JEWETT CAMERON TRADING CO LTD

Current report

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

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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.

Current report

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 personal information with respect to our employees, customers, and our business partners. In the ordinary course of our business, this type of data is also collected, stored, processed, and transmitted on the networks and systems of business partners and vendors from whom we purchase software and/or technology-based services.

Current report

The size and complexity of our and third-party information technology systems and infrastructure, and their connection to the Internet, make such systems potentially vulnerable to service interruptions, system errors leading to data loss, data theft, unauthorized disclosure, and/or cyberattacks. These incidents could result from inadvertent or intentional actions or omissions by our employees and consultants, or those of our business partners and vendors, or from the actions of third parties with criminal or other malicious intent. Notwithstanding our efforts to combat cyber threats, including through the use of third party software, consultants and monitoring agents, as with most other companies, our information technology systems have been, and will likely continue to be, subject from time to time to computer viruses, malicious codes, unauthorized access, and other forms of cyberattack, and we expect the sophistication and frequency of such efforts to continue to increase.

Current report

We are increasingly relying on the networks and systems of third-party vendors as we seek to migrate the storage and processing of business and other information from our own computer servers and networks to “cloud”-based storage and software systems and services maintained by third-party vendors. While we believe there are potential cost savings and other benefits from this migration strategy, we do not control how third-party vendors maintain their networks and systems, what technology they implement to protect their systems from cyber-attack or other malicious behavior, or what corrective or remedial measures they would take in response to service issues or a criminal or other malicious attack. Also, many of these vendors are large, well-known technology companies that maintain substantial volumes of information for a large number of companies, and whose systems may therefore be larger targets for criminal or other malicious actors as compared to our own networks and systems. Accordingly, our migration to third-party networks and system could increase the risk that business and other information maintained by us could be subject to a breach, theft, unauthorized disclosure, or other forms of cyberattacks even if we are not specifically targeted.

Current report

Breaches of information technology systems and technology can be difficult to detect, and any delay in identifying any such incidents may lead to increased harm of the type described above. While we have implemented security measures to protect our information technology systems and infrastructure, and monitor such systems and infrastructure on an ongoing basis for any current or potential threats through sophisticated third party cyber defense companies, there can be no assurance that these measures will prevent the type of incidents that could have a material adverse effect on our business and results of operations.

Current report

On October 15, 2025, we learned that a threat actor had gained unauthorized access to portions of our information technology (“IT”) environment and claimed to have unlawfully accessed certain Company information and data. We immediately activated our cyber incident response plan to contain the intrusion, assess and investigate the incident and implement remedial measures. We also immediately notified law enforcement, including the FBI, and retained external cybersecurity experts to assist. Based on our investigation to date, we believe that the cybersecurity incident consisted of unauthorized access and deployment of encryption and monitoring software by a third party to a portion of our internal corporate IT systems. The incident caused disruptions and limitation of access to portions of our business applications supporting aspects of our operations and corporate functions, which we voluntarily took offline as a precautionary measure. Based on the information reviewed to date, we believe the unauthorized activity has been contained and we were able to bring the impacted portions of our IT systems and individual computer devices back online and operate at full capacity within a week of detection of the unauthorized access.

Current report

Although we ascertained that certain information was exfiltrated, we are still investigating the extent of compromise of any sensitive information contained within the accessed IT systems. However, it is believed that the threat actors unlawfully accessed certain computer systems and exfiltrated images of video meetings and computer screens that may contain sensitive information. The threat actors have threatened to release this information publicly if we did not provide them with a monetary payment, which we did not. The threat actors have made public certain of our information and that of some of our vendors and customers. However, we do not believe that the threat actor was able to infiltrate the computer systems of any of our customers or vendors. We have taken additional cybersecurity measures in response to this incident including closing off the point of unlawful access and bolstering our cyber defensive capabilities, including use of third party cybersecurity experts. At this time, we believe that the costs associated with these activities will be largely covered by our cyber security insurance policy and that the disruption to our operations will likewise be covered by adequate insurance. However, there can be no assurance that our insurance carriers will accept liability under these policies, in which event, we would be compelled to pay the expenses of our cyber experts directly, which would increase our costs and have a material adverse effect on our future financial performance.

Current report

As the investigation of the incident is ongoing, the full scope, nature and ultimate impact of the incident are not yet completely known. We have no current evidence that any personally identifiable information of any employees, customers, suppliers or vendors has been compromised, but our analysis and review of the potential compromised systems and data continues.

Current report

Compliance with global privacy and data security requirements could result in additional costs and liabilities to us or inhibit our ability to collect and process data globally, and our failure to comply with data protection laws and regulations could lead to government actions, which could cause our business and reputation to suffer.

Current report

Evolving state, federal, and foreign laws, regulations and industry standards regarding privacy and security apply to our collection, use, retention, protection, disclosure, transfer and other processing of personal data. Privacy and data protection laws may be interpreted and applied differently from country to country and state to state in the U.S. and may create inconsistent or conflicting requirements, which can increase the costs incurred by us in complying with such laws, which may be substantial. For example, the European Data Protection Regulation (“GDPR”) imposes a broad array of requirements for processing personal data, including elevated disclosure requirements regarding collection and use of such data, and the California Consumer Privacy Act (“CCPA”) substantially expands privacy obligations of many businesses, including requiring new disclosures to California consumers, imposing new rules for collecting or using information about minors and affording consumers the right to know whether their data is sold or disclosed, the right to request that a company delete their personal information, the right to opt-out of the sale of personal information and the right to non-discrimination in terms of price or service when a consumer exercises a privacy right. Like the GDPR, the CCPA establishes potentially significant penalties for violation. The California Privacy Rights Act (“CPRA”), which became operational on July 1, 2023, expands on the CCPA, creating additional consumer rights and protections, including the right to correct personal information, the right to opt out of the use of personal information in automated decision making, the right to opt out of sharing consumer’s personal information for cross-context behavioral advertising, and the right to restrict use of and disclosure of sensitive personal information. Similar restrictions are also included in the privacy laws of other states in the U.S.

Current report

We are evaluating our privacy program as a result of these privacy laws, and it is likely we will incur additional expense and investment of resources in our efforts to comply. If we are unable to implement a suitable compliance program relating to these or future privacy laws and regulations, we may face increased exposure to regulatory actions, including substantial fines and penalties.

Current report

Although these deficiencies do not rise to the level of material weaknesses and no material weaknesses have been identified, and our disclosure controls and procedures were effective at the reasonable assurance level as of August 31, 2025, our management is undertaking remediation measures to ensure that our disclosure controls and procedures remain effective.

Current report

However, we cannot guarantee that in the future we will not identify any material weaknesses or significant deficiencies in connection with this ongoing process, which could result in significant expense to remediate any such deficiencies. Additionally, any inability to report our financial results accurately could result in untimely filing of our public reports, a halt in trading of our securities, shareholder lawsuits and regulatory inquiry or investigations.

Current report

We may issue additional shares of common stock, securities convertible into common stock, or securities with superior rights to our common stock, in the future, including to raise capital, for strategic transactions, or to attract and retain employees, which would have a dilutive effect on existing stockholders.

Current report

The issuance of a substantial number of additional shares of our common stock, securities convertible into common stock, or securities with superior rights to our common stock, or the perception that such sales could occur, could have a material adverse effect on the market price of our common stock. In addition, future sales and issuances of our common stock will result in dilution to our existing stockholders, and new investors could gain rights superior to those of our existing stockholders. This dilution would reduce the ownership percentage and voting power of existing stockholders and could also cause a decline in earnings per share, which could further reduce the market price of our common stock.

Current report

Our stock price may be volatile and you may lose all or a part of your investment.

Current report

Our stock price could fluctuate significantly due to a number of factors, including:

Current report

Many of these factors are beyond our control, and we believe that period-to-period comparisons of our financial results will not necessarily be indicative of our future performance. If our revenues in any particular period do not meet expectations, we may not be able to adjust our expenditures in that period, which could cause our operating results to suffer. If our operating results in any future period fall below the expectations of securities analysts or investors, our stock price may fall by a significant amount.

Current report

Future sales of our common stock by shareholders could cause our stock price to decline, and future issuances of common stock could cause substantial dilution.

Current report

If our existing stockholders sell a large number of shares of our common stock, or the public market perceives that existing stockholders might sell shares of common stock, the market price of our common stock could decline significantly. Sales of substantial amounts of shares of our common stock in the public market by our executive officers, directors, 5% or greater stockholders or other stockholders, or the prospect of such sales, could adversely affect the market price of our common stock. To the extent that option holders exercise outstanding options or we issue additional shares in the future, there may be further dilution and the sales of shares into the marketplace could cause our stock price to drop further.

Current report

We will continue to incur substantial costs and obligations as a result of being a public company.

Current report

As a publicly-traded company, we will continue to incur significant legal, accounting and other expenses. In addition, new and changing laws, regulations and standards relating to corporate governance and public disclosure for public companies, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), regulations related thereto and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and the Nasdaq Stock Market, have increased the costs and the time that must be devoted to compliance matters. We expect these rules and regulations will continue to increase our legal and financial costs and lead to a diversion of management time and attention from revenue-generating activities.

Current report

We are subject to reporting and other obligations under applicable Canadian securities laws, SEC rules and the rules of the Nasdaq Stock Market. These reporting and other obligations place significant demands on our management, administrative, operational and accounting resources. Moreover, any failure to maintain effective internal controls could cause us to fail to meet our reporting obligations or result in material misstatements in our consolidated financial statements. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be materially harmed, which could also cause investors to lose confidence in our reported financial information, which could result in a lower trading price of our common shares.

Previous report

We could experience a decrease in the demand for our products resulting in lower sales volumes.

Previous report

In the past we have at times experienced decreasing products sales with certain customers. The reasons for this can be generally attributed to: increased competition; general economic conditions; demand for products; and consumer interest rates. If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability.

Previous report

We could lose our credit agreement and could result in our not being able to pay our creditors.

Previous report

We have a line of credit with Northrim where short-term operating capital will be provided by purchasing our accounts receivable invoices for up to $6,000,000, or as a loan against our inventory for up to $4,000,000, with the maximum amount we can draw under the line of $6,000,000. The maximum draw amount is currently available, and the line will expire on June 30, 2025. If we lost access to credit, or the borrowing costs exceed the likely benefits of our use of such capital, it could negatively affect our ability to acquire inventory to fulfil our customers’ orders and pay our obligations on a timely basis.

Previous report

Our information technology systems are susceptible to certain risks, including cyber security breaches, which could adversely impact our operations and financial condition.

Previous report

Our operations involve information technology systems that process, transmit and store information about our suppliers, customers, employees, and financial information. These systems face threats including telecommunication failures, natural disasters, and cyber security threats, including computer viruses, unauthorized access to our systems, and other security issues. While we have taken aggressive steps to implement security measures to protect our systems and initiated an ongoing training program to address many of the primary causes of cyber threat with all our employees, such threats change and morph almost daily. There is no guarantee our actions will secure our information systems against all threats and vulnerabilities. The compromise or failure of our information systems could have a negative effect on our business, results of operations, or financial condition.

Previous report

We may decide to acquire assets or enter into business combinations, which could be paid for, either wholly or partially with our common shares and if we decide to do this our current shareholders would experience dilution in their percentage of ownership.

Previous report

Our Articles of Incorporation give our Board of Directors the right to enter into any contract without the approval of our shareholders. Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval. If we acquire an asset or enter into a business combination, this could include exchanging a large amount of our common shares, which could dilute the ownership interest of present shareholders.

Previous report

Future stock distributions could be structured in such a way as to be 1) diluting to our current shareholders or 2) could cause a change in control to new investors.