Tariffs and write-downs deepen Jewett-Cameron (NASDAQ: JCTC) Q1 loss
Jewett-Cameron Trading Company Ltd. reported a very weak first quarter of fiscal 2026. Sales fell 7% to
Cash rose to
Positive
- None.
Negative
- Severe earnings deterioration: Q1 net loss widened to
$3,944,139 (basic and diluted($1.12) per share) from$658,717 (basic and diluted($0.19) ), driven by a negative gross margin and large inventory write-downs. - Gross margin collapse and inventory write-downs: gross margin fell to negative
12.5% , including a$2,208,813 write-down on excess lumber and pet inventory, signaling significant balance sheet and pricing pressure. - Heightened liquidity and going-concern risk: the company discloses substantial liquidity needs, dependency on an expensive asset-based credit line (with
$4,233,236 drawn at11.5% as ofNovember 30, 2025 ), and warns that inability to secure additional funding could force asset liquidations or seeking protection under the U.S. Bankruptcy Code.
Insights
Large loss, margin collapse and liquidity risks make this quarter materially negative.
Jewett-Cameron saw Q1 sales drop to
Structurally, the business is struggling with sharply higher global tariffs on steel and aluminum, weak home-improvement and pet demand, and a major consignment customer exiting a cedar fencing program, leaving substantial excess inventory. Management also points to liquidation of high-cost pet crates and kennels and a cybersecurity incident in
On liquidity, cash was only
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(MARK ONE)
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY
PERIOD ENDED |
| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________ |
COMMISSION FILE NUMBER
| (Exact Name of Registrant as Specified in its Charter) |
| british columbia |
NONE | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| (Address Of Principal Executive Offices) | (Zip Code) |
| ( |
| (Registrant’s Telephone Number, Including Area Code) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol(s) | Name of Each Exchange on Which Registered |
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 12 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. x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer
| Large accelerated filer ¨ | 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. x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value –
Jewett-Cameron Trading Company Ltd.
Index to Form 10-Q
| PART I – FINANCIAL INFORMATION | ||
| Item 1. | Financial Statements | 1 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 31 |
| Item 4. | Controls and Procedures | 31 |
| PART II – OTHER INFORMATION | ||
| Item 1. | Legal Proceedings | 31 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 32 |
| Item 3. | Defaults Upon Senior Securities | 32 |
| Item 4. | Mine Safety Disclosures | 32 |
| Item 5. | Other Information | 32 |
| Item 6. | Exhibits | 32 |
i
PART 1 – FINANCIAL INFORMATION
| Item 1. | Financial Statements |
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
(Unaudited – Prepared by Management)
NOVEMBER 30, 2025
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED BALANCE SHEETS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
November 30, 2025 | August 31, 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net of allowance of $ | ||||||||
| Inventory, net of allowance of $ | ||||||||
| Assets held for sale (Note 4) | ||||||||
| Prepaid expenses | ||||||||
| Prepaid income taxes | ||||||||
| Total current assets | ||||||||
| Property, plant and equipment, net (Note 4) | ||||||||
| Intangible assets, net (Note 5) | ||||||||
| Deferred tax assets (Note 6) | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Bank indebtedness (Note 7) | ||||||||
| Accrued liabilities | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity | ||||||||
| Capital stock (Notes 8, 9) Authorized Issued | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Total stockholders’ equity | ||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
Subsequent events (Note 14)
The accompanying notes are an integral part of these consolidated financial statements.
| 2 |
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
Three Months Ended November 30, 2025 | Three Months Ended November 30, 2024 | |||||||
| SALES | $ | $ | ||||||
| COST OF SALES | ||||||||
| GROSS PROFIT | ( | ) | ||||||
| OPERATING EXPENSES | ||||||||
| Selling, general and administrative expenses | ||||||||
| Depreciation and amortization (notes 4, 5) | ||||||||
| Wages and employee benefits | ||||||||
| Total operating expenses | ||||||||
| Loss from operations | ( | ) | ( | ) | ||||
| OTHER ITEMS | ||||||||
| Gain on sale of property, plant and equipment | ||||||||
| Interest (expense) income | ( | ) | ||||||
| Total other items | ( | ) | ||||||
| Loss before income taxes | ( | ) | ( | ) | ||||
| Income tax (expense) recovery | ( | ) | ||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Basic loss per common share | $ | ( | ) | $ | ( | ) | ||
| Diluted loss per common share | $ | ( | ) | $ | ( | ) | ||
| Weighted average number of common shares outstanding: | ||||||||
| Basic | ||||||||
| Diluted | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 3 |
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
| Capital Stock | ||||||||||||||||||||
| Number of Shares | Amount | Additional paid-in capital | Retained earnings | Total | ||||||||||||||||
| August 31, 2024 | $ | $ | $ | $ | ||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| November 30, 2024 | ||||||||||||||||||||
| Shares issued pursuant to compensation plans (note 9) | — | |||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| August 31, 2025 | ||||||||||||||||||||
| Net loss | — | — | — | ( | ) | ( | ) | |||||||||||||
| November 30, 2025 | $ | $ | $ | $ | ||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 4 |
JEWETT-CAMERON TRADING COMPANY LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Prepared by Management)
(Unaudited)
Three Months Ended November 30, 2025 | Three Months Ended November 30, 2024 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Items not involving an outlay of cash: | ||||||||
| Depreciation and amortization | ||||||||
| Gain on sale of property, plant and equipment | ( | ) | ||||||
| Write-off of property, plant and equipment | ||||||||
| Deferred income taxes | ( | ) | ||||||
| Changes in non-cash working capital items: | ||||||||
| Decrease (increase) in accounts receivable | ( | ) | ||||||
| Decrease (increase) in inventory | ( | ) | ||||||
| Increase in prepaid expenses | ( | ) | ( | ) | ||||
| Decrease in prepaid income taxes | ||||||||
| Decrease in accounts payable and accrued liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Proceeds on sale of property, plant and equipment | ||||||||
| Purchase of property, plant and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from bank indebtedness | ||||||||
| Net cash provided by financing activities | ||||||||
| Net increase (decrease) in cash | ( | ) | ||||||
| Cash, beginning of period | ||||||||
| Cash, end of period | $ | $ | ||||||
Supplemental disclosure with respect to cash flows (Note 13)
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
JEWETT-CAMERON TRADING COMPANY LTD.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Expressed in U.S. Dollars)
November 30, 2025
(Unaudited)
1. NATURE OF OPERATIONS
Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”), incorporated September 1953. 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 reorganized certain of its subsidiaries. JCLC’s name was changed to JC USA Inc. (“JC USA”), and a new subsidiary, Jewett-Cameron Company (“JCC”), was incorporated.
JC USA has the following wholly-owned subsidiaries incorporated under the laws of the State of Oregon: Jewett-Cameron Seed Company, (“JCSC”), incorporated October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated February 2002, and JCC, incorporated September 2013. Jewett-Cameron Trading Company Ltd. and its subsidiaries (the “Company”) have no significant assets in Canada.
The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC’s business consists of the manufacturing and distribution of pet, fencing and other products, wholesale distribution to home centers, other retailers, on-line as well as direct to end consumers located primarily in the United States. Greenwood is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries in the United States. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.
The Company’s operations and general workforce can be negatively affected by a number of external factors. Examples include, but are not limited to, a global pandemic and political conflict in other regions that may affect economies and financial markets globally. It is not possible for the Company to predict the duration or magnitude of adverse results of such external factors and their effect on the Company’s business, financial condition, or ability to raise funds.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
These unaudited consolidated interim financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America (“US GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (“SEC").
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its current wholly owned subsidiaries, JC USA, JCC, and Greenwood, all of which are incorporated under the laws of Oregon, U.S.A.
All inter-company balances and transactions have been eliminated upon consolidation.
Estimates
The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates incorporated into the Company’s consolidated financial statements include the estimated useful lives for depreciable and amortizable assets, the estimated allowances for doubtful accounts receivable and inventory obsolescence, possible product liability and possible product returns, and litigation contingencies and claims. Actual results could differ from those estimates.
| 6 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)
Cash and cash equivalents
The Company considers all highly liquid
instruments with a maturity of three months or less at the time of issuance to be cash equivalents. At November 30, 2025, cash and cash
equivalents were $
Accounts receivable
Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable primarily includes trade receivables from customers. The Company estimates doubtful accounts on an item-by-item basis and includes over aged accounts as part of allowance for doubtful accounts, which are generally ones that are ninety days or greater overdue.
The Company extends credit to domestic customers and offers discounts for early payment. When extension of credit is not advisable, the Company relies on either prepayment or a letter of credit.
Inventory
Inventory, which consists primarily of finished goods, is recorded at the lower of cost, based on the average cost method, and market. Market is defined as net realizable value. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a review of inventory components.
Property, plant and equipment
Property, plant and equipment are recorded at cost less accumulated depreciation. The Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:
| Schedule of estimated life of assets | ||||
| Office equipment | ||||
| Warehouse equipment | ||||
| Buildings |
Intangibles
The Company’s intangible assets have a finite life and are recorded at cost. Amortization is calculated using the straight-line method over the remaining life of the asset. The intangible assets are reviewed annually for impairment.
Asset retirement obligations
The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and normal use of the long-lived assets. The Company also records a corresponding asset which is amortized over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost). The Company does not have any significant asset retirement obligations.
| 7 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)
Impairment of long-lived assets and long-lived assets to be disposed of
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.
Currency and foreign exchange
These financial statements are expressed in U.S. dollars which is also the functional currency of the Company and its subsidiaries as the Company's operations are primarily based in the United States.
The Company does not have non-monetary or monetary assets and liabilities that are in a currency other than the U.S. dollar. Any statement of operations transactions in a foreign currency are translated at rates that approximate those in effect at the time of translation. Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.
Earnings (loss) per share
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings (loss) per common share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.
The earnings (loss) for the three month periods ended November 30, 2025 and 2024 are as follows:
| Schedule of earnings (loss) per share | ||||||||
Three Month Periods ended November 30, | ||||||||
| 2025 | 2024 | |||||||
| Net (loss) | $ | ( | ) | $ | ( | ) | ||
| Basic weighted average number of common shares outstanding | ||||||||
| Effect of dilutive securities | ||||||||
| Stock options | ||||||||
| Diluted weighted average number of common shares outstanding | ||||||||
Comprehensive income (loss)
The Company has no items of other comprehensive income or loss in any period presented. Therefore, net income or loss presented in the consolidated statements of operations equals comprehensive income or loss.
| 8 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)
Stock-based compensation
The Company accounts for stock-based compensation in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”). Equity awards are accounted for at their “fair value” which is measured on the grant date for stock-settled awards. For “full-value” awards, fair value is equal to the underlying value of the stock that have time vesting conditions.
Stock-based compensation to employees are recognized as compensation expense in the financial statements based on their fair values. That expense is recognized over the period during which an employee is required to provide services in exchange for the award. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period, or in the period of grant for awards that vest immediately without any future service condition. For awards that vest over time, previously recognized compensation cost is reversed if the service or performance conditions are not satisfied and the award is forfeited. The Company also grants employees and non-employees restricted stock awards (“RSAs”). The fair value of the RSAs is determined using the fair value of the common shares on the date of the grant. Forfeitures are accounted for as they occur.
The Company has not adopted a stock option plan and has not granted any stock options.
Financial instruments
The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:
Cash and cash equivalents - the carrying amount approximates fair value because the amounts consist of cash held at a bank and cash held in short term investment accounts.
Accounts receivable - the carrying amounts approximate fair value due to the short-term nature and historical collectability.
Bank indebtedness - the carrying amount approximates fair value due to the short-term nature of the obligations.
Accounts payable and accrued liabilities - the carrying amount approximates fair value due to the short-term nature of the obligations.
The estimated fair values of the Company's financial instruments as of November 30, 2025 and August 31, 2025 follows:
| Schedule of estimated fair values | ||||||||||||||||
November 30, 2025 | August 31, 2025 | |||||||||||||||
| Carrying | Fair | Carrying | Fair | |||||||||||||
| Amount | Value | Amount | Value | |||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
| Accounts receivable, net of allowance | ||||||||||||||||
| Accounts payable and accrued liabilities | ||||||||||||||||
| Bank indebtedness | ||||||||||||||||
| 9 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
2. SIGNIFICANT ACCOUNTING POLICIES (cont’d…)
The following table presents information about the assets that are measured at fair value on a recurring basis as of November 30, 2025 and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:
| Schedule of assets measured at fair value on a recurring basis | ||||||||||||||||
November 30, 2025 | Quoted
Prices in Active Markets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
| Assets: | ||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | ||||||||||||
The fair values of cash are determined through market, observable and corroborated sources.
Income taxes
A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
Shipping and handling costs
The Company incurs certain expenses related to preparing, packaging and shipping its products to its customers, mainly third-party transportation fees. All costs related to these activities are included as a component of cost of sales in the consolidated statements of operations. All costs billed to the customer are included as sales in the consolidated statements of operations.
Revenue recognition
The Company recognizes revenue from the sales of lumber, building supply products, industrial wood products, specialty metal products, and other specialty products and tools, when the products are shipped, title passes, and the ultimate collection is reasonably assured. Revenue from the Company's seed operations was generated from seed processing, handling and storage services provided to seed growers, and by the sales of seed products. Revenue from the provision of these services and products is recognized when the services have been performed, products are sold, and collection of the amounts is reasonably assured.
Recent Accounting Pronouncements
The Company has evaluated all recently issued, but not yet effective, accounting pronouncements and determined that it does not believe that any, if currently adopted, would have a material effect on the Company’s financial statements.
| 10 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
3. INVENTORY
A summary of inventory is as follows:
| Schedule of inventory | ||||||||
November 30, 2025 | August 31, 2025 | |||||||
| Pet, fencing, and other products | $ | $ | ||||||
| Industrial wood products | ||||||||
| Inventory net | $ | $ | ||||||
4. PROPERTY, PLANT AND EQUIPMENT
A summary of property, plant, and equipment is as follows:
| Schedule of property, plant, and equipment | ||||||||
November 30, 2025 | August 31 2025 | |||||||
| Office equipment | $ | $ | ||||||
| Warehouse equipment | ||||||||
| Buildings | ||||||||
| Land | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Net book value | $ | $ | ||||||
In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future discounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized. Management's estimates of revenues, operating expenses, and operating capital are subject to certain risks and uncertainties which may affect the recoverability of the Company's investments in its assets. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur which could adversely affect management's estimate of the net cash flow expected to be generated from its operations.
During the first quarter of fiscal
2026 ended November 30, 2025, the Company wrote-off $
In connection with the wind-up of the Company’s
JCSC operations, the Company listed for sale in July 2024 its 11.6 acre property that formerly housed operations. The carrying value of
this property of $
| 11 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
5. INTANGIBLE ASSETS
A summary of intangible assets is as follows:
| Schedule of intangible assets | ||||||||
November 30, 2025 | August 31, 2025 | |||||||
| Intangible assets | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Net book value | $ | $ | ||||||
6. DEFERRED INCOME TAXES
Deferred income tax asset as of
November 30, 2025 of $
7. BANK INDEBTEDNESS
The Company has a line of credit agreement
in the form of a Contract of Sale & Assignment Agreement with Northrim Funding Services (“Northrim”). Under the terms
of the agreement, Northrim will provide short-term operating capital by either purchasing the Company’s accounts receivable invoices
(“AR invoices”) or as a loan against the Company’s inventory position.
8. CAPITAL STOCK
Common Stock
Holders of common stock are entitled to one vote for each share held. There are no restrictions that limit the Company's ability to pay dividends on its common stock. The Company has not declared any dividends since incorporation.
9. RESTRICTED SHARE PLAN
The Company has a Restricted Share Plan (the “Plan”) as approved by shareholders on February 21, 2025. The Plan allows the Company to grant, from time to time, restricted shares as compensation to directors, officers, employees and consultants of the Company. The Restricted Shares are subject to restrictions, including the period under which the shares will be restricted (the “Restricted Period”) and subject to forfeiture which is determined by the Board at the time of the grant. The recipient of Restricted Shares is entitled to all of the rights of a shareholder, including the right to vote such shares and the right to receive any dividends, except that the shares granted under the Plan are nontransferable during the Restricted Period.
| 12 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
9. RESTRICTED SHARE PLAN (cont’d...)
The maximum number of Common Shares
reserved for issuance under the Plan will not exceed 1% of the issued and outstanding number of Common Shares at the time of adoption
or amendment of the Plan. As of November 30, 2025 the maximum number of shares available to be issued under the Plan was
The Board of Directors has set the compensation for non-executive Directors under the Plan at 25 common shares for each quarter of service. The cumulative amount of shares earned each fiscal year to be granted shortly after the close of that fiscal year. Non-executive Directors also received a one-time initial grant of 225 common shares which were issued in December 2020.
During the year ended August 31, 2025,
During the three-month period ended
November 30, 2025, the Company issued
10. PENSION AND PROFIT-SHARING PLANS
The Company has a deferred compensation
401(k) plan for all employees with at least 6 months of service pending a monthly enrollment period. The plan allows for a non-elective
discretionary contribution plus matching employee contributions up to a specific limit. The percentages of contribution remain the discretion
of the Board and are reviewed with management annually. For the three-month periods ended November 30, 2025 and 2024 the 401(k) compensation
expenses were $
11. SEGMENT INFORMATION
The Company has three principal reportable segments. These reportable segments were determined based on the nature of the products offered. Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
The Company evaluates performance based on several factors, of which the primary financial measure is business segment income before taxes. The following tables show the operations of the Company's reportable segments.
Following is a summary of segmented information for the three-month periods ended November 30, 2025 and 2024.
| Schedule of segmented information | ||||||||
| 2025 | 2024 | |||||||
| Sales to unaffiliated customers: | ||||||||
| Industrial wood products | $ | $ | ||||||
| Lawn, garden, pet and other | ||||||||
| $ | $ | |||||||
| Income (loss) before income taxes: | ||||||||
| Industrial wood products | $ | $ | ( | ) | ||||
| Lawn, garden, pet and other | ( | ) | ( | ) | ||||
| Corporate and administrative | ( | ) | ||||||
| $ | ( | ) | $ | ( | ) | |||
| 13 |
JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
11. SEGMENT INFORMATION (cont’d...)
| 2025 | 2024 | |||||||
| Identifiable assets: | ||||||||
| Industrial wood products | $ | $ | ||||||
| Lawn, garden, pet and other | ||||||||
| Corporate and administrative | ||||||||
| $ | $ | |||||||
| Depreciation and amortization: | ||||||||
| Industrial wood products | $ | |||||||
| Lawn, garden, pet and other | ||||||||
| Corporate and administrative | ||||||||
| $ | ||||||||
The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the three months ended November 30, 2025 and 2024:
| Schedule of sales | ||||||||||
| 2025 | 2024 | |||||||||
| Sales | $ | $ | ||||||||
The Company conducts business primarily in the United States, but also has limited amounts of sales in foreign countries. The following table lists sales by country for the three months ended November 30, 2025 and 2024:
| Schedule of sales by country | ||||||||
| 2025 | 2024 | |||||||
| United States | $ | $ | ||||||
| Canada | ||||||||
| Mexico/Latin America/Caribbean | ||||||||
All of the Company’s significant identifiable assets were located in the United States as of November 30, 2025 and 2024.
12. RISKS
Credit risk
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with a high quality financial institution. The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers.
At November 30, 2025,
two customers accounted for greater than 10% of total accounts receivable for an aggregate of
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JEWETT-CAMERON TRADING COMPANY LTD. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Expressed in U.S. Dollars) November 30, 2025 (Unaudited) |
12. RISKS (cont’d…)
Volume of business
The Company has concentrations in the volume
of purchases it conducts with its suppliers. For the three months ended November 30, 2025, there were three suppliers that each accounted
for 10% or greater of total purchases for an aggregate of $
13. SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS
Certain cash payments for the three months ended November 30, 2025 and 2024 are summarized as follows:
| Schedule of cash payments | ||||||||
| 2025 | 2024 | |||||||
| Cash paid during the periods for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
There were no non-cash investing or financing activities during the periods presented.
| 14. | SUBSEQUENT EVENT |
| a) | In December 2025, the Company issued |
| b) | In December 2025, the Company cancelled |
| c) | In December 2025, the Company and its lender Northrim agreed to modify the Company’s line of credit agreement. |
Under the revised agreement:
| · |
| · |
| · | Borrowings against eligible inventory (as defined in the agreements) has been increased from
|
Amounts provided by Northrim will be secured by certain of the Company’s real estate assets. Proceeds from the sale of any such assets will be used to pay down the credit line and thereafter the funding arrangement will revert to the original conditions and limits set in the original agreement.
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| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying consolidated financial statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of November 30, 2025 and August 31, 2025 and its results of operations and cash flows for the three month periods ended November 30, 2025 and 2024 in accordance with U.S. GAAP. Operating results for the three month period ended November 30, 2025 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2026. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year historically being slower than the final two quarters of the fiscal year.
Business Description
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 two reportable operating segments and the parent corporate and administrative segment, which were determined based on the nature of the products offered along with the markets being served. The segments are as follows:
- Pet, Fencing and Other
- Industrial Wood Products
- Corporate and Administrative Services
Pet, Fencing and Other Operating Segment
We have concentrated on building a customer base for Pet, Fencing and our sustainable related products. Management believes this market is less sensitive to downturns in the U.S. economy than the market for new home construction as its products serve both new and existing home and pet owners. However, 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-Right® 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 United States, Canada and Mexico 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 fulfill 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.
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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
The Company formerly operated agricultural seed processing and sales operations through its Jewett-Cameron Seed Company (“JCSC”) subsidiary. JCSC operated out of a Company-owned 11.6 acre facility located adjacent to North Plains, Oregon. We ended regular operations at JCSC effective August 31, 2023. In July 2024, we listed the JCSC property for sale or lease. The combined size of the buildings is approximately 109,500 square feet. 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. The current listing price for the property is $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 Other 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
Our fencing business crafts durable, functional fencing solutions that bolster security, privacy, and beauty. Our primary products include:
| · | The Adjust-A-Gate® family of products are straightforward, lifelong solutions that eliminate measurement issues. Complete steel frame gate kits to perfectly fit openings for wood fences and never sag. Easy enough for homeowners, but with superior quality that meets the demands of the professional contractor. |
| · | Fit-Right® is a fully adjustable gate system for chain link gates. This custom solution is perfect for when a special sized chain link gate opening is needed. Equipped with all the necessary parts, building a gate on-site eliminates measurement issues for the right fit the first time and every time. |
| · | Lifetime Steel Post® offers unmatched strength and versatility in fencing. This post offers versatile support for a range of fence designs and styles, allowing flexibility to showcase the posts or keep them discreetly hidden. |
| · | Euro Fence offers the beauty of wood without the upkeep, featuring durable wood/plastic composite materials. With locking tongue & groove composite and aluminum boards, it provides UV protection, never needs paint or stain, and installs easily in-ground or mounted. |
| · | Perimeter Patrol® Portable Security Panels create an enclosed space or linear fence for outdoor areas. Perfect for crowd control, job site security, outdoor events, enclosed storage areas and more. |
| · | Cedar fencing is a premium softwood known for its unique blend of beauty and durability. Its natural resistance to decay enhances its longevity, while its ease of cutting, sawing, and nailing with standard tools makes it a preferred choice for versatile applications. |
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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:
| · | Lucky Dog® STAY Series Studio Kennels built with long-lasting steel frames and powder coated finish. The waterproof polyester cover offers UPF 50+ protection and is designed for ultimate comfort. |
| · | Lucky Dog® Outdoor Kennel Covers provide durable, waterproof protection with UPF 50+ sun defense. Designed for year-round comfort, they fit securely over Lucky Dog® Kennels. |
| · | Lucky Dog® Dwell Series® Crates offers peace of mind with secure latches, rust-resistant E-coating along with a patented sliding side door and patented corner stabilizers. With a top handle for easy transport and a divider panel for flexible space, they offer durability and convenience. |
| · | Lucky Dog® Exercise Pens provide a secure space for pets with sturdy, rust-resistant wire construction. Featuring a step-thru door, tool-free setup, and fold-flat design for easy storage, these pens are perfect for both indoor and outdoor use. |
Sustainable Products
We sell Sustainable and Post-Consumer Recycled (“PCR”) bag products under the MyEcoWorld® brand. These products are 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:
| · | Food Waste Bags that are certified compostable and worm-safe. These durable bags offer puncture resistance, odor control, and pest deterrence, ensuring reliable use and a cleaner kitchen environment. |
| · | Yard Waste Bags that are suitable for a variety of composting methods, including home, curbside pickup, and industrial composting facilities. |
| · | Pet Poop Bags that ensure no breaks or leaks while keeping the user’s hands clean. |
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.
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% thereafter.
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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.
Results of Operations
Our operations continue to be challenged by the high levels of import tariffs, negative consumer buying trends, and certain operational issues which we are diligently working to resolve. These issues have negatively affected our first quarter results, as sales declined by 7% and our net loss was ($3,944,139), or ($1.12) per share. The current quarter’s net loss was increased by $2,208,813 for the write-down of inventory during the quarter which was primarily related to our excess lumber inventory and liquidation of certain pet inventory.
The current import tariffs, including those on imported metal products, remain a significant strain on our operations. Our markets have been tremendously disrupted, both directly and indirectly, by these new tariffs since their implementation began in February 2025. The direct impacts include cost increases to our supply chain and logistics, and indirectly by their negative effect on consumer confidence which has significantly reduced product demand. These higher costs resulted in a double-digit reduction in overall gross margins across the majority of our product lines.
The new tariffs were announced and became effective very quickly. We were required to pay these tariffs immediately upon effectiveness, but it has been difficult to pass on these higher costs to our customers in the form of price increases for our affected products. Our customers must consent to any price increases, and although we negotiate with our customers to accept higher prices, they may not immediately accept these increases, and any changes may only be accepted after 30 to 90 days, or longer, if at all. Many of our customers did not immediately accept higher prices for our products, but by September 2025, those remaining customers agreed to accept shipments with the higher prices which were implemented in the following weeks. However, the volume of these shipments remain significantly lower than in prior years, which also has negatively affected our revenues. Due to the uncertainty around tariff changes, some of our customers have resisted placing long-term purchases at contracted prices. Although our customers have slowly begun to accept higher product prices, consumers have not yet fully adjusted their expectations. This continues to restrain consumer’s elective purchases, including home improvement and pet products, which lessens demand in the near-term. It is highly probable these increased tariff related costs and their effects will continue to negatively affect our margins and demand for our products for the remainder of fiscal 2026.
We experienced operational issues with our agreement to supply cedar fencing to one of our larger consignment customers during fiscal 2025. After a major customer lost their primary source of western red cedar fencing in 2023, we entered into a consignment program with this customer. This program provided them with a ready source of cedar fencing and provided us with a steadier flow of orders that stabilized the year-over-year lumber sale fluctuations that we commonly experienced as a secondary supplier to multiple big box retailers. However, under this agreement, we were required to have a higher level of fencing inventory on hand than we had previously. During the Spring of 2025, we failed to acquire an adequate supply of fencing to meet our actual demand and were unable to fulfill all our customers’ orders during the third quarter. To ensure we could meet their needs for the remainder of the busy summer season, we quickly moved to secure additional Western Red Cedar from our supply partners to meet their forecasted level of sales for the remainder of the summer season. Unfortunately, much of the additional cedar fencing inventory was not needed as our customer’s actual level of fencing sales fell short of their forecasts as consumers restrained their elective purchases due to the price volatility in these markets, Therefore, we ended the 2025 fencing season with substantial excess cedar fencing inventory on hand. In November 2025 this customer informed us of their intention to transition away from the consignment agreement in calendar year 2026. Although the consignment program provided us with meaningful revenue, it eroded the margin, profitability, and pricing flexibility we were accustomed to in our cedar sales prior to this consignment arrangement. Due the consignment customer’s fencing sales falling short of their forecasts and the subsequent sudden cancelation of the consignment agreement, we still hold significant excess fencing inventory. Although we are actively seeking customers for this inventory, the peak fencing season has passed, and during the first quarter we recorded an inventory write-down to reflect our current expectations for being able to sell this inventory through alternative sales channels. The write-down supports our efforts to focus on our successful fencing and pet products going forward.
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The pet market continues to be sluggish due to low consumer demand and high retailer inventory levels. We remain burdened with high inventory levels of bulky metal crates and kennels that incurred inflated transportation costs from the supply chain crisis. This has made their pricing less competitive while taking up valuable warehouse space. We began to liquidate this older inventory in the first quarter of fiscal 2026. Although these sales recapture some of our inventory costs and will reduce our warehousing costs, these sales are being made at a substantial discount to our historical costs which had a substantial negative effect on our first quarter margins. Although we believed we had made adequate inventory allowances in the previous fiscal year to reflect market conditions, we have recorded an additional $550,000 inventory allowance in the current quarter to reflect ‘current liquidation rates’ as the pet market remains depressed and we expect to continue the liquidation of these products in future quarters until we have sold all the excess inventory.
Sales at Greenwood rose by 45% compared to the first quarter of fiscal 2025 with improved sales margins due to new product pricing. Demand for transit related products are continuing to recover from the lows experienced during the pandemic, and the seat shortage that occurred in fiscal 2025 that slowed transit construction has been resolved. We also have ramped up sales to a new industrial non-transit customer as we continue our efforts to acquire new customers and expand our offerings in non-transit markets. However, as we intend to concentrate our operations on the fence and outdoor segment, we are evaluating strategic alternatives for Greenwood and its industrial wood operations.
We have earnestly been working to reduce our product costs. The multi-country sourcing initiative we began over two years ago has successfully mitigated some of the increased tariffs. We shifted production of our Lifetime Steel Posts® from China to lower-tariffed Vietnam which has helped reduce our direct tariff costs, but shipping and logistic costs in Vietnam remain high. To reduce those costs, we are implementing a new direct import program scheduled to begin later in fiscal 2026. This should improve our LTP and overall margins, as the rollout of our in-store display units continue to successfully grow our lower margin LTP sales, which are up nearly 30% on a dollar basis quarter over quarter.
We are also actively reducing our operating and administrative costs and selling surplus assets to better align with our anticipated revenue levels. The reduction in our work force that we conducted in fiscal 2025 resulted in a 26% reduction in our wages and employee expenses in the current quarter compared to the first quarter of fiscal 2025 without compromising quality or service. Our surplus Jewett-Cameron Seed property of 11.6 acres of land and 109,500 square feet of buildings in Hillsboro remains listed for sale at a price of $7.223 million. We have also recently listed for sale our innovation studio property which is now surplus to our current needs, as we have moved the operations formerly housed in the building to our nearby headquarters and warehouse in North Plains. This property contains a renovated building of 2,000 square feet of flex space and is listed for $795,000. For both the JCSC and innovation studio properties, these are the current asking prices and there is no guarantee the properties will sell for this amount, if at all.
During the first quarter in October 2025, we experienced a cybersecurity incident as a threat actor gained unauthorized access to portions of the Company’s information technology (“IT”) environment. We immediately activated our cyber incident response process to contain the intrusion, assess and investigate the incident, and implemented remedial measures, including retaining external cybersecurity experts and notifying law enforcement. Based on our investigation, we believe the cybersecurity incident consisted of unauthorized access and deployment of encryption and monitoring software by a third party to a portion of the Company’s internal corporate IT systems. We believe the unauthorized activity was contained and our IT systems and individual computer devices were brought back online, and we implemented additional cybersecurity measures. The incident caused disruptions and limitation of access to portions of our business applications, which affected our ability to process and ship orders for several weeks. We believe that the costs associated with these activities will not be material and that the costs related to the services provided by experts and the disruption to our business will be largely covered by the Company’s insurance policies, although there can be no assurance that the insurance carriers will accept liability for these costs, in which event our costs would increase and have a material adverse effect on our future financial performance in the period in which we are required to absorb these costs.
As of November 30, 2025, we had borrowed $4,233,236 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. In December 2025, subsequent to the end of the first quarter, we entered into a revised agreement with Northrim to increase our borrowing capacity under the line. Under the revised agreement, the maximum amount of AR invoices Northrim will purchase at one time is limited to an amount equal to 90% of the maximum eligible accounts and is not to exceed $8,000,000, which was increased from the prior 80% of the net eligible accounts and a $6,000,000 limit. Borrowing against the Company’s inventory was increased to an amount equal to 50% of all eligible inventory from the prior 25%, and the maximum amount the Company may borrow was increased to $6,500,000 from $4,000,000. Amounts provided by Northrim will be secured by certain of the Company’s real estate assets. Proceeds from the sale of any such assets will be used to pay down the credit line and thereafter the funding arrangement will revert to the original conditions and limits set forth prior to the recent amendments. The increase in our line provides us with additional flexibility to provide funds to help our operational realignment and the purchase of inventory ahead of our traditionally busier Spring and Summer seasons.
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In addition to the revised credit line with Northrim, we are currently evaluating other 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, 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.
Our strategic plan for the remainder of fiscal 2026 is to concentrate our resources on our successful fencing and pet 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. We are also reducing our costs, including refining our development efforts to concentrate on improving our existing products, both in design and packaging, that can potentially provide market advantages. Due to the continued uncertainty and higher costs stemming from the high global 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.
Three Months Ended November 30, 2025 and 2024
For the three months ended November 30, 2025, sales were $8,653,467 compared to sales of $9,267,001 for the three months ended November 30, 2024. This is a decrease of $613,534, or 7%. Our sales were negatively affected by the higher tariff rates and lower lumber sales in the current period combined with the continuing negative consumer sentiment. The cybersecurity incident we suffered in October also impacted our ability to process and deliver orders for several weeks which reduced our revenues during the quarter.
Sales at JCC were $7,429,015 compared to sales $8,424,968 for the three months ended November 30, 2024, which was a decrease of $995,953, or 12%. Our customers continue to be slow to accept higher prices for our products caused by inflation and tariffs, and the impacts of the cybersecurity incident also reduced our sales in October. Sales of our fencing products were up 2% from the 1st quarter in fiscal 2025, which was driven by higher sales of our LifeTime Steel Posts (LTP), although pricing for these products remained relatively static due to customers resisting price increases. This compressed our margins as our costs increased due to higher raw material, shipping and tariff costs, which also affected our revenues and margins for our other fencing products. In lumber, our consignment customer reduced their purchases in advance of their notification of terminating the agreement we received in November. For our pet products, we commenced some liquidation of our slower moving inventory which hurt our revenues and margins compared to the comparable prior year’s quarter. Operating loss for JCC was ($3,893,158) compared to an operating loss of ($920,237) for the quarter ended November 30, 2024. The loss in the current quarter included a $2,208,813 inventory write-down related to our excess lumber and liquidation of certain pet inventory. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year historically being slower than the final two quarters of the fiscal year.
Sales at Greenwood for the three months ended November 30, 2025 were $1,224,452 compared to sales of $842,033 for the three months ended November 30, 2024, which was an increase of $382,419, or 45%. Demand by municipalities and transit operators continues to strengthen, while revenues were further boosted by the addition of a new non-transit industrial customer. For the quarter, Greenwood had an operating profit of $125,281 compared to an operating loss of ($23,830) for the three months ended November 30, 2024.
JC USA is the holding company for the wholly-owned operating subsidiaries. For the quarter ended November 30, 2025, JC USA had an operating loss of ($145,887) compared to operating income of $108,720 for the quarter ended November 30, 2024. The results of JC USA are eliminated on consolidation.
Gross margin for the three month period ended November 30, 2025 was negative 12.5% compared to a positive 18.3% for the three months ended November 30, 2024. The largest effects on our current margins were due to the $2,208,813 in additional inventory write-downs we took during the current quarter and a shift in our sales to a higher volume of lower margin products. Our product costs continued to rise in the quarter, particularly due to the higher import tariffs and higher shipping and logistic costs, while our ability to pass on these costs to customers remained limited as they have been slow to accept higher prices. Our margins were also negatively affected by the liquidation sales of certain of our pet inventory which began in the current quarter. Without these negative impacts, we believe our margins would have been higher but still below where we need them to be.
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Operating expenses rose to $2,705,683 in the current quarter compared to $2,552,047 expended in the three months ended November 30, 2024. Selling, General and Administrative Expenses rose to $1,401,035 from $809,213 which was primarily due to higher professional fees related to the engagement of additional consultants in the period and increases to our lumber warehousing costs. Wages and employee benefits dropped significantly to $1,227,038 from $1,661,768 as we continued to reduce our headcount. Depreciation and Amortization decreased to $77,610 from $81,066.
Loss from operations for the current quarter was ($3,784,615) compared to a loss of ($858,145) for the quarter ended November 30, 2024 as the additional inventory reserves taken in the current quarter increased the quarterly loss by ($2,208,813).
Other items in the current quarter included interest expense of ($129,149) which was primarily due to interest paid on our line of credit. In the prior year’s quarter, we recorded a gain on sale of property, plant and equipment of $800 and interest income on our cash balances of $21,998.
The loss before income taxes was for the quarter ended November 30, 2025 was ($3,913,764) compared to a loss of ($835,347) for the quarter ended November 30, 2024. Income tax expense in the current quarter was ($30,375) compared to recovery of $176,630 in the prior year’s quarter. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.
The net loss for the quarter ended November 30, 2025 was ($3,944,139), or ($1.12) per share, compared to a net loss of ($658,717), or ($0.19) per share, for the quarter ended November 30, 2024.
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 2025, the Company had working capital of $13,636,039 compared to working capital of $17,026,472 as of August 31, 2025, a decrease of $3,390,433.
Cash and cash equivalents totaled $1,036,218, an increase of $810,005 from cash of $226,213 as of August 31, 2025. The increase was due to the timing of collection of accounts receivable, which declined to $3,313,266 from $3,863,678, and prepaid expenses, which are largely related to down payments for future inventory purchases, which increased to $1,109,415 from $1,000,439. Inventory declined by $2,358,777 to $13,526,812 from $15,885,589 as we began liquidating our older pet inventory, and we wrote-down our older inventory by $2,208,813. Prepaid income taxes declined to $157,276 from $180,151.
Current liabilities rose to $6,408,759 from $4,695,620 as bank indebtedness increased to $4,233,236 from $2,101,835. Accounts payable declined to $1,204,550 from $1,510,173, and accrued liabilities fell to $970,973 from $1,083,612.
As of November 30, 2025, accounts receivable and inventory represented 84% of current assets and 72% of total assets compared to 91% of current assets and 78% of total assets as of August 31, 2025.
For the three months ended November 30, 2025, the accounts receivable collection period, or DSO, was 35 days compared to 41 days for the three months ended November 30, 2024. Inventory turnover to the three months ended November 30, 2025 was 166 days compared to 160 days for the three months ended November 30, 2024.
External sources of liquidity include an asset-based line of credit agreement with Northrim Funding Services (“Northrim”) which we originally established in fiscal 2024. Under the terms of the agreement, Northrim will provide short-term operating capital by either purchasing the Company’s accounts receivable invoices (“AR invoices”) or as a loan against our inventory position. Subsequent to the end of the quarter, we completed a revised borrowing agreement with Northrim. Under the revised agreement, the maximum amount of AR invoices Northrim will purchase at one time is limited to an amount equal to 90% of the maximum eligible accounts and is not to exceed $8,000,000, which was increased from the prior 80% of the net eligible accounts and a $6,000,000 limit. Borrowing against the Company’s inventory was increased to an amount equal to 50% of all eligible inventory from the prior 25%, and the maximum amount the Company may borrow was increased to $6,500,000 from $4,000,000. Amounts provided by Northrim will be secured by certain of the Company’s real estate assets. Proceeds from the sale of any such assets will be used to pay down the credit line. Interest is computed at the prime rate plus 4.75% with floor of 11% and is secured by certain or our assets. The line expires on June 30, 2026. As of November 30, 2025, we have borrowed $4,233,236 against the line at a current interest rate of 11.5%.
During the quarter, the Company issued no common shares.
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Current Working Capital Requirements
Based on the Company’s current working capital position, combined with the expected timing of accounts receivable and the capital available under our newly revised credit arrangement, the Company is expected to have sufficient liquidity available to meet the Company’s working capital requirements for the next 12 months.
OTHER MATTERS
| Inflation |
Since fiscal 2021, a number of product costs have increased substantially, including raw materials, energy, and transportation/logistical related costs. These higher costs have negatively affected our gross margins. Historically, we have passed cost increases on to the customer, but the rapid rise of prices over the last several years has resulted in consumers significantly reducing discretionary spending which has made the market much more price sensitive. This has made retailers more reluctant to accept higher prices for our goods which has limited our ability to raise our selling prices quickly enough to match the rate of increase of our costs. Our ability to pass through all of the current increase in our product costs to our customers is somewhat limited and occur after such costs are first incurred. Although management is working to mitigate such cost increases through the new sourcing agreements and modifying logistic agreements, we expect that our gross margins will remain under pressure in fiscal 2026.
The increases in interest rates as a result of the higher level of inflation in the US economy experienced beginning in calendar 2021 and continuing through fiscal 2025 has also had a negative effect on our interest expense charged on any borrowing on our lines of credit. The interest rate on our current line of credit is computed using the Prime Interest Rate, which has risen from 3.25% in January 2022 to approximately 7.50% in August 2025. In March 2025, the Company began drawing against its asset-based line of credit to fund its usual seasonal build of inventory to meet its anticipated needs for the busier Spring and Summer seasons. As of the end of the fiscal quarter ended November 30, 2025, the Company has drawn $4,233,236 against this line of credit at a current interest rate of 11.5%.
Environmental, Social and Corporate Governance (ESG)
Jewett-Cameron endeavors to be a good steward and provide sustainable products with a positive impact. We strive to operate and grow in a way that honors our environment and relationships for the long term. This also aligns with one of our three value pillars: stewardship.
Environmental
For our products, the goal is that 90% of materials can be recycled. Our suppliers are audited to strict commercial and fair practice standards, including our own supplier qualifications regarding facilities, capacity, labor practices, and environmental awareness. Packaging is designed to maximize recyclability and re-use and minimize non-recycled materials, and all waste materials in our own facilities are segregated to maximize recycling. Our facilities have replaced high energy consumption infrastructure with energy efficient HVAC and lighting during our most recent remodel.
Active products and designs utilize either recycled or non-petroleum-based plastics to enhance recycling and composting. This includes the recently introduced compostable dog waste bag, a plant-based product, that is less reliant on fossil fuels used in traditional plastic bags. We also dedicate a percentage of sales to support environmental cleanup efforts.
Social
Our social responsibilities include cultural standards of operations and values which we establish in conjunction with our employees. We regularly provide employees with a corporate engagement survey to benchmark their engagement, satisfaction, and ideas for change. We support educational programs that build the future workforce through active participation in regional and statewide organizations, including the CTE/STEM Employer Coalition and assisting teachers to connect traditional school subjects to practical job site applications. We also actively participate in the local community, supported by a Corporate Charitable Giving Charter.
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Governance
As a public company, our processes are outlined and governed by multiple regulations, including the Sarbanes-Oxley Act of 2002. Our financial controls are mapped, executed, self-audited as well as regularly audited by outside experts as part of our annual process. We have established risk mitigations that allows for condensed reviews of risks and impacts with our systems in place. An IT Governance Committee aligns execution and security both for ourselves and also for parties with whom we communicate and do business.
Uyghur Forced Labor Prevention Act
The Uyghur Forced Labor Prevention Act (“UFLPA”) is a US Federal Law signed by President Biden in December 2021 which became effective on June 21, 2022. As enforced by U.S. Customs and Border Protection, the UFLPA prohibits any products that are made, mined, or manufactured, in part or in full, in China’s Xinjiang Uyghur Autonomous Region to be imported into the United States, as they are presumed to have been made with forced labor. Any imports of such goods will be detained and seized by U.S. Customs unless the importer is able to prove that these goods have not been made with forced labor. The Company has ensured that each of its suppliers is in full compliance with the law and none of its products fall under the prohibited goods clause.
Risk Factors
This quarterly report includes “forward–looking statements” as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” “anticipates,” or “hopeful,” or the negative of those terms or other comparable terminology, or by discussions of strategy, plans or intentions. For example, this section contains numerous forward-looking statements. All forward-looking statements in this report are made based on management’s current expectations and estimates, which involve risks and uncertainties, including those described in the following paragraphs.
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. Although we have successfully agreed with Northrim to increase the amount of credit available to us, we may require additional funding to bolster our cash availability in the future. There can be no assurance that we will be successful in locating additional sources of liquidity in the near term, which, if we cannot, 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.
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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.
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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:
| · | Production disruptions or delays at the factory as a result of political instability, labor unrest, mechanical issues, natural disasters, or pandemic outbreaks; |
| · | Capacity constraints; |
| · | Inability to control the quality of the finished products; |
| · | Inability to control manufacturing and delivery schedules; and |
| · | Inability to supply products due to increased costs related to imposition of significant tariffs. |
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.
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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 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.
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.
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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.
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.
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.
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.
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.
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.
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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.
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.
We have identified significant deficiencies in our internal controls. If we are unable to remediate these deficiencies, or if we experience additional significant deficiencies or material weaknesses and are unable to maintain an effective system of internal controls, we may not be able to detect fraud or report our financial results accurately, which could harm our business, negatively affect investor confidence in the Company, and subject us to regulatory scrutiny.
We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our audit of our financial statements for the year ended August 31, 2025. Based on this process, we identified the following significant deficiencies in our internal controls:
| · | The company did not maintain effective controls over certain aspects of financial reporting process including year-end reconciliations of the consignment inventory balances held and year end cut-off procedures, because of the company restructuring that occurred during the year. |
| · | Implementation of formal process surrounding average costing for inventory held due to certain economic pressures including significant tariffs passed for import products from China, where some of the Company's main suppliers are located. |
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. 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.
A contagious disease outbreak could have an adverse effect on our operations and financial condition
Our business could be negatively affected by an outbreak of an infectious disease due to the consequences of the actions taken by companies and governments to contain and control such an outbreak. These consequences include:
| · | The inability of our third-party manufacturers to manufacture or deliver products to us in a timely manner, if it all. |
| · | Isolation requirements may prevent our employees from being able to report to work or being required to work from home or other off-site location which may prevent us from accomplishing certain functions, including receiving products from our suppliers and fulfilling orders for our customers, which may result in an inability to meet our obligations. |
| · | Our new product launches may be delayed or require unexpected changes to be made to our new or existing products. |
| · | The effect of the outbreak on the economy may be severe, including an economic downturn and decrease in employment levels which could result in a decrease in consumer demand for our products. |
The financial impact of such an outbreak are outside our control and are not reasonable to estimate but may be significant. The costs associated with any outbreak may have an adverse impact on our operations and financial condition and not be fully recoverable or adequately covered by insurance.
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Risks Related to Our Common Shares
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.
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.
If we raise additional funds by selling preferred stock or securities, including debt securities, convertible into shares of our common stock, the new shares may have rights, preferences or privileges senior to those of the rights of our existing common shares. If common shares are issued in return for additional funds, the price per share could be lower than that paid by our current stockholders. The result of these actions would be a decrease of each present shareholder’s relative percentage interest in our Company.
Our stock price may be volatile and you may lose all or a part of your investment.
The Company’s common shares currently trade within the NASDAQ Capital Market in the United States. The average daily trading volume of our common stock was approximately 9,300 shares on NASDAQ for the fiscal year ended August 31, 2025. With this limited trading volume, investors could find it difficult to purchase or sell our common stock or experience significant volatility in the price of our common stock.
Our stock price could fluctuate significantly due to a number of factors, including:
| · | issuance of additional shares of our common stock or securities convertible into shares of our common stock, and the expected dilution to our stockholders resulting therefrom, which may occur upon the refinancing of our debt or in connection with other capital raising transactions; |
| · | regulatory developments in the U.S. and foreign countries; |
| · | sales of substantial amounts of our stock or short selling activity by investors; |
| · | variations in our anticipated or actual operating results; |
| · | conditions or trends in our industry generally; and |
| · | events that affect, or have the potential to affect, general economic conditions, including but not limited to political unrest, global trade wars, natural disasters, acts of war, terrorism, or disease outbreaks. |
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.
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.
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.
We will continue to incur substantial costs and obligations as a result of being a public company.
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.
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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.
| Item 3. | Quantitative and Qualitative Disclosures about Market Risk |
Interest Rate Risk
The Company does not have any derivative financial instruments as of November 30, 2025. However, the Company is exposed to interest rate risk.
The Company’s interest income and expense are most sensitive to changes in the general level of U.S. interest rates. In this regard, changes in U.S. interest rates affect the interest earned on the Company’s cash.
The Company is subject to interest rate risk as it has an asset-based line of credit whose interest rate may fluctuate over time. The Company could be subject to increased interest payments as interest rates may change based on economic conditions, as the interest is computed at the prime rate plus 4.75%, with floor of 11%. As of November 30, 2025, the Company has borrowed $4,233,236 (August 31, 2025 - $2,101,835) at an interest rate of 11.5% under this line of credit.
Foreign Currency Risk
The Company operates primarily in the United States. However, a relatively small amount of business is currently conducted in currencies other than U.S. dollars, and the Company may experience an increase in foreign exchange risk as they expand their international sales. Also, to the extent that the Company uses contract manufacturers in foreign countries, currency exchange rates can influence the Company’s purchasing costs.
| Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
Management of the Company, including the Company’s Principal Executive Officer and Principal Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our Principal Executive and Principal Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
Part II – OTHER INFORMATION
| Item 1. | Legal Proceedings |
The Company does not know of any material, active or pending legal proceedings against them; nor is the Company involved as a plaintiff in any other material proceeding or pending litigation. The Company knows of no other active or pending proceedings against anyone that might materially adversely affect an interest of the Company.
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| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
---No Disclosure Required---
| Item 3. | Defaults Upon Senior Securities |
---No Disclosure Required---
| Item 4. | Mine Safety Disclosures |
---No Disclosure Required---
| Item 5. | Other Information |
During the quarter ended November 30, 2025, no director
or officer of the Company
| Item 6. | Exhibits |
| Incorporated by Reference | Filed or Furnished | |||||||||
| No. | Exhibit Description | Form | Date Filed | Number | Herewith | |||||
| 3.1 | Amended and Restated Articles of Incorporation of Jewett-Cameron Lumber Corporation | 10-Q | 1/13/2014 | 3.1 | ||||||
| 3.2 | Articles of Incorporation of Jewett-Cameron Company. | 10-Q | 1/13/2014 | 3.2 | ||||||
| 10.1 | Policy for the Recovery of Erroneously Awarded Executive Compensation as adopted on November 17, 2023 | 10-Q | 2/28/2023 | 10.1 | ||||||
| 10.2 | Executive Severance and Change in Control Policy | 10-K | 12/1/2025 | 10.2 | ||||||
| 21 | Subsidiaries of the Registrant: Refer to page16 of this Form 10-Q | X | ||||||||
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act, Chad Summers | X | ||||||||
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act, Mitch Van Domelen | X | ||||||||
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act), Chad Summers | X | ||||||||
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act), Mitch Van Domelen | X | ||||||||
| 101.INS | XBRL Instance Document | X | ||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | X | ||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | X | ||||||||
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | X | ||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | X | ||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | X | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | X | ||||||||
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SIGNATURES
Pursuant to the requirements 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.
Jewett-Cameron Trading Company Ltd.
(Registrant)
| Date: January 14, 2026 | /s/ “Chad Summers” | |
|
Chad Summers, President and Chief Executive Officer |
| Date: January 14, 2026 | /s/ “Mitch Van Domelen” | |
|
Mitch Van Domelen, Chief Financial Officer and Corporate Secretary |
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FAQ
How did Jewett-Cameron (JCTC) perform in the first quarter of fiscal 2026?
For the three months ended
What drove Jewett-Cameron’s large net loss in the quarter?
The net loss was primarily driven by a
How are tariffs affecting Jewett-Cameron (JCTC)?
The company states that new tariff structures on steel and aluminum and country-specific tariffs have materially increased its supply chain and logistics costs. It notes a double-digit reduction in gross margins across most product lines, difficulty passing price increases through to customers, and ongoing uncertainty about future tariff changes, all of which are negatively affecting demand, margins, and financial condition.
What is Jewett-Cameron’s current liquidity and debt position?
As of
Did Jewett-Cameron (JCTC) experience any significant non-operational events during the quarter?
Yes. In
What strategic actions is Jewett-Cameron taking in response to current challenges?
Management is focusing on fencing and pet product lines, liquidating excess and high-cost inventory, and reducing operating costs, including workforce reductions that lowered wages and benefits to
What customer and supplier concentration risks does Jewett-Cameron face?
For the fiscal year ended
