10-K
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For the fiscal year ended AUGUST
31, 2025
Or
For the Transition period from _________
to _________________
Commission File Number: 000-19954
JEWETT-CAMERON
TRADING CO LTD
(Name of registrant as specified in its charter)
(State or Incorporation or Organization) (IRS Employer ID No.)
32275
NW Hillcrest, North Plains,
OR, USA
97133
(Address of principal executive offices)
Registrant’s Telephone Number 503-647-0110
Securities registered pursuant to Section 12(b)
of the Act:
Title of Each Class Trading Symbol(s) Name of Each Exchange on Which Registered
Common Stock, no par value JCTC NASDAQ Capital Market
Securities registered pursuant to Section 12(g)
of the Act:
None
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined by Rule 405 of the Securities Act ̈Yes xNo
Indicate
by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ̈Yes xNo
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve
months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
xYes ̈No
Indicate by check mark whether the registrant
has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit such files).
xYes ̈No
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.
See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ Accelerated filer ☐
Non-accelerated filer ☒ Smaller Reporting Company ☒
Emerging Growth Company ☐
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.. ̈Yes ̈No
Indicate
by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report. ̈
If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ̈
Indicate
by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ̈
Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).
̈Yes xNo
State the aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the
average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second
fiscal quarter:
February 28, 2025 = $9,802,679
Indicate the number of shares outstanding of
each of the registrant’s classes of common stock, as of December 1, 2025: 3,518,119
Jewett-Cameron Trading Company Ltd.
Form 10-K Annual Report
Fiscal Year Ended August 31, 2025
TABLE OF CONTENTS
PART I
Page
Item 1. Business 1
Item 1A. Risk Factors 7
Item 1B. Unresolved Staff Comments 14
Item 1C. Cybersecurity 14
Item 2. Properties 16
Item 3. Legal Proceedings 16
Item 4. Mine Safety Disclosures 16
PART II
Item 6. [Reserved]1 18
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 26
Item 8. Financial Statements and Supplemental Data 26
Item 9A. Controls and Procedures 46
Item 9B. Other Information 46
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 46
PART III
Item 10. Directors, Executive Officers and Corporate Governance 47
Item 11. Executive Compensation 51
Item 14. Principal Accounting Fees and Services 55
PART IV
Item 15. Exhibits and Financial Statement Schedules 55
i
PART I
ITEM 1. BUSINESS
Forward-Looking Statements
This Annual Report on Form 10-K for the fiscal
year ended August 31, 2025 (“Annual Report”) contains forward-looking statements, within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words like “plans”, “expects”,
“aims”, “believes”, “projects”, “anticipates”, “intends”, “estimates”,
“will”, “should”, “could” and similar expressions in connection with any discussion, expectation,
or projection of future operating or financial performance, events or trends. Forward-looking statements are based on management's current
expectations and assumptions, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to
predict. Actual outcomes and results may differ materially from these expectations and assumptions due to changes in global political,
economic, business, competitive, market, regulatory and other factors. Any forward-looking statements speak only as of the date on which
they are made and we undertake no obligation to publicly update or review any forward-looking information, whether as a result of new
information, future developments or otherwise, except as required by law.
These factors include, but are not limited to,
the fact that our business is highly competitive, we are continually seeking ways to expand our business, we may seek additional financing
or other ways to expand operations and improve margins, as well as the other risk factors that are set forth in more detail elsewhere
in this Annual Report, including in the sections, ITEM 1A, “Risk Factors”, and ITEM 7, “Management's Discussion and
Analysis of Financial Condition and Results of Operations.”
Introduction
Jewett-Cameron Trading Company Ltd. is organized
under the laws of British Columbia, Canada. In this Annual Report, the “Company”, “Jewett-Cameron”, “we”,
“our” and “us” refer to Jewett-Cameron Trading Company Ltd. and its subsidiaries as applicable.
Our operations are classified into three reportable
operating segments and the parent corporate and administrative segment, which were determined based on the nature of the products we
offer along with the markets being served. Consistent with our operational structure, our Chief Executive Officer (CEO), as the chief
operating decision maker, manages our business based on segment financial information for purposes of evaluating performance, allocating
resources, setting incentive compensation targets, as well as internal forecasting of future period financial results. Our segments are
as follows:
· Pet, Fencing and Other
· Industrial wood products
· Seed processing and sales
· Corporate and administrative services
Total Company sales were $41.3 million and $47.1
million during fiscal years ended August 31, 2025 and 2024, respectively. Sales, income before taxes, assets, depreciation and amortization,
capital expenditures, and interest expense by segment are shown in the financial statements under Note 11 “Segment Information.”
Our principal office is located at 32275 NW Hillcrest
Street, North Plains, Oregon; and our website address is www.jewettcameron.com. Our primary mailing address is P.O. Box 1010,
North Plains, OR 97133. Our phone number is (503) 647-0110. The contents of our website or any other website are not incorporated by
reference into this Annual Report.
We file reports and other information with the
Securities and Exchange Commission located at 100 F Street NE, Washington, D.C. 20549. Copies of these filings may be accessed through
their website at www.sec.gov. Reports are also filed under Canadian regulatory requirements on SEDAR, and these reports may be
accessed at www.sedar.com.
The contact person for the Company is Chad Summers,
President and CEO.
Our authorized capital includes 21,567,564 common
shares without par value; and 10,000,000 preferred shares without par value. As of August 31, 2025 and December 1, 2025, there were 3,518,119
common shares outstanding. Our common shares are listed on the NASDAQ Capital Market in the United States with the symbol “JCTC”.
Our fiscal year ends on August 31st.
General Development of Business
Incorporation and Subsidiaries
Jewett-Cameron Trading Company Ltd. was incorporated
under the Company Act of British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”),
which was incorporated in September 1953 in Oregon, USA. Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through
a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary. Effective September 1, 2013, the
Company completed a reorganization of certain of its subsidiaries and JCLC’s name was changed to JC USA Inc. (“JC USA”).
JC USA has the following wholly owned subsidiaries incorporated under the laws of the State of Oregon: Jewett-Cameron Seed Company, (“JCSC”),
incorporated in October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated in February 2002, and Jewett-Cameron Company
(“JCC”) incorporated in September 2013. Jewett-Cameron Trading Company, Ltd. and its subsidiaries have no significant assets
in Canada.
Corporate Development
Incorporated in 1953, JC USA initially operated
as a small lumber wholesaler based in Portland, Oregon. In September 1984, the original stockholders sold their interest in the corporation
to a new group of investors. Two members of that group remained active in the Company. These individuals are Donald Boone, who passed
away in May 2019, and who was the previous Chairman and the former President, Chief Executive Officer, Treasurer, and Principal Financial
Officer, transitioning to strictly the Board Chair in 2017; and Michael Nasser, who retired from day-to-day involvement in the business
in December 2022, but remained engaged as a director until October 2023.
In 1987, we acquired JC USA and began to diversify
into products beyond lumber trading. Lucky Dog® was acquired in 1995 and Adjust-A-Gate® was acquired in 2003.
In 2000, we acquired the operations and property
that became our JCSC seed division.
In 2002, Greenwood acquired the business and
certain assets of Greenwood Forest Products Inc., a company involved in the processing and distribution of specialty wood products.
In April 2023, as a result of lower quantities
of seed for processing, and the demand for its marketing and sales services declining against rising costs, the Board of Directors decided
to close the JCSC seed division. JCSC’s facilities and equipment were near the end of the expected useful life and would have required
significant capital investment to remain operating. Regular operations at JCSC ended effective August 31, 2023, but some seed storage
operations continued through July 2024 in order to provide customers time to obtain alternative storage arrangements. The entire seed
inventory was sold in early October 2023. Some of the JCSC personnel were moved to different positions within the Company as management
has prioritized career development and retention whenever possible.
In September 2024, we announced the successful
conclusion of an 18-month search, evaluation, and onboarding process establishing new suppliers. We have historically sourced the majority
of our metal products from a single factory in China. Under our new strategic sourcing program, we now have suppliers located in Bangladesh
and Vietnam in addition to our original source in China. The products from our new suppliers meet our quality standards with competitive
pricing, but also mitigate to some extent the current 85% tariff rates as of November 10, 2025 from China placed on various Chinese made
steel products imported into the United States.
Narrative Description of Business
We are committed to improving the lives of professionals
and do-it-yourselfers with innovative products that enrich outdoor spaces in their quality, performance, and ease to work with.
The Company’s operations are classified
into four segments: Pet, Fencing and Other; Industrial wood products; Seed processing and sales; and corporate and administrative services.
Pet, Fencing and Other Operating Segment
We have concentrated on building a customer base
for lawn, garden, and pet related products. Fencing is our largest component of this segment. The home improvement business is seasonal,
with higher levels of sales occurring between February and August. Inventory buildup occurs until the start of the season in February
and then gradually declines to seasonal low levels at the end of the summer.
Our wood products, distributed through JCC, are
not unique and are available from multiple suppliers and retail outlets. However, the metal products that JCC manufactures and distributes
may be somewhat differentiated from similar products available from other suppliers. We have been successful in garnering key patents
and trademarks on multiple products that assist their ability to continue to differentiate based on design and functionality.
We own the patents and manufacturing rights connected
with the Adjust-A-Gate® and Fit-RightTM products, which are the gate support systems for wood, vinyl, chain link, and composite
fences, in addition to our trade secret industry practices and well-known trademarked brands. We believe the ownership of these patents
and trademarks is an important competitive advantage for these and certain other products. We completed our purchase of the full global
trademark rights for Adjust-A-Gate® and filed its registration with the US Patent and Trademark Office in February 2023. As of the
close of fiscal 2025, the Company owns 7 US Patents and 1 patent application pending in the US, CA, and MX pertaining to its fencing
products.
Backlog orders have typically not been a factor
in this business as customers may place firm priced orders for products for shipments to take place three to four months in the future
which gives us time to order, manufacture and receive the goods at our warehouse in time to fulfil the customer’s order.
Industrial Wood Products - Greenwood
Greenwood is a wholesale distributor of a variety
of specialty wood products. Current products are focused on the transportation industry. Greenwood’s total sales for fiscal 2025
and 2024 were 9% and 8%, respectively, of total Company sales.
The primary market in which Greenwood competes
has decreased in economic sensitivity as users are incorporating products into the municipal and mass transit transportation sectors.
However, these markets sustained some contractions in recent years due to COVID-19 as work shifted from offices to homes, and many individuals
utilized public transit less due to concerns over exposure. In addition, this segment is prone to disruption of supply chain support
which can impact other commodities outside of those specific to the disruption.
Greenwood utilizes contract manufacturers to
supply its products. Inventory is maintained at non-owned warehouses and wood treating facilities throughout the United States and is
primarily shipped to customers on a just-in-time basis. Inventory is generally not purchased on a speculative basis in anticipation of
price changes as we order the products from the manufacturers and warehouses once a customer places an order with us.
Greenwood has no significant backlog of orders.
Seed Processing and Sales - JCSC
JCSC operated out of a Company-owned 11.6 acre
facility located adjacent to North Plains, Oregon. JCSC processed and distributed agricultural seed. Most of this segment’s sales
came from selling seed to distributors with a lesser amount of sales derived from cleaning seed.
We ended regular operations at JCSC effective
August 31, 2023 and have sold all of our remaining seed inventory. Seed storage operations continued through July 2024.
We have listed the JCSC property for sale or
lease. The surplus property consists of 11.6 acres of land and 109,500 square feet of buildings. One of the buildings is specialized
for the seed industry, while most are metal warehouse buildings with power, allowing a wide array of possible uses. The property is currently
zoned “Rural Industrial” (RIND), which allows for use of the existing property, or development of the site, as approved by
Washington County. While the original listed sale price of the property was based on both the perceived value of the property and the
potential for a rezoning of the property for higher value uses, over the last year, the local economy has weakened and lessened the short-term
needs for the local municipalities to create new housing and industrial land. Therefore, we relisted the property at a reduced listing
price of $7.223 million. This is the current asking price, and there is no guarantee the property will sell for this amount, if at all.
If we are able to complete a sale, the net proceeds will be reduced by brokers’ commissions, expenses related to the sale, and
taxes.
Corporate and Administrative Services –
JC USA
JC USA is the parent company for Greenwood, JCC
and JCSC as described above. JC USA operates out of our offices in North Plains, Oregon and provides professional and administrative
services, including warehousing, accounting and credit services, to JCTC’s subsidiary companies.
Company Products
The Company’s mission is to improve the
lives of professionals and do-it-yourselfers with innovative products that enrich outdoor spaces. We design, source, commercialize and
distribute our products. Many are patent protected and all are well crafted for their quality, performance, and ease to work with.
The Fencing, Pet and Sustainable Product businesses
are conducted by JCC, which operates out of a 5.6 acre owned facility located in North Plains, Oregon that includes offices, a warehouse,
and a paved yard. JCC uses contract manufacturers to make all products. Some of the products that JCC distributes flow through our distribution
center located in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home
centers, eCommerce providers, other retailers, and direct sales to consumers.
The Industrial Wood Products segment is conducted
by Greenwood, a processor and distributor that operates out of the same facilities in North Plains, Oregon. Greenwood contracts with
custom manufacturers for its products. Inventory is maintained at non-owned warehouses and wood treating facilities throughout the United
States and is primarily shipped to customers on a just-in-time basis.
Fencing Products
Fencing represents our largest product line.
Our fencing business crafts durable, functional fencing solutions that bolster security, privacy, and beauty. Our primary products include:
Pet Products
Our Lucky Dog® brand is dedicated to keeping
pets safe and happy with exceptional quality, long-lasting products that put your pet first. Our primary pet products are:
Sustainable Products
Our Sustainable and Post-Consumer Recycled (“PCR”)
bag products are sold under the MyEcoWorld® brand. It is making a tangible, positive difference to the planet by working to reduce
conventional single-use plastic in our daily lives.
We offer two types of bag products. The Compostable
bags are made with 30% corn. The PCR Products are certified to the Global Recycled Standard (GRS) to contain recycled material that has
been independently verified at each stage of the supply chain, from the source to the final product, and cost less than compostable bags.
Our primary Sustainable Products are:
Industrial Wood Products
Greenwood Products specializes in engineering
advanced noise and vibration reduction panels for transit buses, motor coaches, light rail cars, and boats. Our dB-Ply® proprietary
acoustical panel is a cost-effective product designed to reduce vibration and sound transmission to meet mandated interior noise requirements.
Greenwood’s other products include durable, high-performance structural panels tailored for a wide range of industrial applications,
and jumbo concrete forms designed to reduce installation time and lower job-site labor costs.
Seed Segment
The Company formerly operated agricultural seed
processing, distribution and sales through JCSC. Most of this segment’s sales were derived from selling seed to distributors with
a lesser amount of sales derived from cleaning seed. During the fiscal year ended August 31, 2023, the Company decided to close its JCSC
seed subsidiary effective August 31, 2023. During fiscal year 2024, JCSC sold all of its seed inventory and all the moveable equipment.
Company Strategy
We began fiscal 2025 with a positive outlook
and a focus on continuing to lower costs, increase sales, improve margins, introduce innovative products and monetize surplus assets.
However, due primarily to the volatility and uncertainty created by the introduction of various tariffs since February 2025 and the large
purchases of lumber inventory in support of one of our larger customers, our goals to grow and return to profitability in fiscal 2025
were not achieved. Accordingly, management and the Board have reformulated our strategic plan to combat the challenges encountered during
fiscal 2025, and focus on our core strengths during this difficult period. We intend to concentrate our resources on our successful fencing
product lines while monetizing non-core assets and disposing of excess inventory. Management and the Board are also evaluating strategic
alternatives for the Company as well as its individual operating segments and assets that prioritize the Company’s overall value.
Our current strategy includes:
· Focus on our fencing products and increase sales and improve margins;
· Dispose of excess inventory;
· Monetize non-core assets;
· Improve operational efficiencies and cost structures; and
· Seek collaborative alliances and business partnerships where appropriate.
Focus on Fencing
Fencing remains our largest and most successful
product category and will be the primary focus of our operations and expenditure of resources in the near term. Building on our success
with the thousands of deployed in-store display units for our Adjust-A-Gate® products, which have continued to increase visibility
of our products in stores and have led to higher sales volumes, we are continuing to roll out additional in-store display units for our
Lifetime Steel Post® (LTP) product at major home improvement retailers. The LTP displayers are now in 422 stores, which represents
a small fraction of the potential market, both with our existing big box customers and potential new customers in the home improvement
and professional market. We are also working to create new in-store displayers for our other fencing products, and tailor these new displayers
to better fit in other home improvement retailers that may not have the space available for our current full-size display units. We are
also continuing our innovation in this segment as we launched our low-profile Adjust-A-Gate® Unlimited product in 2025. Significant
growth opportunities remain in the fencing sector, both through the expansion of our existing products into more stores, new sales channels,
and through new and improved products. We are developing improvements and enhancements to our existing products, and evaluating outside
products from third parties that complement our current product lines and broaden our product offerings.
The imposition of worldwide tariffs during 2025
significantly eroded our margins on many products and increased supply chain and logistics costs across the majority of our product lines.
The tariffs directly impacted operating costs and had a significant negative impact on overall gross margins. In addition, many customers
altered their usual purchases and deferred their orders during this period of tariff-related volatility. Many of our customers also refused
to immediately accept higher prices for our products which we adjusted in response to the increased costs associated with the tariffs
and global trade disruption. This resulted in an overall decrease in sales. While the Company took actions to attempt to mitigate these
unforeseen events, such as pivoting to alternative suppliers outside of China through an intensive search, evaluation and onboarding
process that began two years ago, and reducing headcount by nearly 30%, these measures were not sufficient to withstand the headwinds
we faced in 2025. However, we believe that the global economic environment is stabilizing and that customers and supply chain partners
are employing reasonable and innovative policies to maintain equilibrium and continuity of commerce. Accordingly, we intend to focus
on improving margins on our core fencing products through these reestablished partnerships, new sales channels and by more controlled
purchasing management.
Dispose of excess inventory
Demand for certain of our pet products remains
slow as the pet market continues its overall weakness. As a result, we have excess pet inventory at our warehouse. We are working with
third-party liquidators to sell this high-quality but slow-moving inventory which will provide us with cash and clear our warehousing
costs for these products. We also currently have about $5 million in excess lumber inventory which we acquired to meet the terms of our
contractual obligations under our consignment agreement with a major customer which they did not need before the end of last season.
Additionally, this customer has since given notice of their intention to transition away from the consignment agreement in calendar 2026.
Although the consignment agreement provided us with meaningful revenue, it was of very low margin and profitability. We are currently
in negotiations with this customer, as well as other third parties, regarding the purchase of our excess lumber inventory.
Monetize non-core assets
Our surplus seed company property remains on
the market at a list price of $7.223 million. We have also recently listed our creative laboratory building for sale at a list price
of $795,000. As we intend to concentrate our business on fencing and outdoor products, we are presently evaluating all of our non-fence-related
products and if they fit within our sharper focus on higher margin products. As a lower margin segment, management and the Board are
currently evaluating Greenwood’s industrial wood business and considering strategic alternatives. We are also reviewing potential
changes to our pet business, as the overall pet industry is expected to remain weak for the foreseeable future.
Improve operations and cost structure
Over the last several years, we have made significant
investments in improving and streamlining our operational capabilities. We also realigned our workforce within our strategic objectives
through the reassignment of some employees to new roles and an overall headcount reduction in 2025 of 27% year-over-year. We will continue
to look for cost savings that improve our operations and increase productivity. Since February 2025, the unprecedented rise in tariffs,
especially for steel and aluminum products, have substantially increased our product costs and compressed our margins. We have been able
to somewhat mitigate a portion of these new tariff costs through our multi-country sourcing initiative. As retailers and consumers are
becoming acclimated to the tariff-related costs, our customers are increasingly accepting the new prices which will help alleviate a
portion of this cost pressure going forward. We will continue to work with our suppliers and customers to find solutions to these tariff
challenges while reducing our costs as much as possible.
Seek collaborative alliances and business partnerships
As part of management’s and the Board’s
strategic plan, the Company will continue to explore potential strategic options to enhance shareholder value. This may include mergers,
acquisitions, divestitures, joint ventures and other business collaborations and partnerships. The Company engages from time to time
in preliminary discussions with third parties regarding a variety of potential transactions. There can be no assurance that these discussions
will result in definitive agreements or the completion of any transaction. We do not intend to provide further updates on these discussions
unless and until a definitive agreement is reached.
Tariffs
Our metal and other products have historically
been mostly manufactured in China and are imported into the United States. Beginning in 2018, the Office of the United States Trade Representative
(“USTR”) instituted new tariffs on the importation of a number of products into the United States from China. These initial
tariffs were a response to what the USTR considers to be certain unfair trade practices by China. The tariffs began at 10%, and subsequently
were increased to 25% as of May 2019.
Prior to fiscal 2024, our metal products were
primarily manufactured in China and subject to the full 25% tariff rate. During fiscal 2024, we engaged suppliers in countries outside
of China, including Bangladesh, Vietnam, Malaysia, and Taiwan. Products manufactured in and imported from these countries were not subject
to the China-specific tariffs, but were subject to other duties and fees that are typically much lower than the then 25% tariff on Chinese
manufactured metal products.
Beginning in February 2025, the new administration
in the United States began to increase tariff rates on numerous products from a range of nations. Imported steel and aluminum
products from all countries globally were assigned a new tariff rate of 25% in addition to any specific country or product
rates. In early April 2025, the U.S. imposed a universal baseline 10% tariff rate on imports globally along with a list of product exemptions.
As of June 4, 2025, the tariff on steel and aluminum imports was raised to 50%. Our steel products imported from countries other than
China are subject to the 50% tariff rate, but not the 10% universal baseline tariff. China, however, has been assigned special rates.
Tariff rates on steel products imported from China were at 95% through November 9, 2025, but were reduced to 85% as of November 10, 2025.
We are continuing our shift to suppliers outside
of China which have lower tariff rates, primarily to Bangladesh and Vietnam. We currently import approximately 5% of our metal products
from China. We also face uncertainty in the interpretation of new tariffs and their applicability, including with respect to customs
valuation, product classification and country-of-origin determinations. Although we and our suppliers seek to comply with applicable
customs laws and regulations, the application of rules regarding new tariffs can be subject to varying interpretations or future re-interpretations.
It is possible that U.S. or other relevant authorities could, upon review or audit, disagree with the valuation, rules of origin or classification
methods applied to certain products. Any such disagreement could result in the retroactive assessment of additional duties with interest,
the imposition of penalties, or other enforcement actions without the ability to mitigate such penalties, thereby adversely affecting
our operations or financial results. Furthermore, certain of our competitors may be better positioned than us to withstand or react to
border taxes, tariffs or other restrictions on global trade and as a result, we may lose market share to such competitors. Due to broad
uncertainty regarding the timing, content and extent of any regulatory changes in the U.S. or abroad, we cannot predict with certainty
the impact, if any, that these changes could have to our business, financial condition and results of operations.
Financial Management
We have continued our efforts to optimize our
operations and reduce our costs. During fiscal 2025, we shifted some employees to better align our workforce with our strategic objectives,
and have reduced our employee headcount by 27% year-over-year. We believe these changes will result in increased productivity and reduce
our costs without compromising quality or service.
As of August 31, 2025, we had borrowed $2,101,835
against our credit line with Northrim Funding Services (“Northrim”). Under the current terms of the agreement, Northrim provides
short-term operating capital by either purchasing the Company’s accounts receivable invoices or as a loan against our inventory
position. The maximum we may borrow against the line is $6,000,000. As of November 28, 2025, our borrowing under this line is $4,304,853.
We are currently discussing with Northrim to adjust the credit line to increase the maximum borrowing computation which would provide
us with additional financial flexibility and to raise the maximum amount available to us. There is no assurance that we will be able
to obtain the desired increases in our credit line, which could have a material adverse impact on our business and financial condition.
Due to the continued uncertainly and higher costs
stemming from the high tariff levels, we expect fiscal 2026 to remain challenging. We will continue to focus on our operational strengths
while reducing costs where possible in our efforts to increase our sales and margins and return to profitability.
In addition, we are currently evaluating several
different strategies to strengthen our liquidity position. These strategies may include, but are not limited to, disposition of certain
non-core assets and unused real property, renegotiation of our credit line with Northrim and seeking additional financing from both the
public and private markets through the issuance of equity or debt securities. There can be no assurance that we will be successful in
achieving these strategies. See “Management’s Discussion and Analysis – Liquidity and Capital Resources”
for additional information.
Customer Concentration
The top ten customers were responsible for 97%
and 88% of total Company sales for the years ended August 31, 2025 and August 31, 2024, respectively. Also, the Company’s two largest
customers were responsible for 74% and 67% of total Company sales for the years ended August 31, 2025 and August 31, 2024, respectively.
Employees
As of August 31, 2025 we had 45 full-time employees
(August 31, 2024 – 62 full-time employees). By segment these employees were located as follows: JCC – 32 (2024 – 40)
Greenwood – 2 (2024 – 2), and JC USA – 11 (2024 - 20). At the end of fiscal 2023, we ceased regular operations at JCSC.
Four of the JCSC employees were transferred to JCC, and the remainder were terminated and offered transition assistance. We continue
to evaluate our ongoing staffing needs, and during fiscal 2024 and 2025 we reduced our number of employees to better align with our current
business operations and development.
None of our employees are represented by unions.
Jewett-Cameron Trading Company Ltd. has no direct employees, and our CEO and CFO are employed by JC USA.
ITEM 1A. RISK FACTORS
Investors should carefully consider the following
risk factors and all other information contained in this Annual Report. There is a great deal of risk involved in our business, and any
of the following risks could affect our business, its financial condition, its potential profits or could result in you losing your entire
investment. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, including
those not presently known to us or that we currently deem immaterial, also may result in decreased revenues, increased expenses or other
events which could result in a decline in our financial condition and the price of our common shares.
Risks Related to Our Business
Due to the uncertainty of the current global
tariff and trade environment, we will require additional cash to fund our operations in the near and longer term
Our management must continually evaluate whether
there are conditions or events, considered in the aggregate, that raise significant concerns in our ability to manage our cash flow and
our business. Failure to manage our cash inflows and outflows effectively can have a material adverse impact on our operations, ability
to order products in a timely manner, and serve our customers effectively. The recent volatile tariff and global trade situation created
many challenges for our ability to effectively manage our supply chain, product costs, customer pricing, and overall operations. In light
of these developments, we believe that it is essential that we take immediate steps to strengthen our liquidity position to enable us
to continue to weather the uncertainties that still exist in the global markets. Accordingly, our management and Board have reformulated
our near-term and long-term strategies, which now focus on strengthening our liquidity position, which may involve selling our real estate
assets and excess inventory, as well as increasing our borrowing capacity under our credit line with Northrim or securing alternative
financing. We are dependent on our credit line which permits us to borrow funds against accounts receivable and inventory. However, our
present borrowing is approaching the maximum allowed under the credit line’s current funding calculations. Although we are in discussions
with Northrim to increase the amount of credit available to us, we are still in need of additional funding to bolster our cash availability
for the near and long term. There can be no assurance that these discussions will result in an increase in borrowing capacity, which,
if it does not, would have a material adverse effect on our ability to operate our business in the normal course and significantly impact
our ability to order product for the upcoming Spring selling season, which would in turn negatively impact our operations, our ability
to develop and execute our business plan, our financial condition, our liquidity and our continuation as a going concern will be subject
to a high degree of risk and uncertainty.
We need additional funding to shield us from
the continuing challenges that have severely impacted us and other companies as a result of the recent tariff and global economic situation,
execute our business plan and continue operations in the normal course. If capital is not available to us when, and in the amounts needed,
we could be required to liquidate our inventory and assets at below market prices, delay purchasing of products, or cease or curtail
operations, which could materially harm our business, financial condition and results of operations. There can be no assurance that we
will be able to raise the capital when we need it to continue our operations.
Any substantial doubt about our ability to continue
as a going concern may affect the price of our common stock, may impact our relationship with third parties with whom we do business,
including our customers, vendors, lenders and employees, and may impact our ability to raise additional capital.
Needed financing may not be available to us on
acceptable terms, or at all. Our ability to obtain additional financing will be subject to several factors, including market conditions,
our operating performance and investor sentiment and any financial or operating covenants required. These factors may make the timing,
amount, terms or conditions of additional financing unattractive, even if available. If we cannot generate sufficient funds from operations
or raise additional capital on a timely basis when needed, our growth or operations could be impeded and our ability to continue as a
going concern would be materially impacted.
We have substantial liquidity needs and
may not be able to obtain sufficient liquidity to operate in the normal course and if we cannot satisfy our liquidity needs, we may be
forced to seek protection under the bankruptcy code.
Although we have reduced our capital budget,
our business remains capital intensive. In addition to the cash requirements necessary to fund ongoing operations, we need to purchase
inventory in anticipation of our upcoming Spring selling season. If we cannot submit and pay for purchase orders in a timely manner,
our ability to provide product and satisfy demand may be impaired. We can provide no assurance that our current liquidity is sufficient
to allow us to continue to operate our business or meet our projected operating needs or that we will be able to raise needed capital
through real estate, inventory and assets sales. In the event we cannot obtain additional capital or alternative financing on acceptable
terms, we may need to reduce the scale of our operations, which may result in curtailing non-profitable business lines and business lines
that do not contribute significantly to profitability. If we cannot obtain sufficient liquidity to operate in the normal course, we may
be forced to seek protection under the U.S. Bankruptcy Code, including initiating liquidation proceedings thereunder, in which event,
our business operations would continue, but under the supervision of the bankruptcy court. It is possible that a trustee would be appointed
or elected by creditors to liquidate our assets for distribution in accordance with the priorities established by the bankruptcy code.
We have a history of operating losses and
may not be able to achieve or sustain profitability in the future; we are substantially dependent on our ability to successfully market
and sell our products at reasonable margins.
We have, in recent years, operated at a loss
and have been highly dependent on sales of higher margin products. However, the imposition of significant tariffs on goods manufactured
in most countries outside the U.S. has substantially eroded historical and projected margins, and in some cases, have resulted in costs
that could not be passed on as price increases. Our prospects for achieving and sustaining profitability in the future will depend primarily
on how successful we are in increasing sales, prices and margins. If we are not successful in executing our business plan, we may not
achieve or sustain profitability and even if we do so, we may not meet sales and margin expectations. Also, even if we are successful
in executing our business plan, our ability to achieve and sustain profitability in the future will also depend on our ability to manage
our operating costs, and profitability may fluctuate from period to period due to our level of investments in sales and marketing, promotional
activities, inventory purchases and timing of supply chain logistics and payments.
Our restructurings and associated organizational
changes may not adequately reduce our expenses and our inability to satisfy our liquidity needs, may lead to additional workforce attrition,
and may cause operational disruptions.
We have recently experienced workforce attrition
in various functions across our business, which may be attributable to our prior corporate restructurings, our current business circumstances,
a combination of both, or other factors. Our efforts to adjust our operations with the reduced workforce may not be successful in preventing
disruption to our business, and with the reduced workforce, we lack redundancy in important functions across our business. We are increasingly
relying on the services of contract sales representatives or other similar arrangements in response to substantial sales force attrition.
Further loss of one or more of our key employees, additional loss of multiple employees in particular functions, and/or our inability
to attract replacement or additional qualified personnel could substantially impair our ability to operate our business and implement
our business plan, which would have a material adverse effect on our business and financial condition, as well as our stock price.
In the event we are unable to satisfy our liquidity
needs, we may experience employee attrition, and our employees may face considerable distraction and uncertainty. A loss of key personnel
or material erosion of employee morale could adversely affect our business and results of operations. Our ability to engage, motivate
and retain key employees or take other measures intended to motivate and incentivize key employees will be limited. The loss of services
of members of our senior management team and other key employees could impair our ability to execute our business strategies and implement
operational initiatives, which may have a material adverse effect on our business, cash flows, liquidity, financial condition and results
of operations.
Governmental actions, such as tariffs,
and/or foreign policy actions could adversely and unexpectedly impact our business.
Since the bulk of our products are supplied from
other countries, political actions by either our trading country or our own domestic policy could impact both availability and cost of
our products. Currently, we see this in regard to tariffs being levied on foreign sourced products entering into the United States, including
from China. The continuing tariffs by the United States on certain goods, including steel and aluminum products, in addition to country
specific tariffs, including China, has the effect of increasing our costs and negatively affecting our business. There also exists the
possibility of new or increased tariffs being levied on manufactured goods imported into the United States. We cannot control the duration
or depth of such actions which may increase our product costs which would in turn reduce our margins and potentially decrease the competitiveness
of our products. These actions could have a negative effect on our business, results of operations, or financial condition.
We also face uncertainty in the interpretation
of new tariffs and their applicability, including with respect to customs valuation, product classification and country-of-origin determinations.
Although we and our suppliers seek to comply with applicable customs laws and regulations, the application of rules regarding new tariffs
can be subject to varying interpretations or future re-interpretations. It is possible that U.S. or other relevant authorities could,
upon review or audit, disagree with the valuation, rules of origin or classification methods applied to certain products. Any such disagreement
could result in the retroactive assessment of additional duties with interest, the imposition of penalties, or other enforcement actions
without the ability to mitigate such penalties, thereby adversely affecting our operations or financial results. Furthermore, certain
of our competitors may be better positioned than us to withstand or react to border taxes, tariffs or other restrictions on global trade
and as a result, we may lose market share to such competitors. Due to broad uncertainty regarding the timing, content and extent of any
regulatory changes in the U.S. or abroad, we cannot predict with certainty the impact, if any, that these changes could have to our business,
financial condition and results of operations. However, the imposition of various tariffs since February 2025 has had a significant negative
impact on our costs, margins and financial condition.
If our top customers were lost, we could
experience lower sales volumes.
For the fiscal year ended August 31, 2025 our
top ten customers represented 97% of our total sales, Our single largest customer was responsible for 39% of our total sales and our
two largest customers were responsible for 74% of total sales in 2025. We would experience a significant decrease in sales and profitability
and would have to cut back our operations, if these customers were lost and could not be replaced. Our top ten customers are located
in North America and are primarily in the retail home improvement and pet industries.
We are dependent upon third-party manufacturers
and suppliers for substantially all of our products
We do not have any manufacturing capabilities
and rely on a limited number of contract manufacturers located outside the United States for the majority of our products. Our reliance
on contract manufacturers involves certain risks, including:
· Capacity constraints;
· Inability to control the quality of the finished products;
· Inability to control manufacturing and delivery schedules; and
If our products are delayed or cannot be supplied
in a timely manner, we risk losing revenue and customers. Developing alternate sources of supply for our products that meet our requirements
may be time-consuming, difficult, and costly, and we may not be able to source our products on terms that are acceptable to us, or at
all, which will have a negative effect on our revenue and financial condition.
We face significant competition, which
could reduce the demand for our products.
Our revenue depends in part on maintaining and
growing the sales of our current products in both existing and new markets, but also by improving existing products and developing new
products. There is substantial competition among companies in each of our market sectors, and a number of companies market products that
compete directly with our products. Current and potential customers may consider these products from our competitors to be superior to
or less expensive than our products. Some of these competitors may also have greater financial, manufacturing, and sales and market resources
than us. If we are unable to effectively compete with these other products and companies, we would likely lose market share which would
result in a decrease in revenue and profitability.
We could experience delays in the delivery
of our products to our customers causing us to lose business.
We purchase our products from other vendors and
a delay in shipment from these vendors to us could cause significant delays in our delivery to our customers. Such disruptions may include
adjustments to ocean shipping schedules, labor strikes or other job-related actions by workers within the supply chain, geopolitical
unrest, longshoreman or rail strikes, geopolitical unrest, or government actions. This could result in a decrease in sales orders to
us and we would experience a loss in profitability. Additionally, certain of our customers may impose penalties for orders not delivered
on time, which could be significant and have a material adverse effect on our margins and financial results.
Inflation could adversely affect our business
Inflation has many impacts on our business, including
increasing our direct costs for raw materials, manufacturing, shipping and logistics, labor, and energy. Our ability to pass on these
higher costs to our customers is limited. When we are able to increase our selling prices, it may be delayed several months after we
first incur the higher costs and we may not be able to fully recoup the difference. In addition, high rates of inflation can reduce consumer’s
discretionary spending and reduce demand for our products. These actions could have a negative effect on our business, results of operations,
or financial condition.
Outdoor product sales are highly seasonal
and subject to adverse weather.
Our fencing and outdoor products are primarily
bought by consumers during the spring and summer. The majority of our revenues and income from these products occur during our 3rd
and 4th quarters of our fiscal year (March through August). Demand for these products is highly affected by the weather. Adverse
weather, including abnormally wet conditions or unseasonably hot or cold temperatures, can negatively affect demand for our products
and cause our customers to delay, or reduce, their orders. This would have a negative effect on our business, results of operations,
or financial condition.
Competitors may infringe on our intellectual property which
would negatively affect our business and financial condition
We rely on our intellectual property rights,
including patents, patent applications, and trademarks, to provide us with competitive advantages and protect us from theft of our intellectual
property. We believe that our patents are valid, enforceable, and valuable. If third parties infringe on our intellectual property,
we may be forced to pursue litigation which would consume significant amounts of our management and financial resources. There is no
guarantee that we will have the financial resources necessary to engage in litigation, or that any litigation we do pursue will result
in a favorable outcome. Such infringements or unfavorable outcomes of litigation would have a negative effect on our business, results
of operations, or financial condition.
Our products may have issues that could
lead to product liability claims
The products we manufacture and distribute expose
us to potential product liability risks. Although we seek to insure against such risks, there can be no assurance that such insurance
coverage will be sufficient to cover any claims or adverse legal judgements, and our costs to defend any litigation could be significant.
A successful product liability claim in excess of our insurance coverage could have a material negative effect on our business and financial
condition. In addition, it could significantly increase our costs of this insurance on commercially reasonable terms or make it unavailable
to us altogether.
We depend on sophisticated information technology systems to
operate our business and a cyberattack or other breach of these systems, or a system error, could have a material adverse effect on our
business and results of operations.
We are increasingly and substantially dependent
upon information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store,
process, and transmit sensitive data on our networks and systems, including our proprietary or confidential business information and