially affect the Company’s reported financial results.
−Removed: As noted above, beginning in fiscal 2019, changes in unrealized gains (losses) on investments are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company.
−Removed: We cannot be sure that customer information and systems are fully protected against security breaches.
−Removed: Journal Technologies’ software processes and stores customer information in the conduct of its business, including in some cases by utilizing cloud-based systems supplied by third-party vendors.
−Removed: Despite our efforts to maintain up-to-date security controls, it is possible that our system could be improperly used to access or misappropriate customer systems or information, including personally identifiable or other confidential information.
−Removed: A material security breach of this nature could harm our reputation, cause us to lose current and potential customers, require us to allocate more resources to information security, or subject us or our customers to liability, resulting in increased costs, loss of revenue, or both.
−Removed: The Traditional Business also operates certain websites that process and, in certain cases, store customer information.
−Removed: A minor security breach was discovered on a website operated by The Traditional Business in early fiscal 2015, and although it was remediated, there can be no assurance that there will not be more material breaches in the future.
+Added: Changes in accounting guidance could have a significant effect on the Company’s reported financial results.
+Added: Preparing consolidated financial statements requires the Company’s management to make estimates and assumptions that affect the reported amount of assets, liabilities, revenues and expenses.
+Added: These estimates and assumptions are affected by management’s application of accounting policies and the prevailing accounting guidance.
+Added: The Company considers fair value measurement and disclosures, revenue recognition, accounting for software costs and income taxes to be critical accounting policies and estimates.
+Added: A change in the accounting guidance with respect to one or more of these areas could materially affect the Company’s reported financial results.
+Added: As noted above, beginning in fiscal 2019, changes in unrealized gains (losses) on investments are included in the Company’s net income (loss) and thus may have a significant impact on the Company’s reported results depending on the fluctuations of the prices of the marketable securities owned by the Company.
+Added: We cannot be sure that customer information and systems are fully protected against security breaches. 
+Added: Journal Technologies’
+Added: software processes and stores customer information in the conduct of its business, including in some cases by utilizing cloud-based systems supplied by third-party vendors. 
+Added: Despite our efforts to maintain up-to-date security controls, it is possible that our system could be improperly used to access or misappropriate customer systems or information, including personally identifiable or other confidential information. 
+Added: A material security breach of this nature could harm our reputation, cause us to lose current and potential customers, require us to allocate more resources to information security, or subject us or our customers to liability, resulting in increased costs, loss of revenue, or both. 
+Added: The Traditional Business also operates certain websites that process and, in certain cases, store customer information. 
+Added: A minor security breach was discovered on a website operated by The Traditional Business in early fiscal 2015, and although it was remediated, there can be no assurance that there will not be more material breaches in the future. 
Also, our insurance may not cover all of the costs that we may incur as a result of a material security breach.
−Removed: The Company has identifi ed material weakness es in its internal control over financial reporting.
+Added:    
The Company has identified material weaknesses in its internal control over financial reporting.
−Removed: The Company’s internal control over financial reporting has been designed to provide management and the Board of Directors with reasonable assurance regarding the preparation and fair presentation of the Company’s consolidated financial statements.
+Added: The Company has identified material weaknesses in its internal control over financial reporting.
+Added: The Company’s internal control over financial reporting has been designed to provide management and the Board of Directors with reasonable assurance regarding the preparation and fair presentation of the Company’s consolidated financial statements.
As a small company, we are not able to segregate duties to the extent we could if we had more people, and we have not sufficiently designed controls that support an effective assessment of our internal controls relating to the prevention of fraud and possible management override of controls.
−Removed: Further, the Company does not have an internal audit department, and has not engaged an outside firm to complete the documentation of its internal control assessment to the level required by the applicable criteria.
+Added: Further, the Company does not have an internal audit group, and has not engaged an outside firm to complete the documentation of its internal control assessment to the level required by the applicable criteria.
We believe that our overall internal control environment is sufficient for a company of our size.
However, the existence of material weaknesses means that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected on a timely basis.
−Removed: If we are not able to correct material weaknesses or deficiencies in internal controls in a timely way, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the SEC’s rules and forms will be adversely affected.
+Added: If we are not able to correct material weaknesses or deficiencies in internal controls in a timely way, our ability to record, process, summarize and report financial information accurately and within the time periods specified in the SEC’s rules and forms will be adversely affected.
Such a result could negatively impact the market price and trading liquidity of our stock, weaken investor confidence in our reported financial information, subject us to civil and criminal investigations and penalties, and generally materially and adversely affect our business and financial condition.
−Removed: For more information regarding the material weaknesses, the mitigating controls we use, and certain remedial steps we have taken or considered, please see Part II.
−Removed: Item 9A Controls and Procedures.
Unresolved Staff Comments
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.