QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY ~~28, 2018~~28. 2019

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO ________

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. xYes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer

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

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 – ~~2,234,494~~4,029,588 common shares as of April ~~16, 2018.~~11, 2019.


	February 28, 2018	August 31, 2017	February 28, 2019			August 31, 2018

ASSETS

Current assets
Cash	$ 2,790,723	$ 5,912,250
Accounts receivable, net of allowance of $Nil (August 31, 2017 - $1,725)	6,064,903	3,565,055
Inventory, net of allowance of $139,704 (August 31, 2017 - $156,713) (note 3)	9,289,193	8,807,545
Cash and cash equivalents		$	3,706,604		$	6,097,463
Accounts receivable, net of allowance of $Nil (August 31, 2018 - $Nil)			3,197,120			4,152,492
Inventory, net of allowance of $89,424 (August 31, 2018 - $75,336) (note 3)			11,705,607			9,803,197
Note receivable			1,797			4,000
Prepaid expenses	883,204	595,776		565,516			347,251
Prepaid income taxes	469,577	-		308,832			114,310

Total current assets	19,497,600	18,880,626		19,485,476			20,518,713

Property, plant and equipment, net(note 4)	3,139,156	3,222,572		2,789,951			3,105,260

Intangible assets, net(note 5)	3,862	77,837		3,319			3,590

Total assets	$ 22,640,618	$ 22,181,035	$	22,278,746		$	23,627,563

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


	February 28, 2018	August 31, 2017	February 28, 2019		August 31, 2018

Continued

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable	$ 782,869	$ 638,128	$	368,673	$	377,092
Accrued liabilities	1,265,612	1,807,192		944,758		1,795,207

Total current liabilities	2,048,481	2,445,320		1,313,431		2,172,299

Deferred tax liability(note 6)	37,035	11,344		79,886		81,853

Total liabilities	2,085,516	2,456,664		1,393,317		2,254,152

Stockholders’ equity
Capital stock (note 8, 9)
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,234,494 common shares (August 31, 2017 – 2,234,494)	1,054,316	1,054,316
4,210,538 common shares (August 31, 2018 – 4,314,659)			993,344		1,017,908
Additional paid-in capital	600,804	600,804		600,804		600,804
Retained earnings	18,899,982	18,069,251		19,291,281		19,754,699

Total stockholders’ equity	20,555,102	19,724,371		20,885,429		21,373,411

Total liabilities and stockholders’ equity	$ 22,640,618	$ 22,181,035	$	22,278,746	$	23,627,563

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


	Three Month Periods ended February 28,		Six Month Periods ended February 28,		Three Month Periods ended February 28,				Six Month Periods ended February 28,
	2018	2017	2018	2017	2019		2018		2019		2018

SALES	$ 13,341,338	$ 9,499,286	$ 22,755,308	$ 19,921,089	$	7,857,175	$	13,341,338	$	16,923,275	$	22,755,308

COST OF SALES	10,705,532	7,370,224	17,932,754	15,397,585		6,095,887		10,705,532		12,852,901		17,932,754

GROSS PROFIT	2,635,806	2,129,062	4,822,554	4,523,504		1,761,288		2,635,806		4,070,374		4,822,554

OPERATING EXPENSES
Selling, general and administrative expenses	616,074	453,668	1,061,951	1,004,717		405,888		616,074		962,036		1,061,951
Depreciation and amortization	122,745	69,368	195,410	138,007		45,401		122,745		96,271		195,410
Wages and employee benefits	1,176,743	1,057,792	2,274,647	2,040,041		1,252,374		1,176,743		2,475,433		2,274,647
	1,915,562	1,580,828	3,532,008	3,182,765		1,703,663		1,915,562		3,533,740		3,532,008

Income from operations	720,244	548,234	1,290,546	1,340,739		57,625		720,244		536,634		1,290,546

OTHER ITEMS
(Loss) gain on sale of property, plant and equipment	530	(393)	(27,022)	(393)		105,365		530		105,365		(27,022)
Interest and other income	5,793	2,000	8,483	3,820		9,184		5,793		26,335		8,483
	6,323	1,607	(18,539)	3,427		114,549		6,323		131,700		(18,539)

Income before income taxes	726,567	549,841	1,272,007	1,344,166		172,174		726,567		668,334		1,272,007

Income tax expense	(218,269)	(240,828)	(441,276)	(549,233)		(52,545)		(218,269)		(199,011)		(441,276)

Net income	$ 508,298	$ 309,013	$ 830,731	$ 794,933	$	119,629	$	508,298	$	469,323	$	830,731

Basic earnings per common share	$ 0.23	$ 0.14	$ 0.37	$ 0.35	$	0.03	$	0.11	$	0.11	$	0.19

Diluted earnings per common share	$ 0.23	$ 0.14	$ 0.37	$ 0.35	$	0.03	$	0.11	$	0.11	$	0.19

Weighted average number of common shares outstanding:
Basic	2,234,494	2,286,294	2,234,494	2,286,294		4,218,348		4,468,988		4,218,672		4,468,988
Diluted	2,234,494	2,286,294	2,234,494	2,286,294		4,218,348		4,468,988		4,218,672		4,468,988

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


	Capital Stock					Capital Stock
	Number of Shares	Amount	Additional paid-in capital	Retained earnings	Total	Number of Shares	Amount	Additional paid-in capital	Retained earnings	Total

August 31, 2016	2,286,294	$ 1,078,759	$ 600,804	$ 15,845,092	$ 17,524,655

Shares repurchased and cancelled (note 9)	(51,800)	(24,443)	-	(502,498)	(526,941)
Net income	-	-	-	2,726,657	2,726,657

August 31, 2017	2,234,494	$ 1,054,316	$ 600,804	$ 18,069,251	$ 19,724,371	4,468,988	$ 1,054,316	$ 600,804	$ 18,069,251	$ 19,724,371

Net income	-	-	-	830,731	830,731	-	-	-	830,731	830,731

February 28, 2018	2,234,494	$ 1,054,316	$ 600,804	$ 18,899,982	$ 20,555,102	4,468.988	$ 1,054,316	$ 600,804	$ 18,899,982	$ 20,555,102

Shares repurchased and cancelled (note 9)					(154,329)	(36,408)	-	(1,235,191)	(1,271,599)
Net income					-	-	-	2,089,908	2,089,908

August 31, 2018					4,314,659	$ 1,017,908	$ 600,804	$ 19,754,699	$ 21,373,411

Shares repurchased and cancelled (note 9)					(104,121)	(24,564)	-	(932,741)	(957,305)
Net income					-	-	-	469,323	469,323

February 28, 2019					4,210,538	$ 993,344	$ 600,804	$ 19,291,281	$ 20,885,429

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


	Six Month Period ended February 28,		Six Month Period ended February 28,
	2018	2017	2019		2018

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 830,731	$ 794,933	$	469,323	$	830,731
Items not involving an outlay of cash:
Depreciation and amortization	195,410	138,007		96,271		195,410
Loss on sale of property, plant and equipment	27,022	393
(Gain) loss on sale of property, plant and equipment			(105,365)		27,022
Deferred income taxes	25,691	4,540		(1,967)		25,691

Changes in non-cash working capital items:
(Increase) in accounts receivable	(2,499,848)	(1,205,537)
Decrease (increase) in accounts receivable			955,372		(2,499,848)
(Increase) in inventory	(481,648)	(817,226)		(1,902,410)		(481,648)
(Increase) decrease in prepaid expenses	(287,428)	25,202
Decrease in note receivable			2,203		-
(Increase) in prepaid expenses			(218,265)		(287,428)
(Increase) in prepaid income taxes	(469,577)	(148,891)		(194,522)		(469,577)
(Decrease) in accounts payable and accrued liabilities	(396,839)	(961,277)		(858,868)		(396,839)

Net cash used in operating activities	(3,056,486)	(2,169,856)		(1,758,228)		(3,056,486)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(66,041)	(335,014)		-		(66,041)
Proceeds from sale of property, plant and equipment	1,000	3,480		324,674		1,000

Net cash used in investing activities	(65,041)	(331,534)
Net cash provided by (used in) investing activities			324,674		(65,041)

CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock			(957,305)		-

Net cash used in financing activities			(957,305)		-

Net decrease in cash	(3,121,527)	(2,501,390)		(2,390,859)		(3,121,527)

Cash, beginning of period	5,912,250	4,519,922		6,097,463		5,912,250

Cash, end of period	$ 2,790,723	$ 2,018,532	$	3,706,604	$	2,790,723

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

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.

On May 29, 2018, the Company completed a 2-for-1 forward stock split of its common shares. All share and per share amounts have been retroactively restated (Note 8).

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 28, ~~2018~~2019 and August 31, ~~2017~~2018 and its results of operations and cash flows for the three month and six month periods ended February 28, ~~2018~~2019 and ~~2017~~2018 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 28, ~~2018~~2019 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, ~~2018.~~2019.

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

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.

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.

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 28, ~~2018,~~2019, cash and cash equivalents was ~~$2,790,723~~$3,706,604 compared to ~~$5,912,250~~$6,097,463 at August 31, ~~2017. At February 28, 2018 and August 31, 2017, there were no cash equivalents.~~2018.

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, 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 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:

The Company’s intangible assets have a finite life and are recorded at cost. Amortization is calculated using the straight-line method over the remaining life of the asset. The intangible assets are reviewed annually for impairment.

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.

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.

These financial statements are expressed in U.S. dollars as the Company's operations are primarily based ~~only~~ in the United States.

The Company does not have ~~significant~~ 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.

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 number of common shares outstanding has been adjusted for a 2 for 1 forward stock split effective May 29, 2018 (Note 8).

The earnings per share data for the three and six month periods ended February 28, ~~2018~~2019 and ~~2017~~2018 are as follows:

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

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 28, ~~2018,~~2019, and there were no options outstanding on February 28, ~~2018.~~2019.

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.

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 28, ~~2018~~2019 and August 31, ~~2017~~2018 follows:

The following table presents information about the assets that are measured at fair value on a recurring basis as of February 28, ~~2018~~2019 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:

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

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.

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 sales in the consolidated statement of operations.

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.

In May 2014, the FASB issued ASU No. 2014-09,Revenue from Contracts with Customers. The new standard provides a five-step approach to be applied to all contracts with customers and also requires expanded disclosures about revenue recognition. The ASU is effective for annual reporting periods beginning after December 15, 2017, including interim periods and is to be retrospectively applied. Early application is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. The Company adopted this ASU ~~on April~~effective September 1, ~~2017,~~2018, using the full retrospective approach, prospectively. ~~There was~~The adoption had no material impact on ~~the Company’s~~its financial statements on adoption as the sale of goods by the Company is performed on a standalone basis and revenue is recognized when the customer obtains control of the ~~goods.~~

~~In November 2015,~~goods and in an ~~ASU was issued to simplify~~amount that considers the ~~presentation~~impact of ~~deferred income taxes. The amendments~~estimated returns, discounts and after allowances that are variable in this ASU require that deferred tax liabilities and assets be classified as non-current on the balance sheet as compared to the current requirements to separate deferred tax liabilities and assets into current and non-current amounts. This ASU is effective for annual periods beginning after December 15, 2016, including interim periods within those annual periods. Earlier application is permitted. This ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented. The Company adopted this ASU on April 1, 2017, prospectively. There was no material impact on the Company’s financial statements on adoption.nature.

In February 2016, Topic 842,Leases was issued to replace the leases requirements in Topic 840,Leases. The main difference between previous GAAP and Topic 842 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous GAAP. A lessee should recognize in the balance sheet a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. If a lessee makes this election, it should recognize lease expense for such leases generally on a straight-line basis over the lease term. The accounting applied by a lessor is largely unchanged from that applied under previous GAAP. Topic 842 will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within those annual periods and is to be retrospectively applied. Earlier application is permitted. The adoption of this new guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In ~~July 2015, Topic 330,~~June 2016, the FASB issued ASU No. ~~2015-11, Simplifying the~~2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of ~~Inventory, which requires that inventory within~~Credit Losses on Financial Instruments. The accounting standard changes the ~~scope of the guidance be measured at the lower of cost and net realizable value. Inventory measured using last-in, first-out (LIFO)~~methodology for measuring credit losses on financial instruments and the ~~retail inventory method (RIM)~~timing when such losses are ~~not impacted by the new guidance. The new standard~~recorded. ASU No. 2016-14 is being issued as part of the simplification initiative. Prior to the issuance of the standard, inventory was measured at the lower of cost or market (where market was defined as replacement cost, with a ceiling of net realizable value and floor of net realizable value less a normal profit margin). This necessitated obtaining three data points to determine market value. Replacing the concept of market with the single measurement of net realizable value is intended to create efficiencies for preparers. Further, this change will more closely align U.S. GAAP and IFRS.The guidance will be effective for fiscal years, ~~beginning after December 15, 2016, including~~and interim periods within those years, ~~and is to be prospectively applied.~~beginning after December 31, 2019. The Company ~~adopted this~~is currently evaluating the impact of ASU No. 2016-13 on ~~April 1, 2017, prospectively. There was no material impact on the Company’s~~its financial ~~statements on adoption.~~

~~Recent Accounting Pronouncements~~~~(cont’d…)~~position, results of operations and liquidity.

In November 2016, ~~Topic 230,~~ the FASB issued ASU No. 2016-18, Statement of Cash Flows: Restricted Cash (Topic 230): a consensus of the FASB’s Emerging Issues Task Force (the “Task Force”). The new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Entities will also be required to reconcile such total to amounts on the balance sheet and disclose the nature of the restrictions. Topic 230 will be effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods. The Company adopted this ASU on ~~December~~September 1, ~~2017,~~2018, prospectively. There was no material impact on the Company’s financial statements on adoption.

In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future discounted cash flows is less than the carrying amount of the asset, an impairment loss will be recognized. Management's estimates of revenues, operating expenses, and operating capital are subject to certain risks and uncertainties which may affect the recoverability of the Company's investments in its assets. Although management has made its best estimate of these factors based on current conditions, it is possible that changes could occur which could adversely affect management's estimate of the net cash flow expected to be generated from its operations.

During the ~~period,~~year ended August 31, 2018, the Company ~~conducted a periodic review of the Company’s patents and determined that two of the patents had expired. The Company immediately amortized~~wrote off the remaining ~~book value~~capitalized costs of ~~the~~$43,635 as a result of two patents ~~and derecognized the respective costs and accumulated amortization values.~~expiring.

Deferred income tax ~~liabilities~~liability as of February 28, ~~2018~~2019 of ~~$37,035~~$79,886 (August 31, ~~2017~~2018 - ~~$11,344) reflects~~$81,853) reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

There was no bank indebtedness under the Company’s $3,000,000 line of credit as of February 28, ~~2018~~2019 or August 31, ~~2017.~~2018.

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

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.

The Company declared a two for one stock split of its common stock with a record date of the close of business on May 25, 2018. Shareholders received one additional common share for each common share held as of the record date. The stock split was effective as of May 29, 2018. Share and per share data have been retroactively adjusted to reflect the effects of the stock split.

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 42^thnd quarter of fiscal ~~2017~~2019 ended ~~August 31, 2017,~~February 28, 2019, the Company repurchased a total of 8,450 shares under a 10b-18 share repurchase plan originally announced on February 7, 2019. The total cost was $63,929 at an average share price of $7.57 per share. The premium paid to acquire those shares over their per share book value in the amount of $61,936 was recorded as a decrease to retained earnings.

During the 1^st quarter of fiscal 2019 ended November 30, 2018, the Company repurchased and cancelled a total of ~~41,800 common~~95,671 shares under a ~~10b5-1~~10b-18 share repurchase ~~plan.~~plan originally announced on June 6, 2018. The total cost was ~~$526,941~~$893,376 at an average share price of $9.34 per share. The premium paid to acquire those shares over their per share book value in the amount of $870,805 was recorded as a decrease to retained earnings.

During the 4^th quarter of fiscal 2018 ended August 31, 2018, the Company repurchased and cancelled a total of 154,329 common shares. The total cost was $1,271,599 at an average price of ~~$12.61~~$8.24 per share. The premium paid to acquire these shares over their per share book value in the amount of ~~$507,217~~$1,235,191 was recorded as a decrease to retained earnings.

Donald Boone, Chairman and former President and CEO of the Company, voluntarily returned 10,000 common shares to treasury for cancellation during the fiscal year ended August 31, 2017. The Company paid no consideration for the shares. Capital stock was reduced by the book value of the shares in the amount of $4,719, with a corresponding increase to retained earnings of $4,719.

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 28, ~~2018~~2019 and August 31, ~~2017.~~2018.

The Company has a deferred compensation 401(k) plan for all employees with at least 126 months of service pending a monthly enrollment time. The plan allows for a non-elective discretionary contribution ~~based on~~plus matching employee contributions up to a specific limit. The percentages of contribution remain the ~~first $45,000~~discretion of ~~eligible compensation, which was decreased from~~ the ~~prior $50,000 during the second quarter of fiscal 2018~~Board and ~~from $60,000 of eligible compensation during the second quarter of fiscal 2017.~~are reviewed with management annually. For the six ~~month periods~~months ended February 28, ~~2018~~2019 and ~~2017,~~2018 the 401(k) compensation expense was ~~$166,369~~$153,561 and ~~$160,157,~~$166,369, respectively.

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 ~~as at and~~ for the six month periods ended February 28, ~~2018~~2019 and ~~2017:~~2018:

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 28, ~~2018~~2019 and ~~2017:~~2018:

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 28, ~~2018~~2019 and ~~2017:~~2018:

All of the Company’s significant identifiable assets were located in the United States as of February 28, ~~2018~~2019 and ~~2017.~~

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 28, 2019, two customers accounted for accounts receivable greater than 10% of total accounts receivable at 49%. At February 28, 2018, three customers accounted for accounts receivable greater than 10% of total accounts receivable at 71%~~. At February 28, 2017, two customers accounted for accounts receivable greater than 10% of total accounts receivable at 52%~~. 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.

The Company has concentrations in the volume of purchases it conducts with its suppliers. For the six months ended February 28, 2019, there were three suppliers that each accounted for 10% or greater of total purchases, and the aggregate purchases amounted to $9,260,530. For the six months ended February 28, 2018, there were three suppliers that each accounted for 10% or greater of total purchases, and the aggregate purchases amounted to $11,365,503. ~~For the six months ended~~

February 28, ~~2017, there were two suppliers that each accounted for 10% or greater of total purchases, and the aggregate purchases amounted to $7,425,603.~~2019

Certain cash payments for the six months ended February 28 are summarized as follows:

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

Subsequent to the end of the period, the Company repurchased an additional 180,950 common shares pursuant to the share repurchase plan announced on February 7, 2019. The total cost was $1,587,777 at an average price of $8.77 per share.

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 28, ~~2018~~2019 and August 31, ~~2017~~2018 and its results of operations and cash flows for the three and six month periods ended February 28, ~~2018~~2019 and February 28, ~~2017~~2018 in accordance with U.S. GAAP. Operating results for the three and six month periods ended February 28, ~~2018~~2019 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, ~~2018.~~2019.

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

The industrial wood products segment reflects the business conducted by Greenwood Products, Inc. (Greenwood). Greenwood is a processor and distributor of industrial wood products. A major product category is treated plywood that is sold primarily to the transportation industry.

The lawn, garden, pet and other segment reflects the business of Jewett-Cameron Company (JCC), which is a wholesaler of wood products and a manufacturer and distributor of specialty metal products. Wood products are primarily fencing, while metal products include pet enclosures and kennels, proprietary gate support systems, perimeter fencing, greenhouses, canopies and umbrellas. Examples of the Company’s brands include Lucky Dog, Animal House and AKC (used under license from the American Kennel Club) for pet enclosures and kennels; Adjust-A-Gate, Fit-Right, and Perimeter Patrol for gates and fencing; Early Start, Spring Gardner, and Weatherguard for greenhouses; and TrueShade for patio umbrellas, furniture covers and canopies. JCC uses contract manufacturers to make the specialty metal products. Some of the products that JCC distributes flow through the Company’s facility in North Plains, Oregon, and some are shipped direct to the customer from the manufacturer. Primary customers are home centers 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, saw blades, digital calipers, and laser guides. MSI brands include MSI-Pro, Avenger, and ProMax.

JC USA Inc. (“JC USA”) is the parent company for the four wholly-owned subsidiaries as described above. JC USA provides professional and administrative services, including warehousing, accounting and credit services, to its subsidiary companies.

~~Three Months Ended February 28, 2018~~The Company’s metal products are manufactured in China and ~~February 28, 2017~~

~~For~~are imported into the ~~three months ended February 28, 2018, sales increased $3,842,052~~United States. The Office of the United States Trade Representative (“USTR”) has now instituted new tariffs on the importation of a number of products into the United States from China effective September 24, 2018. These new tariffs are a response to ~~$13,341,338~~what the USTR considers to be certain unfair trade practices by China. A number of the Company’s products manufactured in China are now subject to new duties that range from ~~$9,499,286. This represents an~~10% to 25% when imported into the United States. Originally, the USTR announced both new and previously released tariffs would increase across the board to 25% as of ~~40%.~~

~~Sales at Greenwood were $852,921 for~~January 1, 2019 but the ~~three months ended February 28, 2018 compared~~increases are currently suspended while China and the United States continue to ~~sales of $737,417 for~~negotiate new trade agreements. However, the ~~three months ended February 28, 2017, which was an increase of $115,504, or 16%. Overall demand for Greenwood’s products remains weak. Historically, a large portion of Greenwood’s sales were~~higher tariffs could be instituted in the ~~marine industry, but~~future if the Company sold its excess marine industry inventory in fiscal 2014. The Company will maintain a readiness to participate in the marine segment when the market rebounds. For the three months ended February 28, 2018, Greenwood had an operating loss of ($4,423) compared to an operating loss of ($35,414) for the three months ended February 28, 2017.negotiations are unsuccessful.

Management is currently working with its suppliers as well as its customers to help outline and, where possible, mitigate the impact of the new tariffs on our customer’s markets. However, if the Company is unable to successfully pass through the additional cost of these tariffs, or if the higher prices reduce consumer demand for the Company’s products, it will have a negative effect on the Company’s sales and gross margins.

This year’s second quarter has been challenging for a number of primarily external factors, but the Company is withstanding the uncertainty well. The Company’s overall financial picture remains solid as management has positioned working capital into inventory necessary to help the Company and our customers mitigate the impacts of both weather and economic uncertainty. Inventory and the current common share repurchase plan are funded from our cash reserves that we have accumulated in prior years. Management believes that with new product launches, conversations with our retail customers, and our ability to quickly both move product and adjust sales channels that our results will stabilize in future periods as the weather improves and the market gains additional clarity regarding China tariffs. Thus far in the early portion of third quarter of fiscal 2019 we are seeing some recovery on these relevant fronts.

For the three months ended February 28, 2019, sales decreased by $5,484,163 to $7,857,175 from $13,341,338. This represents a decrease of 41%.

Sales at JCC were $6,459,228 for the three months ended February 28, 2019 compared to sales of $11,338,772 for the three months ended February 28, ~~2018 compared to sales of $7,166,175 for the three months ended February 28, 2017.~~2018. This represents ~~an increase~~a decrease of ~~$4,172,597,~~$4,879,544, or ~~58%~~43%. The ~~higher~~lower level of sales ~~was due~~in the current quarter were attributable to unseasonably cold and wet weather across most of the ~~addition~~United States, which resulted in retailers delaying their purchases of ~~new customers~~outdoor lawn, garden and ~~increased shipments of specialty lumber products. Management secured additional supplies~~patio products for the Spring and Summer season. The quarter over quarter sales were also distorted by much higher sales of cedar fencing in the year-ago period which were shipped ~~during~~to areas of the ~~quarter to satisfy higher demand from areas previously~~Gulf Coast affected by severe ~~storms.~~storms which were not duplicated in the current quarter. Operating ~~income~~loss for the current quarter was ~~$548,910~~($159,730) compared to operating income of ~~$366,568~~$548,910 for the quarter ended February 28, ~~2017.~~2018. The operating margins in the current quarter was negatively affected by the clearance of older, higher-cost wood inventory in order to make way for new products. 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 Greenwood were relatively flat at $851,130 for the three months ended February 28, 2019 compared to sales of $852,921 for the three months ended February 28, 2018. While Greenwood continues to increase its direct sales to end users, the overall demand for product in the second quarter was not as significant as start up demand in second quarter 2018, thus there was a slight increase in the loss from the segment. For the three months ended February 28, 2019, Greenwood had an operating loss of ($7,109) compared to an operating loss of ($4,423) for the three months ended February 28, 2018.

Sales at JCSC were $332,570 compared to sales of $924,867 for the three months ended February 28, 2018, which was a decrease of $592,297, or 64%. Persistent wet weather, particularly in the Midwest and Southeast United States during late season 2018 and early season 2019 has caused significant impacts for multiple industries, including our own clover seed sales. Late season weather did not allow clover cover crops to be planted which increased the inventories of end users. Early season cold and wet weather has decreased end users’ ability to get back into their fields to plant cover crops prior to primary plantings. Operating loss at JCSC for the quarter was ($71,227) compared to ~~sales~~operating income of ~~$1,159,843~~$27,033 for the quarter ended February 28, 2018.

Sales at MSI were $214,247 for the three months ended February 28, 2017, which was a decrease of $234,976, or 20%. Overall demand for grass seed remains firm due to the continuing strength in the residential housing market in North America. Operating income at JCSC for the quarter was $27,0332019 compared to ~~operating income~~sales of ~~$47,218 for the quarter ended February 28, 2017.~~

~~Sales at MSI were~~ $224,778 for the three months ended February 28, 2018, ~~compared to sales of $435,851 for the three months ended February 28, 2017,~~ which was a decrease of ~~$211,073,~~$10,531, or ~~48%~~5%. Conditions in this segment remain challenging due to increased competition. For the quarter ended February 28, 2018, MSI had an operating loss of ($~~14,399)~~15,623) compared to ~~operating income~~a loss of ~~$25,504~~($14,399) for the quarter ended February 28, ~~2017.~~2018.

JC USA is ~~the~~a holding company for the wholly-owned operating ~~subsidiaries.~~subsidiaries, and thus the overall results of JC USA are eliminated on consolidation. For the quarter ended February 28, ~~2018,~~2019, JC USA had operating income of ~~$169,446~~$425,863 compared to operating income of ~~$145,965~~$169,446 for the quarter ended February 28, ~~2017.~~2018. The increase is due to higher rental and administrative fees charged to its subsidiaries related to higher inventory levels during the period. Thus, while statements reflect higher fee income associated with rent, interest and ~~utilization of the new warehouse space. The results of JC USA~~administration, these are non-cash transactions that are eliminated ~~on consolidation.~~

~~Gross margin for the three months ended February 28, 2018 was 19.8% compared~~and do not contribute to 22.4% for the three months ended February 28, 2017. Margins in the current quarter were negatively affected by the product mix as much of the increase in sales in the quarter were attributable to wood products which have a lower overall margin than metal products.

Operating expenses increased by $334,734 to $1,915,562 from $1,580,828 for the three months ended February 28, 2017. Selling, General and Administrative Expenses rose to $616,074 from $453,668 which is consistent with the higher level of sales. Wages and Employee Benefits increased by $118,951 to $1,176,743 from $1,057,792. Depreciation and Amortization increased to $122,745 from $69,368, as the Company conducted a periodic review of its patents during the current period and determined that two of its patents had expired. The Company immediately amortized the remaining book value of the patents and derecognized the assets. Other items in the current quarter ended February 28, 2018 included interest and other income of $5,793 and gain on sale of property, plant and equipment of $530. During the quarter ended February 28, 2017, other items included interest and other income of $2,000 and loss on sale of property, plant and equipment of ($393).

Income tax expense for the three month period ended February 28, 2018 was $218,269 compared to $240,828 for the quarter ended February 28, 2017. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect. During the current period, the Tax Cuts and Jobs Act became effective which has reduced the Company’s Federal tax rate and resulted in the lower income tax expense compared to the prior year’s period.

~~Net income for the quarter ended February 28, 2018 was $508,298,~~profit or ~~$0.23 per basic and diluted share, compared to net income of $309,013, or $0.14 per basic and diluted share, for the quarter ended February 28, 2017.~~

~~For the six months ended February 28, 2018, sales increased by $2,834,219, or 14% to $22,755,308 from sales of $19,921,089 recorded in the six month period ended February 28, 2017.~~

Sales at Greenwood were $1,515,375 for the six months ended February 28, 2018 compared to sales of $1,697,032 for the six months ended February 28, 2017, a decline of $181,657, or 11%. Overall, demand for Greenwood’s industrial wood products remains weak. For the six months ended February 28, 2018, Greenwood had an operating loss of ($47,183) compared to an operating loss of ($63,876) for the six months ended February 28, 2017.loss.

Gross margin for the three months ended February 28, 2019 was 22.4% compared to 19.8% for the three months ended February 28, 2018. Margins in the prior year’s quarter were negatively affected by the product mix as much of the increase in sales in that quarter were attributable to wood products which have a lower overall margin than metal products.

Operating expenses decreased by $211,899 to $1,703,663 from $1,915,562 for the three months ended February 28, 2018. Selling, General and Administrative Expenses declined to $405,888 from $616,074 which is consistent with the lower level of sales. Wages and Employee Benefits increased by $75,631 to $1,252,374 from $1,176,743. Depreciation and Amortization decreased to $45,401 from $122,745. The Company conducts a periodic review of its patents and determined that two of its patents had expired in the year-ago quarter. The Company immediately amortized the remaining book value of the patents and derecognized the assets. Other items in the current quarter ended February 28, 2019 included gain on the sale of property, plant and equipment of $105,365 as the Company sold its Manning, Oregon property. Interest and other income was $9,184. During the quarter ended February 28, 2018, interest and other income was $5,793 and gain on sale of property, plant and equipment was $530.

Income tax expense for the three month period ended February 28, 2019 was $52,545 compared to $218,269 for the quarter ended February 28, 2018. 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 28, 2019 was $119,629, or $0.03 per basic and diluted share, compared to net income of $508,298, or $0.11 per basic and diluted share, for the quarter ended February 28, 2018.

For all consolidated entities, total sales for the six months ended February 28, 2019 decreased by $5,832,033, or 26%, to $16,923,275 from sales of $22,755,308 recorded in the six month period ended February 28, 2018.

Sales at JCC were $13,452,656 for the six months ended February 28, 2019 compared to sales of $19,323,517 for the six months ended February 28, 2018, ~~compared to sales of $15,585,202 for the six months ended February 28, 2017,~~ which was ~~an increase~~a decrease of ~~$3,738,315,~~$5,870,861, or ~~24%~~30%. ~~The increase~~A significant portion of the decrease in sales ~~was~~is attributable to ~~new customers and increased~~lower sales of specialty lumber, ~~particularly cedar fencing~~ which was ~~sourced~~higher in the ~~first~~previous year’s 2^nd quarter ~~and began shipping during~~due to demand from areas in the ~~second quarter of the current fiscal year. During~~Southern US that were damaged by tropical storms which did not occur in the current six month period. The Company also experienced lower demand for metal products in the current period as retailers stocked up on extra inventory last year ahead of the announced tariffs on Chinese made products, and many are still selling through their pre-tariff inventories. The new 10% tariffs on the importation of a number of products manufactured in China into the United States became effective during the current six-month period. The tariffs have caused uncertainly in the marketplace, and initially have had a somewhat negative effect on the sales of the Company’s affected products. The Company ~~instituted~~has begun to implement some price increases to mitigate the new tariffs where possible. Wetter and colder than normal weather across much of the United States in calendar 2019 has led to a slow start to the usual Spring and Summer sales season and delayed anticipated purchases of lawn, garden and patio products by the Company’s customers. The sales for the period ended February 28, 2018 were negatively affected by the voluntary recall of a specific product which was sold to a single retail store customer. After two incidents of breakage, the Company and the retailer issued a voluntary safety advisory prior to the US Consumer Product Safety Commission issuing a formal recall of the product in March 2018, The actions taken by the Company included a recall of units sold and a permanent withdrawal from sale of all remaining unsold units. This recall had a significant negative effect on JCC’s sales and income during the current six month period, as the Company has provided the retailer with a return allowance for the units and destroyed all remaining inventory of the recalled product. The Company does not anticipate additional significant costs related to the recall in future periods. Operating income at JCC for the current six month period was ~~$849,782~~$14,092 compared to income of ~~$893,787~~$849,782 for the six months ended February 28, ~~2017.~~2018. Overall, the operating results of JCC 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 Greenwood were $1,962,818 for the six months ended February 28, 2019 compared to sales of $1,515,375 for the six months ended February 28, 2018, an increase of $447,443, or 30%. Overall, demand for Greenwood’s industrial wood products remains weak, but management’s efforts to focus on the most in demand products directly to end users have improved this segment’s margins. For the six months ended February 28, 2019, Greenwood had operating income of $26,487 compared to an operating loss of ($47,183) for the six months ended February 28, 2018.

Sales at JCSC for the six months ended February 28, ~~2018~~2019 were ~~$1,393,443~~$1,089,480 compared to sales of ~~$1,638,954~~$1,393,443 for the six months ended February 28, ~~2017.~~2018. This represents a decrease of ~~$245,511,~~$303,963, or ~~15%~~22%. ~~Overall demand~~Supplies of clover seed in the United States were lower than normal, which resulted in higher sales for ~~grass seed remains firm~~the Company during the first quarter of fiscal 2019 which did not carry through into the second quarter due to the ~~continuing strength in~~prolonged wet weather throughout much of the ~~residential housing market in North America.~~United States. Operating ~~income~~loss for the six months ended February 28, ~~2018~~2019 was ~~$90,495~~($60,794) compared to operating income of ~~$84,030~~$90,495 for the six months ended February 28, ~~2017.~~2018.

Sales at MSI for the six months ended February 28, ~~2018 were $522,973, which~~2019 was ~~a decrease of $476,928,~~$418,322 compared to sales of $999,901 for the six months ended February 28, 2017. During the prior year’s period, the Company received a final large order from a now former customer, while results in the current period have been negatively affected by increased competition in the segment. For the three months ended February 28, 2018, MSI had an operating loss of ($3,778) compared to operating income of $65,911 for the six months ended February 28, 2017.

JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had operating income of $382,691 for the six months ended February 28, 2018 compared to operating income of $364,314$522,973 for the six months ended February 28, 2018. ~~The increase is~~This represents a decrease of $104,651, or 20%. Conditions in the sector remain difficult due to higher ~~rental~~competition. Management continues to review this business unit, products, sales channels and ~~administrative fees charged to its subsidiaries related to higher inventory levels and utilization of the new warehouse space. The results of JC USA are eliminated on consolidation.~~

Gross margin for the six month period ended February 28, 2018 was 21.2% compared to 22.7% for the six months ended February 28, 2017. The lower margin in the current period was primarily due to higher sales of lower margin lumber products.

Operating expenses for the six months ended February 28, 2018 rose to $3,532,008 from expenses of $3,182,765 for the six month period ended February 28, 2017. Selling, General and Administrative Expenses increased to $1,061,951 from $1,004,717. Wages and Employee Benefits increased to $2,274,647 from $2,040,041. Depreciation and Amortization rose to $195,410 from $138,007 as the Company conducted a periodic review of its patents during the current period and determined that two of its patents had expired. The Company immediately amortized the remaining book value of the patents and derecognized the assets.

Other items in the current six month period ended February 28, 2018 included interest and other income of $8,483 and loss on sale of property, plant and equipment of ($27,022). During the six months ended February 28, 2017, other items included interest and other income of $3,820 and loss on sale of property, plant and equipment of ($393).

Income tax expense for the six months ended February 28, 2018 was $441,276 compared to $549,233 for the six months ended February 28, 2017. The Company estimates income tax expense for the period based on combined federal and state rates that are currently in effect. During the current period, the Tax Cuts and Jobs Act became effective which has reduced the Company’s Federal tax rate and resulted in the lower income tax expense compared to the prior year’s period.

Net income for the six months ended February 28, 2018 was $830,731, or $0.37 per basic and diluted share, compared to net income of $794,933, or $0.35 per basic and diluted share, for the six months ended February 28, 2017.market differentiation.

Such review may result in additional write-offs and adjustments to the business during the remainder of fiscal 2019. For the six months ended February 28, 2019 MSI had an operating loss of ($19,361) compared to an operating loss of ($3,778) for the six months ended February 28, 2018.

JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had operating income of $707,910 for the six months ended February 28, 2019 compared to operating income of $382,691 for the six months ended February 28, 2018. The increase is due to higher rental and administrative fees charged to its subsidiaries related to higher inventory levels. The results of JC USA are eliminated on consolidation.

Gross margin for the six month period ended February 28, 2019 was 24.0% compared to 21.2% for the six months ended February 28, 2018. The higher margin in the current period was primarily due to higher sales of metal products, while sales in the prior six months included significant amounts of lower margin specialty lumber.

Operating expenses for the six months ended February 28, 2019 were largely unchanged at $3,533,740 compared to $3,532,008 for the six month period ended February 28, 2018. Selling, General and Administrative Expenses decreased to $962,036 from $1,061,951. Wages and Employee Benefits increased to $2,475,433 from $2,274,647. Depreciation and Amortization fell to $96,271 from $195,410 as a review of the Company’s patent portfolio in the six months ended February 28, 2018 determined that two patents had expired and their remaining value was immediately amortized and the assets were derecognized.

Other items in the current six month period ended February 28, 2019 included gain on sale of property, plant and equipment of $105,365 from the sale of the Manning property, and interest and other income of $26,335. During the six months ended February 28, 2018 included interest and other income of $8,483 and loss on sale of property, plant and equipment of ($27,022).

Income tax expense for the six months ended February 28, 2019 was $199,011 compared to $441,276 for the six months ended February 28, 2018. 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 28, 2019 was $469,323, or $0.11 per basic and diluted share, compared to net income of $830,731, or $0.19 per basic and diluted share, for the six months ended February 28, 2018.

As of February 28, ~~2018,~~2019, the Company had working capital of ~~$17,449,119~~$18,172,045 compared to working capital of ~~$16,435,306~~$18,346,414 as of August 31, ~~2017, an increase of $1,013,813. Cash totaled $2,790,723,~~2018, a decrease of ~~$3,121,527. Accounts receivable increased~~$174,369. The Company’s strong working capital position is a demonstration of our core strengths. Cash totaled $3,706,604, a decrease of $2,390,859. Inventory rose to ~~$6,064,903~~$11,705,607 from ~~$3,565,055~~$9,803,197 largely due to the ~~seasonal cycle~~company’s need to attempt to protect themselves and their customers from the impacts of ~~sales~~tariffs. Accounts receivable fell to ~~customers and~~$3,197,120 from $4,152,492 due to the ~~related timing of cash receipts. Inventory increased by $481,648 as persistent winter weather across much~~continued uncertainty of the ~~United States has slowed~~impacts of tariffs and customer’s increased stocking levels and unseasonably harsh winter conditions throughout the ~~purchase of Spring and Summer inventory by retailers. The Company also accelerated certain specialty metal product purchases from China in advance of announced increase in the price of steel.~~US that caused both logistic as well as community impacts. Prepaid expenses, which is largely related to down payments for future inventory purchases, increased by ~~$287,428.~~$218,265. Accounts payable ~~increased~~declined by ~~$144,741~~$8,419 and accrued liabilities ~~decreased~~fell by ~~$541,580.~~$850,449.

During the second quarter of fiscal 2019 ended February 28, 2019, the Company sold its Manning property and buildings to an arms-length party that had a contiguous business and will use the property for their expansion. The Manning property was originally acquired as an investment and the property is not in close proximity to any of the Company’s current business operations. Once purchased, the company had leased it to a third party. Proceeds from the sale totaled $324,674, which represents a gain of $105,365 over the property’s original purchase price net closing costs. This one piece of property was not a significant part of the total land valuation as outlined in Note 4. Management believes there is significant value in the Company’s real estate, as the 2018 Market Value Tax Opinion from Washington County (excluding the Manning property) was $6,804,940 compared to the book value as of February 28, 2019 of $2,364,368. Management has no current plans to dispose of any of the remaining properties as they contain the Company’s ongoing operations.

The company continues to develop products that complement their presence in multiple product and sales channels. The company debuted a new patented steel fence post, LIFETIME POST™ at the National FenceTech show in early March. The product was very well received and continues to position the company firmly in the fencing market. The product was specifically designed to complement Jewett Cameron’s already long running, successful Adjust-A-Gate™ products, thus building a stronger branding in this market segment.

While results to date have been disappointing for European sales, the company continues to build its European presence with representation in multiple countries targeting both pet and fencing products, both in brick and mortar as well as eCommerce segments. Products are well received at industry shows but the strength of the US dollar has had significant impact regarding competitive positioning in multiple markets.

As of February 28, ~~2018,~~2019, accounts receivable and inventory represented ~~79%~~77% of current assets and ~~68%~~67% of total assets. For the three months ended February 28, ~~2018,~~2019, the accounts receivable collection period, or DSO, was 4137 compared to 4341 for the three months ended February 28, ~~2017.~~2018. For the six month period ended February 28, ~~2018,~~2019, the DSO was 4834 compared to 4148 for the six months ended February 28, ~~2017.~~2018. Inventory turnover for the three months ended February 28, ~~2018~~2019 was 77167 days compared to ~~101~~77 days for the three months ended February 28, ~~2017.~~2018. For the six months ended February 28, ~~2018,~~2019, inventory turnover was 91151 days compared to ~~100~~91 days for the six months ended February 28, ~~2017.~~2018.

External sources of liquidity include a line of credit from U.S. Bank of $3,000,000. As of February 28, ~~2018,~~2019, 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 28, ~~2018,~~2019, the one month LIBOR rate plus 175 basis points was ~~3.33% (1.58%~~4.23% (2.48% + 1.75%). The line of credit has certain financial covenants. The Company is in compliance with these covenants.

During the period, the Company received notice that its application for a patent on its updated Adjust-a-Gate gate system has been granted by the United States Patent and Trademark Office. This new patent will extend the protection on the Adjust-a-Gate products for an additional 15 years.

The Company has been utilizing its cash position by repurchasing common shares under formal repurchase plans in order to increase shareholder value. During the six month period ended February 28, 2019 and the fiscal ~~years~~year ended August 31, ~~2017 and 2016,~~2018, 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 ~~March 7, 2016,~~June 6, 2018, the Company announced the Board of Directors had authorized a share repurchase plan to purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. Transactions may involve Jewett-Cameron insiders or their affiliates executed in compliance with Jewett-Cameron's Insider Trading Policy. The share repurchase plan was 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 plan commenced on March 10, 2016 and terminated on August 25, 2016. Under the Plan, the Company repurchased a total of 175,538 common shares at a cost of $2,124,579 which was an average price of $12.10.

On May 23, 2017, the Company announced the Board of Directors had authorized a new share repurchase plan to purchase for cancellation up to 225,000 common shares through the facilities of NASDAQ under similar terms as the March 2016 repurchase plan. The Plan commenced on June ~~1, 2017~~11, 2018 and terminated ~~automatically~~upon the completion of the 250,000 share repurchase on ~~August 31, 2017.~~October 25, 2018. Under the Plan, the Company repurchased and cancelled a total of ~~41,800~~250,000 common shares at a total cost of ~~$526,941~~$2,164,975 which was an average price of ~~$12.61~~$8.66 per share.

~~In addition~~On February 7, 2019, the Board of Directors approved a new share repurchase plan to purchase up to 250,000 common shares under similar terms as the June 6, 2018 Plan. The new plan commenced on February 18, 2019 and will remain in place until August 31, 2019 but may be limited or terminated at any time without prior notice.

The following table details the Company’s repurchase of its common shares during the second quarter of fiscal 2019 ended February 28, 2019.

*Subsequent to the ~~Rule 10b-18 share repurchases, Donald M. Boone, Chairman and former President and CEO, voluntarily returned 15,000~~end of the six month period ended February 28, 2019 through April 11, 2019, the Company has repurchased an additional 180,950 common shares ~~to the Company’s treasury for cancellation in June 2016. In February 2017, Mr. Boone voluntarily returned~~at a total cost was $1,587,777, which is an ~~additional 10,000 to treasury for cancellation. The Company paid no consideration for these shares.~~average price of $8.77 per share

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.

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 ~~3,086~~4,060 shares for the six months ended February 28, ~~2018.~~2019. With this limited trading volume, investors could find it difficult to purchase or sell our common stock.

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.

For the six months ended February 28, ~~2018,~~2019, our top ten customers represented ~~94%~~74% 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.

Governmental actions, such as tariffs, and/or foreign policy actions could adversely and unexpectedly impact our business.

Since the bulk of our products are supplied from other countries, political actions by either our trading country or our own domestic policy could impact both availability and cost of our products. Currently, we see this in regard to tariffs being levied on foreign sourced products entering into the United States, including from China. The recent implementation of higher tariffs by the United States on certain Chinese goods include some of our products which we purchase from suppliers in China. The company has multiple options to assist in mitigating the cost impacts of these government actions. However, we cannot control the duration or depth of such actions which may increase our product costs which would reduce our margins and potentially decrease the competitiveness of our products. These actions could have a negative effect on our business, results of operations, or financial condition.

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

We have a line of credit with U.S. Bank in the amount of $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.

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

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

If we fail to maintain an effective system of internal controls, we may not be able to detect fraud or report our financial results accurately, which could harm our business and we could be subject to regulatory scrutiny.

We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our year ended August 31, ~~2017.~~2018. 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.

The Company does not have any derivative financial instruments as of February 28, ~~2018.~~2019. 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.

The Company operates primarily in the United States. However, a relatively small amount of business is currently conducted in currencies other than U.S. dollars, and the Company may experience an increase in foreign exchange risk as they expand their international sales. Also, to the extent that the Company uses contract manufacturers in China, currency exchange rates can influence the Company’s purchasing costs.

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.

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.

The Company is a named party in a Civil Action in Pennsylvania. The matter is an action seeking compensation for personal injuries and is based on theories of product liability as to Jewett-Cameron. The matter arises out of a dog allegedly escaping from a Jewett-Cameron kennel product and causing personal injuries to three individuals. Jewett-Cameron is currently one of three named Defendants. As of this date, no formal responses have been made and no dates have been established governing the litigation proceedings. This matter is in its early stages making it speculative to predict as to its outcome. It is the Company’s intention to vigorously defend the lawsuit. Jewett-Cameron’s applicable liability insurer is providing a defense covering Jewett-Cameron’s legal fees and costs, and at this time it appears that the insurance estate is sufficient to cover the liability exposure.

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.

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.


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)


Large accelerated filer ¨	Accelerated filer ¨
Non-accelerated filer ¨	Smaller Reporting Company x


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	2627

Item 4.	Controls and Procedures	2628

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	2728

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2728

Item 3.	Defaults Upon Senior Securities	2728

Item 4.	Mine Safety Disclosures	2728

Item 5.	Other Information	2728

Item 6.	Exhibits	2728


	Office equipment	3-7 years
	Warehouse equipment	2-10 years
	Buildings	5-30 years


	Three Month Periods ended February 28,		Six Month Periods ended February 28,

	2018	2017	2018	2017

Net income	$ 508,298	$ 309,013	$ 830,731	$ 794,933

Basic weighted average number of common shares outstanding	2,234,494	2,286,294	2,234,494	2,286,294

Effect of dilutive securities
Stock options	-	-	-	-

Diluted weighted average number of common shares outstanding	2,234,494	2,286,294	2,234,494	2,286,294


	February 28, 2018		August 31, 2017
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$2,790,723	$2,790,723	$5,912,250	$5,912,250
Accounts receivable, net of allowance	6,064,903	6,064,903	3,565,055	3,565,055
Accounts payable and accrued liabilities	2,048,481	2,048,481	2,445,320	2,445,320


	February 28, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	2,790,723	$	2,790,723	$	—	$	—


	February 28, 2018	August 31, 2017

Wood products and metal products	$ 8,620,418	$ 8,184,921
Industrial tools	427,986	434,871
Agricultural seed products	240,789	187,753

	$ 9,289,193	$ 8,807,545


	February 28, 2018	August 31, 2017
Patent	$ -	$ 850,000
Other	43,655	43,655
	43,655	893,655
Accumulated amortization	(39,793)	(815,818)

Net book value	$ 3,862	$ 77,837


	February 28, 2019		August 31, 2018
Trademarks, trade names and other	$	43,655	$	43,655

Accumulated amortization		(40,336)		(40,065)

Net book value	$	3,319	$	3,590


	2018	2017

Sales to unaffiliated customers:
Industrial wood products	$ 1,515,375	$ 1,697,032
Lawn, garden, pet and other	19,323,517	15,585,202
Seed processing and sales	1,393,443	1,638,954
Industrial tools and clamps	522,973	999,901
	$ 22,755,308	$ 19,921,089

Income (loss) before income taxes:
Industrial wood products	$ (47,183)	$ (63,876)
Lawn, garden, pet and other	849,782	893,787
Seed processing and sales	90,495	84,030
Industrial tools and clamps	(3,778)	65,911
Corporate and administrative	382,691	364,314
	$ 1,272,007	$ 1,344,166

Identifiable assets:
Industrial wood products	$ 878,842	$ 912,060
Lawn, garden, pet and other	13,969,856	11,390,537
Seed processing and sales	415,032	505,684
Industrial tools and clamps	498,865	671,308
Corporate and administrative	6,878,023	6,219,299
	$ 22,640,618	$ 19,698,888


	2018	2017
Depreciation and amortization:
Industrial wood products	$ 165	$ 165
Lawn, garden, pet and other	29,421	18,275
Seed processing and sales	3,883	6,482
Industrial tools and clamps	657	657
Corporate and administrative	161,284	112,428
	$ 195,410	$ 138,007

Capital expenditures:
Industrial wood products	$ -	$ -
Lawn, garden, pet and other	-	-
Seed processing and sales	-	-
Industrial tools and clamps	-	-
Corporate and administrative	66,041	335,014
	$ 66,041	$ 335,014

Interest expense:	$ 3	$ -


	2018	2017

United States	$ 21,679,684	$ 18,635,193
Canada	759,136	866,057
Mexico/Latin America	159,436	362,556
Europe	38,993	12,408
Asia/Pacific	118,059	44,875


	~~- 14 -~~


Period	Total Number of Shares purchased	Average Price Paid per Share	Total number of shares purchased as part of publicly announced plans or programs	Maximum Number of shares that may yet be purchased under the plans or programs

December	-	-	-	-

January	-	-	-	-

February	8,450	$7.57	8,450	241,550

Total*	8,450	$7.57	8,450	241,550


3.1 ~~Notice of Change of Articles~~ ~~-= Filed as an exhibit to the 10-Q Quarterly Report filed on January 13, 2014 =-~~ ~~3.2~~ ~~Articles of Incorporation Jewett Cameron Company~~ ~~-= Filed as an exhibit to the 10-Q Quarterly Report filed on January 13, 2014 =-~~ ~~31.1~~ ~~Rule 13a-14a/15d-14(a) Certifications~~ ~~32.1~~ ~~Section 1350 Certifications~~	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 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, Charles Hopewell
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), Charles Hopewell


101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	XBRL Taxonomy Extension Label Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

Cash paid during the periods for:

Income taxes