UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549



FORM 10-Q



(MARK ONE)



[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 2007.





[  ]

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 [X]



Indicate by check mark whether the registrant is a shell company (defined  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  2,377,289 s
hares outstanding at July 6, 2007.



#





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                                                                             







PART 1  FINANCIAL INFORMATION



Item 1.

Financial Statements

































JEWETT-CAMERON TRADING COMPANY LTD.





CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

(Unaudited  Prepared by Management)





MAY 31, 2007









JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

|
|





|                                                                   | May 31,     |  | August 31, 
|------------------------------------------------------------------ | ----------- |  | -----------
|                                                                   | 2007        |  | 2006       
|                                                                   | (Unaudited) |  |            
|                                                                   |             |  |            
|ASSETS                                                             |             |  |            
|                                                                   |             |  |            
|Current assets                                                     |             |  |            
|Cash and cash equivalents                                          | $   468,131 |  | $   146,810
|Accounts receivable, net of allowances
of $0 ( August 31,
2006-$0) | 6,346,073   |  | 6,822,197  
|Inventory (note 3)                                                 | 9,426,825   |  | 8,750,861  
|Prepaid expenses                                                   | 187,736     |  | 139,936    
|                                                                   |             |  |            
|Note receivable (note 4)                                           | 4,000       |  | 4,000      
|                                                                   |             |  |            
|Total current assets                                               | 16,432,765  |  | 15,863,804 
|                                                                   |             |  |            
|Property, plant and equipment, net(note 5)                         | 2,090,656   |  | 2,217,756  
|                                                                   |             |  |            
|Intangible assets, net(note 6)                                     | 836156      |  | 101        
|                                                                   |             |  |            
|Deferred income taxes(note 7)                                      | 143,300     |  | 142,900    
|                                                                   |             |  |            
|Total assets                                                       | $19,502,877 |  | $18,224,561
|                                                                   |             |  |            



- Continued -

































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











JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED BALANCE SHEETS

(Expressed in U.S. Dollars)

(Prepared by Management)

|
|



|                                                    | May 31,     |  | August 31, 
|--------------------------------------------------- | ----------- |  | -----------
|                                                    | 2007        |  | 2006       
|                                                    | (Unaudited) |  |            
|                                                    |             |  |            
|Continued                                           |             |  |            
|                                                    |             |  |            
|LIABILITIES AND STOCKHOLDERS EQUITY                |             |  |            
|                                                    |             |  |            
|Current liabilities                                 |             |  |            
|                                                    |             |  |            
|Account payable                                     | $1,644,505  |  | $2,514,801 
|Accrued liabilities                                 | 1,757,910   |  | 1,537,290  
|Accrue d
 income taxes                              | 20,848      |  | 40,871     
|Current portion of long term liabilities            | 362,843     |  | 59,432     
|                                                    |             |  |            
|Total current liabilities                           | 3,786,106   |  | 4,152,394  
|                                                    |             |  |            
|Long term liabilities(note 8)                       |             |  |            
|Promissory note                                     | 2,034,050   |  | 2,081,963  
|                                                    |             |  |            
|Note payable                                        | 300,000     |  | -          
|                                                    |             |  |            
|Total long term liabilities                         | 2,334,050   |  | 2,081,963  
|                                                    |             |  |            
|Total liabilities                                   | 6,120,156   |  | 6,234,357  
|                                                    |             |  |            
|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                                              |             |  |            
|2,377,289 common shares (August 31, 2006-2,377,289) | 2,138,468   |  | 2,138,468  
|Additional paid-in capital                          | 609,600     |  | 583,211    
|Retained earnings                                   | 10,634,653  |  | 9,268,525  
|                                                    |             |  |            
|Total stockholders equity                          | 13,382,721  |  | 11,990,204 
|                                                    |             |  |            
|Total liabilities and stockholders equity          | $19,502,877 |  | $18,224,561
|                                                    |             |  |            







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

JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)



|                                                       | Three Month Periods Ended
May 31, |  | Nine Month Periods Ended
May 31,
|------------------------------------------------------ | --------------------------------- |  | --------------------------------
|                                                       | 2007                              |  | 2006                            
|                                                       |                                   |  |                                 
|SALES                                                  | $20,855,492                       |  | $20,557,496                     
|                                                       |                                   |  |                                 
|COST OF SALES                                          | 17,700,854                        |  | 17,606,950                      
|                                                       |                                   |  |                                 
|GROSS PROFIT                                           | 3,154,638                         |  | 2,950,546                       
|                                                       |                                   |  |                                 
|OPERATING EXPENSES                                     |                                   |  |                                 
|Selling, general and administrative expenses           | 743,090                           |  | 743,131                         
|Depreciation and amortization                          | 84,676                            |  | 71,899                          
|Wages and employee benefits                            | 1,018,768                         |  | 1,195,647                       
|                                                       | 1,846,534                         |  | 2,010,677                       
|                                                       |                                   |  |                                 
|Income from operations                                 | 1,308,104                         |  | 939,869                         
|                                                       |                                   |  |                                 
|OTHER ITEMS                                            |                                   |  |                                 
|Gain on sale of property, plant and equipment (note 5) | 6,787                             |  | -                               
|Interest and other income                              | (3,863)                           |  | -                               
|Interest expense                                       | (65,130)                          |  | (53,367)                        
|                                                       | (62,206)                          |  | 53,367                          
|                                                       |                                   |  |                                 
|Income before income taxes                             | 1,245,898                         |  | 886,502                         
|                                                       |                                   |  |                                 
|Income taxes                                           | 489,001                           |  | 326,000                         
|                                                       |                                   |  |                                 
|Net income                                             | $  756,897                        |  | $  560,502                      
|                                                       |                                   |  |                                 
|Basic earnings per common share                        | $          .32                    |  | $          .24                  
|                                                       |                                   |  |                                 
|Diluted earnings per common share                      | $          .32                    |  | $          .24                  
|                                                       |                                   |  |                                 
|Weighted average number of common shares outstanding:  |                                   |  |                                 
|Basic                                                  | 2,377,289                         |  | 2,298,539                       
|Diluted                                                | 2,378,353                         |  | 2,361,689                       
|                                                       |                                   |  |                                 
|                                                       |                                   |  |                                 



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









JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

|
|





|                                 | Common Stock |  |            |  |              |  |            
|-------------------------------- | ------------ |  | ---------- |  | ------------ |  | -----------
|                                 | Number       |  |            |  | Addition
-al |  |            
|                                 | of           |  |            |  | Paid-In      |  | Retained   
|Balance                          | Shares       |  | Amount     |  | Capital      |  | Earnings   
|                                 |              |  |            |  |              |  |            
|August 31, 2006                  | 2,377,289    |  | $2,138,468 |  | $583,211     |  | $9,268,525 
|                                 |              |  |            |  |              |  |            
|Net income                       | -            |  | -          |  | -            |  | 1,366,128  
|                                 |              |  |            |  |              |  |            
|Stock-based compensation expense | -            |  |            |  | 26,389       |  | -          
|February 28, 2007                | 2,377,289    |  | $2,138,468 |  | $609,600     |  | $10,634,653
|                                 |              |  |            |  |              |  |            











































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







JEWETT-CAMERON TRADING COMPANY LTD.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Expressed in U.S. Dollars)

(Prepared by Management)

(Unaudited)

|
|







|                                                                | Nine Month   
|--------------------------------------------------------------- | -------------
|                                                                | Periods Ended
|                                                                | May 31       
|                                                                | 2007         
|                                                                |              
|CASH FLOWS FROM OPERATING ACTIVITIES                            |              
|Net income                                                      | $ 1,366,128  
|Items not involving an outlay of cash:                          |              
|Depreciation                                                    | 233,968      
|Gain on sale of property, plant and equipment                   | (6,787)      
|Deferred income taxes                                           | (400)        
|Stock based compensation expense                                | 26,389       
|Changes in non-cash working capital items:                      |              
|(Increase) decrease in accounts receivable                      | 476,124      
|(Increase) decrease in inventory                                | (675,964)    
|(Increase) decrease in prepaid expenses                         | (47,800)     
|(Increase) decrease in income taxes receivable                  | -            
|(Increase) decrease in notes receivable                         | -            
|Increase (decrease) in accounts payable and accrued liabilities | (649,676)    
|Increase (decrease) in accrued income taxes                     | (20,023)     
|                                                                |              
|Net cash provided by operating activities                       | 701,959      
|CASH FLOWS FROM FINANCING ACTIVITIES                            |              
|Proceeds (repayment) of bank indebtedness                       | 0            
|Promissory note                                                 | (44,502)     
|Note payable                                                    | 600,000      
|Net cash provided by (used in) financing activities             | 555,498      
|                                                                |              
|CASH FLOWS FROM INVESTING
 ACTIVITIES                           |              
|Purchase of property, plant and equipment                       | (70,223)     
|Purchase of intangible assets and other                         | (872,700)    
|Proceeds on sale of property, plant and equipment               | 6,787        
|                                                                |              
|Net cash provided by (used in) investing activities             | (936,136)    
|                                                                |              
|Net increase in cash and cash equivalents                       | 321,321      
|                                                                |              
|Cash and cash equivalents, beginning of period                  | 146,810      
|                                                                |              
|Cash and cash equivalents, end of period                        | $    468,131 
|                                                                |              

Supplemental disclosure with respect to cash flows (note 13)









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









JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(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 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 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.



At the Companys annual meeting, which was held on March 9, 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.  Actual results could differ from those estimates.











JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



Cash and cash equivalents



The Company considers cash and cash equivalents to be highly liquid investments with original maturities of three months or less.  At May 31, 2007 and August 31, 200 6
, cash and cash equivalents consisted of cash held at a financial institution.  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 the allowance for doubtful accounts, which are generally ones that are ninety days or greater overdue.



The Company extends credit to our 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.  They include two patents and manufacturing rights which the Company purchased for $850,000.  Amortization is calculated using the straight-line method over the remaining useful lives of 133 months and 144 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).





JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



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



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 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 periods ended follows:



|                                                                                | Three Month Periods Ended |  | Nine Month Periods Ended
|------------------------------------------------------------------------------- | ------------------------- |  | ------------------------
|                                                                                | May 31,                   |  | May 31,                 
|                                                                                | 2007                      |  | 2006                    
|                                                                                |                           |  |                         
|Net income                                                                      | $756,897                  |  | $560,502                
|                                                                                |                           |  |                         
|Basic earnings per share weighted average
number of common shares outstanding   | 2,377,289                 |  | 2,298,539               
|                                                                                |                           |  |                         
|Effect of dilutive securities stock options                                     | 1,064                     |  | 63,150                  
|                                                                                |                           |  |                         
|Diluted earnings per share weighted
average number of common shares outstanding | 2,378,353                 |  | 2,361,689               
|                                                                                |                           |  |                         



















JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



Stock-Based Compensation



Effective September 1, 2005, the Company adopted SFAS No. 123(R), Share-Based Payment (SFAS 123(R)), and related interpretations which superseded APB No. 25. SFAS 123(R) requires that all stock-based compensation be recognized as an expense in the financial statements and that such costs be measured at the fair value of the award. This statement was adopted using the modified prospective method, which requires the Company to recognize compensation expense on a prospective basis. Therefore, prior period financial statements have not been restated. Under this method, in addition to reflecting the remaining service period of awards, compensation expense is also recognized to reflect the remaining service period of awards that had been included in pro forma disclosures in prior periods. Compensation expense was
 recognized using the fair value method described in SFAS 123(R) using the Black-Scholes option-pricing model.



The Company recorded
 pre-tax expense of $
26,389 for the quarter ended November 30, 2006 related to the granting of options to three directors of the Company.  Each director received options to purchase 7,500 shares.  In the quarter ended February 28, 2007 one of these directors resigned and forfeited his options.  In the quarter ended May 31, 2007 another of these directors term in office expired, and he forfeited his options.  The Company granted options to two new directors in the quarter ended May 31, 2007.  Each new director received options to purchase 7,500 shares.  The expense associated with the options granted in the quarter ended May 31, 2007, when considered along with the options that were forfeited, was not significant.  The Company had no outstanding options at August 31, 2006.



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



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



The exercise price of all stock options, granted under the stock option program, must be at least equal to the fair market value (subject to regulated discounts) of such common shares on the date of grant.  Options vest at the discretion of the board of directors. Proceeds received by the Company from exercise of stock options are credited to capital stock.



The Company uses the Black-Scholes option pricing model to determine the fair value of stock-based compensation.  The number of options granted, their grant-date weighted average fair value, and the significant assumptions used to determine fair-value during the three and nine month periods ended are as follows:











JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



|                                              | Three Month Periods Ended |  | Nine Month Periods Ended
|--------------------------------------------- | ------------------------- |  | ------------------------
|                                              | May 31,                   |  | May 31,                 
|                                              | 2007                      |  | 2006                    
|Options granted                               | -                         |  | -                       
|Weighted-average fair value of option granted | -                         |  | -                       
|Compensation expense recorded (pre-tax)       | -                         |  | -                       
|Assumptions:                                  |                           |  |                         
|Dividends                                     | -                         |  | -                       
|Risk-free interest rate                       | -                         |  | -                       
|Expected volatility                           | -                         |  | -                       
|Expected option life                          | -                         |  | -                       



Stock option activity during the nine month periods ended May 31, 2007 is as follows:



|                            | Total   
|--------------------------- | --------
|                            | Number  
|                            | Of      
|                            | Options 
|                            |         
|Balance, at August 31, 2006 | -       
|Granted                     | 37,500  
|Exercised                   | -       
|Forfeited                   | (15,000)
|Balance, at May 31, 2007    | 22,500  



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.



Financial instruments



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



Cash and cash equivalents- the carrying amount approximates fair value because the amounts consist of cash held at financial institutions.



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



Bank indebtedness- the carry amount approximates fair value due to the short-term nature of the obligation.



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



Promissory note- the fair value of the promissory note 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.





JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



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



|                                         | May 31, 2007    |            | August 31, 2006     (Audited)
|---------------------------------------- | --------------- | ---------- | -----------------------------
|                                         | Carrying
Amount | Fair
Value |                              
|                                         |                 |            |                              
|Cash and cash equivalents                | $468,131        | $468,131   |                              
|Accounts receivable                      | 6,346,073       | 6,346,073  |                              
|Note receivable                          | 4,000           | 4,000      |                              
|Bank indebtedness                        | -               | -          |                              
|Accounts payable and accrued liabilities | 3,402,415       | 3,402,415  |                              
|Promissory note                          | 2,096,893       | 1,987,172  |                              
|Note payable                             | 600,000         | 600,000    |                              



Income taxes



Income taxes are provided in accordance with Statement of Financial Accounting Standards 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 carry forwards.  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 by the provision of 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.



Reclassifications



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









JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



2.

SIGNIFICANT ACCOUNTING POLICIES (continued)



Recent Accounting Pronouncements



In July 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, Accounting

for Uncertainty in Income Taxes (FIN 48). FIN 48 clarifies the accounting and reporting for uncertainties in income tax law. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement, presentation, and disclosure of uncertain tax positions taken or expected to be taken in income tax returns. FIN 48 is

effective for fiscal years beginning after December 15, 2006. The adoption of FIN 48 is not anticipated to have an impact on the Companys financial position or results of operations.

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. SFAS No. 157 is effective for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including any financial statements for

an interim period within that fiscal year. The Company is currently assessing the impact of SFAS No. 157 the Companys financial position and results of operations, but does not anticipate a material impact.

In February, 2007, the FASB issued SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities. SFAS No. 159 permits entities to choose to measure many financial assets and financial liabilities at fair

value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings.  SFAS No. 159 is effective for fiscal years beginning after November 15, 2007. We are currently assessing the impact of SFAS No. 159 on our financial position and results of operations, but are does not anticipate a material impact.



The adoption of these new pronouncements is not expected to have a material effect on the Company's consolidated financial position or results of operations.



3.

INVENTORY



A summary of inventory follows:



| |                                      | May 31,
2007 | August 31,
2006
(Audited)
| | ------------------------------------ | ------------ | -------------------------
| |                                      |              |                          
| | Lumber, building materials and other | $8,622,186   | $8,036,198               
| | Industrial tools                     | 310,279      | 379,610                  
| | Seed processing and sales            | 494,360      | 335,053                  
| |                                      |              |                          
| |                                      | $9,426,825   | $8,750,861               



4.

NOTE RECEIVABLE



The note receivable is due on demand and bears interest at prime plus 1%.







JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



5.

PROPERTY, PLANT AND EQUIPMENT



A summary of property plant and equipment follows:



|                         | May 31,
2007 | August 31,
2006
(Audited)
|------------------------ | ------------ | -------------------------
|                         |              |                          
|Office equipment         | $    623,262 | $    640,844             
|Warehouse equipment      | 1,287,051    | 1,215,634                
|Buildings                | 2,004,306    | 2,004,306                
|Land                     | 568,713      | 568,713                  
|                         | 4,483,332    | 4,429,497                
|Accumulated depreciation | (2,392,676)  | (2,211,741)              
|                         |              |                          
|Net book value           | $  2,090,656 | $  2,217,756             



During the three month period ended February 28, 2006, the Company sold its distribution facility in Ogden, Utah (which included the land and building) to an unrelated party.  The Company received gross proceeds of $660,000 and recognized a gain of $599,825.



In the event that facts and circumstances indicate that the carrying amount of an asset may not be recoverable and an estimate of future undiscounted 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.



6.

INTANGIBLE ASSETS



A summary of intangible assets follows:



|                         | May 31,
2007 | August 31,
2006
(Audited)
|------------------------ | ------------ | -------------------------
|                         |              |                          
|Patent                   | $ 850,000    | $            -           
|Other                    | 27,010       | 4,310                    
|                         | 877,010      | 4,310                    
|Accumulated amortization | (40,854)     | (4,209)                  
|                         |              |                          
|Net book value           | $ 836,156    | $       101              



The Company purchased two patents and manufacturing rights for a steel framed gate system.



7.

DEFERRED TAXES



Deferred income taxes of $143,300 (August 31, 2006 - $142,900) relate principally to temporary differences between the accounting and tax treatment of income, expenses, reserves and depreciation.





JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



8.

LONG TERM LIABILITIES



The carrying amount follows:





|                                                                                                                           | May 31,
2007 |  | August 31,
2006
(Audited)
|-------------------------------------------------------------------------------------------------------------------------- | ------------ |  | -------------------------
|                                                                                                                           |              |  |                          
|Promissory note, due June 15, 2010, bearing interest at 6.25% per annum, monthly payments of $16,601                       | $2,096,893   |  | $2,141,395               
|Note payable  patent, bearing interest at 5% per annum,  $300,000 due January 15, 2008 and the remainder January 15, 2009 | 600,000      |  | -                        
|                                                                                                                           |              |  |                          
|                                                                                                                           | 2,696,893    |  | 2,141,395                
|Less current portion:                                                                                                      |              |  |                          
|Promissory note                                                                                                            | 62,843       |  | 59,432                   
|Note payable                                                                                                               | 300,000      |  | -                        
|                                                                                                                           | 362,843      |  | 59,432                   
|                                                                                                                           |              |  |                          
|Long term portion                                                                                                          | $2,334,050   |  | $2,081,963               



The promissory note is secured by the property located in North Plains, Oregon.  The company granted a security interest in the collateral which is the patent.



The aggregate principal repayments required in each of the next four years, assuming the promissory note is renewed under similar terms and conditions and the note payable is paid per the above, will be as follows:



|2007 | $   14,948
|---- | ----------
|2008 | $ 363,896 
|2009 | $ 367,859 
|2010 | $   60,466



At June 15, 2010 the promissory note amount of principal at renewal will be approximately $1,889,725.  The promissory note has certain financial covenants.  The Company is in compliance with these covenants.



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.



At the Companys annual meeting, which was held on March 9, 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.





JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



10.

CONTINGENT LIABILITIES AND COMMITMENTS



a)

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 is 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 with an award of the contested intellectual property rights to the Company.  The Company has accrued reserves to cover the money judgment related to this dispute.



Greenwood Forest Products, Inc. has filed for an appeal for review of the courts opinion.



b)

Greenwood leases office premises pursuant to an operating lease which expires in January 31, 2008.  For the periods ended May 31, 2007 and 2006, rental expense was $130,088 and $128,700, respectively.



JCLC leases office premises pursuant to an operating lease which expires in January 31, 2010.  For the periods ended May 31, 2007 and 2006, rental expense was $6,563 and $6,563, respectively.



Future minimum annual lease payments are as follows:



|2007 | $43,941
|---- | -------
|2008 | $73,235
|2009 | -      
|2010 | -      
|     |        



c)

The Company has a line of credit of $5,000,000 of which $300,000 is dedicated to standby letters of credit to support international transactions.  At May 31, 2007, the Company did not have a balance outstanding, and at August 31, 2006 the Company did not have a balance outstanding (note 8).  The line of credit has certain financial covenants. The Company is in compliance with these covenants.



























JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



11.

SEGEMENTED INFORMATION



The Company has four principal reportable segments, which were determined based on the nature of the products offered along with the markets being served.  Reportable segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  The Company evaluates performance based on several factors, of which the primary financial measure is business segment income before taxes.  The following tables show the operations of the Company's reportable segments.



Following is a summary of segmented information for the nine month periods ended May 31:



|                                   | 2007           |  | 2006       
|---------------------------------- | -------------- |  | -----------
|Sales to unaffiliated customers:   |                |  |            
|Industrial wood products           | $ 32,153,737   |  | $38,480,180
|Lumber, building materials & other | 14,533,573     |  | 14,261,103 
|Seed processing  and sales         | 5,296,785      |  | 4,296,768  
|Industrial tools                   | 790,897        |  | 692,745    
|                                   | $ 52,774,991   |  | $57,730,796
|Income (loss) from operations:     |                |  |            
|Industrial wood products           | $      790,801 |  | $ 1,405,531
|Lumber, building materials & other | 1,531,858      |  | 641,972    
|Seed processing  and sales         | 220,204        |  | 198,610    
|Industrial tools                   | 1,595          |  | 112,150    
|General corporate                  | (98,944)       |  | (87,411)   
|                                   | $   2,445,515  |  | $ 2,270,852
|                                   |                |  |            
|Identifiable assets:               |                |  |            
|Industrial wood products           | $   8,460,413  |  | $ 9,070,113
|Lumber, building materials & other | 9,638,804      |  | 7,229,834  
|Seed processing  and sales         | 801,669        |  | 667,877    
|Industrial tools                   | 459,301        |  | 98,693     
|General corporate                  | 142,691        |  | 107,113    
|                                   | $ 19,502,877   |  | $17,173,630
|                                   |                |  |            







































JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



|                                            |  | 2007         |  | 2006      
|------------------------------------------- |  | ------------ |  | ----------
|Depreciation:                               |  |              |  |           
|Industrial wood products                    |  | $  28,390    |  | $  36,463 
|Lumber, building materials & other          |  | 199,974      |  | 178,317   
|Seed processing  and sales                  |  | 5,296        |  | -         
|Industrial tools                            |  | 308          |  | -         
|                                            |  | $233,968     |  | $214,780  
|                                            |  |              |  |           
|Capital expenditures:                       |  |              |  |           
|Industrial wood products                    |  | $    1,954   |  | $    2,665
|Lumber, building materials & other          |  | 22,725       |  | 36,731    
|Seed processing  and sales
Industrial tools |  | 43,244
2,300 |  | 1,735
-   
|                                            |  | $  70,223    |  | $  41,131 
|                                            |  |              |  |           
|Interest expense:                           |  |              |  |           
|Lumber, building materials & other          |  | $190,729     |  | $167,493  



The following table lists sales made by the Company to a customer which was in excess of 10% of total sales for the periods.



|      |  | Nine Month Periods Ended
|----- |  | ------------------------
|      |  | May 31,                 
|      |  | 2007                    
|Sales |  | $5,859,696              
|      |  |                         



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 among a small number of customers.  At May 31, 2007 and August 31, 2006 no customers accounted for accounts receivable greater than 10% of total accounts receivable.  The Company controls credit risk through credit approvals, credit limits, and monitoring procedures.  The Company performs credit evaluations of its commercial customers but generally does not require collateral to support accounts receivable.



Volume of business



The Company has concentrations in the volume of purchases it conducts with its suppliers.  For the nine month period ended May 31, 2007, there were two suppliers that accounted for greater than    10% of total purchases each, and the aggregate purchases amounted to $12,969,849.  For the nine month period ended May 31, 2006 there were four suppliers that accounted for purchases greater than 10% of total purchases each.  The aggregate purchase amounted to $18,236,742.









JEWETT-CAMERON TRADING COMPANY LTD.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Expressed in U.S. Dollars)

MAY 31, 2007

(Unaudited)_____________________________________________________________________________



13.

SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS



|                                 | Nine Month   
|-------------------------------- | -------------
|                                 | Periods Ended
|                                 | May 31,      
|                                 | 2007         
|                                 |              
|Cash paid during the period for: |              
|Interest                         | $193,458     
|Income taxes                     | $911,170     
|                                 |              
|                                 |              









Item 2.

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



These unaudited financial statements are those of the Company and its wholly owned subsidiaries. In the opinion of management, the accompanying Consolidated Financial Statements of Jewett-Cameron Trading Company Ltd., contain all adjustments, consisting only of normal recurring adjustments, necessary to fairly state its financial position as of May 31, 2007 and August 31, 2006 and its results of operations and cash flows for the nine month periods ended May 31, 2007 and May 31, 2006 in accordance with U.S. GAAP.  Operating results for the nine month period ended May 31, 2007 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, 200 7
..



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

•

Lumber, building materials 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 wholesaler of a variety of specialty wood products.  A major product category is treated plywood that is sold to boat manufacturers and the transportation industry, and another significant product is kiln sticks.  This segment does not experience much seasonality.



The lumber, building materials and other segment reflects the business of Jewett-Cameron Lumber Corporation, which is a wholesaler of building materials and a manufacturer and distributor of specialty wood and metal products for home centers and other retailers.  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.  The fiscal quarters ending May 31 and August 31 reflect the highest levels of activity in this segment.



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 minor amount of sales derived from cleaning of seed.  Even though the harvest and processing cycle is seasonal, sales of JCSC tend to be fairly uniform throughout the year.



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.  These products are primarily sold to retailers that in turn sell to contractors and end users.  Sales of these products tend to be relatively uniform throughout the year.



RESULTS OF OPERATIONS



Three Months Ended May 31, 2007 and May 31, 2006



For the three months ended May 31, 2007, sales increased $297,997 to $20,855,493 from $20,557,496 for the three months ended May 31, 2006.  Primarily this reflects a relatively large increase in sales at JCLC that more than offset a relatively large decrease in sales at Greenwood.



Sales at Greenwood were $11,028,378 for the three months ended May 31, 2007, which was a decrease of $1,420,442 or 13% compared to sales of $12,448,820 for the three months ended May 31, 2006. Contributing to the decline in sales were lower plywood prices and the discontinuation of sales of a previously significant product, scaffold plank made from LVL.  Operating income at Greenwood was up $13,492 or 4% based on a reduction in operating expenses mainly related to wages, incentive compensation, and benefits that more than offset the sales decline.



Sales at JCLC were $8,216,632 for the three months ended May 31, 2007, which was an increase of $1,514,124 or 18% compared to sales of $6,702,508 for the three months ended May 31, 2006.  The increase primarily reflects a very significant increase in the sales of specialty metal products along with a moderate increase in wood products sales.    Operating income was up $412,598 or 48% based on both the higher level of overall sales and particularly on the fact that the gross margin on the sale of the specialty metal products is much higher than on wood products sales.



Sales at JCSC were $1,295,911 for the three months ended May 31, 2007, which was an increase of $127,170 or 10% compared to $1,168,741 for the three months ended May 31, 2006.  The increase in sales is not related to any notable factor.  There was relatively little change in operating income.



Sales at MSI were $314,571 for the three months ended May 31, 2007, which was an increase of $77,144 or 25% compared to $237,427 for the three months ended May 31, 2006.  Operating income declined by $64,505 based on increased manning to handle anticipated future growth coupled with competitive market pressures.



Gross margin for the three month period ended May 31, 2007 was 15.1% compared with 14.4% for the three months ended May 31, 2006.

Operating expenses decreased by $164,143 from $2,010,677 for the three month period ended May 31, 2006 to $1,846,534 for the three month period ended May 31, 2007.  Selling, general, and administrative expenses decreased by $41, depreciation and amortization increased by $12,777, and wages and benefits decreased by $176,879.  The decline in wages and benefits occurred primarily at Greenwood and is related to the lower sales in that business.

Income tax expense for the three month period ended May 31, 2007 was $489,000 compared to $326,000 for the three month period ended May 31, 2006. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.



Net income for the three month period ended May 31, 2007 was $756,897, or $.32 per diluted share compared to $560,502, or $.24 per diluted share for the three month period ended May 31, 2006.  The increase in net income primarily results from the $412,598 increase in operating income at JCLC.



Nine Months Ended May 31, 2007 and May 31, 2006



For the nine month period ended May 31, 2007 sales decreased $4,955,804 to $52,774,992 compared to sales of $57,730,796 for the nine month period ended May 31, 2006.   Primarily this reflects a relatively large decrease in sales at Greenwood.



Sales at Greenwood were $32,153,736 for the nine month period ended May 31, 2007, which was a decrease of $6,326,444 or 20% compared to sales of $38,480,180 for the nine month period ended May 31, 2006.  Contributing to the decline in sales were lower plywood prices and the discontinuation of sales of a previously significant product, scaffold plank made from LVL.  Operating income at Greenwood declined by $614,730 based on lower plywood prices and the loss of profitability that came from the sale of scaffold plank.  Also, Greenwood experienced a sizable bad debt loss in the quarter ended February 28, 2007.



Sales at JCLC were $14,533,573 for the nine month period ended May 31, 2007, which was an increase of $272,470 or 2% compared to sales of $14,261,103 for the nine month period ended May 31, 2006. This reflects a sizable increase in specialty metal products that slightly more than offset a sizable decrease in wood products sales.  Operating income was up $889,886 reflecting the fact that the gross margin on specialty metal products is much higher than on wood products sales.  Also, a $150,000 inventory reserve reversal was reflected in the quarter ended November 30, 2006, and this is reflected in the operating income improvement.



Sales at JCSC were $5,296,785 for the nine months ended May 31, 2007 compared to $4,296,768 for the nine months ended May 31, 2006, which was an increase of $1,000,017 or 19%.  The increase is not related to any notable factor.  Operating income increased by $21,594.



Sales at MSI were $790,897 for the nine month period ended May 31, 2007 compared to $692,745 for the nine month period ended May 31, 2006, which was an increase of $98,152 or 12%.  Operating income declined by $110,555 based on increased manning to handle anticipated future growth coupled with competitive market pressures.



Gross margin for the nine month period ended May 31, 2007 was 15.4% compared with 14.7% for the nine months ended May 31, 2006.

Operating expenses decreased by $555,041 from $6,224,779 for the nine month period ended May31, 2006 to $5,669,738 for the nine month period ended May 31, 2007.  Selling, general, and administrative expenses increased by $6,015, depreciation and amortization increased by $19,188, and wages and benefits decreased by $580,244.  The decline in wages and benefits occurred primarily at Greenwood and is related to the lower sales in that business.

Income tax expense for the nine month period ended May 31, 2007 was $895,444 compared to $1,035,000 for the nine month period ended May 31, 2006. The lower taxes reflect the fact that income for the nine months ended May 31, 2006 included a onetime gain of $599,825 connected with the sale of the Companys distribution center in Utah, which resulted in higher income tax expense based on the gain.  The Company estimates income tax expense for the year based on combined federal and state rates that are currently in effect.



The net income for the nine month periods ended May 31, 2007 was $1,366,128 or $.57 per diluted share compared to $1,728,619 or $.73 per diluted share for the nine months ended May 31, 2006.  The nine month period ended May 31, 2006 included a one-time gain of $599,825 or $.16 per share connected with the sale of the Companys distribution center in Utah.  Excluding this one-time gain net income for the nine months ended May 31, 2006 would have been $1,353,453 and diluted earnings per share would have been $.57.  Excluding the one-time gain net income is up $12,675 based on higher profitability at JCLC offsetting lower profitability at Greenwood and MSI.



LIQUIDITY AND CAPITAL RESOURCES



As of May 31, 2007 the Company had working capital of $12,646,658, which represented an increase of $935,247 compared to working capital of $11,711,411 as of August 31, 2006.  The largest changes effecting this change in working capital were a $476,124 increase in accounts receivable, a $675,964 decrease in inventory, and an $870,296 decrease in accounts payable.



As of May 31, 2007 accounts receivable and inventory represented 96% of current assets and 81% of total assets.  For the three months ended May 31, 2007 the accounts receivable collection period or DSO was 29.7 days compared with 30.4 days for the three months ended May 31, 2006.  DSO for the nine months ended May 31, 2007 was 33.7 days compared with 31.1 days for the nine months ended May 31, 2006.  Inventory turnover for the three months ended May 31, 2007 was 50.1 days compared with 38.9 days for the three months ended May 31, 2006, and inventory turnover for the nine months ended May 31, 2007 was 56.7 days compared with 41.2 days for the nine months ended May 31, 2006.  The large slowdown in inventory turnover in the latest three month and nine month periods reflects the buildup of inventory to service a customer in the industrial wood products segment and the subsequent discontinuation of selling to this customer.



External sources of liquidity include a line of credit from the United States National Bank of Oregon of $5,000,000 of which $300,000 is presently dedicated to standby letters of credit to support international transactions.  At May 31, 2007 the company did not have a balance outstanding leaving $4,700,000 available.  There was no outstanding balance at August 31, 2006.  Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory.  Interest is calculated at either prime or the LIBOR rate plus 190 basis points. The weighted average interest rate for the nine month period ended May 31, 2007 was 8.25%.



Based on the Companys current working capital position, its policy of retaining earnings, and the line of credit available, the Company has adequate working capital to meet its needs during the current fiscal year.



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.



We registered 750,000 common shares with the Securities and Exchange Commission which became effective September 28, 2006; this could result in a substantial proportion of the voting power being transferred to new investor(s).  The result would be that the new shareholder(s) could control our company and persons unknown could replace current management.



We have not established a minimum amount of proceeds that we must receive in the offering before any proceeds may be accepted.  Once accepted, the funds will be deposited into an account maintained by us and considered our general assets.  None of the proceeds will be placed in any escrow, trust or other arrangement; therefore, there are no investor protections for the return of subscription funds once accepted.



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 three month period ended May 31, 2007 was 5,525 shares, and for the nine months ended May 31, 2007 the average daily volume was 12,480 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: increased competition; worldwide economic conditions, specifically those pertaining to lumber prices; demand for products; and consumer interest rates.  If economic conditions deteriorate or if consumer preferences change, we could experience a significant decrease in profitability.



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



For the nine months ended May 31, 2007 our top ten customers represented 41% 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 marine and retail home improvement 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
$300,000 is dedicated to standby letters of credit to support international transactions, and $4,700,000 is available .
  We are currently in compliance with the requirements of our existing line of credit.  If we lost this credit it could become impossible to pay some of our creditors on a timely basis.



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.



Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 (Section 404), we will be required, beginning in fiscal year 2009, to perform an evaluation of our internal controls over financial reporting and have our independent registered public accounting firm test and evaluate the design and operating effectiveness of such internal controls and publicly attest to such evaluation. We have not yet prepared any internal plan of action for compliance with the requirements of Section 404 or any effectiveness evaluation. Although we believe our internal controls are operating effectively, we cannot guarantee that we will not have any material weaknesses as reported by our independent registered public accounting firm. Compliance with the requirements of Section 404 is expected to be expensive and time-consuming. If we fail to complete this evaluation in a timely manner, or if our independent registered public accounting firm cannot timely attest to our evaluation, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.



Item 3.

Quantitative and Qualitative Disclosures about Market Risk



Interest Rate Risk



The Company does not have any derivative financial instruments as of May 31, 2007.  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 is based on various published rates that 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



Management does not expect foreign currency exchange rates to significantly impact the Company in the future.



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 period ended
May 31 , 200
7 the CEO and CFO have concluded that our disclosure controls and procedures were effective. For the period ended
May 31 , 200
7 the CEO and CFO have  also concluded that the disclosure controls and procedures were effective for the purpose of ensuring that material information required to be in this report is made known to management and others, as appropriate, to allow timely decisions regarding required disclosures
..



CEO and CFO CERTIFICATIONS



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



DISCLOSURE CONTROLS AND INTERNAL CONTROLS.



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



LIMITATIONS ON THE EFFECTIVENESS OF CONTROLS.



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







CONCLUSION



In accordance  with SEC requirements, the CEO and CFO note that, as of the period ended
May 31 , 200
7 covered by this repor
t , there were  no significant deficiencies and material weaknesses in our Internal Controls.



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 is 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 with an award of the contested intellectual property rights to the Company.  The Company has accrued reserves to cover the money judgment related to this dispute.



Greenwood Forest Products, Inc. has filed for an appeal 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, Terry D. Schumacher

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), Terry D. Schumacher



















































































SIGNATURES



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



Jewett-Cameron Trading Company Ltd.

(Registrant)





Dated: July 6, 2007

/s/  Donald M. Boone

Donald M. Boone, President/CEO/Director



Dated:  July 6, 2007

/s/  Terry D. Schumacher

Terry D. Schumacher, Chief Financial Officer