JEWETT CAMERON TRADING CO LTD

ITEM 1A. RISK FACTORS

Investors should carefully consider the following risk factors and all other information contained in this Annual Report. There is a great deal of risk involved in theour business of the company, and any of the following risks could affect our business, its financial condition, its potential profits or, and  could result in you losing your entire investment if our business became insolvent. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties, including those not presently known to us or that we currently deem immaterial, also may result in decreased revenues, increased expenses or other events which could result in a decline in tour financial condition and the price of our common stockhares.

Risks Related to Our Common StockBusiness

We may decide to acquire assets or enter into business combinations, which could be paicould experience a decrease in the demand for, either wholly o our partially with our common stock and if we decide to do this our current shareholders would roducts resulting in lower sales volumes.

In the past we have at times experience dilution in their percentage of ownd decreasing products sales with certain customership.

Our Articles of Incorporation give our Board of Directors the right to enter into any . The reasons for this can be generally attributed to: increased competition; general econtract without the approval of our shareholders. Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval. If we acquire an asset or enter into a business combination, thisomic conditions; demand for products; and consumer interest rates. If economic conditions deteriorate or if consumer preferences change, we could include exchanging a large amount ofexperience a significant decrease in profitability.

If our common stocktop customers were lost, whiche could dilute the ownership interest of present stockholders.

Future stock distributions could be structured in such a way asexperience lower sales volumes.

For the fiscal year ended August 31, 2024 our to be 1) diluting to our current shareholders or 2) could cause a change in control to new invp ten customers represented 88% of our total sales, and our single largestors.

If we raise additional funds by selling more  customer was responsible for 36% of our stock, the new stock may have rights, prefertotal sales. We would experiences or privileges senior to those of the rights of our existing stock. If common sto a significant decrease in sales and profitability and would have to cut back is issued in return for addiour operational funds, if the price per sharese customers were lost and could be lower than that paid by onot be replaced. Our current top ten custockholdmers. The result of this would be a lessening of each are located in North America and are present stockholdersimarily in the relative percentagetail home improvement and pet interest in our company.

Thdustries.

We are depende Companys common shares currently trade within the NASDAQ Capital Market in the United States. The nt upon third-party manufacturers and suppliers for substantially all our of products

We do not haverage daily trad any manufacturing volume of our common stock was approximately 5,000 shares on NASDAQ for the fiscal year ended August 31, 2023. Withcapabilities and rely on a limited number of contract manufacturers located outside this limie United trading volume, investors could find it difficult to purchase or sell ourStates for the majority of our products. Our reliance on common stock.

Risks Related to Our Business

A contagious disease ntract manufacturers involves certain risks, including:

If outbreak, such as the recent COVID-19 pandemic emergency, could have an adverse effect on our operationsr products are delayed or cannot be supplied in a timely manner, we risk losing revenue and financial condition

Our business could be negaticustomers. Devely affected by an outbreakoping alternate sources of an infectious disease due tosupply for our products the consat meet our requences of the actions taken by companies and governments to containirements may be time-consuming, difficult, and control the virus. These consequences include:

Thestly, and we may not be financial impact of such an outbreak are outside our control andable to source our products on terms that are not reasonaacceptable to estimate but may be significant. The costs associated with any outbreak may us, or at all, which will have an adverse impa negative effect on our operationsrevenue and financial condition.

We and not be fully recoverable or adequatelyface significant covered by insurance.

Wempetition, which could experience a decrease in reduce the demand for our products resulting in lower.

Our revenue depends in part on maintaining and growing the sales volumes.

In the past we have at times experienced decreasof our current products in both existing and new markets, but also by improving existing products sales with certain customerand developing new products. The reasons for thre is can be generally attributed to: increasedsubstantial competition; general economic among conditions; demand for products;mpanies in each of our market sectors, and consuma number interest rates. If economic conditions deteriorate or if consumer preferences change, we could experience a significant decreaof companies market products that compete directly with our products. Current and potential customers may consider these in profitability.

Ifducts from our top customecompetitors were lost, we could exto be superience lower sales volumes.

For to or the fiscal year ended August 31, 2023 less expensive than our top ten customers represented 88% of our total sales, and our single largest customproducts. Some of these competitors may also have greater was responsible for 35% of our totalfinancial, manufacturing, and sales. We would experience a significant decrease in sales and profitability and would hav and market resources than us. If we are unable to cut back our operations, ifeffectively compete with these customers were lostother products and could not be replaced. Our top ten customers are located in North America and are primarilympanies, we would likely lose market share which would result in the retail homa decrease improvementn revenue and pet industriesrofitability.

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.

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 Chinese goods include some of our products that we purchase from suppliers in China. The company has multiple options to assist in mitigating the costpossibility of new tariffs being levied on manufactured goods impacts oforted into these government ac United States from other countries in additions. However, w to China also currently exists. 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.

WInflation could adve could lose orsely 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 credit agreement and could result in oustomers 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 consumers 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 not beinrevenues and income from these products occur during our 3rd and 4th quarters of our fiscal year. Demand for these products is highly affected by the weather. Adverse weather, including able to pay onormally wet conditions or unseasonably hot or cold temperatures, can negatively affect demand for our creditorproducts and cause our customers to delay, or reduce, their orders.

We have a line of credit 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 U.S. Bank in the acompetitive 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 $10 millionour management and financial resources. There is no guarantee that we will have the financial resources necessary to engage in litigation, of whicr 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 h the entire amount is available. We arave issues that could lead to product liability claims

The products we manufacture and distribute exposes 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 currentloverage could have a material negative effect on our business and financial condition. In addition, it could significantly in compliance crease our costs of this insurance on commercially reasonable terms or make it unavailable to us altogether.

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

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

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

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

If we fail 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 and we could be subject 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, 20234. Based on this process we did not identify any material weaknesses or significant deficiencies. Although we believe our internal controls are operating effectively, we cannot guarantee that in the future we will not identify any material weaknesses in cor significant deficiencies in connection with this ongoing process.

A contagious disease outbreak, such as the recent COVID-19 pandemic emergency, 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 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.

Risks Related to Our Common Shares

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

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

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

If we raise additional funds by selling more of our stock, the new shares may have rights, preferences or privileges senior to those of the rights of our existing 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 this would be a lessening of each present stockholders relative percentage interest in our company.

The Companys common shares currently trade within the NASDAQ Capital Market in the United States. The average daily trading volume of our common stock was approximately 4,700 shares on NASDAQ for the fiscal year ended August 31, 2024. 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.