Jewett Cameron Form 10-Q

10-Q 1 jcmay0910q.htm JEWETT CAMERON FORM 10-Q FOR THE PERIOD ENDED MAY 31, 2009 Jewett Cameron Form 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(MARK ONE)

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 2009

[ ]

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 000-19954

	JEWETT-CAMERON TRADING COMPANY LTD.
	(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.)

	32275 N.W. Hillcrest, North Plains, Oregon		97133
	(Address Of Principal Executive Offices)		(Zip Code)

	(503) 647-0110
	(Registrant’s Telephone Number, Including Area Code)

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] Yes [ ] No

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 [ ]
Non-accelerated filer [ ]	Smaller Reporting Company [X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

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 – 2,390,977 common shares outstanding at May 31, 2009.

Jewett-Cameron Trading Company Ltd.

Index to Form 10-Q

PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27

Item 4.	Controls and Procedures	28

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	29

Item 2.	Changes in Securities and Use of Proceeds	29

Item 3.	Defaults Upon Senior Securities	29

Item 4.	Submission of Matters to a Vote of Securities Holders	29

Item 5.	Other Information	29

Item 6.	Exhibits	29

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)

MAY 31, 2009

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

	May 31,	August 31,
	2009	2008
	(Unaudited)	(Audited)

ASSETS

Current assets
Cash and cash equivalents	$ 4,938,114	$ 5,758,479
Accounts receivable, net of allowance of $4,620 (August 31, 2008 - $10,474)	4,285,277	5,405,861
Inventory, net of allowance of $100,000 (August 31, 2008 - $100,000) (note 3)	6,678,599	8,068,284
Note receivable	41,500	-
Prepaid expenses	284,301	138,957
Prepaid income taxes	413,415	13,753

Total current assets	16,641,206	19,385,334

Property, plant and equipment, net (note 4)	1,930,695	1,861,652
Intangible assets, net (note 5)	681,384	740,382
Deferred income taxes (note 6)	172,430	192,870

Total assets	$ 19,425,715	$ 22,180,238

- Continued -

The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

	May 31,	August 31,
	2009	2008
	(Unaudited)	(Audited)

Continued

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities
Accounts payable	$ 458,632	$ 1,585,844
Accrued liabilities	903,511	1,245,154
Current portion of promissory note and note payable	-	367,807

Total current liabilities	1,362,143	3,198,805

Long term liabilities
Promissory note (note 8)	-	1,951,004

Total liabilities	1,362,143	5,149,809

Contingent liabilities and commitments (note 10)

Stockholders’ equity
Capital stock (note 9)
Authorized
20,000,000 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,390,977 common shares (August 31, 2008 - 2,390,977)	2,256,112	2,256,112
Additional paid-in capital	600,804	600,804
Retained earnings	15,206,656	14,173,513

Total stockholders’ equity	18,063,572	17,030,429

Total liabilities and stockholders’ equity	$19,425,715	$22,180,238

The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Three Month Periods Ended May 31			Nine Month Periods Ended May 31

	2009	2008	2009		2008

SALES	$11,419,331	$17,664,365	$31,556,356		$47,010,755

COST OF SALES	8,992,870	14,541,768	24,866,945		38,629,371

GROSS PROFIT	2,426,461	3,122,597	6,689,411		8,381,384

OPERATING EXPENSES
Selling, general and administrative expenses	535,418	163,127	1,599,000		1,604,254
Depreciation and amortization	80,733	77,887	239,121		234,983
Wages and employee benefits	948,812	1,302,001	3,021,579		3,414,288
	1,564,963	1,543,015	4,859,700		5,253,525

Income from operations	861,498	1,579,582	1,829,711		3,127,859

OTHER ITEMS
Gain on sale of property, plant and equipment	350	16,500	2,350		16,115
Interest and other income	705	507	19,637		653
Interest expense	-	(69,463)	(57,533)		(150,888)
	1,055	(52,456)	(35,546)		(134,120)


Income before income taxes	862,553	1,527,126	1,794,165		2,993,739

Income taxes	379,000	566,750	761,022		1,146,250

Net income	$ 483,553	$ 960,376	$ 1,033,143		$ 1,847,489

Basic earnings per common share	$ .20	$ .40	$ .43		$ .77

Diluted earnings per common share	$ .20	$ .40	$ .43		$ .77

Weighted average number of common shares outstanding:
Basic	2,390,977	2,390,977	2,390,977		2,390,232
Diluted	2,390,977	2,391,093	2,390,977		2,391,284

The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Common Stock
	Number		Additional
	Of		Paid-In	Retained
Balance	Shares	Amount	Capital	Earnings	Total

August 31, 2008	2,390,977	$2,256,112	$600,804	$14,173,513	$17,030,429

Net income	-	-	-	1,033,143	1,033,143

May 31, 2009	2,390,977	$2,256,112	$600,804	$15,206,656	$18,063,572

The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Three Month Periods Ended May 31		Nine Month Periods Ended May 31

	2009	2008	2009	2008

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 483,553	$ 960,376	$1,033,143	$1,847,489
Items not involving an outlay of cash:
Depreciation and amortization	80,733	77,887	239,121	234,983
(Gain) on sale of property, plant and equipment	(350)	(16,500)	(2,350)	(16,115)
Deferred income taxes	32,380	-	20,440	-
Changes in non-cash working capital items:
(Increase) decrease in accounts receivable	(424,658)	363,693	1,120,583	(619,929)
(Increase) in note receivable	-	-	(41,500)	-
(Increase) decrease in inventory	1,730,362	(899,655)	1,389,685	170,529
(Increase) decrease in prepaid expenses	141,789	33,528	(145,345)	(47,908)
(Decrease) in accounts payable and accrued liabilities	(829,876)	(175,082)	(1,468,855)	(107,239)
Increase (decrease) in accrued income taxes	(50,130)	170,534	(399,661)	(294,966)
Net cash provided by operating activities	1,163,803	514,781	1,745,261	1,166,844

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(233,855)	(4,915)	(249,165)	(34,553)
Proceeds from sale of property, plant and equipment	350	16,500	2,350	16,500
Net cash provided by (used in) investing activities	(233,505)	11,585	(246,815)	(18,053)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds (repayment) of bank indebtedness	-	-	-	(1,059)
Issuance of capital stock for cash	-	-	-	56,097
Promissory note	-	(15,725)	(2,018,811)	(47,134)
Note payable	-	-	(300,000)	(300,000)
Net cash (used in) financing activities	-	(15,725)	(2,318,811)	(292,096)

Net increase (decrease) in cash and cash equivalents	930,298	510,641	(820,365)	856,695

Cash and cash equivalents, beginning of period	4,007,816	603,185	5,758,479	257,131

Cash and cash equivalents, end of period	$4,938,114	$ 1,113,826	$ 4,938,114	$1,113,826

Supplemental disclosure with respect to cash flows (note 13)

The accompanying notes are an integral part of these consolidated financial statements.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

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. JCLC has the following wholly owned subsidiaries. MSI-PRO Co. (“MSI), incorporated April 1996, Jewett-Cameron Seed Company, (“JCSC”), incorporated October 2000, and Greenwood Products, Inc. (“Greenwood”), incorporated February 2002. 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 and the vicinity of Portland, Oregon. JCLC’s business consists of warehouse distribution and direct sales of wood products and specialty metal products to home centers and other retailers 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. MSI is an importer and distributor of pneumatic air tools and industrial clamps in the United States. JCSC is a processor and distributor of agricultural seeds in the United States.

During the year ended August 31, 2007 shareholders approved a three for two stock split, which was distributed on or about March 23, 2007 to holders of record on March 19, 2007. The stock started trading on a post-split basis on March 15, 2007. All share counts and per share figures reflect this stock split.

SIGNIFICANT ACCOUNTING POLICIES

Generally accepted accounting principles

These consolidated financial statements have been prepared in conformity with generally accepted accounting principles of the United States of America.

Principles of consolidation

These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, JCLC, MSI, JCSC, and Greenwood, all of which are incorporated under the laws of Oregon, U.S.A.

Significant 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.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Cash and cash equivalents

The Company considers cash and cash equivalents to be highly liquid in nature. At May 31, 2009, cash and cash equivalents consisted of cash of $1,921,553 held at U.S. Bank and $3,016,561 in a money market fund that invests almost exclusively in U.S. Treasury Bills. At August 31, 2008 cash and cash equivalents consisted of cash of $1,755,985 and $4,002,494 in the money market fund. The Company has not experienced any losses in such accounts.

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 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:

	Office equipment	5-7 years
	Warehouse equipment	2-10 years
	Buildings	5-30 years

Intangibles

The Company’s intangible assets have a finite life and are recorded at cost. The most significant intangible assets are two patents related to our gate support systems. Amortization is calculated using the straight-line method over the remaining lives of 108 months and 120 months, respectively, and 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.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

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 as the Company's operations are based only in the United States. Any amounts expressed in Canadian dollars are indicated as such.

The Company does not have non-monetary or monetary assets and liabilities that are in a currency other than the U.S. dollar. Any income statement 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 per share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding in the period. Diluted earnings per common share takes into consideration common shares outstanding (computed under basic earnings per share) and potentially dilutive common shares.

The earnings per share data for the three and nine month periods ended May 31, 2009 and 2008 are as follows:

	Three Month Periods to May 31,		Nine Month Periods to May 31,

	2009	2008	2009	2008

Net income	$ 483,478	$ 960,376	$1,033,143	$1,847,489

Basic weighted average number of common shares outstanding	2,390,977	2,390,977	2,390,077	2,390,232

Effect of dilutive securities
Stock options	-	116	-	1,052

Diluted weighted average number of common shares outstanding	2,390,977	2,391,093	2,390,977	2,391,284

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Comprehensive income

The Company has no items of other comprehensive income in any period presented. Therefore, net income presented in the consolidated statements of operations equals comprehensive income.

Stock-based compensation

The Company follows SFAS No. 123(R), “Share-Based Payment” (“SFAS 123(R)”), and related interpretations. All stock-based compensation is recognized as an expense in the financial statements and such costs are measured at the fair value of the award.

Financial instruments

The Company follows SFAS No. 159 “The Fair Value option for Financial Assets and Financial Liabilities” and 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 a money market fund that invests almost exclusively in U.S. Treasury Bills.

Accounts receivable - the carrying amounts approximate fair value due to the short-term nature and historical collectability.

Notes receivable - the carrying amounts approximate fair value due to the short-term nature of the amount.

Accounts payable and accrued liabilities - the carrying amount approximates fair value due to the short-term nature of the obligations.

Promissory note and note payable - the fair value of the promissory note and note payable is determined by discounting the future contractual cash flows under current financing arrangements at discount rates which represent borrowing rates presently available to the Company for loans with similar terms and maturity.

The estimated fair values of the Company's financial instruments are as follows:

	May 31, 2009 (Unaudited)		August 31, 2008 (Audited)
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash and cash equivalents	$4,938,114	$4,938,114	$5,758,479	$5,758,479
Accounts receivable	4,285,277	4,285,277	5,405,861	5,405,861
Note receivable	41,500	41,500
Accounts payable and accrued liabilities	1,362,143	1,362,143	2,830,998	2,830,998
Promissory note	-	-	2,018,811	1,932,583
Note payable	-	-	300,000	312,713

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Financial instruments (cont’d…)

The following table presents information about the assets that are measured at fair value on a recurring basis as of May 31, 2009, 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:

May 31,

2009

Quoted Prices
in Active
Markets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Cash and cash equivalents

4,938,114

—

The fair values of cash and cash equivalents are determined through market, observable and corroborated sources

Income taxes

Income taxes are provided in accordance with SFAS No. 109 "Accounting for Income Taxes". A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. 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 goods sold in the consolidated statement of operations. All costs billed to the customer are included as revenue in the consolidated statement of operations.

Revenue recognition

The Company recognizes revenue from the sales of lumber, building supply products, industrial wood 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 is 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 and products sold and collection of the amounts is reasonably assured.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Reclassifications

Certain reclassifications have been made to prior periods’ financial statements to conform to the classifications used in the current period.

Recent Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157 establishes a framework for measuring the fair value of assets and liabilities. This framework is intended to provide increased consistency in how fair value determinations are made under various existing accounting standards which permit, or in some cases require, estimates of fair market value.

FASB Staff Position 157-2 (“FSP FAS 157-2”) delayed the effective date of FAS 157 until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, for all nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). We are currently assessing the impact of SFAS No. 157 on our financial position and results of operations, but do not anticipate a material impact.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities”. SFAS 161 changes the disclosure requirements for derivative instruments and hedging activities by requiring enhanced disclosures about how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS 133, and how derivative instruments and related hedged items affect an entity’s operating results, financial position, and cash flows. SFAS 161 is effective for fiscal years beginning after November 15, 2008. Earlier adoption is permitted. The Company is currently reviewing the provisions of FAS 161 and has not yet adopted the statement. However, as the provisions of SFAS 161 are only related to disclosure of derivative and hedging activities, the Company does not believe the adoption of SFAS 161 will have a material impact on its consolidated operating results, financial position, or cash flows.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51,” (SFAS 160). SFAS 160 amends Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This standard defines a noncontrolling interest, sometimes called a minority interest, as the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. SFAS 160 requires, among other items, that a noncontrolling interest be included in the consolidated statement of financial position within equity separate from the parent’s equity; consolidated net income to be reported at amounts inclusive of both the parent’s and noncontrolling interest’s shares and, separately, the amounts of consolidated net income attributable to the parent and noncontrolling interest all on the consolidated statement of income; and if a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be measured at fair value and a gain or loss be recognized in net income based on such fair value. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008. Management has determined that the adoption of SFAS 160 will not have an impact on the Financial Statements.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

In December 2007, the FASB issued SFAS 141(R), which replaces SFAS 141 and retains the fundamental requirements in SFAS 141, including that the purchase method be used for all business combinations and for an acquirer to be identified for each business combination. This standard defines the acquirer as the entity that obtains control of one or more businesses in the business combination and establishes the acquisition date as the date that the acquirer achieves control instead of the date that the consideration is transferred. SFAS 141(R) requires an acquirer in a business combination, including business combinations achieved in stages (step acquisition), to recognize the assets acquired, liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date, with limited exceptions. It also requires the recognition of assets acquired and liabilities assumed arising from certain contractual contingencies as of the acquisition date, measured at their acquisition-date fair values. SFAS 141(R) becomes effective for the first annual reporting period beginning on or after December 15, 2008. Management has determined that the adoption of SFAS 141(R) will not have a material impact on the Financial Statements.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets,” (SFAS 142) in order to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. FSP FAS 142-3 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP FAS 142-3 will not have an impact on the Financial Statements.

In June 2008, the FASB issued FSP No. EITF 03-6-1, “Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities,” (FSP EITF 03-6-1). FSP EITF 03-6-1 states that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. FSP EITF 03-6-1 is effective for fiscal years beginning after December 15, 2008. Management has determined that the adoption of FSP EITF 03-6-1 will not have an impact on the Financial Statements.

Beginning in the fiscal year ended August 31, 2008, we adopted the provisions of FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes”, which prescribes a comprehensive model for how a company should recognize, measure, present and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return (including a discussion of whether to file or not to file a return in a particular jurisdiction). The adoption of FIN 48 has had no impact on the company’s financial statements.

In May 2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles or SFAS No. 162. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements of nongovernmental entities that are presented in conformity with GAAP. This statement shall be effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles. We do not believe that implementation of this standard will have a material impact on our consolidated financial position, results of operations or cash flows.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

In April 2009, FASB issued FSP No. 107-1/APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. Entities shall include disclosures about the fair value of financial instruments whenever it issues summarized financial information for interim reporting periods. Entities shall disclose in the body or in the accompanying notes of its summarized financial information the fair value of all financial instruments for which it is practicable to estimate that value, whether recognized or not recognized in the statement of financial position, as required by Statement 107. Effective for interim periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009, this FSP was adopted and had no impact on our financial condition, results of operations or cash flows.

In April 2009, FASB issued FSP No. 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of the other-than-temporary impairments on debt and equity securities in the financial statements. The FSP is effective for interim and annual reporting periods ending after June 15, 2009. The Company is currently analyzing the impact this FSP will have on its financial statements.

In May 2009, the FASB issued Statement No. 165, Subsequent Events (“SFAS 165”). SFAS 165 requires entities to disclose the date through which they have evaluated subsequent events and whether the date corresponds with the release of their financial statements. Effective for interim and annual periods ending after June 15, 2009, SFAS 165 will become effective in the next reporting quarter. SFAS 165 should not have an impact on our financial condition, results of operations or cash flows.

In June 2009, the FASB issued Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (“SFAS 168”). SFAS 168 will become the single source of authoritative nongovernmental U.S. generally accepted accounting principles (“GAAP”), superseding existing FASB, American Institute of Certified Public Accountants (“AICPA”), Emerging Issues Task Force (“EITF”), and related accounting literature. SFAS 168 reorganizes the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant Securities and Exchange Commission guidance organized using the same topical structure in separate sections. SFAS 168 will be effective for financial statements issued for reporting periods that end after September 15, 2009. This will have an impact on the Company’s financial statements since all future references to authoritative accounting literature will be references in accordance with SFAS 168.

INVENTORY

A summary of inventory is as follows:

	May 31, 2009 (Unaudited)	August 31, 2008 (Audited)


Wood products and metal products	$4,975,290	$6,945,671
Industrial tools	647,774	706,068
Agricultural seed products	1,055,534	416,545

	$6,678,598	$8,068,284

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

PROPERTY, PLANT AND EQUIPMENT

A summary of property, plant, and equipment is as follows:

	May 31, 2009 (Unaudited)	August 31, 2008 (Audited)


Office equipment	$ 677,790	$ 615,940
Warehouse equipment	1,299,501	1,219,360
Buildings	2,089,544	2,004,306
Land	576,881	568,713
	4,643,716	4,408,319

Accumulated depreciation	(2,713,021)	(2,546,667)

Net book value	$ 1,930,695	$ 1,861,652

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.

INTANGIBLE ASSETS

A summary of intangible assets is as follows:

	May 31, 2009 (Unaudited)	August 31, 2008 (Audited)
Patent	$ 850,000	$ 850,000
Other	30,605	30,605
	880,605	880,605
Accumulated amortization	(199,221)	(140,223)

Net book value	$ 681,384	$ 740,382

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

DEFERRED INCOME TAXES

Deferred income taxes as of May 31, 2009 of $172,430 (August 31, 2008 - $192,870) reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

BANK INDEBTEDNESS

There was no bank indebtedness under the Company’s line of credit as of May 31, 2009 or August 31, 2008.

Bank indebtedness, when it exists, is secured by an assignment of accounts receivable and inventory. Prior to January 31, 2008 interest was calculated at either prime or the one month LIBOR rate plus 190 basis points. However, starting on January 31, 2008 the borrowing mechanism was simplified, and the interest rate is calculated solely on the one month LIBOR rate plus 190 basis points.

LONG TERM LIABILITIES

The carrying amounts are as follows:

	May 31, 2009 (Unaudited)	August 31, 2008 (Audited)

Promissory note due June 15, 2010 bearing interest at 6.52% per annum (monthly payments of $16,601)	$ -	$2,018,811

Note payable bearing interest at 5% per annum with $300,000 due January 15, 2008 and the remainder due January 15, 2009	-	300,000
	-	2,318,811
Less current portion:
Promissory note	-	67,807
Note payable	-	300,000
	-	367,807

Long term portion	$ -	$1,951,004

The promissory note was secured by the property at the Company’s headquarters located in North Plains, Oregon. The note payable was used to partially fund the purchase of the patents related to the fence gate support systems. The Company granted a security interest in the patents.

During the quarter ended February 28, 2009, the Company repaid the note payable in full, and prepaid the full amount of the Promissory Note prior to the due date of June 15, 2010.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

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.

During the year ended August 31, 2007 shareholders approved a three for two stock split, which was distributed on or about March 23, 2007 to holders of record on March 19, 2007. The stock started trading on a post-split basis on March 15, 2007. All share amounts and per share figures reflect this stock split.

10.

CONTINGENT LIABILITIES AND COMMITMENTS

One of our subsidiaries was a plaintiff in a lawsuit filed in Portland, Oregon, entitled, Greenwood Products, Inc. et al v. Greenwood Forest Products, Inc. et al., Case No. 05-02553 (Multnomah County Circuit Court).

During fiscal 2002 the Company entered into a purchase agreement to acquire inventory over a 15 month period with an initial estimated value of $7,000,000 from Greenwood Forest Products, Inc. During the year ended August 31, 2003, the Company completed the final phase of the inventory acquisition. As partial consideration for the purchase of the inventory the Company issued two promissory notes, based on its understanding of the value of the inventory purchased. The Company believes it overpaid the obligation by approximately $820,000. The holder counterclaimed for approximately $2,400,000. Management is of the opinion that the counterclaim is of no merit and believes that the Company will be successful in its claim. However, in the event that resolution of the dispute results in a change to the promissory notes, any gain or loss will be recognized in the period that the final determination of the amount is made. Any potential charge is not determinable at this time.

Litigation was completed on March 5, 2007 with the court’s general judgment and money award. The net effect was money judgment in favor of Greenwood Forest Products, Inc. for $242,604. The Company has accrued reserves to cover the money judgment related to this dispute.

Both parties have filed appeals for review of the court’s opinion.

Greenwood formerly leased office premises pursuant to operating leases. One of these leases expired on January 31, 2008, and the Company moved to a new location. The new lease expires on July 31, 2009. Unless terminated by Greenwood, this new lease has automatic extensions through April 30, 2011. For the nine months ended May 31, 2009 and May 31, 2008 rental expense was $67,500 and $108,685 respectively.

JCLC leases office premises pursuant to an operating lease which expires on January 31, 2010. For the nine months ended May 31, 2009 and 2008, rental expense was $6,563 and $6,563 respectively.

Future minimum annual lease payments are as follows:

	Fiscal 2009	$15,417
	Fiscal 2010	$3,646
	Fiscal 2011	$0

At May 31, 2009 and August 31, 2008 the Company had an un-utilized line-of-credit of $5,000,000 and $4,700,000, respectively (note 7). The line-of-credit has certain financial covenants. The Company is in compliance with these covenants.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

11.

SEGMENT INFORMATION

The Company has four 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 nine month periods ended May 31, 2009 and 2008:

	2009	2008


Sales to unaffiliated customers:
Industrial wood products	$ 8,834,109	$ 22,908,955
Lawn, garden, pet and other	18,570,621	17,901,504
Seed processing and sales	3,153,539	5,398,978
Industrial tools and clamps	998,087	801,318
	$31,556,356	$ 47,010,755

Income (loss) from operations:
Industrial wood products	$ (368,749)	$ 1,094,089
Lawn, garden, pet and other	2,216,707	1,868,911
Seed processing and sales	51,831	186,844
Industrial tools and clamps	(8,202)	60,391
Unallocated overhead	(97,422)	(82,376)
	$ 1,794,165	$ 3,127,859
Identifiable assets:
Industrial wood products	$ 3,094,938	$ 7,350,639
Lawn, garden, pet and other	13,743,226	13,192,657
Seed processing and sales	1,251,131	530,965
Industrial tools and clamps	821,563	804,622
Unallocated overhead	101,441	147,129
	$19,012,299	$ 22,026,012

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

11.

SEGMENT INFORMATION (cont’d…)

Depreciation and amortization:
Industrial wood products	$ 3,248	$ 4,911
Lawn, garden, pet and other	221,394	216,108
Seed processing and sales	9,499	8,984
Industrial tools and clamps	4,980	4,980
	$ 239,121	$ 234,983
Capital expenditures:
Industrial wood products	$ 1,500	$ 10,762
Lawn, garden, pet and other	246,646	20,527
Seed processing and sales	1,019	3,264
Industrial tools and clamps	-	-
	$ 249,165	$ 34,553
Interest expense:
Lawn, garden, pet and other	$ 57,532	$ 150,888

The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the nine months ended May 31, 2009 and 2008, respectively:

Nine Months Ended

May 31,

2009

Nine Months Ended

May 31,

2008

Sales

$ 13,571,607

$ 5,859,696

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:

	Nine Months Ended May 31, 2009	Nine Months Ended May 31, 2008

United States	$ 28,331,453	$ 43,426,307
Canada	2,478,761	3,302,699
Mexico	162,918	184,185
Europe	346,173	97,563
Asia/Pacific	217,820	-
Africa	19,231	-

All of the Company’s identifiable assets were located in the United States as of May 31, 2009 and 2008.

JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

May 31, 2009

(Unaudited)

12.

CONCENTRATIONS

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents 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 May 31, 2009, two customers accounted for over 10% of total accounts receivable at a combined total of 56%. At August 31, 2008 one customer accounted for accounts receivable greater than 10% of total accounts receivable at 13%. The Company controls credit risk through credit approvals, credit limits, credit insurance and monitoring procedures. The Company performs credit evaluations of its commercial customers but generally does not require collateral to support accounts receivable.

Volume of business

The Company has concentrations in the volume of purchases it conducts with its suppliers. For the nine months ended May 31, 2009 there were two suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $8,293,014. In the nine month period ended May 31, 2008 there were two suppliers that each accounted for greater than 10% of total purchases, and their aggregate purchases amounted to 41.9% of total purchases.

13.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Certain cash payments for the three and nine month periods ended May 31, 2009 and 2008 are summarized as follows:

	Three Month Periods ended May 31,		Nine Month Periods ended May 31,

	2009	2008	2009	2008

Cash paid during the periods for:
Interest	$ -	$ 66,266	$ 57,533	$ 166,190
Income taxes	$ 396,750	$ 396,216	$ 761,022	$ 1,441,216

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 May 31, 2009 and August 31, 2008 and its results of operations and cash flows for the three and nine month periods ended May 31, 2009 and May 31, 2008 in accordance with U.S. GAAP. Operating results for the three and nine month periods ended May 31, 2009 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2009.

The Company’s operations are classified into four reportable segments, which were determined based on the nature of the products offered along with the markets being served. The segments are as follows:

•

Industrial wood products

•

Lawn, garden, pet and other

•

Seed processing and sales

•

Industrial tools

The industrial wood products segment reflects the business conducted by Greenwood Products, Inc. (Greenwood), a wholly owned subsidiary of Jewett-Cameron Lumber Corporation (JCLC). Greenwood is a processor and distributor of industrial wood and other specialty building products. A major product category is treated plywood that is sold to boat manufacturers and the transportation industry.

The lawn, garden, pet and other segment reflects the business of Jewett-Cameron Lumber Corporation, which is a wholesaler of wood products and a manufacturer and distributor of specialty metal products. Wood products include fencing and landscape timbers, while metal products include dog kennels, a proprietary gate support system, perimeter fencing, and greenhouses. JCLC uses contract manufacturers to make the specialty metal products. Some of the products that JCLC distributes flow through the Company’s distribution center located in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers and other large retailers.

The seed processing and sales segment reflects the business of Jewett-Cameron Seed Company (JCSC), a wholly owned subsidiary of JCLC. 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.

The industrial tools segment reflects the business of MSI-PRO (MSI), a wholly owned subsidiary of JCLC. MSI imports and distributes products including pneumatic air tools, industrial clamps, and saw blades; that are primarily sold to retailers that in turn sell to contractors and end users. Some of these products carry the Avenger Products brand label.

RESULTS OF OPERATIONS

Three Months Ended May 31, 2009 and May 31, 2008

For the three months ended May 31, 2009, sales decreased $6,245,033 to $11,419,331 from $17,664,365 for the three months ended May 31, 2008. The decrease is largely due to a decline in sales of industrial wood products at Greenwood.

Sales at Greenwood were $2,696,711 for the three months ended May 31, 2009, which was a decrease of $4,394,629 or 64% compared to sales of $7,540,185 for the three months ended May 31, 2008. Sales to boat manufacturers represented approximately 59% of Greenwood’s total sales for the year ended August 31, 2008, and demand from these kinds of customers has been severely affected by weak economic conditions. Furthermore, Greenwood lost a major group of boat manufacturing customers, when a two year contract came up for renewal at June 30, 2008. Also contributing to the decline in sales was the departure of some traders earlier in calendar 2008. New traders have been hired, but the net effect has been a reduction in sales. Operating income at Greenwood was ($103,411) for the three months ended May 31, 2009, which was a decline of ($415,239) from the $311,828 profit recorded in the same period a year ago. This primarily reflects the effect of fixed costs at the relatively low level of sales during the period. For the remainder of the fiscal year, depressed conditions in the overall economy and in the boating industry in particular will likely be a significant challenge for all suppliers in the industry including Greenwood.

Sales at JCLC were $7,783,371 for the three months ended May 31, 2009, which was a decrease of $1,076,572, or 12%, compared to sales of $8,859,943 for the three months ended May 31, 2008. Operating income was $1,075,148, which was a decrease of $185,697 compared to the income of $1,260,845 from the year-ago quarter. The percentage decline in operating income was approximately the same as the percentage decline in sales for the quarter, as gross margins remained relatively steady. Overall the operating results of JCLC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.

Sales at JCSC were $439,097 for the three months ended May 31, 2009, which was a decrease of $567,372 or 56% compared to $1,006,469 for the three months ended May 31, 2008. Operating loss for the current quarter was ($56,971), a decrease of $59,701 from the operating income of $2,730 recorded by JCSC in the prior year’s quarter. Grass seed demand has fallen due to the overall economy and substantially lower new home construction rates in North America.

Sales at MSI were $500,153 for the three months ended May 31, 2009, which was an increase of $242,385 or 94% compared to $257,768 for the three months ended May 31, 2008. Operating income was ($18,247), a decrease of $49,848 compared to the operating income of $31,601 recorded in the comparative quarter in the prior fiscal year.

Gross margin for the three month period ended May 31, 2009 was 21.2% compared with 17.7% for the three months ended May 31, 2008. This improvement primarily reflects the fact that metal products sold by JCLC, which have a higher margin than the Company’s other products, were a larger part of the sales mix in the current year vs. the prior year.

Operating expenses increased by $21,948 from $1,543,015 for the three month period ended May 31, 2008 to $1,564,963 for the three month period ended May 31, 2009. Selling, General and Administrative Expenses increased by $372,291 from $163,127, although Wages and Employee Benefits declined by the similar amount of $353,189, as the Company has reduced total employment by approximately 10%. Depreciation and Amortization rose by $2,846, from $77,887 to $80,733.

Income tax expense for the three month period ended May 31, 2009 was $379,000 compared to $566,750 for the three month period ended May 31, 2008. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.

Net income for the three month period ended May 31, 2009 was $483,553 or $.20 per basic and diluted share compared to $960,376 or $.40 per basic and diluted share for the three month period ended May 31, 2008.

Nine Months Ended May 31, 2009 and May 31, 2008

For the nine months ended May 31, 2009, sales decreased $15,454,399 or 32.3% to $31,556,356 from $47,010,755 for the nine months ended May 31, 2008. The decline primarily reflects a relatively large decrease in sales at Greenwood and Jewett Cameron Seed Company that was only partially offset by an increase in sales at Jewett Cameron Lumber Company.

Sales at Greenwood were $8,834,109 for the nine months ended May 31, 2009, which was a decrease of $14,074,846 or 61.4% compared to sales of $22,908,955 for the nine months ended May 31, 2008. A slowdown in the boat manufacturing industry, where much of Greenwood’s sales are targeted was a significant factor contributing to the decline in sales. For the nine months ended May 31, 2009, Greenwood reported an operating loss of ($368,749) compared to an operating profit of $1,094,089 for the nine months ended May 31, 2008. Going forward, the current depressed economic conditions, particularly in the boating industry, will likely continue to be a challenge for Greenwood.

Sales at JCLC were $18,570,621 for the nine months ended May 31, 2009, which was an increase of $669,117 or 3.7% compared to sales of $17,901,504 for the nine months ended May 31, 2008. The increase primarily reflects higher sales of specialty metal products. Operating income increased $347,796, or 18.6%, from $1,868,911to $2,216,707. Overall the operating results of JCLC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.

Sales at JCSC were $3,153,539 for the nine months ended May 31, 2009, which was a decrease of $2,245,439, or 41.6% compared to sales of $5,398,978 for the nine months ended May 31, 2008. The lower sales were largely due to decreased demand for grass seed from new home construction in North America. Operating income for the current nine month period was $51,831, a decrease of $135,013 from the operating income of $186,844 recorded in the prior year’s nine month period.

Sales at MSI were $998,087 for the nine months ended May 31, 2009, which was a increase of $196,769 or 24.6% compared to $801,318 for the nine months ended May 31, 2008. Operating loss for the current nine month period was ($8,202) compared to an operating profit of $60,391 in the prior year’s nine month period.

Gross margin for the nine month period ended May 31, 2009 was 21.2% compared with 17.8% for the nine months ended May 31, 2008 The improvement in gross margin percentage reflects the increased sales of specialty metal products at JCLC, which have higher margins than wood products sales.

Operating expenses decreased by $393,825, or 7.5%, to $4,859,700 for the nine month period ended May 31, 2009 from $5,253,525 for the nine month period ended May 31, 2008. The decrease was largely due to a decline in Wages and Employee Benefits, which fell $392,709, or 11.5%. Management has recently reduced total employment by 10%, which was above the previously announced goal of a 5% reduction. Selling, general, and administrative expenses decreased slightly by $5,254 and depreciation and amortization increased by $4,138.

Income tax expense for the nine month period ended May 31, 2009 was $761,022 compared to $1,146,250 for the nine month period ended May 31, 2008. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.

Net income for the nine month period ended May 31, 2009 was $1,033,143, or $0.43 per basic and diluted share, compared to $1,847,489 or $.77 per basic and diluted share, for the nine month period ended May 31, 2008.

LIQUIDITY AND CAPITAL RESOURCES

As of May 31, 2009 the Company had working capital of $15,279,062, which represented an decrease of $907,467 compared to working capital of $16,186,529 as of August 31, 2008. The largest differences regarding this change in working capital were a $820,365 decrease in cash and cash equivalents, a $1,120,583 decrease in accounts receivable, a $1,127,212 decrease in accounts payable, and a $341,643 decrease in accrued liabilities. The decrease in cash and cash equivalents was primarily due to paying in full a promissory note and note payable from its cash balance, which resulted in a decrease in the current liabilities of $367,807 and long-term liabilities of $1,951,004.

As of May 31, 2009, accounts receivable and inventory represented 66% of current assets and 56% of total assets. For the three months ended May 31, 2009, the accounts receivable collection period or DSO was 34.5 compared with 35.5 for the three months ended May 31, 2008. For the nine months ended May 31, 2009 the DSO was 36.9 days compared with 36.1 days for the nine months ended May 31, 2008. Inventory turnover for the three months ended May 31, 2009 was 77.2 days compared with 58.7 days for the three months ended May 31, 2008. For the nine month period, inventory turnover was 80.7 compared with 68.0 days for the nine month period ended May 31, 2008.

External sources of liquidity include a line of credit from the United States National Bank of Oregon of $5,000,000. At May 31, 2009, none of the line was outstanding and the entire amount of $5,000,000 was available. Also, as of August 31, 2008 the Company had no borrowing against this line of credit. Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory. Prior to January 31, 2008 interest was calculated at either prime or the one month LIBOR rate plus 190 basis points. However, starting on January 31, 2008 the borrowing mechanism was simplified, and the interest rate is calculated solely on the one month LIBOR rate plus 190 basis points.

The Company is currently exploring possible uses for its cash position to increase shareholder value. This may include a common share repurchase program for some of its currently outstanding common shares.

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,” “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 and on the Toronto Stock Exchange in Canada. On NASDAQ the average daily trading volume for the nine month period ended May 31, 2009 was approximately 950 shares. Trading volume on the Toronto Stock Exchange was significantly less than on NASDAQ. With this limited trading volume, investors could find it difficult to purchase or sell the Company’s common stock.

Risks Related to Our Business

We could experience a decrease in the demand for our products resulting in lower sales volumes, which would give us less capital with which to operate.

In the past at times we have at times experienced decreasing products sales with certain customers. The reasons for this can be generally attributed to factors such as competition, wood products prices, and 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 and could not be replaced.

For the nine months ended May 31, 2009, our top ten customers represented 63% 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 in the U.S. and are primarily in the home improvement, marine, and agricultural 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.

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 $5 million of which the entire amount is available. We are currently in compliance with the requirements of our existing line of credit. If we lost this credit it could become impossible to pay some of our creditors on a timely basis.

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. 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.

Furthermore, for the year ending August 31, 2010 our external auditors need to attest to the state of our Section 404 compliance. If our independent registered public accounting firm cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

The Company does not have any derivative financial instruments as of May 31, 2009. 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 equivalents as well as interest paid on debt.

The Company has a line of credit whose interest rate may fluctuate over time based on economic changes in the environment. The Company is subject to interest rate risk and could be subject to increased interest payments if market interest rates fluctuate. The Company does not expect any change in the interest rates to have a material adverse effect on the Company’s results from operations.

Foreign Currency Risk

The Company operates primarily in the United States. However, a relatively small amount of business is conducted in currencies other than U.S. dollars. Also, to the extent that the Company uses contract manufacturers in China, currency exchange rates can influence the Company’s purchasing costs.

Item 4.

Controls and Procedures

The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. They are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. For the quarter ended May 31, 2009 the CEO and CFO have concluded that our disclosure controls and procedures were effective. For the quarter ended May 31, 2009 the CEO and CFO have also concluded that the disclosure controls and procedures were effective for the purpose of ensuring that material information required to be in this report is made known to management and others, as appropriate, to allow timely decisions regarding required disclosures.

CEO and CFO CERTIFICATIONS

Appearing immediately following the Signatures section of this Quarterly Report there are two separate forms of "Certifications" of the CEO and CFO. The second form of Certification is required in accord with Section 302 of the Sarbanes-Oxley Act of 2002 (the Section 302 Certification). This section of the Quarterly Report, which you are currently reading is the information concerning the Controls Evaluation referred to in the Section 302 Certifications and this information should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

DISCLOSURE CONTROLS AND INTERNAL CONTROLS.

Disclosure Controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934 (Exchange Act), such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's (SEC) rules and forms. Disclosure Controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Internal Controls are procedures which are designed with the objective of providing reasonable assurance that (1) our transactions are properly authorized; (2) our assets are safeguarded against unauthorized or improper use; and (3) our transactions are properly recorded and reported, all to permit the preparation of our financial statements in conformity with generally accepted accounting principles. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives.

LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS.

The Company's management, including the CEO and CFO, does not expect that our Disclosure Controls or our Internal Controls will prevent all error and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

CONCLUSION

In accordance with SEC requirements, the CEO and CFO note that, as of the quarter ended May 31, 2009 covered by this report, there were no material weaknesses in our Internal Controls.

Part II – OTHER INFORMATION

Item 1.

Legal Proceedings

Litigation was completed on March 5, 2007 with the court’s general judgment and money award. The net effect was money judgment in favor of Greenwood Forest Products, Inc. for $242,604 and an award of contested intellectual property rights to the Company. The Company has accrued reserves to cover the money judgment related to this dispute.

Both parties have filed appeals for review of the court’s opinion.

The Company does not know of any other 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.

Item 2.

Changes in Securities and Use of Proceeds

---No Disclosure Required---

Item 3.

Defaults Upon Senior Securities

---No Disclosure Required---

Item 4.

Submission of Matters to a Vote of Securities Holders

---No Disclosure Required---

Item 5.

Other Information

---No Disclosure Required---

Item 6.

Exhibits

31.1

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act, Donald M. Boone

31.2

Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act, Thomas Rice.

32.1

Certification of Chief Executive Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act), Donald M. Boone

32.2

Certification of Chief Financial Officer pursuant to 18 U.S.C., 1350 (Section 906 of the Sarbanes-Oxley Act), Thomas Rice

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)

Dated: July 13, 2009

/s/ Donald M. Boone

Donald M. Boone, President/CEO/Director

Dated: July 13, 2009

/s/ Thomas R. Rice

Thomas R. Rice, Chief Financial Officer