FORM 10-QUNITED
STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549[X] QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the quarterly period ended
February 28, 2009OR[ ] TRANSITION REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from
________ to ________Commission file number
333-61801LIFEQUEST 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
No.)8022 S. Rainbow Blvd., Suite 345, Las Vegas, NV
89139(Address of principal executive
offices)      (Zip Code)(702) 914-9688(Registrant's telephone number, including area
code)(Former name, former address and former fiscal year, if
changed since last report.)
1181 Grier Drive, Suite C, Las Vegas, NV
89119-3746 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 Web site, if any, 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 is required to submit and post such file).
 Yes [  ]    No [X]  Not required. Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [   ]. No [X].  1   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 the 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 the number of shares outstanding of each of the issuer's
classes of common and preferred stock, as of the latest practicable date. As of
April 30, 2009, there were 48,812,164 shares of the issuers common stock,
$0.001 par value, outstanding and 10,000,000 shares of the issuers Series B
preferred stock, $0.001 par value, outstanding.


LIFEQUEST WORLD CORPORATION   INDEX   Page
No. Part I.
 Financial Information  Item
1.  Consolidated Financial Statements 4  Item
2.  Managements Discussion and Analysis of Financial
Condition and Results of Operations 13  Item
3.  Qualitative and Quantitative Disclosure About Market Risk 19  Item
4T.  Controls and Procedures 19  Part II.  Other
Information  Item
1.  Legal Proceedings 20  Item
1.A.  Risk Factors 20  Item
2.  Unregistered Sales of Equity Securities and Use of Proceeds 20  Item
3.  Defaults Upon Senior Securities 20  Item
4.  Submission of Matters to a Vote of Security Holders 20  Item
5.  Other Information 20  Item
6.  Exhibits 21


2


LIFEQUEST WORLD CORPORATIONCONSOLIDATED BALANCE SHEETSItem 1.
 Financial StatementsFebruary 28

May 31Assets:
2009

2008(unaudited)

(audited)____________

____________Current
assets:Cash
and cash equivalents
$
                        -

$
                16,336Accounts
receivable
-

11,646Inventories,
net
262,885

277,879Prepaid
expenses and advances
16,782

10,920____________

____________Total
current assets
279,667

316,781____________

____________Office
furnishings and equipment, net
19,107

6,024____________

____________Other
assets:Deposits
and other
1,009,507

6,745Intangible
asset, net
2,387,465

2,388,699____________

____________Total
other assets
3,396,972

2,395,444____________

____________Total
Assets
$
           3,695,746

$
           2,718,249____________

________________________

____________Liabilities and Stockholders' Equity:Current
liabilities:Checks
written in excess of bank balance
$
                27,990

$
                        -Current
portion of capital lease obligation
-

321Accounts
payable
285,977

163,358Accounts
payable-related party
101,181

96,912Accrued
compensation and benefits
281,016

215,018Accrued
royalties-related party
1,452,388

1,087,598Payable
to stockholder/officer
187,107

22,980____________

____________Total
current liabilities
2,335,659

1,586,187Capital lease
obligations, net of current portion
-

-____________

____________Total
liabilities
2,335,659

1,586,187____________

____________Stockholders'
equity:Common
stock, par value $0.001 per share, 150,000,000 sharesauthorized,
44,645,497 and 40,478,830 shares issued and outstanding atFebruary
28, 2009 and May 31, 2008, respectively
44,645

40,479Series
B preferred stock, par value $0.001 per share, 10,000,000 sharesauthorized,
10,000,000 and no shares issued and outstanding atFebruary
28, 2009 and May 31, 2008, respectively
10,000

-Undesignated
preferred stock, par value $0.001 per share, 40,000,000 sharesauthorized,
no shares issued or outstanding atFebruary
28, 2009 and May 31, 2008, respectively
-

-Additional
paid-in capital
9,545,719

8,559,885Accumulated
deficit
(8,240,277)

(7,468,302)____________

____________Total
stockholders' equity
1,360,087

1,132,062____________

____________Total
Liabilities and Stockholders' Equity
$
           3,695,746

$
           2,718,249____________

________________________

____________See
accompanying notes to consolidated financial statements.


3


LIFEQUEST
WORLD CORPORATIONCONSOLIDATED
STATEMENTS OF OPERATIONS(unaudited)Three months
ended February 28,

Nine months
ended February 28,2009



2008


2009



2008Revenue:Sales-product
$
264,549


$
223,204

$
620,194


$
721,130Royalty
income-immune booster

-



20,850


-



80,417Total
Revenue

264,549



244,054


620,194



801,547Cost of sales

69,298



24,290


144,315



156,682Gross profit

195,251



219,764


475,879



644,865Royalty expense-related
party

125,000



125,000


375,000



375,000Distribution, selling
andadministration
expenses

265,205



387,357


854,472



1,132,469Loss from
operations

(194,954)



(292,593)


(753,593)



(862,604)Other income and
(expenses)Interest
expense

(3,559)



(116,973)


(18,382)



(167,196)Total
other income and(expense)

(3,559)



(116,973)


(18,382)



(167,196)Net loss before income
taxes

(198,513)



(409,566)


(771,975)



(1,029,800)Income tax
expense

-



-


-



-Net loss
$
(198,513)


$
(409,566)

$
(771,975)


$
(1,029,800)Basic and diluted
lossper common
share
$
(0.00)


$
(0.01)

$
(0.02)


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

44,275,127



39,755,387


41,730,356



37,332,888See
accompanying notes to consolidated financial statements.


4


LIFEQUEST
WORLD CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited)Nine months
ended February 28,2009

2008CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
$
               (771,975)

$
            (1,029,800)Adjustments to reconcile net lossto net cash used in operating
activities:Depreciation and
amortization
2,767

4,948Loss on disposal of
equipment
9,515

-Changes in operating assets
and liabilities:Accounts
receivable
11,646

(16,222)Inventories
14,994

(235,470)Prepaid
expenses and advances
(5,862)

9,033Deposits
(2,762)

22,242Accounts
payable
126,888

97,373Accrued
expenses
430,788

316,864____________

____________Net
cash used in operating activities
(184,001)

(831,032)____________

____________CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of office furnishings and equipment
(24,131)

-____________

____________Net cash used
in investing activities
(24,131)

-____________

____________CASH FLOWS FROM FINANCING ACTIVITIES:Checks issued in excess of bank balance
27,990

-Proceeds from issuance of common stock, net of
issuance costs
-

2,249,965Payments on installment note payable-immune booster
license
-

(1,384,513)Payments on capital lease obligations
(321)

(694)Advances from (repayment to)
stockholder/officer
164,127

(16,341)____________

____________Net cash
provided by financing activities
191,796

848,417____________

____________NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
(16,336)

17,385CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD
16,336

197,338____________

____________CASH AND CASH EQUIVALENTS AT END OF PERIOD
$
                          -

$
                214,723____________

________________________

____________SUPPLEMENTAL NON-CASH INFORMATION:Common stock issued in connection with theStandstill Addendum to the Nordic Immotech
acquisition agreement
$
              1,000,000

$
                        -____________

________________________

____________See accompanying notes to consolidated
financial statements.


5





NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1 - BASIS OF
PRESENTATION  The
accompanying unaudited consolidated balance sheets of LifeQuest World
Corporation (the Company, We) as of February 28, 2009 and the related
unaudited consolidated statements of operations for the three and nine months
ended February 28, 2009 and February 29, 2008 and the unaudited consolidated
statements of cash flows for the nine-month periods then ended have been
prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and with the instructions for Form
10-Q and Article 10 of Regulation S-X.  In the opinion of management, all
adjustments (which include normal recurring adjustments) considered necessary
for a fair statement of this financial information have been made.  Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles in the
United States of America have been condensed or omitted.  It is suggested
these condensed financial statements be read in conjunction with the financial
statements and notes thereto included in the Companys May 31, 2008 audited
financial statements and Form 10-KSB.  The results of operations for the
period ended February 28, 2009 are not necessarily indicative of the operating
results for the entire year.  The
presentation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and disclosure of contingent
assets and liabilities at the balance sheet date, and the reported amounts of
revenues and expenses during the reporting period.  The estimates and
assumptions used in the accompanying condensed financial statements are based
upon managements evaluation of the relevant facts and circumstances as of the
time of the financial statements.  Actual results could differ from those
estimates.  NOTE
2  COMPANYS CONTINUED EXISTENCE:  The
accompanying unaudited 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 from its new ImmunXT
product utilizing the network of distributors in place and from financing
activities by issuing additional stock, and obtaining necessary capital through
additional advances from the Companys principal stockholder or through private
placements. There can be no assurance the Company will be able to obtain
additional capital from private placements 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 
INVENTORIES:  Inventories
summarized below are priced at the lower of cost (first-in, first-out) or
market:   6





February
28 May
31 2009 2008 Finished
goods and supplies $ 114,768 $ 117,593 Raw
materials 158,117 170,286 Allowance
for obsolescence (10,000) (10,000) Total $ 262,885 $ 277,879  NOTE 4  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 (ImmunXT), as stated by the
scientific research team that developed the product. These rights have 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. The agreement has an initial term of
five years. The agreement automatically renews an additional five years if
minimum purchase commitments are met. The total recorded cost of the license was $2,390,721. The Company
began marketing the product domestically in February 2008. The Company began
amortizing the license at that time and is calculating the amortization over the
estimated sales volume that is anticipated over the remaining term of the
licensed agreement to properly match revenue and expenses. The accumulated
amortization for the period ended February 28, 2009 and May 31, 2008, was $3,256
and $2,022, respectively. Under this license agreement, the Company has minimum purchase
commitments for the calendar years as follows: 2007-1,000 Kilograms (Kg)
($490,000), 2008-2,000 Kg ($980,000) (as amended), 2009-9,000 Kg ($4,410,000),
2010-15,000 Kg ($7,350,000), and 2011 and each year thereafter-20,000 Kg
($9,800,000). If the Company fails to meet the minimum purchase requirements,
Nordic Immotech has the right to terminate their license agreement with three
months written notice from the expiration of the applicable calendar year. The
Company has met the minimum purchase requirements for calendar year 2007. The
2008 purchase commitment was renegotiated (see Notes 7 and 12). The value of
these commitments was determined with pricing as of February 28, 2009. As part of the license agreement noted above, Nordic Immotech
shall pay the Company a royalty of ten percent (10%) of net sales of raw
materials sold by Nordic and or affiliates to independent third parties in
territories outside of the United States. In a separate agreement, the Company was granted an option to
purchase all the shares in Nordic Immotech. 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 anytime before December 1, 2008. This purchase option
was subsequently renegotiated (see Notes 7 and 12).  NOTE 5 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 February
28, 2009 and May 31, 2008 were 88,160. The liability recorded by the Company for
these bonus points was $111,695 (included in accrued compensation and benefits)
at  7





February 28, 2009 and May 31, 2008 which was recorded by the
Company at the fair value of the common stock on the date they were earned.
During the nine month period ended February 28, 2009 and year ended May 31,
2008; no shares were issued to any 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 February 28, 2009,
all 88,160 certificates remain outstanding.  NOTE 6  PREFERRED
STOCK ISSUANCE:  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
during the six-month period ended November 30, 2008 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.  NOTE 7  COMMON STOCK
ISSUANCE:  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 (see Note
4). 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. The Company has
outstanding a 1,700 kg purchase commitment of raw product remaining at February
28, 2009 which equates to approximately $833,000.  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 has been recorded as an advance deposit in other assets for the
potential acquisition of Nordic Immotech. The Company may use the value of these
shares to offset the purchase price of Nordic Immotech, if an agreement to
purchase Nordic Immotech is reached. The Company also has the option to
repurchase these shares for $0.48 per share ($2,000,000) at February 27, 2009 or
$0.60 per share ($2,500,000) at March 31, 2009. Nordic Immotech may not sell
these shares without the Company having the right of repurchase prior to March
31, 2009.  Since no agreement was reached by March 31, 2009, the shares
remain with Nordic Immotech and will be fully tradeable.  However, the
Company is still in negotiations to complete this acquisition and this advance
of shares would still count as a payment against the purchase price.  See
Note 12 for an additional amendment dated March 31, 2009.  As of the date
of this filing, the Company is continuing to pursue the acquisition of Nordic
Immotech.  NOTE 8 
CONTINGENCIES:  In the
ordinary course of business, the Company is exposed to legal actions and
threatened claims and incurs costs to defend against such legal actions and
claims.  Company management is not aware of any such outstanding, pending
or threatened action, claim or other circumstance that would materially affect
the Companys financial position or results of operations.    8





NOTE 9 - INCOME
TAXES:  Deferred taxes are provided on a liability method whereby deferred
tax assets are recognized for deductible temporarydifferences and operating loss and tax credit carry-forwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax basis. Deferred tax assets are reduced by a valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of the enactment. The Company has recorded a full
valuation allowance for all deferred tax assets due to the significance of its
continued operating losses.  NOTE 10  RELATED
PARTY TRANSACTIONS:  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
nine months ended February 28, 2009 and February 29, 2008, the Minimum Royalty
Fee in the amount of $375,000 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 $1,452,388 and $1,087,598 at February 28, 2009 and
May 31, 2008, respectively. The amount owed as of February 28, 2009 includes
interest of $18,377 which was recorded for the nine month period ended February
28, 2009 due to continued delinquent payments.  Payable to stockholder/officer The Company has a payable due to its majority stockholder totaling
$187,107 and $22,980 at February 28, 2009 and May 31, 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 $101,181
and $96,912 at February 28, 2009 and May 31, 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.      9





NOTE 11
 COMMITMENT  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 a minimum commitment of $42,000 during the first year. There are
escalator clauses based on sales milestones, as defined in the agreement, which
could cause the commitment to increase. The Company has expensed $23,200 for the
nine months ended February 28, 2009, relating to this agreement.  ImmunXT Raw Material Purchase Commitment  As a
part of the Nordic Immotech license and distribution agreement, the Company has
a purchase commitment for the raw materials required for the ImmunXT product.
 See Note 4 for the purchase commitment details.  NOTE 12
 SUBSEQUENT EVENT:  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 (See Note 10) into a formal 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 remaining accrued royalties above the note balance will continue
with payment terms based on the Intellectual Property License Agreement
including accumulating new royalty and interest per the agreement.  The
Company received $50,000 in cash in on April 30, 2009 from a third party. This
cash was intended to be an advance on the purchase of the Companys common
stock. The terms of the private placement are still being negotiated.  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
(see Notes 4 and 7). The primary intent of this Addendum was as follows:  1. To extend the time period to agree on the acquisition to June
1, 2009.  2. To extend the required minimum purchase commitment of raw
product for the calendar year 2008. The Company has an outstanding 1,700 kg
purchase commitment of raw product remaining at February 28, 2009 which equates
to approximately $833,000.  In
consideration of these extensions, the Company issued, on March 31, 2009,
4,166,667 common shares at a value of $645,833 to Nordic Immotech. The Company
has the option to repurchase these shares through the expiration date of the
addendum for cash at $0.60 per share. 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
Letter of Intent.   10





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.  NOTE 13
 BASIC AND DILUTED EARNINGS (LOSS) PER SHARE  Basic
earnings (loss) per share is computed by dividing the net earnings (loss) by the
weighted average number of common stock outstanding during the periods
presented. Diluted earnings (loss) per share is computed by dividing the net
earnings (loss) by the weighted average number of common stock outstanding plus
all dilutive potential common shares.  For the
three and nine months ended February 28, 2009 and February 28, 2008, the Company
has potential dilutive shares totaling 88,160 relating to the distributor stock
bonus plan.  These stock bonus shares would be anti-dilutive and therefore,
have been excluded from diluted loss per share.  NOTE 14
 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS  In April 2008,
the FASB finalized Staff Position No. 142-3, Determination of the Useful
Life of Intangible Assets (FSP 142-3). This position amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
No. 142, Goodwill and Other Intangible Assets. FSP 142-3 applies to
intangible assets that are acquired individually or with a group of other assets
and both intangible assets acquired in business combinations and asset
acquisitions. This staff position is effective for fiscal years beginning after
December 15, 2008, which for us is the first quarter of fiscal 2010. We are
currently evaluating the impact of FSP 142-3 on our results of operations and
financial condition.  In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for
how the acquirer in a business combination: recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any controlling interest; recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R also
requires that changes in acquisition-related liabilities for uncertain tax
positions subsequent to its effective date be recorded in earnings currently.
SFAS 141R applies to business combinations for which the acquisition date is on
or after the first reporting period beginning on or after December 15,
2008. We are currently evaluating the impact of SFAS 141R on our results of
operations and financial condition.    11





Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Overview  LifeQuest World Corporation, a Minnesota corporation incorporated
on November 1, 1997, currently trades on the Over-the-Counter Bulletin Board
under the symbol "LQWC". 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 distributers 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 distributers. We offer
substantial earnings 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. In December 2006, LifeQuest World Corporation acquired the
worldwide rights to a new, patented Immune-Stimulatory extract from marine
sourced Spirulina developed by leading research scientists at the National
Center for Natural Product Research (NCNPR) at the University of
Mississippi.  LifeQuest had a limited introduction through its distributors
in its initial launch of ImmunXT in February 2008. The product named
ImmunXT was researched and developed over a ten year period with exhaustive
clinical and scientific testing with benchmark criteria that it had to be 100%
natural and certified vegetarian.  Per the studies done by NCNPR, ImmunXT
is one of the most powerful Immune-Stimulatory extracts, specifically with
respect to macrophage activation within the innate immune system.  Recent
research has shown that the innate immune system, primarily in the digestive
tract, is the bodys first line of defense and its main function is to guard the
body against disease and invasion by harmful pathogens. Along with this scientific team, LifeQuests own group has decades
of practical research, development and manufacturing experience in nutritional
products and maintains a professional awareness of any new life changing
products available from major product development centers. To be considered for
acquisition, products must have either good reputable academic pedigree, backed
with very thorough scientific data, or meet product criteria that have very long
substantiated consumer use with extremely credible personal, subjective and
objective results.  LifeQuest has made a substantial financial investment
along with years of developmental work in the acquisition of ImmunXT. LifeQuest products also 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, and  12





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 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 in our 10-KSB filed for the year
ended May 31, 2008. Our financial statements are prepared in accordance with
U.S. GAAP.  SPECIAL
NOTE REGARDING 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 are 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 current liabilities exceed its
current assets.  The Company intends to generate positive cash flows from
operations through increased sales utilizing the network of distributors in
place with existing products and the new natural immune booster products,
issuing additional stock, and obtaining necessary capital through additional
advances from the Companys principal 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 Company has no other committed sources or
arrangements for additional financing.  Three months Ended February 28, 2009 Compared to Three months
Ended February 29, 2008  Total
revenue for the three months ended February 28, 2009, was $264,549 compared to
$244,054 in the same period ended in 2008.  Gross profit was $195,251 for
the three months ended February 28, 2009, compared to $219,764 for the same
period ended in 2008, as further discussed below. The net loss during the three
months ended February 28, 2009, was $198,513 compared to a net loss of $409,566
in the same period ended in 2008.  Sales and Gross Profit  All
revenue for the three months ended February 28, 2009, was for product sales. The
Company recorded $38,146 in sales for the new ImmunXT product line for the three
months ended February 28, 2009, and $24,080 for the comparable period. There was
$0 and $20,850 of royalty income due from Nordic Immotech for their sales of our
natural immune booster product in Europe during the three month periods ended
February 28, 2009, and February 29, 2008, respectively. Sales by Nordic Immotech
were expected to be sporadic in fiscal 2009 as they continue to introduce the
ImmunXT product in new markets.  They also tend to sell product in bulk to
large distributers which is a different marketing model than what the  13





Company
is currently employing. Sales from our Jurak product line continues to decline
because of a decline in new distributers being added compared to prior
years.  Gross
profit in the three months ended February 28, 2009, decreased to $195,251
compared to $219,764 in the same period ended in 2008. Gross profit as a
percentage of revenue decreased to 74% in the three months ended February 28,
2009, compared to 90% in the same period ended in 2008. The decrease in gross
profit as a percentage of sales is due to product mix.  Royalty Expense-Related Party  The
minimum royalty expense-related party accrued to Jurak Holdings Limited (related
party) remained consistent for both periods at $125,000.  Distribution, Selling and Administrative Expenses  Total
distribution, selling and administrative expenses for the three months ended
February 28, 2009, were $265,205 compared with $387,357 for the same period
ended in 2008. The selling and administrative expenses decreased compared to
2008 as management continues to monitor and control expenses including
eliminating personnel and other costs as necessary during fiscal 2009. We
anticipate increasing personnel and related distribution, selling and
administrative expenses as the new ImmunXT product line grows in sales.  Interest
Expense  Interest expense for the three months ended February 28, 2009, was
$3,559 compared with $116,973 for the same period in the prior year. Current
year interest costs decreased compared to prior year due to imputed interest
expense on the purchase of the Nordic License agreement during 2008. This
agreement was paid in full prior to the three months ended February 28,
2009.  Nine
months Ended February 28, 2009 Compared to Nine months Ended February 29, 2008  Total
revenue for the nine months ended February 28, 2009, was $620,194 compared to
$801,547 in the same period ended in 2008. Gross profit was $475,879 for the
nine months ended February 28, 2009, compared to $644,865 for the same period
ended in 2008, as further discussed below. The net loss during the nine months
ended February 28, 2009, was $771,975 compared to a net loss of $1,029,800 in
the same period ended in 2008.  Sales and Gross Profit  All
revenue for the nine months ended February 28, 2009, was for product sales. The
Company recorded $120,296 and $80,417 in sales for the new ImmunXT product line
for the nine months ended February 28, 2009, and February 29, 2008,
respectively. There was $0 and $80,417 of royalty income due from Nordic
Immotech for their sales of our natural immune booster product in Europe during
the nine month period ended February 28, 2009, and February 29, 2008,
respectively. Sales by Nordic Immotech were expected to be sporadic in fiscal
2009 as they continue to introduce the ImmunXT product in new markets.
 They also tend to sell product in bulk to large distributers which is a
different marketing model than what the Company is currently employing. Sales
from our Jurak product line continues to decline because of a decline in new
distributers being added compared to prior years.   14





Gross
profit in the nine months ended February 28, 2009, decreased to $475,879
compared to $644,865 in the same period ended in 2008. Gross profit as a
percentage of revenue decreased slightly to 77% in the nine months ended
February 28, 2009 compared to 80% in the same period ended in 2008. The decrease
in gross profit as a percentage of sales is due to product mix and was offset by
continued efforts of management to control costs.  Royalty Expense-Related Party  The
minimum royalty expense-related party accrued to Jurak Holdings Limited (related
party) remained consistent for both periods at $375,000.  Distribution, Selling and Administrative Expenses  Total
distribution, selling and administrative expenses for the nine months ended
February 28, 2009, were $854,472 compared with $1,132,469 for the same period
ended in 2008. The selling and administrative expenses decreased compared to
2008 as management continues to monitor and control expenses including
eliminating personnel and other costs as necessary during fiscal 2009. We
anticipate increasing personnel and related distribution, selling and
administrative expenses as the new ImmunXT product line grows in sales.  Interest
Expense  Interest expense for the nine months ended February 28, 2009, was
$18,382 compared with $167,196 for the same period in the prior year. Current
year interest costs decreased compared to prior year due to imputed interest
expense on the purchase of the Nordic License agreement during 2008. This
agreement was paid in full prior to the nine months ended February 28, 2009.   Liquidity and
Capital Resources  Nine
Month Period Ended February 28, 2009  We have
historically had more expenses and cost of sales than revenue in each year of
our operations. The accumulated deficit as of February 28, 2009, was $8,240,277.
 Generally, we have financed operations to date through the proceeds of the
private placement of equity and debt securities and sales revenue. In connection
with our business plan, management anticipates that there may be additional
increases in operating expenses and capital expenditures relating to the new
immune booster products. We intend to finance these expenses with further
issuances of our securities and revenues from operations. Therefore, we expect
we may need to raise additional capital and increase our revenues to meet
long-term operating requirements.  At
February 28, 2009, the Company had $0 of cash compared to $16,336 at May 31,
2008.  The Company had current assets of $279,667 and current liabilities
of $2,335,659 at February 28, 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 $184,001 during the nine months ended
February 28, 2009, compared to net cash used in operating activities of $831,032
in the same period ended in 2008. The decrease in cash used by operations was
primarily due to the significantly lower net loss, the increase in  15





current
liabilities and better management of inventory levels as the Company continues
to monitor and conserve its cash during the nine months ended February 28,
2009.  Net
cash used in investing activities was $24,131 in the first nine months ended
February 28, 2009, compared to $0 in the same period ended in 2008. The increase
in 2009 was due to the investment in equipment needed for the new ImmunXT
product line.  Net
cash provided by financing activities was $191,796 during the nine months ended
February 28, 2009, compared to net cash provided by financing activities in the
same period in 2008 of $848,417.  During the nine months ended February 28,
2009, our primary source of funding came from advances from our officer /
stockholder totaling $164,127.  Issuance of common stock from a private
placement in excess of cash paid on the installment note payable for the immune
booster license resulted in the nine months ended February 29, 2008, having more
cash provided by financing activities than 2009.  No common stock proceeds
were received during the nine months ended February 28, 2009.  Critical Accounting Policies  Our critical accounting policies, including the assumptions and
judgements underlying them, are disclosed in our fiscal 2008 Form 10-KSB in Note
1- Summary of Significant Accounting Policies included in our Consolidated
Financial Statements.  There were no significant changes to our critical
accounting policies during the period ended February 28, 2009. On an ongoing
basis, we evaluate our estimates based on historical experience and on various
other assumptions that are believed to be reasonable under the circumstances.
 The result of which form the basis for making judgements about the
carrying value of assets and liabilities that are not readily apparent from
other sources.  Results may differ from these estimates due to actual
outcomes being different from those on which we based our assumptions. We consider the following accounting policies to be those most
important to the portrayal of our results of operations and financial
conditions:  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.  The Company accounts
for intangible assets in accordance with SFAS No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets. The
carrying values of long-lived assets, including, but not limited to, capital
assets and intangible assets, are amortized over their estimated useful lives,
and are periodically evaluated for impairment when events and circumstances
warrant such a review. The carrying value of a long-lived asset is considered
impaired when the expected undiscounted future cash flows from such asset is
less than its carrying value. In that event, a loss is recognized based on the
amount by which the carrying value exceeds the fair value of the long-lived
asset.  Fair value is  16





determined primarily
using the anticipated cash flows discounted at a rate commensurate with the risk
involved. Losses on long-lived assets to be disposed of are determined in a
similar manner, except that fair values are reduced for the cost to dispose. The
Company performs impairment testing of long-lived assets on annual basis.  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.  Recently Isssued Accounting Pronouncements  In April 2008,
the FASB finalized Staff Position No. 142-3, Determination of the Useful
Life of Intangible Assets (FSP 142-3). This position amends the factors that
should be considered in developing renewal or extension assumptions used to
determine the useful life of a recognized intangible asset under SFAS
No. 142, Goodwill and Other Intangible Assets. FSP 142-3 applies to
intangible assets that are acquired individually or with a group of other assets
and both intangible assets acquired in business combinations and asset
acquisitions. This staff position is effective for fiscal years beginning after
December 15, 2008, which for us is the first quarter of fiscal 2010. We are
currently evaluating the impact of FSP 142-3 on our results of operations and
financial condition.   In
December 2007, the FASB issued SFAS No. 141 (revised 2007), Business
Combinations (SFAS 141R). SFAS 141R establishes principles and requirements for
how the acquirer in a business combination: recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed,
and any controlling interest; recognizes and measures the goodwill acquired in
the business combination or a gain from a bargain purchase; and determines what
information to disclose to enable users of the financial statements to evaluate
the nature and financial effects of the business combination. SFAS 141R also
requires that changes in acquisition-related liabilities for uncertain tax  17





positions subsequent
to its effective date be recorded in earnings currently. SFAS 141R applies to
business combinations for which the acquisition date is on or after the first
reporting period beginning on or after December 15, 2008. We are currently
evaluating the impact of SFAS 141R on our results of operations and financial
condition.    Off
Balance Sheet Arrangements None.  ITEM
3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK Our
financial instruments consist mostly of cash. Our only risk is interest
rate which is not considered significant. The
Company does not hold foreign currency since we do not transact business in
foreign currencies, and therefore have no currency exposure. We do not enter
into futures or forward commodity contracts since we have no market risk
exposure with respect to commodity prices.  Item
4T.  Controls and Procedures  Material
Weaknesses Previously Disclosed  As discussed in Item
8A of our 2008 Annual Report on Form 10-KSB, as of May 31, 2008, we identified
certain material weaknesses relating to our accounting policies and procedures,
board of director financial oversight, lack of segregation of duties, financial
close and reporting and internal financial expertise.  Evaluation of
Disclosure Controls and Procedures  Our Chief Executive
Officer/Chief Accounting Officer evaluated the effectiveness of the Company's
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of the end of the period covered in this report. In light of
the material weaknesses previously disclosed, which have not been remediated as
of the end of the period covered by this Quarterly Report, our Chief Executive
Officer/Chief Accounting Officer concluded that our disclosure controls and
procedures were not effective in providing reasonable assurance that information
required to be disclosed by the Company in the reports that it files or submits
under the Exchange Act was recorded, processed, summarized and reported within
the time periods specified by the Securities and Exchange Commission's rules and
forms and did not ensure that information required to be disclosed in the
reports that we file or submit under the Exchange Act was accumulated and
communicated to our management, including our Chief Executive Officer/Chief
Accounting Officer, as appropriate to allow timely decisions regarding required
disclosure. As a result of this conclusion, the financial statements for the
period covered by this report were prepared with particular attention to the
material weaknesses previously disclosed.  Management is
exercising its best efforts to remediate material weaknesses and significant
deficiencies identified and described above with the resources it currently has,
but due to limited operating funds, management has not made significant efforts
to remediate these deficiencies at this time.   18





Changes
in Internal Controls Over Financial Reporting  There
were no changes in the Companys internal control over financial reporting,
during the quarter ended February 28, 2009, that have materially affected, or
are reasonably likely to materially affect, the Companys internal control over
financial reporting.  PART
II.  OTHER INFORMATION  Item 1.  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 Jurak Corporation World Wide, Inc.
(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 is seeking a default
judgment granting all of the relief sought.  Item 1A. Risk
Factors  An investment in our
common stock involves a number of very significant risks. See our Form 10-KSB
for additional information on this matter.  Item 2.
  Unregistered Sales of Equity Securities and Use of Proceeds  The
Company issued to 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.  The Company
may use the value of these shares to offset the purchase price of Nordic
Immotech, if an agreement to purchase Nordic Immotech is reached. The Company
also has the option to repurchase these shares for $0.48 per share ($2,000,000)
at February 27, 2009, or $0.60 per share ($2,500,000) at March 31, 2009. Nordic
Immotech may not sell these shares without the Company having the right of
repurchase prior to March 31, 2009. If no agreement is reached, the shares
remain with Nordic Immotech and will be fully tradeable.  The
shares were issued in reliance on Section 4(2) of the Securities Act of 1933,
and Regulation S promulgated thereunder.  They were issued in a private
transaction not involving a public offering to a non-U.S. persons as that term
is defined in Rule 902 of Regulation S.  ITEM 3.
   Defaults on Senior Securities None. ITEM
4.    Submission of matters to a Vote of Security
Holders None.   19





Item 5.
   Other Information  No
items occurred during the period of this report which would have been required
to be reported in a Form 8-K which have not been reported.  Item 6.
  Exhibits  The following exhibits are included herein:  31.1 Certification of Chief Executive Officer and Chief Accounting
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14
and 15d-14 of the Exchange Act).  32. Certification pursuant Section 906 of the Sarbanes-Oxley Act of
2002 (18 U.S.C. §1350).    Signatures  In accordance with
the requirements of the Exchange Act of 1934, the registrant caused this report
to be signed on its behalf by the undersigned thereto, duly authorized.  Lifequest
World Corporation.  By /s/
Anthony Jurak Anthony
Jurak Date:
 May 5, 2009 Chief
Executive Officer and Acting
Chief Accounting Officer           20