UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


þ		QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2010


o		TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-157360

WELLTEK INCORPORATED

(Exact name of registrant as specified in its charter)


Nevada	8099	98-0610431
(State or other jurisdiction of	(Primary Standard Industrial	(IRS Employer Identification #)
organization)	Classification Code)

1030 N Orange Ave, Ste 300
Orlando, FL 32801
(Address of Issuer’s principal executive offices)

Tel. (407) 704-8950
(Issuer’s telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 last 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer, “accelerated filer,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer o		Accelerated filer o		Non-accelerated filer o		Smaller reporting company þ

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 136,296,328 as of August 19, 2010.

WELLTEK INCORPORATED

INDEX


	PAGE

Part I. Financial Information		1

Item 1. Financial Statements (Unaudited)		1

Condensed Consolidated Balance Sheets		1

Condensed Consolidated Statements of Operations		2

Consolidated Statements of Cash Flows		3

Consolidated Statements of Changes in Stockholders Equity		4

Notes to Condensed Consolidated Financial Statements		5

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12

Item 3. Quantitative and Qualitative Disclosures about Market Risk		14

Item 4. Controls and Procedures		15

Part II. Other Information		16

Item 1. Legal Proceedings		16

Item 1A. Risk Factors		16

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

Item 3. Defaults upon Senior Securities		16

Item 4. Removed and Reserved		16

Item 5. Other Information		16

Item 6. Exhibits		17

Exhibit 31.1
Exhibit 31.2
Exhibit 32.1
Exhibit 32.2

PART I. FINANCIAL INFORMATION


Item 1.		Financial Statements

WELLTEK, INC

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2010 AND DECEMBER 31, 2009


	JUNE 30, 2010			DECEMBER 31, 2009
	(Unaudited)
ASSETS
Current Assets:
Cash	$	54,571		$	34,270
Accounts receivable, net		298,742			194,386
Prepaid expenses		21,848			16,654
Inventories, net		106,625			97,220

Total current assets		481,786			342,530

Property, plant and equipment-net		246,354			264,775
Investment in shell		100,000			100,000
Goodwill		725,000			—


Total assets	$	1,553,140		$	707,305


LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current Liabilities:
Bank overdraft	$	—		$	—
Accounts payable		333,082			387,086
Accrued expenses		522,586			396,059
Warranty and obsolescence provision		40,000			40,000
Customer deposits		124,577			54,142
Current portion capital lease payable		21,355			23,355
Notes payable		749,115			577,918
Due to related party		110,000			110,000

Total current liabilities		1,900,715			1,588,560

Total Liabilities		1,900,715			1,588,560


Commitments and contingencies

Stockholders’ Deficit
Common stock, $.00001 par value, 200,000,000 shares authorized, 136,296,328 and 85,783,828 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		1,364			858
Treasury stock		(120,000	)		(120,000	)
Additional paid in capital		4,097,256			3,149,262
Accumulated deficit		(4,326,195	)		(3,911,375	)


Total stockholders’ deficit		(347,575	)		(881,255	)


Total liabilities and stockholders’ deficit	$	1,553,140		$	707,305

WELLTEK, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2010 AND 2009


	SIX MONTHS			SIX MONTHS			THREE MONTHS			THREE MONTHS
	ENDED JUNE 30,			ENDED JUNE 30,			ENDED JUNE 30,			ENDED JUNE 30,
	2010			2009			2010			2009

Revenues	$	565,973		$	975,342		$	278,752		$	480,953

Cost of revenues		235,588			519,338			139,648			234,984


Gross profit		330,385			456,004			139,104			245,969


Operating expenses:
Selling expense		23,400			86,171			12,782			3,732
General and administrative		612,941			641,341			224,268			311,931
Depreciation		28,921			57,878			28,921			28,921


Total operating expenses		665,262			785,390			265,971			344,584


Operating loss		(334,877	)		(329,386	)		(126,867	)		(98,615	)


Other income		—			—			—			—
Interest expense		(79,950	)		(512	)		(19,450	)		—


Net loss	$	(414,827	)	$	(329,898	)	$	(146,317	)	$	(98,615	)


Net loss per share
Basic	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.00	)

Diluted	$	(0.00	)	$	(0.01	)	$	(0.00	)	$	(0.00	)

Weighted average number of shares outstanding
Basic		136,296,328			53,680,215			86,258,828			52,309,003

Diluted		144,956,739			60,987,437			94,919,239			59,616,225

WELLTEK, INC

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTH PERIOD ENDED

JUNE 30, 2010 AND 2009


	JUNE 30, 2010			JUNE 30, 2009
Cash flows from operating activities:
Net loss	$	(414,827	)	$	(329,898	)
Adjustments to reconcile net loss to net cash used in operating activities:		189,935
Depreciation		28,921			57,878
Stock based compensation		63,000			—
Stock issued for consulting services		48,750			13,698
Stock issued for finance charges		31,750			—
Warranty and obsolesence provisions		—			—
Changes in operating assets and liabilities:
Accounts receivable		(104,356	)		35,214
Prepaid expenses		5,194			200,548
Inventories, net		(9,405	)		106,484
Accounts payable and accrued expenses		(72,523	)		(53,940	)
Customer deposits		70,435			475,295

Net cash used in operating activities		(163,127	)		505,279

Cash flows used in investing activity:
Purchase of shell corporation		—			(100,000	)
Acquisition of property, plant & equipment		—
Cash received in acquisition in excess of cash paid		—			—

Net cash provided by (used in) investing activity		—			(100,000	)

Cash flows from financing activities:
Proceeds from related party loan		—
Payment of related party loan		—			—
Proceeds from notes payable		171,197
Payment of capital lease		12,230			6,991

Net cash provided by financing activities		183,427			6,991

Net increase in cash		20,301			412,270

Cash, beginning of year		34,270			(8,134	)


Cash, end of period	$	54,571		$	404,136


Supplemental disclosures of cash flow information:
Cash paid for taxes	$	—		$	—

Cash paid for interest	$	—		$	—


Non-cash transactions:
Stock based compensation	$	63,000		$	—

Stock issued for consulting services	$	48,750		$	—

WELLTEK, INC

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

FOR THE YEAR ENDING DECEMBER 31, 2009

AND THE THREE MONTHS ENDING MARCH 31 AND JUNE 30, 2010


										Retained
										Earnings
	Common Stock $.00001 par				Treasury			Additional		Accumulated			Shareholders’
	Shares		Par Value		Stock			Paid in Capital		Deficit			Equity

BEGINNING BALANCE AT JANUARY 2009		52,309,003	$	523	$	(120,000	)	$	2,118,499	$	(2,188,157	)	$	(189,135	)

Shares issued for:
Founders		3,988,952		40							—			40
Merger		16,160,000		162							—			162
Cash		4,276,077		43					533,169		—			533,212
Consulting		1,823,768		18					150,079					150,097
Finance Charges		7,226,028		72					337,000					337,072
Employee options		—		—					10,515		—			10,515
Warrants		—		—							—			—
Treasury stock				—					—					—

Net loss		—		—					—		(1,723,218	)		(1,723,218	)


ENDING BALANCE AT DECEMBER 31, 2009		85,783,828	$	858	$	(120,000	)	$	3,149,262	$	(3,911,375	)	$	(881,255	)


										Retained
										Earnings
	Common Stock $.00001 par				Treasury			Additional		Accumulated			Shareholders’
	Shares		Par Value		Stock			Paid in Capital		Deficit			Equity

BEGINNING BALANCE AT JANUARY 2010		85,783,828	$	858	$	(120,000	)	$	3,149,262	$	(3,911,375	)	$	(881,255	)

Shares issued for:
Founders		—		—							—			—
Merger		—		—							—			—
Cash		350,000		4					62,997		—			63,000
Consulting		—		—					—					—
Finance Charges		125,000		1					31,249					31,250
Employee options		—		—					—		—			—
Warrants		—		—							—			—
Treasury stock				—					—					—

Net loss		—		—					—		(268,503	)		(268,503	)


ENDING BALANCE AT MARCH 31, 2010		86,258,828	$	863	$	(120,000	)	$	3,243,507	$	(4,179,878	)	$	(1,055,508	)


										Retained
										Earnings
	Common Stock $.00001 par				Treasury			Additional		Accumulated			Shareholders’
	Shares		Par Value		Stock			Paid in Capital		Deficit			Equity

BEGINNING BALANCE AT APRIL 1, 2010		86,258,828	$	863	$	(120,000	)	$	3,243,507	$	(4,179,878	)	$	(1,055,508	)

Shares issued for:
Founders		—		—							—			—
Merger		14,500,000		145					724,855		—			725,000
Cash				—							—			—
Consulting		487,500		5					48,745					48,750
Finance Charges		50,000		1					500					500
Employee options				—					—		—			—
Debt Conversion		35,000,000		350					79,650		—			80,000
Treasury stock				—					—					—

Net loss		—		—					—		(146,317	)		(146,317	)


ENDING BALANCE AT JUNE 30, 2010		136,296,328	$	1,363	$	(120,000	)	$	4,097,256	$	(4,326,195	)	$	(347,575	)

Welltek Incorporated

Notes to the Financial Statements

(Unaudited)

NOTE 1 — NATURE OF BUSINESS

WellTek, Inc., (the “Company”) is a Nevada C Corporation that was established in November 2003. The Company is headquartered in Orlando, Florida and operates as a holding company with majority ownership of MedX Limited, whose primary operations include the manufacturing and marketing of high quality medical, rehabilitation and exercise equipment, sold throughout the world. On September 15, 2008, the Company established Pur Healthy Back, Inc., which is engaged in building a national network of medical rehabilitation centers offering managed care companies, self-insured employers and federal government agencies rehabilitation programs for the back and neck. On May 1, 2010, the Company acquired 51% of the outstanding stock of WellCity, Inc., a social networking company.

Going Concern

The accompanying financial statements have been prepared on a going concern basis, which assumes the Company will realize its assets and discharge its liabilities in the normal course of business. As reflected in the accompanying financial statements, the Company has an accumulated deficit of $4,326,195 at June 30, 2010. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management’s plan includes obtaining additional funds by equity financing; however, there is no assurance of additional funding being available. These circumstances raise doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might arise as a result of this uncertainty.

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying audited consolidated financial statements of the Company, and the notes thereto have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations.

Principles of Consolidation

The consolidated financial statements include the accounts of WellTek, Inc., MedX Limited, Pure Healthy Back and WellCity, Inc. All significant intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Statements

The interim financial statements presented herein have been prepared pursuant to the rules and regulations of the SEC. 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 pursuant to such rules and regulations. The interim financial statements should be read in conjunction with the Company’s annual financial statements, notes and accounting policies included in the Company’s Annual Report. In the opinion of management, all adjustments which are necessary to provide a fair presentation of financial position as of June 30, 2010 and the related operating results and cash flows for the interim period presented have been made. All adjustments are of a normal recurring nature. The results of operations, for the period presented are not necessarily indicative of the results to be expected for the year ended December 31, 2010.

Management Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates during the periods include the provision for doubtful accounts, provision for product returns, evaluation of obsolete inventory, and the useful life of long-term assets, such as property, plant and equipment.

Codification

In June 2009, the Financial Accounting Standards Board (FASB) issued its final Statement of Financial Accounting Standards (SFAS) No. 168, "The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles a Replacement of FASB Statement No. 162”. SFAS No. 168 made the FASB Accounting Standards Codification (the Codification) the single source of U.S. GAAP used by nongovernmental entities in the preparation of financial statements, except for rules and interpretive releases of the Securities and Exchange Commission (SEC) under authority of federal securities laws, which are sources of authoritative accounting guidance for SEC registrants. The Codification is meant to simplify user access to all authoritative accounting guidance by reorganizing U.S. GAAP pronouncements into roughly 90 accounting topics within a consistent structure; its purpose is not to create new accounting and reporting guidance. The Codification supersedes all existing non-SEC accounting and reporting standards and was effective for the Company beginning July 1, 2009. Following SFAS No. 168, the Board will not issue new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead, it will issue Accounting Standards Updates (ASU). The FASB will not consider ASUs as authoritative in their own right; these updates will serve only to update the Codification, provide background information about the guidance, and provide the bases for conclusions on the change(s) in the Codification.

Revenue Recognition

The Company recognizes product revenue, net of estimated sales discounts, returns and allowances, in accordance with ASC 600 Revenue which establishes that revenue can be recognized when persuasive evidence of an arrangement exists, the product has been shipped, all significant contractual obligations have been satisfied, the fee is fixed or determinable and collection is reasonably assured. Revenue is recorded when equipment is delivered to the Company’s customers.

Cash and Cash Equivalents:

For the purposes of reporting cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Accounts Receivable

In the normal course of business, the Company provides credit to its customers, performs credit evaluations of these customers and maintains reserves for potential credit losses, which, when realized, have been within the range of management’s allowance for doubtful accounts. The Company establishes an allowance for uncollectible accounts receivable based on historical experience and any specific customer collection issues that the Company has identified.

Inventories

Inventories are stated at the lower of cost or market, with cost being determined by the first in, first-out (FIFO) method. Inventories consist of raw materials and supplies, sub-assemblies, and finished goods. The Company writes down its inventory for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. The Company writes down inventory during the period in which such products are considered no longer effective.

Property and Equipment

Property and equipment is stated at cost. Depreciation is computed using the straight-line method over the estimated useful lives of the related assets, which range from three to seven years.

The Company leases certain equipment under capital leases. The economic substance of the leases is such that the Company is financing the acquisition of the assets through the lease terms, and accordingly, they are recorded as property and equipment and capital lease obligations. These assets are being depreciated on the straight-line method over the term of the leases. Amortization on the capital leases is included in depreciation expense.

Long-lived Assets

Long-lived assets used are reviewed for impairment whenever events or changes in circumstances indicate the related carrying amount may not be recoverable. When required, impairment losses on assets used are recognized based on the excess of the asset’s carrying amount over the fair value of the asset. Long-lived assets to be disposed of are reported at the lower of carrying amount or fair value less cost to sell.

Intangible Assets

The Company accounts for intangible assets in accordance with ASC 350 Intangibles — Goodwill and Other. Generally, intangible assets with indefinite lives, and goodwill, are no longer amortized; they are carried at lower of cost or market and subject to annual impairment evaluation, or interim impairment evaluation if an interim triggering event occurs, using a new fair market value method. Intangible assets with finite lives are amortized over those lives, with no stipulated maximum, and an impairment test is performed only when a triggering event occurs. Such assets are amortized on a straight-line basis over the estimated useful life of the asset.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with ASC 718 Compensation — Stock Compensation. The ASC provides that instruments that were originally issued as employee compensation and then modified, and that modification is made to the terms of the instrument solely to reflect an equity restructuring that occurs when the holders are no longer employees, then no change in the recognition or the measurement (due to a change in classification) of those instruments will result if both of the following conditions are met: (a). There is no increase in fair value of the award (or the ratio of intrinsic value to the exercise price of the award is preserved, that is, the holder is made whole), or the anti-dilution provision is not added to the terms of the award in contemplation of an equity restructuring; and (b). All holders of the same class of equity instruments (for example, stock options) are treated in the same manner.

Advertising

The Company expenses advertising costs as they are incurred.

Product Warranties

Estimated costs related to product warranties are accrued at the time the equipment is sold. In estimating its future warranty obligations, the Company considers various relevant factors, including the Company’s stated warranty policies and practices, the historical frequency of claims and the cost to replace or repair its products under warranty.

Comprehensive Income (Loss)

The Company has no components of other comprehensive income (loss). Accordingly, net income (loss) equals comprehensive income (loss) for the periods presented.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740 Income Taxes. Deferred income tax assets and liabilities are determined based upon differences between financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established when it is more likely than not that the deferred tax assets will not be realized.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the reporting period. Diluted net income (loss) per share is computed similarly to basic net income (loss) per share except that it includes the potential dilution that could occur if dilutive securities were exercised. For the periods presented, the Company did not have any outstanding dilutive securities, and, accordingly, diluted net income (loss) per share equals basic net income (loss) per share.

ACCOUNTING STANDARDS UPDATES

In August 2009, the FASB issued ASU 2009-05 which includes amendments to Subtopic 820-10, “Fair Value Measurements and Disclosures—Overall”. The update provides clarification that in circumstances, in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using one or more of the techniques provided for in this update. The amendments in this ASU clarify that a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of the liability and also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The guidance provided in this ASU is effective for the first reporting period, including interim periods, beginning after issuance. The adoption of this standard did not have a material impact on the Company’s consolidated financial position and results of operations.

In September 2009, the FASB has published ASU No. 2009-12, “Fair Value Measurements and Disclosures (Topic 820) — Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)”. This ASU amends Subtopic 820-10, “Fair Value Measurements and Disclosures — Overall”, to permit a reporting entity to measure the fair value of certain investments on the basis of the net asset value per share of the investment (or its equivalent). This ASU also requires new disclosures, by major category of investments including the attributes of investments within the scope of this amendment to the Codification. The guidance in this Update is effective for interim and annual periods ending after December 15, 2009. Early application is permitted. The Company is in the process of evaluating the impact of this standard on its consolidated financial position and results of operations. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

In October 2009, the FASB has published ASU 2009-13, “Revenue Recognition (Topic 605)-Multiple Deliverable Revenue Arrangements”, which addresses the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25, “Revenue Recognition-Multiple-Element Arrangements”, for separating consideration in multiple-deliverable arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or (c) estimates. This guidance also eliminates the residual method of allocation and requires that arrangement consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method and also requires expanded disclosures. The guidance in this update is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial position and results of operations.

Other ASUs not effective until after June 30, 2010, are not expected to have a significant effect on the Company’s consolidated financial position or results of operations.

NOTE 3 — FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC 820 Fair Value Measurements and Disclosures defines fair value as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk, including the Company’s own credit risk.

In addition to defining fair value, ASC 820 expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

•

Level 1 — inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

•

Level 2 — inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•

Level 3 — inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discontinued cash flow models, and similar techniques.

The Company’s financial asset carried at fair value as of June 30, 2010 is the investment in the shell corporation. Although the Company made the initial investment in cash the investment’s fair value will need to be re-measured on an annual basis. This re-measurement will be based upon the estimation of equity and debt positions at year end. Due to these facts the Company valued the financial asset using a Level 3 input.

The carrying amounts and fair values of the Company’s financial instruments at June 30, 2010 are as follows:


			Fair Value Measurements at June 30, 2010
	Total		Level 1		Level 2		Level 3
Assets:
Investment in Shell Corporation	$	100,000	$	—	$	—	$	100,000

Total Assets:	$	100,000	$	—	$	—	$	100,000

The following is a reconciliation of the beginning and ending balances for the Company’s assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3):


Fair Value Measurements Using Significant Unobservable Inputs (Level 3):
Description	(Level 3)
Assets:
Balance at January 1, 2010	$	100,000
Cumulative effect of the change in accounting principal, January 1, 2009		—
Change in fair value included in operations		—

Balance, June 30, 2010	$	100,000

The carrying amounts of the Company’s other financial instruments, including cash, accounts receivable, accounts payable and accrued liabilities, approximate fair value because of their short maturities. The carrying amount of capital lease obligations approximate fair values based on that their interest rates are at prevailing market rates.

NOTE 4 — INVENTORIES

Inventories consist of raw materials and supplies, sub-assemblies, and finished goods. The Company maintains an inventory of $106,625 and $97,220 at June 30, 2010 and December 31, 2009.

NOTE 5 — PROPERTY AND EQUIPMENT, NET

Property and equipment as of June 30 consists of the following:


	2010			2009
Computers and Software	$	14,250		$	14,250
Manufacturing machinery and equipment		422,530			422,530
Furniture and Fixtures		11,010			11,010


Less: accumulated deprecation		(211,937	)		(96,252	)

	$	235,854		$	351,538

Depreciation expense for the three months ended June 30, 2010 and 2009 was $28,921 and $28,921 respectively.

NOTE 6 — NOTES PAYABLE

At June 30, 2010 and 2009, Notes Payable consists of the following:


	2010		2009
15% Secured Notes	$	400,000	$	0
10% Notes		46,700		145,000
5% Notes		102,500		0
Other		199,915		90,329


	$	749,115	$	235,329

15% Secured Notes

The 15% Secured Notes were originated in July 2009, bear interest at a rate of 15% and were due in six months. The noteholders also received 600,000 shares of common stock. The maturity date of these notes was extended until May 15, 2010. For previous extensions, the noteholders received an additional 1,300,000 shares of common stock. We are in discussions with the noteholders to further extend the maturity date. The Secured Notes have a first lien on all of the assets of the company.

10% Notes

The 10% Notes were originated at varying dates in 2009. The Notes were for a period of one year. The maturity of these notes has since been extended until September 30, 2010.

5% Note

The 5% Note was originated in June 2010. The Note is for a period designated by the maker upon demand and any portion of the Note or the full principal can be converted to Common Stock.

NOTE 7— CONCENTRATIONS

Financial instruments — Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.

The Company maintains its cash in demand deposit accounts which, at times may exceed federally insured limits. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk in cash.

Concentrations of credit risk with respect to accounts receivable are limited due to the large number of customers comprising the Company’s customer base and their dispersion across different geographic locations. The Company generally does not require collateral from its customers.

NOTE 8 — COMMITMENTS AND CONTINGENCIES

The Company leases its corporate office facility. Monthly payments of $8,100 are due under this lease until August 2010.

NOTE 9 — EQUITY

On July 1, 2008, 880,000 stock options with a purchase price of $0.50 per share were granted to management and employees of the Company. These options vested immediately upon grant. On July 25, 2008, 100,000 stock options with a purchase price of $1.50 per share were granted as part of a consulting agreement. These options vested immediately upon grant. On July 31,2008, 300,000 stock options with a purchase price of $1.00 per share were granted to an employee of the company. 100,000 of these options vested immediately with 100,000 vesting on the 1^st and 2^nd anniversary of the grant date. On December 31, 2008, 265,000 stock options with a purchase price of $0.50 per share were granted to management and employees of the Company. These options vested immediately upon grant. Based on the assumptions noted above, the fair market value of the options issued was valued at $492,647.

On May 6, 2009, 270,638 stock options with a purchase price of $0.09 per share were granted to an employee of the company. These options vested immediately upon grant. Based on the assumptions noted above, the fair market value of the options issued was valued at $10,515.

On July 1, 2008, the Company adopted a stock-based compensation plan. Under this plan, stock options may be granted to employees, officers, consultants or others who provide services to the Company.

The Black-Scholes method option pricing model was used to estimate fair value as of the date of grant using the following assumptions:


Risk-Free		2.24	%
Expected volatility		108.9	%
Forfeiture Rate		0.0	%
Expected life	5 Years

For the three months ended June 30, 2010 and 2009, $0 and $0 of general and administrative expenses was attributed to compensation expense associated with cash investors. In addition, for the three months ended June 30, 2010 and 2009, $60,500 and $0 of general and administrative expenses was attributed to stock based compensation for common shares issued for finance charges.

The Company affected a 40 to 1 forward split of its common stock during November 2009.

Note 10 — SUBSEQUENT EVENTS

On August 2, 2010 the Board of Directors and a majority of the shareholders voted to increase the authorized shares of common stock to 400,000,000 shares and to authorize 20,000,000 shares of blank check preferred stock.

MedX Limited, a subsidiary of the company has listed its shares on the Frankfurt Stock Exchange and has commenced trading of these shares.


Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Special Note Regarding Forward-Looking Statements

Certain statements in this Form 10-Q under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” constitute “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such statements are indicated by words or phrases such as “anticipates,” “projects,” “management believes,” “believes,” “intends,” “expects,” and similar words or phrases. Such factors include, among others, the following: competition; seasonality; success of operating initiatives; new product development and introduction schedules; acceptance of new product offerings; advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; availability and terms of capital; labor and employee benefit costs; changes in government regulations; and other factors particular to the Company. You should carefully review the risk factors described in other documents we file from time to time with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for our fiscal year ended December 31, 2009.

Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results, performance, or achievements of Welltek may vary materially from any future results, performance or achievements expressed or implied by such forward-looking statements. All subsequent written and oral forward-looking statements attributable to Welltek or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. Welltek disclaims any obligation to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments.

Merger Transaction

Effective on November 12, 2009 (the “Closing Date”), pursuant to an Agreement and Plan of Merger dated September 1, 2009 (the “Merger Agreement”), between Pharmacity Corporation (currently known as Welltek Incorporated, “Welltek”), WI Acquisition, Inc., a Florida corporation and wholly-owned subsidiary of the Welltek (“WI Acquisition”), and MedX Systems, Inc., a Florida corporation (“MedX Systems”), MedX Systems merged with and into WI Acquisition, with WI Acquisition surviving the merger, and became a wholly-owned subsidiary of Welltek (the “Merger”). The acquisition of MedX Systems through the Merger is treated as a reverse acquisition for accounting purposes, and the business of MedX Systems became the business of Welltek as a result thereof. Welltek conducts its business operations through the following two operating subsidiaries: MedX Limited, an English and Wales corporation (“Limited”) and Pure Healthy Back, Inc., a Florida corporation (“PHB”).

Prior to the Merger, and in anticipation thereof, Welltek filed a certificate of amendment with the Nevada secretary of state changing its name from Pharmacity Corporation to Welltek Incorporated, increasing its authorized common stock from 75 million shares to 200 million shares, and effecting a 40-1 forward split of its common stock.

On May 1, 2010, the Company acquired a 51% interest in the common stock of WellCity, Inc. Welltek currently conducts its business operations through the following three operating subsidiaries: MedX Limited, an English and Wales corporation (“Limited”) and Pure Healthy Back, Inc., a Florida corporation (“PHB”) and WellCity, Inc., a Tennessee corporation (“WellCity”).

References to “Welltek”, the “Company”, “we”, “us”, “our” and similar words refer to Welltek and its wholly-owned subsidiary, WI Acquisition, Inc., and its wholly-owned subsidiaries PHB and majority owned subsidiaries Limited and WellCity, unless the context otherwise requires. WI Acquisition, Inc. is often referred to herein as Welltek .

Overview

WellTek is a global health, fitness and wellness company that provides proven solutions to help address some of the world’s most pressing and costly health and wellness challenges.

In 2008, the WellTek vision began with the acquisition of MedX Corporation, a mature brand of exercise and medical rehabilitation equipment sold around the world with a proven reputation for excellence. Following in 2009, WellTek formed Pure Healthy Back to leverage the well-trusted MedX-branded equipment into its operating platform. After carefully scrutinizing prevailing market perceptions and consumer trends inherent in today’s booming health and wellness environment, WellTek quickly recognized the significant role consumers play in influencing hot new trends with the advent of social media. Consequently, WellTek acquired WellCity, an online platform, to serve as the vital foundation in allowing WellTek to actively reach, engage and influence health and wellness conscious consumers with new and existing brand assets, technologies, products and services.

With specific concentration on high-growth emerging market sectors being fueled by the global health and wellness movement and social media trends, WellTek continues to develop and acquire businesses that will play a definitive role in empowering consumers to feel better, live longer, look younger and enjoy life more as they age; creating a positive impact on the health of millions around the world.

At present, WellTek’s operating subsidiaries include:

•

WellCity: a social utility where health-and-wellness-minded ‘residents’ commune with one another; receive support, information and encouragement from their ‘neighbors’ and from a league of leading professional experts; shop for health and wellness-oriented product and services; compete in WellCity’s proprietary 90-Day Wellness Challenge; and even enjoy income opportunities by leveraging their personal network.

•

MedX Limited: the manufacturer and global distributor of MedX’s superior line of medical exercise and fitness equipment.

•

Pure HealthyBack, Inc.: a forward-thinking company building a national network of patient-centric medical rehabilitation centers for health plans, large self-insured employer groups, federal government agencies and consumers utilizing its proprietary medical exercise technology and scientifically proven clinical protocols to provide a viable and lasting solution to chronic neck and back pain without surgery.

Results of Operations

Welltek Comparison of Three Months Ended June 3, 2010 and 2009

Revenues decreased to $278,752 for the three months ended June 30, 2010 from $480,953 for the comparable 2009 period, representing a decrease of 42%. This decrease is attributed to lower domestic sales due to difficulties in customers obtaining financing for the MedX products. Operating loss increased to ($126,867) for the three months ended June 30, 2010 from ($98,615) for the comparable 2009 period, representing a change of 29%. This change is primarily attributed to a decrease in revenues.

Gross profit decreased to $139,104 for the three months ended June 30, 2010 from $245,969 for the comparable 2009 period, representing a change of 23%. The decrease in gross profit is directly attributed to the decrease in manufacturing revenues.

Operating expenses decreased to $265,971 for the three months ended June 30, 2010 from $344,584 for the comparable 2009 period, representing a decrease of 23%.

Interest Expense increased to $19,450 for the three months ended June 30, 2010 from $0 for the comparable 2009 period. This change is primarily attributed to interest accrued on outstanding debt obligations.

As a result of the above changes, net loss was ($146,317) for the three months ended June 30, 2010 from ($98,615) for the comparable 2009 period, representing a change of 48%. This change is primarily attributed to a decrease in revenues.

Welltek Comparison of Six Months Ended June 30, 2010 and 2009

Revenues decreased to $565,973 for the six months ended June 30, 2010 from $975,342 for the comparable 2009 period, representing a decrease of 42%. This decrease is attributed to lower domestic sales due to difficulties in customers obtaining financing for the MedX products. Operating loss increased to ($334,877) for the six months ended June 30, 2010 from ($329,386) for the comparable 2009 period, representing a change of 2%. This change is primarily attributed to a decrease in revenues.

Gross profit decreased to $330,385 for the six months ended June 30, 2010 from $456,004 for the comparable 2009 period, representing a change of 28%. The decrease in gross profit is directly attributed to the decrease in manufacturing revenues.

Operating expenses decreased to $665,262 for the six months ended June 30, 2010 from $785,390 for the comparable 2009 period, representing a decrease of 15%.

Interest Expense increased to $79,950 for the six months ended June 30, 2010 from $512 for the comparable 2009 period. This change is primarily attributed to interest accrued on outstanding debt obligations.

As a result of the above changes, net loss was ($414,827) for the six months ended June 30, 2010 from ($329,898) for the comparable 2009 period, representing a change of 26%. This change is primarily attributed to increases in interest expense and to a decrease in revenues.

Liquidity and Capital Resources

As of June 30, 2010, Welltek had cash on hand in the amount of $54,571. As of June 30, 2010, Welltek’s current assets were $481,786 and its current liabilities were $1,900,715, which resulted in a working capital deficiency of $347,575. As of June 30, 2010, Welltek had total assets of $1,553,140 and total liabilities of $1,900,715. If Welltek is unable to generate sufficient cash from operations, it will need to find alternative sources of capital in order to continue its operations, such as a public offering or private placement of securities, or loans from its officers or others.

Off Balance Sheet Arrangements

Welltek has no off balance-sheet arrangements.


Item 3.		Quantitative and Qualitative Disclosures About Market Risk.

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


Item 4.		Controls and Procedures.

Disclosure Controls and Procedures

The Company’s management, with the participation of the Company’s Chief Executive Officer (CEO) and Chief Financial Officer (CFO), has evaluated the effectiveness of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (Exchange Act) as of the end of the period covered by the report. Based upon that evaluation, the Company’s CEO and CFO concluded that as of June 30, 2010 the Company’s disclosure controls and procedures were not effective.

Internal Control over Financial Reporting

During the quarter ended June 30, 2010, there have been no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


Item 1.		Legal Proceedings

None.


Item 1A.		Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.


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

During the three months ended June 30, 2010, Welltek issued the following securities in transactions not registered under the Securities Act of 1933, as amended (the “Securities Act”):

•

Issued 14,500,000 shares for the purchase of 51% of the common stock of WellCity, Inc.

•

Issued 487,500 shares to consultants for services rendered.

•

Issued 50,000 shares to note holders for interest payments.

•

Issued 35,000,000 to note holders for the conversion of debt.


Item 3.		Defaults Upon Senior Securities.

The maturity date for the 15% Secured Notes was extended until May 15, 2010. We are in discussions with the note holders to further extend the maturity date.


Item 4.		Removed and Reserved


Item 5.		Other Information.

None.


Item 6.		Exhibits.


Exhibit No.			Description

	3.1	(i)	Articles of Incorporation (2)

	3.1	(ii)	Certificate of Amendment to Articles of Incorporation, filed September 25, 2009 (1)

	3.2		Bylaws (2)

	10.1		Agreement and Plan of Merger, dated September 1, 2009 (3)

	21		Subsidiaries (1)

	31.1		Certification of the PEO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

	31.2		Certification of the PFO Pursuant to Section 302 of Sarbanes-Oxley Act of 2002

	32.1		Certification of the CEO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

	32.2		Certification of the CFO Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002


(1)		Incorporated by reference from the Form 8-K filed by the Company on November 18, 2009

(2)		Incorporated by reference from the Form S-1 filed by the Company on February 17, 2009

(3)		Incorporated by reference from the Form 8-K filed by the Company on September 15, 2009

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Orlando, FL, on August 23, 2010.


Dated: August 23, 2010	WELLTEK INCORPORATED
	By:	/s/ Randy Lubinsky
		Randy Lubinsky
		Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed by the following persons in the capacities indicated:


/s/ Randy Lubinsky Randy Lubinsky		August 23, 2010
Chief Executive Officer, Chairman of the Board and Director
(Principal Executive Officer)

/s/ Mark Szporka Mark Szporka		August 23, 2010
Chief Financial Officer, Secretary and Director
(Principal Financial Officer and Principal Accounting Officer)

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WellTek Inc 10-Q