UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-Q



(MARK ONE)



[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED FEBRUARY 28, 2009





[  ]

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



COMMISSION FILE NUMBER  000-19954



| | JEWETT-CAMERON TRADING COMPANY LTD.                   
| | ------------------------------------------------------
| | (Exact Name of Registrant as Specified in its Charter)



| | BRITISH COLUMBIA                                               |  | NONE                                
| | -------------------------------------------------------------- |  | ------------------------------------
| | (State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



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



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



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  [X] Yes    [  ] No



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



| | Large accelerated filer [  ] | Accelerated filer [  ]       
| | ---------------------------- | -----------------------------
| | Non-accelerated filer [   ]  | Smaller Reporting Company [X]



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

Yes  [ ]  No  [X]



APPLICABLE ONLY TO CORPORATE ISSUERS:



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value  2,390,977 common shares outstanding at February 28, 2009.





#





Jewett-Cameron Trading Company Ltd.



Index to Form 10-Q







|PART I  FINANCIAL INFORMATION |                                                                                      
|------------------------------ | -------------------------------------------------------------------------------------
|                               |                                                                                      
|Item 1.                        | Financial Statements                                                                 
|                               |                                                                                      
|Item 2.                        | Managements Discussion and Analysis of Financial Condition and Results of Operations
|                               |                                                                                      
|Item 3.                        | Quantitative and Qualitative Disclosures about Market Risk                           
|                               |                                                                                      
|Item 4.                        | Controls and Procedures                                                              
|                               |                                                                                      
|PART II  OTHER INFORMATION    |                                                                                      
|                               |                                                                                      
|Item 1.                        | Legal Proceedings                                                                    
|                               |                                                                                      
|Item 2.                        | Changes in Securities and Use of Proceeds                                            
|                               |                                                                                      
|Item 3.                        | Defaults Upon Senior Securities                                                      
|                               |                                                                                      
|Item 4.                        | Submission of Matters to a Vote of Securities Holders                                
|                               |                                                                                      
|Item 5.                        | Other Information                                                                    
|                               |                                                                                      
|Item 6.                        | Exhibits                                                                             













2







#





PART 1  FINANCIAL INFORMATION



Item 1.

Financial Statements































JEWETT-CAMERON TRADING COMPANY LTD.





CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited  Prepared by Management)





FEBRUARY 28, 2009











































3





#





JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)





|                                                                              | February 28,    |  | August 31,     
|----------------------------------------------------------------------------- | --------------- |  | ---------------
|                                                                              | 2009            |  | 2008           
|                                                                              | (Unaudited)     |  | (Audited)      
|                                                                              |                 |  |                
|ASSETS                                                                        |                 |  |                
|                                                                              |                 |  |                
|Current assets                                                                |                 |  |                
|Cash and cash equivalents                                                     | $     4,007,815 |  | $     5,758,479
|Accounts receivable, net of allowance
of $4,620 (August 31, 2008 - $10,474)   | 3,860,619       |  | 5,405,861      
|Inventory, net of allowance
of $100,000 (August 31, 2008 - $100,000) (note 3) | 8,408,961       |  | 8,068,284      
|Note receivable                                                               | 41,500          |  | -              
|Prepaid expenses                                                              | 426,090         |  | 138,957        
|Prepaid income taxes                                                          | 363,285         |  | 13,753         
|                                                                              |                 |  |                
|Total current assets                                                          | 17,108,270      |  | 19,385,334     
|                                                                              |                 |  |                
|Property, plant and equipment, net(note 4)                                    | 1,757,927       |  | 1,861,652      
|Intangible assets, net(note 5)                                                | 701,030         |  | 740,382        
|Deferred income taxes(note 6)                                                 | 204,810         |  | 192,870        
|                                                                              |                 |  |                
|Total assets                                                                  | $  19,772,037   |  | $  22,180,238  
|                                                                              |                 |  |                



- Continued -































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











4

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)



|                                                      | February 28, |  | August 31,  
|----------------------------------------------------- | ------------ |  | ------------
|                                                      | 2009         |  | 2008        
|                                                      | (Unaudited)  |  | (Audited)   
|                                                      |              |  |             
|Continued                                             |              |  |             
|                                                      |              |  |             
|LIABILITIES AND STOCKHOLDERS EQUITY                  |              |  |             
|                                                      |              |  |             
|Current liabilities                                   |              |  |             
|Account payable                                       | $  1,127,031 |  | $  1,585,844
|Accrued liabilities                                   | 1,064,988    |  | 1,245,154   
|Current portion of promissory note and note payable   | -            |  | 367,807     
|                                                      |              |  |             
|Total current liabilities                             | 2,192,019    |  | 3,198,805   
|                                                      |              |  |             
|Long term liabilities                                 |              |  |             
|Promissory note (note 8)                              | -            |  | 1,951,004   
|                                                      |              |  |             
|Total liabilities                                     | 2,192,019    |  | 5,149,809   
|                                                      |              |  |             
|Contingent liabilities and commitments(note 10)       |              |  |             
|                                                      |              |  |             
|Stockholders equity                                  |              |  |             
|Capital stock (note 9)                                |              |  |             
|Authorized                                            |              |  |             
|20,000,000 common shares, without par value           |              |  |             
|10,000,000 preferred shares, without par value        |              |  |             
|Issued                                                |              |  |             
|2,390,977 common shares (August 31, 2008 - 2,390,977) | 2,256,112    |  | 2,256,112   
|Additional paid-in capital                            | 600,804      |  | 600,804     
|Retained earnings                                     | 14,723,102   |  | 14,173,513  
|                                                      |              |  |             
|Total stockholders equity                            | 17,580,018   |  | 17,030,429  
|                                                      |              |  |             
|Total liabilities and stockholders equity            | $19,772,037  |  | $22,180,238 
|                                                      |              |  |             





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







5



JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)



|                                                      | Three Month Periods to
the End of February |  | Six Month Periods to
the End of February
|----------------------------------------------------- | ------------------------------------------ |  | ----------------------------------------
|                                                      |                                            |  |                                         
|                                                      | 2009                                       |  | 2008                                    
|                                                      |                                            |  |                                         
|SALES                                                 | $ 9,354,961                                |  | $15,083,231                             
|                                                      |                                            |  |                                         
|COST OF SALES                                         | 7,308,477                                  |  | 12,348,468                              
|                                                      |                                            |  |                                         
|GROSS PROFIT                                          | 2,046,484                                  |  | 2,734,763                               
|                                                      |                                            |  |                                         
|OPERATING EXPENSES                                    |                                            |  |                                         
|Selling, general and administrative expenses          | 509,457                                    |  | 731,182                                 
|Depreciation and amortization                         | 78,986                                     |  | 78,089                                  
|Wages and employee benefits                           | 1,010,883                                  |  | 1,037,088                               
|                                                      | 1,599,326                                  |  | 1,846,359                               
|                                                      |                                            |  |                                         
|Income from operations                                | 447,158                                    |  | 888,404                                 
|                                                      |                                            |  |                                         
|OTHER ITEMS                                           |                                            |  |                                         
|Gain (loss) on sale of property, plant and
equipment  | 2,000                                      |  | (385)                                   
|Interest and other income                             | 7,586                                      |  | 146                                     
|Interest expense                                      | (20,608)                                   |  | (39,217)                                
|                                                      | (11,022)                                   |  | (39,456)                                
|                                                      |                                            |  |                                         
|                                                      |                                            |  |                                         
|Income before income taxes                            | 436,136                                    |  | 848,948                                 
|                                                      |                                            |  |                                         
|Income taxes                                          | 180,022                                    |  | 335,750                                 
|                                                      |                                            |  |                                         
|Net income                                            | $    256,114                               |  | $  513,198                              
|                                                      |                                            |  |                                         
|Basic earnings per common share                       | $            .11                           |  | $          .21                          
|                                                      |                                            |  |                                         
|Diluted earnings per common share                     | $            .11                           |  | $          .21                          
|                                                      |                                            |  |                                         
|Weighted average number of common shares outstanding: |                                            |  |                                         
|Basic                                                 | 2,390,977                                  |  | 2,390,977                               
|Diluted                                               | 2,390,977                                  |  | 2,391,589                               
|                                                      |                                            |  |                                         
|                                                      |                                            |  |                                         



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









6

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)





|                  | Common Stock |  |            |  |            |  |            
|----------------- | ------------ |  | ---------- |  | ---------- |  | -----------
|                  | Number       |  |            |  | Additional |  |            
|                  | Of           |  |            |  | Paid-In    |  | Retained   
|Balance           | Shares       |  | Amount     |  | Capital    |  | Earnings   
|                  |              |  |            |  |            |  |            
|August 31, 2008   | 2,390,977    |  | $2,256,112 |  | $600,804   |  | $14,173,513
|                  |              |  |            |  |            |  |            
|Net income        | -            |  | -          |  | -          |  | 549,589    
|                  |              |  |            |  |            |  |            
|February 28, 2009 | 2,390,977    |  | $2,256,112 |  | $600,804   |  | $14,723,102
|                  |              |  |            |  |            |  |            





































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

























7





JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)







|                                                                | Six Month Periods to
the End of February
|--------------------------------------------------------------- | ----------------------------------------
|                                                                |                                         
|                                                                | 2009                                    
|                                                                |                                         
|CASH FLOWS FROM OPERATING ACTIVITIES                            |                                         
|Net income                                                      | $  549,589                              
|Items not involving an outlay of cash:                          |                                         
|Depreciation and amortization                                   | 158,387                                 
|Gain (loss) on sale of property, plant and equipment            | (2,000)                                 
|Deferred income taxes                                           | (11,940)                                
|Changes in non-cash working capital items:                      |                                         
|(Increase) decrease in accounts receivable                      | 1,545,242                               
|(Increase) in note receivable                                   | (41,500)                                
|(Increase) decrease in inventory                                | (340,677)                               
|(Increase) in prepaid expenses                                  | (287,133)                               
|Increase (decrease) in accounts payable and accrued liabilities | (638,979)                               
|Increase (decrease) in accrued income taxes                     | (349,532)                               
|Net cash provided by operating activities                       | 581,457                                 
|                                                                |                                         
|CASH FLOWS FROM INVESTING ACTIVITIES                            |                                         
|Purchase of property, plant and equipment                       | (15,310)                                
|Proceeds from sale of property, plant and equipment             | 2,000                                   
|Net cash used in investing activities                           | (13,310)                                
|                                                                |                                         
|CASH FLOWS FROM FINANCING ACTIVITIES                            |                                         
|Proceeds (repayment) of bank indebtedness                       | -                                       
|Issuance of capital stock for cash                              | -                                       
|Promissory note                                                 | (2,018,811)                             
|Note payable                                                    | (300,000)                               
|Net cash provided by (used in) financing activities             | (2,318,811)                             
|                                                                |                                         
|Net increase in cash and cash equivalents                       | (1,750,663)                             
|                                                                |                                         
|Cash and cash equivalents, beginning of period                  | 5,758,479                               
|                                                                |                                         
|Cash and cash equivalents, end of period                        | $  4,007,815                            
|                                                                |                                         
|                                                                |                                         
|                                                                |                                         

Supplemental disclosure with respect to cash flows (note 13)







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





8







JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





1.

NATURE OF OPERATIONS



Jewett-Cameron Trading Company Ltd. was incorporated in British Columbia on July 8, 1987 as a holding company for Jewett-Cameron Lumber Corporation (JCLC), incorporated September 1953.  Jewett-Cameron Trading Company, Ltd. acquired all the shares of JCLC through a stock-for-stock exchange on July 13, 1987, and at that time JCLC became a wholly owned subsidiary.  JCLC has the following wholly owned subsidiaries.  MSI-PRO Co. (MSI), incorporated April 1996, Jewett-Cameron Seed Company, (JCSC), incorporated October 2000, and Greenwood Products, Inc. (Greenwood), incorporated February 2002.  Jewett-Cameron Trading Company, Ltd. and its subsidiaries (the Company) have no significant assets in Canada.



The Company, through its subsidiaries, operates out of facilities located in North Plains and the vicinity of Portland, Oregon.   JCLCs business consists of warehouse distribution and direct sales of wood products and specialty metal products to home centers and other retailers located primarily in the United States. Greenwood is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries in the United States. MSI is an importer and distributor of pneumatic air tools and industrial clamps in the United States. JCSC is a processor and distributor of agricultural seeds in the United States.



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



2.

SIGNIFICANT ACCOUNTING POLICIES



Generally accepted accounting principles



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



Principles of consolidation



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



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



Estimates



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









9





JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)



Cash and cash equivalents



The Company considers cash and cash equivalents to be highly liquid in nature.  At February 28, 2009, cash and cash equivalents consisted of cash of $991,642 held at U.S. Bank and $3,016,173 in a money market fund that invests almost exclusively in U.S. Treasury Bills.  At August 31, 2008 cash and cash equivalents consisted of cash of $1,755,985 and $4,002,494 in the money market fund.  The Company has not experienced any losses in such accounts.



Accounts receivable



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



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



Inventory



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



Property, plant and equipment



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



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



Intangibles



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



Asset retirement obligations



The Company records the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets that result from the acquisition, construction, development, and normal use of the long-lived assets.  The Company also records a corresponding asset which is amortized over the life of the asset.  Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each period to reflect the passage of time (accretion expense) and changes in the estimated future cash flows underlying the obligation (asset retirement cost).  The Company does not have any significant asset retirement obligations.



10





JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)



Impairment of long-lived assets and long-lived assets to be disposed of



Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset.  If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.  Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.



Currency and foreign exchange



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



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



Earnings per share



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



The earnings per share data for the three and six month periods ended February 28, 2009 and February 29, 2008 are as follows:



| |                                                              | Three Month Periods to
the End of February |  | Six Month Periods to
the End of February
| | ------------------------------------------------------------ | ------------------------------------------ |  | ----------------------------------------
| |                                                              |                                            |  |                                         
| |                                                              | 2009                                       |  | 2008                                    
| |                                                              |                                            |  |                                         
| | Net income                                                   | $ 256,114                                  |  | $ 513,198                               
| |                                                              |                                            |  |                                         
| | Basic weighted average number of
common shares outstanding   | 2,390,977                                  |  | 2,390,977                               
| |                                                              |                                            |  |                                         
| | Effect of dilutive securities                                |                                            |  |                                         
| | Stock options                                                | -                                          |  | -                                       
| |                                                              |                                            |  |                                         
| | Diluted weighted average number
of common shares outstanding | 2,390,977                                  |  | 2,390,977                               





11







JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)



Comprehensive income



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



Stock-based compensation



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



Financial instruments



The Company follows SFAS No. 159 The Fair Value option for Financial Assets and Financial Liabilities and uses the following methods and assumptions to estimate the fair value of each class of financial instruments for which it is practicable to estimate such values:



Cash and cash equivalents- the carrying amount approximates fair value because the amounts consist of cash held at a bank and a money market fund that invests almost exclusively in U.S. Treasury Bills.



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



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



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



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



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



| |                                          | February 28, 2009
(Unaudited) |            | August 31, 2008
(Audited)
| | ---------------------------------------- | ----------------------------- | ---------- | -------------------------
| |                                          | Carrying                      | Fair       |                          
| |                                          | Amount                        | Value      |                          
| | Cash and cash equivalents                | $4,007,815                    | $4,007,815 |                          
| | Accounts receivable                      | 3,860,619                     | 3,860,619  |                          
| | Note receivable                          | 41,500                        | 41,500     |                          
| | Accounts payable and accrued liabilities | 2,192,019                     | 2,192,019  |                          
| | Promissory note                          | -                             | -          |                          
| | Note payable                             | -                             | -          |                          





12











JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)



Financial instruments(contd)



The following table presents information about the assets that are measured at fair value on a recurring basis as of February 28, 2009, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:



| |                           |  | February 28, 2009 |           | Quoted Prices
in Active
Markets
(Level 1) |   | Significant
Other
Observable
Inputs
(Level 2) |  | Significant
Unobservable
Inputs
(Level 3) |  
| | ------------------------- |  | ----------------- | --------- | ----------------------------------------- | - | --------------------------------------------- |  | ----------------------------------------- | -
| | Assets:                   |  |                   |           |                                           |   |                                               |  |                                           |  
| | Cash and cash equivalents |  | $                 | 4,007,815 |                                           | $ | 4,007,815                                     |  | $                                         | 



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



Income taxes



Income taxes are provided in accordance with SFAS No. 109 "Accounting for Income Taxes".  A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards.  Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.



Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized.  Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.



Shipping and handling costs



The Company incurs certain expenses related to preparing, packaging and shipping its products to its customers, mainly third-party transportation fees. All costs related to these activities are included as a component of cost of goods sold in the consolidated statement of operations. All costs billed to the customer are included as revenue in the consolidated statement of operations.

.

Revenue recognition



The Company recognizes revenue from the sales of lumber, building supply products, industrial wood and other specialty products and tools, when the products are shipped, title passes, and the ultimate collection is reasonably assured.  Revenue from the Company's seed operations is generated from seed processing, handling and storage services provided to seed growers, and by the sales of seed products.  Revenue from the provision of these services and products is recognized when the services have been performed and products sold and collection of the amounts is reasonably assured.





13







JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)



Reclassifications



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



Recent Accounting Pronouncements



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



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

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

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







14





JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





2.

SIGNIFICANT ACCOUNTING POLICIES(contd)

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

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

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

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

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









15







JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





3.

INVENTORY



A summary of inventory is as follows:



| |                                  | February 28,
2009
(Unaudited) |  | August 31,
2008
(Audited)
| | -------------------------------- | ----------------------------- |  | -------------------------
| |                                  |                               |  |                          
| |                                  |                               |  |                          
| | Wood products and metal products | $6,986,025                    |  | $6,945,671               
| | Industrial tools                 | 767,621                       |  | 706,068                  
| | Agricultural seed products       | 655,315                       |  | 416,545                  
| |                                  |                               |  |                          
| |                                  | $8,408,961                    |  | $8,068,284               



4.

PROPERTY, PLANT AND EQUIPMENT



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



| |                          | February 28,
2009
(Unaudited) |  | August 31,
2008
(Audited)
| | ------------------------ | ----------------------------- |  | -------------------------
| |                          |                               |  |                          
| |                          |                               |  |                          
| | Office equipment         | $   626,255                   |  | $   615,940              
| | Warehouse equipment      | 1,211,430                     |  | 1,219,360                
| | Buildings                | 2,004,306                     |  | 2,004,306                
| | Land                     | 568,713                       |  | 568,713                  
| |                          | 4,410,704                     |  | 4,408,319                
| |                          |                               |  |                          
| | Accumulated depreciation | (2,652,777)                   |  | (2,546,667)              
| |                          |                               |  |                          
| | Net book value           | $ 1,757,927                   |  | $ 1,861,652              



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











16







JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





5.

INTANGIBLE ASSETS



A summary of intangible assets is as follows:



| |                          | February 28,
2009
(Unaudited) | August 31,
2008
(Audited)
| | ------------------------ | ----------------------------- | -------------------------
| | Patent                   | $ 850,000                     | $ 850,000                
| | Other                    | 30,605                        | 30,605                   
| |                          | 880,605                       | 880,605                  
| | Accumulated amortization | (179,575)                     | (140,223)                
| |                          |                               |                          
| | Net book value           | $ 701,030                     | $ 740,382                



6.

DEFERRED INCOME TAXES



Deferred income taxes as of February 28, 2009 of $204,810 (August 31, 2008 - $192,870) reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.



7.

BANK INDEBTEDNESS



There was no bank indebtedness under the Companys line of credit as of February 28, 2009 or August 31, 2008.



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



8.

LONG TERM LIABILITIES



The carrying amounts are as follows:



| |                                                                                                                         | February 28,
2009
(Unaudited) |  | August 31,
2008
(Audited)
| | ----------------------------------------------------------------------------------------------------------------------- | ----------------------------- |  | -------------------------
| |                                                                                                                         |                               |  |                          
| | Promissory note due June 15, 2010 bearing interest at 6.52% per annum (monthly payments of $16,601)                     | -                             |  | $2,018,811               
| |                                                                                                                         |                               |  |                          
| | Note payable bearing interest at 5% per annum with
$300,000 due January 15, 2008 and the remainder
due January 15, 2009 | -                             |  | 300,000                  
| |                                                                                                                         | -                             |  | 2,318,811                
| | Less current portion:                                                                                                   |                               |  |                          
| | Promissory note                                                                                                         | -                             |  | 67,807                   
| | Note payable                                                                                                            | -                             |  | 300,000                  
| |                                                                                                                         | -                             |  | 367,807                  
| |                                                                                                                         |                               |  |                          
| | Long term portion                                                                                                       | $             -               |  | $1,951,004               



17



JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





8.

LONG TERM LIABILITIES(contd)



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



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



9.

CAPITAL STOCK



Common stock



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



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



10.

CONTINGENT LIABILITIES AND COMMITMENTS



a)

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



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



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



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

















18





JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





10.

CONTINGENT LIABILITIES AND COMMITMENTS(contd)



b)

Greenwood formerly leased office premises pursuant to operating leases.  One of these leases expired on January 31, 2008, and the Company moved to a new location.  The new lease expires on July 31, 2009. Unless terminated by Greenwood, this new lease has automatic extensions through April 30, 2011.  For the six months ended February 28, 2009 and February 29, 2008 rental expense was $67,500 and $93,942 respectively.



JCLC leases office premises pursuant to an operating lease which expires on January 31, 2010.  For the six months ended February 28, 2009 and February 29, 2008 rental expense was $4,375 and $4,375 respectively.



Future minimum annual lease payments are as follows:



| | Fiscal 2009 | $30,833
| | ----------- | -------
| | Fiscal 2010 | $3,646 
| | Fiscal 2011 | $0     



c)

At February 28, 2009 and August 31, 2008 the Company had an un-utilized line-of-credit of $5,000,000 and $4,700,000, respectively (note 7).  The line-of-credit has certain financial covenants. The Company is in compliance with these covenants.



11.

SEGMENT INFORMATION



The Company has four principal reportable segments. These reportable segments were determined based on the nature of the products offered.  Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.



The Company evaluates performance based on several factors, of which the primary financial measure is business segment income before taxes.  The following tables show the operations of the Company's reportable segments.



Following is a summary of segmented information for the six month periods ended February 28, 2009 and February 29, 2008, respectively:



| |                                  | 2009         |  | 2008          
| | -------------------------------- | ------------ |  | --------------
| |                                  |              |  |               
| |                                  |              |  |               
| | Sales to unaffiliated customers: |              |  |               
| | Industrial wood products         | $  6,137,398 |  | $ 15,368,770  
| | Lawn, garden, pet and other      | 10,787,250   |  | 9,041,561     
| | Seed processing and sales        | 2,714,442    |  | 4,392,509     
| | Industrial tools and clamps      | 497,934      |  | 543,550       
| |                                  | $20,137,024  |  | $ 29,346,390  
| |                                  |              |  |               
| | Income (loss) from operations:   |              |  |               
| | Industrial wood products         | $  (265,338) |  | $      568,045
| | Lawn, garden, pet and other      | 1,141,559    |  | 816,259       
| | Seed processing and sales        | 108,802      |  | 132,263       
| | Industrial tools and clamps      | 10,045       |  | 4,994         
| | Unallocated overhead             | (63,457)     |  | (54,948)      
| |                                  | $    931,611 |  | $   1,466,613 



19



JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





11.

SEGMENT INFORMATION(contd)



| | Identifiable assets:           |                 |  |                 
| | ------------------------------ | --------------- |  | ----------------
| | Industrial wood products       | $  3,561,936    |  | $   8,753,601   
| | Lawn, garden, pet and other    | 13,934,979      |  | 9,651,956       
| | Seed processing and sales      | 990,746         |  | 1,726,194       
| | Industrial tools and clamps    | 879,870         |  | 665,437         
| | Unallocated overhead           | 41,221          |  | 167,513         
| |                                | $19,408,752     |  | $ 20,964,701    
| |                                |                 |  |                 
| | Depreciation and amortization: |                 |  |                 
| | Industrial wood products       | $         2,145 |  | $          3,658
| | Lawn, garden, pet and other    | 146,595         |  | 144,173         
| | Seed processing and sales      | 6,327           |  | 5,944           
| | Industrial tools and clamps    | 3,320           |  | 3,320           
| |                                | $     158,387   |  | $      157,095  
| | Capital expenditures:          |                 |  |                 
| | Industrial wood products       | $         1,500 |  | $        10,761 
| | Lawn, garden, pet and other    | 12,791          |  | 18,027          
| | Seed processing and sales      | 1,019           |  | 850             
| | Industrial tools and clamps    | -               |  | -               
| |                                | $       15,310  |  | $        29,638 
| | Interest expense:              |                 |  |                 
| | Lawn, garden, pet and other    | $       57,532  |  | $        81,426 



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, 2009 and February 29, 2008, respectively:



| |       | Six Months Ended
February 28,
2009 | Six Months Ended
February 29,
2008
| | ----- | ---------------------------------- | ----------------------------------
| | Sales | $ 7,503,889                        | $              -                  



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:



| |               | Six Months Ended
February 28,
2009 | Six Months Ended
February 29,
2008
| | ------------- | ---------------------------------- | ----------------------------------
| |               |                                    |                                   
| | United States | $ 17,714,281                       | $ 27,363,876                      
| | Canada        | 2,317,780                          | 1,545,284                         
| | Mexico        | 66,181                             | 84,270                            
| | Europe        | 38,782                             | 201,009                           
| | Asia/Pacific  | -                                  | 151,951                           



All of the Companys identifiable assets were located in the United States as of the February 28, 2009 and February 29, 2008.



20



JEWETT-CAMERON TRADING COMPANY LTD. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

February 28, 2009

(Unaudited)





12.

CONCENTRATIONS



Credit risk



Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.  The Company places its cash and cash equivalents with a high quality financial institution.  The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers.  At February 28, 2009, two customers accounted for over 10% of total accounts receivable at a combined total of 28%.  At August 31, 2008 one customer accounted for accounts receivable greater than 10% of total accounts receivable at 13%.  The Company controls credit risk through credit approvals, credit limits, credit insurance and monitoring procedures.  The Company performs credit evaluations of its commercial customers but generally does not require collateral to support accounts receivable.



Volume of business



The Company has concentrations in the volume of purchases it conducts with its suppliers. For the six months ended February 28, 2009 there were two suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $6,345,816.  For the six months ended February 29, 2008 there were three suppliers that each accounted for purchases greater than 10% of total purchases. The aggregate purchases amounted to $7,497,137.



13.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS



Certain cash payments for the three months ended February 28, 2009 and February 29, 2008 are summarized as follows:



| |                                   | Three Month Periods to
the End of February |  | Six Month Periods to
the End of February
| | --------------------------------- | ------------------------------------------ |  | ----------------------------------------
| |                                   |                                            |  |                                         
| |                                   | 2009                                       |  | 2008                                    
| |                                   |                                            |  |                                         
| | Cash paid during the periods for: |                                            |  |                                         
| | Interest                          | $    20,609                                |  | $      64,521                           
| | Income taxes                      | $  180,022                                 |  | $ 1,045,000                             































21





Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations.



These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying Consolidated Financial Statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of February 28, 2009 and August 31, 2008 and its results of operations and cash flows for the three and six month periods ended February 28, 2009 and February 29, 2008 in accordance with U.S. GAAP.  Operating results for the three and six month periods ended February 28, 2009 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 2009.



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

•

Industrial wood products

•

Lawn, garden, pet and other

•

Seed processing and sales

•

Industrial tools



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



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



The seed processing and sales segment reflects the business of Jewett-Cameron Seed Company (JCSC), a wholly owned subsidiary of JCLC.  JCSC processes and distributes agricultural seed.  Most of this segments sales come from selling seed to distributors with a lesser amount of sales derived from cleaning seed.



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



RESULTS OF OPERATIONS



Three Months Ended February 28, 2009 and February 29, 2008



For the three months ended February 28, 2009, sales decreased $5,728,270 to $9,354,961 from $15,083,231 for the three months ended February 29, 2008.  The decrease is largely due to a decline in sales at Greenwood.



Sales at Greenwood were $2,855,840 for the three months ended February 28, 2009, which was a decrease of $4,394,629 or 60% compared to sales of $7,250,469 for the three months ended February 29, 2008.  Sales to boat manufacturers represented approximately 59% of Greenwoods total sales for the year ended August 31, 2008, and demand from these kinds of customers has been severely affected by weak economic conditions.  Furthermore, Greenwood lost a major group of boat manufacturing customers, when a two year contract came up for renewal at June 30, 2008.  Also contributing to the decline in sales was the departure of some traders earlier in calendar 2008.  New traders have been hired, but the net effect has been a reduction in sales.  Operating income was a loss of ($144,989) for the three months ended February 28, 2009, which was a decline of ($413,808) from the $268,819 profit recorded in the same period a year ago.  This primarily reflects the effect of fixed costs at the relatively low level of sales during the period.  For the remainder of the fiscal year, depressed conditions in the overall economy and in the boating industry in particular will likely be a significant challenge for all suppliers in the industry including Greenwood.



22



Sales at JCLC were $5,260,294 for the three months ended February 28, 2009, which was an decrease of $278,896, or 5%, compared to sales of $5,539,191 for the three months ended February 29, 2008.   Operating income was $601,876, which was an increase of $48,550 compared to the income of $553,326 from the year-ago quarter.  Even though sales were lower, the higher income for the current quarter was due to greater sales of higher margin specialty metal products compared to the prior years quarter. Overall the operating results of JCLC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.



Sales at JCSC were $1,003,794 for the three months ended February 28, 2009, which was decrease of $1,271,007 or 56% compared to $2,274,801 for the three months ended February 29, 2008.  Operating income for the current quarter was $11,291, a decrease of $44,313 from the operating income of $55,604 recorded by JCSC in the prior years quarter. Grass seed demand has fallen due to the overall economy and substantially lower new home construction rates in North America.



Sales at MSI were $235,033 for the three months ended February 28, 2009, which was a decrease of $41,566 or 15% compared to $276,599 for the three months ended February 29, 2008. Operating income was $3,822, a decrease of $841 compared to the operating income of $4,663 recorded in the comparative quarter in the prior fiscal year.



Gross margin for the three month period ended February 28, 2009 was 21.9% compared with 18.1% for the three months ended February 29, 2008.  This improvement primarily reflects the fact that metal products sold by JCLC, which have a higher margin than the Companys other products, were a bigger part of the sales mix in the current year vs. the prior year.



Operating expenses decreased by $247,033 from $1,846,359 for the three month period ended February 29, 2008 to $1,599,326 for the three month period ended February 28, 2009.  The decrease was largely due to lower Selling, General, and Administrative expenses, which were $509,457, a decrease of $221,725, or 30.3%, from the quarter ended February 29, 2008. Wages and Benefits decreased by $26,255, and Depreciation and Amortization increased by $897.



Income tax expense for the three month period ended February 28, 2009 was $180,022 compared to $335,750 for the three month period ended February 29, 2008. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.



Net income for the three month period ended February 28, 2009 was $256,114 or $.11 per basic and diluted share compared to $335,750 or $.21 per basic and diluted share for the three month period ended February 29, 2008.



Six Months Ended February 28, 2009 and February 29, 2008



For the six months ended February 28, 2009, sales decreased $9,209,366 or 31.4% to $20,137,024 from $29,346,390 for the six months ended February 29, 2008.  Primarily this reflects a relatively large decrease in sales at Greenwood and Jewett Cameron Seed Company that was only partially offset by an increase in sales at Jewett Cameron Lumber Company.



Sales at Greenwood were $6,137,398 for the six months ended February 28, 2009, which was a decrease of $9,612,182 or 62.5% compared to sales of $15,368,770 for the six months ended February 29, 2008.  A slowdown in the boat manufacturing industry, where much of Greenwoods sales are targeted was a significant factor contributing to the decline in sales.  For the six months ended February 28, 2009, Greenwood reported an operating loss of ($265,338) compared to an operating profit of $568,045 for the six months ended February 29, 2008. Going forward this fiscal year depressed economic conditions, particularly in the boating industry, will likely continue to be a challenge for Greenwood.









23





Sales at JCLC were $10,787,250 for the six months ended February 28, 2009, which was an increase of $1,745,689 or 19.3% compared to sales of $9,041,561 for the six months ended February 29, 2008.  The increase primarily reflects a significant increase in the sales of specialty metal products.  Operating income increased $324,301, or 39.7%, from $816,259 to $1,141,560. Overall the operating results of JCLC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.



Sales at JCSC were $2,714,442 for the six months ended February 28, 2009, which was a decrease of $1,678,067, or 38.2% compared to sales of $4,392,509 for the six months ended February 29, 2008.  The lower sales were largely due to decreased demand for grass seed from new home construction in North America. Operating income for the current six month period was $108,802, a decrease of $23,461 from the prior years six month period.



Sales at MSI were $497,934 for the six months ended February 28, 2009, which was a decrease of $45,616 or 8.4% compared to $543,550 for the six months ended February 29, 2008.  Operating loss for the current six month period was ($63,457) compared to an operating loss of (454,948) in the prior years six month period.



Gross margin for the six month period ended February 28, 2009 was 21.2% compared with 17.9% for the six months ended February 28, 2007 The improvement in gross margin percentage  reflects the increased sales of specialty metal products at JCLC, which have higher margins than wood products sales.



Operating expenses decreased by $415,773, or 11.2%, to $3294,737 for the six month period ended February 28, 2008 from $3,710,510 for the six month period ended February 29, 2008.  Selling, general, and administrative expenses decreased by $377,546, or 26.2%, depreciation and amortization increased by $1,292, and wages and benefits decreased by $39,520.



Income tax expense for the six month period ended February 28, 2009 was $382,022 compared to $579,500 for the six month period ended February 29, 2008. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.



Net income for the six month period ended February 28, 2009 was $549,590, or $0.23 per basic and diluted share, compared to $887,113 or $.37 per basic and diluted share, for the six month period ended February 29, 2008.





LIQUIDITY AND CAPITAL RESOURCES



As of February 28, 2009 the Company had working capital of $14,916,251, which represented an decrease of $1,270,278 compared to working capital of $16,186,529 as of August 31, 2008.  The largest changes effecting this change in working capital were a $1,750,663 decrease in cash, a $1,545,242 decrease in accounts receivable, a $458,813 decrease in accounts payable and accrued liabilities, and a $188,166 decrease in accrued liabilities. The decrease in cash was primarily due to paying in full a promissory note and note payable from its cash balance, which resulted in a decrease in the current liabilities of $367,807 and long-term liabilities of $1,951,004.



As of February 28, 2009, accounts receivable and inventory represented 73% of current assets and 63% of total assets.  For the three months ended February 28, 2009, the accounts receivable collection period or DSO was 34.4 compared with 37.1 for the three months ended February 29, 2008. For the six months ended February 28, 2009 the DSO was 41.6 days compared with 36.6 days for the six months ended February 29, 2008.  Inventory turnover for the three months ended February 28, 2009 was 103.1 days compared with 70.1 days for the three months ended February 29, 2008. For the six month period, inventory turnover was 93.9 compared with 73.9 days for the six month period ended February 29, 2008.











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External sources of liquidity include a line of credit from the United States National Bank of Oregon of $5,000,000.  At February 28, 2009, none of the line was outstanding and  the entire amount of $5,000,000 was available.  Also, as of August 31, 2008 the Company had no borrowing against this line of credit.  Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory.  Prior to January 31, 2008 interest was calculated at either prime or the one month LIBOR rate plus 190 basis points. However, starting on January 31, 2008 the borrowing mechanism was simplified, and the interest rate is calculated solely on the one month LIBOR rate plus 190 basis points.



Business Risks



This quarterly report includes forwardlooking statements as that term is defined in Section 21E of the Securities Exchange Act of 1934. Forward-looking statements can be identified by the use of forward-looking terminology such as believes, expects, may, will, should, seeks, approximately, intends, plans, estimates, anticipates, or hopeful, or the negative of those terms or other comparable terminology, or by discussions of strategy, plans or intentions. For example, this section contains numerous forward-looking statements.  All forward-looking statements in this report are made based on managements current expectations and estimates, which involve risks and uncertainties, including those described in the following paragraphs.



Risks Related to Our Common Stock



We may decide to acquire assets or enter into business combinations, which could be paid for, either wholly or partially with our common stock and if we decide to do this our current shareholders would experience dilution in their percentage of ownership.



Our Articles of Incorporation give our Board of Directors the right to enter into any contract without the approval of our shareholders.  Therefore, our management could decide to make an investment (buy shares, loan money, etc.) without shareholder approval.  If we acquire an asset or enter into a business combination, this could include exchanging a large amount of our common stock, which could dilute the ownership interest of present stockholders.



Future stock distributions could be structured in such a way as to be 1) diluting to our current shareholders or 2) could cause a change in control to new investors.



If we raise additional funds by selling more of our stock, the new stock may have rights, preferences or privileges senior to those of the rights of our existing stock.  If common stock is issued in return for additional funds, the price per share could be lower than that paid by our current stockholders.  The result of this would be a lessening of each present stockholders relative percentage interest in our company.



Our shareholders could experience significant dilution if we issue our authorized 10,000,000 preferred shares.



The Companys common shares currently trade within the NASDAQ Capital Market in the United States and on the Toronto Stock Exchange in Canada.  On NASDAQ the average daily trading volume for the six month period ended February 28, 2009 was 1,150 shares.  Trading volume on the Toronto Stock Exchange was significantly less than on NASDAQ.  With this limited trading volume, investors could find it difficult to purchase or sell the Companys common stock.



Risks Related to Our Business



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



In the past at times we have at times experienced decreasing products sales with certain customers.  The reasons for this can be generally attributed to factors such as competition, wood products prices, and interest rates.  If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability.



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If our top customers were lost and could not be replaced.



For the six months ended February 28, 2009, our top ten customers represented 60% of our total sales. We would experience a significant decrease in sales and profitability and would have to cut back our operations, if these customers were lost and could not be replaced.  Our top ten customers are in the U.S. and are primarily in the home improvement, marine, and agricultural industries.



We could experience delays in the delivery of our products to our customers causing us to lose business.



We purchase our products from other vendors and a delay in shipment from these vendors to us could cause significant delays in our delivery to our customers.  This could result in a decrease in sales orders to us and we would experience a loss in profitability.



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



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



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



We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act.  Based on this process we did not identify any material weaknesses.  Although we believe our internal controls are operating effectively, we cannot guarantee that in the future we will not identify any material weaknesses in connection with this ongoing process.



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



Item 3.

Quantitative and Qualitative Disclosures about Market Risk



Interest Rate Risk



The Company does not have any derivative financial instruments as of February 28, 2009.  However, the Company is exposed to interest rate risk.



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



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



Foreign Currency Risk



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





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Item 4.

Controls and Procedures



The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods.  They are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.  For the quarter ended February 28, 2009 the CEO and CFO have concluded that our disclosure controls and procedures were effective. For the quarter ended February 28, 2009 the CEO and CFO have also concluded that the disclosure controls and procedures were effective for the purpose of ensuring that material information required to be in this report is made known to management and others, as appropriate, to allow timely decisions regarding required disclosures.



CEO and CFO CERTIFICATIONS



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



DISCLOSURE CONTROLS AND INTERNAL CONTROLS.



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



LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS.



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



CONCLUSION



In accordance with SEC requirements, the CEO and CFO note that, as of the quarter ended February 28, 2009 covered by this report, there were no material weaknesses in our Internal Controls.



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Part II  OTHER INFORMATION



Item 1.

Legal Proceedings



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



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



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



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



The Company does not know of any other material, active or pending legal proceedings against them; nor is the Company involved as a plaintiff in any other material proceeding or pending litigation.  The Company knows of no other active or pending proceedings against anyone that might materially adversely affect an interest of the Company.



Item 2.

Changes in Securities and Use of Proceeds

---No Disclosure Required---



Item 3.

Defaults Upon Senior Securities

---No Disclosure Required---



Item 4.

Submission of Matters to a Vote of Securities Holders

---No Disclosure Required---



Item 5.

Other Information

---No Disclosure Required---



Item 6.

Exhibits



31.1

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

31.2

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

32.1

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

32.2

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





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SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



Jewett-Cameron Trading Company Ltd.

(Registrant)





Dated: April 7, 2009

/s/  Donald M. Boone

Donald M. Boone, President/CEO/Director



Dated:  April 7, 2009

/s/  Thomas R. Rice

Thomas R. Rice, Chief Financial Officer





















































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