QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~MAY 31,~~NOVEMBER 30, 2018

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 – ~~4,456,788~~4,218,988 common shares as of ~~July 11, 2018~~January 14, 2019.


	May 31, 2018	August 31, 2017	November 30, 2018			August 31, 2018

ASSETS

Current assets
Cash	$ 6,251,001	$ 5,912,250
Accounts receivable, net of allowance of $Nil (August 31, 2017 - $1,725)	7,092,526	3,565,055
Inventory, net of allowance of $117,906 (August 31, 2017 - $156,713) (note 3)	7,713,010	8,807,545
Cash and cash equivalents		$	5,427,820		$	6,097,463
Accounts receivable, net of allowance of $Nil (August 31, 2018 - $Nil)			3,734,550			4,152,492
Inventory, net of allowance of $75,336 (August 31, 2018 - $75,336) (note 3)			10,925,010			9,803,197
Note receivable			2,097			4,000
Prepaid expenses	775,919	595,776		504,612			347,251
Prepaid income taxes	114,413	-		-			114,310

Total current assets	21,946,869	18,880,626		20,594,089			20,518,713

Property, plant and equipment, net(note 4)	3,101,128	3,222,572		3,054,525			3,105,260

Intangible assets, net(note 5)	3,726	77,837		3,455			3,590

Total assets	$ 25,051,723	$ 22,181,035	$	23,652,069		$	23,627,563

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


	May 31, 2018	August 31, 2017	November 30, 2018		August 31, 2018

Continued

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable	$ 1,219,344	$ 638,128	$	1,478,454	$	377,092
Accrued liabilities	1,835,289	1,807,192		1,229,877		1,795,207
Income taxes payable			27,330		-

Total current liabilities	3,054,633	2,445,320		2,735,661		2,172,299

Deferred tax liability(note 6)	52,779	11,344		86,679		81,853

Total liabilities	3,107,412	2,456,664		2,822,340		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
4,468,988 common shares (August 31, 2017 – 4,468,988)	1,054,316	1,054,316
4,218,988 common shares (August 31, 2018 – 4,314,659)			995,337		1,017,908
Additional paid-in capital	600,804	600,804		600,804		600,804
Retained earnings	20,289,191	18,069,251		19,233,588		19,754,699

Total stockholders’ equity	21,944,311	19,724,371		20,829,729		21,373,411

Total liabilities and stockholders’ equity	$ 25,051,723	$ 22,181,035	$	23,652,069	$	23,627,563

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


	Three Month Period Ended May 31,		Nine Month Period Ended May 31,		Three Months Ended November 30,
	2018	2017	2018	2017		2018		2017

SALES	$ 19,934,709	$ 16,718,234	$ 42,690,017	$ 36,639,323	$	9,066,100	$	9,413,970

COST OF SALES	15,944,995	12,906,533	33,877,749	28,304,118		6,757,014		7,227,222

GROSS PROFIT	3,989,714	3,811,701	8,812,268	8,335,205		2,309,086		2,186,748

OPERATING EXPENSES
Selling, general and administrative expenses	596,830	466,014	1,658,781	1,470,731		556,148		445,877
Depreciation and amortization	71,560	84,693	266,970	222,700		50,870		72,665
Wages and employee benefits	1,312,479	1,237,756	3,587,126	3,277,797		1,223,059		1,097,904

	(1,980,869)	(1,788,463)	(5,512,877)	(4,971,228)		1,830,077		1,616,446

Income from operations	2,008,845	2,023,238	3,299,391	3,363,977		479,009		570,302

OTHER ITEMS
Loss on sale of property, plant and equipment	-	-	(27,022)	(393)		-		(27,552)
Interest and other income	8,156	2,400	16,639	6,220		17,151		2,690
	8,156	2,400	(10,383)	5,827		17,151		(24,862)

Income before income taxes	2,017,001	2,025,638	3,289,008	3,369,804		496,160		545,440

Income tax expense	(627,792)	(819,503)	(1,069,068)	(1,368,736)		(146,466)		(223,007)

Net income	$ 1,389,209	$ 1,206,135	$ 2,219,940	$ 2,001,068	$	349,694	$	322,433

Basic earnings per common share	$ 0.31	$ 0.26	$ 0.50	$ 0.44	$	0.08	$	0.07

Diluted earnings per common share	$ 0.31	$ 0.26	$ 0.50	$ �� 0.44	$	0.08	$	0.07

Weighted average number of common shares outstanding:
Basic	4,468,988	4,572,588	4,468,988	4,572,588		4,256,361		4,468,988
Diluted	4,468,988	4,572,588	4,468,988	4,572,588		4,256,361		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	4,572,588	$ 1,078,759	$ 600,804	$ 15,845,092	$ 17,524,655
August 31, 2017					4,468,988	$ 1,054,316	$ 600,804	$ 18,069,251	$ 19,724,371

Shares repurchased and cancelled (note 9)	(103,600)	(24,443)	-	(502,498)	(526,941)	(154,329)	(36,408)	-	(1,235,191)	(1,271,599)
Net income	-	-	-	2,726,657	2,726,657	-	-	-	2,920,639	2,920,639

August 31, 2017	4,468,988	$ 1,054,316	$ 600,804	$ 18,069,251	$ 19,724,371
August 31, 2018					4,314,659	$ 1,017,908	$ 600,804	$ 19,754,699	$ 21,373,411

Shares repurchased and cancelled (note 9)					(95,671)	(22,571)	-	(870,805)	(893,376)
Net income	-	-	-	2,219,940	2,219,940	-	-	-	349,694	349,694

May 31, 2018	4,468,988	$ 1,054,316	$ 600,804	$ 20,289,191	$ 21,944,311
November 30, 2018					4,218,988	$ 995,337	$ 600,804	$ 19,233,588	$ 20,829,729

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


	Nine Month Period Ended May 31,		Three Months Ended November 30,
	2018	2017	2018		2017

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 2,219,940	$ 2,001,068	$	349,694	$	322,433
Items not involving an outlay of cash:
Depreciation and amortization	266,970	222,700		50,870		72,665
Loss on sale of property, plant and equipment	27,022	393		-		27,552
Deferred income tax expense	41,435	2,162
Deferred income taxes			4,826		(21,565)

Changes in non-cash working capital items:
(Increase) in accounts receivable	(3,527,471)	(2,190,337)
Decrease in inventory	1,094,535	15,354
(Increase) decrease in prepaid expenses	(180,143)	60,093
(Increase) decrease in prepaid income taxes	(114,413)	596
Increase in accounts payable and accrued liabilities	609,313	287,928
Decrease (increase) in accounts receivable			417,942		201,514
(Increase) decrease in inventory			(1,121,813)		(312,590)
Decrease in note receivable			1,903		-
(Increase) in prepaid expenses			(157,361)		(444,782)
Increase (decrease) in accounts payable and accrued liabilities			536,032		(135,512)
Decrease in prepaid income taxes			114,310		-
Increase in income taxes payable	-	317,074		27,330		-

Net cash provided by operating activities	437,188	717,031
Net cash provided by (used by) operating activities			223,733		(290,285)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(99,437)	(368,365)		-		(61,899)
Proceeds from sale of property, plant and equipment	1,000	3,480

Net cash used in investing activities	(98,437)	(364,885)		-		(61,899)

Net increase in cash	338,751	352,146
CASH FLOWS FROM FINANCING ACTIVITIES
Redemption of common stock			(893,376)		-

Net cash used in financing activities			(893,376)		-

Net decrease in cash			(669,643)		(352,184)

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

Cash, end of period	$ 6,251,001	$ 4,872,068	$	5,427,820	$	5,560,066

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 ~~28,~~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 ~~May 31~~November 30, 2018 and August 31, ~~2017~~2018 and its results of operations and cash flows for the three ~~and nine~~ month periods ended ~~May 31,~~November 30, 2018 and 2017 in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three ~~and nine~~ month ~~periods~~period ended ~~May 31,~~November 30, 2018 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 ~~May 31,~~November 30, 2018, cash and cash equivalents was ~~$6,251,001~~$5,427,820 compared to ~~$5,912,250~~$6,097,463 at August 31, ~~2017. At May 31, 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~~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 ~~28,~~29, 2018 (Note 8).

The earnings per share data for the three ~~and nine~~ month periods ended ~~May 31,~~November 30, 2018 and 2017 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 ~~nine~~three month period ended ~~May 31,~~November 30, 2018, and there were no options outstanding on ~~May 31,~~November 30, 2018.

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~~Company's financial instruments as of ~~May 31,~~November 30, 2018 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 ~~May 31,~~November 30, 2018 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~~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 ~~customer takes ownership and assumes the risk of loss. Depending on the specific item, our~~ products are ~~sold to customers either F.O.B (“Free-on-Board”) origin or F.O.B. destination. For products~~ shipped, ~~F.O.B origin, we have determined that~~title passes, and the ~~transfer and title and risk of loss generally occurs when product~~ultimate collection is shipped to the customer and accordingly we recognize revenue at the point of shipping. For products shipped F.O.B destination, we have determined that transfer of title and risk of loss generally occurs when product is received by the customer, and accordingly we recognize revenue at the point of delivery to the customer. Sales returns and allowances are estimated and recorded as a reduction to sales in the period in which sales are recorded. We record net shipping charges in cost of goods sold.reasonably assured. Revenue from the ~~Company’s~~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 ~~will adopt~~adopted this ASU effective September 1, 2018, using the full retrospective approach, prospectively. The ~~Company expects~~adoption had no material impact on 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 and in an amount that considers the impact of estimated returns, discounts and after allowances that are variable in nature.

In November 2015, an ASU was issued to simplify the presentation of deferred income taxes. The amendments 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 September 1, 2017, prospectively. There was no material impact on the Company’s financial statements on adoption.

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 ~~September 1, 2017, prospectively. There was no material impact on the Company’s~~its financial ~~statements on adoption.~~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 ~~will adopt~~adopted this ASU on September 1, 2018, prospectively. ~~The Company is currently assessing this ASU’s impacts~~There was no material impact on the Company’s ~~consolidated results of operations and~~ financial ~~condition.~~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.

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 ~~May~~November 30, 2018 of $86,679 (August 31, 2018 ~~of $52,779 (August 31, 2017~~ - ~~$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 ~~May 31,~~November 30, 2018 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~~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 ~~28,~~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 41^thst quarter of fiscal ~~2017~~2019 ended ~~August 31, 2017,~~November 30, 2018, the Company repurchased and cancelled a total of ~~83,600 common~~95,671 shares under a 10b5-1 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 ~~$6.30~~$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 20,000 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 ~~�nrolm~~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 ~~May 31,~~November 30, 2018 and August 31, ~~2017.~~2018.

The Company has a deferred compensation 401(k) plan for all employees with at least 12 months of service pending a monthly ~~�nrolment~~enrollment time. The plan allows for a non-elective discretionary contribution based on the first $45,000 of eligible compensation, which was decreased from the prior $50,000 during the second quarter of fiscal 2018 and from $60,000 of eligible compensation during the second quarter of fiscal 2017. For the ~~nine month periods~~three months ended ~~May 31,~~November 30, 2018 and 2017 the 401(k) compensation expense was ~~$269,594~~$56,921 and ~~$256,385,~~$46,962, 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~~Company's reportable segments.

Following is a summary of segmented information ~~as at and~~ for the ~~nine~~three month periods ended ~~May 31,~~November 30, 2018 and 2017:

The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the ~~nine~~three months ended ~~May 31,~~November 30, 2018 and 2017:

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 three months ended November 30, 2018 and 2017:

All of the Company’s significant identifiable assets were located in the United States as of November 30, 2018 and 2017.

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 nine months ended May 31, 2018 and 2017:

~~All of the Company’s significant identifiable assets were located in the United States as of May 31, 2018 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 ~~May 31,~~November 30, 2018, ~~two~~three customers accounted for accounts receivable greater than 10% of total accounts receivable at ~~53%~~55%. At ~~May~~August 31, ~~2017, two~~2018, three customers accounted for accounts receivable greater than 10% of total accounts receivable ~~at 53%~~for a total of 56%. 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 ~~nine~~three months ended ~~May 31,~~November 30, 2018, there were three suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to ~~$21,281,697.~~$4,254,311. For the ~~nine~~three months ended ~~May 31,~~November 30, 2017, there were ~~two~~three suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to ~~$13,945,620.~~$3,923,827.

Certain cash payments for the ~~nine~~three months ended ~~May 31~~November 30 are summarized as follows:

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

On June 6, 2018, 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 June 11, 2018 and remains in place until November 30, 2018 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 12,200 common shares under the plan. The total cost was $97,454 at an average price of $7.9888 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 ~~May 31,~~November 30, 2018 and August 31, ~~2017~~2018 and its results of operations and cash flows for the three ~~and nine~~ month periods ended ~~May 31,~~November 30, 2018 and ~~May 31,~~November 30, 2017 in accordance with U.S. GAAP. Operating results for the three ~~and nine~~ month ~~periods~~period ended ~~May 31,~~November 30, 2018 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.

The Company’s metal products are manufactured in China and are imported into the United States. The Office of the United States Trade Representative (“USTR”) has ~~proposed~~now instituted new tariffs on the importation of a number of products into the United States from ~~China.~~China effective September 24, 2018. These new ~~proposed~~ tariffs are a response to 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 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 January 1, 2019 but the increases are currently suspended while China and the United States continue to negotiate new trade agreements. However, the higher tariffs could be instituted in the future if the 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.

For the three months ended November 30, 2018, sales decreased by $347,870, or 4% to $9,066,100 from $9,413,970 for the three months ended November 30, 2017.

Sales at JCC were $6,993,428 for the three months ended November 30, 2018 compared to sales of $7,984,745 for the three months ended November 30, 2017, which was a decrease of $991,317, or 12%. The decrease in sales in the current quarter was due to lower wood sales and no “Black Friday” promotional products, which was partially offset by higher sales in metal products as the Company added a new customer and stocked the customer’s initial launch program. During the current quarter, new 10% tariffs on the importation of a number of products manufactured in China into the United States became effective. 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 has ~~reviewed~~begun to implement some price increases to mitigate the new tariffs where possible. Sales in the prior year’s quarter were negatively affected by the full recall of a “Black Friday” product sold to a single retail customer, which also reduced operating income due to the costs of the recall and destruction of all affected products. Operating income for JCC was $173,821 in the quarter ended November 30, 2018 compared to operating income of $300,872 for the quarter ended November 30, 2017. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year historically being slower than the final two quarters of the fiscal year.

Sales at Greenwood were $1,111,687 for the three months ended November 30, 2018 compared to sales of $662,454 for the three months ended November 30, 2017, which was an increase of $449,233, or 68%. Management has worked to refine the product mix by focusing on the most ~~recent USTR list~~in demand products and redirecting sales directly to end users, which also has improved the segment’s margins. For the quarter, Greenwood had an operating profit of ~~proposed tariffs issued~~$33,596 compared to an operating loss of ($42,760) in the three months ended November 30, 2017.

Sales at JCSC were $756,910 for the three months ended November 30, 2018 compared to sales of $468,575 for the three months ended November 30, 2017. This represents an increase of $288,335, or 62%. Supplies of clover seed in the United States were lower than normal, which resulted in higher sales for the Company although at lower margins as seed prices remain depressed due to market factors over the last several seasons. Operating income for JCSC for the quarter was $10,433 compared to operating income of $63,462 for the quarter ended November 30, 2017.

Sales at MSI were $204,075 for the quarter ended November 30, 2018 compared to sales of $298,196 for the quarter ended November 30, 2017, which was a decrease of $94,121, or 32%. Conditions in the sector remain difficult due to higher competition. Management continues to review this business unit, products, sales channels and market differentiation. Such review may result in additional write-offs and adjustments to the business during fiscal 2019. The operating loss for the quarter was ($3,737) compared to operating income of $10,621 for the three months ended November 30, 2017.

JC USA is the holding company for the wholly-owned operating subsidiaries. For the quarter ended November 30, 2018, JC USA had operating income of $282,047 compared to operating income of $213,245 for the quarter ended November 30, 2017. The increase is due to higher rental and administrative fees charged to its subsidiaries related to higher inventory levels during the period. The results of JC USA are eliminated on ~~June 15,~~consolidation.

Gross margin for the three month period ended November 30, 2018 was 25.5% compared to 23.2% for the three months ended November 30, 2017. The current margins were higher due to a more favorable product mix of higher metal product sales and ~~has determined that~~lower wood product sales.

Operating expenses rose by $213,631 to $1,830,077 from $1,616,446 for the ~~Company’s products may be subject~~three months ended November 30, 2018 as the Company allocated additional resources towards attracting new customers both domestically and internationally. Selling, General and Administrative Expenses rose to ~~new or revised duties. The proposed duties which may be imposed~~$556,148 from $445,877. Depreciation and Amortization decreased to $50,870 from $72,665. Wages and Employee Benefits increased to $1,223,059 from $1,097,904. Interest and other income increased to $17,151 from $2,690 due to higher interest rates received on the Company’s ~~products are included~~cash and cash equivalents in the ~~second set~~current quarter. Loss on sale of ~~tariff lines~~property, plant and remain subject to further review, including a comment process and public hearing. After completion of this process, USTR will issue a final determination on the products from the second set that would be subject to additional duties of up to 25%. The likelihood of such new tariffs ultimately being implemented, as well as the timing of the initial collection of any new tariffs, is uncertain, as the United States and China continue to negotiate the issues. Management is currently assessing the potential impacts of the new duties on the Company’s products if they are ultimately implemented by USTR. The Company intends to use its best efforts to mitigate the potential impacts and protect its competitive positionequipment was $Nil in the ~~marketplace.~~current quarter compared to a loss of $27,552 in the quarter ended November 30, 2017.

~~For~~The Company's income tax expense in the ~~three months ended May 31, 2018, sales increased by $3,216,475, or 19%,~~current period was $146,466 compared to ~~$19,934,709 from sales of $16,718,234~~$223,007 for the three months ended ~~May 31, 2017.~~

Sales at Greenwood were $995,388 for the three months ended May 31, 2018 compared to sales of $1,160,302 for the three months ended May 31, 2017, which was a decrease of $164,914, or 14%. Demand for Greenwood’s products has begun to improve, and recent changes in the product mix and redirecting sales directly to end users has improved Greenwood’s margins. For the three months ended May 31, 2018, Greenwood had operating income of $16,942 compared to operating income of $5,279 for the three months ended May 31, 2017.

Sales at JCC were $18,191,284 for the three months ended May 31, 2018 compared to sales of $14,107,579 for the three months ended May 31, 2017. This represents an increase of $4,083,705, or 29%. The higher level of sales was due to the addition of new customers and additional shipments of specialty lumber products, primarily wood fencing products, to areas previously affected by severe storms. Operating income for the current quarter was $1,707,128 compared to income of $1,600,385 for the quarter ended May 31, 2017 as the wood fencing products have significantly less sales margin than other JCC products.

Sales at JCSC were $518,146 for the three months ended May 31, 2018 compared to sales of $1,195,357 for the three months ended May 31, 2017. This is a decrease of $677,211, or 57%. Sales in the current year’s quarter were negatively affected by the very late arrival of Spring weather. The poor weather delayed or curtailed planting schedules throughout the Midwest United States which is the largest consumer of the Company’s clover seed for use as cover crops. Sales in the prior year’s quarter were higher than normal as the late arrival of Spring weather in 2017 pushed some sales historically received in the second quarter into the third quarter. For the quarter ended May 31, 2018, JCSC had an operating loss of ($6,020) compared to an operating profit of $42,477 in the quarter ended May 31, 2017.

Sales at MSI for the three months ended May 31, 2018 were $229,891 compared to sale of $254,996 for the three months ended May 31, 2017, which was a decline of $25,105, or 10%. Conditions in this segment remain challenging due to increased competition.MSI had an operating loss of ($6,055) compared to an operating profit of $20,670 for the three month period ended May 31, 2017.

JC USA is the holding company for the wholly-owned operating subsidiaries. For the quarter ended May 31, 2018, JC USA had operating income of $305,006 compared to operating income of $356,828 for the quarter ended May 31, 2017. The decrease is due to decreased rental and administrative fees charged to its subsidiaries related to lower inventory levels during the period. The results of JC USA are eliminated on consolidation.

Gross margin for the three months ended May 31, 2018 was 20.0% compared to 22.8% for the three months ended May 31, 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 $192,406 to $1,980,869 from $1,788,463 for the three months ended May 31, 2017, which is consistent with the higher level of sales. Selling, General and Administrative increased to $596,830 from $466,014. Wages and Employee Benefits rose to $1,312,479 from $1,237,756, and Depreciation and Amortization fell to $71,560 from $84,693. Interest and Other Income was $8,156 compared to $2,400 for the year-ago quarter.

~~Income tax expense for the three months ended May 31, 2018 was $627,792 compared to $819,503 for the three month period ended May 31,~~November 30, 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~~The Federal Tax Cuts and Jobs Act became effective during the 3^rd quarter of fiscal 2018 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~~three months ended ~~May 31,~~November 30, 2018 was ~~$1,389,209,~~$349,694, or ~~$0.31~~$0.08 per ~~basic and diluted~~ share, compared to net income of ~~$1,206,135~~$322,433, or ~~$0.26~~$0.07 per basic and diluted share, for the ~~quarter~~three months ended ~~May 31,~~November 30, 2017 after adjustment for the 2-for-1 stock split effective May ~~28, 2018.~~

~~For the nine months ended May 31, 2018, sales increased by $6,050,694, or 17%, to $42,690,017 from sales of $36,639,323 for the nine month period ended May 31, 2017.~~

Sales at Greenwood were $2,510,763 for the nine months ended May 31, 2018 compared to sales of $2,857,334 for the nine months ended May 31, 2017. This represents a decrease of $346,571, or 12%. Historically, a large portion of Greenwood’s sales were in the marine industry, but the Company sold its excess marine industry inventory in fiscal 2014. The Company continues to build on new relationships that broaden its historical marine base. Greenwood has successfully penetrated the transportation market adapting many of its marine-grade plywood characteristics to new applications. For the nine months ended May 31, 2018, Greenwood had an operating loss of ($30,241) compared to an operating loss of ($58,597) for the nine months ended May 31, 2017.

Sales at JCC were $37,514,801 for the nine months ended May 31, 2018 compared to sales of $29,692,782 for the nine months ended May 31, 2017, which was an increase of $7,822,019, or 26%. The increase in sales was attributable to new customers and increased sales of specialty lumber, particularly cedar fencing which was sourced in the first quarter shipped during the second and third quarters of the current fiscal year. During the current nine month period, the Company instituted a 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 negative effect on JCC’s sales and income during the current nine 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 was $2,556,910 for the nine months ended May 31, 2018 compared to operating income of $2,494,172 for the nine months ended May 31, 2017, which was an increase of $62,738, or 3%. 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 JCSC for the nine months ended May 31, 2018 were $1,911,588, which was a decrease of $922,723, or 33%, from sales of $2,834,311 for the nine months ended May 31, 2017. Overall demand for grass seed remains firm due to the continuing strength in the residential housing market in North America, but demand for clover seed from farmers, which is currently the Company’s largest seed product, was down significantly in the current period due to poor weather in the Midwest United States. For the nine month period ended May 31, 2018, JCSC had operating income of $84,474 compared to operating income of $126,507 for the nine months ended May 31, 2017.

Sales at MSI were $752,865 for the nine months ended May 31, 2018 compared to sales of $1,254,897 for the nine months ended May 31, 2017, which was a decrease of $502,032, or 40%. During the prior year’s period, the Company received a final large order from a now former customer, while results in the current period continue to be negatively affected by increased competition in the segment. For the nine months ended May 31, 2018, MSI had an operating loss of ($9,833) compared to an operating profit of $86,581 for the nine months ended May 31, 2017.

JC USA, the holding company that provides professional and administrative services for the wholly-owned operating subsidiaries had operating income of $687,698 for the nine months ended May 31, 2018 compared to operating income of $721,141 for the nine months ended May 31, 2018. The decrease is due to lower rental and administrative fees charged to its subsidiaries related to lower inventory levels. The results of JC USA are eliminated on consolidation.

Gross margin for the nine month period ended May 31, 2018 was 20.6% compared to 22.7% for the nine months ended May 31, 2017. The lower margin in the current period was primarily due to higher sales of lower margin lumber products.

Operating expenses rose by $541,649 to $5,512,877 from operating expenses of $4,971,228 in the nine month period ended May 31, 2017. Selling, general and administrative expenses increased to $1,658,781 from $1,470,731, an increase of $188,050. Wages and employee benefits increased to $3,587,126 from $3,277,797. Depreciation and amortization increased to $266,970 from $222,700. During the current nine-month period, the Company conducted a periodic review of its patents 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 nine month period ended May 31, 2018 were loss on the sale of property, plant and equipment of ($27,022) and interest and other income of $16,639. In the nine month period ended May 31, 2017 were loss on the sale of property, plant and equipment of ($393) and interest and other income of $6,220.

Income tax expense in the current nine month period was $1,069,068 compared to $1,368,736 for the nine months ended May 31, 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 nine months ended May 31, 2018 was $2,219,940, or $0.50 per basic and diluted share, compared to net income of $2,001,068, or $0.44 per basic and diluted share, for the nine months ended May 31, 2017 after adjustment for the 2-for-1 stock split effective May 28,29, 2018.

As of ~~May 31,~~November 30, 2018, the Company had working capital of ~~$18,892,236~~$17,858,428 compared to working capital of ~~$16,435,306~~$18,346,414 as of August 31, ~~2017, an increase~~2018, a decrease of ~~$2,456,930.~~$487,986. Cash and cash equivalents totaled ~~$6,251,001, an increase~~$5,427,820, a decrease of ~~$338,751.~~$669,643, as $893,376 of cash was spent on the repurchase of shares during the quarter. Accounts receivable ~~increased~~fell to ~~$7,092,526~~$3,734,550 from ~~$3,565,055~~$4,152,492 due to the seasonal cycle of sales to customers and the related timing of cash receipts. Inventory ~~decreased~~increased by ~~$1,094,535~~$1,121,813 to $10,925,010 as ~~the Company had previously accelerated certain specialty metal product purchases~~additional products were sourced from China ~~in advance~~ahead of ~~announced increase in~~ the ~~price of steel.~~scheduled tariff increase. Prepaid expenses, which is largely related to down payments for future inventory purchases, increased by ~~$180,143.~~ $157,361. Note receivable fell to $2,097 from $4,000, and prepaid income taxes fell to $Nil from $114,310.

Accounts payable increased by ~~$581,216~~$1,101,362 to $1,478,454 due to the timing of the accelerated inventory purchases. Accrued liabilities declined by $565,330 to $1,229,877, and ~~accrued liabilities increased by $28,097.~~income taxes payable rose to $27,330 from $Nil.

As of ~~May 31,~~November 30, 2018, accounts receivable and inventory represented ~~67%~~71% of current assets and ~~59%~~62% of total assets. For the three months ended ~~May 31,~~November 30, 2018, the accounts receivable collection period, or DSO, was 33 compared to 30 for the three months ended May 31, 2017. For the nine month period ended May 31, 2018, the DSO was 45 compared to 41 for the nine months ended May 31, 2017. Inventory turnover for the three months ended May 31, 2018 was 4937 days compared to 6033 days for the three months ended ~~May 31,~~November 30, 2017. ~~For~~Inventory turnover to the ~~nine~~three months ended ~~May 31,~~November 30, 2018 ~~inventory turnover~~ was 67140 days compared to 78113 days for the ~~nine~~three months ended ~~May 31,~~November 30, 2017.

External sources of liquidity include a line of credit from U.S. Bank of $3,000,000. As of ~~May 31,~~November 30, 2018, 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 ~~May 31,~~November 30, 2018, the one month LIBOR rate plus 175 basis points was ~~3.70% (1.95%~~4.07% (2.32% + 1.75%). The line of credit has certain financial covenants. The Company is in compliance with these covenants.

During the current nine month period ended May 31, 2018, 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 first quarter of fiscal ~~years~~2019 ended November 30, 2018 and the fiscal 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 ~~May 23, 2017,~~June 6, 2018, the Company announced the Board of Directors had authorized a share repurchase plan to purchase for cancellation up to ~~450,000~~250,000 common shares ~~(adjusted for the 2-for-1 stock split effective May 28, 2018)~~ through the facilities of NASDAQ. Transactions may involve Jewett-Cameron insiders or their affiliates executed in compliance with ~~Jewett-Cameron’s~~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”~~("ADTV") of ~~Jewett-Cameron’s~~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~~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 ~~83,600~~250,000 common shares at a total cost of ~~$526,941~~$2,164,975 which was an average price of ~~$6.30.~~$8.66 per share.

~~On June 6, 2018,~~The following table details the ~~Company announced~~Company’s repurchase of its common shares during the ~~Board~~first quarter of Directors authorized a new share repurchase plan under similar terms to the May 2017 repurchase plan. The Company can purchase for cancellation up to 250,000 common shares. The plan commended on June 11, 2018 and will remain in place untilfiscal 2019 ended November 30, 2018 but may be limited or terminated at any time without prior notice. As of July 5, 2018, the Company had repurchased 12,200 common shares under the new plan at a cost of $97,454 which is an average price of 7.9888.2018.

In addition to the Rule 10b-18 share repurchases, Donald M. Boone, Chairman and former President and CEO, voluntarily returned 15,000 pre-split (30,000 post-split) common shares to the Company’s treasury for cancellation in June 2016. In February 2017, Mr. Boone voluntarily returned an additional 10,000 pre-split (20,000 post-split) common shares to treasury for cancellation. The Company paid no consideration for these shares.

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 ~~4,850~~4,832 shares for the ~~nine~~three months ended ~~May 31, 2018 after adjustment for the 2-for-1 stock split effective May 28,~~November 30, 2018. 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 ~~nine~~three months ended ~~May 31,~~November 30, 2018, our top ten customers represented ~~87%~~76% 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 ~~May 31,~~November 30, 2018. 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~~€13a-15(e) or Rule ~~15d-15~~€15d-15(e) under the Securities Exchange Act of 1934 (the “~~Exchange Act~~”“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.

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

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	22 21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2726

Item 4.	Controls and Procedures	2726

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	2826

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2827

Item 3.	Defaults Upon Senior Securities	2827

Item 4.	Mine Safety Disclosures	2827

Item 5.	Other Information	2827

Item 6.	Exhibits	2827


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


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

	2018	2017	2018	2017

Net income	$ 1,389,209	$ 1,206,135	$ 2,219,940	$ 2,001,068

Basic weighted average number of common shares outstanding	4,468,988	4,572,588	4,468,988	4,572,588

Effect of dilutive securities
Stock options	-	-	-	-

Diluted weighted average number of common shares outstanding	4,468,988	4,572,588	4,468,988	4,572,588


	Three Month Periods ended November 30,

	2018	2017

Net income	$ 349,694	$ 322,433

Basic weighted average number of common shares outstanding	4,256,361	4,468,988

Effect of dilutive securities
Stock options	-	-

Diluted weighted average number of common shares outstanding	4,256,361	4,468,988


	May 31, 2018		August 31, 2017
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$6,251,001	$6,251,001	$5,912,250	$5,912,250
Accounts receivable, net of allowance	7,092,526	7,092,526	3,565,055	3,565,055
Accounts payable and accrued liabilities	3,054,633	3,054,633	2,445,320	2,445,320


	May 31, 2018		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	6,251,001	$	6,251,001	$	—	$	—


	May 31, 2018	August 31, 2017

Wood products and metal products	$ 7,142,278	$ 8,184,921
Industrial tools	392,728	434,871
Agricultural seed products	178,004	187,753

	$ 7,713,010	$ 8,807,545


	May 31, 2018	August 31, 2017
Patent	$ -	$ 850,000
Other	43,655	43,655
	43,655	893,655
Accumulated amortization	(39,929)	(815,818)

Net book value	$ 3,726	$ 77,837


	November 30, 2018		August 31, 2018
Trademarks, trade names and other	$	43,655	$	43,655

Accumulated amortization		(40,200)		(40,065)

Net book value	$	3,455	$	3,590


	2018	2017

Sales to unaffiliated customers:
Industrial wood products	$ 2,510,763	$ 2,857,334
Lawn, garden, pet and other	37,514,801	29,692,781
Seed processing and sales	1,911,588	2,834,311
Industrial tools and clamps	752,865	1,254,897
	$ 42,690,017	$ 36,639,323


	2018	2017

Income (loss) before income taxes:
Industrial wood products	$ (30,241)	$ (58,597)
Lawn, garden, pet and other	2,556,910	2,494,172
Seed processing and sales	84,474	126,507
Industrial tools and clamps	(9,833)	86,581
Corporate and administrative	687,698	721,141
	$ 3,289,008	$ 3,369,804

Identifiable assets:
Industrial wood products	$ 684,944	$ 1,066,183
Lawn, garden, pet and other	13,977,679	11,987,315
Seed processing and sales	376,440	528,954
Industrial tools and clamps	460,438	494,625
Corporate and administrative	9,552,222	8,400,927
	$ 25,051,723	$ 22,478,004

Depreciation and amortization:
Industrial wood products	$ 193	$ 248
Lawn, garden, pet and other	58,108	38,626
Seed processing and sales	5,751	9,857
Industrial tools and clamps	848	986
Corporate and administrative	202,070	172,983
	$ 266,970	$ 222,700

Capital expenditures:
Industrial wood products	$ -	$ -
Lawn, garden, pet and other	-	-
Seed processing and sales	18,547	12,495
Industrial tools and clamps	-	-
Corporate and administrative	80,890	355,870
	$ 99,437	$ 368,365

Interest expense:	-	-


	2018		2017

United States	$	8,664,491	$	8,899,759
Canada		311,148		364,173
Europe		22,474		5,073
Mexico/Latin America		66,206		79,958
Middle East		-		12,209
Asia/Pacific		1,781		52,798


	~~- 14 -~~


	2018		2017

Cash paid during the periods for:
Interest	$	-	$	-
Income taxes	$	1,184,983	$	1,032,725


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

September	45,339	$ 8.84	199,558	50,442

October	50,442	$ 9.76	250,000	-

November⁽¹⁾	-	-	-	-

Total	95,671	$ 9.34	250,000	-