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Note 4 - Debts and Commitments

12 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Commitments Disclosure [Text Block]

4. DEBTS AND COMMITMENTS

During fiscal 2013, the Company borrowed from its investment margin account the aggregate purchase price of $29.5 million for two acquisitions, in each case pledging its marketable securities as collateral. In addition, there were subsequent borrowings of $45.5 million to purchase additional marketable securities bringing the margin loan balance up to $75 million during fiscal 2023. In March 2024, the Company sold a portion of its marketable securities for approximately $40.6 million and used these proceeds and excess cash from operations to pay down the margin loan balance to $27.5 million at September 30, 2024.

The interest rate for these investment margin account borrowings fluctuates based on the Federal Funds Rate plus 50 basis points with interest only payable monthly. The interest rate as of September 30, 2024 was 5.5% after the first cut of 50 basis points to the central bank's key interest rate by Federal Reserve since 2020. The Federal Reserve may continue to reduce the rate in the near future. These investment margin account borrowings do not mature.

In November 2015, the Company purchased a 30,700 square foot office building constructed in 1998 on about 3.6 acres in Logan, Utah that had been previously leased for Journal Technologies. The Company paid $1.24 million and financed the balance with a real estate bank loan of $2.26 million which had a fixed interest rate of 4.66%. This loan is secured by the Logan facility and can be paid off at any time without prepayment penalty. In October 2020, the Company executed an amendment to lower the interest rate of this loan to a fixed rate of 3.33% for the remaining 10 years. This real estate loan had a balance of approximately $1.12 million as of September 30, 2024. Each monthly installment payment is approximately $16,700.

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

The Company is responsible for a portion of maintenance, insurance and property tax expenses relating to the leased properties. Rental expenses, inclusive of these expenses, for fiscal years 2024 and 2023 were $303,000 and $289,000, respectively.

Effective January 1, 2023, the Company began sponsoring a 401(k) retirement plan and a 409(A) non-qualified deferred compensation plan for its employees. The 401(k) retirement plan is a defined contribution plan available to employees meeting minimum service requirements. Eligible employees can contribute up to 100% of their current compensation to the plan subject to certain statutory limitations. The Company matches 50% of the 401(k) contribution up to 4% of total compensation. Contributions to the retirement plan were $610,000 and $363,000 for fiscal 2024 and 2023, respectively. As of September 30, 2024, there were deferred compensation liabilities of approximately $784,000 of which $748,000 were held under a trust account for the 409(A) plan.

The following table represents the Company’s future obligations:

		Payments due by Fiscal Year (000)
		2025				2026				2027				2028				2029				2030 and after				Total
Real estate loan		$	164,000			$	169,000			$	175,000			$	181,000			$	187,000			$	244,000			$	1,120,000
Obligations under operating leases			89,000				37,000				---				---				---				---				126,000
Non-qualified deferred compensation 409(A) plan			---				784,000				---				---				---				---				784,000
Long-term accrued liabilities*			---				1,742,000				805,000				508,000				333,000				347,000				3,735,000
		$	253,000			$	2,732,000			$	980,000			$	689,000			$	520,000			$	591,000			$	5,765,000

*

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