QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED ~~MAY 31, 2016~~FEBRUARY 28, 2017

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

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

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value – ~~2,370,704common~~2,286,294common shares as of ~~July 14, 2016.~~April 13, 2017.

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


	May 31, 2016	August 31, 2015	February 28, 2017		August 31, 2016

Continued

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Accounts payable	$ 1,304,549	$ 984,955	$ 302,684		$ 839,972
Litigation reserve (note 12(a))	-	90,671
Accrued liabilities	1,394,191	1,024,358	1,049,803		1,473,792

Total current liabilities	2,698,740	2,099,984	1,352,487		2,313,764

Deferred tax liability(note 6)	4,203	34,300	26,813		31,353

Total liabilities	2,702,943	2,134,284	1,379,300		2,345,117

Contingent liabilities and commitments(note 12)

Stockholders’ equity
Capital stock (note 8)
Capital stock (note 8, 9)
Authorized
21,567,564 common shares, without par value
10,000,000 preferred shares, without par value
Issued
2,413,446 common shares (August 31, 2015 – 2,476,832)	1,138,590	1,168,712
2,286,294 common shares (August 31, 2016 – 2,286,294)		1,078,759		1,078,759
Additional paid-in capital	600,804	600,804	600,804		600,804
Retained earnings	16,611,798	15,754,619	16,640,025		15,845,092

Total stockholders’ equity	18,351,192	17,524,135	18,319,588		17,524,655

Total liabilities and stockholders’ equity	$ 21,054,135	$ 19,658,419	$ 19,698,888		$ 19,869,772

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


	Three Month Period Ended May 31,		Nine Month Period Ended May 31,			Three Month Periods to the end of February			Six Month Periods to the end of February
	2016	2015	2016		2015	2017	2016		2017	2016

SALES	$ 14,458,713	$ 13,289,408	$ 37,588,354		$ 30,755,429	$ 9,499,286	$ 11,188,133		$ 19,921,089	$ 23,129,641

COST OF SALES	11,281,973	11,047,607	29,996,180		24,741,485	7,370,224	9,152,554		15,397,585	18,714,207

GROSS PROFIT	3,176,740	2,241,801	7,592,174		6,013,944	2,129,062	2,035,579		4,523,504	4,415,434

OPERATING EXPENSES
Selling, general and administrative expenses	542,581	465,864	1,616,796		1,438,687	453,668	531,423		1,004,717	1,074,216
Depreciation and amortization	82,978	71,211	226,961		210,894	69,368	68,470		138,007	143,983
Wages and employee benefits	1,046,229	925,386	3,017,643		2,588,420	1,057,792	1,095,069		2,040,041	1,971,414
						1,580,828	1,694,962		3,182,765	3,189,613
	(1,671,788)	(1,462,461)	(4,861,400)		(4,238,001)

Income from operations	1,504,952	779,340	2,730,774		1,775,943	548,234	340,617		1,340,739	1,225,821

OTHER ITEMS
Gain on sale of property, plant and equipment	-	-	5,600		-
(Loss) gain on sale of property, plant and equipment					(393)	5,600		(393)	5,600
Interest and other income	2,978	8,534	13,538		22,617	2,000	1,800		3,820	10,534
Interest expense	-	(658)	(27)		(658)
Litigation expense (Note 12(a))	-	-	(115,990)	-		-	(115,990)		-	(115,990)
	2,978	7,876	(96,879)		21,959	1,607	(108,590)		3,427	(99,856)

Income before income taxes	1,507,930	787,216	2,633,895		1,797,902	549,841	232,027		1,344,166	1,125,965

Income tax expense	(599,200)	(326,116)	(1,060,960)		(725,455)	(240,828)	(100,067)		(549,233)	(461,760)

Net income	$ 908,730	$ 461,100	$ 1,572,935		$ 1,072,447	$ 309,013	$ 131,960		$ 794,933	$ 664,205

Basic earnings per common share	$ 0.37	$ 0.18	$ 0.64		$ 0.41	$ 0.14	$ 0.05		$ 0.35	$ 0.27

Diluted earnings per common share	$ 0.37	$ 0.18	$ 0.64		$ 0.41	$ 0.14	$ 0.05		$ 0.35	$ 0.27

Weighted average number of common shares outstanding:
Basic	2,458,170	2,561,702	2,470,566		2,612,199	2,286,294	2,476,832		2,286,294	2,476,832
Diluted	2,458,170	2,561,702	2,470,566		2,612,199	2,286,294	2,476,832		2,286,294	2,476,832

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


	Three Month Period Ended May 31,		Nine Month Period Ended May 31,		Three Month Period to the end of February				Six Month Period to the end of February
	2016	2015	2016	2015	2017		2016		2017		2016

CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$ 908,730	$ 461,100	$ 1,572,935	$ 1,072,447	$ 309,013		$ 131,960		$ 794,933		$ 664,205
Items not involving an outlay of cash:
Depreciation and amortization	82,978	71,211	226,961	210,894	69,368		68,470		138,007		143,983
Gain on sale of property, plant and equipment	-	-	(5,600)	-
Deferred income tax expense (recovery)	(33,601)	(2,163)	(30,097)	(4,872)
Loss (gain) on sale of property, plant and equipment				393		(5,600)		393		(5,600)
Deferred income taxes				7,705		(9,301)		4,540		3,504
Interest income on litigation	-	(6,734)	(6,661)	(19,983)	-		-		-		(6,661)
Decrease in litigation reserve	-	-	(84,010)	-	-		(84,010)		-		(84,010)

Changes in non-cash working capital items:
(Increase) decrease in accounts receivable	(597,843)	107,980	(694,191)	(2,483,168)
Decrease in inventory	213,122	2,485,712	1,053,681	536,845
(Increase) decrease in note receivable	-	275	1,310	13,575
(Increase) decrease in prepaid expenses	(271,860)	104,098	(61,249)	41,194
(Increase) decrease in prepaid income taxes	159,031	19,133	26,570	350,863
Increase (decrease) in accounts payable and accrued liabilities	974,527	631,547	689,427	270,805
Decrease (increase) in accounts receivable				(1,161,352)		535,231		(1,205,537)		(96,348)
Decrease (increase) in inventory				(1,197,634)		651,225		(817,226)		840,559
Decrease in note receivable				-		360		-		1,310
Decrease in prepaid expenses				54,425		543,620		25,202		210,611
Increase in prepaid income taxes				(149,487)		(159,031)		(148,891)		(132,461)
Decrease in accounts payable and accrued liabilities				(396,374)		(373,786)		(961,277)		(285,100)
Decrease in income taxes payable				(310,974)		-		-		-

Net cash provided by (used in) operating activities	1,435,084	3,872,159	2,689,076	(11,400)	(2,774,917)		1,299,138		(2,169,856)		1,253,992

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment	(31,618)	(70,543)	(79,520)	(85,240)	(109,393)		(37,376)		(335,014)		(47,902)
Proceeds from sale of property, plant and equipment	-	-	5,600	-	3,480		5,600		3,480		5,600

Net cash used in investing activities	(31,618)	(70,543)	(73,920)	(85,240)	(105,913)		(31,776)		(331,534)		(42,302)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank indebtedness	-	-	-	875,386
Repayment of bank indebtedness	-	(875,386)	-	(875,386)
Redemption of common stock	(745,878)	(1,101,574)	(745,878)	(2,394,051)

Net cash used in financing activities	(745,878)	(1,976,960)	(745,878)	(2,394,051)

Net increase (decrease) in cash	$ 657,588	$ 1,824,656	$ 1,869,278	$ (2,490,691)	(2,880,830)		1,267,362		(2,501,390)		1,211,690

Cash, beginning of period	$ 5,627,987	$ 12,193	$ 4,416,297	$ 4,327,540	4,899,362		4,360,625		4,519,922		4,416,297

Cash, end of period	$ 6,285,575	$ 1,836,849	$ 6,285,575	$ 1,836,849	$ 2,018,532		$ 5,627,987		$ 2,018,532		$ 5,627,987

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

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

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

The Company, through its subsidiaries, operates out of facilities located in North Plains, Oregon. JCC’s business consists of the manufacturing and distribution of specialty metal products and wholesale distribution of wood products to home centers and other retailers located primarily in the United States. Greenwood is a processor and distributor of industrial wood and other specialty building products principally to customers in the marine and transportation industries in the United States. MSI is an importer and distributor of pneumatic air tools and industrial clamps in the United States. JCSC is a processor and distributor of agricultural seeds in the United States. JC USA provides professional and administrative services, including accounting and credit services, to its subsidiary companies.

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, 2016~~February 28, 2017 and August 31, ~~2015~~2016 and its results of operations and cash flows for the three and ~~nine~~six month periods ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and May 31, 2015~~ in accordance with generally accepted accounting principles of the United States of America (“U.S. GAAP”). Operating results for the three and ~~nine~~six month periods ended ~~May 31, 2016~~February 28, 2017 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, ~~2016.~~2017.

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

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

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

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

The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. At ~~May 31, 2016,~~February 28, 2017, cash was ~~$6,285,575~~$2,018,532 compared to ~~$4,416,297~~$4,519,922 at August 31, ~~2015.~~2016. At ~~May 31, 2016~~February 28, 2017 and August 31, ~~2015,~~2016, there were no cash equivalents.

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

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

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

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

The Company’s intangible assets have a finite life and are recorded at cost. The most significant intangible assets are two patents related to gate support systems. Amortization is calculated using the straight-line method over the remaining lives of 2112 months and 3324 months, respectively, and are reviewed annually for impairment.

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

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

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

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

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 ~~nine~~six month periods ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and 2015~~ are as follows:

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

All stock-based compensation is recognized as an expense in the financial statements and such costs are measured at the fair value of the award.

No options were granted during the ~~nine~~six month period ended ~~May 31, 2016,~~February 28, 2017, and there were no options outstanding on ~~May 31, 2016.~~February 28, 2017.

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

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

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

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

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

The estimated fair values of the Company's financial instruments as of ~~May 31, 2016~~February 28, 2017 and August 31, ~~2015~~2016 follows:

The following table presents information about the assets that are measured at fair value on a recurring basis as of ~~May 31, 2016,~~February 28, 2017, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset:

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

A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carryforwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities.

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

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

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

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

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.

Deferred income tax liability as of ~~May~~February 28, 2017 of $26,813 (August 31, 2016 ~~of $4,203 (August 31, 2015~~ – ~~$34,300)~~$31,353) reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

There was no bank indebtedness under the Company’s $3,000,000 line of credit as of ~~May 31, 2016~~February 28, 2017 or August 31, ~~2015.~~2016.

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

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.

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

During the 4^th quarter of fiscal 2016 ended August 31, 2016, the Company repurchased and cancelled a total of 112,152 common shares under a 10b5-1 share repurchase plan. The total cost was $1,378,701 at an average price of $12.29. The premium paid to acquire these shares over their per share book value in the amount of $1,325,994 was recorded as a decrease to retained earnings. In addition to the shares repurchased under the 10b5-1 repurchase plan, Donald Boone, President and CEO of the Company, voluntarily returned 15,000 common shares to treasury for cancellation. The Company paid no consideration for the shares. Capital stock was reduced by the book value of the shares in the amount of $7,124, with a corresponding increase to retained earnings of $7,124.

During the 3^rd quarter of fiscal 2016 ended May 31, 2016, the Company repurchased and cancelled a total of 63,386 common shares under a 10b5-1 share repurchase plan. The total cost was $745,878 at an average price of $11.77 per share. The premium paid to acquire these shares over their per share book value in the amount of $715,756 ~~was recorded as a decrease to retained earnings.~~

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

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

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

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

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

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

The Company had no stock options outstanding as of ~~May 31, 2016~~February 28, 2017 and August 31, ~~2015.~~2016.

The Company has a deferred compensation 401(k) plan for all employees with at least 12 months of service pending a monthly enrolment time. The plan allows for a non-elective discretionary contribution based on the first $60,000 of eligible compensation. During the quarter ended February 29, 2016, the Company made an additional 10% contribution for all eligible employees as a one-time compensation bonus. For the six month periods ended February 28, 2017 and February 29, 2016, the 401(k) compensation expense was $160,157 and $279,975, respectively.

The Company has a deferred compensation 401(k) plan for all employees with at least 12 months of service pending a monthly enrollment time. The plan allows for a non-elective discretionary contribution based on the first $60,000 of eligible compensation. During the second quarter of fiscal 2016 ended February 29, 2016, the Company made an additional 10% contribution for all eligible employees as a one-time compensation bonus. For the nine month periods ended May 31, 2016 and 2015, the 401(k) compensation expense was $360,275 and $186,345, respectively.

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

During fiscal 2002 the Company entered into a purchase agreement to acquire inventory over a 15 month period with an initial estimated value of $7,000,000 from Greenwood Forest Products, Inc. During the year ended August 31, 2003, the Company completed the final phase of the inventory acquisition. As partial consideration for the purchase of the inventory the Company issued two promissory notes, based on its understanding of the value of the inventory purchased. The Company believes it overpaid the obligation by approximately $820,000. The holder counterclaimed for approximately $2,400,000.

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

~~During~~A series of rulings and appeals between the ~~1st quarter of fiscal~~years ended August 31, 2011 ~~the Oregon Court of Appeals ruled that the judgment~~to August 31, 2015, resulted in ~~favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of the defendants should stand. The judgment in favor of~~ the Company ~~was for $819,000 plus attorney’s fees. The judgment against the plaintiffs is for $1,187,137. The Company appealed the decision~~recognizing aggregate litigation income of $272,695, and aggregate interest expense of $363,366 to ~~the Oregon Supreme Court. During the 1st quarter of fiscal 2011, the Company recorded~~August 31, 2015, totaling a ~~litigation~~net loss of $962,137 and interest of $391,988 in addition to the existing litigation reserve of $225,000. Additional interest of $48,790 was recorded during the remainder of fiscal 2011. During the 1st quarter of fiscal 2012 ended November 30, 2011, additional interest of $16,204 was accrued.

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

In July 2014, upon remand from the Oregon Supreme Court, the Oregon Court of Appeals has concluded that Greenwood Forest Products, Inc. as defendants are entitled to a new trial, and, as a consequence, ruled that the judgment in favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of defendants should stand. The judgment in favor of the Company was for $819,000 plus attorney’s fees. The judgment against plaintiffs was for $1,187,137. On August 7, 2014, the Company filed a petition with the Oregon Supreme Court for a review of the Oregon Court of Appeals notice. The petition requests the Oregon Supreme Court review the most recent ruling by the Oregon Court of Appeals, reverse the decision, and affirm the original judgment of the trial court. In September 2015, the Oregon Supreme Court ruled on the Company’s petition and has reversed the decision of the Oregon Court of Appeals and remanded the case to back to the Court of Appeals for further proceedings. The Court also denied the defendants’ request for a new trial.$90,671.

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

~~During the quarter ended February 29,~~ 2016, the Company and Greenwood Forest Products, Inc., settled all litigation between the two companies. The Company made a cash payment of $200,000 to Greenwood Forest Products, Inc., as full settlement and termination of the litigation (the “Settlement Payment”). ~~The~~During the six months ended February 29, 2016 and year ended August 31, 2016, litigation expense of $115,990 ~~represents the difference between the Settlement Payment, and the litigation reserve balance on~~was recorded. As a result, to the date of settlement ~~of $84,010 which is net of interest income recognized for the period.~~

~~The litigation reserve was reversed in full upon the settlement reached~~ during the ~~nine month period~~year ended ~~May~~August 31, ~~2016.~~2016, the Company recognized aggregate litigation income, and aggregate interest expense of $156,705, and $363,366 respectively, resulting in an aggregate loss of $206,661.

At ~~May 31, 2016~~February 28, 2017 and August 31, ~~2015~~2016, the Company had an un-utilized line-of-credit of $3,000,000 (note 7). The line-of-credit has certain financial covenants. The Company is in compliance with these covenants.

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 ~~nine~~six month periods ended ~~May 31:~~February 28, 2017 and February 29, 2016:

Litigation expense incurred during the period ended February 29, 2016 of $115,990 is included in this balance (Note 12(a)).

The following table lists sales made by the Company to customers which were in excess of 10% of total sales for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 and ~~2015:~~February 29, 2016:

The Company conducts business primarily in the United States, but also has limited amounts of sales in foreign countries. The following table lists sales by country for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 and ~~2015:~~February 29, 2016:

All of the Company’s significant identifiable assets were located in the United States as of ~~May 31, 2016~~February 28, 2017 and ~~2015.~~

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with a high quality financial institution. The Company has concentrations of credit risk with respect to accounts receivable as large amounts of its accounts receivable are concentrated geographically in the United States amongst a small number of customers. At ~~May 31, 2016, one customer accounted for accounts receivable greater than 10% of total accounts receivable at 43%. At May 31, 2015, four~~February 28, 2017, two customers accounted for accounts receivable greater than 10% of total accounts receivable at ~~77%~~52%. At February 29, 2016, two customers accounted for accounts receivable greater than 10% of total accounts receivable at 59%. The Company controls credit risk through credit approvals, credit limits, credit insurance and monitoring procedures. The Company performs credit evaluations of its commercial customers but generally does not require collateral to support accounts receivable.

The Company has concentrations in the volume of purchases it conducts with its suppliers. For the ~~nine~~six months ended ~~May 31,~~February 28, 2017, there were two suppliers that each accounted for 10% or greater of total purchases, and the aggregate purchases amounted to $7,425,603. For the six months ended February 29, 2016, there were three suppliers that each accounted for 10% or greater of total purchases, and the aggregate purchases amounted to ~~$16,016,162. For the nine months ended May 31, 2015, there were three suppliers that each accounted for greater than 10% of total purchases, and the aggregate purchases amounted to $15,064,820.~~$9,607,690.

Certain cash payments for the ~~nine~~six months ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and 2015~~ are summarized as follows:

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

Subsequent to the end of the third quarter, the Company re-purchased and cancelled a total of 42,742 shares of its common stock pursuant to the Company’s 10b5-1 share re-purchase plan, previously announced on March 7, 2016. The total cost was $489,274 at an average share price of $11.45 per share.

~~On June 2, 2016, the Company incorporated a new wholly-owned subsidiary in the State of Oregon.~~

~~On June 22, 2016, Donald Boone, President and CEO of the Company, voluntarily returned 15,000 common shares to treasury for cancellation. No consideration was paid to Mr. Boone for the shares.~~

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, 2016~~February 28, 2017 and August 31, ~~2015~~2016 and its results of operations and cash flows for the three and ~~nine~~six month periods ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and May 31, 2015~~ in accordance with U.S. GAAP. Operating results for the three and ~~nine~~six month periods ended ~~May 31, 2016~~February 28, 2017 are not necessarily indicative of the results that may be experienced for the fiscal year ending August 31, ~~2016.~~2017.

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:

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

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

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

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

The industrial tools segment reflects the business of MSI-PRO (MSI). MSI imports and distributes products including pneumatic air tools, industrial clamps, and saw blades; that are primarily sold to retailers that in turn sell to contractors and end users.

Three Months Ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and May 31, 2015~~

For the three months ended ~~May 31, 2016,~~February 28, 2017, sales ~~increased by $1,169,305, or 9%,~~decreased $1,688,847 to ~~$14,458,713~~$9,499,286 from ~~sales~~$11,188,133. This represents a decrease of ~~$13,289,408 for the three months ended May 31, 2015.~~15%.

Sales at Greenwood were ~~$951,820~~$737,417 for the three months ended ~~May 31, 2016~~February 28, 2017 compared to sales of ~~$1,063,599~~$1,304,839 for the three months ended ~~May 31, 2015,~~February 29, 2016, which was a decrease of ~~$111,779,~~$567,422, or ~~11%~~43%. ~~The Company continues its efforts to obtain new customers and new uses for its products, including its customers internationally. However, overall~~Overall demand for Greenwood’s products ~~continues~~continue to ~~be weak due to the continued weakness in the marine industry.~~lag historic levels. For the three months ended ~~May 31, 2016,~~February 28, 2017, Greenwood had an operating loss of ($~~7,698), which was a decline~~35,414) compared to operating income of ~~$50,249 from an operating profit of $42,551~~$7,163 for the three months ended ~~May 31, 2015.~~February 29, 2016.

Sales at JCC were ~~$12,936,795~~$7,166,175 for the three months ended ~~May 31, 2016~~February 28, 2017 compared to sales of ~~$11,430,273~~$8,507,752 for the three months ended ~~May 31, 2015.~~February 29, 2016. This represents ~~an increase~~a decrease of ~~$1,506,522,~~$1,341,577, or ~~13%~~16%. ~~Several recently introduced products have continued~~During the period, management has worked to ~~be well received by customers, whiles~~broaden its sales channels, including online and internationally. Sales in the prior year’s ~~results~~period were ~~negatively~~positively affected by ~~prolonged winter weather across the United States~~certain existing customers placing and ~~slowdowns and shutdowns at West Coast US ports which impacted the delivery of products to the Company from manufacturers~~receiving seasonal orders earlier than in ~~China.~~prior years. Operating income for the current quarter was ~~$1,368,715~~$573,208 compared to ~~operating~~ income of ~~$1,062,168~~$568,289 for the quarter ended ~~May 31, 2015.~~February 29, 2016. The operating results of JCC are historically seasonal with the first two quarters of the fiscal year being slower than the final two quarters of the fiscal year.

Sales at JCSC were ~~$238,904~~$1,159,843 for the three months ended ~~May 31, 2016~~February 28, 2017 compared to sales of ~~$416,416~~$1,127,060 for the three months ended ~~May 31, 2015. This is a decrease~~February 29, 2016, which was an increase of ~~$177,512,~~$32,783, or ~~43%~~3%. The ~~rebound~~price of grass seed has been strengthening, which has been helped by continued increases in residential housing in the US resulted earlier shipments to customers during the second quarter of fiscal 2016, while available seed supplies have been restricted by the persistent drought in the Western US which reduced harvested yields in the calendar 2015 growing season. Forhome construction. Operating income at JCSC for the quarter ~~JCSC had an operating loss of ($44,415)~~was $55,193 compared to an operating loss of ($~~10,408)~~87,359) for the ~~prior year’s quarter.~~quarter ended February 29, 2016.

Sales at MSI were $435,851 for the three months ended ~~May 31, 2016 were $331,194, which was a decline of $47,926, or 13%, from~~February 28, 2017 compared to sales of ~~$379,120~~$248,482 for the three months ended ~~May 31, 2015.~~February 29, 2016, which was an increase of $187,369, or 75%. The ~~segment has recently become more competitive,~~higher sales in the current quarter were primarily due to management’s efforts to develop new eCommerce sales channels for the tool and clamp products. Operating income for MSI was $32,414 for the ~~Company has reduced prices on certain of its products which resulted in lower operating margins. MSI had~~quarter ended February 28, 2017 compared to an operating loss of ($~~2,577)~~46,036) for the ~~three month period compared to operating income was $21,325 for the three month period~~quarter ended ~~May 31, 2015.~~February 29, 2016.

Gross margin for the three months ended ~~May 31, 2016~~February 28, 2017 was ~~22.0%~~22.4% compared ~~16.9%~~to 18.2% for the three months ended ~~May 31, 2015.~~February 29, 2016.

Operating expenses ~~increased~~decreased by ~~$209,327~~$114,134 to ~~$1,671,788~~$1,580,828 from ~~$1,462,461~~$1,694,962 for the three months ended ~~May 31, 2015.~~February 29, 2016. Selling, General and Administrative Expenses ~~rose~~fell to ~~$542,581~~$453,668 from ~~$465,864.~~$531,423. Wages and Employee Benefits ~~increased~~decreased slightly by $37,277 to ~~$1,046,229~~$1,057,792 from ~~$925,386, and Depreciation and Amortization rose~~$1,095,069 as the Company made an additional 10% contribution to ~~$82,978 from $71,211. Interest and other income fell to $2,978 from $8,534, and Interest expense was $Nil compared to ($658) for~~each eligible employee’s 401(k) plan as a one-time compensation bonus in the three months ended ~~May 31, 2015.~~February 29, 2016. Depreciation and Amortization increased slightly to $69,368 from $68,470.

Income tax expense for the three ~~months ended May 31, 2016 was $599,200 compared to $326,116 for the three~~ month period ended ~~May 31, 2015.~~February 28, 2017 was $240,828 compared to $100,067 for the quarter ended February 29, 2016. The Company estimates income tax expense for the quarter based on combined federal and state rates that are currently in effect.

Net income for the quarter ended ~~May 31, 2016~~February 28, 2017 was ~~$908,730,~~$309,013, or ~~$0.37~~$0.14 per basic and diluted share, compared to net income of ~~$461,100,~~$131,960, or ~~$0.18~~$0.05 per basic and diluted share, for the quarter ended ~~May 31, 2015.~~February 29, 2016. The ~~current quarter’s earnings per share~~net income for the prior year’s quarter was ~~positively~~negatively affected by a one-time litigation loss. The Company and Greenwood Forest Products, Inc. settled their litigation dating from the ~~repurchase~~Company’s acquisition of ~~common shares~~certain inventory from Greenwood Forest in 2003. Both parties determined it was prudent to settle the original claim and ~~lower weighted average number~~counter-claim due to the high cost of ~~common shares outstanding.~~the litigation, which had been remanded back to the Oregon Court of Appeals in September 2015 for a third time. The Company recorded a one-time litigation loss of $115,990 related to the settlement of all the outstanding claims and related costs during the quarter ended February 29, 2016.

~~Nine~~Six Months Ended ~~May 31,~~February 28, 2017 and February 29, 2016 ~~and May 31, 2015~~

For the ~~nine~~six months ended ~~May 31, 2016,~~February 28, 2017, sales ~~increased~~decreased by ~~$6,832,925,~~$3,208,552, or ~~22%,~~14% to ~~$37,588,354~~$19,921,089 from sales of ~~$30,755,429~~$23,129,641 recorded in the ~~nine~~six month period ended ~~May 31, 2015.~~February 29, 2016.

Sales at Greenwood were ~~$3,810,183~~$1,697,032 for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 compared to sales of ~~$3,183,802~~$2,858,363 for the ~~nine~~six months ended ~~May 31, 2015. This represents an increase~~February 29, 2016, a decline of ~~$626,381,~~$1,161,331, or ~~20%~~41%. Sales in the first half of fiscal 2017 have ~~begun to rebound as~~been slow but the Company ~~has obtained new customers and new uses for its products, but due to the continued weakness~~expects some improvement in the ~~marine industry, overall demand remains below historical levels. For~~second half of the ~~nine~~year as certain primary customers have indicated they will be adding orders. Operating loss for Greenwood for the six months ended ~~May 31, 2016, Greenwood had~~February 28, 2017 was ($63,876) compared to operating income of ~~$36,714 compared to $134,231~~$44,412 for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016.

Sales at JCC were ~~$30,313,357~~$15,585,202 for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 compared to sales of ~~$24,164,127~~$17,376,563 for the ~~nine~~six months ended ~~May 31, 2015,~~February 29, 2016, which was ~~an increase~~a decrease of ~~$6,149,230,~~$1,791,361, or ~~25%~~10%. In the current period, management has endeavored to broaden JCC’s sales channels, including increasing eCommerce sales and establishing a dedicated sales team to obtain new customers in international markets. The ~~increase~~decrease in sales ~~for~~from the ~~current~~prior year’s period was primarily due to higher than normal sales in the ~~market’s continued acceptance of recently introduced new products and~~six months ended February 29, 2016 as the ~~addition of new small and mid-sized customers. The~~ Company ~~also~~ received and shipped seasonal orders from certain ~~existing~~ customers earlier than in previous years. The results in the prior year’s nine month period were negatively affected by prolonged winter weather across the United States and the West Coast port slowdown which delayed the delivery of product from manufacturers in China. Operating income at JCC was ~~$2,959,076~~$1,294,640 compared to $1,408,252 for the ~~nine~~six months ended ~~May 31, 2016 compared to operating income of $2,179,054 for the nine months ended May 31, 2015, which was an increase of $780,022, or 36%.~~February 29, 2016. Overall, the operating results of JCC are seasonal with the first two quarters of the fiscal year being much slower than the final two quarters of the fiscal year.

Sales at JCSC for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 were ~~$2,587,373, which was an increase of $483,820, or 23%, from~~$1,638,954 compared to sales of ~~$2,103,553~~$2,348,469 for the ~~nine~~six months ended ~~May 31, 2015. Although grass~~February 29, 2016. This represents a decrease of $709,515, or 30%. The decline in sales was largely due to lower per pound seed ~~demand has risen in conjunction with the improvement~~prices in the ~~US residential housing market, the sales environment for the segment remains challenging due~~current six month period compared to the ~~decline in seed cleaning services as more growers cleaning in-house. Current supplies have also been restricted by~~comparable prior year’s period when the persistent drought in the Western US ~~which reduced~~and in other seed growing areas temporarily boosted prices due to smaller harvested ~~yields in~~yields. Operating income for the ~~calendar 2015 growing season. For the nine month period~~six months ended ~~May 31, 2016, JCSC had~~February 28, 2017 was $96,864 compared to an operating loss ~~of ($69,380) compared to operating income~~ for the ~~nine~~six months ended ~~May 31, 2015~~February 29, 2016 of ~~$249,055.~~($29,405).

Sales at MSI were ~~$877,441~~ for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 were $999,901, which was an increase of $453,656, or 83%, compared to sales of ~~$1,303,947~~$546,245 for the ~~nine~~six months ended ~~May 31, 2015, which was a decrease~~February 29, 2016. Management has worked to increase eCommerce sales and has also begun to build stronger relationships with distributors. Sales in the prior year’s period were negatively affected by the Company’s reduction of ~~$426,506, or 33%. The segment has recently become more competitive, and the Company has reduced~~ prices on certain ~~of its~~ products ~~which reduced operating margins. For~~due to increased competitiveness in certain segments. Operating income at MSI for the ~~nine~~six months ended ~~May 31, 2016, MSI had~~February 28, 2017 was $79,696 compared to an operating loss of ($~~64,896) compared to operating income of $74,252~~68,301) for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016.

Gross margin for the ~~nine~~six month period ended ~~May 31, 2016~~February 28, 2017 was ~~20.2%~~22.7% compared to ~~19.6%~~19.1% for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016.

Operating expenses ~~rose by $623,339 to $4,861,400~~for the six months ended February 28, 2017 were relatively unchanged at $3,182,765 from ~~operating~~ expenses of ~~$4,238,001 in~~$3,189,613 for the ~~nine~~six month period ended ~~May 31, 2015.~~February 29, 2016. Selling, ~~general~~General and ~~administrative expenses rose~~Administrative Expenses declined to ~~$1,616,796~~$1,004,717 from ~~$1,438,687, an increase of $178,109.~~$1,074,216. Wages and ~~employee benefits~~Employee Benefits increased to ~~$3,017,643~~$2,040,041 from ~~$2,588,420~~$1,971,414 as the Company ~~made an additional 10% contribution to each eligible employee’s 401(k) plan~~hired Charlie Hopewell as ~~a one-time compensation bonus in~~Chief Operating Officer. Mr. Hopewell was later named President and CEO of the ~~current period.~~Company upon the retirement of Donald Boone from those positions. Depreciation and ~~amortization increased~~Amortization declined slightly to ~~$226,961~~$138,007 from ~~$210,894.~~$143,983.

Other items in the current ~~nine~~six month period ended ~~May 31,~~February 28, 2017 included interest and other income of $3,820 and loss on sale of property, plant and equipment of ($393). During the six months ended February 29, 2016, ~~were~~other items included a gain on sale of property, plant and equipment of $5,600 and interest and other income of ~~$13,538. Interest expense was a ($27).~~$10,534. Litigation loss of ($115,990) was related to the settlement of the litigation between the Company and Greenwood Forest Products, Inc. ~~In the nine months ended May 31, 2015, other items were interest and other income of $22,617 and interest expense of ($658).~~

Income tax expense infor the ~~current nine month period~~six months ended February 28, 2017 was ~~$1,060,960~~$549,233 compared to ~~$725,455~~$461,760 for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016. The Company estimates income tax expense for the period based on combined federal and state rates that are currently in effect.

Net income for the ~~nine~~six months ended ~~May 31, 2016~~February 28, 2017 was ~~$1,572,935,~~$794,933, or ~~$0.64~~$0.35 per basic and diluted share, compared to net income of ~~$1,072,477,~~$664,205, or ~~$0.41~~$0.27 per basic and diluted share, for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016. The net income in the ~~current nine month~~prior year’s period was ~~positively~~negatively affected by the ~~buyback~~one-time litigation loss related to the settlement of ~~common shares which resulted in a lower weighted average number of common shares.~~the lawsuits with Greenwood Forest Products.

As of ~~May 31, 2016,~~February 28, 2017, the Company had working capital of ~~$16,047,875~~$15,057,209 compared to working capital of ~~$15,103,474~~$14,450,870 as of August 31, ~~2015,~~2016, an increase of ~~$944,401.~~$606,339. Cash totaled ~~$6,285,575, an increase~~$2,018,532, a decrease of ~~$1,869,278.~~$2,501,390. Accounts receivable rose to ~~$4,382,438~~$4,547,741 from ~~$3,688,247 which is consistent with~~$3,342,204 due to the seasonal ~~nature~~cycle of sales to customers and the ~~Company’s sales cycle.~~related timing of cash receipts. Inventory ~~decreased~~increased by ~~$1,053,681~~$817,226 and prepaid expenses, which are largely related to down payments for future inventory purchases, ~~increased~~decreased by ~~$61,249. Note receivable declined by $1,310 as the entire remaining balance of the note was repaid during the period.~~$25,202. Prepaid income taxes rose to $149,487 from $596. Accounts payable decreased by ~~$26,570.~~

~~Accounts payable increased by $319,594~~$537,288 and accrued liabilities ~~increased~~decreased by ~~$369,833. Litigation reserve declined by $90,671 to $Nil as the Company settled its outstanding litigation during the period and the entire amount was applied against the amount of the settlement.~~

In May 2016, the Company received its final permits for the construction of a warehouse expansion at its headquarters property in North Plains. Construction commenced immediately upon receipt of the required permits, and will measure 150 feet by 80 feet and a height of 37 feet. The Company anticipates using the new warehouse for several new product lines.$423,989.

As of ~~May 31, 2016,~~February 28, 2017, accounts receivable and inventory represented ~~62%~~82% of current assets and ~~55%~~68% of total assets. For the three months ended ~~May 31, 2016,~~February 28, 2017, the accounts receivable collection period, or DSO, was 2843 compared to 3431 for the three months ended ~~May 31, 2015.~~February 29, 2016. For the ~~nine~~six month period ended ~~May 31, 2016,~~February 28, 2017, the DSO was 3241 compared to 4430 for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016. Inventory turnover for the three months ended ~~May 31, 2016~~February 28, 2017 was 60101 days compared to 8278 days for the three months ended ~~May 31, 2015.~~February 29, 2016. For the ~~nine~~six months ended ~~May 31, 2016,~~February 28, 2017, inventory turnover was 71100 days compared to 9877 days for the ~~nine~~six months ended ~~May 31, 2015.~~February 29, 2016.

External sources of liquidity include a line of credit from U.S. Bank of $3,000,000. As of ~~May 31, 2016,~~February 28, 2017, the Company had no borrowing balance leaving the entire amount available. Borrowing under the line of credit is secured by an assignment of accounts receivable and inventory. The interest rate is calculated solely on the one month LIBOR rate plus 175 basis points. As of ~~May 31, 2016~~February 28, 2017, the one month LIBOR rate plus 175 basis points was ~~2.21% (0.46%~~2.53% (0.78% + 1.75%). The line of credit has certain financial covenants. The Company is in compliance with these covenants.

In May 2016, the Company received its final permits for the construction of a warehouse expansion at its headquarters property in North Plains. The completed building measures 150 feet by 80 feet and has a height of 37 feet, and will be used for several new product lines. During the second quarter of fiscal 2017, the Company received its conditional occupation permits and began using the new expansion.

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

On ~~January 13, 2014,~~March 7, 2016, the Company announced the Board of Directors ~~had authorized~~approved a share repurchase plan to purchase for cancellation up to ~~313,493~~250,000 common shares through the facilities of ~~NASDAQ Stock Market ("NASDAQ").~~NASDAQ. Transactions may involve Jewett-Cameron insiders or their affiliates executed in compliance with Jewett-Cameron's Insider Trading Policy. The share repurchase plan will be effected in accordance with Rule 10b-18 under the U.S. Securities Exchange Act of 1934, which contains restrictions on the number of shares that may be purchased on a single day, subject to certain exceptions for block purchases, based on the average daily trading volumes ("ADTV") of Jewett-Cameron's shares on NASDAQ. Purchases shall be limited to one “Block” purchase per week in lieu of the 25% of ADTV limitation for compliance with Rule 10b-18(b)(4). A “block” as defined under Rule 10b-18(a)(5) means a quantity of stock that, among other things, is at least 5,000 shares and has a purchase price of at least US$50,000. The ~~share repurchase~~ plan commenced on ~~January 20, 2014~~March 10, 2016 and terminated on ~~March 24, 2014. A total of 313,493 common shares were repurchased under this plan. The total cost of the shares acquired was $3,055,591 at an average price of $9.75 per share.~~

On April 9, 2014, the Company announced the Board of Directors had authorized a share repurchase plan to purchase for cancellation up to 300,000 common shares through the facilities of NASDAQ under similar terms as the January 13, 2014 repurchase plan. This share repurchase plan commenced on April 14, 2014 and terminated on November 14, 2014.August 25, 2016. Under the Plan, the Company repurchased a total of ~~235,782~~175,538 common shares at a cost of ~~$2,494,654~~$2,124,579 which is an average price of ~~$10.58 per share.~~

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

On March 7, 2016, the Company announced the Board of Directors approved a new share purchase plan to purchase for cancellation up to 250,000 common shares through the facilities of NASDAQ. The terms of the plan are similar to the January 13, 2014 repurchase plan. The plan commenced on March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice. During the 3^rd quarter of fiscal 2016 ended May 31, 2016, the Company repurchased and cancelled 63,386 common shares at a cost of $745,878 which is an average price of $11.77. Subsequent to the end of the period, the Company repurchased and cancelled an additional 42,742 common shares at a cost of $489,274 which is an average price of $11.45 per share.$12.10.

In addition to the Rule 10b-18 share repurchases, Donald M. Boone, CEO, President and Director, voluntarily returned 15,000 common shares to the Company’s treasury for cancellation in August 2015. In June 2016, Mr. Boone voluntarily returned an additional 15,000 to treasury for cancellation. The Company paid no consideration for these shares.

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

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

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

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

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

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

The Company’s common shares currently trade within the NASDAQ Capital Market in the United States. The average daily trading volume of our common stock on NASDAQ was ~~2,180~~2,748 shares for the ~~nine~~six months ended ~~May 31, 2016.~~February 28, 2017. With this limited trading volume, investors could find it difficult to purchase or sell our common stock.

We could experience a decrease in the demand for our products resulting in lower sales volumes.

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

For the ~~nine~~six months ended ~~May 31, 2016,~~February 28, 2017, our top ten customers represented ~~80%~~78% of our total sales. We would experience a significant decrease in sales and profitability and would have to cut back our operations, if these customers were lost and could not be replaced. Our top ten customers are in the U.S., Canada and Mexico and are primarily in the retail home improvement industry.

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

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

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

We have a line of credit with U.S. Bank in the amount of $3,000,000, of which $3,000,000 is available. We are currently in compliance with the requirements of our existing line of credit. If we lost this credit it could become impossible to pay some of our creditors on a timely basis.

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

We have completed a management assessment of internal controls as prescribed by Section 404 of the Sarbanes-Oxley Act, which we were required to do in connection with our year ended August 31, ~~2015.~~2016. Based on this process we did not identify any material weaknesses. Although we believe our internal controls are operating effectively, we cannot guarantee that in the future we will not identify any material weaknesses in connection with this ongoing process.

The Company does not have any derivative financial instruments as of ~~May 31, 2016.~~February 28, 2017. However, the Company is exposed to interest rate risk.

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

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

The Company operates primarily in the United States. However, a relatively small amount of business is 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.

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

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

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

~~During~~A series of rulings and appeals between the ~~1st quarter of fiscal~~years ended August 31, 2011 ~~the Oregon Court of Appeals ruled that the judgment~~to August 31, 2015, resulted in ~~favor of Jewett Cameron as plaintiffs should be reversed and the judgment in favor of the defendants should stand. The judgment in favor of~~ the Company ~~was for $819,000 plus attorney’s fees. The judgment against the plaintiffs was for $1,187,137. The Company appealed the decision~~recognizing aggregate litigation income of $272,695, and aggregate interest expense of $363,366 to ~~the Oregon Supreme Court. During the 1st quarter of fiscal 2011, the Company recorded~~August 31, 2015, totaling a ~~litigation~~net loss of $962,137 and interest of $391,988 in addition to the existing litigation reserve of $225,000. Additional interest of $48,790 was recorded during the remainder of fiscal 2011. During the 1st quarter of fiscal 2012 ended November 30, 2011, additional interest of $16,204 was accrued.

~~During the period ended February 29,~~ 2016, the Company and Greenwood Forest Products, Inc., settled all litigation between the two companies. The Company made a cash payment of $200,000 to Greenwood Forest Products, Inc., as full settlement and termination of the litigation (the “Settlement Payment”). ~~The~~During the year ended August 31, 2016, litigation expense of $115,990 ~~represents the difference between the Settlement Payment, and the litigation reserve balance on~~was recorded. As a result, to the date of settlement during the year ended August 31, 2016, the Company has recognized aggregate litigation income, and aggregate interest expense of ~~$84,010 which is net~~$156,705, and $363,366 respectively, resulting in an aggregate loss of ~~interest income recognized for the period.~~$206,661.

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.

~~The following table details the Company’s repurchase of its common shares during the quarter ended May 31, 2016.~~

⁽¹⁾ The Company announced a 10b-18 share repurchase plan on March 7, 2016. The Plan allowed for the repurchase of up to 250,000 common shares commencing March 10, 2016 and remains in place until August 25, 2016, but may be limited or terminated at any time without prior notice.

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

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

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

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

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


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


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


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


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements	3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2625

Item 4.	Controls and Procedures	26

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	26

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2826

Item 3.	Defaults Upon Senior Securities	2826

Item 4.	Mine Safety Disclosures	2826

Item 5.	Other Information	2827

Item 6.	Exhibits	2827


	May 31, 2016	August 31, 2015

ASSETS

Current assets
Cash	$ 6,285,575	$ 4,416,297
Accounts receivable, net of allowance of $Nil (August 31, 2015 - $Nil)	4,382,438	3,688,247
Inventory, net of allowance of $189,761 (August 31, 2015 - $120,824) (note 3)	7,297,894	8,351,575
Note receivable	-	1,310
Prepaid expenses	780,708	719,459
Prepaid income taxes	-	26,570

Total current assets	18,746,615	17,203,458

Property, plant and equipment, net(note 4)	2,138,800	2,231,711

Intangible assets, net(note 5)	168,720	223,250

Total assets	$ 21,054,135	$ 19,658,419


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

August 31, 2013	3,134,936	$ 1,479,246	$ 600,804	$ 18,517,971	$ 20,598,021

Shares repurchased and cancelled (note 9)	(430,306)	(203,045)	-	(4,054,723)	(4,257,768)
Net income	-	-	-	1,858,453	1,858,453

August 31, 2014	2,704,630	1,276,201	600,804	16,321,701	18,198,706

Shares repurchased and cancelled (note 9)	(227,798)	(107,489)	-	(2,341,053)	(2,448,542)
Net income	-	-	-	1,773,971	1,773,971

August 31, 2015	2,476,832	1,168,712	600,804	15,754,619	17,524,135

Shares repurchased and cancelled (note 9)	(63,386)	(30,122)		(715,756)	(745,878)
Net income	-	-	-	1,572,935	1,572,935

May 31, 2016	2,413,446	$ 1,138,590	$ 600,804	$ 16,611,798	$ 18,351,192


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

August 31, 2015	2,476,832	$ 1,168,712	$ 600,804	$ 15,754,619	$ 17,524,135

Shares repurchased and cancelled (note 9)	(190,538)	(89,953)	-	(2,034,626)	(2,124,579)
Net income	-	-	-	2,125,099	2,125,099

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

Net income	-	-	-	794,933	794,933

February 28, 2017	2,286,294	$ 1,078,759	$ 600,804	$ 16,640,025	$ 18,319,588


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


	Three Month Period Ended May 31,		Nine Month Period Ended May 31,

	2016	2015	2016	2015

Net income	$ 908,730	$ 461,100	$ 1,572,935	$ 1,072,447

Basic weighted average number of common shares outstanding	2,458,170	2,561,702	2,470,566	2,612,199

Effect of dilutive securities
Stock options	-	-	-	-

Diluted weighted average number of common shares outstanding	2,458,170	2,561,702	2,470,566	2,612,199


	Three Month Periods to the end of February,		Six Month Periods to the end of February

	2017	2016	2017	2016

Net income	$ 309,013	$ 131,960	$ 794,933	$ 664,205

Basic weighted average number of common shares outstanding	2,286,294	2,476,832	2,286,294	2,476,832

Effect of dilutive securities
Stock options	-	-	-	-

Diluted weighted average number of common shares outstanding	2,286,294	2,476,832	2,286,294	2,476,832


	May 31, 2016		August 31, 2015
	Carrying	Fair	Carrying	Fair
	Amount	Value	Amount	Value
Cash	$6,285,575	$6,285,575	$4,416,297	$4,416,297
Accounts receivable, net of allowance	4,382,438	4,382,438	3,688,247	3,688,247
Note receivable	-	-	1,310	1,310
Accounts payable and accrued liabilities	2,698,740	2,698,740	2,009,313	2,009,313


	May 31, 2016		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash	$	6,285,575	$	6,285,575	$	—	$	—


	May 31, 2016	August 31, 2015

Wood products and metal products	$ 6,621,744	$ 7,376,505
Industrial tools	394,937	525,667
Agricultural seed products	281,213	449,403

	$ 7,297,894	$ 8,351,575


	May 31, 2016	August 31, 2015
Patent	$ 850,000	$ 850,000
Other	43,655	43,655
	893,655	893,655
Accumulated amortization	(724,935)	(670,405)

Net book value	$ 168,720	$ 223,250


	May 31, 2016	August 31, 2015

Litigation expense⁽¹⁾	$ (84,010)	$ -
Litigation reserve	84,010	117,387
Interest expense	-	-
Interest income	-	(26,716)
Total	$ -	$ 90,671


	2016		2015

Sales to unaffiliated customers:
Industrial wood products	$	3,810,183	$	3,183,802
Lawn, garden, pet and other		30,313,357		24,164,127
Seed processing and sales		2,587,373		2,103,553
Industrial tools and clamps		877,441		1,303,947
	$	37,588,354	$	30,755,429

Income (loss) before income taxes:
Industrial wood products	$	36,714	$	60,543
Lawn, garden, pet and other		2,417,382		1,058,352
Seed processing and sales		(95,840)		50,753
Industrial tools and clamps		(83,839)		68,227
Corporate and administrative		359,478		560,026
	$	2,633,895	$	1,797,901


		2016		2015

Identifiable assets:
Industrial wood products	$	1,074,934	$	1,242,471
Lawn, garden, pet and other		10,215,128		11,342,373
Seed processing and sales		364,294		552,280
Industrial tools and clamps		504,628		747,022
Corporate and administrative		8,895,151		4,762,020
	$	21,054,135	$	18,616,166

Depreciation and amortization:
Industrial wood products	$	573	$	735
Lawn, garden, pet and other		49,318		43,537
Seed processing and sales		7,943		8,209
Industrial tools and clamps		1,528		2,067
Corporate and administrative		167,599		156,346
	$	226,961	$	210,894

Capital expenditures:
Industrial wood products	$	-	$	-
Lawn, garden, pet and other		-		-
Seed processing and sales		-		-
Industrial tools and clamps		-		-
Corporate and administrative		79,521		85,240
	$	79,521	$	85,240

Interest expense:
Lawn, garden, pet and other	$	658	$	658


	2016		2015

United States	$	34,666,374	$	29,044,754
Canada		1,051,116		919,603
Mexico / Latin America		1,774,158		744,775
Middle East		11,686		12,164
Africa		-		2,960
Asia/Pacific		85,020		31,173
	$	37,588,354	$	30,755,429


	2016		2015

Cash paid during the periods for:
Interest	$	-	$	-
Income taxes	$	895,607	$	379,234



Period	Total Number of Shares purchased	Average Price Paid per Share	Total number of shares purchased as part of publicly announced plans or programs⁽¹⁾	Maximum Number of shares that may yet be purchased under the plans or programs

March	4,246	$ 11.20	4,246	245,754

April	13,654	$ 11.62	17,900	232,100

May	45,486	$ 11.87	63,386	186,614

Total	63,386	$ 11.77	63,386	186,614