Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
An evaluation was performed under the supervision and with the participation of the Company’s management, including Steven Myhill-Jones, its Chief Executive Officer (“CEO”), and Erik Nakamura, its Chief Financial Officer (“CFO”), of the effectiveness of the Company’s disclosure controls and procedures as of September 30, 2025. Based on that evaluation, management concluded that the Company’s disclosure controls and procedures were not effective as of September 30, 2025 due primarily to the material weaknesses in internal control over financial reporting described below.
Management’s Report on Internal Control over Financial Reporting
The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting (“ICFR”), as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934. To assess the effectiveness of these controls, management applied the criteria outlined in the Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework). The Company’s ICFR has been designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of the Company’s consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). All internal controls, no matter how well designed, have inherent limitations. Because of these inherent limitations, internal control over financial reporting may not prevent or detect misstatements. A material weakness is a deficiency, or a combination of deficiencies, in ICFR such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim consolidated financial statements will not be prevented or detected on a timely basis.
Based on that evaluation and applicable SEC rules, management identified remaining material weaknesses in ICFR as of September 30, 2025. A previous material weakness was remediated during fiscal year 2025.
Segregation of duties and revenue review controls
The Company continues to have material weaknesses related to segregation of duties, review controls related to the design, implementation, and operation of controls over revenue recognition and associated deferred revenue process that originated and were disclosed in prior periods. While management has implemented additional controls and made meaningful progress during fiscal year 2025, the Company was not able to fully remediate the material weaknesses by September 30, 2025. Management’s remediation efforts continue, as described below, and management is confident in its ability to achieve a full remediation in fiscal year 2026.
Remediation Plan and Progress
At the request of the Board of Directors, the Company engaged an independent third-party advisory firm to support management in evaluating and strengthening the Company’s ICFR. In addition to fully remediating prior material weakness regarding insufficient accounting resources, management believes the Company made significant progress during fiscal 2025 in remediating the segregation of duties and revenue review controls weaknesses. This included implementing administrative access controls for specific systems, modernizing the finance function by clearly defining roles and responsibilities, and reassessing, redesigning, and implementing new controls specifically targeted to mitigate the previously identified material weaknesses. However, in order to conclude that a material weakness has been remediated, management must obtain evidence that the relevant controls have been properly designed and have operated effectively for a sufficient period of time. Because certain controls were newly implemented or substantially enhanced during fiscal 2025, additional time is required to evaluate the operating effectiveness of the newly designed and implemented controls before concluding that the material weaknesses have been remediated. Specifically:
●
During fiscal year 2025, the Company increased the size and experience level of its finance organization, in order to strengthen technical accounting expertise, enhance review and monitoring activities, and improve segregation of duties.
●
In the third quarter of fiscal year 2025, the Company implemented enterprise resource planning (“ERP”) for its subsidiary Journal Technologies. The Company is continuing its ERP modernization efforts for its Traditional Business, which management believes will further enhance system-based segregation of duties, workflow approvals, and user-access controls.
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●
Effective December 12, 2025, Erik Nakamura was appointed as the Company’s Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer. This leadership transition is expected to further support the Company’s remediation efforts, including enhancing oversight and review procedures and strengthening segregation of duties.
●
Management intends to continue to work with third-party advisors during fiscal year 2026 to further enhance the Company’s ICFR and to evaluate whether any remaining material weaknesses have been fully remediated.
The Company will also continue to utilize certain mitigating controls, including enhanced management review procedures, analytical reviews, and Board-level oversight designed to help identify potential errors or misstatements. These monitoring activities include periodic review and comparative analysis of financial and operational information with prior periods by department supervisors, the CEO, the CFO, and the Board of Directors. The Company will continue to evaluate and refine its compensating controls as part of its remediation strategy and plans to reassess the operating effectiveness of its controls early in fiscal year 2026.
Although a material weakness indicates that there is a reasonable possibility that a material misstatement will not be prevented or detected on a timely basis, management is not aware of any material misstatements in the Company’s consolidated financial statements as of and for the year ended September 30, 2025.
Changes in Internal Control over Financial Reporting
There were positive changes in the Company’s internal control over financial reporting during the fiscal year ended September 30, 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. During fiscal year 2025, the Company fully remediated its prior material weakness related to insufficient accounting resources by enhancing technical accounting expertise, strengthening review and monitoring activities, and increasing the size and experience of its finance team. With respect to the remaining material weaknesses regarding segregation of duties and revenue review controls, please see the description of the Company’s enhanced controls, including its ERP modernization efforts and increases in finance personnel, as described above under “Remediation Plan and Progress.”
Item 9B. Other Information
(a) None.
(b) The Company has not adopted a Rule 10b5-1 trading arrangement, and no directors or executive officers of the Company adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the fourth quarter of 2025.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable
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PART III
Item 10. Directors, Executive Officers and Corporate Governance
The information set forth in the tables, the notes thereto, and the paragraphs under the captions “Election of Directors”, “Corporate Governance” and “Delinquent Section 16(a) Reports” in the Company’s definitive Proxy Statement for the Annual Meeting of Shareholders to be held in February 2026 (the “Proxy Statement”), which Proxy Statement will be filed with the SEC within 120 days after September 30, 2025, is incorporated herein by reference.
The Company has adopted a Code of Ethics that applies to all directors, officers and employees of the Company, including the Chief Executive Officer and Chief Financial Officer. The Company’s Code of Ethics was filed as Exhibit 14 to the fiscal year 2020 Form 10-K.
Item 11. Executive Compensation
The information set forth under the captions “Executive Compensation” and “Corporate Governance” in the Proxy Statement is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” in the Proxy Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information set forth under the caption “Corporate Governance” in the Proxy Statement is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information set forth under the caption “Other Matters Regarding Independent Registered Public Accounting Firm” in the Proxy Statement is incorporated herein by reference.
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PART IV
Item 15. Exhibits, Financial Statement Schedules
The following documents are filed as part of this Report:
(1)
Consolidated Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 23)
Consolidated Balance Sheets at September 30, 2025 and 2024
Consolidated Statements of Comprehensive Income for the years ended September 30, 2025 and 2024
Consolidated Statements of Shareholders’ Equity for the years ended September 30, 2025 and 2024
Consolidated Statements of Cash Flows for the years ended September 30, 2025 and 2024
Notes to Consolidated Financial Statements
(2)
Exhibits
3.1
Articles of Incorporation of Daily Journal Corporation, as amended (*)
3.2
Amended and Restated Bylaws of Daily Journal Corporation (*)
4.1
Description of Common Stock of Daily Journal Corporation (~)
10.1
Form of Non-Negotiable Certificate Representing an Employee Participant Interest in the Daily Journal Corporation (“DJC”) Plan for Supplemental Compensation to an Employee as long as that Employee Remains Employed by DJC or one of its Subsidiaries, Based on Pre-tax Earnings of DJC and its Subsidiaries on a Consolidated Basis (~) (‡)
10.2
Daily Journal Corporation 2024 Equity Incentive Plan
10.3
Form of Restricted Stock Unit Award under the Daily Journal Corporation 2024 Equity Incentive Plan for Employees
10.4
Form of Non-Employee Director Restricted Stock Unit Award
10.5
Separation Agreement and Release by the Company and Tu To
21.1
Daily Journal Corporation's List of Subsidiaries
23.1
Consent of Independent Registered Public Accounting Firm
31.1
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act
31.2
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and Rule 15d-14(a) of the Exchange Act
32.1
Certification of Principal Executive Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2
Certification of Principal Financial Officer pursuant to Rule 13a-14(b) of the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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Daily Journal Corporation Policy Regarding Erroneously Awarded Compensation
101.INS
Inline XBRL Instance
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Inline XBRL Taxonomy Extension Schema
Inline XBRL Taxonomy Extension Calculation
Inline XBRL Taxonomy Extension Definition
Inline XBRL Taxonomy Extension Labels
Inline XBRL Taxonomy Extension Presentation
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
(*)
Filed as an Exhibit to the Company’s 2020 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on December 16, 2020
(~)
Filed as an Exhibit to the Company’s 2019 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on December 12, 2019
(‡)
Management Compensatory Plan
Item 16. Form 10-K Summary
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
DAILY JOURNAL CORPORATION
Date: December 29, 2025
/s/ Steven Myhill-Jones
Steven Myhill-Jones
Chief Executive Officer and Chairman of the Board
(Principal Executive Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Steven Myhill-Jones
Chairman of the Board and
Chief Executive Officer
December 29, 2025
Steven Myhill-Jones
/s/ Erik Nakamura
Chief Financial Officer,
(Principal Financial Officer and
Principal Accounting Officer)
December 29, 2025
Erik Nakamura
/s/ Mary Conlin
Director
December 29, 2025
Mary Conlin
/s/ John Frank
Director
December 29, 2025
John Frank
/s/ Rasool Rayani
Director
December 29, 2025
Rasool Rayani
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