UNITED STATES
SECURITIES ANDEXCHANGE COMMISSION

Washington, D.C. 20549
**FORM 10-QSB**
(Mark One)

**QUARTERLY REPORTPURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIESEXCHANGE ACT OF 1934e**
For the quarterly period ended                            **FEBRUARY 28, 2007**
OR

**TRANSITION REPORTPURSUANT TO SECTION 13 OR
15(d) OF THESECURITIES EXCHANGE ACT OF 1934**
For the transition period from ___________ to _______________________

Commission File Number: 333-61801**PHYTOLABS, INC.
(formerly JurakCorporation World Wide, Inc.) 

(Exact name of registrant as specified in its charter)
 

MINNESOTA                                                                        88-0407679

                                                                                                           (State or other jurisdiction of                                                                                               (Federal Employer
                                                                                                            incorporation or organization)                                                                                               Identification No.)

 

1181 GrierDrive, Suite C, Las Vegas, NV 89119-3746
**(Address of principal executive offices) (Zip Code)** 

(702)914-9688
**Registrant's telephone number, including area code
Check whether the registrant (1) has filed all reports required to be filedby Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements forthe past 90 days. YES NO 

Indicate by check mark whether the registrant is a shell company (as definedin Rule 12b-2 of the Exchange Act. YES NO 

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of sharesoutstanding of each of the issuer's classes of common stock, as of the latestpracticable date.

 

Class                                                               Outstanding at April 16, 2007
Common Stock, no par value                            101,231,791
 
PHYTOLABS, INC.
(formerly JURAKCORPORATION WORLD WIDE, INC.)

 

INDEX

 

                                                                                                                                                                                                                                        Page No.
Part I.   Financial Information

Item 1. Financial Statements

Condensed Balance Sheets                                                                                                                                                                                  3

Condensed Statements of Operations                                                                                                                                                                   4

Condensed Statements of Cash Flows                                                                                                                                                                  5

Selected Notes to      Condensed Financial Statements                                                                                                                                              6

Item 2.    Management's Discussion and Analysis of

           Financial Condition and Results of Operations                                                                                                                                                       9

Item 3. Controls and    Procedures                                                                                                                                                                                  15

Part II. Other Information 

Item 1. Legal Proceedings                                                                                                                                                                                            16

Item 2. Unregistered Sales of    Equity Securities and Use of Proceeds                                                                                                                             16

Item 5. Other Information                                                                                                                                                                                             16

Item 6. Exhibits                                                                                                                                                                                                            16

SIGNATURES                                                                                                                                                                                                                   16 

**PHYTOLABS, INC.**

**(formerly JURAKCORPORATION WORLD WIDE, INC.)**

 

NOTES TO CONDENSEDFINANCIAL STATEMENTS

NOTE 1 - CONDENSED FINANCIAL STATEMENTS
**Company Name Change**
Effective March 13, 2007, the Company changed its name to PhytoLabs, Inc.(formerly Jurak Corporation World Wide Inc.) in connection with productdevelopment of a new, patent pending extract for which the Company, through itswholly owned subsidiary, Phytolab Solutions, Inc. was granted worldwidedistribution rights. Marketing and selling of these products is expected tobegin in the fourth quarter of fiscal 2007. The shares of the Company trade onthe Over the Counter Bulletin Board under the symbol, "PYTL."

The condensed balance sheets as of February 28, 2007 and 2006 and the relatedcondensed statements of operations for the three and nine months ended February28, 2007 and 2006 and the condensed statements of cash flows for the nine-monthperiods then ended have been prepared by the Company without audit. In theopinion of management, all adjustments (which include normal recurringadjustments) necessary to present fairly the financial position, results ofoperations, and cash flows at February 28, 2007 and 2006 and for the nine monthsthen ended have been made. 

Certain information and footnote disclosures normally included in financialstatements prepared in accordance with generally accepted accounting principlesin the United States of America have been condensed or omitted. It is suggestedthese condensed financial statements be read in conjunction with the financialstatements and notes thereto included in the Company's May 31, 2006 auditedfinancial statements and form 10-KSB. The results of operations for thenine-month period ended February 28, 2007 are not necessarily indicative of theoperating results for the entire year.

The presentation of financial statements in conformity with generallyaccepted accounting principles requires management to make estimates andassumptions that affect the reported amounts of assets, liabilities, anddisclosure of contingent assets and liabilities at the balance sheet date, andthe reported amounts of revenues and expenses during the reporting period. Theestimates and assumptions used in the accompanying condensed financialstatements are based upon management's evaluation of the relevant facts andcircumstances as of the time of the financial statements. Actual results coulddiffer from those estimates.

Reclassifications 

Certain prior year amounts reported on the Company's condensed balance sheethave been reclassified to conform to the current presentation. Suchreclassifications had no impact on total consolidated assets, net loss orstockholders' deficit. 

NOTE 2 - INVENTORIES

Inventories summarized below are priced at the lower of first-in, first-outcost or market:

 
February 28  
May 31
 
2007  
2006
Finished goods 
$                 72,297  
$                     71,653
Raw materials 
23,629  
18,392
Allowance for obsolensce 
(31,891)  
(31,891)
Total 
$                   64,035     
$                       58,154
NOTE 3 -ADVANCE TO OFFICER/STOCKHOLDER

During the first nine months ended February 28, 2007, the Company made ashort-term, non-interest-bearing loan to an officer/stockholder in the amount of$44,435 of which $2,000 was advanced during the three months ended February 28,2007.

NOTE 4 -OTHER ASSET- IMMUNE BOOSTER LICENSE

During the nine months ended February 28, 2007, the Company expended $583,909for licensing fees associated with an exclusive license and distributionagreement to acquire the worldwide marketing rights to the world's mostpowerful, natural immune booster discovered to date, as stated by the scientificresearch team that developed the product. These rights are being acquired fromNordic Immotech Trading APS, a leading life science company with a successfulhistory of producing unique, patented products that are distributed on a globalscale. On December 1, 2006, the Company, through its wholly owned subsidiary,Phytolab Solutions, Inc. finalized the closing of this exclusive global licenseand distribution agreement with respect to this natural immune booster product.Phytolab Solutions, Inc. has not yet begun to market or sell these products, butexpects to begin in the fourth quarter of fiscal 2007. As part of the closingfor this agreement, the Company paid $550,000 per the terms of the agreement onDecember 6, 2006. The agreement calls for additional installment paymentstotaling $1,950,000 to be paid as follows:

$500,000                                March 31, 2007

$500,000                                June 30, 2007

$500,000                                September 30, 2007

$450,000                                November 30, 2007

The Company has imputed interest on these installments at a rate of 10%. Thediscounted value of the licensed asset totals $2,407,099. The remaininginstallments payable, net of the calculated imputed interest, totaling of$1,823,190 has been recorded as of February 28, 2007. Since the sales andmarketing of this new immune booster product has not been initiated, noamortization of the licensed asset has been made for the three months endedFebruary 28, 2007. 

As part of the license agreement noted above Nordic Immotech shall pay aroyalty of ten percent (10%) of net sales of products sold by Nordic and oraffiliates to independent third parties.

In a separate agreement, the Company was granted an option to purchase allthe shares in Nordic Immotech (the supplier). Subject to the terms andconditions of the separate agreement the Company has the option to purchase allof the shares of Nordic Immotech (170,000 shares) at a fixed price of $76.47 pershare for a total of $13,000,000. The Company may exercise the option anytimebefore December 1, 2008.

NOTE 5 -STOCKHOLDERS' DEFICIT

During the first quarter ended August 31, 2006 the Company sold 10,000,000shares of common stock at $0.02 per share for a total of $200,000. Theaccumulated deficit as of February 28, 2007 was $5,446,557 and $4,635,264 as ofMay 31, 2006. 

On December 6, 2006, the Company sold $600,000 unregistered shares of commonstock plus a one-year warrant to purchase an additional common share at $1.25for a unit price of $1.00. The Company received $600,000 from this transaction.As of April 16, 2007 the share certificates have not yet been issued for thissubscription payment received.

NOTE 6 - CONTINGENCIES

In the ordinary course of business, the Company is exposed to legal actionsand threatened claims and incurs costs to defend against such legal actions andclaims. Company management is not aware of any such outstanding, pending orthreatened action, claim or other circumstance that would materially affect theCompany's financial position or results of operations. 

NOTE 7 - INCOME TAXES

Deferred taxes are provided on a liability method whereby deferred tax assetsare recognized for deductible temporarydifferences andoperating loss and tax credit carryforwards and deferred tax liabilities arerecognized for taxable temporary differences. Temporary differences are thedifferences between the reported amounts of assets and liabilities and their taxbasis. Deferred tax assets are reduced by a valuation allowance when, in theopinion of management, it is more likely than not that some portion or all ofthe deferred tax assets will not be realized. Deferred tax assets andliabilities are adjusted for the effects of changes in tax laws and rates on thedate of the enactment. The Company has recorded a full valuation allowance forall deferred tax assets due to the significance of its continued operatinglosses.

NOTE 8 - RELATED PARTY TRANSACTIONS
**Intellectual Property License Agreement**
In January 1999, we entered into an intellectual propertylicense agreement (the "License Agreement") with Jurak Holdings Limited ("JHL"),a corporation organized under the laws of the Province of Alberta and anaffiliate of our Chief Executive Officer and one of our directors. Pursuant tothe terms and provisions of the License Agreement, we are required to pay thegreater 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 theLicense Agreement (the "Continuing Royalty Fee"). After fiscal 2013, we arerequired to make payments in the amount of the Continuing Royalty Fee.

For the nine months ended February 28, 2007 and 2006, theminimum royalty fee for the amount of $375,000 was expensed. The accruedpayments due and owing to JHL under the License Agreement for the MinimumRoyalty Fee and the Continuing Royalty Fee were $576,105 and $250,000 atFebruary 28, 2007 and May 31, 2006, respectively.

NOTE 9 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In July 2006, Financial Accounting Standards Board (FASB) issuedInterpretation No. 48, Accounting for Uncertainty in Income Taxes - AnInterpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies theaccounting treatment (recognition and measurement) for an income tax positiontaken in a tax return and recognized in a company's financial statements. Thenew standard also contains guidance on "de-recognition, classification, interestand penalties, accounting in interim periods, disclosure, and transition". Theprovisions of FIN 48 are effective for fiscal years beginning after December 15,2006. We are currently evaluating the impact of this statement but we believethe adoption of FIN 48 will not have an impact on our consolidated financialposition or results of operations.

In September 2006, the U.S. Securities and Exchange Commission staff issuedStaff Accounting Bulletin No. 108, Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements ("SAB 108"). This SAB addresses diversity in practice of quantifyingfinancial statement misstatements. It establishes an approach that requiresquantification of financial statement misstatements based on the effects of themisstatements on each of the company's financial statements and the relatedfinancial statement disclosures. The SAB is effective for financial statementsissued for fiscal years ending after November 15, 2006. The adoption of SAB 108did not have an impact on our consolidated financial position or results ofoperations. 

In September 2006, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFASNo. 157"). This standard clarifies the principle that fair value should be basedon the assumptions that market participants would use when pricing an asset orliability. Additionally, it establishes a fair value hierarchy that prioritizesthe information used to develop those assumptions. This standard is effectivefor financial statements issued for fiscal years beginning after November 15,2007. We are currently evaluating the impact of this statement. We believe theadoption of SFAS No. 157 will not have a material impact on our consolidatedfinancial position or results of operations. 

NOTE 10 - SUBSEQUENT EVENTS

On March 31, 2007, the Company received $999,950 as part of a privateplacement sale of the Company's unregistered common stock at a price per shareof $1.00. This sale also included for each share purchased a one-year warrant topurchase an additional common share at $1.25. As of April 16, 2007 the sharecertificates have not yet been issued for this subscription payment received.

 

Item 2.Management's Discussion and Analysis of Financial

Condition and Results of Operations 

Overview

PhytoLabs, Inc, (formerly Jurak Corporation World Wide, Inc.), a Minnesotacorporation incorporated on November 1, 1997, currently trades on theOver-the-Counter Bulletin Board under the symbol "PYTL". We are aproduct-focused company specializing in the herbal supplement industry andmarket. Our main product is the "Jurak Classic Whole Body Tonic", also known asJC Tonic. This product was first developed in 1943 by Carl Jurak, the father ofthe founder of our company. The Jurak Classic Whole Body Tonic is marketed in a32-ounce bottle and a two thirds-ounce mono-dose packaged as 45 doses in a box;all which constitute approximately 100% of the sales. A second product derivedfrom another of Carl Jurak's 1940's formulations was introduced in December2005. 

We distribute our products through a network marketing system usingindependent distributors. Network marketing appeals to a wide cross-section ofpeople, particularly those seeking to supplement income, start a home-basedbusiness or pursue entrepreneurial opportunities other than conventionalfull-time 

employment. We consider our attractive compensation plan and cash bonus poolsto be attractive components of our network marketing system. We also believethat our network marketing system is ideally suited to market herbal supplementproducts because sales of such products are strengthened by ongoing personalcontact between our distributors and their customers. Distributors are given theopportunity through sponsored events and training sessions to network with otherdistributors, develop selling skills and establish personal goals. We supplementmonetary incentives with other forms of recognition in order to further motivateand foster an atmosphere of excitement through our distributor network. 

We have obtained trademark protection for the name "JC Tonic" within theUnited States and within Canada. We also own the web sites www.jurak.com,www.jctonic.com and www.tonicman.com. 

The Company is also obtaining the worldwide marketing rights to the world'smost powerful, natural immune booster discovered to date, as stated by thescientific research team that developed the product. These rights are beingacquired from a leading life science company with a successful history ofproducing unique, patented products that are distributed on a global scale. OnDecember 1, 2006, the Company finalized the closing of this exclusive globallicense and distribution agreement with respect to this natural immune boosterproduct. The Company has not yet begun to market or sell these products, butexpects to begin in the fourth quarter of fiscal 2007. (See Note 4)

The following discussion and analysis of our results ofoperations and financial position should be read in conjunction with our auditedfinancial statements and the notes thereto, included in our 10-KSB filed for theyear ended May 31, 2006. Our financial statements are prepared in accordancewith U.S. GAAP. 

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 

The following discussion is intended to provide an analysisof our financial condition and should be read in conjunction with our auditedfinancial statements and the notes thereto.  The matters discussed in thissection that are not historical or current facts deal with potential futurecircumstances and developments.  Such forward-looking statements include,but are not limited to, the development plans for our growth, trends in theresults of our development, anticipated development plans, operating expensesand our anticipated capital requirements and capital resources.  Our actualresults could differ materially from the results discussed in theforward-looking statements.

The accompanying financial statements have been prepared in conformity withaccounting principles generally accepted in the United States of America, whichcontemplate continuation of the Company as a going concern. However, the Companyhas sustained substantial losses and its liabilities exceed its assets. TheCompany intends to generate positive cash flows from operations throughincreased sales utilizing the network of distributors in place with existingproducts and the new natural immune booster 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. As statedin Note 5, the Company has sold additional stock in a private placement duringthe three months ended August 31, 2006.  This sale was a continuation ofthe private placement started in May 2006. However, there can be no assurancethe Company will be able to obtain additional capital from private placements inthe future.

In December 2006, the Company also announced a best efforts private placementof $3,000,000 at $1.50 per share. The proceeds of the private placement are tobe used for regular corporate needs as well as funding the product launch of ourrecently acquired rights to the world's most powerful, natural immune boosterproduct. One group of investors has invested funds to date. That group requiredthat all investments be made for an average of $1.00 per share, with a one-yearwarrant to purchase an additional share at $1.25 per share. The Company receivedthe first $600,000 on December 6, 2006 and $999,950 on March 31, 2007.

 

With the formal completion of the exclusive global license and distributionagreement relative to the natural immune booster product, the Company willaccelerate work on the packaging and branding of this new product to make itwidely available to North American and European markets with an anticipatedlaunch in the 4th quarter of 2007.

Three months Ended February 28, 2007 Compared to Three monthsEnded February 28, 2006 

Total sales for the three months ended February 28, 2007 was$240,088 compared to $380,012 in the same period ended in 2006. Gross profit wasreduced to $200,259 for the three months ended February 

28, 2007 compared to $283,484 for the same period ended in2006, as further discussed below. The net loss during the three months endedFebruary 28, 2007 was ($287,283) compared to ($225,589) in the same period endedin 2006.

Sales and Gross Margins

Sales for three months ended February 28, 2007 decreased by37% to $240,088 compared to $380,012 in the same period ended in 2006. Thedecrease in sales was related to issues associated with the reliability of theCompany's computer systems used to track and account for distributors' salesactivity. The system problems caused delays in the accumulation of sales data,which affected the timely calculation and payment of distributor bonuses. Theseproblems caused a decline in sales activity by the distributors. In May 2006,the Company enhanced and improved the computer system, which improved the salesdata accumulation process. In July 2006, the Company rolled out a replicatedCompany website for each of its 9,900 distributors. The replicated websitesallow each distributor to advertise to their specific customers, while providingthe product and company information from the Company's new website. Managementis confident the improved computer system, the replicated websites and newproduct offerings in 2007 will result in an increase in sales volume and thatthe Company will regain the confidence of the distributor network. 

Gross profit in the three months ended February 28, 2007decreased to $200,259 compared to $283,484 in the same period ended in 2006 as aresult of the decline in sales and increased packaging and freight costs. Grossprofit as a percentage of revenue increased to 83% in the three months endedFebruary 28, 2007 compared to 75% in the same period ended in 2006. This was dueprimarily to reduced promotions resulting in higher pricing and resulting grossprofit percentage on products sold.

Royalty Expense-Related Party

The minimum royalty expense-related party accrued to JurakHoldings Limited (related party) remained consistent for both periods at$125,000.

Distribution, Selling and Administrative Expenses

Total distribution, selling and administrative expenses forthe three months ended February 28, 2007 were $316,962 compared with $364,527for the same period ended in 2006. The decrease is primarily related todecreases in sales expenses, payroll and related benefits, consulting fees andcontract labor. With the decrease in sales, the Company continues to be activelyworking to reduce overhead costs. 

Interest expense for the three months ended February 28, 2007was $45,580 compared with $19,546 for the same period in the prior year. Currentyear interest costs relate to the imputed interest on the installmentpayable-immune booster license. Prior year interest costs primarily relate toloans from a principal stockholder and related entities, which were outstandingduring the prior year quarter. The majority of these loans were converted intocommon stock or paid off during the fiscal year ended May 31, 2006. 
**Nine months Ended February 28, 2007 Compared to Nine monthsEnded February 28, 2006**
Total sales for the nine months ended February 28, 2007 was$796,674 compared to $1,143,473 in the same period ended in 2006. Gross profitdeclined to $619,436 for the nine months ended February 28, 2007 compared to$877,844 for the same period ended in 2006, as further discussed below. The netloss during the nine months ended February 28, 2007 was ($811,313) compared to($836,529) in the same period ended in 2006.

Sales and Gross Margins

Sales for the nine months ended February 28, 2007 decreasedby 30% to $796,674 compared to $1,143,473 in the same period ended in 2006. Thedecrease in sales was related to issues associated with the reliability of theCompany's computer systems used to track and account for distributors' sales.The system problems caused delays in the accumulation of sales data, whichaffected the timely calculation and payment of distributor bonuses. Theseproblems caused a decline in sales activity by the distributors. In May 2006,the Company enhanced and improved the computer system, which improved the salesdata accumulation process, however, increased distributor activity has been slowin returning. In July 2006, the Company rolled out a replicated Company websitefor each of its 9,900 distributors. The replicated websites allow eachdistributor to advertise to their specific customers, while providing theproduct and company information from the Company's new website. Management isconfident the improved computer system, the replicated websites and new productofferings will result in an increase in sales volume in 2007.

Gross profit in the nine months ended February 28, 2007decreased to $619,436 compared to $877,844 in the same period ended in 2006 dueprimarily to the decline in product sales. Gross profit as a percentage ofrevenue increased slightly to 78% in the nine months ended February 28, 2007compared to 77% in the same period ended in 2006. This was due to decreasedpackaging, freight and distribution costs.

 

Royalty Expense-Related Party

The minimum royalty expense-related party accrued to JurakHoldings Limited (related party) remained consistent for both periods at$375,000 ($125,000 per quarter). 

Distribution, Selling, and Administrative Expenses

Total distribution, selling and administrative expenses forthe nine months ended February 28, 2007 were $1,010,169 compared with $1,267,897for the same period ended in 2006. The decrease is primarily related todecreases in sales expenses, payroll and related benefits, consulting fees andcontract labor. The Company incurred a consulting fee of $175,000 for the ninemonths ended February 28, 2006 which was not applicable to the nine months thisyear. With the decrease in sales, the Company continues to actively reduceoverhead costs. Interest expense for the nine months ended February 28, 2007 was$45,580 compared with $71,476 for the same period in 2006. Current year interestcosts relate to the imputed interest on the installment payable-Nordic License.Prior year interest costs primarily relate to loans from a principal stockholderand related entities, which were outstanding during the prior 2006-quarter. Themajority of these loans were converted into common stock or paid off during thefiscal year ended May 31, 2006. 

Liquidity and Capital Resources
**Nine Month Period Ended February 28, 2007

We have historically had more expenses and cost of sales than revenue in eachyear of our operations. The accumulated deficit as of February 28, 2007 was$5,446,577 compared to $4,635,264 as of May 31, 2006. Generally, we havefinanced operations to date through the proceeds of the private placement ofequity and debt securities and sales revenue. In connection with our businessplan, management anticipates that there may be additional increases in operatingexpenses and capital expenditures relating to the new immune booster products.We intend to finance these expenses with further issuances of our securities andrevenues from operations. Therefore, we expect we may need to raise additionalcapital and increase our revenues to meet long-term operating requirements.

 

We currently have a $3,000,000 private placement offering in process. Thesefunds will be used to make the required payments for our new license agreementand to launch and market our natural immune booster product.

At February 28, 2007, the Company had $725 of unrestricted cash compared to$44,073 of unrestricted cash at May 31, 2006. The Company had current assets of$113,357 and current liabilities of $1,125,848 at February 28, 2007 compared tocurrent assets of $110,841 and current liabilities of $604,586 at May 31, 2006.

Net cash used in operating activities was $258,777 during the nine monthsended February 28, 2007 compared to net cash used in operating activities of$220,646 in the same period ended in 2006. The decrease was due primarily to theincreased operating loss for the nine months ended February 28, 2007 compared tothe operating loss for the nine months ended February 28, 2006 after adjustingfor the net increase in trade payables.

Net cash used in investing activities was $609,368 in the first nine monthsended February 28, 2007 compared to $0 in the same period ended in 2006. Thechange was caused primarily by officer/shareholder advances and the purchase ofthe immune booster license. The Company expended $583,909 for licensing feesassociated with the acquisition of the worldwide exclusive marketing rights tothe world's most powerful, natural immune booster discovered to date, as statedby the scientific research team that developed the product. These rights arebeing acquired from a leading life science company with a successful history ofproducing unique, patented products that are distributed on a global scale. 

Net cash provided by financing activities was $824,797 in the first ninemonths ended February 28, 2007 compared to net cash provided by financingactivities in the same period in 2006 of $228,811. Proceeds from the issuance ofcommon stock were $800,000 in the first nine months of fiscal 2006 compared to

$269,566 in the same period of 2006. In December, 2006 the Company announceda best efforts private placement of $3,000,000 U.S. at $1.50 per share. Theplacement was subsequently cancelled, and a new offering was immediatelyintroduced for $3,000,000 U.S. at $1.00 per unit. Each unit consists of oneshare of common stock and one-year warrant to purchase one share of common stockat $1.25. The proceeds of the private placement are to be used for regularcorporate needs as well as funding the product launch of our recently acquiredrights to the world's most powerful, natural immune booster product. The Companyreceived the first $600,000 on December 6, 2006 and $999,950 on March 31, 2007

Critical Accounting Policies

Our critical accounting policies, including the assumptions and judgementsunderlying them, are discussed in our fiscal 2006 Form 10-KSB in Note 1 Summaryof Significant Accounting Policies included in our Consolidated FinancialStatements. There were no significant changes to our critical accountingpolicies during the nine months ended February 28, 2007. These policies havebeen consistently applied in all material respects and disclose such matters asallowance for doubtful accounts, sales returns, inventory valuation, warrantyexpense, income taxes, revenue recognition and fixed asset and intangible assetimpairment recognition. On an ongoing basis, we evaluate our estimates based onhistorical experience and on various other assumptions that are believed to bereasonable under the circumstances, the result of which form the basis formaking judgements about the carrying value of assets and liabilities that arenot readily apparent from other sources. Results may differ from these estimatesdue to actual outcomes being different from those on which we based ourassumptions. Management on an ongoing basis reviews these estimates andjudgements.

Recently Issued Accounting Pronouncements

In July 2006, Financial Accounting Standards Board (FASB) issuedInterpretation No. 48, Accounting for Uncertainty in Income Taxes - AnInterpretation of FASB Statement No. 109 ("FIN 48"). FIN 48 clarifies theaccounting treatment (recognition and measurement) for an income tax positiontaken in a tax return and recognized in a company's financial statements. Thenew standard also contains guidance on "de-recognition, classification, interestand penalties, accounting in interim periods, disclosure, and transition". Theprovisions of FIN 48 are effective for fiscal years beginning after December 15,2006. We are currently evaluating the impact of this statement but we believethe adoption of FIN 48 will not have an impact on our consolidated financialposition or results of operations.

 

In September 2006, the U.S. Securities and Exchange Commission staff issuedStaff Accounting Bulletin No. 108, Considering the Effects of Prior YearMisstatements when Quantifying Misstatements in Current Year FinancialStatements ("SAB 108"). This SAB addresses diversity in practice of quantifyingfinancial statement misstatements. It establishes an approach that requiresquantification of financial statement misstatements based on the effects of themisstatements on each of the company's financial statements and the relatedfinancial statement disclosures. The SAB is effective for financial statementsissued for fiscal years ending after November 15, 2006. The adoption of SAB 108did not have an impact on our consolidated financial position or results ofoperations. 

In September 2006, the Financial Accounting Standards Board (FASB) issuedStatement of Financial Accounting Standards No. 157, Fair Value Measurements ("SFASNo. 157"). This standard clarifies the principle that fair value should be basedon the assumptions that market participants would use when pricing an asset orliability. Additionally, it establishes a fair value hierarchy that prioritizesthe information used to develop those assumptions. This standard is effectivefor financial statements issued for fiscal years beginning after November 15,2007. We are currently evaluating the impact of this statement. We believe theadoption of SFAS No. 157 will not have a material impact on our consolidatedfinancial position or results of operations. 

Item 3. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

An evaluation made at the end of the period covered by this report wasperformed under the supervision and with the participation of the Company'spresident, chief executive officer ("CEO") and the chief financial officer(CFO") of the effectiveness of the design and operation of the Company'sdisclosure controls and procedures to insure that the Company records,processes, summarizes and reports in a timely and effective manner theinformation required to be disclosed in reports filed with or submitted to theSecurities and Exchange Commission. Based on that evaluation, the Company'smanagement, including the CEO and CFO, concluded that the Company's disclosurecontrols and procedures were effective in timely bringing to their attentionmaterial information related to the Company required to be included in theCompany's periodic Securities and Exchange Commission filings. Since the date ofthis evaluation, there have been no significant changes in the Company'sinternal controls or in other factors that could significantly affect thosecontrols.

However, due to the limited number of Company employees engaged in theauthorization, recording, processing and reporting of transactions, there isinherently a lack of segregation of duties. The company periodically assessesthe cost versus benefit of adding the resources that would remedy or mitigatethis situation, and currently does not consider the benefits to outweigh thecosts of adding additional staff in light of the limited number of transactionsrelated to the Company's operations.

 

Changes in Internal Controls Over Financial Reporting

There have been no significant changes in internal control over financialreporting that occurred during the fiscal period covered by this report thathave materially affected or are reasonably likely to materially affect theCompany'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 ClarkCounty in and for the State of Nevada by Jurak Corporation World Wide, Inc.(plaintiffs) and one former employee and her spouse (defendants). The suitentails that the former employee processed credit refunds to a debit/credit cardheld at their banking institution. In addition, the former employee embezzledfunds by setting up a merchant processing system and diverting the charging ofour distributors' credit cards from our merchant processor to their processor.All is evidenced by information located on the computer used by the formeremployee at the Company as well as through other reporting mechanisms andprocessing systems. The Company is seeking relief for damages in excess of$60,000; special damages according to proof; for attorneys' fees and costs ofsuit; and for other and further relief as the Court may deem just and proper ascompensation for monies embezzled by the former employee and her spouse. Noanswer has been received from the defendant and the Company is seeking a defaultjudgment granting all of the relief sought. 

Item 2 Changes in Securities

During the nine month period ended February 28, 2007 the Company sold10,000,000 shares of unregistered common stock at $0.02 per share and 600,000units at $1.00 under a private placement, for a total proceeds of $800,000 tothe Company. Relative to the 600,000 units, each unit consists of one share ofcommon stock and one warrant to purchase a share of common stock at $1.25. Nounderwriters were used for the sale of common stock. The shares of stock weresold pursuant to an exemption from registration under Rule 506 of Regulation D.

Item 5 Other Information

No items occurred during the period of this report whichwould have been required to be reported in a Form 8-K which have not beenreported.

There have been on material changes to the procedures bywhich security holders may recommend nominees to the Company's board ofdirectors. 

Item 6 Exhibits
****
The following exhibits are included herein:

31.1 Certification of Chief Executive Officer        pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Rules 13a-14        and 15d-14 of the Exchange Act).

32. Certifications pursuant Section 906 of the        Sarbanes-Oxley Act of 2002 (18 U.S.C. Sect. 1350).

Signatures

In accordance with the requirements of the Exchange Act of 1934, theregistrant caused this report to be signed on its behalf by the undersignedthereto, duly authorized.

Jurak Corporation World Wide, Inc.

By                                      /s/ Anthony Jurak                                      
Anthony Jurak,                      Chairman of the Board, Director, Chief Accounting Officer

Date: April 17, 2007**********