UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549   FORM 10-K   (Mark One)  x
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  For the fiscal year
ended May 31, 2009  OR   ̈
TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934  Commission file
number: 333-61801  LIFEQUEST WORLD CORPORATION (Exact name of
registrant as specified in its charter)  Minnesota
88-0407679(State or other
jurisdiction of incorporation or organization)
(I.R.S.
Employer Identification Number)  8022 S. Rainbow
Blvd., Suite 345 Las Vegas, Nevada
89139-6477 (Address of principal
executive offices)  (702)
914-9688 (Registrants
telephone number, including area code)   Securities registered
pursuant to Section 12(b) of the Act:   Title of Each
Class

Name of
Exchange on Which RegisteredN/A

N/A  Securities registered
pursuant to Section 12(g) of the Act:  Title of Each
ClassCommon Stock,
par value $0.001 per share
Preferred
Stock, par value $0.001 per share     Indicate
by check mark if the Registrant is a well-known seasoned issuer as defined in
Rule 405 of the Securities Act.    Yes   ̈    No  x  Indicate by check
mark if the Registrant is not required to file reports pursuant to Section 13 or
Section 15(d) of the Act.    Yes   ̈    No  x  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.    Yes  x    No   ̈  Indicate by check mark whether the
registrant has submitted electronically and posted on its corporate Website, if
nay, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such filed).  Yes ̈Nox(Not required for smaller reporting
companies.)  Indicate by check
mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
is not contained herein, and will not be contained, to the best of the
Registrants knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   ̈  Indicate by check
mark whether the Registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer or a smaller reporting company. See definitions of
large accelerated filer, accelerated filer and smaller reporting company
in Rule 12b-2 of the Exchange Act. (Check one):  Large accelerated
filer   ̈    Accelerated
filer   ̈  Non-accelerated
filer   ̈    Smaller reporting
company  x  Indicate by check
mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act).    Yes   ̈    No  x  At November 30,
2008, the aggregate market value of shares held by non-affiliates of the
Registrant (based upon 23,914,064 shares) was $5,739,375.  At September 11,
2009, there were 60,237,164 shares of the Registrants common stock outstanding
and 10,000,000 of the Registrants preferred stock outstanding.  DOCUMENTS
INCORPORATED BY REFERENCE  None.             LIFEQUEST WORLD CORPORATION  Form
10-K  Part IItem
1.
Business.
4Item
1A.
Risk
Factors.
11Item
2.
Properties.
19Item
3.
Legal
Proceedings.
19Item
4.
Submission of Matters to a
Vote of Security Holders.
20Part IIItem
5.
Market for Registrants Common Equity, Related
Stockholder Matters and Issuer Purchases of
Equity Securities.
20Item
7.
Managements Discussion and Analysis of Financial Condition and Results  of Operations.
22Item
8.
Financial Statements and Supplementary
Data.
29Item
9.
Changes
In and Disagreements With Accountants
on Accounting and Financial Disclosure.
47Item
9A(T).
Controls and Procedures.
47Item
9B.
Other Information.
49Part IIIItem
10.
Directors,
Executive Officers, and Corporate Governance.
49Item
11.
Executive
Compensation.
51Item
12.
Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters.
53Item
13.
Certain Relationships and Related Transactions, and Director Independence.
53Item
14.
Principal
Accounting Fees and Services.
54     PART I    ITEM 1. BUSINESS.  BUSINESS HISTORY AND DEVELOPMENT  LifeQuest World Corporation was incorporated under the laws of the
State of Minnesota on November 1, 1997. In this Annual Report, the terms
Company, us, we, our and its are used as references to LifeQuest World
Corporation. We develop and distribute dietary supplements.  The shares of
the Company trade on the Over the Counter Bulletin Board under the symbol,
LQWC.  LifeQuest World Corporation is a company that was created to
provide the opportunity for positive changes in the health and overall well
being of people worldwide. LifeQuests founder, Anthony Carl Jurak, is a well
recognized visionary in the nutritional industry and is a pioneer in ushering in
the new, flourishing category of functional foods that today is quickly becoming
one of the largest segments in the nutritional industry. Anthonys inspiration
comes from his father Carl Jurak, who in 1922 developed a first in nutritional
functional foods in the form of a whole body tonic herb liquid supplement. By
1943, Carl started one of the first direct sales organizations in America for
the distribution of his functional nutritional product. Due to its personal
appeal and many health benefits, it is still being used, distributed and sold by
LifeQuest today. Since the early 1980s, Anthonys companies have sold
functional nutritional products and with the formation of LifeQuest he is once
again following his quest to provide an opportunity for health, wealth and
happiness to those who desire to join these efforts.  LifeQuest embraces the fundamental principal of what a direct
sales organization must have in place to succeed: motivation; training;
self-development; enthusiasm; and a LIFE-changing sense of purpose for
its distributors; along with a QUESTfor a quality of life which includes
better health and a gain in wealth for its family of distributors throughout the
WORLD.   BUSINESS OPERATIONS  General LifeQuest World Corporation is a Life Science company that is
dedicated to significantly improving the lives of its family members, associates
and distributor organization. We strive daily through our own research and
development laboratories, as well as our professional association with one of
the worlds leading botanical research centers, to provide human beings with
solutions to many of lifes unanswered health challenges. Infusing proprietary
science under the scrutiny of Good Manufacturing Practices (GMP), and adhering
to the efficacy of pharmaceutical protocols, LifeQuests products are effective,
safe and superior within the marketplace for nutritional supplements and
consumables. But our commitment does not end there. The worlds demand for
health and well-being only begins with proper nutrition. LifeQuest strives to
present a whole-minded approach for our   distributors to better living by putting equal emphasis on an
improved life style, freedom through financial reward and the enhancement of the
Human Spirit. We provide extensive product education and personal development
through sophisticated training programs for our distributors. We offer
substantial earning potential available through a generous compensation plan. To
promote optimum health, we have invested millions of dollars to create superior
nutritional supplements and advanced personal care products. It is with great
pride that LifeQuest World Corporation hopes continue to inspire thousands to
change an average existence, into a life of celebration. LifeQuest products must meet the requirements of strong
functionality and be results based because we design product research on the
principle that functional, beneficial nutritional products are desired by
consumers today. The consumer understands that good nutritional practices may
reduce the risk of disease. LifeQuests products have been developed to
enhance immune competence, detoxification, functionality at the cellular level
and promote digestive health. LifeQuest believes that an optimal immune system,
positive cellular function and digestive health are vital and beneficial for
overall, better physical health.  The
immune stimulatory extract that LifeQuest World acquired had the potential to be
a successful addition to the Companys product line and funding for the license
rights and for on-going marketing through private placements was key for the
Company to have a successful introduction.  However, our fundraising
efforts were not sufficient to meet the contract terms.  The
product was developed at the University of Mississippi and had already been
tested extensively in Europe and was being marketed in that part of the world in
a limited way. North America was considered to be the primary market and
preparations for this were on-going until the collapse of the economy in
September 2008.  This situation put on hold additional funding (which was
to come from the same group who funded the purchase of the license) for the
marketing of the product and thus, the project had to be curtailed.  The
license agreement which was to terminate on December 1, 2008 included an option
to purchase the license-holder, Nordic Immotech Trading ApS and discussions to
that end were taking place which concluded with an Letter Of Intent (LOI) to
delay the termination date to March 31, 2009, and when the market conditions had
not improved the LOI was again renegotiated for an extension to June 1,
2009.  As
mentioned above, LifeQuest World was handicapped by the lack of funding but
nevertheless continued its efforts to market the product.  However, sales
were insufficient to be able to fulfill its purchase obligations under the LOI,
and the license holder Nordic Immotech Trading ApS terminated the license
agreement on August 19, 2009.  Since
the termination of the agreement, there have been ongoing discussions with
Nordic Immotech with a view to indeed purchase that company and thereby obtain
total license rights to this extract. At this date of the 10-K filing, nothing
has been formalized.  In
the meantime, the business of LifeQuest World continues with its original
product line and with a number of new additions to the product line in various
stages of preparation.  These   include
hair products; a multiple vitamin/mineral compound; a natural product for
stimulation; and a group of organ specific herbal supplements.  Additionally
the Company has recently entered into an agreement with a telemarketing group
from Canada to prepare a marketing campaign for some of the Companys
products.  Industry Overview  Nutritional Supplements  The nutrition industry includes many various sized companies that
manufacturer and distribute products generally intended to maintain the bodys
health and general well being. The four major product categories within the
nutrition industry are: (i) nutritional supplements, which are products such as
vitamins and minerals, dietary supplements, herbs and botanicals, and compounds
derived from these substances; (ii) natural and organic foods; (iii) functional
foods; and (iv) personal care products.  One of our products, The Youth Solution, is a blend of 18
bi-directional tonic herbs with added minerals. Daniel B. Mowrey, Ph.D., in his
book, Herbal Tonic Therapies, states, The definition of a tonic clearly
excludes the notion of making stronger by pushing the body in one direction
only. Tonics are bi-directional, capable of both increasing and decreasing the
activity of body processes. Herbs whose action is bi-directional are called
tonics. Tonic herbs have the ability to exert balancing action on both systems
and biochemical processes of the body. Their power lies in both their
therapeutic benefits and ease of application.  Mowrey continues, The concept of a tonic may sound strange to
modern ears. We simply have not made room in our medical or nutritional agendas
for a concept of a substance that restores balance. We believe that this will
change as the medical community begins to realize that many modern plagues may
be prevented and even treated by maintaining optimum health in all body systems.
Such a re-orientation of thought demands that much less emphasis be placed on
finding and killing germs, and much more on increasing the body systems
natural defenses and restorative powers.  Material Agreements  Intellectual Property License Agreement  On approximately January 1, 1999, we entered into an intellectual
property license agreement (the License Agreement) with Jurak Holdings Limited
(JHL), a corporation organized under the laws of the Province of Alberta and
an affiliate of our Chief Executive Officer and one of our directors.
 Pursuant to the terms and provisions of the License Agreement, we are
required to pay the greater of $500,000 for fiscal year 2003, and each calendar
year thereafter, during the first ten years of the License Agreement (the
Minimum Royalty Fee), or eight percent of the net sales of all licensed
products sold under the License Agreement (the Continuing Royalty Fee).
 After fiscal 2013, we are required to make payments in the amount of the
Continuing Royalty Fee.    The accrued payments due and owing to JHL under the License
Agreement for the Minimum Royalty Fee and the Continuing Royalty Fee including
interest was $1,600,803 and $1,087,598 at May 31, 2009 and 2008, respectively.
During the year ended May 31, 2009, the Company and JHL refinanced $1,345,957 of
accrued royalties into a convertible note.   Immune Booster License Agreement  During the year ended May 31, 2007, the Company initiated the
purchase of licensing fees associated with an exclusive license and distribution
agreement to acquire the worldwide marketing rights to ImmunXT. These rights had
been acquired from Nordic Immotech Trading APS (Nordic Immotech), a leading life
science company with a successful history of producing unique, patented products
that are distributed on a global scale. On December 1, 2006, the Company
finalized the closing of this exclusive global license and distribution
agreement with respect to this natural immune booster product. The Company paid installments totaling $2,500,000 per the terms of
the agreement. The Company has imputed interest on these installments at a rate
of 10% because the 2007 note was non-interest bearing. The discounted value of
the licensed asset totals $2,390,721. As part of the license agreement noted above, Nordic Immotech
shall pay a royalty of ten percent (10%) of net sales of products sold by Nordic
and or affiliates to independent third parties outside of the U.S. In a separate agreement, the Company was granted an option to
purchase all the shares in Nordic Immotech (the supplier). Subject to the terms
and conditions of the separate agreement, the Company had the option to purchase
all of the shares of Nordic Immotech (170,000 shares) at a fixed price of $76.47
per share for a total of $13,000,000. The Company could exercise the option
anytime before December 1, 2008. Also, under the terms of the license and distributor agreement,
the Company was required to make certain minimum raw material purchases from
Nordic Immotech.  During the 3rd and 4th quarters of
fiscal 2009, the Company received two extensions on their agreement due to not
meeting their raw material purchase commitments.  On August 19, 2009, the
agreement was formerly terminated by Nordic Immotech.  The Company is still
trying to negotiate some sort of re-instatement at this time.  If those
negotiations are not successful, the Company will no longer be able to sell the
ImmunXT product beyond 1-year from the termination date.  Intellectual Property  Patents and other proprietary rights are vital to our business
operations. We protect our technology through a trademark that Jurak Holdings
Limited (JHL) owns and can license. JHLs policy is to seek appropriate
protection both in the United States and abroad for The Youth Solution and other
products. We have acquired trademark protection as follows.    JC Tonic  On January 15, 2002, the United States Patent and Trademark Office
issued a certificate of registration, registration no. 2,530,329, to JHL for
protection of our exclusive use of the trademark JC Tonic. The certificate of
registration for JC Tonic was issued under Class 6, 18, 44, 46, 51 and 52 for
herbal, mineral and vitamin supplements, and shall remain in force and effect
for ten years from the date of issuance.  The Youth Solution  On May 3, 2005, the United States Patent and Trademark Office
issued an application serial no. 78/618,318, registration no. 2625515, to JHL
for protection of our exclusive use of the trademark The Youth Solution. The
certificate of registration for The Youth Solution was issued under Class 3
for body lotions, and shall remain in force and effect for ten years from the
date of issuance.  On September 24, 2002, the United States Patent and Trademark
Office issued a certificate of registration, serial no. 75/703,055, registration
no. 2,625,515, to JHL for protection of our exclusive use of the trademark The
Youth Solution. The certificate of registration for The Youth Solution was
issued under Class 5 and 32 for herbal supplements, and shall remain in force
and effect for ten years from the date of issuance.  Helena  On August 12, 2008, the United States Patent and Trademark Office
issued a certificate of registration, serial no. 78/523794 registration no.
3,486,184 to JHL for protection of our exclusive use of the trademark HELENA.
The certificate of registration for HELENA was issued under Class 3 for
non-medicated skin care preparation and hair care preparation and shall remain
in force and effect for ten years from the date of issuance.  Vimirex  On July 7, 2009, the United States Patent and Trademark Office
issued a certificate of registration, serial no. 78/549525 registration no.
3,652,626 to JHL for protection of our exclusive use of the trademark VIMIREX.
The certificate of registration for VIMIREX was issued under Class 5 for
vitamins; mineral supplements and nutritional supplements and shall remain in
force and effect for ten years from the date of issuance.  JC Junior  On June 28, 2005, the United States Patent and Trademark Office
accepted JHLs application for registration under serial no. 78/659,837, for
protection of our exclusive use of the trademark JC Junior. The application
was filed for JC Junior under Class 5 and 32 for herbal supplements.
 Once final approval is obtained by the United States Patent and Trademark
Office, the trademark shall remain in force and effect for ten years from the
date of issuance.    Take An Ounce and Feel the Bounce  On June 13, 2000, the United States Patent and Trademark Office
issued a certificate of registration, serial no. 76/069,199, registration no.
2,490,428, to us for protection of our exclusive use of the trademark Take An
Ounce and Feel the Bounce. The certificate of registration for Take An Ounce
and Feel the Bounce was issued under Class 32 for herbal supplements, and shall
remain in force and effect for ten years from the date of issuance.  Ambassador of Health  On May 5, 1999, the United States Patent and Trademark Office
issued a certificate of registration, serial no. 75/702,892, registration no.
2,613,042, to us for protection of our exclusive use of the trademark
Ambassador of Health. The certificate of registration for Ambassador of
Health was issued under Class 16 and 35 for magazines and newsletters on health
and nutrition and for personnel recruitment and business consultation, and shall
remain in force and effect for ten years from the date of issuance.  We may consider filing additional patent applications with respect
to our technologies and any novel aspects of our technology to protect our
intellectual property. Future patents, if issued, may be challenged, invalidated
or circumvented. Thus, any patent that we own or license from third parties may
not provide adequate protection against competitors. The patent applications
that we may file in the future may not result in issued patents. Also, patents
may not provide us with adequate proprietary protection or advantages against
competitors with similar or competing technologies. As a result of potential
conflicts with the proprietary rights of others, we may in the future have to
prove that we are not infringing the patent rights of others or be required to
obtain a license to the patent. We do not know whether such a license would be
available on commercially reasonable terms, or at all.  We also rely on trade secrets and unpatentable know-how that we
seek to protect, in part, by confidentiality agreements. However, it is possible
that parties may breach those agreements, and we may not have adequate remedies
for any breach. It is also possible that our trade secrets or unpatentable
know-how will otherwise become known or be independently developed by
competitors. There can be no assurance that third parties will not assert
infringement or other claims against us with respect to any existing or future
products, or that licenses would be available if our technology were
successfully challenged by a third party, or if it became desirable to use any
third-party technology to enhance our products. Litigation to protect our
proprietary information or to determine the validity of any third-party claims
could result in significant expense to us and divert the efforts of our
technical and management personnel, whether or not we are successful in such
litigation.  While we have no knowledge that we are infringing the proprietary
rights of any third party, there can be no assurance that such claims will not
be asserted in the future with respect to our existing or future products. Any
such assertion by a third party could require us to pay royalties, to
participate in costly litigation and defend licensees in any such suit pursuant
to indemnification agreements, or to refrain from selling an alleged infringing
product or service.    COMPETITION  The business of developing and distributing nutritional and
personal care products such as our products is highly competitive. Numerous
manufacturers, distributors and retailers compete for consumers and, in the case
of other network marketing companies, for distributors. We compete directly with
other entities that develop, manufacture, market and distribute dietary
supplements. We compete with these entities by emphasizing the underlying
science, value and high quality of our products, as well as the convenience and
financial benefits afforded by our network marketing system and compensation
plan. However, many of our competitors may be substantially larger and have
greater financial resources and broader name recognition. Our markets are highly
sensitive to the introduction of new products that may rapidly capture a
significant share of those markets.  The nutritional supplement market is characterized by: (i) large
selection of essentially similar products that may be difficult to
differentiate; (ii) retail consumer emphasis on value pricing; (iii) constantly
changing formulations based on evolving scientific research; (iv) low entry
barriers resulting from low brand loyalty, rapid change, widely available
manufacturing, low regulatory requirements, and ready access to large
distribution channels; and (v) a lack of uniform standards regarding product
ingredient sources, potency, purity, absorption rate, and form.  There can be no assurance that we will be able to effectively
compete in this intensely competitive environment. Nutritional and personal care
products can be purchased in a wide variety of distribution channels, including
retail stores and the fact that our product offering line is relatively limited
compared to the wide variety of products offered by many of our competitors, and
are often premium priced. Our ability to remain competitive depends in part upon
the successful marketing of our premium priced products.  We also compete with other network marketing organizations for
time, attention and commitment of new and current distributors. Our ability to
remain competitive depends, in significant part, on our success in recruiting
and retaining distributors. We believe that we offer a rewarding and unique
compensation plan and attractive benefits and services. To the extent
practicable, our compensation plan is designed to be seamless, permitting
international expansion without re-entry requirements. There can be no assurance
that our program for recruiting and retaining distributors will be successful.
The pool of individuals interested in the business opportunities presented by
network marketing tends to be limited in certain markets, and is reduced to the
extent other network marketing companies successfully recruit these individuals
into their businesses. Although we believe that we offer an attractive
opportunity for our distributors, there can be no assurance that other network
marketing companies will not be able to recruit our existing distributors or
deplete the pool of potential distributors in a given market.    ITEM 1A. RISK FACTORS.  An investment in our common stock involves a number of very
significant risks. You should carefully consider the following risks and
uncertainties in addition to other information in evaluating our company and its
business before purchasing shares of our common stock. Our business, operating
results and financial condition could be seriously harmed due to any of the
following risks. The risks described below are all of the material risks that we
are currently aware of that are facing our company. Additional risks not
presently known to us may also impair our business operations. You could lose
all or part of your investment due to any of these risks.  Risks Related to
Our Business  We Have a History of Operating Losses and There Can Be No
Assurance We Will Be Profitable in the Future; Need to Raise Capital to Continue
Our Growth.  We have a history of operating losses, expect to continue to incur
losses, and may never be profitable.  We do not expect positive cash flow
from operations in the near term.  Further, we have been dependent on sales
of our equity securities and debt financing to meet our cash requirements.
 We incurred a net loss of $1,219,382 for the fiscal year ended May 31,
2009, and have an aggregate net loss of $8,687,684 as of May 31, 2009.
  As of May 31, 2009, we had a working capital deficit of $2,346,515.
 There is no assurance that actual cash requirements will not exceed our
estimates.  In particular, additional capital may be required in the event
that we encounter greater costs associated with general and administrative
expenses and costs of offering equity securities or debt financing.  We May Need to Raise Capital to Continue Our Growth.  Based upon our historical losses from operations, we will require
additional funding in the future. If we cannot obtain capital through financings
or otherwise, our ability to execute our development plans and achieve
profitable operational levels will be greatly limited. Historically, we have
funded our operations through the issuance of equity and short-term debt
financing arrangements. We may not be able to obtain additional financing on
favorable terms, if at all. Our future cash flows and the availability of
financing will be subject to a number of variables, including potential
production and the market prices of our products. Further, debt financing could
lead to a diversion of cash flow to satisfy debt-servicing obligations and
create restrictions on business operations. If we are unable to raise additional
funds, it would have a materially adverse effect upon our operations.  Our Success Depends on the Ability of Our Suppliers With Whom
We Have Business Arrangements.  We depend on a number of suppliers that produce our products.
Failure to maintain continuous access to these suppliers may have a materially
adverse affect our business. Such suppliers may experience equipment failures
and service interruptions, of which we have no control, which could adversely
affect customer confidence, our business operations and our   reputation. If we experience a significant increase in demand, we
may have to expand our third party suppliers. We cannot be assured that
additional suppliers will be available to us, or that if available it will be
available on terms that are acceptable to us. If we cannot produce a sufficient
quantity of our products to meet demand or delivery schedules, our customers
might reduce demand, reduce the purchase price they are willing to pay for our
product, or replace our product with the product of a competitor, any of which
could have a materially adverse effect on our financial condition and
operations.  We Rely on the Network Marketing System.  We have relied on the network marketing system to distribute,
market and sell our products. We have no long-term contractual relationship with
these distributors. While we believe that the distributors will continue to
provide their services, there can be no assurance that the distributors will be
available in the future, and if available, will be available on terms deemed
acceptable to us. We had approximately 2,000 distributors and 1,600 retail
customers at May 31, 2009.  Our success is dependent on the on-going sales of our flagship
product, JC Tonic, from which 85% of our sales are derived.  We are
developing a new training program that will be introduced in the 2nd
quarter which will train and motivate current distributors and revitalize our
distribution force.  The end result will be a larger number of new
distributors purchasing and re-selling our products, thus increasing our sales. Our Continued Operations Depend on the Successful Marketing
of our Products After the license termination of our ImmunXT product, our business
plan is based on the marketing and distribution of primarily two products, The
Youth Solution (JC Tonic), and Helena Whole Body Anti-Aging Skin Rejuvenator.
There is no assurance that we will be successful in implementing our marketing
strategies or that our marketing strategies, even if implemented, will lead to
the successful achievement of our objectives. If we are not able to successfully
implement our marketing strategies, our business operations and financial
performance may be adversely affected. The novelty and the design of our
products are important to our success and competitive position, and if we are
unable to continue to develop and offer such a unique product to our customers,
our business could suffer. Our Growth Could Harm Our Future Business Results. As we proceed with the production, marketing and sale of our
existing and anticipated products, we expect to experience significant and rapid
growth of our business. We may need to add staff to manage operations, handle
marketing efforts and perform finance and accounting functions. We may be
required to hire a broad range of additional personnel in order to successfully
advance our operations. This growth is likely to place a strain on our
management and operational resources. The failure to develop and implement
effective operational and financial systems, or to hire and retain sufficient
personnel for the performance of all of the functions necessary to effectively
service and manage our potential business, or the failure to manage growth
effectively, could have a materially adverse affect on our business and
financial condition.   Our Success is Dependent Upon the Acceptance of Our Products
and Our Business. Our success depends upon our achieving significant market
acceptance of our products. We cannot guarantee that consumers will purchase our
products. Acceptance of herbal supplemental products will depend on the success
of our advertising, promotional and marketing efforts.  Failure
to maintain effective internal controls  A failure to maintain effective internal controls could adversely
affect our business. The Company has begun the process of documenting and
testing its internal controls as required by the Sarbanes-Oxley Act of 2002. The
Company expects to incur significant costs in complying with these requirements,
including increased staffing costs, increased accounting, auditing and
consulting fees. In addition, the requirements of Sarbanes-Oxley may limit the
ability of the Company to make any future acquisitions. Failure by the Company
to adequately meet the internal control requirements would be reported in the
Companys filings to the Securities and Exchange Commission  which could
negatively impact the Companys reputation and its stock price. Loss of Key Management Personnel. The Company has a relatively small staff and depends on two key
management people. The loss of any of our key management personnel could have an
adverse impact on our future development and could impair our ability to
succeed. Our performance is substantially dependent our ability to continue to
hire and retain such personnel. The loss of any of our other key management
personnel could have a materially adverse effect on our business, development,
financial condition, and operating results. We do not maintain "key person" life
insurance on any of our directors or senior executive officers. Many of Our Competitors Are Larger and Have Greater Financial
and Other Resources Than We Do. The dietary supplement industry, in general, is intensely
competitive. Our products compete with other dietary supplemental based
products. Such based products are currently marketed by well-established,
successful companies that possess greater financial, marketing, distribution,
personnel and other resources than us. Using these resources, these companies
can implement extensive advertising and promotional campaigns, both generally
and in response to specific marketing efforts by competitors, to enter into new
markets rapidly and to introduce new products. Competitors with greater
financial resources also may be able to enter the market in direct competition
with us, offering attractive marketing tools to encourage the sale of products
that compete with our products or present cost features which consumers may find
attractive. Government Regulation. Any changes in regulation by the Federal Trade Commission (FTC)
and/or the U.S. Food and Drug Administration (FDA) with respect to labeling
and advertising of our products could have an adverse affect on our business. A
change in these requirements could add additional cost to the production of our
products. However, these government regulatory   agencies generally allow companies to make changes when new
materials are to be printed and so the financial effects would be minimal.  RISKS RELATED TO OUR COMMON STOCK  Sale of Restricted Common Stock.  As of May 31, 2009, there are 49,062,164 outstanding shares of our
common stock, of which 34,812,108 are restricted securities as that term is
defined in Rule 144 under the Securities Act of 1933, as amended (the
Securities Act). Although the Securities Act and Rule 144 place certain
prohibitions on the sale of restricted securities, restricted securities may be
sold into the public market under certain conditions.  Any significant downward pressure on the price of our common stock
as certain stockholders sell their shares of our common stock may encourage
short sales. Any such short sales could place further downward pressure on the
price of our common stock.  The Trading Price of Our Common Stock on the OTC Bulletin Board
Has Been and May Continue to Fluctuate Significantly and Stockholders May Have
Difficulty Reselling Their Shares.  Our common stock has traded as low as $0.11 and as high as $1.50
for the years ended May 31, 2009 and 2008, respectively. In addition to
volatility associated with Bulletin Board securities in general, the value of
your investment could decline due to the impact of any of the following factors
upon the market price of our common stock: (i) changes in the demand for our
products; (ii) disappointing results from our marketing and sales efforts; (iii)
failure to meet our revenue or profit goals or operating budget; (iv) decline in
demand for our common stock; (v) downward revisions in securities analysts'
estimates or changes in general market conditions; (vi) lack of funding
generated for operations; (vii) investor perception of our industry or our
business prospects; and (viii) general economic trends.  In addition, stock markets have experienced extreme price and
volume fluctuations and the market prices of securities have been highly
volatile. These fluctuations are often unrelated to operating performance and
may adversely affect the market price of our common stock. As a result,
investors may be unable to sell their shares at a fair price and you may lose
all or part of your investment.  Additional Issuances of Equity Securities May Result in
Dilution to Our Existing Shareholders.  Our Articles of Incorporation authorize the issuance of
150,000,000 shares of common stock and 50,000,000 shares of preferred stock. The
Board of Directors has the authority to issue additional shares of our capital
stock to provide additional financing in the future and the issuance of any such
shares may result in a reduction of the book value or market price of the
outstanding shares of our common stock. If we do issue any such additional
shares, such   issuance also will cause a reduction in the proportionate
ownership and voting power of all other stockholders. As a result of such
dilution, if you acquire shares of our common stock, your proportionate
ownership interest and voting power could be decreased. Further, any such
issuances could result in a change of control.  We are authorized to issue shares of preferred stock. Our board of
directors, without shareholder approval, may issue shares of preferred stock
with rights superior to the rights of the holders of shares of common stock. As
a result, shares of preferred stock could be issued quickly and easily,
adversely affecting the rights of holders of shares of common stock and could be
issued with terms calculated to delay or prevent a change in control or make
removal of management more difficult. Although we have no present plans to issue
additional shares of preferred stock, the issuance of preferred stock in the
future could adversely affect the rights of the holders of common stock and
reduce the value of the common stock.  Our Common Stock is Classified as a Penny Stock under SEC
Rules Which Limits the Market for Our Common Stock.  Because our stock is not traded on a stock exchange or on the
NASDAQ National Market or the NASDAQ Small Cap Market, and because the market
price of the common stock is less than $5 per share, the common stock is
classified as a "penny stock." Our stock has not traded above $5 per share. SEC
Rule 15g-9 under the Exchange Act imposes additional sales practice requirements
on broker-dealers that recommend the purchase or sale of penny stocks to persons
other than those who qualify as an "established customer" or an "accredited
investor." This includes the requirement that a broker-dealer must make a
determination that investments in penny stocks are suitable for the customer and
must make special disclosures to the customers concerning the risk of penny
stocks. Many broker-dealers decline to participate in penny stock transactions
because of the extra requirements imposed on penny stock transactions.
Application of the penny stock rules to our common stock reduces the market
liquidity of our shares, which in turn affects the ability of holders of our
common stock to resell the shares they purchase, and they may not be able to
resell at prices at or above the prices they paid.  A Decline in the Price of Our Common Stock Could Affect Our
Ability to Raise Further Working Capital and Adversely Impact Our
Operations.  A decline in the price of our common stock could result in a
reduction in the liquidity of our common stock and a reduction in our ability to
raise additional capital for our operations. Because our operations to date have
been principally financed through the sale of equity securities, a decline in
the price of our common stock could have an adverse effect upon our liquidity
and our continued operations. A reduction in our ability to raise equity capital
in the future would have a materially adverse effect upon our business plan and
operations, including our ability to continue our current operations. If our
stock price declines, we may not be able to raise additional capital or generate
funds from operations sufficient to meet our obligations.    GOVERNMENT REGULATION  In the United States, where we primarily sell our products, we are
subject to laws, regulations, administrative determinations, court decisions and
similar restrictions at the federal, state and local levels, collectively known
as regulations. These regulations include and pertain to, among other things:
(i) the formulation, manufacturing, packaging, labeling, advertising,
distribution, sale and storage of our product; (ii) our product claims and
advertising, including label claims, direct claims, as well as claims and
advertising by our distributor, for which we may be held responsible; and (iii)
our network marketing organization and activities.  Products  The formulation, manufacturing, packaging, labeling, advertising,
distribution, and sale and storage of our products are subject to regulation by
a number of governmental agencies. The federal agencies include the Food and
Drug Administration (FDA), the Consumer Product Safety Commission, the United
States Department of Agriculture, and others. Our activities are also regulated
by various codes and agencies of the states and localities in which our product
is or may be manufactured, distributed or sold. The FDA, in particular,
regulates the formulation, manufacturing and labeling of dietary and herbal
supplements, which includes our product.  The Dietary Supplement Health and Education Act of 1994 (DSHEA),
revised the provisions of the Federal Food, Drug and Cosmetic Act (FFDCA),
concerning the composition and labeling of dietary supplements, which we believe
is generally favorable to the dietary supplement industry. DSHEA created a new
statutory category of products or dietary supplements. This new category
includes vitamins, minerals, herbs, amino acids, and other dietary substances
for human use to supplement the diet. However, DSHEA grandfathered, with certain
limitations, dietary ingredients that were on the market before October 15,
1994. A dietary supplement containing a new dietary ingredient (NDI), and
placed on the market on or after October 15, 1994, must have a history of use or
other evidence establishing a basis for expected safety. Manufacturers of
dietary supplements using a structure-function statement or other claim must
have scientific substantiation that the statement is true, accurate, and not
misleading. Our product, JC Tonic, The Youth Solution, is classified as a
dietary supplement under the FFDCA and DSHEA.  The labeling requirements for dietary supplements with respect to
labels affixed to containers have been set forth in final regulations effective
March 23, 1999. These regulations include the serving size, dietary ingredient
information, and the proper detail and format required for the Supplement
Facts box. Our product labels are in compliance with those regulations. Many
states have also recently become active in the regulation of dietary supplement
products. These states may require modification of labeling of our product sold
in those states, e.g., Texas, New York and California.  On January 6, 2000, the FDA published a final rule on permissible
structure/function statements to be placed on labels and in brochures.
Structure/function statements are claims of the benefit or positive effect of a
product or an ingredient on the bodys structure or function. This regulation
does not significantly change the way the FDA interprets structure/function   statements. We have not made any substantial label revisions based
on this regulation regarding any of our structure/function product statements.
Subsequently, the FDA published a final rule that the level of science needed to
support a structure/function claim would be raised close to the current Federal
Trade Commission (FTC) standard, which is competent and reliable scientific
evidence. We believe that we have adequate substantiation for all label claims
used.  FDA Final Rule  Safe Use of Dietary Supplements On June 22, 2007, FDA announced a final rule establishing current
good manufacturing practice requirements (CGMPs) for dietary supplements. In
addition, by the end of the year, the industry will be required to report all
serious dietary supplement adverse events to FDA. Ensuring
Quality  Under the final rule,
manufacturers are required to evaluate the identity, purity, quality, strength
and composition of dietary supplements. These regulations are intended to
provide more accountability in the manufacturing process so that consumers can
be confident that the products they purchase contain what is on the
label. The
final rule aims to ensure that dietary supplements do not have: ? wrong ingredients ? too much or too little of a dietary ingredient ? improper packaging ? improper labeling ? contamination problems due to natural toxins,
bacteria, pesticides, glass, lead, or other substances  All of
these guidelines have been followed by LifeQuest World Corporation since
beginning the marketing of our products.  Product Claims, Advertising and Website  The FDA considers website promotional content to constitute
labeling, and thus our website must not contain disease claims or drug claims,
but only permissible structure/function claims. The Federal Trade Commission
(FTC) governs the advertising of dietary supplements in any medium or vehicle
- print ads, radio spots, infomercials, internet ads, and websites. The
fundamental FTC rule is that all material advertising claims, whether express or
implied, must be substantiated by reliable and competent scientific evidence.
Because our website must comply with both FDA and FTC regulations, we routinely
review our web site and our scientific substantiation for particular claims to
determine if it is sufficient to ensure that there are no disease claims
present. We also require our distributors replicated websites to be in
compliance with FDA and FTC regulations. As such, and to ensure Internet
compliance, distributors may only use their replicated website. Any independent
websites are unauthorized and their creators   are solely liable for defending any regulatory enforcement
actions. Violations of this policy may result in the termination of the
distributors relationship with the Company.  The FTC
issued a guidance document to assist companies in understanding and complying
with the substantiation requirement for advertising claims for supplements. We
have organized the documentation supporting and substantiating our advertising
and promotional practices in compliance with these guidelines. We have not been
notified that we have been or are the subject of any enforcement action by the
FTC. However, any such action in the future by the FTC could materially
adversely affect our ability to successfully market our product. Therefore, we
pay careful attention to new guidelines and recent investigations launched,
complaints filed, and fines imposed by the FTC.  We attempt to remain in full compliance with all applicable laws
and regulations governing the manufacture, labeling, sale, distribution and
advertising of our product.  Network Marketing System  Laws and regulations prevent the use of deceptive or fraudulent
practices that have sometimes been inappropriately associated with legitimate
direct selling and network marketing activities. These laws include
anti-pyramiding, securities, lottery, referral selling, anti-fraud and business
opportunity statutes, regulations and court cases. Illegal schemes, typically
referred to as pyramid, chain distribution, or endless chain schemes,
compensate participants primarily and solely for the introduction or enrollment
of additional participants into the scheme. Often these schemes are
characterized by large up-front entry or sign-up fees, over-priced products of
low value, little or no emphasis on the sale or use of products, high-pressure
recruiting tactics, and claims of huge and quick financial rewards requiring
little or no effort. Generally, these laws are directed at ensuring that product
sales ultimately are made to consumers and that advancement within sales
organization is based on sales of the enterprises products, rather than
investments in the organization or other non-retail sales related criteria or
activity. We ensure through counsel that our network marketing system is in
regulatory compliance.  We currently have distributors in all fifty states. In addition to
federal regulation, each state has enacted its own little FTC Act to regulate
sales and advertising. We may receive requests to supply information regarding
our network marketing plan to regulatory agencies. We believe that our network
marketing program is in compliance with laws and regulations relating to network
marketing activities in our current markets.  We cannot predict the nature of any future law, regulation,
interpretation, or application, nor can we predict what effect additional
governmental legislation or regulations, judicial decisions or administrative
orders, when and if promulgated, would have on our business in the future. It is
possible that future developments may require that we revise our network
marketing program or our product manufacturing and labeling.    EMPLOYEES  We currently employ three (3) employees, all of whom are full-time
employees. In addition to our current staff, we also have approximately 2,000
distributors nationwide. None of the Companys
employees are represented under collective bargaining agreements. The Company
considers its employee relations to be good.  REPORTS TO
STOCKHOLDERS  We are currently a reporting issuer in the U.S. and are subject to
reporting requirements under section 13 or 15(d) of the U.S. Securities
Exchange Act of 1934, as amended.  We are required to file the
following with the U.S. Securities and Exchange Commission (the SEC): (i)
quarterly reports on Form 10-Q; (ii) an annual report on Form 10-K; (iii) a Form
8-K to report the occurrence of certain reportable events; (iv) Forms 3, 4 and 5
to report insider sales and acquisition of our securities; and (v) proxy
statements. We are required to deliver an annual report to our stockholders
prior to or with the distribution of proxy materials relating to annual
stockholder meetings.     ITEM 2. PROPERTIES  The Company is
currently leasing temporary space from one of its employees. The agreement terms
for the space will extend through February 2010. The Company anticipates moving
to a new location at that time.  ITEM 3. LEGAL
PROCEEDINGS  On December 13, 2006, a civil suit was filed in the District Court
of Clark County in and for the State of Nevada by LifeQuest World Corporation
(plaintiffs) and one former employee and her spouse (defendants). The suit
entails that the former employee processed credit refunds to a debit/credit card
held at their banking institution. In addition, the former employee embezzled
funds by setting up a merchant processing system and diverting the charging of
our distributors' credit cards from our merchant processor to their processor.
All is evidenced by information located on the computer used by the former
employee at the Company as well as through other reporting mechanisms and
processing systems. The Company is seeking relief for damages in excess of
$60,000; special damages according to proof; for attorneys' fees and costs of
suit; and for other and further relief as the Court may deem just and proper as
compensation for monies embezzled by the former employee and her spouse. No
answer has been received from the defendant and the Company obtained a default
judgment granting all of the relief sought.   The Company has not yet
been able to collect any amounts granted by the default judgment.  Management is not aware of any other legal proceedings
contemplated by any governmental authority or any other party involving us or
our properties. As of the date of this Annual Report, no director, officer or
affiliate is (i) a party adverse to us in any legal proceeding, or (ii) has an
adverse interest to us in any legal proceedings. Management is not aware of any
other legal proceedings pending or that have been threatened against us or our
properties.    ITEM
4. Submission of Matters to a Vote of Security Holders.  None.   Part II ITEM 5. MARKET FOR
REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF
EQUITY SECURITIES  MARKET
FOR COMMON EQUITY  The shares of the Company trade on the Over the Counter Bulletin
Board under the symbol, LQWC  The market for our common stock is limited, volatile and sporadic.
The following table sets forth the high and low sales prices relating to our
common stock on a quarterly basis for the last two fiscal years as quoted by the
NASDAQ. These quotations reflect inter-dealer prices without retail mark-up,
markdown or commissions, and may not represent actual transactions.  Quarter
Ended
High
Bid
Low
BidMay 31, 2009
$0.55
$0.11February 28,
2009
$0.24
$0.16November 30,
2008
$0.31
$0.24August 31,
2008
$0.40
$0.30May 31, 2008
$0.60
$0.30February 28,
2008
$0.65
$0.55November 30,
2007
$0.70
$0.45August 31,
2007
$1.50
$0.26May 31,
2007
$0.90
$0.40  As of May 31, 2009, there were approximately 312 shareholders of
record of our common shares as reported by our transfer agent, Signature Stock
Transfer, Inc., which does not include shareholders who shares are held in
street or nominee names. We believe that there are approximately 200 beneficial
owners of our common stock. There are 10,000,000 of preferred stock outstanding.  DIVIDEND
POLICY  No dividends have been declared by the Board of Directors on our
common stock. Our losses do not currently indicate the ability to pay any cash
dividends, and we do not have any intention of paying cash dividends on our
common stock in the foreseeable future. We are trying to market our products and
expand our business; therefore, it is unlikely that we would use profits for the
purpose of paying dividends for the foreseeable future.     SECURITIES
AUTHORIZED FOR ISSUANCE UNDER COMPENSATION PLANS  As of the date of this Annual Report, we do not have an equity
compensation plan under which equity securities are authorized for issuance to
employees, officers, or directors.  As of the date of this Annual Report,
we do not have any options issued or outstanding under any equity compensation
plan.  The
Company was offering 3,000,000 of its common shares to its distributors under a
plan where the distributors earn certificates based on sales and bonus points.
 This plan was terminated on June 1, 2007.  Each certificate is
redeemable for one share of the Companys common stock three years after the
certificate has been earned.  The number of certificates outstanding at May
31, 2009 was 88,160. A corresponding liability for the certificates earned has
previously been recorded and the outstanding balance is $111,695 at May 31, 2009
and is included in Accrued compensation and benefits.  During the years
ended May 31, 2009 and 2008, respectively, no shares were issued to various
distributors under this plan.  Effective June 1, 2007 this plan has been
discontinued and all distributors holding certificates at that time became fully
vested. The Company has not set a date for issuing these common shares as of the
date of this filing.   Equity Compensation Plan InformationPlan Category
Number of securities to be issued upon exercise of
outstanding options, warrants and rights(a)
Weighted-average exercise price of outstanding options,
warrants and rights(b)
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities reflected
in column (a))(c)Equity
compensation plans approved by security holders
N/A
N/A
N/AEquity
compensation plans not approved by security holders
Ambassador
Program
88,160
N/A
None    RECENT SALES OF UNREGISTERED SECURITIES  Private Placements  During fiscal year ended May 31, 2009, we issued Nordic Immotech
4,166,667 shares of common stock with a fair value of $1,000,000 or $0.24 per
share on December 8, 2008. Additionally, we issued Nordic Immotech another
4,166,667 shares of common stock with a fair value of $645,833 or $0.155 per
share on March 31, 2009. The Company was intending to use the value of these
shares to offset the purchase price of Nordic Immotech, if an agreement to
purchase Nordic Immotech was reached. If no agreement was reached, the shares
would remain with Nordic Immotech and would be tradeable. In May 2009, the Company had a single private placement and issued
250,000 shares of our restricted common stock at $0.20 per share for $50,000. In
addition, there were 250,000 warrants attached with an exercise price of $0.30
to purchase one common share. The warrants expire in one year.  During fiscal year ended May 31, 2008, we executed private
placements totaling 6,400,000 shares (1,400,000 at $0.50, 2,500,000 shares at
$0.20 per share and 2,500,000 at $0.42 per share) of our restricted common
stock, for which we received cash in amounts of $2,249,965.  ITEM
6.  SELECTED FINANCIAL DATA  Not
required by smaller reporting companies.    ITEM 7.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS  LifeQuest World Corporation, a Minnesota corporation incorporated
on November 1, 1997, currently trades on the Over-the-Counter Bulletin Board
under the symbol "LQWC". We are a product-focused company specializing in the
herbal supplement industry and market. The following discussion and analysis of our results of operations
and financial position should be read in conjunction with our audited financial
statements and the notes thereto, included elsewhere in this Annual Report. Our
financial statements are prepared in accordance with U.S. GAAP. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS  In this report and from time to time, in reports filed with the
Securities and Exchange Commission, in press releases, and in other
communications to shareholders or the investing public, there may be forward
looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995. The Company may make forward-looking statements concerning
possible or anticipated future financial performance, business activities,
plans, pending claims, investigations or litigation which are typically preceded
by the words believes, expects, anticipates, intends or similar
expressions. For such forward-looking statements, the   Company claims the protection of the safe harbor for
forward-looking statements contained in federal securities laws. Shareholders
and the investing public should understand that such forward looking statements
are subject to risks and uncertainties which could cause actual performance,
activities, anticipated results, outcomes or plans to differ significantly from
those indicated in the forward-looking statements. Such risks and uncertainties
include, but are not limited to: lower sales to customers; the introduction of
competitive products and technologies; our ability to successfully reduce
operating expenses; delays in new product introductions; higher than expected
expense related to new sales and marketing initiatives; availability of adequate
supplies of raw materials; and other factors discussed from time to time in the
Companys filings with the Securities and Exchange Commission. Our actual
results could differ materially from the results discussed in the
forward-looking statements.  The following discussion is intended to provide an analysis of our
financial condition and should be read in conjunction with our audited financial
statements and the notes thereto.  The matters discussed in this section
which is not historical or current facts deal with potential future
circumstances and developments.  Such forward-looking statements include,
but are not limited to, the development plans for our growth, trends in the
results of our development, anticipated development plans, operating expenses
and our anticipated capital requirements and capital resources.  Our actual
results could differ materially from the results discussed in the
forward-looking statements.  The accompanying financial statements have been prepared in
conformity with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern.  However, the Company has
sustained substantial losses and its liabilities exceed its assets which has created a substantial
doubt about the Companys ability to continue as a going concern.  The
Company is trying to generate positive cash flows from operations through
increased sales utilizing the network of distributors in place with existing
products, issuing additional stock, and obtaining necessary capital through
additional advances from the Companysprincipal stockholder or through private
placements.  To continue operations, the Company must raise additional capital.
However, there can be no assurance the Company will be able to obtain additional
capital from private placements in the future.  The proceeds of the private
placements are being used for regular corporate needs.  Critical Accounting Policies  Inventory Valuation: The Companys inventories are valued at the
lower of cost or market using the first-in, first-out method (FIFO). Reserves
for overstock and obsolescence are estimated and recorded to reduce the carrying
value to estimated net realizable value. The amount of the reserve is determined
based on projected sales information, plans for discontinued products and other
factors. Though management considers these reserves adequate and proper, changes
in sales volumes due to unexpected economic or competitive conditions are among
the factors that could materially affect the adequacy of this reserve.  Intangible Asset: Intangible asset, entirely comprised of the
ImmunXT license, is recorded at cost and is presented net of amortization.
Amortization is computed over the   estimated sales volume that is anticipated over the remaining term
of the licensed agreement to properly match revenue and expenses.  Income Taxes: We account for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109,
Accounting for Income Taxes as clarified by FIN 48. In the preparation of the
Companys consolidated financial statements, management calculates income taxes.
This includes estimating the Companys current tax liability as well as
assessing temporary differences resulting from different treatment of items for
tax and book accounting purposes. These differences result in deferred tax
assets and liabilities, which are recorded on the balance sheet. These assets
and liabilities are analyzed regularly and management assesses the likelihood
that deferred tax assets will be realized from future taxable income. The
valuation allowance for deferred income tax benefits is determined based upon
the expectation of whether the benefits are more likely than not to be realized.
The Company has recorded a full valuation
allowance for all deferred tax assets due to the significance of its continued
operating losses.  FIN
No. 48 requires the recognition of a financial statement benefit of a tax
position only after determining that the relevant tax authority would more
likely than not sustain the position following an audit. For tax positions
meeting the more-likely-than-not threshold, the amount recognized in the
financial statements is the largest benefit that has a greater than fifty
percent likelihood of being realized upon ultimate settlement with the relevant
tax authority.   Revenue Recognition: The Company recognizes revenue when the
earnings process is complete, evidenced by persuasive evidence of an agreement,
delivery has occurred or services have been rendered, the price is fixed or
determinable, and collectability is reasonably assured.  The earning
process completion is evidenced through the shipment of goods, as the sales
terms of our products are FOB shipping point, the risk of loss is transferred
upon shipment and there are no significant obligations subsequent to that point.
There are no significant estimates related to revenue recognition.  RESULTS OF OPERATIONS  Years ended May 31,2009
2008
% ChangeRevenue
$
   769,616
$
   977,469
-21.26%Gross Profit
$
   577,274
$
    767,566
-24.79%Net Loss
$(1,219,382)
$(1,457,068)
-16.31%Basic and Diluted Net Loss per Share
$
      (0.03)
$      (0.04)
-25%   Year Ended May 31, 2009 Compared to Year Ended May 31, 2008     Overview  Total revenue for the year ended May 31, 2009, was $769,616
compared to $977,469 in 2008.  Gross profit declined to $577,274 for the
year ended May 31, 2009 compared to $767,566 in 2008, as further discussed
below. The net loss for the year ended May 31, 2009, was ($1,219,382) compared
to ($1,457,068) in 2008.  Revenue and Gross Margins  Revenues for the year ended May 31, 2009 decreased by 21% to
$769,616 compared to $977,469 in 2008.  Product sales were $733,833 and
$909,381 for the years ended May 31, 2009 and 2008, respectively. Product sales
included sales for the ImmunXT product line which were $195,613 and $53,190 for
the years ended May 31, 2009 and 2008, respectively. The Company began selling
the ImmunXT product in the North America market in February 2008. The revenue
amount also includes $35,783 and $68,088 of royalty income received from Nordic
Immotech for their sales of our ImmunXT product in Europe. The Company has
continued to experience weaker demand for its existing products compared to last
year and is actively developing new product offerings. Effective August 19,
2009, the Company no longer has the marketing and distribution rights for the
ImmunXT product.  The Company can continue to sell their remaining ImmunXT
inventory over the next 12 months.  Gross profit in the year ended May 31, 2009 decreased to $577,274
compared to $767,566 in the same period ended in 2008 due primarily to the
decline in product sales. Gross profit as a percentage of revenue decreased to
75% in the year ended May 31, 2009 compared to 78% in the same period ended in
2008. This was due to primarily to having to discount our products due to a
continued decline of product sales.  Royalty
Expense-Related Party  The minimum royalty expense-related party accrued to Jurak
Holdings Limited (related party) remained consistent for both years at $500,000
($125,000 per quarter) per the contract terms.  Distribution, Selling, and Administrative Expenses  Total distribution, selling and administrative expenses for the
year ended May 31, 2009, were $1,167,074 compared with $1,541,999 for the year
ended in 2008. Selling and administrative expenses decreased by approximately
$374,925 in 2009. This decrease is primarily related to the decrease in cash
available to market the Companys product line and increased effort by
management to control overall costs.  During this past year, management has
reduced headcount to its lowest possible level in order to still be able to
effectively operate. Other Income and Expense  Interest expense for the year ended May 31, 2009, was $129,582
compared with $182,635 for the year ended in 2008. Current year interest costs
decreased over prior year due to decreased   interest expense on the debt agreement to buy the Nordic Immotech
License.  The expense for 2009 includes a beneficial conversion charge of
$96,140 in connection with the convertible note issued in payment of past due
accrued royalty fees to a related party. LIQUIDITY AND CAPITAL RESOURCES  We have historically had more expenses and cost of sales than
revenue in each year of our operations. The accumulated deficit as of May 31,
2009, was $8,687,684 compared to $7,468,302 as of May 31, 2008.  Generally,
we have financed operations to date through the proceeds of the private
placement of equity and debt securities and revenue. We intend to finance these
expenses with further issuances of our securities and revenues from operations.
Therefore, we expect the need to raise additional capital and increase our
revenues to meet long-term operating requirements.  We currently are analyzing the opportunity for a private placement
offering. We have not finalized the terms of a placement, if one were to occur.
The proceeds of any new private placement would be used for regular corporate
needs as well as funding any new product development.  At May 31, 2009, the Company had no unrestricted cash compared to
$16,336 of unrestricted cash at May 31, 2008.  The Company had current
assets of $282,009 and current liabilities of $2,628,524 at May 31, 2009,
compared to current assets of $316,781 and current liabilities of $1,586,187 at
May 31, 2008.  Net cash used in operating activities was $243,602 during the year
ended May 31, 2009, compared to net cash used in operating activities of
$943,919 in the year ended May 31, 2008. The decrease was due primarily to the
decreased operating loss and a significant reduction in ImmunXT purchases
inventory for the year ended May 31, 2009.  Net cash used in investing activities was $20,361 in the year
ended May 31, 2009, compared to $6,220 in the year ended in 2008.  Net cash provided by financing activities was $247,627 in the year
ended May 31, 2009, compared to net cash provided by financing activities in the
year ended in 2008 of $769,137. The Company raised a significant amount of
additional capital in 2008 compared to 2009 in order to market the ImmunXT
product.  PLAN OF OPERATION  We have been, since our inception, reliant on external investment
to finance ongoing operations as we are not yet operating profitably.
 While we expect that we anticipate achieving profitable operations in the
future, there can be no assurance that our revenue, margins, and profitability
will increase or be sufficient to support our operations in the long term. We
expect we will need to raise additional capital to meet short and long-term
operating requirements. We believe that private placements of equity capital and
debt financing may be adequate to fund our   long-term operating requirements. We may also encounter business
endeavors that require significant cash commitments or unanticipated problems or
expenses that could result in a requirement for additional cash. If we raise
additional funds through the issuance of equity or convertible debt securities
other than to current shareholders, the percentage ownership of our current
shareholders would be reduced, and such securities might have rights,
preferences or privileges senior to our common stock. Additional financing may
not be available upon acceptable terms, or at all. If adequate funds are not
available or are not available on acceptable terms, we may not be able to take
advantage of prospective business endeavors or opportunities, which could
significantly and materially restrict our business operations. We are continuing
to pursue external financing alternatives to improve our working capital
position and to grow our business to the greatest possible extent.  MATERIAL
COMMITMENTS A significant commitment for fiscal year ending May 31, 2009,
relates to the License Agreement with Jurak Holdings Limited (related party). As
of fiscal year ended May 31, 2009, an aggregate amount of $1,600,803 is due and
owing to Jurak Holdings Limited for Accrued Minimum Royalty fees, accrued
interest and a related note payabledue to lack of timely payment. See Note 8 in
financial statements for additional information.  On December 1, 2006, the Company finalized the closing of the
exclusive global license and distribution agreement with Nordic Immotech
Trading. As part of the closing for this agreement, the Company had a calendar
year minimum raw product purchase commitment: The license agreement could be
terminated by Nordic Immotech Trading if the minimum purchase commitment was not
met. Effective August 19, 2009, Nordic Immotech has terminated the license
agreement with the Company due to not meeting the required raw material purchase
commitments.  As part of the license agreement noted above, Nordic Immotech
Trading was required to pay a royalty of ten percent (10%) of net sales of
products sold by Nordic and affiliates to independent third parties in Europe.
This agreement was effectively terminated in August 2009, as well.  In a separate agreement, the Company was granted an option to
purchase all the shares in Nordic Immotech Trading (the sole supplier of the raw
material ingredient for our ImmunXT product). Subject to the terms and
conditions of the separate agreement, the Company had the option to purchase all
of the shares of Nordic (170,000 shares) at a fixed price of $76.47 per share
for a total of $13,000,000. The Company could exercise the option anytime before
December 1, 2008.  The Company was able to negotiate with Nordic Immotech
two extensions to their agreements through June 1, 2009.  For those
extensions, the Company issued 8,333,334 shares of common stock valued at
$1,645,833 to Nordic Immotech.  These shares were to be used as a partial
offset to the purchase price owed to Nordic Immotech if the Company was
successful in purchasing Nordic Immotech.  However, the Company was
unsuccessful in their efforts and the value of these shares has been lost
subsequent to year-end.  See Notes 3 and 9 in the Companys financial
statements for further information.   OFF-BALANCE
SHEET ARRANGEMENTS As of the date of this Annual Report, we do not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial
condition, revenues or expenses, results of operations, liquidity, capital
expenditures or capital resources, that are material to our investors. The term
off-balance sheet arrangement generally means any transaction, agreement or
other contractual arrangement to which an entity unconsolidated with us is a
party, under which we have: (i) any obligation arising under a guarantee
contract, derivative instrument or variable interest; or (ii) a retained or
contingent interest in assets transferred to such entity or similar arrangement
that serves as credit, liquidity, or market risk support for such assets.  FUTURE OUTLOOK  The demand for our products is largely dependent upon the level of
acceptance and understanding of herbal dietary supplements in the North American
distributor and consumer sectors. Market size for herbal dietary supplement
products and our relative share of this market will be affected by a number of
factors, which include general understanding and awareness, continuing growth in
homeopathic awareness, government regulations and general economic conditions.
We are attempting to mitigate some of these risks through education and
employing well-known persons to endorse our products.  As we continue to expand our operations internationally we must be
aware of any inherent business risks associated with doing so. We have attempted
to mitigate these risks by establishing a network marketing system utilizing
persons who are familiar with the industry.    ITEM 7A.
 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.  Not
required by smaller reporting companies.                   ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.  LifeQuest World
Corporation Audited Financial
Statements As of and for the
years ended May 31, 2009 and 2008 Index Report of Independent
Registered Public Accounting Firm Balance Sheets Statements of
Operations Statements of Cash Flows Notes to Financial
Statements                                REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board of Directors and Stockholders LifeQuest World Corporation  We have audited the accompanying consolidated balance sheets of
LifeQuest World Corporation as of May 31, 2009 and 2008, and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management.  Our responsibility is to express an opinion on these
financial statements based on our audits.  We conducted our audits in accordance with the standards of the
Public Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the Companys internal control over financial
reporting. Accordingly, we express no such opinion.  An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.  In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of LifeQuest World
Corporation as of May 31, 2009 and 2008, and the results of its operations and
its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.  The accompanying financial statements have been prepared assuming
the Company will continue as a going concern.  As discussed in Note 2 to
the financial statements, the Company has suffered recurring losses from
operations and its current liabilities exceed its current assets.  These
factors raise substantial doubt about its ability to continue as a going
concern.  Managements plans in regard to these matters are also described
in Note 2.  The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.   /s/ Carver Moquist & O'Connor, LLC   Minneapolis,
Minnesota September
14, 2009


LIFEQUEST WORLD CORPORATIONCONSOLIDATED BALANCE SHEETSMAY 31, 2009 AND 2008May 31

May 31Assets:
2009

2008____________

____________Current
assets:Cash
and cash equivalents
$
                       -

$
               16,336Accounts
receivable
24,203

11,646Inventories,
net
255,789

277,879Prepaid
expenses and advances
2,017

10,920____________

____________Total
current assets
282,009

316,781____________

____________Office
furnishings and equipment, net
19,301

6,024____________

____________Other
assets:Deposits
and other
1,645,893

6,745Intangible
asset, net
2,385,974

2,388,699____________

____________Total
other assets
4,031,867

2,395,444____________

____________Total
Assets
$
          4,333,177

$
          2,718,249____________

________________________

____________Liabilities and Stockholders' Equity:Current
liabilities:Checks
written in excess of bank balance
$
               30,821

$
                       -Current
portion of capital lease obligation
-

321Accounts
payable
259,477

134,766Accounts
payable-related party
96,912

96,912Accrued
compensation and benefits
305,651

218,306Other
accrued liabilities
144,754

25,304Convertible
note payable to related party
1,350,724

-Accrued
royalties-related party
250,078

1,087,598Payable
to stockholder/officers
190,107

22,980____________

____________Total
current liabilities
2,628,524

1,586,187____________

____________Total
liabilities
2,628,524

1,586,187____________

____________Stockholders'
equity:Common
stock, par value $0.001 per share, 150,000,000 sharesauthorized,
49,062,164 and 40,478,830 shares issued and outstanding atMay
31, 2009 and 2008, respectively
49,062

40,479Series
B preferred stock, par value $0.001 per share, 10,000,000 sharesauthorized,
10,000,000 and no shares issued and outstanding atMay
31, 2009 and 2008, respectively
10,000

-Undesignated
preferred stock, par value $0.001 per share, 40,000,000 sharesauthorized,
no shares issued or outstanding atMay
31, 2009 and 2008, respectively
-

-Additional
paid-in capital
10,333,275

8,559,885Accumulated
deficit
(8,687,684)

(7,468,302)____________

____________Total
stockholders' equity
1,704,653

1,132,062____________

____________Total
Liabilities and Stockholders' Equity
$
          4,333,177

$
          2,718,249____________

________________________

____________See
accompanying notes to consolidated financial statements.     LIFEQUEST
WORLD CORPORATIONCONSOLIDATED
STATEMENTS OF OPERATIONSFOR THE
YEARS ENDED MAY 31, 2009 AND 2008Year Ended
May 312009



2008Revenue:Sales-product
$
733,833


$
909,381Royalty
income-immune booster

35,783



68,088Total
Revenue

769,616



977,469Cost of sales

192,342



209,903Gross profit

577,274



767,566Royalty expense-related
party

500,000



500,000Distribution, selling
andadministration
expenses

1,167,074



1,541,999Loss from
operations
(1,089,800)


(1,274,433)Other income and
(expenses):Interest
expense

(129,582)



(182,635)Total
other income and(expense),
net

(129,582)



(182,635)Net loss before income
taxes

(1,219,382)



(1,457,068)Income tax
expense

-



-Net loss
$
(1,219,382)


$
(1,457,068)Basic and diluted
lossper common
share
$
(0.03)


$
(0.04)Weighted
averageoutstanding common
shares-basic and
diluted

43,175,177



38,125,837See
accompanying notes to consolidated financial statements.    LIFEQUEST WORLD CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS'
EQUITYFOR THE YEARS ENDED MAY 31, 2009 AND 2008AdditionalCommon Stock

Preferred Stock


Paid-In


AccumulatedShares

Amount

Shares

Amount


Capital


Deficit

TOTALBalance
- May 31, 2007
34,245,499


34,246

-


-


6,316,153


(6,011,234)

339,165Issuance
of common stock at$0.50
per share in Private Placementduring
July 2007
1,400,000


1,400







698,600




700,000Issuance
of common stock at$0.20
per share in Private Placementduring
September 2007
2,500,000


2,500







497,500




500,000Cancellation
of common stock issued forcompensation
in April 2007, originally valuedat
$0.70 per share, in February 2008
(166,669)


(166)







166




-Issuance
of common stock at$0.42
per share in Private Placementduring
November 2007
1,190,476


1,190







498,775




499,965Issuance
of common stock at$0.42
per share in Private Placementduring
December 2007
595,238


595







249,405




250,000Issuance
of common stock at$0.42
per share in Private Placementduring
February 2008
714,286


714







299,286




300,000Net
loss














(1,457,068)

(1,457,068)Balance
- May 31, 2008
40,478,830

$
40,479

-

$
-

$
8,559,885

$
(7,468,302)

1,132,062Issuance
of preferred stock forconsideration
of an employmentagreement
in September 2009





10,000,000


10,000


(10,000)




-Issuance
of common stock for considerationof
a standstill agreement in connection with
the
Nordic license in December 2008valued
at $0.24 per share
4,166,667


4,167







995,833




1,000,000Issuance
of common stock for considerationof
a standstill agreement in connection withthe
Nordic license in March 2008 valued at
$0.155
per share.
4,166,667


4,166







641,667




645,833Beneficial
conversion feature charge inConnection
with a convertible noteagreement
in April 2009











96,140




96,140Issuance
of common stock at$0.20
per share in Private Placementduring
May 2009
250,000


250







46,750Net
loss














(1,219,382)

(1,219,382)Balance
- May 31, 2008
49,062,164

$
49,062

10,000,000

$
10,000

$
10,330,275

$
(8,687,684)

$
1,704,653See accompanying notes to consolidated financial
statements.


LIFEQUEST
WORLD CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE
YEARS ENDED MAY 31, 2009 AND 20082009
2008____________
____________CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
$   (1,219,382)
$
  (1,457,068)Adjustments to reconcile net lossto net cash used in operating
activities:Depreciation and
amortization
5,329
7,370Loss on disposal of
assets
4,480
-Non-cash interest
expense
96,140
42,412Changes in operating assets
and liabilities:Accounts
receivable
(12,557)
(4,024)Inventories
22,090
(213,869)Prepaid
expenses and advances
8,903
2,934Deposits
6,685
31,853Accounts
payable
124,711
63,844Accrued
expenses
719,999
582,629____________
____________Net
cash used in operating activities
(243,602)
(943,919)____________
____________CASH FLOWS FROM INVESTING ACTIVITIES:Acquiring office furnishings and equipment
(20,361)
(6,220)____________
____________Net cash used
in investing activities
(20,361)
(6,220)____________
____________CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of common stock, net of
issuance costs
50,000
2,249,965Payments on installment payable-immune booster
license
-
(1,450,000)Checks issued in excess of bank balance
30,821
-Payments on capital lease obligations
(321)
(932)Advances from (repayment to)
stockholder/officer
167,127
(29,896)____________
____________Net cash
provided by financing activities
247,627
769,137____________
____________NET INCREASE IN CASH AND CASH EQUIVALENTS
(16,336)
(181,002)CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD
16,336
197,338____________
____________CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
               -
$
        16,336____________
________________________
____________Supplemental
 disclosures of cash flow information:Interest
paid
$
               -
$
      140,233Income tax
payments
$
               -
$
               -Common stock
issued as consideration for standstill agreement
$
    1,645,833
$
               -Accrued
royalties-related party converted into debt
$
    1,345,957
$
               -See accompanying notes to consolidated
financial statements.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS May 31, 2009 and 2008 Note
1 - Nature of Business and Summary of Significant Accounting Policies: Nature
of business: LifeQuest World Corporation was incorporated under the laws of the
State of Minnesota on November 1, 1997. The Company is located in Las Vegas,
Nevada and develops and distributes dietary herbal supplement products. The shares of the Company trade on the Over the Counter Bulletin
Board under the symbol, "LQWC." A summary of the Company's significant accounting policies is as
follows: Principles
of Consolidation: The consolidated financial statements include the accounts of
LifeQuest World Corporation and its wholly owned subsidiary. All significant
inter-company accounts and transactions have been eliminated in
consolidation. Revenue
recognition: The Company recognizes revenue when persuasive evidence of an
arrangement exists, title and risk of ownership passes, the sales price is fixed
or determinable, and collectability is probable. Generally, these criteria are
met at the time product is shipped to our distributors or directly to a retail
customer. Use
of estimates: The preparation of the financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make certain estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the financial statement date and revenues and expenses during
the reporting period. Actual results could differ from Company estimates. Cash: The Company considers all highly liquid debt instruments with
original maturities of three months or less to be cash equivalents. The Company
maintains its cash in a high quality financial institution. The balance at times
may exceed the federally insured limits. Accounts
Receivable: The Company collects payments from its customers almost entirely
from credit cards. Primarily, any accounts receivable balance at the end of the
reporting period is due to a two or three day lag in receiving the funds from
the credit card processors. It also includes royalty payments due from Nordic
Immotech for product sales made in Europe through May 31, 2009. Balances still   outstanding after management has used reasonable collection
efforts are written off through a charge to the allowance for doubtful accounts
and a credit to accounts receivable. Historically, the Company has not
experienced significant losses related to receivables from individual customers.
At May 31, 2009 and 2008, the Company considers its accounts receivable to
be fully collectible and therefore have not recorded an allowance for doubtful
accounts. Inventories: Inventories are valued at the lower of cost or market, using the
first-in, first-out method (FIFO).  The Company reviews inventory on a
regular basis and provides for slow-moving, obsolete or unusable inventories by
reducing inventory to its estimated useful or scrap value. Inventories are
report at their net amounts, and consist of the following:  May 312009

2008Raw
materials
$ 115,643

$170,286Finished
goods and supplies
157,146

117,593Allowance
for obsolescence
(17,000)

(10,000)$ 255,789

$ 277,879  Office
furnishings and equipment: Office furnishings and equipment are recorded at cost and
depreciated on a straight-line basis over their estimated useful life of three
to seven years. Maintenance and minor renewals are expensed when incurred. Depreciation expense for
the years ended May 31, 2009 and 2008 was $2,604 and $5,348, respectively. Intangible
Asset-Immune Booster License: Intangible asset, entirely comprised of the immune booster
license, is recorded at cost and is presented net of amortization. Amortization
is being computed over the estimated sales volume that is anticipated over the
remaining term of the licensed agreement to properly match revenue and expenses.
There was $2,725 and $2,022 of amortization expense for the years ended May 31,
2009 and 2008, respectively. In August 2009, the Company has been notified that
the distribution rights to this product have been terminated effective August
2009. (See Note 8  Commitments and Note 9  Subsequent Events) Long-lived
assets: Long-lived assets, such as property and equipment and intangible
assets are reviewed for impairment whenever 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 comparison of the carrying amount of
an asset to estimated undiscounted future cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash
flows,   an impairment charge is recognized in the amount by which the
carrying amount of the assets exceeds the fair value of the asset. Income
taxes: Income taxes are accounted for in accordance with SFAS
No. 109, as clarified by FIN No. 48, which requires an asset and
liability approach to financial accounting and reporting for income taxes.
Accordingly, deferred tax assets and liabilities arise from the difference
between the tax basis of an asset or liability and its reported amount in the
financial statements. Deferred tax amounts are determined using the tax rates
expected to be in effect when the taxes will actually be paid or refunds
received, as provided under currently enacted tax law. Valuation allowances are
established when necessary to reduce deferred tax assets to the amount expected
to be realized. Income tax expense or benefit is the tax payable or refundable,
respectively, for the period plus or minus the change in deferred tax assets and
liabilities during the period.  FIN No. 48 requires the recognition of a financial statement
benefit of a tax position only after determining that the relevant tax authority
would more likely than not sustain the position following an audit. For tax
positions meeting the more-likely-than-not threshold, the amount recognized in
the financial statements is the largest benefit that has a greater than fifty
percent likelihood of being realized upon ultimate settlement with the relevant
tax authority. Advertising: The Company expenses advertising costs as they are incurred.
Advertising costs were $400 and $8,810 for the years ended May 31, 2009 and
2008, respectively. Shipping
and handling costs: Shipping and handling costs charged to customers have been
included in sales. Inbound and outbound freight and handling costs incurred by
the Company have been included in cost of sales. Research
and development costs: Research and development costs consist of on-going product
development and enhancement efforts. Total expenses amounted to $15,471 and
$16,914 for the years ended May 31, 2009 and 2008, respectively. Fair
value of financial instruments: The carrying value of the Company's financial instruments
approximates fair value at May 31, 2009 and 2008. The carrying amounts for cash,
accounts receivable, accounts payable, accrued liabilities and notes payable
approximate fair value due to the short maturity of these instruments. Segment
Reporting: The
Company operates as one reporting segment. Reclassifications:   Certain prior year amounts have been reclassified to conform to
current year presentation.  Loss
per common share: The Company computes earnings per share in accordance with
Statement of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS
128"). SFAS 128 requires companies to compute earnings per share under two
different methods, basic and diluted, and present per share data for all periods
in which statements of operations are presented. Basic earnings per share are
computed by dividing net income by the weighted average number of shares of
common stock outstanding during the applicable period. Diluted earnings per
share are computed by dividing net income by the weighted average number of
common stock outstanding during the period increased by potentially dilutive
common shares.  Potentially dilutive common shares include stock
warrants and shares to be issued under the Distributor Stock Bonus Plan (See
Note 8  Commitments).  Dilution is determined using the treasury
stock method.  The following table provides a reconciliation of the numerators
and denominators used in calculating basic and diluted earnings per share for
the years ended May 31, 2009 and 2008.  May 312009

2008Basic
earnings per share calculation:Net
loss to common shareholders
$(1,219,382)

($1,457,068)Weighted
average common shares outstanding
43,175,177

38,125,837Basic
net loss per share
$(0.03)

$(0.04)  Diluted
earnings per share calculation:Net
loss to common shareholders
$(1,219,382)

($1,457,068)Weighted
average common shares outstanding
43,175,177

38,125,837Warrants
and dilutive shares (1)
-

-Diluted
weighted average common shares outstanding
43,175,177

38,125,837Diluted
net loss per share
$(0.03)

$(0.04) (1)There were 250,000 stock warrants and 88,160 shares
under the Distributor Stock Bonus Plan that were anti-dilutive due to the
Companys net loss for the year ended May 31, 2009 and 2008, respectively, and
therefore have been excluded from the calculation. Recent
accounting pronouncements: In April 2009, the Financial Accounting Standards Board (FASB)
issued FASB Staff Position (FSP) No. FAS 157-4, Determining Fair Values When
the Volume and Level of Activity for the Asset or Liability Have Significantly
Decreased and Identifying Transactions That Are Not Orderly. This FSP provides
guidance on (1) estimating the fair value of an asset or liability when the
volume and level of the activity for the asset or liability have significantly
declined and   (2) identifying transactions that are not orderly. This FSP also
amends certain disclosure provisions of SFAS No. 157 to require, among other
things, disclosures in interim periods of the inputs and valuation techniques
used to measure fair value. The Company is currently evaluating the impact of
this standard, but would not expect it to have a material impact on our
financial position, results of operations, or cash flows. In
June 2008, the FASB issued FSP No. EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating
Securities. This guidance states that unvested share-based payment awards
that contain nonforfeitable rights to dividends or dividend equivalents are
participating securities and should be included in the computation of earnings
per share using the two-class method outlined in SFAS No. 128, Earnings per
Share. The two-class method is an earnings allocation formula that
determines earnings per share for each class of common stock and participating
security according to dividends declared and participation rights in
undistributed earnings. The adoption of this new guidance on June 1, 2009
should not have an effect on the Company's reported earnings per share.  In
April 2008, the FASB issued FASB Staff Position (FSP) No. FAS 142-3,
Determination of the Useful Life of Intangible Assets. This guidance
addresses the determination of the useful life of intangible assets which have
legal, regulatory or contractual provisions that potentially limit a company's
use of an asset. Under the new guidance, a company should consider its own
historical experience in renewing or extending similar arrangements. The Company
is required to apply the new guidance to intangible assets acquired after
December 31, 2008.  In
February 2008, the FASB issued FASB Staff Position FAS 157-2 ("FSP FAS 157-2")
"Effective Date of FASB Statement No. 157" which delays the effective date of
SFAS No. 157 for non-financial assets and non-financial liabilities that are
recognized or disclosed in the financial statements on a nonrecurring basis to
fiscal years beginning after November 15, 2008. These non-financial items
include assets and liabilities such as reporting units measured at fair value in
a goodwill impairment test and non-financial assets acquired and non-financial
liabilities assumed in a business combination. The Company has not applied the
provisions of SFAS No. 157 to its non-financial assets and non-financial
liabilities in accordance with FSP FAS 157-2. The Company does not expect FAS
157-2 to have an impact to the financial statements or reported earnings per
share.  During
March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities (SFAS No. 161).  SFAS No. 161 is
intended to improve financial reporting about derivative instruments and hedging
activities by requiring enhanced disclosures to enable investors to better
understand their effects on an entitys financial position, financial
performance, and cash flows.  SFAS No. 161 also improves transparency about
the location and amounts of derivative instruments in an entitys financial
statements; how derivative instruments and related hedged items are accounted
for under Statement 133; and how derivative instruments and related hedged items
affect its financial position, financial performance, and cash flows.  SFAS
No. 161 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008, with early application
encouraged.  We do not believe the adoption of SFAS No. 161 will have a
material effect on our results of operations or financial position.    In
June 2009, the FASB issued SFAS No. 168, The FASB Accounting
Standards Codification TM and the Hierarchy of Generally Accepted Accounting
Principles, a replacement of FASB Statement No. 162 (SFAS 168),
which establishes the FASB Accounting Standards Codification as the source of
authoritative accounting principles recognized by the FASB to be applied in the
preparation of financial statements in conformity with generally accepted
accounting principles. SFAS 168 explicitly recognizes rules and interpretive
releases of the Securities and Exchange Commission (SEC) under federal
securities laws as authoritative GAAP for SEC registrants. SFAS 168 will become
effective in the first quarter of fiscal year 2010 and will not have a material
impact on the Companys consolidated financial statements.  Note
2 - Company's Continued Existence: The accompanying consolidated financial statements have been
prepared in conformity with accounting principles generally accepted in the
United States of America, which contemplate continuation of the Company as a
going concern. However, the Company has sustained substantial losses and has a
significant working capital deficit. The Company intends to generate positive
cash flows from operations through increased sales utilizing the network of
distributors in place, from financing activities such as issuing additional
stock through private placement, and obtaining necessary capital through
additional advances from the Company's principal stockholder. However, there can
be no assurance the Company will be able to obtain additional capital from
private placements or advances from stockholders in the future. The Company has
no other committed sources or arrangements for additional financing. The financial statements do not include any adjustment relating to
recoverability and classification of recorded assets, or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue to exist. Note
3 - Intangible Asset: On December 1, 2006, the Company purchased, through an exclusive
license and distribution agreement, the worldwide marketing rights to the most
powerful, natural immune booster discovered to date, as stated by the scientific
research team that developed the product. These rights were being acquired from
Nordic Immotech Trading APS. The license was purchased through installment
payments totaling $2,500,000, per the terms of the agreement, which are paid in
full as of May 31, 2008. The agreement, however, was terminated on August 19,
2009 by Nordic Immotech Trading APS due to not meeting the minimum raw material
purchase commitments. (See Notes 8 and 9). The Company has imputed interest on these installments at a rate
of 10% because the payment schedule was non-interest bearing. The discounted
value of the licensed asset totals $2,373,190. Additional costs for legal
services were also incurred for $17,531. The total cost of the license is
$2,390,721. The Company began marketing the product domestically in February
2008. The Company began amortizing the license at this time. The accumulated
amortization for the years ended May 31, 2009 and 2008, was $4,748 and $2,022,
respectively.   In a separate agreement, the Company was granted an option to
purchase all the shares in Nordic Immotech (the sole supplier of the raw
material ingredient for our ImmunXT product). Subject to the terms and
conditions of the separate agreement, the Company has the option to purchase all
of the shares of Nordic Immotech (170,000 shares) at a fixed price of $76.47 per
share for a total of $13,000,000. The Company could exercise the option anytime
before December 1, 2008.  The Company has been notified that both
agreements have been terminated effective August 2009 (See Note 9  Subsequent
Events). In December 2008, the Company and Nordic Immotech entered into a
Standstill Addendum to the purchase agreement and distribution and sublicense
agreements related to their exclusive license agreement for the ImmunXT product,
as noted above. The primary intent of this Addendum was to extend the time
period to acquire Nordic Immotech and to extend the required minimum purchase
commitment of raw product for the calendar year 2008 to March 31, 2009. In
consideration for this Addendum, the Company has issued Nordic Immotech
4,166,667 shares of common stock with a fair value of $1,000,000 or $0.24 per
share which was the Companys stock closing price on December 8, 2008.
 This deposit has been classified in other assets on the Companys balance
sheet.  Following the terms of the Standstill Addendum, this has been
recorded as a non-refundable advance deposit against the purchase price for the
potential acquisition of Nordic Immotech. On March 31, 2009, the Company and Nordic Immotech entered into a
second Standstill Addendum (II) to the purchase agreement and distribution and
sublicense agreements related to their exclusive license agreement for the
ImmunXT product. The primary intent of this Addendum was as follows: 1. To extend the time period to exercise the option to purchase
Nordic Immotech. 2. To extend the required minimum purchase commitment of raw
product for the calendar year 2008. In consideration of these extensions, the Company issued, on March
31, 2009, 4,166,667 common shares at a fair value of $645,833 or $0.155 per
share which was the Companys stock closing price on March 31, 2009 to Nordic
Immotech. If the Company and Nordic Immotech come to an agreement to purchase
all of the outstanding shares of Nordic Immotech, the value of these common
shares and the 4,166,667 common shares already issued on December 8, 2008 will
be used to offset the purchase price outlined in the purchase agreement. The Company and Nordic Immotech have a preliminary agreement on
the terms of purchase outlined in a preliminary Letter of Intent. Any
consideration made to Nordic Immotech as defined in the agreement is
non-refundable if the acquisition transaction is not closed.  As of August
19, 2009, Nordic Immotech has terminated both of these agreements due to
non-performance of the terms.  Because of this termination, the Company
will record an impairment loss against the Nordic license intangible asset and
the two advance deposits for the acquisition of Nordic Immotech all totaling
$4,031,867 in the 1st quarter ending August 31, 2009. As of the date of this 10-K filing, the Company is still in
negotiations to attempt to complete this acquisition and the advance of these
shares would be considered a payment against the purchase price.  Unless
these continuing negotiations are successful, a full writeoff of the Companys   assets pertaining to this agreement, as previously noted, will be
recorded in 1st quarter ending August 31, 2009.   The
Companys remaining ImmunXT inventory as of May 31, 2009 totals $212,589.
 Under the termination provisions, the Company has the right to continue
selling the product for the next 12 months or offer it back to Nordic Immotech
at cost.  Note
4 -Capital Lease
Obligations: The Company has one capital lease for new computer equipment,
expiring October 2008. The lease bears interest at 5%. The obligation is
collateralized by the equipment under lease. Total cost of the lease equipment
was $20,406 and was fully depreciated at May 31, 2009 and 2008, respectively.
The lease was paid in full during the year ended May 31, 2009. Note
5 - Stockholders Equity: In September 2008, the Board of Directors has designated
10,000,000 of 50,000,000 total authorized preferred shares as Series B. The
Series B preferred shares have no liquidating or other preference, cannot be
converted to common stock or sold and has no dividend rights. However, each
Series B preferred share has the equivalent of ten common shares for voting
rights. The Company will vote with Series B preferred stock and common stock
shareholders as one class.  The Company issued 10,000,000 shares of the
Series B preferred stock to our CEO for his consideration in signing a 2-year
employment agreement effective October 15, 2008. If for any reason the CEO
terminates his contract and employment with the Company, these preferred shares
will be returned to the treasury of the Company. On December 8, 2008, the Company issued 4,166,667 shares of its
common stock valued at $1,000,000 ($0.24 per share) in connection with the first
extension agreement with Nordic Immotech (See note 3). On March 31, 2009, the Company issued 4,166,667 shares of its
common stock valued at $645,833 ($0.155 per share) in connection with the
2nd extension agreement with Nordic Immotech (see note 3). In May 2009, the Company had a single private placement and issued
250,000 shares of our restricted common stock at $0.20 per share for $50,000. In
addition, there were 250,000 warrants attached with an exercise price of $0.30
per common share . The warrants expire in one year. In
July 2007, the Company had a single private placement and issued
1,400,000 shares of our restricted commons stock at $0.50 per share for
$700,000. No warrants were issued with this issuance.  In
September 2007, we subsequently authorized a private placement of up to
12,000,000 shares of our common stock without warrants on a best efforts
basis.   The Company sold 2,500,000 shares at $0.20 per share for
$500,000 in September 2007. From November 2007 to February 2008, the
Company sold 2,500,000 shares at $0.42 per share for total net
proceeds of $1,049,965. In April 2007, we issued 83,335 shares of our restricted common
stock to an officer/employee and 83,334 shares of restricted stock to an
employee as compensation for services provided. The   shares were valued at their fair value of $0.70 per share for a
total compensation charge of $350,000. During the year ended May 31, 2008, the employees forfeited the
shares due to personal tax ramifications and the Company does not intend to
replace this form of compensation. During the year ended May 31, 2009 and 2008,
no shares were issued to our distributors under the Company's distributor bonus
plan (See Note 8 - Commitments). Note
6 - Income Taxes: The provision for income taxes differs from the amount computed by
applying the U.S. federal income tax rate to loss before income taxes as
follows:  May 312009

2008Expected
(benefit) at statutory rate
34%

34%State
taxes
-

-Increase
in valuation allowance
(34% )

(34%)Effective
tax rate
0%

0%   The income tax provision consists of the following for the years
ended May 31: 2009

2008Current
tax provision
$           
-

$           
-Deferred
tax (benefit)
(371,000)

(487,000)Change
in valuation allowance
371,000

487,000Total
income tax provision
$           
-

$           
- The following is a summary of the significant components of the
Company's deferred tax, assets and liabilities: May 312009

2008Deferred
tax assets:Net
operating loss
$   2,172,000

$    1,975,000Related
party accruals
582,000

408,000Valuation
allowance
(2,754,000)

(2,383,000)Net
deferred tax assets
$
                -

$
                 - Tax law provides for limitation on the use of future net operating
loss carryovers should significant ownership changes occur. The Company has net
operating loss carry forwards of   approximately $6,386,000 that begin to expire in 2018 and continue
to expire through the year 2028. Note
7 - Related Party Transactions:  Jurak Intellectual Property License Agreement  In January 1999, we entered into an intellectual property license
agreement (the "License Agreement") with Jurak Holdings Limited ("JHL"), a
corporation organized under the laws of the Province of Alberta, Canada and an
affiliate of our Chief Executive Officer and one of our directors. Pursuant to
the terms and provisions of the License Agreement, we are required to pay the
greater of $500,000 for fiscal year 2003 and each calendar year thereafter,
during the first ten years of the License Agreement (the "Minimum Royalty Fee"),
or eight percent of the net sales price of all licensed products sold under the
License Agreement (the "Continuing Royalty Fee"). After fiscal 2013, we are
required to make payments in the amount of the Continuing Royalty Fee. On any
amounts past due on this agreement, interest will accrue at prime plus 1%.  For the
year ended May 31, 2009 and 2008, the Minimum Royalty Fee in the amount of
$500,000 was expensed. The accrued payments due and owing to JHL under the
License Agreement for the Minimum Royalty Fee and the Continuing Royalty Fee
were $250,078 and $1,087,598 at May 31, 2009 and 2008, respectively. The amount
owed as of May 31, 2009 and 2008, respectively, includes interest of $144,591
and $129,494 due to continued delinquent payments.  Total interest expense
of $15,097 and $61,610 was recorded for the years ended May 31, 2009 and 2008,
respectively.  In April 2009, the Company and Jurak Holdings Limited have entered
into an agreement to convert $1,345,957 of the accrued royalties  related
party outstanding related to the Intellectual Property License Agreement into a
formal convertible note effective April 24, 2009. The note will pay interest at
prime rate plus 1% and is due upon demand. Jurak Holdings Limited has the right
to convert this debt at any time into common stock at a value of $0.14 per share
adjusted for any stock split or adjustment. Because the fair value of the
Companys stock was $0.15 on the date of this convertible note, a $96,140
beneficial conversion feature charge was recorded to interest expense.  The
remaining accrued royalties in excess of the note balance will continue with
payment terms based on the Intellectual Property License Agreement including
accumulating new royalties and interest per the agreement. The outstanding
balance of the convertible note to related party at May 31, 2009, including
interest of $4,767, is $1,350,274.  Payable to stockholder/officer The Company has a payable due to its majority stockholder totaling
$190,107 and $22,980 at May 31, 2009 and 2008, respectively. These liabilities
are for reimbursement of business expenses due the stockholder and for working
capital advances made to the Company. No interest is being charged on these
balances. Accounts Payable  Related Party   The Company has included in accounts payable  related party
balances due to an entity owned by the majority stockholder totaling $96,912 at
May 31, 2009 and 2008, respectively. These liabilities are for consulting
services and reimbursement of business expenses due the entity. No interest is
being charged on these outstanding balances.  Note
8  Commitments: Distributor
Stock Bonus Plan Prior to June 1, 2007, the Company offered to its distributors a
plan whereby the distributors could earn a stock bonus based on sales and "bonus
points." Distributors earned certificates redeemable for one share of the
Company's common stock three years after the certificate has been earned. The
number of certificates outstanding at May 31, 2009 was 88,160. The liability
recorded by the Company for these bonus points was $111,695 at May 31, 2009 and
2008, respectively, which was recorded by the Company at the fair market value
of the common stock  on the date that they were earned. This liability
balance is classified with accrued compensation and benefits on the balance
sheet.  During the years ended May 31, 2009 and 2008, respectively, no
shares were issued to various distributors under this plan. Effective June 1,
2007, this plan was discontinued and all distributors who had earned
certificates under the plan became fully vested. As of September 14, 2009, all
88,160 certificates remain outstanding. License
Agreement-Related Party: The Company has entered into an intellectual property license
agreement with an entity owned by the majority stockholder. Pursuant to the
terms and provisions of the License Agreement, we are required to pay the
greater of $500,000 for fiscal year 2003 and each calendar year thereafter,
during the first ten years of the License Agreement (the "Minimum Royalty Fee"),
or eight percent of the net sales price of all license products sold under the
License Agreement (the "Continuing Royalty Fee"). After fiscal 2013, we are
required to make payments in the amount of the Continuing Royalty Fee. The
agreement also requires interest payments of prime plus one percent if the
royalty fees are in arrears at the end of a calendar year. The Company is
currently in arrears on royalty fees. Accrued royalties and related interest
charges due under this license agreement are $250,078 and $1,087,598 at May 31,
2009 and 2008, respectively. (See Note 7  Related Party Transactions) Other
Asset  Immune Booster License Agreement: The Company has a license agreement with Nordic Immotech to
purchase raw product to distribute. See Note 3 for additional information. As
defined in the agreement, the Company has a minimum purchase commitment of raw
product. The supplier has the right to terminate the license agreement, without
recourse, if the purchase commitment is not met. The commitment is based on the
calendar year as follows: 1,000 kg ($490,000) in 2007, 2,000 kg ($980,000) in
2008 (as amended), 9,000 kg ($4,410,000) in 2009, 15,000 kg ($7,350,000) in 2010
and 20,000 kg ($9,800,000) in 2011. The value of these commitments was
determined with pricing effective as of May 31, 2009.  The supplier has entered into a sublicense agreement with the
Company to distribute the product in defined markets, primarily Europe. The
Company will receive a royalty of ten percent of sales.   The Company has earned $35,783 and $68,088 in royalties for the
years ended May 31, 2009 and 2008, respectively.  The agreement permits the Company to include 100% of raw product
sold by the supplier, during calendar year 2007 and 2008, and 50% of raw product
sold by the supplier, during subsequent calendar years, along with the Companys
own purchases, in the determination of meeting the minimum commitment as defined
in the agreement. The Company has met the minimum purchase commitment for
calendar year 2007 and not for 2008. Because the Company has not met the
required minimum purchases, the agreement has been terminated effective August
19, 2009 for this non-performance.  Endorsement and Consulting Agreement  The Company has entered into an endorsement and consulting
agreement with a film and television actor to promote the immune booster product
line. The one year agreement was effective May 1, 2008, with a Company option to
extend two years. The Company has terminated this agreement during the year
ended May 31, 2009. The Company has negotiated a settlement where the actor is
owed $55,000 for prior services at May 31, 2009.  The entire $55,000
settlement amount is accrued as of May 31, 2009 and is classified in other
accrued liabilities on the balance sheet.  Operating Lease  The Company rented office and warehouse space in Las Vegas, Nevada
under terms of an operating lease which calls for an initial base monthly rental
of approximately $6,700, increasing annually, plus common area operating
expenses, through June 2009. Rent expense plus common area operating expenses
under this agreement for the years ended May 31, 2009 and 2008, was $118,033 and
$115,083, respectively. The Company vacated the premises in February 2009.
 As of May 31, 2009, the Company has back due amounts on this lease
totaling $33,172 which is classified in other accrued liabilities on the balance
sheet. The Company relocated in February 2009 to the home of an employee
on a temporary basis. The employee was compensated by issuance of 1,000,000
shares of common stock in June 2009 with fair value of $170,000. The value of
these shares is being expensed over the 1-year term of the agreement.  The
term of the lease is one year ending February 2010. Rent expense under this
agreement for the year ended May 31, 2009 was $35,000. There are no minimum
lease payments. (See Note 9  Subsequent Events)  NOTE
9  Subsequent Events:  Private
Placement Sale  In September 2009, the Company had a single private placement and
issued 175,000 shares of our restricted common stock at $0.20 per share for
$35,000. In addition, there were 175,000   warrants attached with an exercise price of $0.30 per common
share. The warrants expire in one year. Cancelation of Nordic Immotech License Agreement The Company has received, on August 19, 2009, a termination
notification to the Exclusive License and Distribution Agreement date December
1, 2006 (See Note 3  Intangible Asset) from Nordic Immotech. Per the agreement,
we are responsible for the remaining minimum raw material purchase commitment
for the year 2008 and a scientific study performed by Nordic Immotech. The total
obligation is estimated to be approximately $850,000. Scandinavian Clinical
Nutrition, the parent of Nordich Immotech APS, is working with the Company to
sell raw material to a new distributor to minimize the liability for this
obligation.  Due to the loss of this Nordic Immotech license agreement, the
Company will write-off in 1st quarter ending August 31, 2009, the
value of the assets pertaining to this agreement totaling $4,031,867 (see Note 3
for more information). Agreement to Provide Auto-Dial Telemarketing The Company entered into a one year marketing agreement on June
2009. This marketing agreement calls for the vendor to provide telemarketing and
promotional advertising to assist with increasing sales of our product and
developing additional distributors and marketers. As a part of the compensation
for these services, the Company was required to issue 12,000,000 common shares.
The Company issued 10,000,000 restricted common shares at fair value of
$1,700,000 or $0.17 per share which was the Companys stock closing price on
June 25, 2009. In addition, an existing shareholder transferred 2,000,000
tradeable common shares to the company at fair value of $340,000 or $0.17 per
share which was the Companys stock closing price on June 29, 2009. The
marketing company is required to return the 10,000,000 restricted common shares
if it doesnt achieve certain agreed upon performance measures.  If the
marketing company is not successful in increasing the Companys active customer
accounts by 50% within 90 days, the company can terminate the agreement. In addition to the stock compensation, cash payments will be due
each month at a rate of 50% of new gross sales proceeds and repeat orders will
incur a 40% commission rate.  There is no maximum commission that can be
earned under this agreement. Office Lease Change In February 2009, the Company vacated their leased office space
and moved to the home of an employee. On June 1, 2009, the Company issued
1,000,000 restricted common shares at fair value of $170,000 or $0.17 per share
which was the Companys stock closing price on June 1, 2009. The term of the
lease is one year through February 2010.  ITEM
9. CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE  None.    ITEM 9AT. CONTROLS AND PROCEDURES  The
Company maintains disclosure controls and procedures designed to provide
reasonable assurance that information required to be disclosed in its reports
filed pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), are recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms. Such
information is accumulated and communicated to management, including our Chief
Executive Officer / Principal Accounting Officer as appropriate, to allow timely
decisions regarding required disclosure. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance the
objectives of the control system are met. As of May 31, 2009 our management, with the
participation of our Chief Executive Officer / Principal Accounting Officer,
carried out an evaluation of the effectiveness of our disclosure controls and
procedures as such term is defined in Rule 13a-15(e) under the Exchange Act.
Based on this evaluation, the Chief Executive Officer / Principal Accounting
Officer concluded that the Company's disclosure controls and procedures were not
effective as of May 31, 2009, because of the identification of the
material weaknesses in internal control over financial reporting described
below. Notwithstanding the material weaknesses that existed as of May
31, 2009, our Chief Executive Officer / Principal Accounting Officer has
concluded that the financial statements included in this Annual Report on Form
10-K present fairly, in all material respects, the financial position, results
of operations and cash flows of the Company in conformity with accounting
principles generally accepted in the United States of America
("GAAP").  Report of Management on LifeQuest World Corporations Internal
Control Over Financial Reporting  Our principal executive officer (Chief Executive Officer and
Principal Accounting Officer), and other members of management of LifeQuest
World Corporation, are responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange
Act Rules 13a-15(f) or 15d-15(f). Internal control over financial reporting is a
process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles. Internal
control over financial reporting includes those policies and procedures that (1)
pertain to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our assets; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that our receipts and expenditures are being made
only in accordance with authorizations of our management and directors; and (3)
provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could have a
material effect on the financial statements. Because of its inherent
limitations, our internal controls and procedures may not prevent or detect
misstatements. A control system, no matter how well conceived and operated, can
provide only reasonable, not absolute, assurance that the objectives of the
control system are met. 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, have been detected. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies and procedures may deteriorate. The following material
weaknesses have been identified by members of our management and reported to the
board of directors:  o Currently, the sole Board Member acts in the capacity of the Audit
Committee. This individual lacks independence and is not considered a financial
expert. It is managements view that such a committee, including financial
expertise and independent membership, is an utmost important entity level
control over the Companys financial statement. o We did not maintain proper segregation of duties for the
preparation of our financial statements. As of May 31, 2009, the majority of the
preparation of the financial statements was carried out by an independent
contractor. The independent contractor prepared routine and non-routine journal
entries, processed certain transactions, prepared certain account
reconciliations, selected accounting principles, and prepared interim and annual
financial statements (including report combinations, consolidation entries and
footnote disclosures) in accordance with generally accepted accounting
principles without review and approval by someone with financial expertise for
overseeing such duties. o The Company had insufficient resources to adequately review and
approve certain account reconciliations and journal entries prepared by
personnel without technical accounting and reporting expertise. o We have a history of entering into legal arrangements or
agreements with significant financial statement implications without timely and
complete supporting documentation, such as private equity placements. This has
potential for improper application of accounting principles and related
financial reporting of such transactions. o The Company has not adopted a Code of Ethics and Code of Conduct
to provide guidance for our directors, officers and employees.  As of
May 31, 2009, our management with the participation of our chief executive
officer and principal accounting officer, documented our control environment,
however, management did not assess our internal control over financial reporting
based on criteria for effective internal control over financial reporting as
described in Internal Control  Integrated Framework issued by the Committee
of Sponsoring Organizations (COSO) of the Treadway Commission. As a result of
this review, material weaknesses were identified, as described above, and,
management has concluded that our internal controls over financial reporting
were not effective as of May 31, 2009. Carver, Moquist & OConnor, an
independent registered public accounting firm, was not required to and has not
issued a report concerning the effectiveness of our internal control over
financial reporting as of May 31, 2009.  (c) Changes in Internal Control Over Financial Reporting.
There have not been any changes in the Companys internal control over financial
reporting during the most recent fiscal quarter ended May 31, 2009, that
materially affected, or are reasonably likely to materially effect, the
Companys internal control over financial reporting.    The Company is continuing its efforts to address deficiencies in
internal control over financial reporting. Management and the Board of Directors
believe, as the Company receives further funding through private placements and
growth in operations, it will be able to invest in remediating the identified
weaknesses.   ITEM
9B. OTHER INFORMATION  None.        Part III    ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  IDENTIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS  All of our directors hold office until the next annual general
meeting of the shareholders or until their successors are elected and qualified.
Our officers are appointed by our Board of Directors and hold office until their
earlier death, retirement, resignation or removal.  As of the date of this Annual Report, our directors and executive
officers, their ages and positions held are as follows:   NAME
AGE
OFFICES HELDAnthony
C. Jurak
71
Director,
Chairman of the Board and Chief Executive Officer, President and Secretary  BIOGRAPHIES  The backgrounds of our directors and executive officers are as
follows:  Anthony C. Jurak.Mr. Jurak is the founder of our company,
and a director and Chairman of the Board and our Chief Executive
Officer/Secretary. Mr. Jurak was also a co-chairman and secretary/treasurer for
more than the five years of Matol Partners Corporation, terminating his position
in February 1997, and since has worked primarily for us. While with Matol
Partners Corporation, Mr. Jurak was in charge of finances and then committed his
time to marketing and sales. Mr. Jurak has broad marketing and financial
experience, including wholesale and retail companies.  FAMILY RELATIONSHIPS    There are no family relationships among our directors or
officers.  INVOLVEMENT IN
CERTAIN LEGAL PROCEEDINGS  During the past five years, none of our directors, executive
officers or persons that may be deemed promoters is or have been involved in any
legal proceeding concerning (i) any bankruptcy petition filed by or against any
business of which such person was a general partner or executive officer either
at the time of the bankruptcy or within two years prior to that time; (ii) any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor offenses); (iii) being
subject to any order, judgment or decree, not subsequently reversed, suspended,
or vacated, of any court of competent jurisdiction permanently or temporarily
enjoining, barring, suspending or otherwise limiting involvement in any type of
business, securities or banking activity; or (iv) being found by a court, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law (and the
judgment has not been reversed, suspended or vacated).  COMMITTEES OF THE BOARD OF DIRECTORS  Audit Committee  The audit committee operates under a written charter adopted by
the Board of Directors during June 2004.  As of the date of this Annual
Report, Anthony Jurak has been appointed to our audit committee.  Mr. Jurak
is not independent within the meaning of Rule 10A-3 under the Exchange Act.
 The Board of Directors has determined that there is not a financial expert
serving on the audit committee.  The audit committee's primary function is to provide advice with
respect to our financial matters and to assist the Board of Directors in
fulfilling its oversight responsibilities regarding finance, accounting, and
legal compliance. The audit committee's primary duties and responsibilities will
be to: (i) serve as an independent and objective party to monitor our financial
reporting process and internal control system; (ii) review and appraise the
audit efforts of our independent accountants; (iii) evaluate our quarterly
financial performance as well as our compliance with laws and regulations; (iv)
oversee management's establishment and enforcement of financial policies and
business practices; and (v) provide an open avenue of communication among the
independent accountants, management, and the Board of Directors.  COMPLIANCE WITH
SECTION 16(a) OF THE EXCHANGE ACT   Section 16(a) of the Exchange Act requires directors and officers,
and the persons who beneficially own more than 10% of common stock of certain
companies, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission. We are not required to file reports under
Section 16 of the Exchange Act.      ITEM
11. EXECUTIVE COMPENSATION  During fiscal years ended May 31, 2009 and 2008, certain officers
were compensated for their role as executive officers. As of the date of this
Annual Report, we do not have any stock option, pension, annuity, insurance,
profit sharing or similar benefit plans. Executive compensation is subject to
change concurrent with our requirements. We have employment agreement with our
officer. This agreement is for two years and expires October 14, 2010.  Generally, our director does not receive salary or fees for
serving as director nor does he receive any compensation for attending meetings
of the Board of Directors. However, we may adopt a director compensation policy
in the future. We do not currently have any standard arrangement pursuant to
which our directors are compensated for services provided as a director or for
committee participation or special assignments. Directors are, however, entitled
to reimbursement of expenses incurred in attending meetings.  SUMMARY COMPENSATION TABLE  Compensation  We do not currently have a compensation committee. Compensation
decisions are made from time-to-time by our Board of Directors with no
established policies or formulas. The following table sets forth the
compensation received by officers.   Long Term CompensationAnnual Compensation
Awards
PayoutsName and PrincipalPosition
Year
Salary($)
Bonus($)
OtherAnnualCompen-sation($)
RestrictedStockAward(s)($)
SecuritiesUnderlyingOptions/SARs(#)
LTIPPayouts($)
All OtherCompen-sation($)Anthony Jurak Chief Executive
Officer/  Secretary, Chairman of the Board, Director,
President
2009
2008
$90,000
$66,000
Nil
Nil
Nil
Nil
None
None
Nil
Nil
None
None
$27,651
$23,661  Stock
Options/SAR Grants In Fiscal Year Ended May 31, 2009  As of the date of this Annual Report, we do not have a stock
option plan in effect. The following reflects the information for fiscal year
ended May 31, 2009, regarding stock options. No stock options were granted in
any previous fiscal years.        Name
Number
ofSecuritiesUnderOptions/SARsGranted
% of
TotalOptions/SARsGranted toEmployees inFinancial
Year
Exercise
orBase Price($/Security)
Expiration
DateNot
Applicable
Nil
Nil
Nil
Not applicable  Long Term
Incentive Plan (LTIP) Awards Table  We have no long-term incentive plans in place and therefore there
were no awards made under any long-term incentive plan to any of the above
executive officers during fiscal year ended May 31, 2009.     EMPLOYMENT AGREEMENTS  As of the date of this Annual Report, our President and Director
have an employment agreement that expires in October 2010.      ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS  As of the date of this Annual Report, the following table sets
forth certain information with respect to the beneficial ownership of our common
stock by each stockholder known by us to be the beneficial owner of more than 5%
of our common stock and by each of our current directors and executive officers.
Each person has sole voting and investment power with respect to the shares of
common stock, except as otherwise indicated. Beneficial ownership consists of a
direct interest in the shares of common stock, except as otherwise indicated. As
of May 31, 2009, there are 49,062,164 shares of common stock issued and
outstanding.  Title of Class
Name and
Address of BeneficialOwner
Amount
and Nature ofBeneficial Ownership
Percentageof Class
Preferred SharesCommon
Anthony C. Jurak (1) (2)
Chief Executive Officer/
Secretary, Chairman of the Board, Director
16,564,769
33.94%
10,000,000Common
Executive Officers/Directors as a group
16,564,769
33.94% (1) The address for all
management is 8022 S. Rainbow Blvd, Suite 345, Las Vegas, NV  89139. (2) 9,837,284 shares held by
Jurak Holdings Limited, 4478 97th Street, Edmonton, Alberta, Canada T6E 5R9, of
which Anthony Jurak is the sole beneficiary.    CHANGES IN
CONTROL  Our Board of Directors is unaware of any arrangement or
understanding among the individuals listed in the beneficial ownership table
with respect to election of our directors or other matters. We are unaware of
any contract or other arrangement of which may at a   subsequent date result in a change in control of our company.    ITEM 13. CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE  On approximately January 1, 1999, we entered into an intellectual
property license agreement (the License Agreement) with Jurak Holdings
Limited, a corporation organized under the laws of the Province of Alberta and
an affiliate of our Chief Executive Office and  director, Anthony Jurak.
 Pursuant to the terms and provisions of the License Agreement, beginning
with fiscal year 2003, for a term of ten (10) years, we are required to pay
annually the greater of $500,000 (Minimum Royalty Fee) or eight percent (8%)
of the net sales revenue (Continuing Royalty Fee) of all licensed products
sold under the license agreement.  After fiscal 2013, we are required to
make payments in the amount of the Continuing Royalty Fee.  As of May 31,
2009, the amount of the Accrued Minimum Royalty Fee due and owing is
$250,078.  The Company and Jurak Holdings Limited have entered into an
agreement to convert $1,345,957 of the accrued royalties  related party
outstanding related to the Intellectual Property License Agreement into a formal
convertible note effective April 24, 2009. The note will pay interest at prime
rate plus 1% and is due upon demand. Jurak Holdings Limited has the right to
convert this debt into common stock at a value of $0.14 per share adjusted for
any stock split or adjustment. The outstanding balance on the convertible note
at May 31, 2009, including interest of $4,767, is $1,350,274.     ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES  AUDIT
AND NON-AUDIT FEES The following table presents fees for audit and other services
provided by Carver Moquist & O'Connor, LLC for the years ended May 31, 2009
and 2008:  Year EndedMay 31,

May 31,2009

2008Audit
fees (1)

$
33,800

$
36,260Audit-related
fees (2)

-

8,999    Tax
fees (3)

6,345

5,620All
other fees (4)

--

--Total
Fees

$
40,145

$
50,879 (1)     
Audit fees consist of fees for services provided in connection with the audit of
our financial statements and reviews of our quarterly financial statements. (2)     
Audit-related fees consist of assurance and related services that include, but
are not limited to, consultation concerning financial accounting and reporting
standards and regulatory filing reviews. (3)     
Tax fees consist of the aggregate fees billed for professional services rendered
by Carver Moquist & O'Connor, LLC for tax compliance, tax advice, and tax
planning. (4)
All Other Fees relate to services rendered that do not meet the above category
descriptions.  We did not engage the services of Carver Moquist &
O'Connor, LLC to render other professional services.  PART IV  ITEM 14. EXHIBITS,
FINANCIAL STATEMENT SCHEDULES  Exhibit List  31.1     Certificate
pursuant to Rule 13a-14(a)  31.2     Certification
pursuant to Rule 13a-14(a)  32.1     Certificate
pursuant to 18 U.S.C. Subsection 1350  32.2     Certificate
pursuant to 18 U.S.C. Subsection 1350       SIGNATURES Pursuant to the requirements of  Section 13 or 15(d) of the
Exchange Act fo 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.   LifeQuest
World Corporation (Registrant)  By /s/
Anthony Jurak Anthony
Jurak Chairman, Chief Executive Officer, Principal Accounting Officer,
Director and President Date September
14, 2009  Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.  By /s/
Anthony Jurak Anthony
Jurak Chairman, Chief Executive Officer, Principal Accounting Officer,
Director and President Date September
14, 2009