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, 2022 and August 31, 2022
and its results of operations and cash flows for the three month periods ended
November 30, 2022 and 2021 in accordance with U.S. GAAP. Operating results for
the three month period ended November 30, 2022 are not necessarily indicative of
the results that may be experienced for the fiscal year ending August 31, 2023.
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.
The Company's operations are classified into three reportable operating segments
and the parent corporate and administrative segment, which were determined based
on the nature of the products offered along with the markets being served. The
segments are as follows:
º Industrial wood products
º Lawn, garden, pet and other
º Seed processing and sales
º Corporate and administration
The industrial wood products segment reflects the business conducted by
Greenwood Products, Inc. (Greenwood). Greenwood is a processor and distributor
of industrial wood products. A major product category is treated plywood that is
sold primarily to the transportation industry, including the municipal and mass
transit transportation sectors.
The lawn, garden, pet and other segment reflects the business of Jewett-Cameron
Company (JCC), which is a wholesaler of wood products and a manufacturer and
distributor of specialty metal products. JCC operates out of a 5.6 acre owned
facility located in North Plains, Oregon that includes offices, a warehouse, and
a paved yard. This business is a wholesaler, and a manufacturer and distributor
of products that include an array of pet enclosures, kennels, and pet welfare
and comfort products, proprietary gate support systems, perimeter fencing,
greenhouses, and fencing in-fill products made of wood, metal and composites.
Examples of the Company's brands include Lucky Dog®, for pet products;
Adjust-A-Gate™, Fit-Right®, Perimeter Patrol®, and Lifetime Post™ for gates and
fencing; Early Start, Spring Gardner™, Greenline®, and Weatherguard for
greenhouses. JCC uses contract manufacturers to manufacture these products. Some
of the products that JCC distributes flow through the Company's facility in
North Plains, Oregon, and some are shipped direct to the customer from the
manufacturer. Primary customers are home centers, eCommerce partners, on-line
direct consumers as well as other retailers.
The seed processing and sales segment reflects the business of Jewett-Cameron
Seed Company (JCSC). JCSC processes and distributes agricultural seed. Most of
this segment's sales come from selling seed to distributors with a lesser amount
of sales derived from cleaning seed.
JC USA Inc. ("JC USA") is the parent company for the wholly-owned subsidiaries
as described above. JC USA provides professional and administrative services,
including warehousing, accounting and credit services, to its subsidiary
companies.
Tariffs
The Company's metal products are manufactured in China and are imported into the
United States. 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 effective September 24, 2018. These new tariffs are 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 10, 2019. A number of the Company's products manufactured in China have been
subject to duties of 25% when imported into the United States.
These new tariffs were temporarily reduced on many of the Company's imported
products in September 2019 under a deemed one-year exemption. The 25% tariff
rate was restored on the Company's products in September 2020 when the exemption
expired.
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Results of Operations
Sales in the first quarter of fiscal 2023 were 3% lower than the sales in the
first quarter of fiscal 2022. Even with the slight decline in overall sales,
several of our product lines continued to build upon the strong volumes recorded
in the fourth quarter of fiscal 2022. Fencing products, both wood and metal,
experienced volume increases which was aided by a decline in domestic US
shipping and freight rates. The high freight charges which were prevalent in
fiscal 2022 made the overall costs of shipping our bulkier fence products
prohibitively high for our customers and had a significant impact on our orders.
Sales of some of our pet products, particularly larger kennels and crates, were
down in the first quarter. This was largely due to an issue with one existing
customer which restricted our sales to them this quarter. The issue has since
been resolved and we are getting back on track to ramp up our sales to this
customer in the 3rd quarter of this fiscal year.
Freight costs, both domestic and international, have continued to fall from
their 2022 highs which should improve our margins going forward. However, we are
presently working off our higher cost inventory which we purchased in fiscal
2022. Even though this had the effect of constraining our margins during the
current period, we were still able to improve our gross margin to 22.7% compared
to 19.1% recorded in Q1 of fiscal 2022 and from the 21.9% margin we had for all
of fiscal 2022.
Although our inventory position at the end of the first quarter is higher than
our historical position, it has us well positioned to meet our expected sales
during the second and into the third quarter. It also allows us to avoid the
manufacturing and shipping disruptions around Chinese New Year and any unplanned
disruptions due to rising COVID rates in China. We don't anticipate any
significant additions to our inventory during the second quarter except in
fencing which is due to a new consignment sales agreement with a major retailer.
This new agreement changes our long-time sales relationship to a consignment
sales agreement for their stores in several states. This strengthens our
relationship by making Jewett-Cameron their preferred supplier for cedar
fencing. It will require us to position larger amounts of inventory at each
store within the contract area. Although we will need to acquire additional
inventory in the second quarter in order to initially fully stock each store
covered under the agreement, it will reduce our storage costs as it will reduce
the amount of inventory we will have at our warehouse. This arrangement will
also provide us with greater visibility on what products are selling in each
location, and improve our ability to meet market demands.
We are continuing to add new products that complement our traditional strengths.
To expand our eco-friendly product line, we have signed a new distribution
agreement with SECOS Group of Australia to be the exclusive distributor of their
MyEcoWorld® sustainable bag products in the US and Canada. We currently source
our compostable Lucky Dog Poop Bags made from corn starch and other natural
renewable resources from SECOS, which will continue under a separate agreement.
Consumers are seeking more environmentally friendly alternatives to conventional
hydrocarbon derived plastic products. This new contract allows Jewett-Cameron to
expand our product line of sustainable products, including bin liners and other
pet products. We intend to begin marketing these products to big box store
customers and other retailers in the 3rd quarter of fiscal 2023. Under the
agreement with SECOS, we have a minimum sales target of $2.8 million by March
31, 2024 to maintain our exclusivity.
In November, we appointed Chief Financial Officer Mitch Van Domelen to the
additional position of Corporate Secretary. Michael Nasser, the former Corporate
Secretary and co-founder of the Company, will continue to serve Jewett-Cameron
as a Director. We also appointed a new Independent Director to the Board. Mike
Henningsen is an experienced distribution business professional. From 1999 to
2018, Mr. Henningsen was Chairman & President of Henningsen Cold Storage, a
fourth-generation family business founded in 1923 headquartered in Hillsboro
Oregon with logistics facilities in six states. Prior to joining Henningsen Cold
Storage in 1988, he served as a Commercial Loan Officer for Wells Fargo Bank.
Besides his Board position with Jewett-Cameron, he also serves on the Boards of
Parr Lumber Company, Willamette Windows, and the Southwest Washington Chapter of
the American Red Cross. He also serves as an advisor to the Professional Benefit
Services Board in Salem and on the Board of Trustees of Pacific University in
Forest Grove, Oregon and the Columbia River Maritime Museum in Astoria, Oregon.
Mr. Henningsen holds both a Bachelors of Science in Business Management and an
MBA from the University of Oregon.
As of November 30th, we have drawn $7.6 million against our $10 million bank
line of credit. We expect to utilize a portion of the available $2.4 million to
fund our required inventory build of wood fencing needed for our new consignment
sales agreement. Otherwise, we do not anticipate any further significant
purchases of inventory during the second quarter as our current inventory
position of our other products are sufficient to meet our expected sales in the
second quarter into the third quarter. This is expected to allow us to more
effectively manage our working capital in fiscal 2023.
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The economic conditions in the US will remain a challenge for the remainder of
fiscal 2023. The continuing higher food, energy and housing costs are
restricting consumer's discretionary income which may restrain our ability to
grow sales in the near-term. Our inventory on-hand was primarily purchased
during the period of historically high raw material and freight costs. Even
though those costs have declined from their 2022 highs, our high inventory costs
will restrain our gross profit in 2023 until such time as we are able to cycle
through our existing inventory and replace it with lower cost goods. The rate of
inflation is also expected to remain high, and we may not be able to increase
our prices in response as quickly as our costs could rise which would also have
a negative effect on our margins and profitability.
Our management is committed to work through these challenges. We are focusing on
growing our core products and strengthening our relationships with our customers
and suppliers. Since the end of the COVID emergency, we have resumed our regular
practice of meeting in person with our customers and suppliers. Management has
recently met in person with each of our primary customers and key suppliers.
These meetings have been successful in helping us formulate strategies together
to better navigate this difficult economic environment as well as discuss
significant opportunities for both new and existing products. We are also
improving our own operational procedures by leveraging our recent strategic
investments we have made in new and updated facilities, technologies, and
specialty personnel. These investments have improved our ability to manage the
business and will ultimately result in a more focused product line, more
efficient shipping and receiving, and lower costs going forward.
Three Months Ended November 30, 2022 and 2021
For the three months ended November 30, 2022, sales were $12,577,500 compared to
sales of $12,917,724 for the three months ended November 30, 2021. This is a
decrease of $340,224, or 3%. Gross profit, however, increased by $394,837, or
16%, primarily due to lower freight costs and a more favorable sales mix of
higher margin products.
Sales at JCC were $11,619,082 for the three months ended November 30, 2022
compared to sales of $11,845,884 for the three months ended November 30, 2021,
which was a slight decrease of $226,802, or 2%. Fencing products were strong in
the current quarter. However, pet kennels and crates declined due to a temporary
issue with a major customer which has now been resolved. During the quarter, we
continued to liquidate certain inventory located in Europe and some obsolete
inventory located in the US. Operating loss for JCC was ($156,651) compared to
an operating loss of ($699,697) for the quarter ended November 30, 2021.
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 were $606,909 for the three months ended November 30, 2022
compared to sales of $534,112 for the three months ended November 30, 2021,
which was an increase of $72,297, or 14%. Greenwood's sales have been heavily
impacted by the COVID-19 pandemic, as many of their products are sold to
municipalities and larger transit operators which continue to see reduced demand
for transit services. Management is actively recruiting new brokers to both open
new sales channels and broaden its customer base. For the quarter, Greenwood had
an operating loss of ($44,246) compared to operating income of $69,950 for the
three months ended November 30, 2021.
Sales at JCSC declined to $351,509 for the three months ended November 30, 2022
compared to sales of $537,729 for the three months ended November 30, 2021. The
lower sales are attributable to lower market prices for grass seed and red
clover, which are JCSC's two most prominent products. Management has decided to
hold inventory and not sell at the present depressed prices and instead seek
higher selling prices in future quarters. Operating loss for JCSC for the
quarter was ($27,818) compared to an operating loss of ($101,350) for the
quarter ended November 30, 2021.
JC USA is the holding company for the wholly-owned operating subsidiaries. For
the quarter ended November 30, 2022, JC USA had operating income of $121,040
compared to operating income of $246,640 for the quarter ended November 30,
2021. The results of JC USA are eliminated on consolidation.
Gross margin for the three month period ended November 30, 2022 was 22.7%
compared to 19.1% for the three months ended November 30, 2021. Although the
high raw material and shipping and logistic expenses experienced in fiscal 2022
have now begun to decline, we are selling through our inventory acquired with
these record high costs which continues to pressure our margins.
Operating expenses declined slightly to $2,866,498 in the three months ended
November 30, 2022 from $2,932,044 for the three months ended November 30, 2021.
Selling, General and Administrative Expenses fell to $826,807 from $988,288.
Wages and employee benefits rose to $1,928,155 from $1,874,118 as additional
personnel in specialty areas were added and other wages increased in response to
the broad wage inflation being experienced by most industries throughout the
area and the United States. Depreciation and Amortization increased to $111,536
from $69,638. Other items were interest expense of ($86,552) related to the
borrowing on the Company's bank line of credit.
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The loss before income taxes was ($93,350) for the quarter ended November 30,
2022 compared to a loss of ($484,457) for the quarter ended November 30, 2021.
Income tax recovery in the current quarter was $19,590 compared to income tax
recovery in the year-ago quarter of $93,316. 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, 2022 was
($73,760), or ($0.02) per share, compared to a net loss of ($391,141), or
($0.11) per share, for the quarter ended November 30, 2021.
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 2022, the Company had working capital of $19,212,728 compared
to working capital of $19,207,874 as of August 31, 2022, an increase of $4,854.
Cash and cash equivalents totaled $1,742,482, an increase of $1,258,019 from
cash of $484,463. The increase was due to the timing of collection of accounts
receivable, which fell to $5,237,397 from $7,191,646, and fewer expenditures for
the acquisition of new inventory during the quarter. Inventory increased by
$1,370,146 to $22,002,459 from $20,632,313. Prepaid expenses, which is largely
related to down payments for future inventory purchases, decreased by $488,461
to $624,114. Prepaid income taxes fell to $208,551 from $208,963.
Current liabilities increased slightly to $10,602,275 from $10,422,086. The
Company drew an additional $600,000 against its line of credit during the
quarter which increased the amount borrowed to $7,600,000 from $7,000,000 as of
August 31, 2022. Accounts payable declined to $1,381,077 from $1,566,047, and
accrued liabilities declined to $1,621,198 from $1,856,039.
As of November 30, 2022, accounts receivable and inventory represented 91% of
current assets and 79% of total assets compared to 86% of current assets and 74%
of total assets as of November 30, 2021. For the three months ended November 30,
2022, the accounts receivable collection period, or DSO, was 38 days compared to
42 days for the three months ended November 30, 2021. Although the Company's
level of non-current and past-due invoices is not a significant percentage of
its overall accounts receivable, management made a concerted effort to collect
on these invoices during the current quarter which is primarily responsible for
the decline in the DSO. Inventory turnover to the three months ended November
30, 2022 was 200 days compared to 135 days for the three months ended November
30, 2021 which reflects the higher levels of inventory currently on hand.
External sources of liquidity include a line of credit from U.S. Bank of
$10,000,000. As of November 30, 2022, the Company had a borrowing balance of
$7,600,000, leaving $2,400,000 available. Borrowing under the line of credit is
secured by an assignment of accounts receivable and inventory. Interest was
previously calculated solely on the one-month LIBOR rate plus 175 basis points.
Beginning with the monthly interest payment due March 31, 2022, the Company's
Bank Line of Credit agreement was revised to change the calculation of the
interest rate from the one-month LIBOR rate to the one-month Secured Overnight
Financing Rate (SOFR). Interest is now calculated based on the one-month SOFR
plus 157 basis points, which ames of November 30, 2022 was 5.39% (3.82% +
1.57%). The line of credit has certain financial covenants. The Company is in
compliance with these covenants.
During the quarter, the Company issued 3,557 common shares to officers,
directors and employees as compensation under the Company's Restricted Share
Plan at a deemed average price of $6.55 per share for a total cost of $23,303.
Current Working Capital Requirements
Based on the Company's current working capital position, combined with the
expected timing of accounts receivable and the Bank Line of Credit, the Company
is expected to have sufficient liquidity available to meet the Company's working
capital requirements for the remainder of fiscal 2023.
OTHER MATTERS
Inflation
Historically, inflation has not been a significant issue for the Company.
However, beginning in fiscal 2021, a number of product costs increased
substantially, including raw materials, energy, and transportation/logistical
related costs.
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These higher costs have negatively affected the Company's gross margins.
Typically, the Company passes cost increases on to the customer, and is
currently raising its product prices as much as the market will bear. Retailers
are currently more receptive to such increases than in the past due to a mutual
understanding of the current inflationary environment and the objective reasons
for such. Since the ability of the Company to pass through all of the current
increase in its product costs to its customers are somewhat limited and occur
after such costs are first incurred, management expects that its gross margins
will remain under pressure in fiscal 2023.
The increases in interest rates as a result of the higher level of inflation in
the US economy experienced beginning in calendar 2021 and throughout 2022 has
also had a negative effect on the Company's interest expense paid for its
borrowing under its Bank Line of Credit. The interest rate paid by the Company
has increased from 1.83% as of November 30, 2021 to 5.39% as of November 30,
2022.
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 metal 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 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 made from corn starch and other natural,
renewable resources, 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. The
Company also actively participates in the local community, supported by a
Corporate Charitable Giving Charter.
Governance
As a public company, our processes are outlined and governed by multiple
regulations, including Sarbanes-Oxley. 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.
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Business Risks
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 Common Stock
We may decide to acquire assets or enter into business combinations, which could
be paid for, either wholly or partially with our common stock 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 stock,
which could dilute the ownership interest of present stockholders.
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 stock may
have rights, preferences or privileges senior to those of the rights of our
existing stock. If common stock is 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 stockholder's relative
percentage interest in our company.
Our shareholders could experience significant dilution if we issue our
authorized 10,000,000 preferred shares.
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 on
NASDAQ was 4,360 shares for the three months ended November 30, 2022. With this
limited trading volume, investors could find it difficult to purchase or sell
our common stock.
Risks Related to Our Business
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 the virus. These consequences include:
º The inability of our third-party manufacturers in China and elsewhere to
manufacture or deliver products to us in a timely manner, if it all.
º 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.
º Our new products may be delayed or require unexpected changes to be made to
our new or existing products.
º 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.
23
We could experience a decrease in the demand for our products resulting in lower
sales volumes.
In the past, we have at times experienced decreasing products sales with certain
customers. The reasons for this can be generally attributed to: increased
competition; general economic conditions; demand for products; and consumer
interest rates. If economic conditions deteriorate or if consumer preferences
change, we could experience a significant decrease in profitability.
If our top customers were lost, we could experience lower sales volumes.
For the three months ended November 30, 2022, our top ten customers represented
89% of our total sales. 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 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.
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 which we purchase from
suppliers in China. The company has multiple options to assist in mitigating the
cost impacts of these government actions. However, we cannot control the
duration or depth of such actions which may increase our product costs which
would 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 could lose our credit agreement and could result in our not being able to pay
our creditors.
We have a line of credit with U.S. Bank in the amount of $10,000,000, of which
$2,400,000 is currently available. We are currently in compliance with the
requirements of our existing line of credit. If we lost access to this credit it
could become impossible to pay some of our creditors 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 year ended August 31, 2022. Based on this process we did not
identify any material weaknesses. Although we believe our internal controls are
operating effectively, we cannot guarantee that in the future we will not
identify any material weaknesses in connection with this ongoing process.
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