UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
NOVEMBER 30, 2006OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 333-61801
JURAK CORPORATION 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 Grier Drive, 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 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act. YES [ ] NO [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Class Outstanding at January 11, 2007
Common Stock, no par value 100,632,578
JURAK CORPORATION 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 8
Item 3. Controls and Procedures 13
Part II. Other Information 14
Item 1. Legal Proceedings 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 5. Other Information 15
Item 6. Exhibits 15
SIGNATURES 15
JURAK CORPORATION WORLD WIDE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The condensed balance sheets as of November 30, 2006 and 2005 and the related condensed statements of operations for the three and six months ended November 30, 2006 and 2005 and the condensed statements of cash flows for the six-month periods then ended have been prepared by the Company without audit. In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at November 30, 2006 and 2005 and for the six months then ended 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, 2006 audited financial statements and form 10-KSB. The results of operations for the period ended November 30, 2006 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.
Reclassifications
Certain prior year amounts reported on the Company's condensed balance sheet have been reclassified to conform to 2006 presentation. Such reclassifications had no impact on total consolidated assets, net income or stockholders' equity.
NOTE 2 - INVENTORIES
Inventories summarized below are priced at the lower of first-in, first-out cost or market:
| November 30 | May 31 | ||
| 2006 | 2006 | ||
| Finished goods | $ 65,612 | $ 71,653 | |
| Raw materials | 22,233 | 18,392 | |
| Allowance for obsolensce | (31,891) | (31,891) | |
| Total |
$ 55,954
|
$ 58,154
|
NOTE 3 -ADVANCE TO OFFICER/STOCKHOLDER
During the first six months ended November 30, 2006, the Company made a short-term, non-interest-bearing loan to an officer/stockholder in the amount of $42,435 of which $493 was advanced during the three months ended November 30, 2006.
NOTE 4 - OTHER ASSET-LICENSE
During the first quarter ended August 31, 2006, the Company expended $15,054 for licensing fees associated with a letter of intent to acquire the worldwide exclusive marketing rights to the world's most powerful, natural immune booster discovered to date, as stated by the scientific research team that developed the product. These rights are being acquired from a leading life science company with a successful history of producing unique, patented products that are distributed on a global scale. On December 6, 2006, the Company finalized the closing of this exclusive global license and distribution agreement with respect to this natural immune booster product. (See note 10).
NOTE 5 -STOCKHOLDERS' DEFICIT
During the first quarter ended August 31, 2006 the Company sold 10,000,000 shares of common stock at $0.02 per share for a total of $200,000. No shares were sold in the second quarter of 2006. The accumulated deficit as of November 30, 2006 was $5,159,294 and $4,635,264 as of May 31, 2006.
NOTE 6 - 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.
NOTE 7 - INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carryforwards 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 8 - RELATED PARTY TRANSACTIONS
Intellectual Property License Agreement
On approximately January 1, 1999, we entered into an intellectual property license agreement (the "License Agreement") with Jurak Holdings Limited ("JHL"), a corporation organized under the laws of the Province of Alberta and an affiliate of our Chief Executive Officer and one of our directors. Pursuant to the terms and provisions of the License Agreement, we are required to pay the greater of $500,000 for fiscal year 2003 and each calendar year thereafter, during the first ten years of the License Agreement (the "Minimum Royalty Fee"), or eight percent of the net sales 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.
For the six months ended November 30, 2006 and 2005, the minimum royalty fee for the amount of $250,000 was expensed. The accrued payments due and owing to JHL under the License Agreement for the Minimum Royalty Fee and the Continuing Royalty Fee was $451,105 and $250,000 at November 30, 2006 and May 31, 2006, respectively.
NOTE 9 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"-an Interpretation of FASB Statement No. 109". (FIN No. 48"), which clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Additionally, FIN 48 provides guidance on derecognition, classification, interest, penalties, accounting in interim periods and disclosure related to uncertain income tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of adopting FIN No. 48, but does not anticipate that it will have a material effect on its financial position, results of operations or cash flows.
NOTE 10 -- SUBSEQUENT EVENTS
On December 6, 2006, the Company received $600,000 as part of a private placement sale of the Company's restricted common stock at a price per share of $1.50. As of January 17, 2007 the share certificates have not yet been issued for this subscription payment received.
On December 6, 2006, the Company finalized the closing on an exclusive global license and distribution agreement with respect to a natural immune booster product. As part of the closing for this agreement, the Company paid $550,000 per the terms of the agreement on December 11, 2006. The agreement calls for additional payments totaling $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
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Overview
Jurak Corporation World Wide, Inc., a Minnesota corporation, currently trades on the Over-the-Counter Bulletin Board under the symbol "JRAK". We are a product-focused company specializing in the herbal supplement industry and market. Our main product is the "Jurak Classic Whole Body Tonic", also known as JC Tonic, which is a herbal supplemental blend of thirty different ingredients comprised primarily of medicinal herbs. The Jurak Classic Whole Body Tonic was first developed in 1943 by Carl Jurak, the father of the founder of our company. The Jurak Classic Whole Body Tonic is marketed in a 32-ounce bottle and a 20-ounce mono-dose packaged as 45 doses in a box; all which constitute approximately 100% of the sales.
We distribute our products through a network marketing system using independent distributors. Network marketing appeals to a wide cross-section of people, particularly those seeking to supplement income, start a home-based business or pursue entrepreneurial opportunities other than conventional full-time employment. We consider our attractive compensation plan and cash bonus pools to be attractive components of our network marketing system. We also believe that our network marketing system is ideally suited to market herbal supplement products because sales of such products are strengthened by ongoing personal contact between our distributors and their customers. Distributors are given the opportunity through sponsored events and training sessions to network with other distributors, develop selling skills and establish personal goals. We supplement monetary incentives with other forms of recognition in order to further motivate and foster an atmosphere of excitement through our distributor network.
We have obtained trademark protection for the name "JC Tonic" within the United States and within Canada. We also own the web sites www.jurak.com, www.jctonic.com and www.tonicman.com.
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, 2006. 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 that 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 liabilities
exceed its assets. The Company intends to generate positive cash flows from operations through
increased sales utilizing the network of distributors in place with existing 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. As stated in Note 5, the Company
has sold additional stock in a private placement during the three months ended August 31, 2006.
This sale was a continuation of the private placement started in May 2006. However, there can be no
assurance the Company will be able to obtain additional capital from private placements in the future.
On December 14, 2006 the Company also announced a best efforts private placement of 3,000,000 U.S. at $1.50 per share. The proceeds of the private placement are to be used for regular corporate needs as well as funding the product launch of our recently acquired rights to the world's most powerful, natural immune booster product. The Company also announced that the first $600,000 has been received on December 11, 2006.
With the formal completion of the exclusive global license and distribution agreement relative to the natural immune booster product, the Company will accelerate work on the packaging and branding of this new product to make it widely available to North American and European markets.
Three months Ended November 30, 2006 Compared to Three months Ended November 30, 2005
Total sales for the three months ended November 30, 2006 was $301,095 compared to $356,494 in the same period in 2005. Gross profit was reduced to $215,591 for the three months ended November 30, 2006 compared to $270,572 for the same period in 2005, as further discussed below. The net loss during the three months ended November 30, 2006 was ($243,773) compared to ($242,497) in the same period in 2005.
Sales and Gross Margins
Sales for three months ended November 30, 2006 decreased by 16% to $301,095 compared to $356,494 in the same period in 2005. The decrease in sales was related to issues associated with the reliability of the Company's computer systems used to track and account for distributors' sales activity. The system problems caused delays in the accumulation of sales data, which affected the timely calculation and payment of distributor bonuses. These problems caused a decline in sales activity by the distributors. In May 2006, the Company enhanced and improved the computer system, which improved the sales data accumulation process. In July 2006, the Company rolled out a replicated Company website for each of its 9,900 distributors. The replicated websites allow each distributor to advertise to their specific customers, while providing the product and company information from the Company's new website. Management is confident the improved computer system, the replicated websites and new product offerings will result in an increase in sales volume and that the Company will regain the confidence of the distributor network. Sales have increased by $45,604 over the three months ended August 31, 2006 from a total of $255,491 to $301,095 for the three months ended November 30, 2006.
Gross profit in the three months ended November 30, 2006 decreased to $215,591 compared to $270,572 in the same period in 2005 due to the decline in sales and increased packaging and freight costs. Gross profit as a percentage of revenue decreased slightly to 72% in the three months ended November 30, 2006 compared to 76% in the same period in 2005. This was due to increased packaging and freight costs, which the Company was not able to pass along to our customers.
Selling, General and Administrative Expenses
Total selling, general and administrative expenses for the three months ended November 30, 2006 were $459,364 compared with $488,290 for the same period in 2005. The decrease is primarily related to decreases in sales expenses, payroll and related benefits and contract labor. With the decrease in sales, the Company has been actively working to reduce overhead costs. The minimum royalty fee accrued to Jurak Holdings Limited (related party) remained consistent for both periods at $125,000.
Interest expense for the three months ended November 30, 2006 was $0 compared with $24,779 for the same period in 2005. Interest costs primarily relate to loans from a principal stockholder and related entities, which were outstanding during the prior 2005 quarter. The majority of these loans were converted into common stock or paid off during the fiscal year ended May 31, 2006.
Six months Ended November 30, 2006 Compared to Six months Ended November 30, 2005
Total sales for the six months ended November 30, 2006 was $556,586 compared to $763,461 in the same period in 2005. Gross profit declined to $419,177 for the six months ended November 30, 2006 compared to $594,360 for the same period in 2005, as further discussed below. The net loss during the six months ended November 30, 2006 was ($524,030) compared to ($610,940) in the same period in 2005.
Sales and Gross Margins
Sales for the six months ended November 30, 2006 decreased by 27% to $556,586 compared to $763,461 in the same period in 2005. The decrease in sales was related to issues associated with the reliability of the Company's computer systems used to track and account for distributors' sales activity primarily in the first quarter of 2006. The system problems caused delays in the accumulation of sales data, which affected the timely calculation and payment of distributor bonuses. These problems caused a decline in sales activity by the distributors. In May 2006, the Company enhanced and improved the computer system, which improved the sales data accumulation process. In July 2006, the Company rolled out a replicated Company website for each of its 9,900 distributors. The replicated websites allow each distributor to advertise to their specific customers, while providing the product and company information from the Company's new website. Management is confident the improved computer system, the replicated websites and new product offerings will result in an increase in sales volume and that the Company will regain the confidence of the distributor network.
Gross profit in the six months ended November 30, 2006 decreased to $419,177 compared to $594,360 in the same period in 2005 due primarily to the decline in sales. Gross profit as a percentage of revenue decreased slightly to 75% in the six months ended November 30, 2006 compared to 78% in the same period in 2005. This was due to increased packaging and freight costs, which the Company was not able to pass along to our customers.
Selling, General and Administrative Expenses
Total selling, general and administrative expenses for the six months ended November 30, 2006 were $943,207 compared with $1,153,370 for the same period in 2005. The decrease is primarily related to decreases in sales expenses, payroll and related benefits and contract labor. In the first quarter 2005, the Company incurred a consulting fee of $175,000, which was not applicable to the current year first quarter. With the decrease in sales, the Company has been actively working to reduce overhead costs. The minimum royalty fee accrued to Jurak Holdings Limited (related party) remained consistent for both periods at $250,000 or $125,000 per quarter.
Interest expense for the six months ended November 30, 2006 was $0 compared with $51,930 for the same period in 2005. Interest costs primarily relate to loans from a principal stockholder and related entities, which were outstanding during the prior 2005 quarter. The majority of these loans were converted into common stock or paid off during the fiscal year ended May 31, 2006.
Liquidity and Capital Resources
Six Month Period Ended November 30, 2006
We have historically had more expenses and cost of sales than revenue in each year of our operations. The accumulated deficit as of November 30, 2006 was $5,159,294 compared to $4,635,264 as of May 31, 2006. 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 working expenses and capital expenditures relating to operating expenses. 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.
We are currently trying to raise capital through a $3,000,000 private placement. These funds will be used to make the required payments for our new license agreement and to launch and market our natural immune booster product.
At November 30, 2006, the Company had $5,187 of unrestricted cash compared to $44,073 of unrestricted cash at May 31, 2006. The Company had current assets of $109,657 and current liabilities of $916,775 at November 30, 2006 compared to current assets of $110,841 and current liabilities of $604,586 at May 31, 2006.
Net cash used in operating activities was $209,202 during the six months ended November 30, 2006 compared to net cash used in operating activities of $129,767 in the same period in 2005. The increase was due primarily to a greater operating loss for the six months ended November 30, 2006 compared to the operating loss for the six months ended November 30, 2005 after adjusting for the non-cash charges for professional services paid via stock.
Net cash provided by investing activities was $3,951 in the first six months in 2006 compared to $0 in the same period in 2005. The Company expects to spend approximately $10,000 on capital equipment additions during the fiscal year ending May 31, 2007 of which $0 was expended during the first six months in 2006. The Company also expended $15,054 for licensing fees associated with a letter of intent to acquire the worldwide exclusive marketing rights to the world's most powerful, natural immune booster discovered to date, as stated by the scientific research team that developed the product. These rights are being acquired from a leading life science company with a successful history of producing unique, patented products that are distributed on a global scale.
Net cash provided by financing activities was $166,365 in the first six months in 2006 compared to net cash provided by financing activities in the same period in 2005 of $144,561. Proceeds from the issuance of common stock were $200,000 in the first six months of 2006 compared to $159,823 in the same period of 2005. The increase in stock proceeds was partially offset by the $42,519 advance to an officer/stockholder during the six months ended November 30, 2006.
PLAN OF OPERATION: As of the date of this Quarterly Report, we have generated revenue from operations and continue to rely upon internally generated funds and advances, funds from the sale of shares of stock and loans from our shareholders and private investors to finance our operations and growth. Management anticipates a possible increase in operating expenses and capital expenditures relating to its business operations. We may finance further expenditures with future issuances of our restricted common stock. We believe that potential sales revenues and any private placements of equity capital and debt financing, if successful, may be adequate to fund our operations over the next year. We may encounter business endeavors that require significant cash commitments or unanticipated problems or expenses that could result in a requirement for additional cash before that time. If we raise additional funds through the issuance of equity or convertible debt securities other than to current shareholders, the percentage ownership of our current shareholders would be reduced, and such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of potential marketing opportunities for its products, which could significantly and materially restrict our business operations. As of the date of this Quarterly Report, management believes that an estimated $2,000,000 to $5,000,000 is required over the next two years for payment of expenses associated with our ongoing business operations. Management believes that we can satisfy our cash requirements for approximately the next twelve months based on sales revenues, proceeds received from private placement offerings, and our ability to obtain advances or equity private placements from certain investors and other parties, as necessary. As of the date of this Quarterly Report, there is substantial doubt regarding our ability to continue as a going concern as we have not generated sufficient cash flow to fund our business operations and material commitments. We must raise additional capital. We have not generated sufficient cash flow in the past to fund our operations and activities. Historically, we have relied upon internally generated funds, funds from the sale of shares of stock and loans from our shareholders and private investors to finance our operations and growth. Our future success and viability are entirely dependent upon our current management to generate revenues from our business operations and raise additional capital through further private offerings of our stock or loans from private investors. Management is optimistic that we will be successful in our capital raising efforts. There can be no assurance, however, that we will be able to generate sufficient revenues or raise additional capital. Our failure to successfully generate sufficient revenues and/or raise additional capital will have a material and adverse affect upon our shareholders and us. We may be forced to further reduce operating expenditures and/or cease operations altogether.
On December 14, 2006 the Company announced a best efforts private placement of $3,000,000 U.S. at $1.50 per share. The proceeds of the private placement are to be used for regular corporate needs as well as funding the product launch of our recently acquired rights to the world's most powerful, natural immune booster product. The Company also announced that the first $600,000 has been received on December 11, 2006.
Critical Accounting Policies
Our critical accounting policies, including the assumptions and judgements underlying them, are discussed in our fiscal 2006 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 six months ended November 30, 2006. These policies have been consistently applied in all material respects and disclose such matters as allowance for doubtful accounts, sales returns, inventory valuation, warranty expense, income taxes, revenue recognition and fixed asset and intangible asset impairment recognition. 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. Management on an ongoing basis reviews these estimates and judgements.
Recently Issued Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board ("FASB") issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes"-an Interpretation of FASB Statement No. 109". (FIN No. 48"), which clarifies the accounting for uncertainty in income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. Additionally, FIN 48 provides guidance on derecognition, classification, interest, penalties, accounting in interim periods and disclosure related to uncertain income tax positions. FIN No. 48 is effective for fiscal years beginning after December 15, 2006. The Company is currently evaluating the impact of adopting FIN No. 48, but does not anticipate that it will have a material effect on its financial position, results of operations or cash flows.
Item 3. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
An evaluation made at the end of the period covered by this report was performed under the supervision and with the participation of the Company's president, chief executive officer ("CEO") and the chief financial officer (CFO") of the effectiveness of the design and operation of the Company's disclosure controls and procedures to insure that the Company records, processes, summarizes and reports in a timely and effective manner the information required to be disclosed in reports filed with or submitted to the Securities and Exchange Commission. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective in timely bringing to their attention material information related to the Company required to be included in the Company's periodic Securities and Exchange Commission filings. Since the date of this evaluation, there have been no significant changes in the Company's internal controls or in other factors that could significantly affect those controls.
However, due to the limited number of Company employees engaged in the authorization, recording, processing and reporting of transactions, there is inherently a lack of segregation of duties. The company periodically assesses the cost versus benefit of adding the resources that would remedy or mitigate this situation, and currently does not consider the benefits to outweigh the costs of adding additional staff in light of the limited number of transactions related to the Company's operations.
Changes in Internal Controls Over Financial Reporting
There have been no significant changes in internal control over financial reporting that occurred during the fiscal period covered by this report 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 two former employees (defendants). The suit entails that the former employees 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 employees of the Company. No answer has been received from the defendant and the Company is seeking a default judgment granting all of the relief sought.
Item 2 Changes in Securities
During the six month period ended November 30, 2006 the Company sold 10,000,000 shares of common stock for $200,000. No underwriters were used for the sale of common stock. The Company relied on Rule 505 to sell these shares.
Item 5 Other Information
No items occured during the period of this report which would have been required to be reported in a Form 8K which have not bee reported.
There have been no material changes to the procedures by which security holders may recommend nominees to the Company's Board of Directors.
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, the registrant caused this report to be signed on its behalf by the undersigned thereto duly authorized.
Jurak Corporation World Wide, Inc.
By /s/ Anthony Jurak
Anthony Jurak
Date: January 17, 2007 Chairman of the Board, Director