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 FEBRUARY 29, 2016

¨

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 – 2,476,832 common shares as of April 13, 2016.

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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	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	26
Item 4.	Controls and Procedures	26
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	28

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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)

FEBRUARY 29, 2016

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JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	February 29, 2016	August 31, 2015
ASSETS
Current assets
Cash	$  5,627,987	$  4,416,297
Accounts receivable, net of allowance        of $Nil (August 31, 2015 - $Nil)	3,784,595	3,688,247
Inventory, net of allowance       of $147,730 (August 31, 2015 - $120,824) (note 3)	7,511,016	8,351,575
Note receivable	-	1,310
Prepaid expenses	508,848	719,459
Prepaid income taxes	159,031	26,570
Total current assets	17,591,477	17,203,458
Property, plant and equipment, net (note 4)	2,171,983	2,231,711
Intangible assets, net (note 5)	186,897	223,250
Total assets	$  19,950,357	$  19,658,419

- Continued -

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

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JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	February 29, 2016	August 31, 2015
Continued
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$  753,336	$  984,955
Litigation reserve (note 12(a))	-	90,671
Accrued liabilities	970,877	1,024,358
Total current liabilities	1,724,213	2,099,984
Deferred tax liability (note 6)	37,804	34,300
Total liabilities	1,762,017	2,134,284
Contingent liabilities and commitments (note 12)
Stockholders’ equity
Capital stock (note 8)
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,476,832 common shares (August 31, 2015 – 2,476,832)	1,168,712	1,168,712
Additional paid-in capital	600,804	600,804
Retained earnings	16,418,824	15,754,619
Total stockholders’ equity	18,188,340	17,524,135
Total liabilities and stockholders’ equity	$  19,950,357	$  19,658,419

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

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JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Three Month Periods to the end of February		Six Month Periods to the end of February
	2016	2015	2016	2015
SALES	$ 11,188,133	$  9,483,404	$  23,129,641	$  17,466,021
COST OF SALES	9,152,554	7,581,284	18,714,207	13,693,878
GROSS PROFIT	2,035,579	1,902,120	4,415,434	3,772,143
OPERATING EXPENSES
Selling, general and administrative expenses	531,423	511,375	1,074,216	972,823
Depreciation and amortization	68,470	70,600	143,983	139,683
Wages and employee benefits	1,095,069	853,441	1,971,414	1,663,034
	1,694,962	1,435,416	3,189,613	2,775,540
Income from operations	340,617	466,704	1,225,821	996,603
OTHER ITEMS
Gain on sale of property, plant and equipment	5,600	-	5,600	-
Interest and other income	1,800	7,188	10,534	14,083
Litigation expense (Note 12(a))	(115,990)	-	(115,990)	-
	(108,590)	7,188	(99,856)	14,083
Income before income taxes	232,027	473,892	1,125,965	1,010,686
Income tax expense	(100,067)	(190,332)	(461,760)	(399,339)
Net income	$     131,960	$    283,560	$      664,205	$     611,347
Basic earnings per common share	$           0.05	$          0.11	$            0.27	$           0.23
Diluted earnings per common share	$           0.05	$          0.11	$            0.27	$           0.23
Weighted average number of common shares outstanding:
Basic	2,476,832	2,585,661	2,476,832	2,637,587
Diluted	2,476,832	2,585,661	2,476,832	2,637,587

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

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JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Capital Stock
	Number of  Shares	Amount	Additional paid-in capital	Retained earnings	Total
August 31, 2013	3,134,936	$  1,479,246	$  600,804	$  18,517,971	$  20,598,021
Shares repurchased and cancelled (note 9)	(430,306)	(203,045)	-	(4,054,723)	(4,257,768)
Net income	-	-	-	1,858,453	1,858,453
August 31, 2014	2,704,630	1,276,201	600,804	16,321,701	18,198,706
Shares repurchased and cancelled (note 9)	(227,798)	(107,489)	-	(2,341,053)	(2,448,542)
Net income	-	-	-	1,773,971	1,773,971
August 31, 2015	2,476,832	1,168,712	600,804	15,754,619	17,524,135
Net income	-	-	-	664,205	664,205
February 29, 2016	2,476,832	$  1,168,712	$  600,804	$  16,418,824	$  18,188,340

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

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JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

	Three Month Period to the end of February		Six Month Period to the end of February
	2016	2015	2016	2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$  131,960	$  283,560	$  664,205	$  611,347
Items not involving an outlay of cash:
Depreciation and amortization	68,470	70,600	143,983	139,683
Gain on sale of property, plant and equipment	(5,600)	-	(5,600)	-
Deferred income taxes	(9,301)	(6,426)	3,504	(2,709)
Interest income on litigation	-	(6,588)	(6,661)	(13,249)
Decrease in litigation reserve	(84,010)	-	(84,010)	-
Changes in non-cash working capital items:
Decrease (increase) in accounts receivable	535,231	(2,313,462)	(96,348)	(2,591,148)
Decrease (increase) in inventory	651,225	(358,245)	840,559	(1,948,867)
(Increase) decrease in note receivable	360	(1,700)	1,310	13,300
Decrease (increase) in prepaid expenses	543,620	(255,461)	210,611	(62,904)
(Increase) decrease in prepaid income taxes	(159,031)	126,559	(132,461)	331,730
(Decrease) in accounts payable and   accrued liabilities	(373,786)	(373,590)	(285,100)	(360,742)
Net cash provided by (used in) operating activities	1,299,138	(2,834,753)	1,253,992	(3,883,559)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(37,376)	(13,417)	(47,902)	(14,697)
Proceeds from sale of property, plant and   equipment	5,600	-	5,600	-
Net cash used in investing activities	(31,776)	(13,417)	(42,302)	(14,697)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank indebtedness	-	875,386	-	875,386
Redemption of common stock	-	-	-	(1,292,477)
Net cash provided by (used in) financing activities	-	875,386	-	(417,091)
Net increase (decrease) in cash	1,267,362	(1,972,784)	1,211,690	(4,315,347)
Cash, beginning of period	4,360,625	1,984,977	4,416,297	4,327,540
Cash, end of period	$  5,627,987	$      12,193	$  5,627,987	$       12,193

Supplemental disclosure with respect to cash flows (note 15)

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

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

1.

NATURE OF OPERATIONS

Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”), incorporated September 1953. Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary. Effective September 1, 2013, the Company reorganized certain of its subsidiaries. JCLC’s name was changed to JC USA Inc. (“JC USA”), and a new subsidiary, Jewett-Cameron Company (“JCC”), was incorporated.  

JC USA has the following wholly owned subsidiaries: MSI-PRO Co. (“MSI”), incorporated April 1996, Jewett-Cameron Seed Company, (“JCSC”), incorporated October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated February 2002, and Jewett-Cameron Company, incorporated September 2013. Jewett-Cameron Trading Company Ltd. and its subsidiaries (the “Company”) have no significant assets in Canada.

The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC’s business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood 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. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.

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 February 29, 2016 and August 31, 2015 and its results of operations and cash flows for the three and six month periods ended February 29, 2016 and February 28, 2015 in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three and six month periods ended February 29, 2016 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2016.

2.

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, JC USA, JCC, MSI, JCSC, and Greenwood, all of which are incorporated under the laws of Oregon, U.S.A.

All inter-company balances and transactions have been eliminated upon consolidation.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

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.

Cash and cash equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.  At February 29, 2016, cash was $5,627,987 compared to $4,416,297 at August 31, 2015.  At February 29, 2016 and August 31, 2015, there were no cash equivalents.

Accounts receivable

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable primarily includes trade receivables from customers. The Company estimates doubtful accounts on an item-by-item basis and includes over aged accounts as part of allowance for doubtful accounts, which are generally ones that are ninety days or greater overdue.  

The Company extends credit to domestic customers and offers discounts for early payment.  When extension of credit is not advisable, the Company relies on either prepayment or a letter of credit.

Inventory

Inventory, which consists primarily of finished goods, is recorded at the lower of cost, based on the average cost method, and market.  Market is defined as net realizable value. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a review of inventory components.

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation.  The Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:

Office equipment	3-7 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 gate support systems.  Amortization is calculated using the straight-line method over the remaining lives of 24 months and 36 months, respectively, and are reviewed annually for impairment.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

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.

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.  

The Company does not have non-monetary or monetary assets and liabilities that are in a currency other than the U.S. dollar.  Any statement of operations transactions in a foreign currency are translated at rates that approximate those in effect at the time of translation.  Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.

Earnings 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.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Earnings per share (cont’d…)

The earnings per share data for the three and six month periods ended February 29, 2016 and February 28, 2015 are as follows:

	Three Month Periods to the end of February,		Six Month Periods to the end of February
	2016	2015	2016	2015
Net income	$   131,960	$  283,560	$  664,205	$   611,347
Basic weighted average number of        common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587
Effect of dilutive securities
Stock options	-	-	-	-
Diluted weighted average number       of common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587

Comprehensive income

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

Stock-based compensation

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.

No options were granted during the six month period ended February 29, 2016, and there were no options outstanding on February 29, 2016.

Financial instruments

The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:

Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank and cash held in short term investment accounts.

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

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.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Financial instruments (cont’d…)

The estimated fair values of the Company's financial instruments as of February 29, 2016 and August 31, 2015 follows:

	February 29, 2016		August 31, 2015
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$5,627,987	$5,627,987	$4,416,297	$4,416,297
Accounts receivable, net of allowance	3,784,595	3,784,595	3,688,247	3,688,247
Note receivable	-	-	1,310	1,310
Accounts payable and accrued liabilities	1,724,213	1,724,213	2,009,313	2,009,313

The following table presents information about the assets that are measured at fair value on a recurring basis as of February 29, 2016, 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:

	February 29, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	5,627,987	$	5,627,987	$	—	$	—

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

Income taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss 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.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

2.

SIGNIFICANT ACCOUNTING POLICIES (cont’d…)

Revenue recognition

The Company recognizes revenue from the sales of lumber, building supply products, industrial wood products, specialty metal products, and other specialty products and tools, when the products are shipped, title passes, and the ultimate collection is reasonably assured.  Revenue from the Company's seed operations 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, products sold and collection of the amounts is reasonably assured.

Recent Accounting Pronouncements

Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements.

3.

INVENTORY

A summary of inventory is as follows:

	February 29, 2016	August 31, 2015
Wood products and metal products	$ 6,777,109	$  7,376,505
Industrial tools	443,061	525,667
Agricultural seed products	290,846	449,403
	$ 7,511,016	$  8,351,575

4.

PROPERTY, PLANT AND EQUIPMENT

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

	February 29, 2016	August 31, 2015
Office equipment	593,305	$     591,124
Warehouse equipment	1,460,394	1,520,724
Buildings	2,878,849	2,878,849
Land	761,924	761,924
	5,694,472	5,752,621
Accumulated depreciation	(3,522,489)	(3,520,910)
Net book value	$  2,171,983	$  2,231,711

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

4.

PROPERTY, PLANT AND EQUIPMENT (cont’d…)

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.

5.

INTANGIBLE ASSETS

A summary of intangible assets is as follows:

	February 29, 2016	August 31, 2015
Patent	$  850,000	$  850,000
Other	43,655	43,655
	893,655	893,655
Accumulated amortization	(706,758)	(670,405)
Net book value	$  186,897	$  223,250

6.

DEFERRED INCOME TAXES

Deferred income tax liability as of February 29, 2016 of $37,804 (August 31, 2015 – $34,300) reflects 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.

7.

BANK INDEBTEDNESS

There was no bank indebtedness under the Company’s $3,000,000 line of credit as of February 29, 2016 or August 31, 2015.

Bank indebtedness, when it exists, is secured by an assignment of accounts receivable and inventory. Interest is calculated solely on the one month LIBOR rate plus 175 basis points.

8.

CAPITAL STOCK

Common Stock

Holders of common stock are entitled to one vote for each share held.  There are no restrictions that limit the Company's ability to pay dividends on its common stock.  The Company has not declared any dividends since incorporation.

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JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

9.

CANCELLATION OF CAPITAL STOCK

Treasury stock may be kept based on an acceptable inventory method such as the average cost basis.  Upon disposition or cancellation, the treasury stock account is credited for an amount equal to the number of shares cancelled, multiplied by the cost per share and the difference is treated as additional paid-in-capital in excess of stated value.

During the 4^th quarter of fiscal 2015 ended August 31, 2015, the Company repurchased and cancelled a total of 4,778 common shares under a 10b5-1 share repurchase plan. The total cost was $54,491 at an average price of $11.41 per share. The premium paid to acquire these shares over their per share book value in the amount of $52,236 was recorded as a decrease to retained earnings. In addition to the shares repurchased under the 10b5-1 repurchase plan, Donald Boone, President and CEO of the Company, voluntarily returned 15,000 common shares to treasury for cancellation. The Company paid no consideration for the shares. Capital stock was reduced by the book value of the shares in the amount of $7,077.

During the 3^rd quarter of fiscal 2015 ended May 31, 2015, the Company repurchased and cancelled a total of 89,051 common shares under a 10b5-1 share repurchase plan. The total cost was $1,101,574 at an average price of $12.37 per share. The premium paid to acquire these shares over their per share book value in the amount of $1,059,554 was recorded as a decrease to retained earnings.

During the 1^st quarter of fiscal 2015 ended November 30, 2014, the Company repurchased and cancelled a total of 118,969 common shares under a 10b5-1 share repurchase plan. The total cost was $1,292,477 at an average price of $10.86 per share. The premium paid to acquire these shares over their per share book value in the amount of $1,236,340 was recorded as a decrease to retained earnings.

10.

STOCK OPTIONS

The Company has a stock option program under which stock options to purchase securities from the Company can be granted to directors and employees of the Company on terms and conditions acceptable to the regulatory authorities of Canada, notably the Ontario Securities Commission and the British Columbia Securities Commission.

Under the stock option program, stock options for up to 10% of the number of issued and outstanding common shares may be granted from time to time, provided that stock options in favor of any one individual may not exceed 5% of the issued and outstanding common shares.  No stock option granted under the stock option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee.  Generally, no option can be for a term of more than 10 years from the date of the grant.

The exercise price of all stock options, granted under the stock option program, must be at least equal to the fair market value (subject to regulated discounts) of such common shares on the date of grant.  Options vest at the discretion of the Board of Directors.

The Company had no stock options outstanding as of February 29, 2016 and August 31, 2015.

11.

PENSION AND PROFIT-SHARING PLANS

The Company has a deferred compensation 401(k) plan for all employees with at least 12 months of service pending a semi-annual enrolment time.  The plan allows for a non-elective discretionary contribution based on the first $60,000 of eligible compensation. During the quarter ended February 29, 2016, the Company made an additional 10% contribution for all eligible employees as a one-time compensation bonus. For the six month periods ended February 29, 2016 and February 28, 2015, the 401(k) compensation expense was $279,975 and $111,365, respectively.

- 16 -

JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

12.

CONTINGENT LIABILITIES AND COMMITMENTS

a)

A subsidiary 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.

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 accrued reserves to cover the money judgment related to this dispute.  Both parties filed appeals for review of the court’s opinion.

During the 1st quarter of fiscal 2011, the Oregon Court of Appeals ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of the defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorneys fees.  The judgment against the plaintiffs is for $1,187,137.  The Company appealed the decision to the Oregon Supreme Court. During the 1st quarter of fiscal 2011, the Company recorded a litigation loss of $962,137 and interest of $391,988 in addition to the existing litigation reserve of $225,000. Additional interest of $48,790 was recorded during the remainder of fiscal 2011. During the 1st quarter of fiscal 2012 ended November 30, 2011, additional interest of $16,204 was accrued.

In February 2012, the Company received the decision from the Oregon Supreme Court which was favorable to Jewett Cameron as plaintiff. As a result, the Company has reversed $1,459,832 of the litigation reserve and accrued interest during the 2nd quarter of fiscal 2012 ended February 29, 2012.  The reversal was treated as a one-time gain during the quarter.

In July 2014, upon remand from the Oregon Supreme Court, the Oregon Court of Appeals has concluded that Greenwood Forest Products, Inc. as defendants are entitled to a new trial, and, as a consequence, ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorney’s fees.  The judgment against plaintiffs was for $1,187,137.  On August 7, 2014, the Company filed a petition with the Oregon Supreme Court for a review of the Oregon Court of Appeals notice. The petition requests the Oregon Supreme Court review the most recent ruling by the Oregon Court of Appeals, reverse the decision, and affirm the original judgment of the trial court. In September 2015, the Oregon Supreme Court ruled on the Company’s petition and has reversed the decision of the Oregon Court of Appeals and remanded the case to back to the Court of Appeals for further proceedings. The Court also denied the defendants’ request for a new trial.

During the year ended August 31, 2015, the Company recorded $26,716 of interest income due to the favorable difference in interest rates between the judgments. During the six months ended February 29, 2016, the Company recorded $6,661 of interest income.

During the period ended February 29, 2016, the Company and Greenwood Forest Products, Inc., settled all litigation between the two companies. The Company made a cash payment of $200,000 to Greenwood Forest Products, Inc., as full settlement and termination of the litigation (the “Settlement Payment”). The litigation expense of $115,990 represents the difference between the Settlement Payment, and the litigation reserve balance on the date of settlement of $84,010 which is net of interest income recognized for the period.

- 17 -

JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

12.

CONTINGENT LIABILITIES AND COMMITMENTS (cont’d…)

A summary of the litigation reserve is as follows:

	February 29, 2016	August 31,  2015
Litigation expense (1)	$     (84,010)	$                  -
Litigation reserve	84,010	117,387
Interest expense	-	-
Interest income	-	(26,716)
Total	$                -	$        90,671

(1)

The litigation reserve was reversed in full upon the settlement reached during the six month period ended February 29, 2016.

b)

At February 29, 2016 and August 31, 2015 the Company had an un-utilized line-of-credit of $3,000,000 (note 7).  The line-of-credit has certain financial covenants. The Company is in compliance with these covenants.

13.

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 six month periods ended February 29, 2016 and February 28, 2015:

	2016	2015
Sales to unaffiliated customers:
Industrial wood products	$    2,858,363	$    2,120,203
Lawn, garden, pet and other	17,376,563	12,733,854
Seed processing and sales	2,348,469	1,687,137
Industrial tools and clamps	546,246	924,827
	$  23,129,641	$  17,466,021
Income (loss) before income taxes:
Industrial wood products	$         44,412	$         43,322
Lawn, garden, pet and other	1,048,667	419,690
Seed processing and sales	(51,425)	129,211
Industrial tools and clamps	(81,262)	47,540
Corporate and administrative *	165,574	370,923
	$    1,125,966	$    1,010,686

*

Litigation expense incurred during the period ended February 29, 2016 of $118,990 is included in this balance (Note 12(a)).

- 18 -

JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

13.

SEGMENT INFORMATION (cont’d…)

	2016	2015
Identifiable assets:
Industrial wood products	$     1,457,118	$      1,641,934
Lawn, garden, pet and other	8,814,395	13,490,158
Seed processing and sales	664,569	747,635
Industrial tools and clamps	504,438	845,180
Corporate and administrative	8,509,837	2,784,469
	$   19,950,357	$    19,509,376
Depreciation and amortization:
Industrial wood products	$               490	$                490
Lawn, garden, pet and other	23,828	27,675
Seed processing and sales	5,332	5,473
Industrial tools and clamps	1,199	1,401
Corporate and administrative	113,134	104,644
	$        143,983	$         139,683
Capital expenditures:
Industrial wood products	$                    -	$                   -
Lawn, garden, pet and other	-	-
Seed processing and sales	-	-
Industrial tools and clamps	-	-
Corporate and administrative	47,902	14,697
	$          47,902	$         14,697
Interest expense:	$                    -	$                   -

The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the six months ended February 29, 2016 and February 28, 2015:

	2016	2015
Sales	$      10,958,881	$     7,734,187

The Company conducts business primarily in the United States, but also has limited amounts of sales in foreign countries. The following table lists sales by country for the six months ended February 29, 2016 and February 28, 2015:

	2016	2015
United States	$      20,857,137	$   16,438,761
Canada	611,644	533,745
Mexico/Latin America	1,601,811	462,805
Europe	-	-
Asia/Pacific	59,049	30,710

All of the Company’s significant identifiable assets were located in the United States as of February 29, 2016 and February 28, 2015.

- 19 -

JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 29, 2016

(Unaudited)

14.

CONCENTRATIONS

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable.  The Company places its cash with a high quality financial institution.  The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers. At February 29, 2016, two customers accounted for accounts receivable greater than 10% of total accounts receivable at 59%. At February 28, 2015, one customer accounted for accounts receivable greater than 10% of total accounts receivable at 38%. 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 six months ended February 29, 2016, there were three suppliers that each accounted for 10% of total purchases, and the aggregate purchases amounted to $9,607,690. For the six months ended February 28, 2015, there were three suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $9,460,114.

15.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Certain cash payments for the six months ended February 29, 2016 and February 28, 2015 are summarized as follows:

	2016		2015
Cash paid during the periods for:
Interest	$	-	$	-
Income taxes	$	590,657	$	70,198

There were no non-cash investing or financing activities during the periods presented.

16.

SUBSEQUENT EVENTS

On March 7, 2016, the Company announced the Board of Directors approved a new share purchase plan in accordance with Rule 10b-18. The Company can purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. The plan commenced on March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice. As of the date of this Form 10-Q, the Company has repurchased a total of 5,042 common shares under the plan. The total cost was $56,596 at an average price of $11.22 per share.

- 20 -

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 February 29, 2016 and August 31, 2015 and its results of operations and cash flows for the three and six month periods ended February 29, 2016 and February 28, 2015 in accordance with U.S. GAAP.  Operating results for the three and six month periods ended February 29, 2016 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2016.

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

Effective September 1, 2013, the Company reorganized certain of its subsidiaries. Jewett-Cameron Lumber Corporation (JCLC) was changed to JC USA Inc. (JC USA), which has the following four wholly-owned subsidiaries.  

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 to boat manufacturers and the transportation industry.  

The lawn, garden, pet and other segment reflects the business of the newly incorporated Jewett-Cameron Company (JCC), which is a manufacturer and distributor of specialty metal products and a wholesaler of wood products formerly conducted by JCLC. Wood products include fencing and landscape timbers, while metal products include dog kennels, proprietary gate support systems, perimeter fencing, and greenhouses.  JCC uses contract manufacturers to make the specialty metal products.  Some of the products that JCC 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 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.

The industrial tools segment reflects the business of MSI-PRO (MSI).  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.

RESULTS OF OPERATIONS

Three Months Ended February 29, 2016 and February 28, 2015

For the three months ended February 29, 2016, sales increased $1,704,729 to $11,188,133 from $9,483,404. This represents an increase of 18%.

Sales at Greenwood were $1,304,839 for the three months ended February 29, 2016 compared to sales of $1,127,521 for the three months ended February 28, 2015, which was a an increase of $177,318, or 16%. Greenwood benefited from the Company’s sustained efforts to obtain new customers and new uses for its products, including its customers internationally. However, overall demand for Greenwood’s products continues to lag historical levels. In February 2014, the Company sold its excess inventory related to the marine industry in an arm’s length transaction. The Company does not anticipate a significant marine industry recovery in the near future.  Nevertheless, the Company will maintain a readiness to participate in the marine segment when, and if, the market rebounds. For the three months ended February 29, 2016, Greenwood had operating income of $7,163 compared to operating income of $25,255 for the three months ended February 28, 2015.

- 21 -

Sales at JCC were $8,507,752 for the three months ended February 29, 2016 compared to sales of $6,844,945 for the three months ended February 28, 2015. This represents an increase of $1,662,807, or 24%. The increase in sales was primarily due to the Company’s efforts to obtain new business, including expanding its customer base through the addition of small and mid-sized customers, and the sales of new products introduced during the second half of the last fiscal year. The Company also received and shipped seasonal orders from certain existing customers earlier than in previous years. The prior year’s results were also negatively affected by prolonged winter weather across the United States and slowdowns and shutdowns at West Coast US ports which impacted the delivery of products to the Company from manufacturers in China. Operating income for the current quarter was $568,289 compared to $499,026 for the quarter ended February 28, 2015. The operating results of JCC are historically seasonal with the first two quarters of the fiscal year being slower than the final two quarters of the fiscal year.

Sales at JCSC were $1,127,060 for the three months ended February 29, 2016 compared to sales of $982,243 for the three months ended February 28, 2015, which was an increase of $144,817, or 15%.  Demand for grass seed has risen in conjunction with the improvement in residential home sales. Operating loss at JCSC for the quarter was ($87,359) compared to income of $46,290 for the quarter ended February 28, 2015. The persistent drought in the Western US significantly reduced harvested yields in the calendar 2015 growing season, and the Company continues to see a decline in seed cleaning services from more growers cleaning in-house.

Sales at MSI were $248,482 for the three months ended February 29, 2016 compared to sales of $528,695 for the three months ended February 28, 2015, which was a decrease of $280,213, or 53%. The segment has recently become more competitive, and the Company has reduced prices on certain of its products which resulted in lower operating margins. Operating loss for the quarter was ($46,036) compared to operating income of $16,788 for the comparative quarter in the prior year, with the decrease attributable to the lower level of sales.

Gross margin for the three months ended February 29, 2016 was 18.2% compared to 20.1% for the three months ended February 28, 2015.

Operating expenses increased by $259,546 to $1,694,962 from $1,435,416 for the three months ended February 28, 2015. Selling, General and Administrative Expenses rose to $531,423 from $511,375. Wages and Employee Benefits increased by $241,628 to $1,095,069 from $853,441 as the Company made an additional 10% contribution to each eligible employee’s 401(k) plan as a one-time compensation bonus in the current period. Depreciation and Amortization decreased slightly to $68,470 from $70,600.

During the quarter, the Company and Greenwood Forest Products, Inc. settled their litigation dating from the Company’s acquisition of certain inventory from Greenwood Forest in 2003. Both parties determined it was prudent to settle the original claim and counter-claim due to the high cost of the litigation, which had been remanded back to the Oregon Court of Appeals in September 2015 for a third time. The Company recorded a one-time litigation loss of $115,990 related to the settlement of all the outstanding claims and related costs.

Income tax expense for the three month period ended February 29, 2016 was $100,067 compared to $190,332 for the three month period ended February 28, 2015. 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 quarter ended February 29, 2016 was $131,960, or $0.05 per basic and diluted share, compared to net income of $283,560, or $0.11 per basic and diluted share, for the quarter ended February 28, 2015. The net income in the current quarter was negatively affected by the one-time litigation loss.

Six Months Ended February 29, 2016 and February 28, 2015

For the six months ended February 29, 2016, sales increased by $5,663,620, or 32%, to $23,129,641 from sales of $17,466,021 recorded in the six month period ended February 28, 2015.

Sales at Greenwood were $2,858,363 for the six months ended February 29, 2016 compared to sales of $2,120,203 for the six months ended February 28, 2015. Sales have begun to rebound as the Company has obtained new customers and new uses for its products, but due to the continued weakness in the marine industry, overall demand remains below historical levels. Operating income for Greenwood for the six months ended February 29, 2016 was $44,415 compared to income of $43,322 for the six months ended February 28, 2015.

- 22 -

Sales at JCC were $17,376,563 for the six months ended February 29, 2016 compared to sales of $12,733,854 for the six months ended February 28, 2015, which was an increase of $4,642,709, or 36%. The increase in sales for the current period was primarily due to the market’s continued acceptance of the new products introduced during the second half of fiscal 2015 and the addition of new small and mid-sized customers. The Company also received and shipped seasonal orders from certain existing customers earlier than in previous years. The results in the prior six months were negatively affected by prolonged winter weather across the United States and the West Coast port slowdown which delayed the delivery of product from manufacturers in China. Operating income at JCC was $1,408,252 compared to $893,201 for the six months ended February 28, 2015. 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 for the six months ended February 29, 2016 were $2,348,470 compared to sales of $1,687,137 for the six months ended February 28, 2015. This represents an increase of $661,333, or 39%. Although grass seed demand has risen in conjunction with the improvement in the US residential housing market, the sales environment for the segment remains challenging due to the decline in seed cleaning services as more growers cleaning in-house. Operating loss for the six months ended February 29, 2016 was ($29,705) compared to operating income of $117,035 for the six months ended February 28, 2015.

Sales at MSI were for the six months ended February 29, 2016 were $546,245, which was a decrease of $378,582, or 41%, from sales of $924,827 for the six months ended February 28, 2015. The segment has recently become more competitive, and the Company has reduced prices on certain of its products which resulted in lower operating margins. The operating loss at MSI for the six months ended February 29, 2016 was ($68,301) compared to income of $63,182 for the six months ended February 28, 2015.

Gross margin for the six month period ended February 29, 2016 was 19.1% compared to 21.6% for the six months ended February 28, 2015.

Operating expenses increased by $414,073, or 15%, to $3,189,613 from $2,775,540 recorded in the six month period ended February 28, 2015. Selling, General and Administrative Expenses rose to $1,074,216 from $972,823. Wages and Employee Benefits increased to $1,971,414 from $1,663,034 as the Company made an additional 10% contribution to each eligible employee’s 401(k) plan as a one-time compensation bonus in the current period. Depreciation and Amortization was relatively flat at $143,983 compared to $139,683.

Other items in the current six month period ended February 29, 2016 were gain on sale of property, plant and equipment of $5,600 and interest and other income of $10,534. Litigation loss of ($115,990) was related to the settlement of the litigation between the Company and Greenwood Forest Products, Inc. In the six months ended February 28, 2015, other items were interest and other income of $14,083.

Income tax expense for the six months ended February 29, 2016 was $461,760 compared to $399,339 for the six months ended February 28, 2015. The Company estimates income tax expense for the period based on combined federal and state rates that are currently in effect.

Net income for the six months ended February 29, 2016 was $664,205, or $0.27 per basic and diluted share, compared to net income of $611,347, or $0.23 per basic and diluted share, for the six months ended February 28, 2015. The net income in the current period was negatively affected by the one-time litigation loss related to the settlement of the lawsuits with Greenwood Forest Products.

LIQUIDITY AND CAPITAL RESOURCES

As of February 29, 2016, the Company had working capital of $15,867,264 compared to working capital of $15,103,474 as of August 31, 2015, an increase of $763,790. Cash totaled $5,627,987, an increase of $1,211,690. Accounts receivable rose to $3,784,595 from $3,688,247 due to the seasonal cycle of sales to customers and the related timing of cash receipts. Inventory decreased by $840,559 and prepaid expenses, which are largely related to down payments for future inventory purchases, decreased by $210,611. Note receivable declined by $1,310 as the entire remaining balance of the note was repaid during the period.

- 23 -

Accounts payable decreased by $231,619 and accrued liabilities decreased by $53,481. Litigation reserve declined by $90,671 to $nil as the Company settled its outstanding litigation during the period and the entire amount was applied against the amount of the settlement.

As of February 29, 2016, accounts receivable and inventory represented 64% of current assets and 57% of total assets. For the three months ended February 29, 2016, the accounts receivable collection period, or DSO was 31 compared to 48 for the three months ended February 28, 2015. For the six month period ended February 29, 2016, the DSO was 30 compared to 52 for the six months ended February 28, 2015. Inventory turnover for the three months ended February 29, 2016 was 78 days compared to 130 days for the three months ended February 28, 2015. For the six months ended February 29, 2016, inventory turnover was 77 compared to 134 days for the six months ended February 28, 2015.

External sources of liquidity include a line of credit from U.S. Bank of $3,000,000. As of February 29, 2016, the Company had no borrowing balance leaving the entire amount available.  Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory.  The interest rate is calculated solely on the one month LIBOR rate plus 175 basis points.  As of February 29, 2016 the one month LIBOR rate plus 175 basis points was 2.19% (0.44% + 1.75%). The line of credit has certain financial covenants.  The Company is in compliance with these covenants.

The Company has been utilizing its cash position by repurchasing common shares under formal repurchase plans in order to increase shareholder value.  During the fiscal years ended August 31, 2015 and 2014, the Company has repurchased common shares through share repurchase plans approved by the Board of Directors in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934.

On January 13, 2014, the Company announced the Board of Directors had authorized a share repurchase plan to purchase for cancellation up to 313,493 common shares through the facilities of NASDAQ Stock Market ("NASDAQ"). Transactions may involve Jewett-Cameron insiders or their affiliates executed in compliance with Jewett-Cameron's Insider Trading Policy. The share repurchase plan will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, which contains restrictions on the number of shares that may be purchased on a single day, subject to certain exceptions for block purchases, based on the average daily trading volumes ("ADTV") of Jewett-Cameron's shares on NASDAQ. Purchases shall be limited to one “Block” purchase per week in lieu of the 25% of ADTV limitation for compliance with Rule 10b-18(b)(4). A “block” as defined under Rule 10b-18(a)(5) means a quantity of stock that, among other things, is at least 5,000 shares and has a purchase price of at least US$50,000. The share repurchase plan commenced on January 20, 2014 and terminated on March 24, 2014. A total of 313,493 common shares were repurchased under this plan. The total cost of the shares acquired was $3,055,591 at an average price of $9.75 per share.

On April 9, 2014, the Company announced the Board of Directors had authorized a share repurchase plan to purchase for cancellation up to 300,000 common shares through the facilities of NASDAQ under similar terms as the January 13, 2014 repurchase plan. This share repurchase plan commenced on April 14, 2014 and terminated on November 14, 2014. Under the Plan, the Company repurchased a total of 235,782 common shares at a cost of $2,494,654 which is an average price of $10.58 per share.

On February 11, 2015, the Company announced the Board of Directors had authorized a new share repurchase plan to purchase for cancellation up to 300,000 common shares through the facilities of NASDAQ under similar terms to the January 13, 2014 repurchase plan. The plan commenced on February 17, 2015 and was terminated by the Board on July 17, 2015. Under the Plan, the Company repurchased a total of 93,829 common shares at a cost of $1,156,066 which is an average price of $12.32.

On March 7, 2016, the Company announced the Board of Directors approved a new share purchase plan to purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. The terms of the plan are similar to the January 13, 2014 repurchase plan. The plan commenced on March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice. As of the date of this Form 10-Q, the Company has repurchased a total of 5,042 common shares under the plan. The total cost was $56,596 which is an average price of $11.22 per share.

In addition to the Rule 10b-18 share repurchases, Donald M. Boone, CEO, President and Director, voluntarily returned 15,000 common shares to the Company’s treasury for cancellation in August 2015. The Company paid no consideration for these shares.

- 24 -

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. The average daily trading volume of our common stock on NASDAQ was 1,511 shares for the six months ended February 29, 2016. With this limited trading volume, investors could find it difficult to purchase or sell our common stock.

Risks Related to Our Business

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 six months ended February 29, 2016, our top ten customers represented 80% 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., Canada and Mexico and are primarily in the retail home improvement industry.  

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 $3,000,000, of which $3,000,000 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.

- 25 -

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, 2015.  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.

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Interest Rate Risk

The Company does not have any derivative financial instruments as of February 29, 2016. However, the Company is exposed to interest rate risk.

The Company’s interest income and expense are most sensitive to changes in the general level of U.S. interest rates.  In this regard, changes in U.S. interest rates affect the interest earned on the Company’s cash.

The Company 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

Disclosure Controls and Procedures

Management of the Company, including the Company’s Principal Executive and Financial Officer, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on that evaluation, our Principal Executive and Financial Officer has concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective in ensuring that information required to be disclosed in our Exchange Act reports is (1) recorded, processed, summarized and reported in a timely manner, and (2) accumulated and communicated to our management, including our Chief Executive Officer and our Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 26 -

Part II – OTHER INFORMATION

Item 1.

Legal Proceedings

a)

A subsidiary 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.

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 of the Company.  The Company accrued reserves to cover the money judgment related to this dispute.  Both parties filed appeals for review of the court’s opinion.

During the 1st quarter of fiscal 2011, the Oregon Court of Appeals ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of the defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorney’s fees.  The judgment against the plaintiffs was for $1,187,137.  The Company appealed the decision to the Oregon Supreme Court. During the 1st quarter of fiscal 2011, the Company recorded a litigation loss of $962,137 and interest of $391,988 in addition to the existing litigation reserve of $225,000. Additional interest of $48,790 was recorded during the remainder of fiscal 2011. During the 1st quarter of fiscal 2012 ended November 30, 2011, additional interest of $16,204 was accrued.

In February 2012, the Company received the decision from the Oregon Supreme Court which was favorable to Jewett Cameron as plaintiff. As a result, the Company has reversed $1,459,832 of the litigation reserve and accrued interest during the 2nd quarter of fiscal 2012 ended February 29, 2012.  The reversal was treated as a one-time gain during the quarter.

In July 2014, upon remand from the Oregon Supreme Court, the Oregon Court of Appeals has concluded that Greenwood Forest Products, Inc. as defendants are entitled to a new trial, and, as a consequence, ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorney’s fees.  The judgment against plaintiffs was for $1,187,137.  On August 7, 2014, the Company filed a petition with the Oregon Supreme Court for a review of the Oregon Court of Appeals notice. The petition requests the Oregon Supreme Court review the most recent ruling by the Oregon Court of Appeals, reverse the decision, and affirm the original judgment of the trial court. In September 2015, the Oregon Supreme Court ruled on the Company’s petition and has reversed the decision of the Oregon Court of Appeals and remanded the case to back to the Court of Appeals for further proceedings. The Court also denied the defendants’ request for a new trial.

During the year ended August 31, 2015, the Company recorded $26,716 of interest income due to the favorable difference in interest rates between the judgments. During the six months ended February 29, 2016, the Company recorded $6,661 of interest income.

During the period ended February 29, 2016, the Company and Greenwood Forest Products, Inc., settled all litigation between the two companies. The Company made a cash payment of $200,000 to Greenwood Forest Products, Inc., as full settlement and termination of the litigation (the “Settlement Payment”). The litigation expense of $115,990 represents the difference between the Settlement Payment, and the litigation reserve balance on the date of settlement of $84,010 which is net of interest income recognized for the period.

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.

Unregistered Sales of Equity Securities and Use of Proceeds

---No Disclosure Required---

- 27 -

Item 3.

Defaults Upon Senior Securities

---No Disclosure Required---       

Item 4.  Mine Safety Disclosures

---No Disclosure Required---       

Item 5.

Other Information

---No Disclosure Required---

Item 6.

Exhibits

3.1

Amended and Restated Articles of Incorporation of Jewett-Cameron Lumber Corporation

-= Filed as an exhibit to the 10-Q Quarterly Report filed on January 13, 2014 =-

3.2

Articles of Incorporation of Jewett-Cameron Company.

-= Filed as an exhibit to the 10-Q Quarterly Report filed on January 13, 2014 =-

31.1

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

32.1

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

- 28 -

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)

April 13, 2016

/s/  “Donald M. Boone”

Donald M. Boone,

President/CEO/Treasurer/Director/CFO

- 29 -

EX-31.1

CERTIFICATIONS

I, Donald M. Boone, certify that:

1. 

I have reviewed this Quarterly Report on Form 10-Q of Jewett-Cameron Trading Company Ltd;

2. 

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. 

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. 

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principals;

c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the end of the period covered by this report based on such evaluation; and

d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. 

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)

all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)

any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:

April 13, 2016

By:

/s/  “Donald M. Boone”

Donald M. Boone,

Chief Executive Officer, President and Treasurer

and Principal Financial Officer

EX-32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Jewett-Cameron Trading Company Ltd. (the “Company”) on Form 10-Q for the period ended February 29, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned officer of the Company does hereby certify, to such officer’s knowledge, that, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)

The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  April 13, 2016	Signed: /s/  “Donald M. Boone”
	Donald M. Boone, Chief Executive Officer, President and Treasurer and Principal Financial Officer

XML

Document and Entity Information	6 Months Ended
	Feb. 29, 2016 shares
Document and Entity Information:
Entity Registrant Name	Jewett Cameron Trading Co Ltd
Document Type	10-Q
Document Period End Date	Feb. 29, 2016
Amendment Flag	false
Entity Central Index Key	0000885307
Current Fiscal Year End Date	--08-31
Entity Common Stock, Shares Outstanding	2,476,832
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Entity Incorporation, State Country Name	British Columbia
Entity Incorporation, Date of Incorporation	Jul. 08, 1987
Trading Symbol	jctcf

XML

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED BALANCE SHEETS (Prepared by Management) (Unaudited) - USD ($)		Feb. 29, 2016		Aug. 31, 2015
Current assets
Cash		$ 5,627,987	[1]	$ 4,416,297
Accounts receivable, net of allowance of $Nil (August 31, 2015 - $Nil)		3,784,595		3,688,247
Inventory, net of allowance of $147,730 (August 31, 2015 - $120,824)	[2]	7,511,016		8,351,575
Note receivable				1,310
Prepaid expenses		508,848		719,459
Prepaid income taxes		159,031		26,570
Total current assets		17,591,477		17,203,458
Property, plant and equipment, net	[3]	2,171,983		2,231,711
Intangible assets, net	[4]	186,897		223,250
Total assets		19,950,357		19,658,419
Current liabilities
Accounts payable		$ 753,336		984,955
Litigation reserve	[5]			90,671
Accrued liabilities		$ 970,877		1,024,358
Total current liabilities		1,724,213		2,099,984
Deferred tax liability		37,804		34,300
Total liabilities		1,762,017		2,134,284
Contingent liabilities and commitments	[6]	0		0
Stockholders' equity
Capital stock Authorized: 21,567,564 common shares, without par value, 10,000,000 preferred shares, without par value. Issued: 2,476,832 common shares (August 31, 2015 - 2,476,832)	[7]	1,168,712		1,168,712
Additional paid-in capital		600,804		600,804
Retained earnings		16,418,824		15,754,619
Total stockholders' equity		18,188,340		17,524,135
Total liabilities and stockholders' equity		$ 19,950,357		$ 19,658,419

[1] Supplemental disclosure with respect to cash flows (note 15)

[2] Note 3

[3] Note 4

[4] Note 5

[5] Note 12(a)

[6] Note 12

[7] Note 8

XML

Statement of Financial Position - Parenthetical - USD ($)	Feb. 29, 2016	Aug. 31, 2015
Statement of financial position
Preferred Stock, Par Value	$ 0	$ 0
Preferred Stock, Shares Authorized	10,000,000	10,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value	$ 0	$ 0
Common Stock, Shares Authorized	21,567,564	21,567,564
Common Stock, Shares Issued	2,476,832	2,476,832
Common Stock, Shares Outstanding	2,476,832	2,476,832
Accounts Receivable allowance	$ 0	$ 0
Inventory allowance	$ 147,730	$ 120,824

XML

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF OPERATIONS (Prepared by Management) (Unaudited) - USD ($)		3 Months Ended		6 Months Ended
		Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Income statement
SALES		$ 11,188,133	$ 9,483,404	$ 23,129,641	$ 17,466,021
COST OF SALES		9,152,554	7,581,284	18,714,207	13,693,878
GROSS PROFIT		2,035,579	1,902,120	4,415,434	3,772,143
OPERATING EXPENSES
Selling, general and administrative expenses		531,423	511,375	1,074,216	972,823
Depreciation and amortization		68,470	70,600	143,983	139,683
Wages and employee benefits		1,095,069	853,441	1,971,414	1,663,034
Total operating expenses		1,694,962	1,435,416	3,189,613	2,775,540
Income from operations		340,617	466,704	1,225,821	996,603
OTHER ITEMS
Gain on sale of property, plant and equipment		5,600		5,600
Interest and other income		1,800	7,188	10,534	14,083
Litigation expense	[1]	(115,990)		(115,990)
Total other items		(108,590)	7,188	(99,856)	14,083
Income before income taxes		232,027	473,892	1,125,965	1,010,686
Income tax expense		(100,067)	(190,332)	(461,760)	(399,339)
Net income		$ 131,960	$ 283,560	$ 664,205	$ 611,347
Basic earnings per common share		$ 0.05	$ 0.11	$ 0.27	$ 0.23
Diluted earnings per common share		$ 0.05	$ 0.11	$ 0.27	$ 0.23
Weighted average number of common shares outstanding: Basic		2,476,832	2,585,661	2,476,832	2,637,587
Weighted average number of common shares outstanding: Diluted		2,476,832	2,585,661	2,476,832	2,637,587

[1] Note 12(a)

XML

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Prepared by Management) (Unaudited) - USD ($)		Number of Shares	Amount	Additional paid in capital	Retained earnings	Total
Beginning balance at Aug. 31, 2013			$ 1,479,246	$ 600,804	$ 18,517,971	$ 20,598,021
Shares outstanding at Aug. 31, 2013		3,134,936
Shares repurchased and cancelled, value	[1]		(203,045)		(4,054,723)	(4,257,768)
Shares repurchased and cancelled, shares	[1]	(430,306)
Net income					1,858,453	1,858,453
Ending balance at Aug. 31, 2014			1,276,201	600,804	16,321,701	18,198,706
Shares outstanding at Aug. 31, 2014		2,704,630
Shares repurchased and cancelled, value	[1]		(107,489)		(2,341,053)	(2,448,542)
Shares repurchased and cancelled, shares	[1]	(227,798)
Net income					1,773,971	1,773,971
Ending balance at Aug. 31, 2015			1,168,712	600,804	15,754,619	17,524,135
Shares outstanding at Aug. 31, 2015		2,476,832
Net income					664,205	664,205
Ending balance at Feb. 29, 2016			$ 1,168,712	$ 600,804	$ 16,418,824	$ 18,188,340
Shares outstanding at Feb. 29, 2016		2,476,832

[1] Note 9

XML

JEWETT-CAMERON TRADING COMPANY LTD. CONSOLIDATED STATEMENTS OF CASH FLOWS (Prepared by Management) (Unaudited) - USD ($)		3 Months Ended		6 Months Ended
		Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$ 131,960	$ 283,560	$ 664,205	$ 611,347
Items not involving an outlay of cash:
Depreciation and amortization		68,470	70,600	143,983	139,683
Gain on sale of property, plant and equipment		(5,600)		(5,600)
Deferred income taxes		(9,301)	(6,426)	3,504	(2,709)
Interest income on litigation			(6,588)	(6,661)	(13,249)
Decrease in litigation reserve		(84,010)		(84,010)
Changes in non-cash working capital items:
Decrease (increase) in accounts receivable		535,231	(2,313,462)	(96,348)	(2,591,148)
Decrease (increase) in inventory		651,225	(358,245)	840,559	(1,948,867)
(Increase) decrease in note receivable		360	(1,700)	1,310	13,300
Decrease (increase) in prepaid expenses		543,620	(255,461)	210,611	(62,904)
(Increase) decrease in prepaid income taxes		(159,031)	126,559	(132,461)	331,730
(Decrease) in accounts payable and accrued liabilities		(373,786)	(373,590)	(285,100)	(360,742)
Net cash provided by (used in) operating activities		1,299,138	(2,834,753)	1,253,992	(3,883,559)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment		(37,376)	(13,417)	(47,902)	(14,697)
Proceeds from sale of property, plant and equipment		5,600		5,600
Net cash used in investing activities		(31,776)	(13,417)	(42,302)	(14,697)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank indebtedness			875,386		875,386
Redemption of common stock					(1,292,477)
Net cash provided by (used in) financing activities			875,386		(417,091)
Net increase (decrease) in cash		1,267,362	(1,972,784)	1,211,690	(4,315,347)
Cash, beginning of period		4,360,625	1,984,977	4,416,297	4,327,540
Cash, end of period	[1]	$ 5,627,987	$ 12,193	$ 5,627,987	$ 12,193

[1] Supplemental disclosure with respect to cash flows (note 15)

XML

1. Nature of Operations

6 Months Ended

Feb. 29, 2016

Notes

1. Nature of Operations

1.             NATURE OF OPERATIONS

Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (“JCLC”), incorporated September 1953. Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary. Effective September 1, 2013, the Company reorganized certain of its subsidiaries. JCLC’s name was changed to JC USA Inc. (“JC USA”), and a new subsidiary, Jewett-Cameron Company (“JCC”), was incorporated. 

JC USA has the following wholly owned subsidiaries: MSI-PRO Co. (“MSI”), incorporated April 1996, Jewett-Cameron Seed Company, (“JCSC”), incorporated October 2000, Greenwood Products, Inc. (“Greenwood”), incorporated February 2002, and Jewett-Cameron Company, incorporated September 2013. Jewett-Cameron Trading Company Ltd. and its subsidiaries (the “Company”) have no significant assets in Canada.

The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC’s business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood 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. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.

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 February 29, 2016 and August 31, 2015 and its results of operations and cash flows for the three and six month periods ended February 29, 2016 and February 28, 2015 in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three and six month periods ended February 29, 2016 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2016.

XML

2. Significant Accounting Policies

6 Months Ended

Feb. 29, 2016

Notes

2. Significant Accounting Policies

2.             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, JC USA, JCC, MSI, JCSC, and Greenwood, all of which are incorporated under the laws of Oregon, U.S.A.

All inter-company balances and transactions have been eliminated upon consolidation.

Estimates

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Significant estimates incorporated into the Company’s consolidated financial statements include the estimated useful lives for depreciable and amortizable assets, the estimated allowances for doubtful accounts receivable and inventory obsolescence, possible product liability and possible product returns, and litigation contingencies and claims. Actual results could differ from those estimates.

Cash and cash equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.  At February 29, 2016, cash was $5,627,987 compared to $4,416,297 at August 31, 2015.  At February 29, 2016 and August 31, 2015, there were no cash equivalents.

Accounts receivable

Trade and other accounts receivable are reported at face value less any provisions for uncollectible accounts considered necessary. Accounts receivable primarily includes trade receivables from customers. The Company estimates doubtful accounts on an item-by-item basis and includes over aged accounts as part of allowance for doubtful accounts, which are generally ones that are ninety days or greater overdue. 

The Company extends credit to domestic customers and offers discounts for early payment.  When extension of credit is not advisable, the Company relies on either prepayment or a letter of credit.

Inventory

Inventory, which consists primarily of finished goods, is recorded at the lower of cost, based on the average cost method, and market.  Market is defined as net realizable value. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a review of inventory components.

Property, plant and equipment

Property, plant and equipment are recorded at cost less accumulated depreciation.  The Company provides for depreciation over the estimated life of each asset on a straight-line basis over the following periods:

Office equipment	3	7
Warehouse equipment	2	10
Buildings	5	30

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 gate support systems.  Amortization is calculated using the straight-line method over the remaining lives of 24 months and 36 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.

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. 

The Company does not have non-monetary or monetary assets and liabilities that are in a currency other than the U.S. dollar.  Any statement of operations transactions in a foreign currency are translated at rates that approximate those in effect at the time of translation.  Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.

Earnings 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 six month periods ended February 29, 2016 and February 28, 2015 are as follows:

	Three Month Periods to the end of February,		Six Month Periods to the end of February
	2016	2015	2016	2015
Net income	$   131,960	$  283,560	$  664,205	$   611,347
Basic weighted average number of common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587
Effect of dilutive securities
Stock options	-	-	-	-
Diluted weighted average number of common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587

Comprehensive income

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

Stock-based compensation

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.

No options were granted during the six month period ended February 29, 2016, and there were no options outstanding on February 29, 2016.

Financial instruments

The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:

Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank and cash held in short term investment accounts.

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

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.

The estimated fair values of the Company's financial instruments as of February 29, 2016 and August 31, 2015 follows:

	February 29, 2016		August 31, 2015
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$5,627,987	$5,627,987	$4,416,297	$4,416,297
Accounts receivable, net of allowance	3,784,595	3,784,595	3,688,247	3,688,247
Note receivable	-	-	1,310	1,310
Accounts payable and accrued liabilities	1,724,213	1,724,213	2,009,313	2,009,313

The following table presents information about the assets that are measured at fair value on a recurring basis as of February 29, 2016, 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:

	February 29, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	5,627,987	$	5,627,987	$	—	$	—

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

Income taxes

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss 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 products, specialty metal products, and other specialty products and tools, when the products are shipped, title passes, and the ultimate collection is reasonably assured.  Revenue from the Company's seed operations 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, products sold and collection of the amounts is reasonably assured.

Recent Accounting Pronouncements

Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements.

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3. Inventory

6 Months Ended

Feb. 29, 2016

Notes

3. Inventory

3.             INVENTORY

A summary of inventory is as follows:

	February 29, 2016	August 31, 2015
Wood products and metal products	$ 6,777,109	$  7,376,505
Industrial tools	443,061	525,667
Agricultural seed products	290,846	449,403
	$ 7,511,016	$  8,351,575

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4. Property, Plant and Equipment

6 Months Ended

Feb. 29, 2016

Notes

4. Property, Plant and Equipment

4.             PROPERTY, PLANT AND EQUIPMENT

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

	February 29, 2016	August 31, 2015
Office equipment	593,305	$     591,124
Warehouse equipment	1,460,394	1,520,724
Buildings	2,878,849	2,878,849
Land	761,924	761,924
	5,694,472	5,752,621
Accumulated depreciation	(3,522,489)	(3,520,910)
Net book value	$  2,171,983	$  2,231,711

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.

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5. Intangible Assets

6 Months Ended

Feb. 29, 2016

Notes

5. Intangible Assets

5.             INTANGIBLE ASSETS

A summary of intangible assets is as follows:

	February 29, 2016	August 31, 2015
Patent	$  850,000	$  850,000
Other	43,655	43,655
	893,655	893,655
Accumulated amortization	(706,758)	(670,405)
Net book value	$  186,897	$  223,250

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6. Deferred Income Taxes

6 Months Ended

Feb. 29, 2016

Notes

6. Deferred Income Taxes

6.             DEFERRED INCOME TAXES

Deferred income tax liability as of February 29, 2016 of $37,804 (August 31, 2015 – $34,300) reflects 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.

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7. Bank Indebtedness

6 Months Ended

Feb. 29, 2016

Notes

7. Bank Indebtedness

7.             BANK INDEBTEDNESS

There was no bank indebtedness under the Company’s $3,000,000 line of credit as of February 29, 2016 or August 31, 2015.

Bank indebtedness, when it exists, is secured by an assignment of accounts receivable and inventory. Interest is calculated solely on the one month LIBOR rate plus 175 basis points.

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8. Capital Stock

6 Months Ended

Feb. 29, 2016

Notes

8. Capital Stock

8.             CAPITAL STOCK

                Common Stock

                Holders of common stock are entitled to one vote for each share held.  There are no restrictions that limit the Company's ability to pay dividends on its common stock.  The Company has not declared any dividends since incorporation.

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9. Cancellation of Capital Stock

6 Months Ended

Feb. 29, 2016

Notes

9. Cancellation of Capital Stock

9.             CANCELLATION OF CAPITAL STOCK

Treasury stock may be kept based on an acceptable inventory method such as the average cost basis.  Upon disposition or cancellation, the treasury stock account is credited for an amount equal to the number of shares cancelled, multiplied by the cost per share and the difference is treated as additional paid-in-capital in excess of stated value.

During the 4^th quarter of fiscal 2015 ended August 31, 2015, the Company repurchased and cancelled a total of 4,778 common shares under a 10b5-1 share repurchase plan. The total cost was $54,491 at an average price of $11.41 per share. The premium paid to acquire these shares over their per share book value in the amount of $52,236was recorded as a decrease to retained earnings. In addition to the shares repurchased under the 10b5-1 repurchase plan, Donald Boone, President and CEO of the Company, voluntarily returned 15,000 common shares to treasury for cancellation. The Company paid no consideration for the shares. Capital stock was reduced by the book value of the shares in the amount of $7,077.

During the 3^rd quarter of fiscal 2015 ended May 31, 2015, the Company repurchased and cancelled a total of 89,051 common shares under a 10b5-1 share repurchase plan. The total cost was $1,101,574 at an average price of $12.37 per share. The premium paid to acquire these shares over their per share book value in the amount of $1,059,554 was recorded as a decrease to retained earnings.

During the 1^st quarter of fiscal 2015 ended November 30, 2014, the Company repurchased and cancelled a total of 118,969 common shares under a 10b5-1 share repurchase plan. The total cost was $1,292,477 at an average price of $10.86 per share. The premium paid to acquire these shares over their per share book value in the amount of $1,236,340 was recorded as a decrease to retained earnings.

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10. Stock Options

6 Months Ended

Feb. 29, 2016

Notes

10. Stock Options

10.          STOCK OPTIONS

The Company has a stock option program under which stock options to purchase securities from the Company can be granted to directors and employees of the Company on terms and conditions acceptable to the regulatory authorities of Canada, notably the Ontario Securities Commission and the British Columbia Securities Commission.

Under the stock option program, stock options for up to 10% of the number of issued and outstanding common shares may be granted from time to time, provided that stock options in favor of any one individual may not exceed 5% of the issued and outstanding common shares.  No stock option granted under the stock option program is transferable by the optionee other than by will or the laws of descent and distribution, and each stock option is exercisable during the lifetime of the optionee only by such optionee.  Generally, no option can be for a term of more than 10 years from the date of the grant.

The exercise price of all stock options, granted under the stock option program, must be at least equal to the fair market value (subject to regulated discounts) of such common shares on the date of grant.  Options vest at the discretion of the Board of Directors.

The Company had no stock options outstanding as of February 29, 2016 and August 31, 2015.

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11. Pension and Profit-sharing Plans

6 Months Ended

Feb. 29, 2016

Notes

11. Pension and Profit-sharing Plans

11.          PENSION AND PROFIT-SHARING PLANS

The Company has a deferred compensation 401(k) plan for all employees with at least 12 months of service pending a semi-annual enrolment time.  The plan allows for a non-elective discretionary contribution based on the first $60,000 of eligible compensation. During the quarter ended February 29, 2016, the Company made an additional 10% contribution for all eligible employees as a one-time compensation bonus. For the six month periods ended February 29, 2016 and February 28, 2015, the 401(k) compensation expense was $279,975 and $111,365, respectively.

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12. Contingent Liabilities and Commitments

6 Months Ended

Feb. 29, 2016

Notes

12. Contingent Liabilities and Commitments

12.          CONTINGENT LIABILITIES AND COMMITMENTS

a)            A subsidiary 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.

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 accrued reserves to cover the money judgment related to this dispute.  Both parties filed appeals for review of the court’s opinion.

During the 1st quarter of fiscal 2011, the Oregon Court of Appeals ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of the defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorneys fees.  The judgment against the plaintiffs is for $1,187,137.  The Company appealed the decision to the Oregon Supreme Court. During the 1st quarter of fiscal 2011, the Company recorded a litigation loss of $962,137 and interest of $391,988 in addition to the existing litigation reserve of $225,000. Additional interest of $48,790 was recorded during the remainder of fiscal 2011. During the 1st quarter of fiscal 2012 ended November 30, 2011, additional interest of $16,204 was accrued.

In February 2012, the Company received the decision from the Oregon Supreme Court which was favorable to Jewett Cameron as plaintiff. As a result, the Company has reversed $1,459,832 of the litigation reserve and accrued interest during the 2nd quarter of fiscal 2012 ended February 29, 2012.  The reversal was treated as a one-time gain during the quarter.

In July 2014, upon remand from the Oregon Supreme Court, the Oregon Court of Appeals has concluded that Greenwood Forest Products, Inc. as defendants are entitled to a new trial, and, as a consequence, ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of defendants should stand.  The judgment in favor of the Company was for $819,000 plus attorney’s fees.  The judgment against plaintiffs was for $1,187,137.  On August 7, 2014, the Company filed a petition with the Oregon Supreme Court for a review of the Oregon Court of Appeals notice. The petition requests the Oregon Supreme Court review the most recent ruling by the Oregon Court of Appeals, reverse the decision, and affirm the original judgment of the trial court. In September 2015, the Oregon Supreme Court ruled on the Company’s petition and has reversed the decision of the Oregon Court of Appeals and remanded the case to back to the Court of Appeals for further proceedings. The Court also denied the defendants’ request for a new trial.

During the year ended August 31, 2015, the Company recorded $26,716 of interest income due to the favorable difference in interest rates between the judgments. During the six months ended February 29, 2016, the Company recorded $6,661 of interest income.

During the period ended February 29, 2016, the Company and Greenwood Forest Products, Inc., settled all litigation between the two companies. The Company made a cash payment of $200,000 to Greenwood Forest Products, Inc., as full settlement and termination of the litigation (the “Settlement Payment”). The litigation expense of $115,990 represents the difference between the Settlement Payment, and the litigation reserve balance on the date of settlement of $84,010 which is net of interest income recognized for the period.

A summary of the litigation reserve is as follows:

	February 29, 2016	August 31, 2015
Litigation expense (1)	$     (84,010)	$                  -
Litigation reserve	84,010	117,387
Interest expense	-	-
Interest income	-	(26,716)
Total	$                -	$        90,671

(1)           The litigation reserve was reversed in full upon the settlement reached during the six month period ended February 29, 2016.

b)            At February 29, 2016 and August 31, 2015 the Company had an un-utilized line-of-credit of $3,000,000 (note 7).  The line-of-credit has certain financial covenants. The Company is in compliance with these covenants.

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13. Segment Information

6 Months Ended

Feb. 29, 2016

Notes

13. Segment Information

13.           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 six month periods ended February 29, 2016 and February 28, 2015:

	2016	2015
Sales to unaffiliated customers:
Industrial wood products	$    2,858,363	$     2,120,203
Lawn, garden, pet and other	17,376,563	12,733,854
Seed processing and sales	2,348,469	1,687,137
Industrial tools and clamps	546,246	924,827
	$  23,129,641	$   17,466,021
Income (loss) before income taxes:
Industrial wood products	$         44,412	$          43,322
Lawn, garden, pet and other	1,048,667	419,690
Seed processing and sales	(51,425)	129,211
Industrial tools and clamps	(81,262)	47,540
Corporate and administrative *	165,574	370,923
	$  1,125,966	$     1,010,686
Identifiable assets:
Industrial wood products	$     1,457,118	$     1,641,934
Lawn, garden, pet and other	8,814,395	13,490,158
Seed processing and sales	664,569	747,635
Industrial tools and clamps	504,438	845,180
Corporate and administrative	8,509,837	2,784,469
	$   19,950,357	$   19,509,376
Depreciation and amortization:
Industrial wood products	$               490	$               490
Lawn, garden, pet and other	23,828	27,675
Seed processing and sales	5,332	5,473
Industrial tools and clamps	1,199	1,401
Corporate and administrative	113,134	104,644
	$       143,983	$        139,683
Capital expenditures:
Industrial wood products	$                  -	$                   -
Lawn, garden, pet and other	-	-
Seed processing and sales	-	-
Industrial tools and clamps	-	-
Corporate and administrative	47,902	14,697
	$        47,902	$          14,697
Interest expense:	$                  0	$                    0

*              Litigation expense incurred during the period ended February 29, 2016 of $118,990 is included in this balance (Note 12(a)).

The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the six months ended February 29, 2016 and February 28, 2015:

	2016	2015
Sales	$    10,958,881	$     7,734,187

The Company conducts business primarily in the United States, but also has limited amounts of sales in foreign countries. The following table lists sales by country for the six months ended February 29, 2016 and February 28, 2015:

	2016	2015
United States	$  20,857,137	$  16,438,761
Canada	611,644	533,745
Mexico/Latin America	1,601,811	462,805
Europe	-	-
Asia/Pacific	59,049	30,710

All of the Company’s significant identifiable assets were located in the United States as of February 29, 2016 and February 28, 2015.

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14. Concentrations

6 Months Ended

Feb. 29, 2016

Notes

14. Concentrations

14.          CONCENTRATIONS

Credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable.  The Company places its cash with a high quality financial institution.  The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers. At February 29, 2016, two customers accounted for accounts receivable greater than 10% of total accounts receivable at 59%. At February 28, 2015, one customer accounted for accounts receivable greater than 10% of total accounts receivable at 38%. 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 six months ended February 29, 2016, there were three suppliers that each accounted for 10% of total purchases, and the aggregate purchases amounted to $9,607,690. For the six months ended February 28, 2015, there were three suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $9,460,114.

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15. Supplemental Disclosure With Respect To Cash Flows

6 Months Ended

Feb. 29, 2016

Notes

15. Supplemental Disclosure With Respect To Cash Flows

15.          SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

Certain cash payments for the six months ended February 29, 2016 and February 28, 2015 are summarized as follows:

	2016		2015
Cash paid during the periods for:
Interest	$	0	$	0
Income taxes	$	590,657	$	70,198

There were no non-cash investing or financing activities during the periods presented.

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16. Subsequent Events

6 Months Ended

Feb. 29, 2016

Notes

16. Subsequent Events

16.          SUBSEQUENT EVENTS

On March 7, 2016, the Company announced the Board of Directors approved a new share purchase plan in accordance with Rule 10b-18. The Company can purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. The plan commenced on March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice. As of the date of this Form 10-Q, the Company has repurchased a total of 5,042 common shares under the plan. The total cost was $56,596 at an average price of $11.22 per share.

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2. Significant Accounting Policies: Generally Accepted Accounting Principles (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Generally Accepted Accounting Principles

Generally accepted accounting principles

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

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2. Significant Accounting Policies: Principles of Consolidation (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Principles of Consolidation

Principles of consolidation

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

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2. Significant Accounting Policies: Estimates (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Estimates

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.

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2. Significant Accounting Policies: Cash and Cash Equivalents (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Cash and Cash Equivalents

Cash and cash equivalents

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.  At February 29, 2016, cash was $5,627,987 compared to $4,416,297 at August 31, 2015.  At February 29, 2016 and August 31, 2015, there were no cash equivalents.

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2. Significant Accounting Policies: Accounts Receivable (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Accounts Receivable

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.

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2. Significant Accounting Policies: Inventory (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Inventory

Inventory

Inventory, which consists primarily of finished goods, is recorded at the lower of cost, based on the average cost method, and market.  Market is defined as net realizable value. An allowance for potential non-saleable inventory due to excess stock or obsolescence is based upon a review of inventory components.

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2. Significant Accounting Policies: Property, Plant and Equipment (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Property, Plant and Equipment

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	3	7
Warehouse equipment	2	10
Buildings	5	30

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2. Significant Accounting Policies: Intangibles (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Intangibles

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 gate support systems.  Amortization is calculated using the straight-line method over the remaining lives of 24 months and 36 months, respectively, and are reviewed annually for impairment.

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2. Significant Accounting Policies: Asset Retirement Obligations (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Asset Retirement Obligations

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.

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2. Significant Accounting Policies: Impairment of Long-lived Assets and Long-lived Assets To Be Disposed of (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Impairment of Long-lived Assets and Long-lived Assets To Be Disposed of

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.

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2. Significant Accounting Policies: Currency and Foreign Exchange (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Currency and Foreign Exchange

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. 

The Company does not have non-monetary or monetary assets and liabilities that are in a currency other than the U.S. dollar.  Any statement of operations transactions in a foreign currency are translated at rates that approximate those in effect at the time of translation.  Gains and losses from translation of foreign currency transactions into U.S. dollars are included in current results of operations.

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2. Significant Accounting Policies: Comprehensive Income (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Comprehensive Income

Comprehensive income

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

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2. Significant Accounting Policies: Stock-based Compensation (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Stock-based Compensation

Stock-based compensation

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.

No options were granted during the six month period ended February 29, 2016, and there were no options outstanding on February 29, 2016.

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2. Significant Accounting Policies: Financial instruments (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Financial instruments

Financial instruments

The Company uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:

Cash - the carrying amount approximates fair value because the amounts consist of cash held at a bank and cash held in short term investment accounts.

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

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.

The estimated fair values of the Company's financial instruments as of February 29, 2016 and August 31, 2015 follows:

	February 29, 2016		August 31, 2015
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$5,627,987	$5,627,987	$4,416,297	$4,416,297
Accounts receivable, net of allowance	3,784,595	3,784,595	3,688,247	3,688,247
Note receivable	-	-	1,310	1,310
Accounts payable and accrued liabilities	1,724,213	1,724,213	2,009,313	2,009,313

The following table presents information about the assets that are measured at fair value on a recurring basis as of February 29, 2016, 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:

	February 29, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	5,627,987	$	5,627,987	$	—	$	—

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

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2. Significant Accounting Policies: Income Taxes (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Income Taxes

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.

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2. Significant Accounting Policies: Shipping and Handling Costs (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Shipping and Handling Costs

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.

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2. Significant Accounting Policies: Revenue Recognition (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Revenue Recognition

Revenue recognition

The Company recognizes revenue from the sales of lumber, building supply products, industrial wood products, specialty metal products, and other specialty products and tools, when the products are shipped, title passes, and the ultimate collection is reasonably assured.  Revenue from the Company's seed operations 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, products sold and collection of the amounts is reasonably assured.

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2. Significant Accounting Policies: Recent Accounting Pronouncements (Policies)

6 Months Ended

Feb. 29, 2016

Policies

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Management has reviewed the new accounting guidance and determined that there is not a material impact on our financial statements.

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2. Significant Accounting Policies: Property, Plant and Equipment: Property, Plant and Equipment, Estimated Useful Lives (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Property, Plant and Equipment, Estimated Useful Lives

Office equipment	3	7
Warehouse equipment	2	10
Buildings	5	30

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2. Significant Accounting Policies: Schedule of Earnings Per Share, Basic and Diluted (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Earnings Per Share, Basic and Diluted

	Three Month Periods to the end of February,		Six Month Periods to the end of February
	2016	2015	2016	2015
Net income	$   131,960	$  283,560	$  664,205	$   611,347
Basic weighted average number of common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587
Effect of dilutive securities
Stock options	-	-	-	-
Diluted weighted average number of common shares outstanding	2,476,832	2,585,661	2,476,832	2,637,587

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2. Significant Accounting Policies: Financial instruments: Fair Value, Option, Quantitative Disclosures (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Fair Value, Option, Quantitative Disclosures

	February 29, 2016		August 31, 2015
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$5,627,987	$5,627,987	$4,416,297	$4,416,297
Accounts receivable, net of allowance	3,784,595	3,784,595	3,688,247	3,688,247
Note receivable	-	-	1,310	1,310
Accounts payable and accrued liabilities	1,724,213	1,724,213	2,009,313	2,009,313

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2. Significant Accounting Policies: Financial instruments: Fair Value, Assets Measured on Recurring Basis (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Fair Value, Assets Measured on Recurring Basis

	February 29, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	5,627,987	$	5,627,987	$	—	$	—

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3. Inventory: Schedule of Inventory, Current (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Inventory, Current

	February 29, 2016	August 31, 2015
Wood products and metal products	$ 6,777,109	$  7,376,505
Industrial tools	443,061	525,667
Agricultural seed products	290,846	449,403
	$ 7,511,016	$  8,351,575

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4. Property, Plant and Equipment: Property, Plant and Equipment (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Property, Plant and Equipment

	February 29, 2016	August 31, 2015
Office equipment	593,305	$     591,124
Warehouse equipment	1,460,394	1,520,724
Buildings	2,878,849	2,878,849
Land	761,924	761,924
	5,694,472	5,752,621
Accumulated depreciation	(3,522,489)	(3,520,910)
Net book value	$  2,171,983	$  2,231,711

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5. Intangible Assets: Property, Plant, and Equipment and Intangible Assets (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Property, Plant, and Equipment and Intangible Assets

	February 29, 2016	August 31, 2015
Patent	$  850,000	$  850,000
Other	43,655	43,655
	893,655	893,655
Accumulated amortization	(706,758)	(670,405)
Net book value	$  186,897	$  223,250

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12. Contingent Liabilities and Commitments: Legal Matters and Contingencies (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Legal Matters and Contingencies

	February 29, 2016	August 31, 2015
Litigation expense (1)	$     (84,010)	$                  -
Litigation reserve	84,010	117,387
Interest expense	-	-
Interest income	-	(26,716)
Total	$                -	$        90,671

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13. Segment Information: Schedule of Segment Reporting Information, by Segment (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Segment Reporting Information, by Segment

	2016	2015
Sales to unaffiliated customers:
Industrial wood products	$    2,858,363	$     2,120,203
Lawn, garden, pet and other	17,376,563	12,733,854
Seed processing and sales	2,348,469	1,687,137
Industrial tools and clamps	546,246	924,827
	$  23,129,641	$   17,466,021
Income (loss) before income taxes:
Industrial wood products	$         44,412	$          43,322
Lawn, garden, pet and other	1,048,667	419,690
Seed processing and sales	(51,425)	129,211
Industrial tools and clamps	(81,262)	47,540
Corporate and administrative *	165,574	370,923
	$  1,125,966	$     1,010,686
Identifiable assets:
Industrial wood products	$     1,457,118	$     1,641,934
Lawn, garden, pet and other	8,814,395	13,490,158
Seed processing and sales	664,569	747,635
Industrial tools and clamps	504,438	845,180
Corporate and administrative	8,509,837	2,784,469
	$   19,950,357	$   19,509,376
Depreciation and amortization:
Industrial wood products	$               490	$               490
Lawn, garden, pet and other	23,828	27,675
Seed processing and sales	5,332	5,473
Industrial tools and clamps	1,199	1,401
Corporate and administrative	113,134	104,644
	$       143,983	$        139,683
Capital expenditures:
Industrial wood products	$                  -	$                   -
Lawn, garden, pet and other	-	-
Seed processing and sales	-	-
Industrial tools and clamps	-	-
Corporate and administrative	47,902	14,697
	$        47,902	$          14,697
Interest expense:	$                  0	$                    0

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13. Segment Information: Schedule of Sales in Excess of Ten Percent (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Sales in Excess of Ten Percent

	2016	2015
Sales	$    10,958,881	$     7,734,187

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13. Segment Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

	2016	2015
United States	$  20,857,137	$  16,438,761
Canada	611,644	533,745
Mexico/Latin America	1,601,811	462,805
Europe	-	-
Asia/Pacific	59,049	30,710

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15. Supplemental Disclosure With Respect To Cash Flows: Schedule of Cash Flow, Supplemental Disclosures (Tables)

6 Months Ended

Feb. 29, 2016

Tables/Schedules

Schedule of Cash Flow, Supplemental Disclosures

	2016		2015
Cash paid during the periods for:
Interest	$	0	$	0
Income taxes	$	590,657	$	70,198

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1. Nature of Operations (Details)	6 Months Ended
	Feb. 29, 2016
Details
Entity Incorporation, State Country Name	British Columbia
Entity Incorporation, Date of Incorporation	Jul. 08, 1987

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2. Significant Accounting Policies: Cash and Cash Equivalents (Details) - USD ($)	Feb. 29, 2016		Nov. 30, 2015	Aug. 31, 2015	Feb. 28, 2015		Nov. 30, 2014	Aug. 31, 2014
Details
Cash	$ 5,627,987	[1]	$ 4,360,625	$ 4,416,297	$ 12,193	[1]	$ 1,984,977	$ 4,327,540

[1] Supplemental disclosure with respect to cash flows (note 15)

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2. Significant Accounting Policies: Property, Plant and Equipment: Property, Plant and Equipment, Estimated Useful Lives (Details)	6 Months Ended
	Feb. 29, 2016
Minimum
Office equipment, expected useful lives in years	3
Warehouse equipment, expected useful lives in years	2
Buildings, expected useful lives in years	5
Maximum
Office equipment, expected useful lives in years	7
Warehouse equipment, expected useful lives in years	10
Buildings, expected useful lives in years	30

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2. Significant Accounting Policies: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Details
Net income	$ 2,016	$ 2,015	$ 611,347	$ 2,015
Net income	$ 2,016	$ 2,015	$ 611,347	$ 2,015
Weighted Average Number of Shares Issued, Basic			2,637,587
Weighted average number of common shares outstanding: Diluted	2,476,832	2,585,661	2,476,832	2,637,587

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3. Inventory: Schedule of Inventory, Current (Details) - USD ($)		Feb. 29, 2016	Aug. 31, 2015
Details
Wood products and metal products		$ 6,777,109	$ 7,376,505
Industrial tools		443,061	525,667
Agricultural seed products		290,846	449,403
Inventory, net of allowance of $90,384 (August 31, 2014 - $111,756)	[1]	$ 7,511,016	$ 8,351,575

[1] Note 3

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4. Property, Plant and Equipment: Property, Plant and Equipment (Details) - USD ($)		Feb. 29, 2016	Aug. 31, 2015
Details
Office equipment		$ 593,305	$ 591,124
Warehouse equipment		1,460,394	1,520,724
Buildings and Improvements, Gross		2,878,849	2,878,849
Land		761,924	761,924
Property, Plant and Equipment, Gross		5,694,472	5,752,621
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment		(3,522,489)	(3,520,910)
Property, plant and equipment, net	[1]	$ 2,171,983	$ 2,231,711

[1] Note 4

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5. Intangible Assets: Property, Plant, and Equipment and Intangible Assets (Details) - USD ($)	6 Months Ended	12 Months Ended
	Feb. 29, 2016	Aug. 31, 2015
Details
Finite-Lived Patents, Gross	$ 850,000	$ 850,000
Other Finite-Lived Intangible Assets, Gross	43,655	43,655
Finite-Lived Intangible Assets, Gross, Total	893,655	893,655
Amortization of Intangible Assets	(706,758)	(670,405)
Intangible Assets, Current, Total	$ 186,897	$ 223,250

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6. Deferred Income Taxes (Details) - USD ($)	Feb. 29, 2016	Aug. 31, 2015
Details
Deferred Tax Assets, Net	$ 37,804	$ 34,300

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7. Bank Indebtedness (Details)	Feb. 29, 2016 USD ($)
Details
Line of Credit Facility, Maximum Borrowing Capacity	$ 3,000,000

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9. Cancellation of Capital Stock (Details) - USD ($)	3 Months Ended			9 Months Ended	12 Months Ended
	Aug. 31, 2015	May. 31, 2015	Nov. 30, 2014	May. 31, 2015	Aug. 31, 2015
Details
Payments for Repurchase of Common Stock	$ 54,491	$ 1,101,574	$ 1,292,477
Average price per share repurchased and cancelled	$ 11.41		$ 10.86	$ 12.37
Cumulative Effect on Retained Earnings, before Tax	$ 52,236		$ 1,236,340	$ 1,059,554
Shares returned to treasury for cancellation	15,000
Shares returned to treasury for cancellation, value					$ 7,077

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11. Pension and Profit-sharing Plans (Details) - USD ($)	6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Details
Pension Contributions	$ 279,975	$ 111,365

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12. Contingent Liabilities and Commitments (Details) - USD ($)		3 Months Ended	6 Months Ended	12 Months Ended
		Feb. 29, 2016	Feb. 29, 2016	Aug. 31, 2015
Details
Litigation Settlement Interest			$ (6,661)	$ 26,716
Litigation Settlement Interest			6,661	(26,716)
Litigation Settlement, Amount		$ 200,000
Litigation expense	[1]	$ 115,990	$ 115,990
Litigation reserve	[1]			$ (90,671)
Line of Credit Facility, Maximum Borrowing Capacity		$ 3,000,000	$ 3,000,000

[1] Note 12(a)

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12. Contingent Liabilities and Commitments: Legal Matters and Contingencies (Details) - USD ($)		6 Months Ended	12 Months Ended
		Feb. 29, 2016	Aug. 31, 2015
Details
Litigation reserve	[1]		$ 90,671
Litigation reserve	[1]		(90,671)
Litigation Settlement Interest		$ (6,661)	26,716
Litigation Settlement Interest		$ 6,661	(26,716)
Litigation settlement total			$ 90,671

[1] Note 12(a)

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13. Segment Information: Schedule of Segment Reporting Information, by Segment (Details) - USD ($)	3 Months Ended		6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015	Feb. 29, 2016	Feb. 28, 2015
Details
Industrial wood products, sales			$ 2,858,363	$ 2,120,203
Lawn, garden, pet and other, sales			17,376,563	12,733,854
Seed processing and sales, sales			2,348,469	1,687,137
Industrial tools and clamps, sales			546,246	924,827
SALES	$ 11,188,133	$ 9,483,404	23,129,641	17,466,021
Industrial wood products, income before tax			44,412	43,322
Lawn, garden, pet and other, income before tax			1,048,667	419,690
Seed processing and sales, income before tax			(51,425)	129,211
Industrial tools and clamps, income before tax			(81,262)	47,540
Corporate and administrative income before tax			165,574	370,923
Income (loss) before income taxes			1,125,966	1,010,686
Industrial wood products, assets			1,457,118	1,641,934
Lawn, garden, pet and other, assets			8,814,395	13,490,158
Seed processing and sales, assets			664,569	747,635
Industrial tools and clamps, assets			504,438	845,180
Corporate and administrative assets			8,509,837	2,784,469
Identifiable assets			19,950,357	19,509,376
Industrial wood products, depreciation and amortization			490	490
Lawn, garden, pet and other, depreciation and amortization			23,828	27,675
Seed processing and sales, depreciation and amortization			5,332	5,473
Industrial tools and clamps, depreciation and amortization			1,199	1,401
Corporate and administrative depreciation and amortization			113,134	104,644
Depreciation and amortization	$ 68,470	$ 70,600	143,983	139,683
Corporate and administrative capital expenditures			47,902	14,697
Interest Paid			$ 0	$ 0

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13. Segment Information: Schedule of Sales in Excess of Ten Percent (Details) - USD ($)	6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Details
Sales to customers in excess of 10% of total sales	$ 10,958,881	$ 7,734,187

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13. Segment Information: Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Details) - USD ($)	6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Details
United States sales	$ 20,857,137	$ 16,438,761
Canada sales	611,644	533,745
Mexico/Latin America sales	1,601,811	462,805
Asia/Pacific sales	$ 59,049	$ 30,710

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14. Concentrations (Details) - USD ($)	6 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Details
Concentration Risk, Customer	59	38
Concentration, volume of purchases	$ 9,607,690	$ 9,460,114

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15. Supplemental Disclosure With Respect To Cash Flows: Schedule of Cash Flow, Supplemental Disclosures (Details) - USD ($)	3 Months Ended
	Feb. 29, 2016	Feb. 28, 2015
Details
Income Taxes Paid	$ 590,657	$ 70,198

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16. Subsequent Events (Details)	6 Months Ended
	Feb. 29, 2016
Details
Subsequent Event, Description	On March 7, 2016, the Company announced the Board of Directors approved a new share purchase plan in accordance with Rule 10b-18. The Company can purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. The plan commenced on March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice. As of the date of this Form 10-Q, the Company has repurchased a total of 5,042 common shares under the plan. The total cost was $56,596 at an average price of $11.22 per share.