UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-Q

|                                               |                                                                                           
|---------------------------------------------- | ------------------------------------------------------------------------------------------
|(Mark One)                                    
|x                                              | QUARTERLY REPORT PURSUANT TO
  SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
|                                              
|For
  the Quarterly Period Ended June 30, 2009
|                                              
|o                                              | 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: 333-149260

|                                                        
|--------------------------------------------------------
|WELLQUEST MEDICAL & WELLNESS CORPORATION                
|(Exact name of
  registrant as specified in its charter)

|                                                                    |  |                                    
|------------------------------------------------------------------- |  | -----------------------------------
|Oklahoma                                                            |  | 20-1842879                         
|(State or other
  jurisdiction of 
  incorporation or organization) |  | (IRS Employer
  Identification No.)

3400 SE Macy Rd, #18
Bentonville, Arkansas 72712
(Address of Principal Executive Offices)

(479) 845-0880
(Registrants telephone number, including area code)

(Former name, former address and former fiscal year, if changed since
last report)

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 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 (§232.405 of this chapter) during
the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). o  Yes o No

Indicate by check mark whether the registrant is a
large accelerated filer, an accelerated filer, a non-accelerated filer, or a
small reporting company. See definitions of large accelerated filer,
accelerated filed, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):

|                                              |                            
|--------------------------------------------- | ---------------------------
|Large accelerated filer o                     | Accelerated filer o        
|Non-accelerated filer o                       | Smaller reporting company o
|(Do not check if a smaller reporting company) |                            

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

As of August 13,
2009, there were 29,010,167 shares of registrants common stock outstanding.

---



WELLQUEST MEDICAL & WELLNESS CORPORATION

|         |                         |                                                                                                                 |      
|-------- | ----------------------- | --------------------------------------------------------------------------------------------------------------- | -----
|INDEX    |                         |                                                                                                                
|         |                         |                                                                                                                
|PART I.  | FINANCIAL
  INFORMATION |                                                                                                                
|         |                         |                                                                                                                 |      
|         | ITEM 1.                 | Financial
  Statements                                                                                          |      
|         |                         |                                                                                                                 |      
|         |                         | Consolidated
  balance sheets at June 30, 2009 (unaudited) and December 31, 2008                                | 3    
|         |                         |                                                                                                                 |      
|         |                         | Consolidated
  statements of operations for the three and six months ended June 30, 2009 and
  2008 (unaudited) | 4    
|         |                         |                                                                                                                 |      
|         |                         | Consolidated
  statements of cash flows for the six months ended June 30, 2009 and 2008
  (unaudited)           | 5    
|         |                         |                                                                                                                 |      
|         |                         | Notes
  to unaudited consolidated financial statements                                                          |      
|         |                         |                                                                                                                 | 6-14 
|         | ITEM 2.                 | Managements
  Discussion and Analysis of Financial Condition and Results of Operations                         | 15-20
|         |                         |                                                                                                                 |      
|         | ITEM 3.                 | Quantitative
  and Qualitative Disclosures About Market Risk                                                    | 21   
|         |                         |                                                                                                                 |      
|         | ITEM 4T.                | Controls
  and Procedures                                                                                       | 21   
|         |                         |                                                                                                                 |      
|PART II. | OTHER
  INFORMATION     |                                                                                                                
|         |                         |                                                                                                                 |      
|         | ITEM 1                  | Legal
  proceedings                                                                                             | 22   
|         | ITEM 1A                 | Risk
  factors                                                                                                  | 22   
|         | ITEM 2                  | Unregistered
  sales of equity securities and use of proceeds                                                   | 22   
|         | ITEM 3                  | Defaults
  upon senior securities                                                                               | 22   
|         | ITEM 4                  | Submission
  of matters to a vote of security holders                                                           | 22   
|         | ITEM 5                  | Other
  information                                                                                             | 22   
|         | ITEM 6                  | Exhibits                                                                                                        | 22   
|         |                         |                                                                                                                 |      
|         | SIGNATURES              | 23                                                                                                             

---



WELLQUEST MEDICAL & WELLNESS
CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

PART I. FINANCIAL INFORMATIONITEM 1. Financial Statements

Consolidated
Balance Sheets

|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---------------- | - | ---------- | -
|                                                                                                                                                                                                                                  |  | June 30 2009
(Unaudited) |            | December 31
2008 |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |  
|Assets                                                                                                                                                                                                                            |  |                          |            |                  |   |            |  
|Current assets:                                                                                                                                                                                                                   |  |                          |            |                  |   |            |  
|Cash                                                                                                                                                                                                                              |  | $                        | 59,801     |                  | $ | 103,265    |  
|Accounts receivable, less allowance of $189,190 and
$235,348 at June
  30, 2009 and December 31, 2008, respectively                                                                                                               |  |                          | 235,342    |                  |   | 293,363    |  
|Other current assets                                                                                                                                                                                                              |  |                          | 57,837     |                  |   | 50,737     |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Total current assets                                                                                                                                                                                                              |  |                          | 352,980    |                  |   | 447,365    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Property and equipment, net                                                                                                                                                                                                       |  |                          | 334,681    |                  |   | 387,125    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Deferred financing costs, net of accumulated amortization of $9,258
and
  $0 at June 30, 2009 and December 31, 2008, respectively                                                                                                 |  |                          | 101,842    |                  |   |           |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Total assets                                                                                                                                                                                                                      |  | $                        | 789,503    |                  | $ | 834,490    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Liabilities and Stockholders Deficit                                                                                                                                                                                             |  |                          |            |                  |   |            |  
|Current liabilities:                                                                                                                                                                                                              |  |                          |            |                  |   |            |  
|Line of credit                                                                                                                                                                                                                    |  | $                        | 185,000    |                  | $ | 202,494    |  
|Accounts payable                                                                                                                                                                                                                  |  |                          | 209,859    |                  |   | 293,312    |  
|Accrued liabilities                                                                                                                                                                                                               |  |                          | 219,590    |                  |   | 207,329    |  
|Due to physicians and related parties                                                                                                                                                                                             |  |                          | 526,816    |                  |   | 545,823    |  
|Note payable to related party                                                                                                                                                                                                     |  |                          |           |                  |   | 349,608    |  
|Current maturities of long-term debt                                                                                                                                                                                              |  |                          | 462,276    |                  |   | 517,324    |  
|Current obligations under capital leases                                                                                                                                                                                          |  |                          | 25,942     |                  |   | 23,902     |  
|Current maturities of subordinated debentures payable to
stockholders,
  net of unamortized discount of $0 and $17,093 at June 30, 2009 and December
  31, 2008, respectively                                                     |  |                          | 490,497    |                  |   | 523,409    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Total current liabilities                                                                                                                                                                                                         |  |                          | 2,119,980  |                  |   | 2,663,201  |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Long-term subordinated convertible debenture to a stockholder, less
  current maturities                                                                                                                                          |  |                          | 443,123    |                  |   |           |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Long-term obligations under capital leases, less current
portion                                                                                                                                                                  |  |                          | 105,144    |                  |   | 118,646    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Total liabilities                                                                                                                                                                                                                 |  |                          | 2,668,247  |                  |   | 2,781,847  |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Stockholders deficit:                                                                                                                                                                                                            |  |                          |            |                  |   |            |  
|Preferred stock - $.01 par value; authorized
2,500,000 shares 75,000
  designated as Series A convertible preferred stock; 25,515 and 37,440 shares
  issued and outstanding at June 30, 2009 and December 31, 2008, respectively |  |                          | 255        |                  |   | 374        |  
|Common stock - $.001 par value; authorized
150,000,000 shares;
  29,010,167 and 23,716,361 shares issued and outstanding at June 30, 2009 and
  December 31, 2008, respectively                                                   |  |                          | 29,010     |                  |   | 23,716     |  
|Additional paid-in capital                                                                                                                                                                                                        |  |                          | 1,476,820  |                  |   | 1,263,030  |  
|Warrants outstanding                                                                                                                                                                                                              |  |                          | 177,000    |                  |   | 177,000    |  
|Accumulated deficit                                                                                                                                                                                                               |  |                          | (3,561,829 | )                |   | (3,411,477 | )
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|                                                                                                                                                                                                                                  |  |                          | (1,878,744 | )                |   | (1,947,357 | )
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  
|Total liabilities and stockholders deficit                                                                                                                                                                                       |  | $                        | 789,503    |                  | $ | 834,490    |  
|                                                                                                                                                                                                                                  |  |                          |            |                  |   |            |  

3

---



WELLQUEST MEDICAL & WELLNESS
CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Consolidated
Statements of Operations

For the three and six months ended
June 30, 2009 and 2008
(Unaudited)

|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|-------------------------------------------------------------- |  | ------------------------------ | ---------- | ------------------------ | - | ---------- | - | ---- | ---------- | - | - | ---------- | -
|                                                               |  | Three Months Ended 
  June 30, |            | Six Months EndedJune 30, |  
|                                                               |  | 2009                           |            | 2008                     |   | 2009       |   | 2008 |           
|                                                               |  |                                |            |                          |   |            |   |      |           
|                                                               |  |                                |            |                          |   |            |   |      |           
|Net revenue                                                    |  | $                              | 940,121    |                          | $ | 779,660    |   | $    | 1,870,457  |   | $ | 1,631,206  |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Operating expenses:                                            |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Salaries, wages and benefits                                   |  |                                | 310,449    |                          |   | 358,100    |   |      | 615,809    |   |   | 653,044    |  
|Rents and facility expenses                                    |  |                                | 71,142     |                          |   | 79,334     |   |      | 143,723    |   |   | 154,186    |  
|Clinic direct expenses, excluding salaries, wages
and benefits |  |                                | 366,766    |                          |   | 301,185    |   |      | 717,833    |   |   | 540,325    |  
|Spa direct expenses, excluding salaries, wages and
benefits    |  |                                | 78,916     |                          |   | 77,615     |   |      | 156,353    |   |   | 135,465    |  
|General corporate expenses                                     |  |                                | 69,620     |                          |   | 383,499    |   |      | 211,496    |   |   | 436,127    |  
|Depreciation and amortization                                  |  |                                | 29,143     |                          |   | 27,242     |   |      | 57,738     |   |   | 54,297     |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Total operating expenses                                       |  |                                | 926,036    |                          |   | 1,226,975  |   |      | 1,902,952  |   |   | 1,973,444  |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Operating income (loss)                                        |  |                                | 14,085     |                          |   | (447,315   | ) |      | (32,495    | ) |   | (342,238   | )
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Interest income (expense):                                     |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Interest income                                                |  |                                |           |                          |   | 530        |   |      |           |   |   | 3,232      |  
|Interest expense                                               |  |                                | (63,933    | )                        |   | (67,174    | ) |      | (117,857   | ) |   | (139,453   | )
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Net interest expense                                           |  |                                | (63,933    | )                        |   | (66,644    | ) |      | (117,857   | ) |   | (136,221   | )
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Net loss applicable to common stock                            |  | $                              | (49,848    | )                        | $ | (513,959   | ) | $    | (150,352   | ) | $ | (478,459   | )
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Loss per common share:                                         |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Basic and diluted                                              |  | $                              | (0.002     | )                        | $ | (0.022     | ) | $    | (0.006     | ) | $ | (0.021     | )
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Weighted average number of common shares outstanding:          |  |                                |            |                          |   |            |   |      |            |   |   |            |  
|Basic and diluted                                              |  |                                | 25,177,933 |                          |   | 23,239,394 |   |      | 24,451,185 |   |   | 23,239,394 |  
|                                                               |  |                                |            |                          |   |            |   |      |            |   |   |            |  

4

---



WELLQUEST MEDICAL & WELLNESS
CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Consolidated
Statements of Cash Flows

For the six months ended June 30,
2009 and 2008
(Unaudited)

|                                                                                                                        |  |      |          |      |   |          |  
|----------------------------------------------------------------------------------------------------------------------- |  | ---- | -------- | ---- | - | -------- | -
|                                                                                                                        |  | 2009 |          | 2008 |  
|                                                                                                                        |  |      |          |      |  
|                                                                                                                        |  |      |          |      |   |          |  
|Cash Flows from Operating
  Activities                                                                                  |  |      |          |      |   |          |  
|Net loss                                                                                                                |  | $    | (150,352 | )    | $ | (478,459 | )
|Adjustments to reconcile net loss to net cash used in operating
  activities:                                           |  |      |          |      |   |          |  
|Depreciation and amortization                                                                                           |  |      | 57,738   |      |   | 54,297   |  
|Amortization of debt discount                                                                                           |  |      | 17,093   |      |   | 48,294   |  
|Amortization of deferred financing costs                                                                                |  |      | 9,258    |      |   |         |  
|Stock based compensation                                                                                                |  |      | 7,860    |      |   |         |  
|Change in assets and liabilities:                                                                                       |  |      |          |      |   |          |  
|Accounts receivable, net                                                                                                |  |      | 58,021   |      |   | 52,194   |  
|Other current assets                                                                                                    |  |      | (7,100   | )    |   | 3,499    |  
|Accounts payable and accrued liabilities                                                                                |  |      | (71,192  | )    |   | 671      |  
|Due to physicians and related parties                                                                                   |  |      | (19,007  | )    |   | 308,722  |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Net cash used in operating activities                                                                                   |  |      | (97,681  | )    |   | (10,782  | )
|                                                                                                                        |  |      |          |      |   |          |  
|Cash Flows from Investing
  Activities                                                                                  |  |      |          |      |   |          |  
|Purchases of property and equipment                                                                                     |  |      | (5,294   | )    |   | (5,484   | )
|                                                                                                                        |  |      |          |      |   |          |  
|Cash Flows from Financing
  Activities                                                                                  |  |      |          |      |   |          |  
|Repayment of long-term borrowings and obligations under capital
leases                                                  |  |      | (66,510  | )    |   | (67,007  | )
|Repayment of
  subordinated debentures payable to stockholders                                                          |  |      |         |      |   | (25,000  | )
|Net borrowings
  (repayments) on line of credit                                                                         |  |      | (17,494  | )    |   | 15,279   |  
|Borrowings on subordinated convertible debenture from a
stockholder                                                     |  |      | 50,000   |      |   |         |  
|Borrowings on note payable from a related party                                                                         |  |      | 93,515   |      |   |         |  
|Proceeds from issuance of common stock                                                                                  |  |      |         |      |   | 56,000   |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Net cash provided by (used in) financing activities                                                                     |  |      | 59,511   |      |   | (20,728  | )
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Net decrease in cash                                                                                                    |  |      | (43,464  | )    |   | (36,994  | )
|Cash, beginning of period                                                                                               |  |      | 103,265  |      |   | 91,711   |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Cash, end of period                                                                                                     |  | $    | 59,801   |      | $ | 54,717   |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Non-cash Investing and Financing
  Activities                                                                           |  |      |          |      |   |          |  
|Restricted
  certificate of deposit applied to long-term borrowings                                                     |  | $    |         |      | $ | 250,000  |  
|Exchange of
  current note payable to related party for long-term subordinated convertible
  debenture and common stock |  |      | 443,123  |      |   |         |  
|Stock issued to related party in connection with a subordinated
  convertible debenture                                 |  |      | 111,100  |      |   |          |  
|Conversion of subordinated debentures held by stockholders                                                              |  |      | 100,005  |      |   |         |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  | $    | 654,228  |      | $ | 250,000  |  
|                                                                                                                        |  |      |          |      |   |          |  
|                                                                                                                        |  |      |          |      |   |          |  
|Supplemental Disclosures of Cash
  Flow Information                                                                     |  |      |          |      |   |          |  
|Cash paid for interest                                                                                                  |  | $    | 87,114   |      | $ | 139,412  |  
|                                                                                                                        |  |      |          |      |   |          |  

5

---



WELLQUEST MEDICAL & WELLNESS CORPORATION
(formerlyHQHealthQuest
Medical & Wellness Centers, Ltd.)

Notes to
Consolidated Financial Statements June 30, 2009
(Unaudited)

1. Organization and
Business Description and Managements Plans

HQHealthQuest Medical & Wellness Centers, LTD
(HQHealthQuest) was incorporated in the state of Oklahoma in November 2004.
Its wholly-owned subsidiary, WellQuest of Arkansas, Inc. (WellQuest of
Arkansas), was incorporated in the state of Arkansas in May 2005. We changed
our name to WellQuest Medical & Wellness Corporation (WellQuest) on April
24, 2008.

WellQuest delivers an integrated model of primary
medical care, preventive/wellness services and medical esthetics in upscale
facilities located in high-traffic retail corridors. The delivery site is
titled WellQuest Medical Clinic and Spa, a trademarked business name. The
WellQuest concept combines a customer-service oriented medical treatment
facility for interventional care with programmed preventive services and
products that lead clients in the quest for wellness. The facility also houses
an advanced medical spa for skincare services and products. WellQuest currently
operates one facility in Bentonville, Arkansas.

Principles of Consolidation

The accompanying consolidated financial statements
include the accounts of WellQuest, its wholly owned subsidiary, WellQuest of
Arkansas, and Northwest Arkansas Primary Care Physicians, P.A. (collectively,
the Company). In December 2003, the Financial Accounting Standards Board
(FASB) issued FASB Interpretation 46R (FIN 46R), Consolidation of Variable Interest Entities. FIN 46R
clarifies the application of Accounting Research Bulletin No. 51, Consolidated Financial Statements, which
addressed the consolidation by business enterprises of variable interest
entities (VIEs). FIN 46R provides guidance in determining when VIEs should be
consolidated in the financial statements of the primary beneficiary.

WellQuest of Arkansas entered into a Management and
Medical Services Agreement with Northwest Arkansas Primary Care Physicians, P.A
(NWAPCP) pursuant to which NWAPCP was granted exclusive rights to operate
medical practices in the current center and all future sites that WellQuest of
Arkansas might open in Northwest Arkansas. As a result, NWAPCP is responsible
for hiring all physicians and nurse practitioners who operate in the medical
clinic. The proceeds from the practice are assigned to WellQuest of Arkansas.
From those proceeds, WellQuest of Arkansas pays the compensation of the
employees of NWAPCP and all expenses associated from the conduct of the
practice. WellQuest of Arkansas receives a monthly management fee of 7.5% of
the practices net revenues, and after all practice loans and interest are
repaid in full, receives a performance bonus as a share of any practice operating
profits after physician compensation and all practice operating expenses are
paid. Any remaining profits are paid to NWAPCP. Because NWAPCP currently has
outstanding loans due to WellQuest of Arkansas, 80% of any remaining profits
are used to reduce the debt. The remaining 20% of any remaining profits are
paid or payable to the owners of NWAPCP. Once the debt has been repaid in full,
remaining profits will be paid or payable to NWAPCP.

Because the accounts of NWAPCP are consolidated with
ours, loans to fund NWAPCPs operating losses are eliminated and reported as
expenses in the consolidated financial statements. Operating profits of NWAPCP
used to reduce its debt to WellQuest are eliminated and reported as operating
profits in the consolidated financial statements. For each period presented,
NWAPCPs profits paid or payable to its owners are reported as physician
compensation in clinic direct expenses.

As a result of WellQuests evaluation of the effect
that the adoption of FIN 46R would have on WellQuests results of operations
and financial condition, WellQuest determined that NWAPCP qualifies for
consolidation, as WellQuest is the primary beneficiary of the operations of the
clinic after physician compensation pursuant to the terms of the management
agreement. As a result, the operations of the clinic, primarily clinic revenues
and expenses, were consolidated into WellQuest for financial statement
reporting purposes in accordance with the provisions of FIN 46R. All
significant intercompany accounts and transactions have been eliminated.

Managements Plans

The financial statements of the Company have been
prepared on the basis of accounting principles applicable to a going concern,
which contemplates the realization of assets and the satisfaction of liabilities
in the normal course of business. At June 30, 2009, the Company had a working
capital deficit of approximately $1,800,000 and had incurred net losses of
approximately $150,000 for the six months ended June 30, 2009. The Company also
has an accumulated deficit of approximately $3,600,000. The Company has, in
large part, been supported by the proceeds from long-term debt and certain
major stockholders. There is no commitment for such stockholders to continue
providing financial support to the Company.

6

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerlyHQHealthQuest Medical & Wellness Centers, Ltd.)

Notes to Consolidated Financial Statements June 30, 2009
(Unaudited)

These factors, among others, raise substantial doubt
concerning the ability of the Company to continue as a going concern. The
financial statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or the amount and
classification of liabilities that might result should the Company be unable to
continue as a going concern. The ability of the Company to continue as a going
concern is dependent upon the ongoing support of its stockholders, investors,
customers and creditors, and its ability to successfully establish and operate
additional clinics and spas throughout selected geographical markets. As
discussed in the following paragraph, the Company will require additional
financial resources in order to fund obligations as they become due.

WellQuest is seeking to identify potential equity
participants in the public equity market in an attempt to generate sufficient
additional investment capital to meet working capital needs for expansion and
development. Management and major stockholders are currently marketing the
Company based on managements plans which include: expanding the model, which
will enable WellQuest to spread its management costs over several centers; fund
expansion to a major metropolitan area in the United States; and complete
development of the business model. This funding will further allow WellQuest to
reduce debt service requirements.

Completion of managements plans will require the
Company to obtain additional debt or equity financing beyond those resources
currently available to the Company. There is no assurance the Company will be
successful in securing resources to fund current obligations as they become due
in 2009 or to support the Company until such time, if ever, that the Company is
able to consistently generate income from operations.

2. Basis of Presentation

The accompanying unaudited interim consolidated
financial statements of the Company have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission (SEC). Certain
information in footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to these rules and regulations. The accompanying
unaudited interim consolidated financial statements reflect all adjustments
which the Company considers necessary for a fair presentation of the results of
operations for the interim periods covered and for the financial condition of
the Company at the date of the interim balance sheet. All such adjustments
(except as otherwise disclosed herein) are of a normal recurring nature.

The results of operations for the three and six months
ended June 30, 2009 are not necessarily indicative of the results to be
expected for the full year. It is suggested that the December 31, 2008 financial
information contained in the Companys Form 10-K be read in conjunction with
the financial statements and notes thereto.

3. Summary of Significant
Accounting Policies

Use of 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 and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.

Revenue Recognition

The Company recognizes revenue in accordance with SEC
Staff Accounting Bulletin No. 104, Revenue
Recognition in Financial Statements (SAB 104). Under SAB 104,
revenue is recognized when the title and risk of loss have passed to the
customer, there is persuasive evidence of an arrangement, delivery has occurred
or services have been rendered, the sales price is determinable and
collectability is reasonably assured.

Net revenue of the Company is comprised of net clinic
revenue and revenue derived from the sales of spa services and related
products. Net clinic revenue is recognized at the time of service and is
recorded at established rates reduced by provisions for doubtful accounts and
contractual adjustments. Contractual adjustments arise as a result of the terms
of certain reimbursement and managed care contracts. Such adjustments represent
the difference between charges at established rates and estimated

7

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerlyHQHealthQuest Medical & Wellness Centers, Ltd.)

Notes to Consolidated Financial Statements June 30, 2009
(Unaudited)

recoverable amounts and are recognized in the period
the services are rendered. Any differences between estimated contractual
adjustments and actual final settlements under reimbursement contracts are
recognized as contractual adjustments in the year final settlements are determined.

Spa revenues are recognized at the time of sale, as
this is when the services have been provided or, in the case of product
revenues, delivery has occurred, and the spa receives the customers payment.
Revenues from pre-paid purchases are also recorded when the customer takes
possession of the merchandise or receives the service. Pre-paid purchases are
defined as either gift cards or series sales. Series sales are the purchase of
a series of services to be received over a period of time. Pre-paid purchases
are recorded as a liability (deferred revenue) until they are redeemed. Gift
cards expire two years from the date of the customers purchase. Series sales
do not carry an expiration date.

Deferred Financing Costs

Deferred financing costs were incurred in association
with the issuance of debt to a related party and stockholder. As part of the
issuance of a $443,123 subordinated debenture (Note 9), the Company issued
1,250,000 shares of common stock to the holder of the debenture. The shares
were issued during the second quarter of 2009 and were valued at $111,100.
These costs are being amortized over the life of the debt utilizing the
effective interest method. Amortization expense of $9,258 and $0 were recorded
during the six months ended June 30, 2009 and 2008, respectively, and was
recorded in interest expense.

Earnings Per Share

The Company calculates and discloses earnings per
share (EPS) in accordance with Statement
of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share (SFAS 128). SFAS 128
requires dual presentation of Basic and Diluted EPS on the face of the
statements of operations and requires a reconciliation of the numerator and
denominator of the Basic EPS computation to the numerator and denominator of
the Diluted EPS computation. Basic EPS excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the issuance
of common stock that then shared in the earnings of the Company.

In computing Diluted EPS, only potential common shares
that are dilutive  those that reduce earnings per share or increase loss per
share  are included. Exercise of options and warrants or conversion of
convertible securities is not assumed if the result would be antidilutive, such
as when a loss from continuing operations is reported. The control number for
determining whether including potential common shares in the Diluted EPS
computation would be antidilutive is income from continuing operations. As a
result, if there is a loss from continuing operations, Diluted EPS would be computed
in the same manner as Basic EPS, even if an entity has net income after
adjusting for discontinued operations, an extraordinary item or the cumulative
effect of an accounting change. The Company incurred a loss from continuing
operations for the three and six month periods ended June 30, 2009 and 2008.
Therefore, basic EPS and diluted EPS are computed in the same manner for that
period. Anti dilutive and/or non-exercisable warrants and convertible preferred
stock and convertible subordinated debentures represent approximately
17,700,000 and 15,200,000 common shares at June 30, 2009 and 2008, respectively
which may become dilutive in future calculations of EPS.

Share-Based Payment

In December 2004, the Financial Accounting Standards
Board issued SFAS No. 123R, Share-Based Payment (SFAS 123R). SFAS 123R is a revision
of SFAS 123, Accounting for Stock-Based Compensation,
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,
and its related implementation guidance. Under paragraph 7 of SFAS 123R, if the
fair value of goods or services received in a share-based payment transaction
with nonemployees is more reliably measurable than the fair value of the equity
instruments issued, the fair value of the goods or services received shall be
used to measure the transaction. In contrast, if the fair value of the equity
instruments issued in a share-based payment transaction with nonemployees is
more reliably measurable than the fair value of the consideration received, the
transaction shall be measured based on the fair value of the equity instruments
issued. We utilized the fair value of the equity instruments issued to
nonemployees to value the shares issued. We recognize the fair value of
stock-based compensation awards in general corporate expense in the
consolidated statements of operations on a straight-line basis over the vesting
period.

8

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

In January 2009, the Company entered into a one year
agreement with a consulting company for public and investor relations services.
Pursuant to the original agreement, the Company agreed to pay the consultant
$6,000 per month ($72,000 per year) and issue 348,600 shares of common stock.
As of June 30, 2009, the Company has not issued the shares. Subsequent to June
30, 2009, the Company exercised the termination clause in the contract and the
consultant agreed to reduce the number of shares of stock to 261,450. The
shares have been valued at $0.08888 and $23,238 has been recorded as an accrued
liability on the Companys balance sheet and as general corporate expense on
the Companys income statement for the anticipated issuance of the shares.

Reclassifications

Certain reclassifications have been made to prior
periods financial statements to conform to the current year presentation.
These reclassifications had no effect on the Companys net income.

4. Business Segments

SFAS No. 131 Disclosures
About Segments of an Enterprise and Related Information (SFAS 131)
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. SFAS 131 requires
that a public business enterprise report financial and descriptive information
about its reportable operating segments. Reportable operating segments are
defined as a component of an enterprise:

| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | That engages in business activities from which it
  may earn revenues and expenses,                 
| |   |                                                                                                     
| |  | Whose operating results are regularly reviewed by
  the enterprises chief operating decision maker,
| |   |                                                                                                     
| |  | For which discrete financial information is
  available.                                            

Corporate assets detailed below are primarily comprised
of property and equipment, corporate cash, accounts receivable and other
corporate assets. Summarized financial information concerning the Companys
reportable operating segments is shown in the following tables as of June 30,
2009 and 2008:

|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|------------------------------- |  | ---------------------------------------- | --------- | ------------- | - | ----------------------- | - | ------------ | -------- | - | - | --------- | -
|                                |  | For
  the Six Months Ended June 30, 2009 |          
|                                |  |                                          |          
|                                |  | Medical
  Clinic ○                       |           | Medical
  Spa |   | Unallocated
  Corporate |   | Consolidated |         
|                                |  |                                          |           |               |   |                         |   |              |         
|Net revenue                     |  | $                                        | 1,522,085 |               | $ | 345,872                 |   | $            | 2,500    |   | $ | 1,870,457 |  
|Operating expenses              |  |                                          | 1,204,467 |               |   | 395,940                 |   |              | 302,545  |   |   | 1,902,952 |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Income (loss) from
  operations |  |                                          | 317,618   |               |   | (50,068                 | ) |              | (300,045 | ) |   | (32,495   | )
|Interest expense                |  |                                          |          |               |   |                        |   |              | 117,857  |   |   | 117,857   |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Net income (loss)               |  | $                                        | 317,618   |               | $ | (50,068                 | ) | $            | (417,902 | ) | $ | (150,352  | )
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Total assets                    |  | $                                        | 389,692   |               | $ | 193,685                 |   | $            | 206,126  |   | $ | 789,503   |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  

|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|------------------------------- |  | ---------------------------------------- | --------- | ------------- | - | ----------------------- | - | ------------ | -------- | - | - | --------- | -
|                                |  | For
  the Six Months Ended June 30, 2008 |          
|                                |  |                                          |          
|                                |  | Medical
  Clinic                         |           | Medical
  Spa |   | Unallocated
  Corporate |   | Consolidated |         
|                                |  |                                          |           |               |   |                         |   |              |         
|Net revenue                     |  | $                                        | 1,279,766 |               | $ | 351,440                 |   | $            |         |   | $ | 1,631,206 |  
|Operating expenses              |  |                                          | 1,019,491 |               |   | 481,971                 |   |              | 471,982  |   |   | 1,973,444 |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Income (loss) from
  operations |  |                                          | 260,275   |               |   | (130,531                | ) |              | (471,982 | ) |   | (342,238  | )
|Interest income                 |  |                                          |          |               |   |                        |   |              | 3,232    |   |   | 3,232     |  
|Interest expense                |  |                                          |          |               |   |                        |   |              | 139,453  |   |   | 139,453   |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Net income (loss)               |  | $                                        | 260,275   |               | $ | (130,531                | ) | $            | (608,203 | ) | $ | (478,459  | )
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  
|Total assets                    |  | $                                        | 452,446   |               | $ | 272,980                 |   | $            | 114,957  |   | $ | 840,383   |  
|                                |  |                                          |           |               |   |                         |   |              |          |   |   |           |  

The financial information for the Medical Clinic
presented above represents the revenue and direct operating expenses of NWAPCP
after elimination of intercompany expenses charged to NWAPCP by WellQuest of
Arkansas. Intercompany expenses

9

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

that have been eliminated include the following: a
management fee paid by NWAPCP to WellQuest of Arkansas ($114,156 and $95,744
for the six-month period ended June 30, 2009 and 2008, respectively), lease
expense paid by NWAPCP to WellQuest of Arkansas ($20,499 and $27,111 for the
six-month period ended June 30, 2009 and 2008, respectively), and interest
expense paid by NWAPCP to WellQuest of Arkansas ($6,859 and $23,551 for the
six-month period ended June 30, 2009 and 2008, respectively).

|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  
|----------------------------- |  | ------------------------------------------ | ------- | ------------- | - | ----------------------- | - | ------------ | -------- | - | - | ------- | -
|                              |  | For
  the Three Months Ended June 30, 2009 |        
|                              |  |                                            |        
|                              |  | Medical
  Clinic                           |         | Medical
  Spa |   | Unallocated
  Corporate |   | Consolidated |         
|                              |  |                                            |         |               |   |                         |   |              |         
|Net revenue                   |  | $                                          | 770,437 |               | $ | 169,684                 |   | $            |         |   | $ | 940,121 |  
|Operating expenses            |  |                                            | 614,340 |               |   | 196,830                 |   |              | 114,866  |   |   | 926,036 |  
|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  
|Income (loss) from operations |  |                                            | 156,097 |               |   | (27,146                 | ) |              | (114,866 | ) |   | 14,085  |  
|Interest expense              |  |                                            |        |               |   |                        |   |              | 63,933   |   |   | 63,933  |  
|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  
|Net income (loss)             |  | $                                          | 156,097 |               | $ | (27,146                 | ) | $            | (178,799 | ) | $ | (49,848 | )
|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  
|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  
|Total assets                  |  | $                                          | 389,692 |               | $ | 193,685                 |   | $            | 206,126  |   | $ | 789,503 |  
|                              |  |                                            |         |               |   |                         |   |              |          |   |   |         |  

|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  
|------------------------------- |  | ------------------------------------------ | ------- | ------------- | - | ----------------------- | - | ------------ | -------- | - | - | --------- | -
|                                |  | For
  the Three Months Ended June 30, 2008 |        
|                                |  |                                            |        
|                                |  | Medical
  Clinic                           |         | Medical
  Spa |   | Unallocated
  Corporate |   | Consolidated |         
|                                |  |                                            |         |               |   |                         |   |              |         
|Net revenue                     |  | $                                          | 586,219 |               | $ | 193,441                 |   | $            |         |   | $ | 779,660   |  
|Operating expenses              |  |                                            | 561,877 |               |   | 262,236                 |   |              | 402,862  |   |   | 1,226,975 |  
|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  
|Income (loss) from
  operations |  |                                            | 24,342  |               |   | (68,795                 | ) |              | (402,862 | ) |   | (447,315  | )
|Interest income                 |  |                                            |        |               |   |                        |   |              | 530      |   |   | 530       |  
|Interest expense                |  |                                            |        |               |   |                        |   |              | 67,174   |   |   | 67,174    |  
|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  
|Net income (loss)               |  | $                                          | 24,342  |               | $ | (68,795                 | ) | $            | (469,506 | ) | $ | (513,959  | )
|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  
|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  
|Total assets                    |  | $                                          | 452,446 |               | $ | 272,980                 |   | $            | 114,957  |   | $ | 840,383   |  
|                                |  |                                            |         |               |   |                         |   |              |          |   |   |           |  

The financial information for the Medical Clinic
presented above represents the revenue and direct operating expenses of NWAPCP
after elimination of intercompany expenses charged to NWAPCP by WellQuest of
Arkansas. Intercompany expenses that have been eliminated include the
following: a management fee paid by NWAPCP to WellQuest of Arkansas ($57,783
and $43,732 for the three-month period ended June 30, 2009 and 2008,
respectively), lease expense paid by NWAPCP to WellQuest of Arkansas ($10,250
and $12,632 for the three-month period ended June 30, 2009 and 2008,
respectively), and interest expense paid by NWAPCP to WellQuest of Arkansas
($2,410 and $8,791 for the three-month period ended June 30, 2009 and 2008,
respectively).

5. Common and Preferred Stock

Between January 2008 and
February 2008, the Company sold an aggregate of 630,000 shares of common stock
to four investors for aggregate gross proceeds of $56,000. These shares were
issued in reliance on the exemption provided by Section 4(2) of the Securities
Act of 1933, as amended.

In July 2008, the Company
sold an aggregate of 111,111 shares of common stock to an investor for
aggregate gross proceeds of $10,000. These shares were issued in reliance on
the exemption provided by Section 4(2) of the Securities Act of 1933, as
amended.

On April 24, 2008, the Company amended its certificate
of incorporation with the State of Oklahoma to adjust the par value of common
stock to $0.001 per share. The Company also amended the number of authorized
shares of common and preferred stock to 150,000,000 and 2,500,000,
respectively. The par value of preferred stock remains unchanged at $0.01 per
share. The financial statements and other disclosures for all periods presented
have been retroactively restated to reflect these changes.

Between April 2009 and June
2009, four holders of 11,925 shares of the Companys preferred stock elected to
convert the shares to 2,981,250 shares of the Companys common stock.

10

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

Between May 2009 and June 2009, three holders of
$100,000 of convertible subordinated debentures elected to convert the debt to
1,062,556 shares of common stock according to the terms of the debenture
agreements.

6. Income Taxes

The Company had no current income tax provision for
the quarter ended June 30, 2009 due to approximately $3.1 million in net
operating loss carryforwards incurred since inception. The effective income tax
rate for the quarter ended June 30, 2009 differs from the U.S. federal
statutory rate of 34% due to the change in the valuation allowance.

Based upon a review of its income tax filing
positions, the Company believes that its positions would be sustained upon an
audit and does not anticipate any adjustments that would result in a material
change to its financial position. Therefore, no reserves for uncertain income
tax positions have been recorded. The Company recognizes interest related to
income taxes as interest expense and penalties as operating expenses.

7.
Incentive Stock Plan

On April 4, 2008, the shareholders of the Company
adopted the WellQuest Medical and Wellness Corporation 2008 Incentive Stock
Plan (the 2008 Plan).

The purpose of the 2008 Plan is to further the growth
and development of the Company by providing, through ownership of stock of the
Company, an incentive to officers and other key personnel who are in a position
to contribute materially to the prosperity of the Company including, but not
limited to, all salaried personnel of the Company, to increase such persons
interests in the Companys welfare, to encourage them to continue their
services to the Company, and to attract individuals of outstanding ability to
enter the employment of the Company. The 2008 Plan authorizes the issuance of
5,000,000 shares of the Companys common stock.

On August 4, 2008, the Company granted stock options
for 500,000 shares of stock at an exercise price of $0.08888 per share. The
options are subject to a vesting schedule as follows: 166,667 options on August
4, 2008; 166,667 options on August 4, 2009; and 166,666 options on August 4,
2010. The options have a termination date of August 3, 2018. Compensation
expense was calculated at approximately $29,000, which will be recognized over
the vesting period. The amount expensed for the six months ended June 30, 2009
related to these options was approximately $4,800. The Company has reserved
500,000 shares of common stock for the exercise of these options.

On December 9, 2008, we granted stock options for
300,000 shares of stock at an exercise price of $0.08888 per share. The options
are subject to a vesting schedule as follows: 100,000 options on April 14,
2011; 100,000 options on April 14, 2012; and 100,000 options on April 14, 2013.
The options have a termination date of April 14, 2015. Compensation expense was
calculated at approximately $23,000, which will be recognized over the vesting
period. The amount expensed for the six months ended June 30, 2009 related to
these options was approximately $3,000. The Company has reserved 300,000 shares
of common stock for the exercise of these options.

8. Recent Accounting Pronouncements

In March 2008, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 161, Disclosures about Derivative Instruments and Hedging
Activities  an amendment of FASB Statement No. 133(SFAS 161).
SFAS 161 requires enhanced disclosures about an entitys derivative and hedging
activities, including qualitative disclosures about objectives and strategies
for using derivatives, quantitative disclosures about fair value amounts of and
gains and losses on derivative instruments, and disclosures about
credit-risk-related contingent features in derivative agreements. SFAS 161 is
effective for fiscal years and interim periods beginning after
November 15, 2008. The Company adopted SFAS 161 as of January 1, 2009. The
adoption of SFAS 161 did not have a material effect on its financial statements
and related disclosures.

In April 2009, the Financial Accounting Standards
Board issued FASB Staff Position No. FAS 107-1 and APB 28-1, Interim Disclosure about Fair Value of Financial
Instruments(FSP 107-1). FSP 107-1 amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments,
to require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements. FSP 107-1 also amends APB Opinion No. 28, Interim Financial Reporting, to require
those disclosures in summarized financial information at interim reporting
periods. FSP 107-1 is effective for interim reporting periods ending after June
15, 2009. The Company adopted FSP
107-1 as of April 1, 2009. The disclosures related to FSP 107-1 are included in
Note 10.

11

---



WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

In May 2009, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards No. 165, Subsequent Events(SFAS 165). SFAS
165 establishes general standards of accounting for and disclosure of events
that occur after the balance sheet date but before financial statements are
issued or are available to be issued. SFAS 165 became effective for interim or
annual reporting periods ending after June 15, 2009. The Company adopted
SFAS 165 as of April 1, 2009. The disclosures required by SFAS 165 are included
in Note 11.

In June 2009, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
No. 167, Amendments to FASB Interpretation No. 46(R) (SFAS 167).
This Statement amends Interpretation 46(R) to require an entity to perform a
qualitative analysis to determine whether the entitys variable interest or
interests give it a controlling financial interest in a variable interest
entity (VIE). This analysis identifies the primary beneficiary of a VIE as the
entity that has both the power to direct the activities that most significantly
impact the VIEs economic performance and the obligation to absorb losses or
the right to receive benefits of the VIE. SFAS 167 amends Interpretation 46(R)
to replace the quantitative-based risks and rewards approach previously
required for determining the primary beneficiary of a VIE. SFAS 167 is effective
as of the beginning of an entitys first annual reporting period that begins
after November 15, 2009 and for interim periods within that first annual
reporting period. Earlier application is prohibited. We will assess the
application of this Statement on our Consolidated Financial Statements.

In June 2009, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No.
168, The FASB Accounting Standards
CodificationTM and the Hierarchy of
Generally Accepted Accounting Principles  a replacement of FASB Statement No.
162(SFAS 168). SFAS 168 identifies the sources of accounting
principles and the framework for selecting the principles used in the
preparation of financial statements of nongovernmental entities that are
presented in conformity with generally accepted accounting principles in the
United States. SFAS 168 is effective for interim and annual periods ending
after September 15, 2009.

9. Subordinated Convertible Debentures Payable to
Stockholders

In 2007 and 2006, the Company issued convertible
debentures with detachable warrants to certain stockholders. These debentures
bear interest at the fixed rate of 10% per annum, and shall be paid in arrears
on a quarterly basis. These debentures matured on June 30, 2009, at which time
the unpaid principal balance was due and payable. Subsequent to June 30, 2009,
the holders of the debentures extended the maturity dates to either September
30, 2009 or December 31, 2009. The rights of the holders under these debentures
to collect the amounts due are subordinated to the rights of the banks owed as
identified under Long-Term Debt. These debentures are convertible in full into
shares of the Companys series A convertible preferred stock at the option of
the holder at any time after the date of issuance. No partial conversions of
the debentures are allowed. The conversion price is $22.22 per share, subject
to adjustment pursuant to the terms of the debenture agreement. Between May
2009 and June 2009, three holders of $100,000 of these convertible subordinated
debentures elected to convert the debt to 1,062,556 shares of common stock
according to the terms of the debenture agreements.

During the second quarter of 2009, the Company entered
into an agreement with a stockholder and related party whereby the related
party agreed to exchange $443,123.28 of outstanding debt owed by the Company to
the related party for a convertible debenture in the principal face amount of
the outstanding debt. The outstanding debt was bridge financing provided to the
Company from time to time that was payable on demand. In connection with the
Agreement, the Company issued 1,250,000 shares of common stock to the related
party. The Agreement was made effective as of April 1, 2009. The Debenture will
be due and payable April 1, 2012, and accrues interest at the rate of 10% per
annum. The Debenture will be convertible into shares of common stock of the
Company at a conversion price of $0.08888 per share. The shares have been
valued at $0.08888 per share and the cost has been recorded as deferred
financing costs and will be amortized over the life of the associated
debenture.

10. Fair Value Measurements

The Company accounts for assets and liabilities which
are required to be measured at fair value in accordance with SFAS No. 157, Fair
Value Measurements (SFAS
157). SFAS 157 establishes a framework for measuring fair value and related
disclosures. SFAS 157 has the following key elements:

12

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WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Defines fair value as the exit price that would be
  received to sell an asset or paid to transfer a liability in an orderly
  transaction between market participants at the measurement date;
| |   |                                                                                                                                                                                                
| |  | Establishes a three-level hierarchy (valuation
  hierarchy) for fair value measurements;                                                                                                     
| |   |                                                                                                                                                                                                
| |  | Requires consideration of the Companys
  creditworthiness when valuing liabilities; and                                                                                                       
| |   |                                                                                                                                                                                                
| |  | Expands disclosures about instruments measured at
  fair value.                                                                                                                                

The valuation hierarchy considers the transparency of
inputs used to value assets and liabilities as of the measurement date. The
less transparent or observable the inputs used to value assets and liabilities,
the lower the classification of the assets and liabilities in the valuation
hierarchy. A financial instruments classification within the valuation
hierarchy is based on the lowest level of input that is significant to its fair
value measurement. The three levels of the valuation hierarchy and the
classification of the Companys financial assets and liabilities within the
hierarchy are as follows:

Level 1Inputs
to the valuation methodology are unadjusted quoted prices in active markets for
identical assets or liabilities. The Company doesnt currently hold any assets
or liabilities that are considered Level 1 according to the hierarchy described
in SFAS 157.

Level 2Inputs
to the valuation methodology include:

| |                                                                                                                                                |                                                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                               | quoted prices in active markets for similar (not
  identical) assets or liabilities;                                                                                                                                   
| |                                                                                                                                                |                                                                                                                                                                                                                        
| |                                                                                                                                               | quoted prices for identical or similar assets in
  markets with insufficient volume or infrequent transactions (less active
  markets);                                                                                
| |                                                                                                                                                |                                                                                                                                                                                                                        
| |                                                                                                                                               | inputs other than quoted prices that are observable
  for the asset or liability (for example, interest rates or yield curves); and                                                                                    
| |                                                                                                                                                |                                                                                                                                                                                                                        
| |                                                                                                                                               | model-driven valuations in which all significant
  inputs are observable or can be derived principally from or corroborated by
  observable market data for substantially the full term of the assets or
  liabilities.
| |                                                                                                                                                |                                                                                                                                                                                                                        
| | The Company doesnt currently hold any assets or
  liabilities that are considered Level 2 according to the hierarchy described
  in SFAS 157.

Level 3Inputs
to the valuation methodology are unobservable and significant to the fair value
measurement. Inputs reflect the use of significant management judgment. These
values are determined using financial models for which the assumptions utilize
estimates of market participant assumptions. Level 3 liabilities include the
Companys long-term subordinated debenture issued to a stockholder. In
considering the fair value of these debentures, the Company calculated fair
value using a three-year maturity date of April 1, 2012 and a discount rate of
12%.

The Company considers the following to be financial
instruments: cash, accounts receivable, accounts payable, debt and subordinated
debentures. The estimated fair value of such instruments at June 30, 2009
approximates their carrying value as reported on the Companys consolidated
balance sheet except as disclosed in the following table.

|                                                           |  |                                                                       |   |           |   |           |  |  |         | 
|---------------------------------------------------------- |  | --------------------------------------------------------------------- | - | --------- | - | --------- |  |  | ------- | 
|                                                           |  | Fair
  Value Measurements at June 30, 2009 Using Inputs Considered as |  
|                                                           |  |                                                                       |  
|                                                           |  | Level
  1                                                             |   | Level
  2 |   | Level
  3 | 
|                                                           |  |                                                                       |   |           |   |           | 
|                                                           |  |                                                                       |   |           |   |           |  |  |         | 
|Long term
  subordinated debenture issued to a stockholder |  | $                                                                     |  |           | $ |          |  |  | 420,377 | 

The table below provides a roll-forward of the
Companys Level 3 obligation which is measured at fair value on a recurring
basis:

|                                                   |  |                                                                    |         | 
|-------------------------------------------------- |  | ------------------------------------------------------------------ | ------- | 
|                                                   |  | Financial
  Assets Using Significant Unobservable Inputs (Level 3) |        
|                                                   |  |                                                                    |        
|                                                   |  | Long-term
  subordinated debentures to stockholders                |        
|                                                   |  |                                                                    |        
|Balance at December 31, 2008                       |  | $                                                                  |        | 
|                                                   |  |                                                                    |        
|Purchases, sales, issuances, and settlements
(net) |  |                                                                    | 420,337 | 
|Balance at June 30, 2009                           |  | $                                                                  | 420,377 | 
|                                                   |  |                                                                    |        

13

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WELLQUEST
MEDICAL & WELLNESS CORPORATION
(formerly HQHealthQuest Medical & Wellness Centers, Ltd.)

Notes
to Consolidated Financial Statements June 30, 2009
(Unaudited)

11. Subsequent Events

The Company has evaluated events subsequent to the
balance sheet date (June 30, 2009) through August 14, 2009, the date the
financial statements were issued.

14

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ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

This
Managements Discussion and Analysis of Financial Condition and Results of
Operations includes a number of forward-looking statements that reflect
Managements current views with respect to future events and financial
performance. You can identify these statements by forward-looking words such as
may, will, expect, anticipate, believe, estimate and
continue, or
similar words. Those statements include statements regarding the intent, belief
or current expectations of us and members of our management team as well as the
assumptions on which such statements are based. Prospective investors are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risk and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements.

Readers
are urged to carefully review and consider the various disclosures made by us
in this report and in our other reports filed with the Securities and Exchange
Commission. The following Managements Discussion and Analysis of Financial
Condition and Results of Operations of the Company should be read in
conjunction with the Consolidated Financial Statements and notes related
thereto included in this Quarterly Report on Form 10-Q. Important factors
currently known to Management could cause actual results to differ materially
from those in forward-looking statements. We undertake no obligation to update
or revise forward-looking statements to reflect changed assumptions, the
occurrence of unanticipated events or changes in the future operating results
over time. We believe that our assumptions are based upon reasonable data
derived from and known about our business and operations. No assurances are
made that actual results of operations or the results of our future activities
will not differ materially from our assumptions. Factors that could cause
differences include, but are not limited to, expected market demand for our services
and products, fluctuations in pricing for materials, and competition.

Overview

We
were incorporated in the State of Oklahoma on November 8, 2004 as HQHealthQuest
Medical & Wellness Centers, Ltd. We incorporated a wholly-owned subsidiary
in the State of Arkansas on May 5, 2005 as WellQuest Medical & Wellness
Centers of Arkansas, Inc., which subsequently changed its name to WellQuest of
Arkansas, Inc. We opened our first medical center in Bentonville, Arkansas on
September 12, 2005. We changed our name to WellQuest Medical & Wellness
Corporation on April 24, 2008.

We
provide an integrated medical delivery site with family physician healthcare
services, preventive/wellness services and medical skin-care services. The
integration of these services embraces the clinical synergy of medical
treatments for illness, preventive/wellness services and products for health
maintenance and medically supervised skin-care treatments for aesthetic
enhancement.

Results
of Operations

The
following discussion of the financial condition and results of operations
should be read in conjunction with the financial statements included herewith.
This discussion should not be construed to imply that the results discussed
herein will necessarily continue into the future, or that any conclusion
reached herein will necessarily be indicative of actual operating results in
the future.

Three
months ended June 30, 2009 compared to the three months ended June 30, 2008

Net
Revenues. We had net revenues for the three months ended
June 30, 2009 of $940,121 compared to the three months ended June 30, 2008 of
$779,660. This increase of $160,461 is primarily the result of the increase in
medical service revenues of $184,218 due to continued increases in medical
client visits. Medical client visits increased from 6,435 for the three months
ended June 30, 2008, to 8,384 for the three months ended June 30, 2009, an
increase of 30%. The increase in medical clinic visits is attributed to
continued success in attracting new medical clients and keeping established
clients. Established client visits were 6,751 for the three months ended June
30, 2009 compared to 5,037 for the three months ended June 30, 2008, an
increase of 34%. New client visits accounted for 1,633 visits for the three
months ended June 30, 2009, compared to 1,398 visits for the three months ended
June 30, 2008, an increase of 17%. In addition, medical spa revenues were down
12% ($23,757) from $169,684 for the three months ended June 30, 2009, compared
to $193,441 for the three months ended June 30, 2008. The decrease in medical
spa revenues was primarily due to lower revenue ($18,907) from injectables such
as Botox, Juvederm, Radiesse, and Sculptra. The decrease was caused by the
turnover of our primary injection nurse position in the fourth quarter of 2008.

15

---



Net
Operating Expenses. Operating expenses for the three
months ended June 30, 2009, were $926,036 compared to the three months ended
June 30, 2008, which were $1,226,975. This decrease of $300,939 was the result
of a decrease of $287,996 in corporate expenses related to reduced legal,
accounting, and consulting costs. Medical spa expenses decreased $65,406 as a
result of a decrease in administrative staffing as well as the transition of several
full-time service provider positions to part-time. These decreases were offset
by an increase of $52,463 in medical clinic operating expenses related to
increased service revenues.

Corporate
expenses decreased $287,996, primarily due to a decrease of $177,982 in
accounting, legal, and consulting fees associated with our registration
statement filed with the SEC. The majority of the accounting and legal expense
for the SEC registration was recognized during the first and second quarters of
2008. Corporate consulting costs also decreased $107,565 based on 2008
consulting agreements for a total of $108,965 related to the medical spa and an
exploration of expansion possibilities. We incurred only $1,400 in consulting
costs for the three months ended June 30, 2009.

Medical
spa expenses decreased as a result of a reduction in administrative staffing as
well as the transition of several full-time service provider positions to
part-time status. Staffing costs for the medical spa decreased $44,914 from
$113,594 for the three months ended June 30, 2009 compared to $68,680 for the
three months ended June 30, 2008. Expenses related to spa products decreased
$20,507 in response to lower sales of several product lines.

Medical
clinic operating expenses increased to support higher service revenues. Medical
provider labor costs increased $114,733 as a result of adding a full-time
physician in March 2009 as well as a full-time physicians assistant in July
2008, and several part time physicians assistants and advance nurse
practitioners throughout the fourth quarter of 2008 and first quarter of 2009.
This increase was partially offset by a $10,440 reduction in marketing costs,
$10,000 reduction in physician recruitment costs, as well as $10,709 reduction
in administrative staffing.

Operating
Income (Loss). Operating income for the three months
ended June 30, 2009 was $14,085 compared to an operating loss of $447,315 for
the three months ended June 30, 2008. This increase of $461,400 was primarily
the result of the combined impact of increased revenue and decreased operating
expenses discussed above.

Net
Interest Expense. Our net interest expense for the three
months ended June 30, 2009 was $63,933 compared to $66,644 for the three months
ended June 30, 2008.

Net
Loss Applicable to Common Stock.Net loss for the
three months ended June 30, 2009 was $49,848 compared to a net loss of $513,959
for the three months ended June 30, 2008. This decrease of $464,111 is primarily
the result of the items discussed above.

Six
months ended June 30, 2009 compared to the six months ended June 30, 2008

Net
Revenues. We had net revenues for the six months ended
June 30, 2009, of $1,870,457 compared to the six months ended June 30, 2008,
which was $1,631,206. This increase of $239,251 is primarily the result of the
increase in medical service revenues of $242,319 due to continued increases in
medical client visits. Medical client visits increased from 13,876 for the six months
ended June 30, 2008, to 16,550 for the six months ended June 30, 2009, an
increase of 19%. The increase in medical clinic visits is attributed to
continued success in attracting new medical clients and keeping established
clients. Established client visits were 13,195 for the six months ended June
30, 2009 compared to 10,429 for the six months ended June 30, 2008, an increase
of 27%. New client visits accounted for 3,355 visits for the six months ended
June 30, 2009, compared to 3,447 visits for the six months ended June 30, 2008,
a decrease of 3%.

Net
Operating Expenses. Operating expenses for the six months
ended June 30, 2009 were $1,902,952 compared to the six months ended June 30,
2008, which were $1,973,444. This decrease of $70,492 was the result of an
increase of $184,976 in medical clinic operating expenses related to increased
service revenues and staffing costs to improve client service. Medical spa
operating expenses decreased $86,031 due to decreases in administrative
staffing as well as the transition of several full-time service provider
positions to part-time status. Decreased corporate expenses accounted for the
remaining $169,437 decrease, due to reduced costs from our registration
statement filed with the SEC and a reduction in various consulting costs.

Medical
clinic operating expenses increased to support higher service revenues and
staffing costs to improve client service. Physician compensation increased
$110,049 and medical staff payroll increased $39,277 for the six months ended
June 30, 2009, compared to the six months ended June 30, 2008. Supplies expense
($30,169) and laboratory service expenses ($20,998) also increased in response
to our higher medical clinic revenue during the same reporting period.

16

---



Medical
spa expenses decreased as a result of a reduction in administrative staffing as
well as the transition of several full-time service provider positions to
part-time status. Staffing costs for the medical spa decreased $45,553 from
$136,198 for the six months ended June 30, 2009, compared to $181,751 for the
six months ended June 30, 2008. Expenses related to spa products decreased
$32,058 in response to lower sales of several product lines.

Corporate
expenses decreased $169,437, primarily due to a decrease of $72,026 in
accounting, legal, and consulting fees associated with our registration
statement filed with the SEC. The majority of the accounting and legal expense
for the SEC registration was recognized during the six months ended June 30,
2008. Corporate consulting costs also decreased $107,565 based on 2008
consulting agreements for a total of $108,965 related to the medical spa and an
exploration of expansion possibilities. We incurred only $1,400 in consulting
costs for the six months ended June 30, 2009.

Operating
Loss. The operating losses for the six months ended June
30, 2009 and 2008 were $32,495 and $342,238, respectively. This decrease of
$309,743 was primarily the result of the combined impact of increased revenue
and decreased operating expenses discussed above.

Net
Interest Expense. Our net interest expense for the six
months ended June 30, 2009 was $117,857 compared to $136,221 for the six months
ended June 30, 2008. This decrease of $18,364 was primarily the result of
reduced amortization of the debt discount recorded for the subordinated
convertible debentures. The decrease in amortization of debt discount was
$31,201, from $17,093 for the six months ended June 30, 2009 compared to
$48,294 for the six months ended June 30, 2008. We also saw reduced interest
expense due to a decrease in our Small Business Administration loan in April
2008. The bank holding our Small Business Administration loan released the
restriction on a $250,000 certificate of deposit, which we used to reduce the
principal of the loan. This reduced the monthly debt service of the note,
thereby reducing interest expense. These decreases were partially offset by
increased interest expense recognized on a note payable to a related party. The
funds were utilized primarily to pay for expenses related to our SEC
registration statement.

Net
Loss Applicable to Common Stock.Net loss for the
six months ended June 30, 2009 was $150,352 compared to $478,459 for the six
months ended June 30, 2008. This decrease of $328,107 is primarily the result
of the items discussed above.

Liquidity
and Capital Resources

As
of June 30, 2009, we had a working capital deficit of $1,767,000, resulting
from current liabilities of $2,119,980. For the six months ended June 30, 2009,
net cash flow used in operating activities totaled $97,681. Cash used in
investing activities totaled $5,294. Cash provided by financing activities
totaled $59,511; including $84,004 in debt reductions, which were offset by
$143,515 in borrowings from stockholders.

Our
days in medical accounts receivables were 31 days and 39 days as of June 30,
2009 and December 31, 2008, respectively. All medical spa services and product
sales are paid at the point of service by credit cards, debit cards, checks or
cash. Accounts receivable related to medical spa services are not material and
are not included in this analysis. Medical clinic services provided by
Northwest Arkansas Primary Care Physicians are generally submitted for billing
to third-party insurance companies or Medicare within 48 hours of the time of
service. We have engaged a professional medical billing company to submit the
claims to insurers. Most claims are submitted electronically to the insurance companies
and Medicare. These claims become accounts receivable at the time they are
submitted to the insurance company. The aging of accounts receivable begins at
the date of the billing submission. Insurance companies then review the
electronic billing and either ask for more/corrected information, deny the
particular service or part of a service or pay it (electronically to a bank
lock box) or by check mailed. In addition, each insurance company adjusts the
billing amount for each specific service to the insurance allowable rate as
specified in that insurance companys contract with Northwest Arkansas Primary
Care Physicians. The insurance company will also identify any portions of the
billing that are to be paid by the insured client (client responsible). These
reviews and adjustments are communicated along with payments to us in an
Explanation of Benefits.

We
calculate days sales outstanding using average daily sales over the previous
three months to arrive at an average daily charge amount. Medical clinic
accounts receivable as of the end of the period is divided by the average daily
charge amount to arrive at days sales outstanding. Below is a calculation of
the days sales outstanding as reported above:

17

---



|                                                               |  |              |           |              |   |           |  
|-------------------------------------------------------------- |  | ------------ | --------- | ------------ | - | --------- | -
|                                                               |  | Three Months |           | Three Months |  
|                                                               |  | Ended        |           | Ended        |  
|                                                               |  | June 30,     |           | December 31, |  
|                                                               |  |              |           |              |  
|                                                               |  | 2009         |           | 2008         |  
|                                                               |  |              |           |              |  
|                                                               |  |              |           |              |   |           |  
|Gross Medical Clinic Revenue (1)                               |  | $            | 1,177,537 |              | $ | 1,174,388 |  
|Expense recorded for Contractual adjustment/Bad
Debt Allowance |  |              | (407,100  | )            |   | (408,955  | )
|                                                               |  |              |           |              |   |           |  
|Net Medical Clinic Revenue                                     |  | $            | 770,437   |              | $ | 765,433   |  
|                                                               |  |              |           |              |   |           |  
|                                                               |  |              |           |              |   |           |  
|# of Days in period (2)                                        |  |              | 91        |              |   | 92        |  
|                                                               |  |              |           |              |   |           |  
|Average Daily Charge (3) = (1) / (2)                           |  | $            | 12,940    |              | $ | 12,765    |  
|                                                               |  |              |           |              |   |           |  
|Medical Clinic Accounts Receivable (4)                         |  | $            | 405,497   |              | $ | 497,303   |  
|Other Accounts Receivable                                      |  | $            | 19,035    |              | $ | 31,408    |  
|                                                               |  |              |           |              |   |           |  
|                                                               |  | $            | 424,532   |              | $ | 528,711   |  
|                                                               |  |              |           |              |   |           |  
|                                                               |  |              |           |              |   |           |  
|Days in medical accounts receivable = (4) /
(3)                |  |              | 31        |              |   | 39        |  
|                                                               |  |              |           |              |   |           |  

We
make every effort to collect any anticipated client responsible portions of a
service bill (such as a co-pay or deductible) at the time of service. Payments
by the insurance companies are posted to each clients account at the time it
is received. Client payments are also posted as received. Accounts receivable
are then reduced by the amounts of insurance contractual adjustments, insurance
payments and client payments. At the time any amounts are determined to be owed
by the client; printed bills are sent to the responsible party of the client.
During all of these collection processes from the time of the initial billing
date to the insurance companies, the accounts are individually and collectively
aged. Due to the complexities of medical insurance policies, employer specific
policies, and coverage qualifications, some appeals and interactions with
insurance companies can result in three to six months of claim reconciliation.
If the client does not respond after three mailed billings, then the account is
turned over to a collection company that pursues collection from the client.
When an account is turned over for collection, it is removed from the accounts
receivable and maintained in a bad debt recovery account and reserved at its
estimated realizable value. If the collection company fails in locating the
client or in collecting the account due, then the balance of the account is
written off against the allowance. Any amounts due under $5.00 are immediately
written off due to the cost of collection exceeding the expected collection
recovery.

We
expect significant capital expenditures during the next 12 months, contingent
upon raising capital. These anticipated expenditures are for opening an
additional office, property and equipment, overhead and working capital
purposes. We have sufficient funds to conduct our operations for a few months,
but not for 12 months or more. We anticipate that we will need an additional
$1,500,000 to fund our anticipated operations for the next 12 months, depending
on revenues from operations. We have no contracts or commitments for additional
funds and there
can be no assurance that financing will be available in amounts or on terms
acceptable to us, if at all.

By
adjusting our operations and development to the level of capitalization, we
believe we have sufficient capital resources to meet projected cash flow
deficits for the remainder of 2009. However, if during that period or
thereafter, we are not successful in generating sufficient liquidity from
operations or in raising sufficient capital resources, on terms acceptable to
us, this could have a material adverse effect on our business, results of
operations, liquidity and financial condition.

We
presently do not have any available credit, bank financing or other external
sources of liquidity. Due to our brief history and historical operating losses,
our operations have not been a source of liquidity. We will need to obtain
additional capital in order to expand operations and become profitable. In
order to obtain capital, we may need to sell additional shares of our common
stock or borrow funds from private lenders. There can be no assurance that we
will be successful in obtaining additional funding.

To
the extent that we raise additional capital through the sale of equity or
convertible debt securities, the issuance of such securities may result in
dilution to existing stockholders. If additional funds are raised through the
issuance of debt securities, these securities may have rights, preferences and
privileges senior to holders of common stock and the terms of such debt could
impose restrictions on our operations. Regardless of whether our cash assets
prove to be inadequate to meet our operational needs, we may seek to compensate
providers of services by issuance of stock in lieu of cash, which may also result
in dilution to existing shareholders. Even if we are able to raise the funds
required, it is possible that we could incur unexpected costs and expenses,
fail to collect significant amounts owed to us, or experience unexpected cash
requirements that would force us to seek alternative financing.

18

---



Whereas
we have been successful in the past in raising capital, no assurance can be
given that these sources of financing will continue to be available to us
and/or that demand for our equity/debt instruments will be sufficient to meet
our capital needs, or that financing will be available on terms favorable to
us. If funding is insufficient at any time in the future, we may not be able to
take advantage of business opportunities or respond to competitive pressures,
or may be required to reduce the scope of our planned service development and
marketing efforts, any of which could have a negative impact on our business
and operating results. In addition, insufficient funding may have a material
adverse effect on our financial condition, which could require us to:

| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | curtail operations significantly;                                                                                                                           
| |   |                                                                                                                                                             
| |  | sell significant assets;                                                                                                                                    
| |   |                                                                                                                                                             
| |  | seek arrangements with strategic partners or other
  parties that may require us to relinquish significant rights to products,
  technologies or markets; or
| |   |                                                                                                                                                             
| |  | explore other strategic alternatives including a
  merger or sale of our company.                                                                           

Critical Accounting Policies

Accounts
Receivable

Accounts
receivable principally represent receivables from customers and third-party
payors for medical services provided by clinic physicians, less an allowance
for contractual adjustments and doubtful accounts. We utilize a third party
billing organization that estimates the collectability of receivables based on
industry standards and our collection history. We recorded contractual
adjustments and bad debt expense of approximately $802,000 and $682,000 for the
six months ended June 30, 2009 and 2008, respectively. We recorded contractual
adjustments and bad debt expense of approximately $407,000 and $314,000 for the
three months ended June 30, 2009 and 2008, respectively. Our revenues and
receivables are reported at their estimated net realizable amounts and are
subject to audit and adjustment. Provisions for estimated third-party payor
settlements are provided in the period the related services are rendered and
are adjusted in the period of settlement. Actual settlements could have an
adverse material effect on our financial position and operations.

Our
accounts receivable include amounts that are pending approval from third party
payors. Claims for insured clients are first filed with insurance, at which
time the net realizable amount is unknown. The insurance company processes the
claim and calculates the payment made to us. The following factors are among
those considered by the insurance company: adjustments based on contracted
amounts for specific procedures, outstanding deductible for the client, and
co-insurance percentages. Our billing system does not separately track claims
that are pending approval. Our billing system also does not track claims that
are denied by a third party payor and ultimately paid by the client. Thus, the
amount of claims classified as insurance receivables that are reclassified to
self-pay is not quantifiable. We calculate allowances for contractual
adjustments and bad debts based on total accounts receivable outstanding.

|                            |  |                     |         |                 |   |                         |  |       |         |  |   |         | 
|--------------------------- |  | ------------------- | ------- | --------------- | - | ----------------------- |  | ----- | ------- |  | - | ------- | 
|                            |  |                     |        
|                            |  | As of June 30, 2009 |        
|                            |  |                     |        
|                            |  | 60
  days or less   |         | 61 
  120 days |   | Greater
  than 120 days |  | Total |        
|                            |  |                     |         |                 |   |                         |  |       |        
|Medicare/Medicaid           |  | $                   | 19,513  |                 | $ | 3,699                   |  | $     | 4,157   |  | $ | 27,369  | 
|Third party insurance (1)   |  |                     | 168,269 |                 |   | 25,796                  |  |       | 33,287  |  |   | 227,353 | 
|Self pay (2)                |  |                     | 19,809  |                 |   | 21,523                  |  |       | 109,444 |  |   | 150,776 | 
|Other                       |  |                     | 8,208   |                 |   | 405                     |  |       | 10,423  |  |   | 19,035  | 
|                            |  |                     |         |                 |   |                         |  |       |         |  |   |         | 
|Total Accounts
  Receivable |  | $                   | 215,799 |                 | $ | 51,423                  |  | $     | 157,311 |  | $ | 424,532 | 
|                            |  |                     |         |                 |   |                         |  |       |         |  |   |         | 

|                            |  |                         |         |                 |   |                         |  |       |         |  |   |         | 
|--------------------------- |  | ----------------------- | ------- | --------------- | - | ----------------------- |  | ----- | ------- |  | - | ------- | 
|                            |  |                         |        
|                            |  | As of December 31, 2008 |        
|                            |  |                         |        
|                            |  | 60
  days or less       |         | 61 
  120 days |   | Greater
  than 120 days |  | Total |        
|                            |  |                         |         |                 |   |                         |  |       |        
|Medicare/Medicaid           |  | $                       | 19,173  |                 | $ | 1,966                   |  | $     | 2,691   |  | $ | 23,830  | 
|Third party insurance (1)   |  |                         | 224,900 |                 |   | 40,113                  |  |       | 48,859  |  |   | 313,872 | 
|Self pay (2)                |  |                         | 31,883  |                 |   | 28,891                  |  |       | 98,827  |  |   | 159,601 | 
|Other                       |  |                         | 15,873  |                 |   | 5,173                   |  |       | 10,362  |  |   | 31,408  | 
|                            |  |                         |         |                 |   |                         |  |       |         |  |   |         | 
|Total Accounts
  Receivable |  | $                       | 291,829 |                 | $ | 76,143                  |  | $     | 160,739 |  | $ | 528,711 | 
|                            |  |                         |         |                 |   |                         |  |       |         |  |   |         | 

|    |                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Third party insurance represents claims made to
  insurance companies not classified as Medicare, Medicaid, or other
  government-backed program.                   
|    |                                                                                                                                                                     
|(2) | Self pay receivables are defined as all amounts due
  from individuals. The amounts can include amounts due from uninsured clients
  and co-payments or deductibles.

Revenue
Recognition

We
recognize revenue in accordance with Securities and Exchange Commission (SEC)
Staff Accounting Bulletin No. 104, Revenue Recognition in Financial Statements
(SAB 104). Under SAB 104, revenue is recognized when the title and risk of loss
have passed to the customer, there is persuasive evidence of an arrangement,
delivery has occurred or services have been rendered, the sales price is
determinable and collectability is reasonably assured.

Our
net revenue is comprised of net clinic revenue and revenue derived from the
sales of spa services and related products. Net clinic revenue is recognized at
the time of service and is recorded at established rates reduced by provisions
for doubtful accounts and contractual adjustments. Contractual adjustments
arise as a result of the terms of certain reimbursement and managed care
contracts. Such adjustments represent the difference between charges at
established rates and estimated recoverable amounts and are recognized in the
period the services are rendered. Any differences between estimated contractual
adjustments and actual final settlements under reimbursement contracts are
recognized in the year they are determined.

Spa
revenues are recognized at the time of sale, as this is when the services have
been provided or, in the case of product revenues, delivery has occurred, and the
spa receives the customers payment. Revenues from pre-paid purchases are also
recorded when the customer takes possession of the merchandise or receives the
service. Pre-paid purchases are defined as either gift cards or series sales.
Series sales are the purchase of a series of services to be received over a
period of time. Pre-paid purchases are recorded as a liability (deferred
revenue) until they are redeemed. Gift cards expire two years from the date of
the customers purchase. Series sales do not carry an expiration date.

Earnings
Per Share

We
calculate and disclose earnings per share (EPS) in accordance with Statement of
Financial Accounting Standards (SFAS) No. 128, Earnings
Per Share (SFAS 128). SFAS 128 requires dual presentation of Basic
and Diluted EPS on the face of the statements of operations and requires a
reconciliation of the numerator and denominator of the Basic EPS computation to
the numerator and denominator of the Diluted EPS computation. Basic EPS
excludes dilution and is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for
the period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in our earnings.

In
computing Diluted EPS, only potential common shares that are dilutive  those
that reduce earnings per share or increase loss per share  are included.
Exercise of options and warrants or conversion of convertible securities is not
assumed if the result would be antidilutive, such as when a loss from
continuing operations is reported. The control number for determining whether
including potential common shares in the Diluted EPS computation would be
antidilutive is income from continuing operations. As a result, if there is a
loss from continuing operations, Diluted EPS would be computed in the same
manner as Basic EPS, even if an entity has net income after adjusting for
discontinued operations, an extraordinary item or the cumulative effect of an
accounting change. We incurred a loss from continuing operations for the three
and six month periods ended June 30, 2009 and 2008. Therefore, basic EPS and
diluted EPS are computed in the same manner for that period. Anti dilutive
and/or non-exercisable warrants and convertible preferred stock and convertible
subordinated debentures represent approximately 17,700,000 and 15,200,000
common shares at June 30, 2009 and 2008, respectively, which may become
dilutive in future calculations of EPS.

Share-Based
Payment

In
December 2004, the Financial Accounting Standards Board issued SFAS No. 123R, Share-Based
Payment (SFAS 123R).
SFAS 123R is a revision of SFAS 123, Accounting for Stock-Based Compensation,
and supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees,
and its related implementation guidance. Under paragraph 7 of SFAS 123R, if the
fair value of goods or services received in a share-based payment transaction
with nonemployees is more reliably measurable than the fair value of the equity
instruments issued, the fair value of the goods or services received shall be
used to measure the transaction. In contrast, if the fair value of the equity
instruments issued in a share-based payment transaction with nonemployees is
more reliably measurable than the fair value of the consideration received, the
transaction shall be measured

19

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based on the fair value of the equity instruments
issued. We utilized the fair value of the equity instruments issued to
nonemployees to value the shares issued. We recognize the fair value of
stock-based compensation awards in general corporate expense in the
consolidated statements of operations on a straight-line basis over the vesting
period.

In
January 2009, we entered into a one year agreement with a consulting company
for public and investor relations services. Pursuant to the original agreement,
we agreed to pay the consultant $6,000 per month ($72,000 per year) and issue
348,600 shares of common stock. As of June 30, 2009, we had not issued the
shares. Subsequent to June 30, 2009, we exercised the termination clause in the
contract and the consultant agreed to reduce the number of shares of stock to
261,450. The shares have been valued at $0.08888 and $23,238 has been recorded
as an accrued liability on our balance sheet and as general corporate expense
on our income statement for the issuance of the shares.

In
April 2009, we agreed to issue 1,250,000 shares of common stock to a related
party and stockholder as part of the issuance of a $443,123 subordinated
convertible debenture. The shares have been valued at $0.08888 per share and
the cost has been recorded as deferred debt financing costs and will be
amortized over the life of the associated debenture.

Recent Accounting Pronouncements

In
March 2008, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 161, Disclosures
about Derivative Instruments and Hedging Activities  an amendment of FASB
Statement No. 133(SFAS 161). SFAS 161 requires enhanced
disclosures about an entitys derivative and hedging activities, including
qualitative disclosures about objectives and strategies for using derivatives,
quantitative disclosures about fair value amounts of and gains and losses on
derivative instruments, and disclosures about credit-risk-related contingent
features in derivative agreements. SFAS 161 is effective for fiscal years and
interim periods beginning after November 15, 2008. We adopted SFAS 161 as
of January 1, 2009. The adoption of SFAS 161 did not have a material effect on
our financial statements and related disclosures.

In
April 2009, the Financial Accounting Standards Board issued FASB Staff Position
No. FAS 107-1 and APB 28-1, Interim
Disclosure about Fair Value of Financial Instruments(FSP 107-1).
FSP 107-1 amends FASB Statement No. 107, Disclosures
about Fair Value of Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. FSP 107-1
also amends APB Opinion No. 28, Interim
Financial Reporting, to require those disclosures in summarized
financial information at interim reporting periods. FSP 107-1 is effective for
interim reporting periods ending after June 15, 2009. We adopted FSP 107-1 as
of April 1, 2009. The disclosures related to FSP 107-1 are included in Note 11.

In
May 2009, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 165, Subsequent Events(SFAS 165). SFAS 165 establishes
general standards of accounting for and disclosure of events that occur after
the balance sheet date but before financial statements are issued or are
available to be issued. SFAS 165 became effective for interim or annual
reporting periods ending after June 15, 2009. We adopted SFAS 165 as of April
1, 2009. The disclosures required by SFAS 165 are included in Note 12.

In
June 2009, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation
No. 46(R) (SFAS 167). This Statement amends Interpretation
46(R) to require an entity to perform a qualitative analysis to determine
whether the entitys variable interest or interests give it a controlling
financial interest in a variable interest entity (VIE). This analysis
identifies the primary beneficiary of a VIE as the entity that has both the
power to direct the activities that most significantly impact the VIEs
economic performance and the obligation to absorb losses or the right to
receive benefits of the VIE. SFAS 167 amends Interpretation 46(R) to replace
the quantitative-based risks and rewards approach previously required for
determining the primary beneficiary of a VIE. SFAS 167 is effective as of the
beginning of an entitys first annual reporting period that begins after
November 15, 2009 and for interim periods within that first annual
reporting period. Earlier application is prohibited. We will assess the
application of this Statement on our Consolidated Financial Statements.

In
June 2009, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards CodificationTM and the
Hierarchy of Generally Accepted Accounting Principles  a
replacement of FASB Statement No. 162(SFAS 168). SFAS 168
identifies the sources of accounting principles and the framework for selecting
the principles used in the preparation of financial statements of
nongovernmental entities that are presented in conformity with generally
accepted accounting principles in the United States. SFAS 168 is effective for
interim and annual periods ending after September 15, 2009. We do not expect
the adoption of SFAS 168 to have a material effect on our financial statements
and related disclosures.

20

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ITEM 3 
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not
required under Regulation S-K for smaller reporting companies.

ITEM 4T
- CONTROLS AND PROCEDURES

(a)
Evaluation of disclosure controls and procedures.

Our
management, with the participation of our Chief Executive Officer and Chief
Financial Officer, evaluated the effectiveness of our disclosure controls and
procedures pursuant to Rule 13a  15(e) and 15d  15(e) under the Securities
Exchange Act of 1934 as of June 30, 2009. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and
procedures, no matter how well designed and operated, can provide only
reasonable assurance of achieving the desired control objectives. In addition,
the design of disclosure controls and procedures must reflect the fact that
there are resource constraints and that management is required to apply its
judgment in evaluating the benefits of possible controls and procedures
relative to their costs.

Based
on our evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are designed at a
reasonable assurance level and are effective to provide reasonable assurance
that information we are required to disclose in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding required disclosure.

(b)
Changes in internal control over financial reporting.

We regularly
review our system of internal control over financial reporting and make changes
to our processes and systems to improve controls and increase efficiency, while
ensuring that we maintain an effective internal control environment. Changes
may include such activities as implementing new, more efficient systems,
consolidating activities, and migrating processes.

There
were no changes in our internal control over financial reporting that occurred
during the period covered by this Quarterly Report on Form 10-Q that have
materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting.

21

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PART II - OTHER INFORMATION

Item 1. Legal
Proceedings.

From time to time, we may become involved in various
lawsuits and legal proceedings which arise in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an adverse result
in these or other matters may arise from time to time that may harm our
business. We are currently not aware of any such legal proceedings or claims
that we believe will have, individually or in the aggregate, a material adverse
affect on our business, financial condition or operating results.

Item 1A. Risk Factors.

Not
required under Regulation S-K for smaller reporting companies.

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

Between
April 2009 and June 2009, we issued 2,981,250 shares of our common stock to
four investors upon the conversion of 11,925 shares of preferred stock.

Between
May 2009 and June 2009, we issued 1,062,556
shares of our common stock to three
investors upon the conversion of $100,000 of convertible subordinated
debentures.

Effective
April 1, 2009, we issued a $443,123 subordinated convertible debenture to
Regent Private Capital, LLC, which is owned by Lawrence Field, one of our
Directors. The debenture was issued for the retirement of $443,123 that Regent
had loaned to us from time to time. The debenture accrues interest at the rate
of 10% per annum, is due on April 1, 2012 and is convertible into shares of our
common stock at a conversion price of $0.08888 per share.

In
June 2009, we issued 1,250,000 shares of common stock to Regent Private
Capital, LLC in connection with the issuance of the subordinated convertible
debenture.

Item 3. Defaults Upon Senior
Securities.

None.

Item 4. Submission of Matters to a
Vote of Security
Holders.

None.

Item 5. Other
Information.

None.

Item 6. Exhibits

|      |                                                                                                                                                                                     
|----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.01 | Letter Agreement, dated as
  of May 11, 2009, by and between WellQuest Medical & Wellness Corporation
  and Regent Private Capital, LLC.                                            
|      |                                                                                                                                                                                     
|10.02 | Form of Subordinated
  Convertible Debenture, issued as of April 1, 2009, issued to Regent Private
  Capital, LLC.                                                                  
|      |                                                                                                                                                                                     
|31.01 | Certification of Chief
  Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002           
|      |                                                                                                                                                                                     
|31.02 | Certification of Chief
  Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as
  adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002           
|      |                                                                                                                                                                                     
|32.01 | Certifications of Chief
  Executive Officer and Chief Financial Officer pursuant to 18 U.S.C.
  Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
  2002

22

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SIGNATURES

In accordance with requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

|                      |  |                              |                                                                                          |                 | 
|--------------------- |  | ---------------------------- | ---------------------------------------------------------------------------------------- | --------------- | 
|                      |  | WELLQUEST MEDICAL & WELLNESS
|                      |  | CORPORATION                 
|                      |  |                              |                                                                                          |                
|Date: August 14, 2009 |  |                              | By:                                                                                      | /s/ STEVE SWIFT
|                      |  |                              |                                                                                          |                 | 
|                      |  |                              | Steve Swift                                                                             
|                      |  |                              | Chief Executive Officer (Principal Executive
  Officer)                                 
|                      |  |                              |                                                                                          |                
|Date: August 14, 2009 |  |                              | By:                                                                                      | /s/ GREG PRIMM 
|                      |  |                              |                                                                                          |                 | 
|                      |  |                              | Greg Primm                                                                              
|                      |  |                              | Chief Financial Officer (Principal Financial Officer
  and Principal Accounting Officer)

23

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