UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 2004
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OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 333-61801
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JURAK CORPORATION WORLD WIDE, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 88-0407679
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1181 Grier Drive, Suite C, Las Vegas, NV 89119-3746
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(Address of principal executive offices)
(702) 914-9688
(Registrant's telephone number, including area code)
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
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Class Outstanding as of January 18, 2005
----- ----------------------------------
$0.001 par value 31,072,581
Restricted 144 stock 848,384
JURAK CORPORATION WORLD WIDE, INC.
I N D E X
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets
November 30, 2004 (Unaudited) and
May 31, 2004 1
Statements of Operations
Three months and six months ended November 30,
2004 and 2003 (Unaudited) 2
Condensed Statements of Cash Flows
Six months ended November 30,
2004 and 2003 (Unaudited) 3
Selected Notes to Condensed Financial
Statements (Unaudited) 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
Item 3. Controls and Procedures 7
PART II. OTHER INFORMATION
Item 1. Legal Proceeding
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits 9
(b) Reports on Form 8-K 9
Part I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
JURAK CORPORATION WORLD WIDE, INC.
CONDENSED BALANCE SHEETS
Restated
November 30, May 31,
ASSETS 2004 2004
------------ ----------
(Unaudited) (Audited)
Inventories $ 72,210 $ 96,149
Prepaid expenses 31,192 156,130
----------- -----------
Total current assets 103,042 252,279
Property, plant and equipment - net 33,547 33,441
Deposits 9,410 25,554
Restricted cash 35,544 35,544
----------- -----------
$ 181,903 $ 346,818
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Checks issued in excess of bank balance $ 12,488 $ 65,736
Current portion of capital lease obligations 6,813 5,156
Accounts payable 128,541 280,816
Accrued compensation 268,354 500,143
Accrued royalties 481,152 400,736
Payable to related parties 1,350,085 1,324,116
----------- -----------
Total current liabilities 971,561 2,576,703
Capital lease obligation, net of current portion 9,383 10,082
----------- -----------
Total liabilities 2,466,424 2,586,785
----------- -----------
STOCKHOLDERS' DEFICIT:
Common stock 31,468 31,268
Additional paid-in capital 807,349 767,549
Accumulated deficit (3,123,338) (3,038,784)
----------- -----------
(2,284,521) (2,239,967)
----------- -----------
$ 181,903 $ 346,818
=========== ===========
Note: The balance sheet at May 31, 2004 has been taken from the audited
financial statements at that date, and has been condensed.
See Notes to Condensed Financial Statements.
1
JURAK CORPORATION WORLD WIDE, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
November 30 November 30
---------------------------- ----------------------------
2004 2003 2004 2003
------------ ------------ ------------ ------------
Sales $ 499,396 $ 721,069 $ 1,272,855 $ 1,410,700
Cost of sales 106,026 161,349 291,390 338,229
------------ ------------ ------------ ------------
Gross profit 393,370 559,720 981,465 1,072,471
Selling, general and administrative expense 409,187 562,660 996,080 1,142,468
------------ ------------ ------------ ------------
Loss from operations (15,187) (2,940) (14,615) (69,997)
------------ ------------ ------------ ------------
Other income (expense):
Interest income -- 32 -- 37
Interest expense (33,507) (26,725) (69,939) (59,295)
------------ ------------ ------------ ------------
(33,307) (26,693) (69,939) (59,258)
------------ ------------ ------------ ------------
Loss before income taxes (49,324) (29,633) (84,554) (129,255)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (49,324) $ (29,633) $ (84,554) $ (129,255)
============ ============ ============ ============
Loss per common share $ (.00) $ (.01) $ (.00) $ (.01)
============ ============ ============ ============
Loss per common share assuming dilution $ (.00) $ (.01) $ (.00) $ (.01)
============ ============ ============ ============
Weighted average outstanding shares 31,467,581 31,055,500 31,368,127 31,055,500
============ ============ ============ ============
See Notes to Condensed Financial Statements.
2
JURAK CORPORATION WORLD WIDE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
November 30
----------------------
2004 2003
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (84,554) $(129,255)
Depreciation 6,177 2,100
Changes in current assets and liabilities:
Inventories 23,939 151,582
Prepaid expenses 124,938 --
Deposits 16,144 --
Accounts payable (152,275) (96,921)
Accrued compensation and accrued royalties 58,235 114,858
--------- ---------
Net cash provided by (used in) operating activities (7,396) 42,364
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of office equipment (2,745) --
--------- ---------
Net cash provided by (used in) investing activities (2,745) --
--------- ---------
CASH FLOWS FROM FINANCING AND OTHER ACTIVITIES:
Checks issued in excess of bank balance (53,248) --
Cash received for issuance of common stock 40,000 --
Payments on capital lease obligations (2,580) --
Increase in payable to related parties 25,969 36,207
--------- ---------
Net cash used in investing and other activities 10,141 12,371
--------- ---------
Net increase in cash -- 78,571
Cash and savings:
Beginning of period -- 13,749
--------- ---------
End of period $ -- $ 92,320
========= =========
See Notes to Condensed Financial Statements.
3
JURAK CORPORATION WORLD WIDE, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements:
The condensed balance sheet as of November 30, 2004, the statement of
operations for the three and six months ended November 30, 2004 and
2003, 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 only normal
recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows at November
30, 2004 and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed
or omitted. It is suggested that these condensed financial statements
be read in conjunction with the financial statements and notes thereto
included in the Company's May 31, 2004 audited financial statements.
The results of operations for the period ended November 30, 2004 are
not necessarily indicative of the operating results for the full year.
Certain accounts in the prior year financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current quarter financial statements. These reclassifications
had no effect on net loss or stockholders' deficit.
RECENT ACCOUNTING PRONOUNCEMENTS.
SFAS No. 151.
In November 2004, Financial Accounting Standards Board (FASB) issued
Statement on Financial Accounting Standard (SFAS) No. 151 "Inventory
Costs" amends the guidance in Accounting Research Bulletin (ARB) No.
43, Chapter 4 "Inventory Pricing," to clarify the accounting for
abnormal amounts of idle facility expense, freight, handling costs, and
wasted material (spoilage). Paragraph 5 pf ARB 43, Chapter 4,
previously stated that under some circumstances, items such as idle
facility expense, excessive spoilage, double freight, and rehandling
costs may be so abnormal as to require treatment as current period
charges." SFAS No. 151 requires that those items be recognized as
current-period charges regardless of whether they meet the criterion of
"so abnormal." In addition, SFAS No, 151 requires that allocation of
fixed production overheads to the costs of conversion be based on the
normal capacity of the production facilities. SFAS No. 151 shall be
effective for inventory costs incurred during fiscal years beginning
after June 15, 2005. Earlier application is permitted for inventory
costs incurred during fiscal years beginning after the date SFAS No.
151 was issued. SFAS No. 151 shall be applied prospectively. The
Company does not expect the adoption of SFAS No. 151 to have a material
effect on its financial statements.
SFAS No. 153.
In December 2004, FASB issued SFAS No. 153 "Exchanges of Nonmonetary
Assets" amends APB Opinion No. 29, "Accounting for Nonmonetary
Transactions." APB No. 29 is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the
assets exchanged. The guidance in that Opinion, however, included
certain exceptions to that principle. SFAS No. 153 amends APB No. 29 to
eliminate the exception for nonmonetary exchanges of similar productive
assets and replaces it with a general exception for exchanges of
nonmonetary assets that do not have commercial substance. A nonmonetary
exchange has commercial substance if the future cash flows of the
entity are expected to change significantly as a result of the
exchange. SFAS No. 153 shall be effective for nonmonetary asset
exchanges occurring in fiscal periods beginning after June 15, 2005.
Earlier application is permitted for nonmonetary asset exchanges
occurring in fiscal periods beginning after the date SFAS No. 153 was
issued. SFAS No. 153 shall be applied prospectively. The Company does
not expect the adoption of SFAS No. 153
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to have a material effect on its financial statements.
SFAS No. 123R.
In December 2004, FASB issued SFAS No. 123R which requires companies to
recognize in the income statement the grant-date fair value of stock
options and other equity-based compensation issued to employees, but
expressed no preference for the type of valuation model. FASB No. 123R
is effective for small business issuers as of the beginning of interim
or annual reporting periods that begin after December 15, 2005. The
impact of SFAS NO. 123R has not been determined at this time.
Note 2. Inventories:
Inventories consist of the following:
November 30, May 31,
2004 2004
-------------- --------------
Raw materials $ 23,757 $ 12,181
Finished goods 48,453 83,968
-------------- --------------
Totals $ 72,210 $ 96,149
============== ==============
Note 3. Stockholders' Deficit:
During the three months ended November 30, 2004, stockholders' deficit
changed for net loss of $84,554.
Note 4 Subsequent Event:
In January 2005, the Company converted a portion of its debt and
related accrued interest in the amount of $90,677 into capital stock.
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATION
Forward Looking Statements
Certain statements in this report constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and the
Securities Exchange Act of 1934. These statements may appear in a number of
places in this report and can be identified by the use of terminology such as
"anticipate," "believe," "estimate," "intend," "may," "could," "possible,"
"plan," "will," "forecast," and similar words or expressions. The Company's
forward-looking statements generally relate to, among other things: (i) the
Company's financing plans; (ii) trends affecting the Company's financial
condition or results of operations; (iii) the Company's growth strategy and
operating strategy; and (iv) the declaration of any payment of dividends.
Investors must carefully consider forward-looking statements and understand that
such statements involve a variety of risks and uncertainties, known and unknown,
and may be affected by inaccurate assumptions. Consequently, no forward-looking
statement can be guaranteed and actual results may vary materially. The Company
undertakes no obligation to update any forward-looking statement.
General
Jurak Corporation World Wide, Inc., a Minnesota corporation (the
"Company") currently trades on the Over-the-Counter Bulletin Board under the
symbol "JCWW".
Results of Operations
For the Six-Month Period Ended November 30, 2004 Compared to the
Six-Month Period Ended November 30, 2003.
The Company incurred net losses of approximately ($84,554) for the
six-month period ended November 30, 2004 compared to a net loss of approximately
($129,255) for the six-month period ended November 30, 2003 (a decrease of
$44,701).
During the six-month period ended November 30, 2004, the Company
generated $1,272,855 in gross revenues compared to $1,410,700 in gross revenues
during the six-month period ended November 30, 2003 (a slight decrease of
$137,845). Cost of sales decreased during the six-month period ended November
30, 2004 to $291,390 from $338,229 for the same period during 2003 (a decrease
of $46,839. Therefore, during the six-month period ended November 30, 2004,
gross profit was $981,465 compared to gross profit of $1,072,471 during the
six-month period ended November 20, 2003 (a decrease of $91,006). Management of
the Company believes that the decrease in gross revenues and resulting decrease
in gross profit resulted from the Company's customers who stocked up on product
during a promotional period during the first quarter of 2004.
During the six-month period ended November 30, 2004, the Company
incurred $996,080 in selling, general and administrative expense compared to
$1,142,468 in selling, general and administrative expense incurred during the
six-month period ended November 30, 2003 (a decrease of $146,388). Interest
expense of $69,939 was incurred during the six-month period ended November 30,
2004 compared to interest expense of $59,295 during the same period in 2003.
Therefore, during the six-month period ended November 30, 2004, net loss was
($84,554) compared to a net loss of ($129,255) incurred during the six-month
period ended November 30, 2003. Management of the Company anticipates that the
profit margin will increase as the Company acquires new customers and continues
to lower its cost of sales and selling, general and administrative expense.
As a result of the above, the Company's net loss for the six-month
period ended November 30, 2004 was approximately ($84,554) or ($0.00) per share.
For the Three-Month Period Ended November 30, 2004 Compared to
Three-Month Period Ended November 30, 2003.
6
The Company incurred net losses of approximately ($49,324) for the
three-month period ended November 30, 2004 compared to a net loss of
approximately ($29,633) for the three-month period ended November 30, 2003 (an
increase of $19,691).
During the three-month period ended November 30, 2004, the Company
generated $499,396 in gross revenues compared to $721,069 in gross revenues
during the three-month period ended November 30, 2003 (a decrease of $221,673).
Cost of sales decreased during the six-month period ended November 30, 2004 to
$106,026 from $161,349 for the same period during 2003 (a decrease of $55,323.
Therefore, during the three-month period ended November 30, 2004, gross profit
was $393,370 compared to gross profit of $559,720 during the three-month period
ended November 20, 2003 (a decrease of $166,350).
During the three-month period ended November 30, 2004, the Company
incurred $409,187 in selling, general and administrative expense compared to
$562,660 in selling, general and administrative expense incurred during the
three-month period ended November 30, 2003 (a decrease of $153,473). Interest
expense of $33,507 was incurred during the three-month period ended November 30,
2004 compared to interest expense of $26,725 during the same period in 2003.
Therefore, during the three-month period ended November 30, 2004, net loss was
($49,324) compared to a net loss of ($29,633) incurred during the three-month
period ended November 30, 2003.
As a result of the above, the Company's net loss for the three-month
period ended November 30, 2004 was approximately ($49,324) or ($0.00) per share.
Liquidity and Capital Resources
Six-Month Period Ended November 30, 2004
The Company has historically had more expenses and cost of sales than
income in each year of its operations. The accumulated deficit as restated May
31, 2004 was $3,038,784, and current liabilities are in excess of current
assets. It has generally been able to maintain a positive cash position through
financing activities.
As of the six-month period ended November 30, 2004, the Company's
current assets were $103,042 and its current liabilities were $971,561, which
resulted in a working capital deficit of $868,519. As of the six-month period
ended November 30, 2004, the Company's total assets were $181,903 consisting of:
(i) $72,210 in inventories; (ii) $31,192 in prepaid expenses; (iii) $35,544 in
restricted cash; (iv) $9,410 in deposits; and (v) $33,547 in net valuation of
property, plant and equipment.
As of the six-month period ended November 30, 2004, the Company's total
liabilities were $2,466,424 consisting of: (i) $1,350,085 payable to related
parties; (ii) $481,152 in accrued royalties; (iii) $268,354 in accrued
compensation; (iv) $128,541 in accounts payable; (v) $12,488 in checks issues in
excess of bank balance; and (vi) $21,871 in current and long-term capital lease
obligation.
During the six-month period ended November 30, 2004, net cash flows
used in operating activities was ($7,396) consisting primarily of a net loss of
($84,554), which was adjusted by $6,177 for depreciation, and ($152,275) in
accounts payable, $124,939 in prepaid expenses, $23,939 in inventories and
$58,235 in accrued compensation and accrued royalties.
During the six-month period ended November 30, 2004, net cash flows
used in investing activities was ($2,745) for the purchase of office equipment.
During the six-month period ended November 30, 2004, net cash flows
from financing activities was $10,141 consisting of ($53,248) in checks issued
in excess of bank balance, an increase of $25, 969 in accounts payable to
related parties, and $40,000 in cash received for issuance of common stock.
The Company's future success and viability are dependent on the
Company's ability to develop, provide and market its products and services, and
the continuing ability to generate capital financing. Management is optimistic
that the Company will be successful in its business operating and capital
raising efforts, however, there can be no assurance that the Company will be
successful in generation of substantial revenue or raising additional capital.
The failure to generate substantial revenues or raise additional capital may
have a material and adverse effect upon the Company and its shareholders.
7
There are no known trends, events or uncertainties that are likely to
have a material impact on the short or long term liquidity, except perhaps
declining sales. The primary source of liquidity in the future will be increased
sales accounts in many categories. Additionally, existing accounts continue to
expand the use of the Company's products resulting in higher revenues. In the
event that sales do not increase the Company may have to seek additional funds
through equity sales or debt. Additional equity sales could have a dilutive
effect. The debt financing, if any, would most likely be convertible to common
stock, which would also have a dilutive effect. There can be no assurance that
additional capital will be available on terms acceptable to the Company or on
any terms whatsoever. There are no material commitments for capital
expenditures. There are no known trends, events or uncertainties reasonably
expected to have a material impact on the net sales or revenues or income from
continuing operations. There are no significant elements of income or loss that
do not arise from continuing operations. There are no seasonal aspects to the
business of the Company.
ITEM 3. CONTROLS AND PROCEDURES
The Company maintains disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15(d)-15(e) under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) that are designed to ensure that information
required to be disclosed in the Company's reports under the Exchange Act, is
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to the Company's management, including the Company's Chief
Executive Officer and its President and Chief Financial Officer, as appropriate,
to allow timely decisions regarding required disclosure.
An evaluation was conducted under the supervision and with the
participation of the Company's management, including the Company's Chief
Executive Officer and its President and Chief Financial Officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures as at November 30, 2004 pursuant to Rules 13a-15(b) and 15d-15(b)
under the Exchange Act. Based on that evaluation, the Company's Chief Executive
Officer and its President and Chief Financial Officer have concluded that the
Company's disclosure controls and procedures were effective as of such date to
ensure that information required to be disclosed in the reports the Company
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time period specified in Commission rules and forms.
There has been no change in the Company's internal control over
financial reporting (as defined in Rules 13(a)-15(f) and 15(d)-15(f) under the
Exchange Act) during the six-month period ended November 30, 2004 that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not applicable.
ITEM 2. CHANGES IN SECURITIES.
The Company and Maria Jose Guedes and Justino Almeida ("Investors"),
entered into an agreement regarding the settlement of an aggregate amount of
$90,677 in principal and accrued interest due and owing to Investors by the
Company relating to previous advances provided by Investors to the Company (the
"Debt"). Pursuant to the terms and provisions of the Agreement: (i) the Company
agreed to settle the Debt by issuing to Investors 453,384 shares of its
restricted common stock at the rate of $0.20 per share (which amount is based
upon the average of the open and close price of $0.00 of the Company's shares of
Common Stock traded on the OTC Bulletin Board between November 16, 2004 and
December 29, 2004; and (ii) Investors agreed to convert the Debt and accept the
issuance of the 453,384 shares of restricted common stock of the Company as full
and complete satisfaction of the Debt. The Company issued the 453,384 shares of
restricted common stock to Investors pursuant to the transactional exemption
under Section 4(2) and Regulation S of the Securities Act of 1933, as amended
(the "Securities Act"). Investors acknowledged that the securities to be issued
have not been registered under the Securities Act, that he understood the
economic risk of an investment in the securities, and that he had the
opportunity to ask questions of and receive answers from the Company's
management concerning any and all matters related to acquisition of the
securities.
8
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
(a) Not Applicable.
(b) Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not Applicable.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
31.1 Certification of Chief Executive Officer pursuant to
Securities Exchange Act of 1934, Rule 13a-14(a) or
15d-14(a).
31.2 Certification of Chief Financial Officer pursuant to
Securities Exchange Act of 1934, Rule 13a-14(a) or
15d-14(a).
32.1 Certification of Chief Executive Officer pursuant to
Securities Exchange Act of 1934, Rule 13a-14(b) or
15d-14(b) and 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
32.2 Certification of Chief Financial Officer pursuant to
Securities Exchange Act of 1934, Rule 13a-14(b) or
15d-14(b) and 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.
(b) Reports on Form 8-K
The Company has not filed Form 8-K during the quarter ended
November 30, 2004.
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
JURAK CORPORATION WORLD WIDE, INC.
Date: January 18, 2004 By: /s/ Anthony Carl Jurak
------------------------------------
Anthony Carl Jurak
Chairman of the Board and Director
Chief Executive Officer and
Chief Financial Officer
9