U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark One)

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

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

Commission File No. 000-30518

GENELINK, INC.

(Exact name of registrant as specified in its charter)

Pennsylvania State of Incorporation		23-2795613 I.R.S. Employer I.D. No.

317 Wekiva Springs Road, #200
Longwood, FL 32779
(Address of principal executive offices)

Registrant’s telephone number including area code: (800) 588-4363

Securities registered under Section 12(b) of the Exchange Act:
None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.01 Par Value
(Title of class)

Indicate by check mark if the registrant is well-known season issuer, as defined in Rule 405 of the Securities Act.

Yes o No þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes o No þ

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 þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” 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 þ
				(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12B-12 of the Exchange Act).

Yes o No þ

Aggregate market value of common stock held by non-affiliates of the Registrant, as of June 30, 2008 was $44,100,000 based on the closing price of the common stock of the Nasdaq OTC Bulletin Board.

As of October 30, 2009, there were 110,712,025 shares of the issuer’s common stock, $.01 par value, outstanding.

EXPLANATORY NOTE

This Annual Report on Form 10-K/A is being filed by GeneLink, Inc. (the “Registrant”) to amend the Annual Report on Form 10-K filed by the Registrant with the Securities and Exchange Commission on March 31, 2009 to revise the signature page and Exhibit 31.1 and to add Exhibits 3.1 and 10.1.

 

 

TABLE OF CONTENTS

ITEM 1. DESCRIPTION OF BUSINESS			2
ITEM 1A. RISK FACTORS			10
ITEM 1B. UNRESOLVED STAFF COMMENTS			21
ITEM 2. PROPERTIES			21
ITEM 3. LEGAL PROCEEDINGS			21
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS			23
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES			24
ITEM 6. SELECTED FINANCIAL DATA			27
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			27
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			35
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTS			35
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE			64
ITEM 9A. CONTROLS AND PROCEDURES			64
ITEM 9B. OTHER INFORMATION			65
ITEM 10. DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE			66
ITEM 11. EXECUTIVE COMPENSATION			72
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS			80
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE			82
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES			82
ITEM 15. EXHIBITS			83
Exhibit 3.1
Exhibit 10.1
Exhibit 21
Exhibit 31.1
Exhibit 32.1

FORWARD LOOKING STATEMENTS

The statements, other than statements of historical or present facts included in this annual report are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical or present facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, but not limited to, “may”, “will”, “expect”, “estimate”, “anticipate” or “believe”. These forward-looking statements are based on management’s current believe, based upon currently available information, as to the outcome and timing of future events. Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Our forward-looking statements speak only as of the date on which this annual report was filed with the SEC. We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements, or if we believe that our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse to our shareholders. Many important factors that could cause such a difference are described in this Form 10-K in Part I, Item 1A, Risk Factors, which you should review carefully. Please consider our forward-looking statements in light of those risks as you read this annual report.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

GeneLink, Inc. (“GeneLink, the “Company”, “we” or “us”) is a publicly-held Pennsylvania corporation listed on the NASDAQ OTC Bulletin Board trading under the symbol “GNLK.” We have created a breakthrough methodology for SNP (single nucleotide polymorphism) based genetic profiling (patents issued and pending) and we intend to market and/or license these proprietary assessments to companies that manufacture or market to the nutraceutical, personal care and skin care industries.

We were founded in response to the explosion of information being generated in the field of human molecular genetics. Scientists are discovering an increasing number of connections between genes and specific diseases or physical attributes and tendencies. The growth of scientific knowledge in this area has been accelerating as a direct result of the National Institutes of Health Genome Project.

Our expansion into the bioscience field with our innovative genetic profiles help companies create and deliver more effective products — personalized wellness and “quality of life” products tailored to their customer’s individual needs — based on the science of genetics, thereby allowing the consumer and/or their health care provider to determine what vitamin/nutritional supplements, skin-care products, and health care or weight loss regimens are best for their individual needs.

We have developed proprietary SNP-based genetic profiles (named GeneLink Nutragenetic Profile^TM and Dermagenetics^® profiles). These profiles provide a means of predicting an individual’s inherent genetic capacity to combat such conditions as oxidative stress and other important selected areas of physiologic health. The profiles, for example, can measure a person’s potential to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds.

Our profile assessment enables nutritional and skin care companies and health care professionals to recommend a specific and targeted regimen of antioxidant vitamins, nutrients or skin care formulations that have been specifically designed to compensate for predicted deficiencies and to help provide individuals the best of health and appearance.

In 2004, we formed a wholly owned subsidiary, Dermagenetics, Inc., to provide our genetically customized products and services to the skin and personal care market. In December 2007, we formed a wholly owned subsidiary, GeneWize Life Sciences, Inc. (“GeneWize”), to provide our genetically customized products and services to the nutrition and skincare markets. GeneWize formally launched its products and services in August 2008.

We have never achieved a profit, having realized net losses each year, including operating losses before extraordinary items of $790,868 in 2006, $1,560,624 in 2007 and $2,603,509 in 2008. There can be no assurance that we will ever realize significant sales or become profitable.

Oxidative Stress Profiles

The Oxidative Stress (OS) Profile (US patent pending, Australian patent issued) provides a means of predicting an individual’s inherent genetic capacity to combat oxidative stress. The profile can measure a person’s potential to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds.

This profile information will enable nutritional and skin care companies to recommend a specific and targeted regimen of antioxidant vitamins, nutrients or skin-care formulations that have been specifically designed to compensate for predicted deficiencies. Thus, the OS profile can be used to make rational choices to help optimize nutritional and skin care needs to provide the best of health and appearance.

The profile examines genes of the OS family for the existence of SNPs (naturally occurring variations in genes) that can result in an amino acid substitution in the protein that is encoded by that gene. If such a protein is an OS enzyme, it may be less efficient in enzymatic activity, in which case oxidative damage to cellular proteins and DNA accumulates over time. It appears that some tissues are more vulnerable than are others to oxidative stress. SNPs in other oxidative stress genes have been associated with heart disease, cancer, neurological degeneration and aging.

A search for SNPs has the advantage of identifying genetic variations that reduce an individual’s antioxidant defense capacity. It can detect changes that are life-long and predicted to chronically affect the ability to defend against oxidative stress, aging and age related disease. Genetic profiling information based on SNPs analyses can be used to design appropriate antioxidant vitamin, nutrient and skin-care formulations that are specifically tailored to each individual.

Oxidative Stress for Skin Health and Skin Aging Profile

By simply swabbing the inside of one’s mouth and sending the collected sample to our laboratory, an individual can have a skin or personal care formulation specifically designed to compensate for associated deficiencies.

Currently, when a person sees wrinkles or lines, he or she may begin to apply a variety of products and creams that contain antioxidants such as retinoids. This approach is only partially effective because it typically begins only after the signs of aging have appeared. A superior strategy is to predict certain causes of the aging of the skin and initiate a therapy that is designed to match the individual’s genetic pattern and genetic risk of skin aging. For example, individuals with moderate or high risk of oxidative stress could be encouraged to initiate a therapy much earlier - even before outward signs of skin aging.

Our Skin Health test for skin aging looks for SNPs in several key genes that are associated with oxidative stress, skin irritation, photo aging and an individual’s ability to naturally defend against environmental stresses. Skin health test results can be used to guide consumers to skin therapies or skin products containing unique active ingredients (SNPActives™) and formulations designed to help alleviate specific oxidative stresses and other potential deficiencies in the skin.

Other SNP Profiles Developed by the Company

We have also developed a Cardiovascular Risk Profile and an Osteopenia Susceptibility Profile. Cardiovascular disease claims more lives each year than the next five leading causes of death combined. We have recently developed a Cardiovascular Risk Profile, that analyzes a broad collection of genes believes to play an important part in heart health, according to the latest research. Our Cardiovascular Risk Profile is designed to identify SNPs associated with increased risk of developing high blood pressure, atherosclerosis, inflammation, problems with vascular integrity and coronary artery disease.

Osteopenia is a condition that often leads to osteoporosis, a disease characterized by low bone density. Osteoporosis is responsible for 1.5 million fractures each year (including fractures of the vertebrae, forearms, wrists and hips). According to the National Osteoporosis Foundation, 1 in 3 women and at least 1 in 12 men will develop osteoporosis during their lifetime. Our Osteopenia gene test looks for SNPs in several key genes that are associated with bone density. Since osteoporosis can develop undetected for decades, this test may be a tool to help determine the future risk for fractures and related clinical conditions such as spinal column compression and bone breaks with or without falls and guide early interventions or therapies that help combat or prevent the condition.

We have developed a NQ01 SNP profile. NQ01 is a protein that contributes to the recharging Coenzyme Q10. Coenzyme Q10 is a natural compound made by the human body that helps cells produce energy and protect against free radicals that can damage DNA and other molecules of the cell. The NQ01 assessment is complete, ready to market and a provisional patent has been filed. We have also developed a DNA Integrity and Repair Panel which is complete and ready to market. We have developed an Alzheimer/Dementia Panel that requires some additional clinical validation.

Intellectual Property

On May 1, 2007, we received a U.S. patent (No. 7,211,383) for our proprietary method for assessing skin health in humans. Additionally, we have filed a series of U.S. patent applications relating to the our DNA Collection Kit^® and methods for assessing a human subject’s susceptibility to various health conditions, including skin health, oxidative damage, osteoporosis and other bone density disorders and obesity and for methods of selecting and measuring recommended supplement doses of preventative agents for such conditions. There can be no assurance that we will receive patent protection on our methods or procedures. We are negotiating licensing these proprietary assessments to companies that manufacture or market to the $100 billion plus nutraceutical, personal care, skin care, and weight-loss industries.

We believe that our gene profiles offer marketing companies the information they need to create and sell more effective products tailored to their customer’s individual needs — based on the science of genetics. By simply swabbing the inside of one’s mouth (using our patented DNA Collection Kit^®) and sending the collected sample to our laboratories — consumers can be directed to personalized products — specifically formulated to help compensate for their predicted deficiencies.

We have also developed and received a U.S. patent (No. 6,291,171) on a non-invasive DNA Collection Kit^® for the collection of DNA specimens of clients. No licensing or training is necessary for the collection by a client of his or her DNA specimen. The DNA Collection Kit^® consists of several swabs, collection accessories, complete instructions and a mailing envelope; the kit and kit elements are bar coded to facilitate tracking, control and confidentiality. The collection process is self administered and non-invasive (the DNA specimen is obtained by swabbing the inside of the cheek) and takes less than five minutes to complete. The kit is currently classified as a non-medical device. There is no assurance that the patent will prevent others from gathering DNA in a similar manner.

In addition to the aforementioned U.S. patents for “Kits and Methods for Assessing Skin Health” and GeneLink’s non-invasive DNA Collection Kit, GeneLink has also been awarded an Australian patent (No. 2002230953) for its “Kits and Methods for Assessing Oxidative Stress”.

GeneLink is also pursuing trademark protection for various trademarks and tradenames used in connection with the marketing of its genetically-guided products. GeneLink now owns federal trademark registrations in the U.S. for GENELINK^®, SNPACTIVE^®, DERMAGENETICS^® and DNA ULTRACUSTOM^®. Additionally, GeneLink has received Notices of Allowance for federal trademark registration for LIFEMAP NUTRITION™, GENELINK HEALTHY AGING ASSESSMENT™, LIFEMAP SKIN CARE™; SNPBOOST™, JUICEBOOST™, LIFEMAP WEALTH SYSTEM™ and YOUR GENETIC COMPASS™. Additional trademark applications are pending for LIFEMAP ESSENTIALS™ and LIFEMAP CUSTOM™.

Scientific Advisory Board

Our Scientific Advisory Board consists of Dr. Robert P. Ricciardi, Dr. Bernard L. Kasten, Dr. Harry Harrison, Dr. James Simpkins, Dr. Donald Cannon, Dr. Robert P.K. Keller, Dr. Robert L. Kagan and Dr. Heather Mittiga. Dr. Ricciardi and Dr. Kasten are members of our Board of Directors. Dr. Mittiga is the daughter of Dr. Kasten.

GeneWize Life Sciences, Inc.

On August 1, 2008, GeneWize Life Sciences, Inc., a wholly-owned subsidiary of GeneLink, held its grand opening launch conference with over 1,500 participants from around the country. GeneWize is the first direct selling company to focus exclusively on marketing nutritional supplements and skin care products specifically tailored to an individual’s genetic makeup.

GeneWize’s product offering in 2008 consisted of its foundational LifeMap Nutrition™ System. The LifeMap Nutrition™ System is the first comprehensive system of personalized (mass customized) nutritional supplement manufacturing based on genetic testing that measures single nucleotide polymorphisms (“SNPs”; pronounced “snips”) in DNA. GeneLink’s patented pending assessments, such as GeneLink Healthy Aging Assessment™ and Oxidative Stress, form the foundation of this system. Genetic test results drive a proprietary algorithm that generates a nutritional report linked to an individual “titration matrix.” In order to help compensate for any predicted deficiencies, genetically selected ingredients and nutrients (SNPboosts™, or “snip boosts”) are titrated and blended into the individual nutritional formulation. Thus, each customer’s product is individually customized and manufactured specifically for that customer.

Customers order the LifeMap Nutrition™ in a 30-day supply which currently comes in an encapsulated form. List price for monthly supplements is from $99 to $119. Customers generally subscribe to an automatic shipment program which sends their product out monthly, creating a recurring revenue stream for the company. GeneWize plans in the near future to expand product and product line offerings to include other science-related but not genetically customized supplements (“lifestyle boosts”) as well as to offer genetically customized skincare solutions developed by Dermagenetics, another subsidiary of GeneLink. GeneLink has previously marketed the Dermagenetics™ skin care product to the high-end spa market.

In addition to nutritional products, GeneWize, as a direct selling company, offers customers the opportunity to participate in selling and distributing the product to others and receive compensation for doing so. These independent marketing affiliates must agree to and comply with the Company’s policies related to the sale and distribution of products, particularly as it relates to product claims or, in the case of recruiting other affiliates, income potential. In return for creating sales and complying with appropriate policies and regulations, GeneWize provides commissions and incentives. It also provides internet ordering sites, business management tools, marketing materials, training and events in support of these affiliates.

In March 2009, GeneWize launched GeneWize Academy, a sophisticated video/audio/interactive on-line educational resource. We believe that GeneWize Academy will assure a high level of education and consistency across the GeneWize sales channel, and will result in the best service and quality to customers as the Company grows.

In January 2009, at the Super Bowl, GeneWize launched GeneWize Sports, an effort to engage athletes in the benefit of genetically guided and personalized nutritional regimens. This division is pursuing high visibility athletes as well as fitness and training professionals to extend their influence to the non-professional athlete as well. We believe the benefits of LifeMap Nutrition™ and its emphasis on oxidative stress are equally if not more applicable to the high performance physical demands of an athlete, whether of a professional or weekend variety.

In terms of numbers of affiliates as of the August 1, 2008 launch and as of the date of this filing, GeneWize far exceeded its plan and expectations, having enrolled over 14,300 independent marketing affiliates as of the date of this filing. This unanticipated and extraordinary demand has put unanticipated pressure on infrastructure, including laboratories, manufacturing and customer service. Since the launch, GeneWize completed significant upgrades to its infrastructure, Customer Service Team and technology, and Marketing and Sales Team capacity during Q4 2008 and Q1 2009. It has increased capacity in manufacturing and DNA testing labs as well as Customer Service Teams. Management believes that they are now poised for the growth that new product offerings may bring.

Affiliates and Licensing and Distribution Partners

We have entered into agreements with several laboratories pursuant to which these laboratories perform SNP genotyping of samples provided by us for any genetics-based products that we may develop.

In February 2006, we entered into a distribution agreement with Rejuvenation Plus Pty Ltd, an international skincare and cosmetics company, pursuant to which that company has been granted the exclusive right to distribute products based upon our technology in Australia and New Zealand.

In June 2007, we entered into a license and distribution agreement with PhytoRich, LLC, pursuant to which PhytoRich will distribute our nutritional care and skin care systems to its medical practitioner customers.

In December 2007, we entered into a license and distribution agreement with Solgar Vitamin and Herb, pursuant to which Solgar will manufacture, market and distribute a line of premium genetically guided dietary supplements utilizing the Company’s Nutritional System™ to Solgar’s health food and specialty natural food retailers North America. Solgar has informed us that it has terminated the license and distribution agreement, and while we continue to process tests for Solgar we are negotiating the terms of the termination of the relationship with Solgar.

We have a Distribution Agreement with Food Science Corporation to develop and market personalized nutritional products linked to our genetic profiling technology. Food Science has been a leader in nutritional research by setting new standards of quality in the formulation of nutritional supplements created exclusively for health care professionals and their patients. Food Science focuses on innovation and product effectiveness and serves a loyal client base of over 12,000 medical doctors, chiropractors, osteopaths and nutritionists.

State and Federal Regulation

We offer a variety of DNA based predictive assessments designed to measure SNPs. SNPs are slight variations in an individual’s genetic makeup. GeneLink assessments are not intended to diagnose, treat or cure any disease and are intended for education purposes only.

Our state-of-the-art genetic testing technologies are designed to accurately assess these genetic variations and ultimately provide information that can help guide the selection of nutritional supplements and customized skincare products. Worldwide, the laboratories contracted by us have appropriate accreditations for the jurisdictions in which they are located. The assessment testing protocols and test results are independently validated by the laboratories performing the tests. Appropriate accreditations, licenses, and permits are obtained by the individual laboratories as required.

Our predictive assessments may be subject to regulation both at a State and Federal level. The Centers for Medicare & Medicaid Services (CMS) regulates most laboratory testing performed on humans in the U.S. through the Clinical Laboratory Improvement Amendments (CLIA). The Division of Laboratory Services, within the Survey and Certification Group, under the Center for Medicaid and State Operations (CMSO) has the responsibility for implementing the CLIA Program.

Certain states such as New York and California have more stringent regulations for clinical laboratories and broader definitions as to what testing is regulated. International jurisdictions also may impose regulations on the conditions under which testing is performed on their residents. Some states may require a physician order for the testing.

We endeavor to maintain compliance with all relevant State and Federal regulations. Currently due to unique, state specific regulatory requirements GeneLink DNA assessment services have not been available for the residents of New York and California. Compliance with California requirements was accomplished in the first quarter of 2009 with the Company’s affiliation with a California compliant lab facility. We continue to actively seek the appropriate approvals to provide testing in New York and in all other jurisdictions both domestic and international.

Our sample collection kit is appropriately classified as a specimen transport and storage container under 21 C.F.R. § 864.3250. Products covered by this classification regulation are defined as follows:

A specimen transport and storage container, which may be empty or prefilled, is a device intended to contain biological specimens, body waste, or body exudate during storage and transport in order that the matter contained therein can be destroyed or used effectively for diagnostic examination. If prefilled, the device contains a fixative solution or other general purpose reagent to preserve the condition of a biological specimen added to the container. This section does not apply to specimen transport and storage containers that are intended for use as part of an over-the-counter test sample collection system for drugs of abuse testing.

Products falling within 21 C.F.R. § 864.3250 are Class I devices and are exempt from the Federal Drug Administration’s (FDA) 510(k) requirement. Our sample collection kit utilizes absorbent tipped swabs for specimen collection, and such swabs are considered Class I, 510(k)-exempt devices, pursuant to 21 C.F.R. § 880.6025.

As the regulatory environment evolves, our Scientific Advisory Board members monitor current regulatory requirements and assist us and our contract laboratories in maintaining compliance with all applicable regulatory requirements.

Existing State, Federal, or international regulations may change, be modified or expanded in any jurisdiction. If our genetic testing was deemed to require a specific approval by the FDA or other regulatory agency, additional costs might be incurred by us and delay of introduction of new tests might ensue and current testing services could be impaired.

Federal Trade Commission Regulations

Marketing and advertising practices in the dietary supplement arena are subject to Federal Trade Commission (FTC) regulation. Enforcement actions have been undertaken by the FTC against companies alleged to have made false and misleading marketing statements. The FTC actions have resulted in consent decrees and required monetary payments by the involved parties. We believe that we currently are in compliance with all relevant FTC regulations. New regulations may be promulgated as a result of new legislation or by changing enforcement policy in any of the relevant regulatory agencies. We endeavor to proactively anticipate changes in the regulatory environment and to maintain appropriate compliance.

FDA Regulation of Nutritional Supplements

The Dietary Supplement Health and Education Act of 1984 (DSHEA) amended the Federal Food Drug and Cosmetic Act, defined dietary supplements including vitamins and minerals, and provided a regulatory framework to ensure safe quality dietary supplements and the dissemination of accurate information about such products. Under DSHEA dietary supplements are regulated as foods. The FDA is prohibited from regulating the active ingredients in dietary supplements as food additives or drugs unless product claims trigger a declaration drug status. GeneLink’s supplements are all currently accepted as safe and are not regulated as drugs. New ingredients will not be added to our product offerings unless they are accepted by the FDA. If any individual ingredient becomes subject to additional FDA regulation it could be replaced by a suitable substitute without material impact on the usefulness or marketability of the specific GeneLink or GeneWize product.

Privacy Protection and HIPAA

We are committed to meeting the ideals for confidentiality of individuals’ personal information as expressed in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and maintains strict confidentiality regarding clients’ identity and the security of their results.

Dermagenetics

We formed a subsidiary known as “Dermagenetics, Inc.” which has created and is distributing DNA UltraCustom™ skin cream, genetically designed to an individual’s needs, specifically to the spa industry. Currently, Dermagenetics is not actively marketing to the spa industry at this time.

DNA Banking

We have ceased marketing DNA banking services. The University of North Texas Health Science Center (the “Health Science Center”) will continue to store the DNA specimen for a 75 year period, for all existing clients who have sent in DNA for banking. Upon a client’s request, and payment of a retrieval fee, the stored DNA specimen can be retrieved and sent to a laboratory for testing. The Health Science Center is no longer obligated to receive and store any additional DNA specimens.

Competition

Our potential competitors in the United States and abroad in the field of personalized nutrition and skin care are numerous and include, among others, major pharmaceutical and diagnostic companies, specialized biotechnology firms, universities and other research institutions. Many of our potential competitors have considerably greater financial technical, marketing and other resources than we do, which may allow these competitors to discover important genes or successfully commercialize these discoveries before we could.

The business of manufacturing, distributing and marketing nutritional supplements and personalized skin care and skin health products is highly competitive. Many of our competitors are substantially larger and have greater financial resources with which to manufacture and market their products. The barriers to competition are low in these markets because the products are generally not protected by patents. Our ability to remain competitive depends on the successful introduction, marketing, promotion, and addition of new offerings to our product line.

ITEM 1A. RISK FACTORS

Our business and the value of our shares are subject to the risks described above and certain additional risks described below.

IF OUR FORMER CHIEF EXECUTIVE OFFICER PREVAILS WITH RESPECT TO HIS LITIGATION AGAINST US, WE MAY NOT BE ABLE TO PAY ANY JUDGMENT AND COULD BE FORCED TO CEASE OUR OPERATIONS.

As more fully described above under “Description of Our Business — Recent Events”, our former Chief Executive Officer has brought a third action against us.

On October 14, 2005, we terminated the employment of John R. DePhillipo, our former Chief Executive Officer and President. In November 2005, Mr. DePhillipo brought suit against us alleging, among other things, that he was terminated without cause, that we breached the terms of his employment agreement and that he was entitled to receive back salary and at least $1,500,000 of salary throughout the remainder of the term set forth in such employment agreement. We denied such allegations and brought counterclaims against Mr. DePhillipo alleging that Mr. DePhillipo was terminated for cause, that Mr. DePhillipo breached his fiduciary duty to us and alleging breach of fiduciary duty, conversion, negligent misrepresentation, unjust enrichment and fraud. We settled this case in May 2008 and each party executed general releases in June 2008. In August 2008, John and Maria DePhillipo brought another action against us and certain of our officers, directors and advisors alleging among other things that we and our officers, directors and advisors fraudulently and negligently induced Mr. DePhillipo to settle the previous matter and to cause him and his family to sell the shares of our common stock held by them at a price of $0.06 per share in accordance with the terms of the settlement reached in May 2008. If John and Maria DePhillipo prevail in this litigation and obtain a judgment against us for all or any substantial portion of their claim against us or our officers, directors or advisors (as we have agreed to indemnify such officers, directors and advisors), it is likely that we will not be able to pay any such judgment and may be forced to cease operations. In such event, it is unlikely that our shareholders would receive any distributions if we were forced to cease operations and liquidate.

WE NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE, TO CONTINUE OUR OPERATIONS.

We have spent, and expect to continue to spend in the future, substantial funds to complete our planned product development efforts and expand our sales and marketing activities. We need to raise additional funds to implement our business plan, and cannot be certain that we will be able to obtain additional financing on favorable terms or at all.

Our future capital requirements and the adequacy of available funds will depend on numerous factors, including:

	•		the successful commercialization of our existing products and services;
	•		progress in our product development efforts;
	•		progress with regulatory affairs activities;
	•		the growth and success of effective sales and marketing activities;
	•		the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and
	•		the development of strategic alliances for the marketing of our products.

If funds generated from our operations are insufficient to meet current or planned operating requirements, we will have to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources. We do not have any committed sources of additional financing, and cannot provide assurance that additional funding, if necessary, will be available on acceptable terms, if at all. If adequate funds are not available, we may have to delay, scale-back or eliminate certain aspects of its operations or attempt to obtain funds through arrangements with collaborative partners or others. This may result in the relinquishment of our rights to certain of our technologies, product candidates, products or potential markets. Therefore, the inability to obtain adequate funds could have a material adverse impact on our business, financial condition, and results of operations and our ability to remain in business.

THE GLOBAL ECONOMIC DOWNTURN COULD RESULT IN A REDUCED DEMAND FOR OUR PRODUCTS AND INCREASED VOLATILITY IN OUR STOCK PRICE.

Uncertainty about current and future economic conditions may cause consumers to reign in their spending generally, the impact of which may be that they stop or delay their purchases of our genetic tests and consumer products. If these general economic conditions persist or continue to worsen, our future operating results could be adversely affected, particularly relative to our current expectations. In addition, reduced consumer spending may drive us and our competitors to offer additional products at promotional prices, which would have a negative impact on gross profit. A continued softening in consumer sales may adversely affect our industry, business and results of operations. Additionally, due to the weak economic conditions and tightened credit environment, some of our distributors may not have the same purchasing power, leading to lower purchases of our products for placement into distribution channels. Consequently, demand for our products could be materially different from expectations, which could negatively affect our results of operations and cause our stock price to decline.

In addition, financial market volatility or credit market disruptions may limit our access to capital and may also negatively affect our customers’ and our vendors’ ability to obtain credit to finance their businesses on acceptable terms. As a result, our customers’ needs and ability to purchase our products may decrease, and our vendors may increase their prices, reduce their output or change their terms of sale. Any inability of customers to pay us for our products, or any demands by vendors for different payment terms, may adversely affect our operations and cash flow.

Declining economic conditions may also increase our costs. If the economic conditions do not improve or continue to deteriorate, our results of operations or financial condition could be adversely affected.

CHANGES IN CREDIT CARD ASSOCIATION AND DEBIT NETWORK FEES OR PRODUCTS COULD INCREASE COSTS OR OTHERWISE LIMIT OUR OPERATIONS.

From time to time, credit card associations and debit networks increase the organization and/or processing fees (known as interchange fees) that they charge. It is possible that competitive pressures will result in our absorbing a portion of such increases in the future, which would increase its operating costs, reduce our profit margin and adversely affect our business, operating results and financial condition.

INCREASED HOLDBACKS BY CREDIT CARD PROCESSORS MAY ADVERSELY AFFECT OUR CASH FLOW AND FINANCIAL CONDITION.

Due to the current global credit crisis, some of the companies that process our credit card transactions have increased and may continue to increase the amount that they keep in reserve as holdbacks. Holdbacks are the portion of the revenue from a credit card transaction that is held in reserve by the credit card processor to cover possible disputed charges, chargeback fees, and other expenses. After a predetermined time or upon reaching levels of reserves deemed sufficient, holdbacks are returned to us. In our case, a majority of the funds that we receive from consumers, including all of our revenues from recurring monthly sales, are received from credit card transactions. If the holdback percentage on credit card transaction increases, the percentage that we receive upon processing the credit card transaction decreases. Although we are entitled to receive any remaining holdback amount after a designated period of time, any increase in the holdback percentage would result in a delay in our receiving the full proceeds from the sales of our products and services. This will adversely affect our cash flow and financial condition.

GENELINK AND ITS SUBSIDIARIES MAY BECOME AFFECTED BY LAWS, GOVERNMENTAL REGULATIONS, ADMINISTRATIVE DETERMINATIONS, COURT DECISIONS AND SIMILAR CONSTRAINTS WHICH COULD MAKE COMPLIANCE COSTLY AND SUBJECT GENELINK AND ITS SUBSIDIARIES TO ENFORCEMENT ACTIONS BY GOVERNMENTAL AGENCIES.

The marketing and performing of genetic testing and the formulation, manufacturing, packaging, labeling, holding, storage, distribution, advertising and sale of nutritional and skin care products are affected by extensive laws, governmental regulations and policies, administrative determinations, court decisions and similar constraints at the federal, state and local levels. There can be no assurance that GeneLink, its subsidiaries or its independent distributors will be in compliance with all of these regulations. A failure by GeneLink, its subsidiaries or its distributors to comply with these laws and regulations could lead to governmental investigations, civil and criminal prosecutions, administrative hearings and court proceedings, civil and criminal penalties, injunctions against product sales or advertising, civil and criminal liability for GeneLink or its subsidiaries, bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to GeneLink or its subsidiaries. In addition, the adoption of new regulations and policies or changes in the interpretations of existing regulations and policies may result in significant new compliance costs or discontinuation of product sales and may adversely affect the marketing of our products, resulting in decreases in revenues.

GeneWize’s marketing program will be subject to laws and regulations applicable to direct selling marketing organizations. These laws and regulations generally are directed at preventing fraudulent or deceptive schemes, often referred to as “pyramid” or “chain sales” schemes, by ensuring that product sales ultimately are made to consumers and that advancement within an organization is based on sales of the organization’s products rather than investments in the organization or other non-retail sales-related criteria. The regulations concerning these types of marketing programs do not include “bright line” rules and are inherently fact-based.

GeneWize may also be subject to the risk of private party challenges to the legality of its direct selling program. Direct selling programs of some other companies have been successfully challenged in the past. The challenges centered on whether the marketing programs of direct selling companies are investment contracts in violation of applicable securities laws and pyramid schemes in violation of applicable FTC rules and regulations.

In 2003, the FDA proposed a new regulation to require current Good Manufacturing Practice guidelines (“CGMPs”) in the manufacture, packing, holding, and distribution of nutritional supplements. The proposed rules would establish minimum standards that must be met by all companies that manufacture, package, and hold nutritional supplements in the United States. Violation of those standards would render the products in question presumptively adulterated and unlawful to sell. The proposed CGMPs would require manufacturers to follow procedures that would track nutrients from source to finished product, test nutrients for identity, purity, quality, strength, and composition at each stage of production, and record full compliance with specific regulations governing production, manufacture, and holding of nutritional supplements. We expect that the CGMPs will increase GeneWize’s product costs by requiring its various contract manufacturers to expend additional capital and resources on quality control testing, new personnel, plant redesign, new equipment, facilities placement, recordkeeping and ingredient and product testing. The FDA and some state agencies invite the public to complain if they experience any adverse effects from the consumption of nutritional supplements. These complaints may be made public. Regardless of whether complaints of this kind are substantiated or proven, public release of complaints of this type may have an adverse effect upon public perception of GeneLink and its subsidiaries, the quality of their products or the prudence of taking their products. Changes in consumer attitudes based on adverse event reports could adversely affect the potential market for and sales of products and make it more difficult to recruit and retain independent distributors and obtain endorsers.

WE ARE SUBJECT TO GOVERNMENT REGULATION, WHICH MAY SIGNIFICANTLY INCREASE OUR COSTS AND DELAY INTRODUCTION OF FUTURE PRODUCTS.

Changes in existing regulations at either the state or federal level could require advance regulatory approval of genetic risk assessment tests, resulting in a substantial curtailment or even prohibition of our activities without regulatory approval. If our genetic tests ever require regulatory approval, on either a state or federal level, then the costs of introduction may increase or marketing and sales of products may be significantly delayed. In September 2006, the FDA issued draft guidelines pursuant to which it would require pre-market review of certain types of genetic tests. Although we do not think that our genetic tests are covered by the draft guidelines, the FDA is currently evaluating and could assert pre-market review of all types of genetic tests.

WE HAVE A HISTORY OF LOSSES AND MAY HAVE CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.

We commenced operations in 1994. We have incurred significant losses to date and revenues have been limited. Our expenses have exceeded revenues in each year since inception. Given planned levels of operating expenses, we may continue to incur losses for the foreseeable future. Our accumulated deficit as of December 31, 2008 was $15,285,207. Our expenses historically have consisted principally of research and development, salaries and for general and administrative expenses incurred while building its business infrastructure. We plan to increase operating expenses in anticipation of increasing revenues. If our revenue growth is slower than anticipated or operating expenses exceed expectations, our losses will significantly increase. Even if we were to achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

OUR BUSINESS CURRENTLY DEPENDS PRIMARILY ON THE SUCCESS OF PRODUCT SALES AND OUR TECHNOLOGY LICENSING PROGRAM, WHICH IF UNSUCCESSFUL, WILL THREATEN OUR SURVIVAL.

An element of our current business strategy is to enter into licensing arrangements with companies to manufacture products incorporating our technologies. We face challenges in entering into new license agreements. During discussions with potential licenses, significant negotiation issues arise from time to time. We can not be assured that prospective licensees will be persuaded during negotiations to enter into a license agreement with us, either at all or on terms acceptable to us. In addition, the existence of our subsidiaries could be seen by potential licensing partners as competition to their plans.

The royalties we receive from licensees depend on their efforts and expenditures over which we have no control. Because it is up to our licensees to decide when and if they will introduce products using our technology, we cannot predict when and if our licensees will generate substantial sales of such products. The amount and timing of royalty payments are dependent on the ability of our licensees to gain successful regulatory approval for, market and sell products incorporating our technologies. Failure of certain licensees to gain regulatory approval, if required, or market acceptance for such products could have a material adverse effect on our business, financial condition and results of operations.

If one or more of our licensees fail to pursue the development or marketing of these products as planned, our revenue and profits could be adversely affected. We do not control the timing and other aspects of the development or commercialization of products incorporating our licensed technologies because our licensees may have priorities that differ from ours or their development or marketing efforts may be unsuccessful, resulting in delayed or discontinued products. Hence, the amount and timing of royalty payments received by us will fluctuate, and such fluctuations could have a material adverse effect on our business, financial condition and results of operations.

The addition of our GeneWize subsidiary has offered us an additional strategy of product development and direct-to-market sales opportunities. While it has seen a high interest and response to its initial offerings, its ability to retain affiliates and customers has yet to be tested for any significant period. Critical to its success is the conversion of initial sales into recurring revenue of product sales of its nutritional and skin products. GeneWize’s sales history is too abbreviated to determine accurately a conversion rate for recurring revenues. Because of the short operating history, any forecasts and assurance of future revenues continue to be less than certain. As a result of its initial demand, GeneWize has increased operating expenses in order to serve the initial influx of affiliates and customers. This increase in overhead creates significant additional demands on the cash flows of the Company which if not accompanied by corresponding continued increase in sales could materially impact the financial condition of the Company.

OUR COMMON STOCK PRICE IS VOLATILE AND WE HAVE A THIN TRADING MARKET.

Although the our Common Stock is listed on the NASDAQ OTC Bulletin Board, recently daily trading volume of our Common Stock has generally been limited. The prices for securities of biosciences companies have historically been volatile. The trading price of our Common Stock has experienced considerable fluctuation since we began public trading in 1998.

WE EXPECT FUTURE DILUTION TO SHAREHOLDERS AND INVESTORS.

We believe it is likely that we will be required to raise additional amounts to fund future operations. If additional funds are raised through issuing equity securities or debt securities convertible into equity, dilution to shareholders may occur. In addition, if our former Chief Executive Officer and his wife prevail in their outstanding litigation against us, we may be forced to reissue as much as 3,953,000 shares to them.

OUR LIMITED OPERATING HISTORY AND RECENT CHANGE IN MARKETING STRATEGY MAKE IT DIFFICULT TO EVALUATE OUR PROSPECTS.

We have a limited operating history on which to evaluate our business and prospects. We are in the process of rebranding and repositioning our company and creating a network of independent distributors. There is no assurance that we will achieve significant sales as a result of this new strategy. We also may not be successful in addressing our operating challenges such as establishing a viable network of independent distributors, developing brand awareness and expanding our market presence. Our prospects for profitability must be considered in light of our evolving business model. These factors make it difficult to assess our prospects.

IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME WIDESPREAD, WE MAY HAVE LESS DEMAND FOR OUR PRODUCTS.

Genetic testing has raised ethical issues regarding confidentiality and the appropriate uses of the resulting information. For these reasons, governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Any of these scenarios could reduce the potential markets for our services and products.

DUE TO THE HIGH LEVEL OF COMPETITION IN OUR INDUSTRY, WE MIGHT FAIL TO RETAIN OUR CUSTOMERS AND DISTRIBUTORS, WHICH WOULD HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.

The business of marketing skin care and nutrition products is highly competitive and sensitive to the introduction of new products which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, distributors, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad. In addition, we anticipate that we will be subject to increasing competition in the future from sellers that utilize electronic commerce. Many of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than we do. Our present or future competitors may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we do. For example, if our competitors develop skin care or nutritional treatments that prove to be more effective than our products, demand for our products could be reduced. Accordingly, we may not be able to compete effectively in our markets and competition may intensify. We are also subject to significant competition for the recruitment of distributors from other network marketing organizations, including those that market nutritional supplements and skin care products as well as other types of products. Our ability to be competitive therefore will depend, in significant part, on our success in recruiting and retaining distributors through an attractive compensation plan, the maintenance of an attractive product portfolio and other incentives. We cannot ensure that our programs for recruitment and retention of distributors will be successful, and if they are not, our financial condition and operating results would be harmed.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNPROVEN.

The market for our products and services is at an early state of development and may not continue to grow. The general scientific community has only a limited understanding of the role of genes in predicting disease. The marketplace may never accept our products and services, and we may never be able to sell our products and services at a profit. Our efforts to commercialize our intellectual property have had limited success to date. We can achieve broad market acceptance only with substantial education about the benefits and limitations of our products and services.

NEW PRODUCTS MAY RENDER OUR PRODUCTS OBSOLETE AND OUR SALES MAY SUFFER.

The skin care and nutritional supplement markets historically have been influenced by “fad” products that became popular due to changing consumer tastes and media attention. Our products may be rendered obsolete by changes in popular tastes as well as media attention on new products or adverse media attention on skin care and nutritional supplements, which could reduce our sales. It may be difficult for us to change our product line to adapt to changing tastes. In addition, other “fad” food regimens, such as low carbohydrate diets, may decrease the overall popularity and use of our products, as well as result in higher returns of our products, thereby increasing our expenses.

THE SALE OF OUR PRODUCTS INVOLVES PRODUCT LIABILITY AND RELATED RISKS THAT COULD EXPOSE US TO SIGNIFICANT INSURANCE AND LOSS EXPENSES.

We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Most of our products contain combinations of ingredients, and there is little long-term experience with the effect of these combinations. In addition, interactions of these products with other products, prescription medicines and over-the-counter drugs have not been fully explored or understood and may have unintended consequences. While our third party manufacturers perform tests in connection with the formulations of our products, these tests are not designed to evaluate the inherent safety of our products.

Although we maintain product liability insurance, it may not be sufficient to cover product liability claims and such claims could have a material adverse effect on our business. The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of our insurance coverage would harm us by adding further costs to our business and by diverting the attention of our senior management from the operation of our business. Even if we successfully defend a liability claim, the uninsured litigation costs and adverse publicity may be harmful to our business.

Any product liability claim may increase our costs, and adversely affect our revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles, and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which if adversely determined could subject us to substantial monetary damages.

WE ARE DEPENDENT ON A LIMITED NUMBER OF INDEPENDENT SUPPLIERS, LABORATORIES AND MANUFACTURERS OF OUR PRODUCTS.

We rely entirely on a limited number of third parties to supply and manufacture our products and to perform laboratory tests on our behalf. Our manufacturers produce our products on a purchase order basis only and can terminate their relationships with us at will. These third parties may be unable to satisfy our supply requirements, perform our laboratory tests, and manufacture our products on a timely basis, fill and ship our orders promptly, provide services at competitive costs or offer reliable products and services. The failure to meet of any of these critical needs would delay or reduce product shipment and adversely affect our revenues, as well as jeopardize our relationships with our independent distributors and customers. In the event any of our third party suppliers, manufacturers or laboratories were to become unable or unwilling to continue to provide us with services and products in required volumes and at suitable quality levels, we would be required to identify and obtain acceptable replacement sources. There is no assurance that we would be able to obtain alternative sources on a timely basis. An extended interruption in the supply of our products would result in decreased product sales and our revenues would likely decline. We believe that we can meet our current supply, laboratory and manufacturing requirements with our current suppliers, laboratories and manufacturers or with available substitute suppliers, laboratories and manufacturers.

While we require that our manufacturers verify the accuracy of the contents of our products, we do not have the expertise or personnel to monitor the production of products by these third parties. We rely exclusively, without independent verification, on certificates of analysis regarding product content provided by our third party suppliers and limited safety testing by them. We cannot be assured that these outside manufacturers will continue to supply products to us reliably in the compositions we require. Errors in the manufacture of our products could result in product recalls, significant legal exposure, adverse publicity, decreased revenues, and loss of distributors and endorsers.

WE ARE DEPENDENT ON KEY PERSONNEL.

Our success will depend in large part upon the continued services of a number of key employees and consultants. The loss of the services of any of these individuals could have a material adverse effect on us. In addition, if one or more of our key employees or consultants leaves to join a competitor or to form a competing company, the loss of such personnel and any resulting loss of existing or potential clients to any such competitor could have a material adverse effect on our business, financial condition and results of operations. In the event of the loss of any such personnel, there can be no assurance that we would be able to prevent the unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel.

OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY OR SOMEONE CLAIMS THAT WE ARE INFRINGING ON THEIR PROPRIETARY TECHNOLOGY.

Our success depends, in part, upon our proprietary methodologies and other intellectual property rights. There can be no assurance that the steps taken by us to protect our proprietary information will be adequate to deter misappropriation of our proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. In addition, although we believe that our services and products do not infringe on the intellectual property rights of others, there can be no assurance that such a claim will not be asserted against us in the future, or that if asserted any such claim will be successfully defended. A successful claim against us could materially and adversely affect our business, financial condition and results of operations.

Our success will depend on our ability to obtain and protect patents on our technology and to protect our trade secrets. Our patents, which have been or may be issued, may not afford meaningful protection for our technology and products. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or unenforceable. In addition, the our current and future patent applications may not result in the issue of patents in the United States or foreign countries. Competitors may develop products similar to our products that do not conflict with our patents. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time and divert management’s attention from other business concerns. We may also provoke third parties to assert claims against us.

We have received notice of an alleged patent infringement from an Australian bioscience company, Genetic Technologies Limited (GTG), that it has certain rights under filed patents to which we may be infringing upon. Although it is the opinion of our patent counsel that there is no infringement, and that in the event there is an infringement, it will not effect our business because GTG’s patents are not material to our technology, no assurance can be given that GTG would not prevail if it brings legal action against us or that the result of any such action would not have a material adverse effect on our business and prospects.

INTERRUPTIONS TO OR FAILURE OF OUR INFORMATION PROCESSING SYSTEMS MAY DISRUPT OUR BUSINESS AND OUR SALES MAY SUFFER.

We are dependent on our information processing systems to timely process customer orders, oversee and manage our distributor network and control our inventory, and for our distributors to communicate with their customers and distributors in their network. Interruptions to or failure of our information processing systems may be costly to fix and may damage our relationships with our customers and distributors, and cause us to lose customers and distributors. If we are unable to fix problems with our information processing systems in a timely manner our sales may suffer. In view of the unanticipated growth of GeneWize, many of our systems are either incomplete, insufficient, and/or in process of being developed and could prove to be insufficient, especially if we experience a large increase in business.

THE FAILURE TO RECRUIT, MAINTAIN AND MOTIVATE A LARGE BASE OF PRODUCTIVE INDEPENDENT DISTRIBUTORS COULD LIMIT GENEWIZE’S ABILITY TO GENERATE REVENUES.

GeneWize has entered into the direct sales business. To derive revenues, GeneWize will have to recruit and engage independent distributors. We cannot assure you that GeneWize will be successful in recruiting and retaining productive independent distributors, particularly since direct sales organizations usually experience high turnover rates of independent distributors. Typically, independent distributors can terminate their relationships at any time.

In recruiting and keeping independent distributors, GeneWize will be subject to significant competition from other direct sales organizations, both inside and outside its industry. Its ability to attract and retain independent distributors will be dependent on the attractiveness of its compensation plan, its product mix, and the support it offers to its independent distributors. Adverse publicity concerning direct sales marketing and public perception of direct selling businesses generally could negatively affect GeneWize’s ability to attract, motivate and retain independent distributors.

We anticipate that GeneWize’s independent distributor organization will be headed by a relatively small number of key independent distributors who together with their downline network will be responsible for a disproportionate amount of revenues. We believe this structure is typical in the direct selling industry, as sales leaders emerge in these organizations. The loss of key independent distributors could adversely affect GeneWize’s revenues and could adversely affect GeneWize’s ability to attract other independent distributors.

ADVERSE PUBLICITY ASSOCIATED WITH GENEWIZE’S PRODUCTS, INGREDIENTS OR NETWORK MARKETING PROGRAM, OR THOSE OF SIMILAR COMPANIES, COULD HARM GENEWIZE’S FINANCIAL CONDITION AND OPERATING RESULTS.

Adverse publicity concerning any actual or purported failure of GeneWize or its independent distributors to comply with applicable laws and regulations regarding product claims and advertising, good manufacturing practices, the regulation of its network marketing program, the licensing of GeneWize’s products for sale in its target markets or other aspects of its business, whether or not resulting in enforcement actions or the imposition of penalties, could have an adverse effect on the goodwill of GeneWize and could negatively affect its ability to attract, motivate and retain distributors, which would negatively impact its ability to generate revenue. We cannot ensure that all distributors will comply with applicable legal requirements relating to the advertising, labeling, licensing or distribution of its products.

WE ARE SUBJECT TO, AMONG OTHER THINGS, REQUIREMENTS REGARDING THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING AND OUR FAILURE TO IDENTIFY OR CORRECT DEFICIENCIES AND AREAS OF WEAKNESS IN THE COURSE OF THESE AUDITS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as new rules and regulations adopted by the Securities and Exchange Commission and the Public Company Accounting Oversight Board. We expect to spend significant amounts of time and money on compliance with these rules. Our failure to correct any noted weaknesses in internal controls over financial reporting could result in the disclosure of material weaknesses which could have a material adverse effect upon the market value of our stock. There can be no assurance that these internal audits will uncover all material deficiencies or areas of weakness in our operations or internal controls. If left undetected and uncorrected, such deficiencies and weaknesses could have a material adverse effect on our financial condition and results of operations.

OUR ARTICLES OF INCORPORATION AND BYLAWS COULD DELAY OR DISCOURAGE A TAKEOVER ATTEMPT.

Our articles of incorporation and bylaws contain provisions that may delay or discourage a takeover attempt that a shareholder might consider in their best interest, including takeover attempts that might result in a premium being paid on shares of our Common Stock. These provisions, among other things provide that only the board of directors or president may call special meetings of the shareholders; and establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not applicable

ITEM 2. PROPERTIES

The Company leases its principal offices in Longwood, Florida. The lease is for a term of three (3) years, ending December 2010, and provides for monthly rental payments of $5,500.48.

ITEM 3. LEGAL PROCEEDINGS

Effective October 14, 2005, we terminated the employment of John R. DePhillipo, our former Chief Executive Officer and President and a former director. In 2005, Mr. DePhillipo commenced two lawsuits allegedly arising out of his termination by us for “cause,” as defined in his Employment Agreement with us.

In an Action filed in the United States District Court for the Eastern District of Pennsylvania, John R. DePhillipo v. Robert P. Ricciardi, Civil Action No. 05-5906, Mr. DePhillipo alleged that Dr. Ricciardi, a Director and Officer of the Company, (1) caused Mr. DePhillipo’s employment with us to be wrongfully terminated and therefore is personally liable for all severance owed Mr. DePhillipo, in the amount of at least $75,000; (2) was personally liable for Mr. DePhillipo’s unpaid back salary of $84,000 simply because Dr. Ricciardi is an officer and/or director of the Company; and (3) acted sufficiently maliciously to justify punitive damages being assessed against Dr. Ricciardi of $10,000,000. Counsel for Dr. Ricciardi entered an answer to this action and subsequently the action against Dr. Ricciardi was dismissed with prejudice against Mr. DePhillipo in March 2006.

In a separate Action filed by Mr. DePhillipo against us in November 2005 in the Superior Court of New Jersey, Law Division, Atlantic County, John R. DePhillipo v. GeneLink, Inc., Docket No. ATL-L-7479-05, Mr. DePhillipo alleged that his termination by us “for cause” was improper and therefore he was entitled to in excess of $1,500,000 in severance pay under the terms of an employment agreement, allegedly entered into effective January 1, 2005 (the “Employment Agreement”) and an additional $84,000 in accrued and unpaid compensation. We filed an Answer denying the material allegations of the Complaint and asserted a number of affirmative defenses. We filed counterclaims against Mr. DePhillipo for breach of fiduciary duty, conversion, negligent misrepresentation, unjust enrichment and fraud while Mr. DePhillipo served as our Chief Executive Officer, President and Chief Financial Officer. The counterclaims sought recovery in excess of that sought by Mr. DePhillipo in the Complaint.

Pursuant to the Settlement, on May 13, 2008 we and Mr. DePhillipo settled all issues, claims and counterclaims each may have with respect to the Action. Under the Settlement, we acquired 3,953,000 shares from Mr. DePhillipo and his family and paid Mr. DePhillipo and his family $0.06 per share, resulting in a purchase price of $237,180. Additionally, under the Settlement we paid Mr. DePhillipo $220,000. As part of the Settlement, we and Mr. DePhillipo delivered general releases to each other.

On August 12, 2008, in an Action filed in the Philadelphia Court of Common Pleas, DePhillipo, et.al. v. GeneLink, Inc. t/a GeneLink Biosciences, Inc., et. al., Philadelphia County Court of Common Pleas, August Term 2008 No. 1128, Mr. DePhillipo and Maria DePhillipo, his spouse, filed suit against the Company, GeneWize and certain of the Company’s officers, directors and advisors. Mr. and Mrs. DePhillipo allege, among other things, that the Company and certain of these officers, directors and/or advisors fraudulently and/or negligently conspired to induce Mr. DePhillipo to enter into the Settlement and to cause Mr. and Mrs. DePhillipo to sell their shares of the Company’s common stock to the Company, that the Company and its counsel fraudulently and negligently misrepresented the Company’s financial condition to induce Mr. DePhillipo to enter into the Settlement and to cause Mr. and Mrs. DePhillipo sell their shares of the Company’s common stock, and that the Company failed to timely disclose information concerning the formation and operation of GeneWize. Mr. and Mrs. DePhillipo seek approximately $20 million in damages based upon an alleged value of the Company’s common stock of $5.00 per share. They also seek rescission of the Settlement and thus the return of the 3,953,000 shares of the Company’s common stock sold by them to us pursuant to the Settlement.

We have agreed to indemnify our offices, directors and advisors who have been named as defendants in the Action and will be liable for any costs or expenses incurred by or judgments entered against such defendant.

On October 1, 2008, the Company, as well as all of the other defendants, moved to dismiss the Action in its entirety through the filing of preliminary objections. These preliminary objections are currently pending before the court.

We and our Board of Directors deny the claims set forth in the Action and are vigorously defending the baseless claims made by Mr. and Mrs. DePhillipo.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock is listed on the NASDAQ and OTC Bulletin Board under the System “GNLK”. Set forth below, for the periods indicated, is the range of high and low bid information for the Company’s common stock for the past 2 years, when the Company’s common stock began trading. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

2008		High				Low
1st Quarter		$	0.12			$	0.07
2nd Quarter			0.53				0.07
3rd Quarter			0.56				0.22
4th Quarter			0.35				0.10

2007		High				Low
1st Quarter		$	0.07			$	0.05
2nd Quarter			0.11				0.04
3rd Quarter			0.20				0.09
4th Quarter			0.21				0.08

As of March 16, 2009, there were 171 holders of record of the Company’s Common Stock. The Company has never paid dividends and does not anticipate paying any dividends in the future. The Company anticipates that it will retain all future revenues for working capital purposes.

The payment of cash dividends in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, the Company’s financial condition and other factors deemed relevant to the Board of Directors. In addition, the Company’s ability to pay dividends may become limited under future loan agreements which may restrict or prohibit the payment of dividends.

EQUITY COMPENSATION PLAN INFORMATION

Number of

securities remaining

available for future

Number of

issuance under

securities to be

equity

issued upon exercise

Weighted-average

compensation plans

of outstanding

exercise price of

(excluding securities

options, warrants

outstanding options

reflected in column

and rights

warrants and rights

(a))

Plan Category

(a)

(b)

(c)

Equity compensation plans approved by security holders1

5,850,000

$

0.19

150,000

Equity compensation plans not approved by security holders

10,437,499

$

0.21

0

Total

16,287,499

$

0.20

150,000

RECENT SALES OF UNREGISTERED SECURITIES.

In November 2008, the Company issued a private placement memorandum for up to $1,000,000 of stock at a price of $0.10 per share. Through December 31, 2008, the Company received $853,500 in gross proceeds and issued 8,535,000 shares of Common Stock pursuant to such private placement memorandum.

In June 2008, 1,562,500 warrants were exercised in cashless exercises in which the Company held back 425,564 warrants as payment for the exercise prices and issued 1,136,936 shares of Common Stock in connection with such exercises.

In June 2008, the holders of all of the outstanding convertible secured promissory notes (the “Notes”) issued by the company converted the Notes into shares of the Company’s Common Stock at a conversion price of $0.05 per share. The Notes were issued in consideration for certain loans provided to the Company by third parties between May 12, 2006 and June 6, 2007. $882,041 in principal and accrued interest of Notes were converted into 17,640,813 shares of Common Stock.

Effective May 9, 2008 through June 12, 2008, pursuant to a tender offer undertaken by the Company, holders of warrants, not including warrants issued to officers and directors of the Company in June 2007 and September 2007, were entitled to exercise their warrants at reduced exercise prices as follows:

Number of		Original Exercise Price				Revised
Existing Warrants		of Existing Warrants				Exercise Price
7,346,577		$0.075-$0.10				$0.05
4,872,704		$0.20-$0.25				$0.06
2,755,500		$0.40-$0.50				$0.08
2,246,250		$0.60-$1.00				$0.09

A total of 10,574,951 warrants were exercised in the tender offer for cash proceeds of $706,990.

Pursuant to an Order of Settlement dated May 13, 2008 (the “Settlement”), the Company and John R. DePhillipo settled all issues, claims and counterclaims each party may have with respect to the Action entitled, John R. DePhillipo v. GeneLink, Inc. (Superior Court of New Jersey Law Division: Atlantic County, Docket No. ATL-L-7479-05). Under the Settlement, the Company acquired 3,953,000 shares from Mr. DePhillipo and his family and paid Mr. DePhillipo and his family $0.06 per share, resulting in a purchase price of $237,180.

The Company issued 68,750 and 510,000, shares of Common Stock for consulting services rendered to the Company valued at $3,688 and $96,476 for the years ended December 31, 2007, and 2006, respectively. These shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933. In addition, the Company paid $155,312 in fundraising commissions related to private placements during 2007 that were charged to paid in capital.

In August 2007, the Company issued a private placement memorandum for up to $1,700,000 of units consisting of restricted common stock at $.075 per share with an attached warrant to acquire ¹/4 of a share of common stock. The warrants are exercisable for 5 years at a price of $.10 per share. During November 2007, the Company closed on $1,431,400 of units with proceeds allocated to stock of $1,161,159 and attached warrants of $270,241. These shares and warrants were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

In connection with this offering, the Company issued 2,575,250 of dealer warrants with 5 year terms. 515,050 of the dealer warrants have an exercise price of $.10 per share, while the remaining 2,060,200 are exercisable at $.075 per share.

During the year ended December 31, 2007, the Company issued $137,500 principal amount of convertible secured promissory notes and issued 687,500 shares of restricted Common Stock in connection with the issuance of the notes.

During 2007 the Company issued 5,093,024 shares of common stock as conversion of promissory notes and accrued interest. The value of the notes converted as of December 31, 2007 was $254,653.

During the year ended December 31, 2006, the Company issued $827,890 principal amount of convertible secured promissory notes and issued 4,139,452 shares of restricted Common Stock in connection with the issuance of the notes. The aggregate amounts recorded in connection with the issuance of the notes and the stock were $1,008,788, representing the $827,890 of gross proceeds of notes plus debt issuance costs related to the stock issuance of $180,898. The notes and shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

In January 2006, the Company issued $200,000 of bridge notes in reliance upon Rule 506 of Regulation D under the Securities Act of 1933. The bridge notes were refinanced in June 2006 upon issuance of the convertible secured promissory notes referenced above.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes in Item 8 in this Annual Report on Form 10-K.

Overview

2008 was a landmark year for the Company. The vision of being a leader in genetically-guided health, beauty and wellness products leapt forward with the launch of GeneWize and its LifeMap Nutritional Supplement. Revenues generated in the third quarter of 2008 alone exceeded revenues from all prior years combined, although some of this revenue was not recognized until later in 2008. We finished the year having performed more than 10,000 DNA tests and had over 13,000 people enroll as independent affiliates telling others about the LifeMap product.

The tremendous unexpected response to our new offering put significant strain on our systems and service providers as well as our capital requirements for inventory and infrastructure. We ended the year raising an additional $853,000 toward those ends. That private placement effort continues into 2009 with an additional $565,000 in private-placement stock sales and $1,200,000 in convertible debt raised in 2009 through the date of this filing. We believe the success in raising capital in a dismal economy and financial environment supports the vision of the future of nutrigenomics and personalization in the health, wellness and beauty products.

Results of Operations

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2008 TO FISCAL YEAR ENDED DECEMBER 31, 2007.

Assets

The Company’s assets increased by $1,161,402 due largely to increases in inventory and accounts receivable resulting from operations. Inventory increased by $735,869 and consists primarily of raw materials products for the custom nutritional products sold by GeneWize. Inventory was higher that anticipated due to delays in realizing recurring revenues, as more fully described below in “Revenues” below. Receivables, which increased by $678,238, are largely amounts pending from credit card companies for product sales, as well as receivables for DNA testing services from licensees. In addition to inventory and receivables, the Company invested in capital equipment to support operations. Property and equipment increased by $243,508, net of depreciation. These increases in assets were offset by a $537,174 decrease in cash.

Liabilities

The Company’s liabilities increased by $1,393,839 due to payables created from operations of GeneWize and its related impact on GeneLink’s DNA testing operations. In addition to general payables, accrued expenses include commissions payable of $128,664 and $150,000 in guarantee expenses accrued for an event contract. The Company also has recognized deferred royalty revenue of $163,033 from its contract with Solgar. Offsetting the increase in operating liabilities was the retirement through conversion of $487,968 of long term convertible debt.

Equity

The Company raised additional funds through two efforts during the year. In April 2008 the Company made an offer of a reduced warrant exercise price to warrant holders to incentivise cash exercises and provide funding to meet the cash required to complete the Settlement with our former CEO. Additionally, at the end of the year, the Company pursued a private placement of shares which, through December 31, 2008 had raised an additional $853,500 and resulted in the issuance of 8,535,000 additional shares at $.10. Private placement efforts continue into 2009 with an additional $565,000 in private-placement stock sales and $1,200,000 in convertible debt raised in 2009 through the date of this filing.

Revenues

The Company saw its nominal licensing and testing revenues continue in 2008, but the dramatic increase in revenues, from $97,744 in 2007 to $6,377,443 in 2008, is attributable to the launch of GeneWize. Initial sales generated by GeneWize were very strong, driven by the unique offering of a personalized and customized product providing genetically-guided nutrition. By the August 2008 launch date over 5,000 affiliates had signed on.

The growth in GeneWize revenues slowed substantially when, shortly after the August 2008 launch, (a) our former CEO filed a complaint against the Company seeking to undo the Settlement and seeking approximately $20,000,000, and (b) California and New York imposed more stringent requirements regarding our DNA testing. The complaint filed by our former CEO, initiated nine days after the launch conference, created substantial concern in the distribution channel and disrupted momentum from the conference. In addition to the litigation, the noted regulatory requirements all but shut down the critical California and New York markets while we worked on getting compliant under the newly promulgated rules. Additionally, the huge initial response overwhelmed our initial lab capacity. As a result, DNA testing and the commensurate beginning of recurring revenues from monthly resales was delayed.

While we recognized substantial revenues in the fourth quarter of 2008, $2,453,434 represented gross deferred revenues from the third quarter of 2008 which were realized in the fourth quarter of 2008 as we caught up in testing and shipping product. Gross revenues in GeneWize from recurring sales for the year totaled $808,921.

Cost of Goods Sold

Cost of Good Sold also increased dramatically, from $70,809 in 2007 to $1,812,488 in 2008, with the launch of GeneWize and its proprietary nutritional supplement. Costs include laboratory costs, LifeMap ingredients, processing, packaging and outbound shipping related to the products.

Expenses

Expenses increased due to the launch of our GeneWize subsidiary. The most significant expense item is customer acquisition and sales commissions paid to sales affiliates totaling $3,106,062. Overall commissions were approximately 49% of GeneWize’s sales for 2008. This number is higher than we expect going forward due to the fact that most of the sales in this initial period included a ‘first order’ bonus commission. As recurring and subsequent sales build, the impact of first-order commissions will be reduced as it is averaged with the normal commissions from recurring revenues. Additionally, in 2008 the Company moved its headquarters to a new leased facility in Longwood, Florida, hired 29 additional staff for management and customer service, began leasing and customizing proprietary software for infrastructure and incurred significant conference and event costs, all leading to increases in selling, general and administrative costs. Furthermore, the Company incurred significant legal costs in 2008 in defending itself from litigation brought against it by its former CEO.

Losses

The Company continued to incur an operating loss, largely related to startup and early-stages costs related to the launch of GeneWize and its sales, marketing and operating costs. In addition to general operating losses, the Company incurred significant legal costs in 2008 in defending itself from litigation brought against it by its former CEO. The Company incurred $229,025 of Other Expenses that were financing-related, resulting from converting debt issued in the prior year. Losses increased from $1,560,624 in 2007 to $2,603,509 in 2008. Of those losses, $363,400 and $384,081 respectively, resulted from non-cash charges relating to the granting of options and warrants in those years.

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2007 TO FISCAL YEAR ENDED DECEMBER 31, 2006.

Assets. The Company’s assets increased from $548,481 at December 31, 2006 to $1,383,824 at December 31, 2007, an increase of $835,343. This increase was primarily due to an increase in cash and cash equivalents from $149,695 at December 31, 2006 to $972,371 at December 31, 2007, an increase of $822,676. This increase of cash resulted from the sale of common stock and warrants by the Company in November 2007 in the amount of $1,431,398, less fees and costs incurred in connection with such offering.

Liabilities. The Company’s liabilities decreased from $1,407,784 at December 31, 2006 to $1,190,457 at December 31, 2007, a decrease of $217,327. This decrease in liabilities was primarily due to a decrease in accrued compensation from $710,323 at December 31, 2006 to $144,168 at December 31, 2007, a decrease of $566,155, relating to a decrease in $662,617 of accrued compensation owed to an officer and director of the Company. This decrease in liabilities was partially offset by an increase in convertible secured promissory notes payable, net of debt issuance and stock conversion discounts, from $298,390 at December 31, 2006 to $487,968 at December 31, 2007, an increase of $189,578, as Company issued $380,000 principal amount of convertible secured promissory notes in 2007 and note holders converted $229,253 of notes into common stock of the Company in 2007; and an increase in accounts payable and accrued expenses from $365,590 at December 31, 2006 to $439,399 at December 31, 2007, an increase of $73,809. The $487,968 and $298,390 amount of convertible secured notes payable reflected on the balance sheets as of December 31, 2007 and 2006, respectively, are net of debt issuance costs and stock conversion discounts. The outstanding amount of convertible secured notes payable as of December 31, 2007 and 2006 was $832,269 and $827,890, respectively.

Losses. The Company incurred an operating loss of $1,265,487 for the fiscal year ended December 31, 2007, as compared to an operating loss of $793,576 for the fiscal year ended December 31, 2006, an increase of $471,911. This increase in operating losses was primarily due to the incurring of $363,400 of expenses in connection with grants of options and warrants to officers and directors during the year ended December 31, 2007; an increase in professional fees from $173,590 for the year ended December 31, 2006 to $346,148 for the year ended December 31, 2007, an increase of $172,558, which increase relates to costs incurred in connection with the litigation brought against the Company by its former chief executive officer; and the decrease in gross profits from $110,253 for the year ended December 31, 2006 to $26,935 for the year ended December 31, 2007.

Revenues. The Company’s total operating revenues for the fiscal year ended December 31, 2007 were $97,744 as compared to $175,674 for the fiscal year ended December 31, 2006, a decrease of $77,930. The Company saw licensing and testing revenues continue in 2008, but the dramatic increase in revenues, from $97,744 in 2007 to $6,377,443 in 2008, came from the launch of GeneWize. Initial sales in the GeneWize subsidiary were very strong, driven by the unique offering of a mass-customization model providing genetically-guided nutrition. By the August 2008 launch date over 5,000 affiliates had signed on.

Expenses. Total expenses for fiscal year ended December 31, 2007 were $1,658,368, as compared to $969,250 for the fiscal year ended December 31, 2006, an increase of $689,118. Selling, general and administrative expenses increased from $476,539 for the year ended December 31, 2006 to $1,268,022 for the year ended December 31, 2007, an increase of $791,483. This increase in selling, general and administrative expenses is primarily due to the incurring of $363,400 of expenses in connection with grants of options and warrants to officers and directors during the year ended December 31, 2007, and an increase in professional fees from $173,590 for the year ended December 31, 2006 to $346,148 for the year ended December 31, 2007, an increase of $172,558, which increase relates to costs incurred in connection with the litigation brought against the Company by its former chief executive officer.

Segment Operating Results

The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments for the year ended December 31, 2008:

		GeneLink				Dermagenetics				GeneWize Life
		Inc.				Inc.				Sciences, Inc.
Net Revenues		$	291,206			$	29,738			$	6,056,499
Operating expenses			1,973,028				40,113				6,980,049
Other income			12,238				—				—
Pre-tax earnings (loss)			(1,669,584	)			(10,375	)			(923,550	)

The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments for the year ended December 31, 2007:

		GeneLink				Dermagenetics
		Inc.				Inc.
Net Revenues		$	30,458			$	67,286
Operating expenses			1,479,300				190,648
Other income			10,956				624
Pre-tax earnings (loss)			(1,437,886	)			(122,738	)

Liquidity and Capital Resources

For 2008, the Company’s primary liquidity requirement was the funding of the Company’s sales and marketing efforts, funding improvements in the Company’s infrastructure and the payment of past obligations of the Company. While the Company has been successful at raising needed funds during the year, the complaint filed in August 2008 by our former CEO against the Company has had a negative impact, both direct and indirect, on the Company’s ability to raise capital. The direct impact reflects concerns by investors and potential investors over the Company’s future in the face of a $20,000,000 complaint. In addition, those concerns in the general public market impacted our stock price. The negative pressure on our stock price influenced the offering price on subsequent private offerings and created greater dilution from the offerings as well.

Subsequent to year end, in January 2009 the Company sold an additional 5,650,000 shares of restricted Common Stock of the Company at a purchase price of $0.10 per share pursuant to a continued Confidential Private Offering Memorandum, and received an aggregate gross amount of $565,000.

On February 26, 2009, the Company issued to an accredited investor $1,000,000 principal amount of Convertible Notes and issued 1,500,000 Warrants to acquire shares of Common Stock at an exercise price of $0.11 per share in connection therewith. The Warrants are exercisable on or after August 26, 2009 and on or before February 26, 2014. In March 2009, the Company issued an additional $200,000 of notes and issued 300,000 additional warrants in connection therewith. The Convertible Notes mature on February 26, 2014 and bear interest at the rate of 8% per year through February 26, 2011 and thereafter bear interest at the rate of 10% per year. The Convertible Notes may not be prepaid without the approval of the holders of the Convertible Notes. The Convertible Notes are convertible at the option of the holders of the Convertible Notes upon the earlier to occur of (a) August 26, 2009 or (b) the adoption and filing of an amendment to increase the capitalization of the Company to at least 175,000,000 shares of Common Stock (the “Initial Conversion Date”). Additionally, the Convertible Notes are exercisable at the option of the holders of the Convertible Notes at any time upon the occurrence of a Change in Control Event (as defined in the Convertible Notes). A mandatory conversion of the Convertible Notes will occur if after the Initial Conversion Date the closing price of the Common Stock of the Company is at least $0.50 per share for 30 consecutive trading days. The conversion price for the Convertible Notes is $0.10 per share, subject to adjustment in the event of a stock split, combination, reclassification, reorganization or similar event.

Cash and Cash Equivalents

On December 31, 2008, the Company’s cash and cash equivalents amounted to $435,197 as compared to $972,371 at December 31, 2007, a decrease of $537,174. This decrease resulted from a net use of cash from operations due to early stage operations of GeneWize. During 2008, the Company’s operating activities utilized $1,450,900 as compared to utilizing $705,086 in 2007, an increase of $745,814. Cash utilized during these periods resulted from the Company’s net losses for such periods, payment of litigation expenses and the Settlement, and the payment of accounts payable.

Investing activities utilized $281,408 in 2008, as compared to utilizing $90,827 in 2007. Financing activities provided $1,195,134 in 2008, as compared to $1,618,589 in 2007, primarily through the issuance of 8,535,000 of shares of common stock, less $46,580 of cash costs associated with such issuances and the exercise of warrants whose net proceeds provided $706,989.

The Company believes that it needs approximately $2.5 million of working capital to fund the Company’s sales and marketing efforts and infrastructure improvement and to pay existing obligations for the balance of 2009. In 2009, through the date of this filing, the Company has raised approximately $1.8 million of this amount. If the Company cannot obtain the balance of this required financing, it is unlikely that the Company will be able to fully implement its business plan.

Critical Accounting Policies

Stock options:

The Financial Accounting Standards Board has issued SFAS No. 123R, which defines a fair value based method of accounting for an employee stock option and similar equity instruments and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also temporarily allowed an entity to continue to measure compensation cost for those plans using the method of accounting prescribed by Accounting Principles Board Opinion No. 25 (APB 25). Entities electing to remain with the accounting in APB 25 must make proforma disclosures of net income (loss) and, if presented, earnings (loss) per share, as if the fair value based method of accounting defined in SFAS 123R had been adopted. As required, the Company has adopted SFAS No. 123R for the years ended December 31, 2008 and 2007.

Intangible assets and amortization of patents:

Legal and professional fees and expenses in connection with the filing of patent and trademark applications have been capitalized and are amortized over fifteen years on a straight-line basis. The Company has filed for and has patents pending in the USA and foreign countries on its method of DNA gathering. The Company has a registered trademark for its names, logos, and other proprietary products and “branding” terms. The Company also filed for and has patents pending on its three proprietary genetic indicator tests and has received a patent in Australia regarding its Oxidative Stress Profile.

Revenue and cost recognition:

GeneLink receives separate fees for the kits and for lab services. Upon entering into a distribution arrangement with GeneLink, a distributor will order kits at a price negotiated between GeneLink and the distributor. Upon the distributor receiving from a customer of such distributor an order for the underlying genetically guided skin care or nutrition product that the distributor is selling, a sample of the customer’s DNA will be obtained and the kit will be sent to the lab for analysis. At that time the distributor will be charged an agreed upon price for the lab services. This is in addition to the price of the kits.

The price for each of the kits and the lab services come about through arms-length negotiations between GeneLink and its distributors and are based upon the costs incurred by GeneLink for the kits and the lab services.

Upon termination of a distribution arrangement, GeneLink is not required to repurchase any kits remaining in the possession of the distributor. Typically, only a small number of kits are purchased at any time. The distributor has some period after the end of the distribution arrangement to sell off any remaining kits. If it does, GeneLink will provide the lab services for each kit sold.

Revenue from genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred.

Revenue from product sales is recognized when there is persuasive evidence of an arrangement, delivery has occurred and title and risk of loss have transferred to the customer, the sales price is determinable and collectability is reasonably assured. The Company has no consignment sales. Product revenue is reduced for allowances and adjustments, including returns, discontinued items, discounts, trade promotions and slotting fees.

Revenue from distributor sales and marketing kits is recognized when there is persuasive evidence of an arrangement, delivery has occurred and title and risk of loss have transferred to the customer, the sales price is determinable and collectability is reasonably assured. To the extent that kits have been received from distributors but the related products or services have not been fully delivered, recognition of all related revenue is deferred. Consistent with its return policy, the Company recognizes revenues from the sales of products immediately upon shipment and transfer of title. It offers no returns but allows for refunds on a genetically customized product for the first 90 days after an initial order as a ‘trial’ period. No refunds are offered on genetic assessments, marketing materials, non-customized products or on customized products beyond 90 days of initial order unless it constitutes the correction of a billing error.

Allowance for sales returns and allowances:

The Company predominantly sells customized products and ships on an as-requested basis. As a consequence of customization, there is no resulting finished product inventory at the Company or any affiliate or distributor location for which to accrue returns allowance. The Company did maintain an inventory for sale of some marketing and sales materials for separate resale, but the amounts were immaterial. The Company does provide a refund policy, only on customized product, for up to 90 days.

The Company analyzes sales returns in accordance with SFAS No. 48, Revenue Recognition When Right of Return Exists. The Company is able to make reasonable and reliable estimates based on its history. The Company also monitors the buying patterns of the end-users of its products based on sales data received. The Company reviews its estimated product allowances based on historical refunds of its customers. The Company believes that this analysis creates appropriate estimates of expected future returns.

Accounts receivable:

Accounts receivable include amounts due from credit card service partners, including any holdbacks or reserves, and to a lesser degree trade accounts receivable. A provision may be made for estimated bad trade debts based on management’s estimate of the amount of possible credit losses in the Company’s existing trade accounts receivable. As of December 31, 2008 and 2007, the Company has not recorded any reserve for bad debts from trade or credit receivables.

Use of Estimates:

The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Evaluation of liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering among other factors, the progress of each case, our experience and the experience of others in similar cases, and the opinions and views of legal counsel. Given the inherent difficulty of predicting the outcome of our litigation matters, particularly in cases in which claimants seek substantial or indeterminate damages, we cannot estimate losses or ranges of losses for cases where there is only a reasonable possibility that a loss may have been incurred. See “Legal Proceedings” in Part I, Item 3 of the Annual Report on Form 10-K for information on our judicial, regulatory and arbitration procedures.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Any long-term notes the Company has issued for financing have had fixed interest rates. As a result, our exposure to market risk caused by fluctuations in interest ratio is minimal. Our investments have short-term maturities and we do not believe that a change in market rates would have a significant negative impact on the value of our interests.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTS

INDEX TO FINANCIAL STATEMENTS

		Page
Report of Independent Registered Public Accounting Firm			36
Financial Statements
Consolidated Balance Sheets			37-38
Consolidated Statements of Operations			39
Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)			40
Consolidated Statements of Cash Flows			41-42
Notes to Consolidated Financial Statements			43-63

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

GeneLink, Inc. and Subsidiaries
Longwood, Florida

We have audited the accompanying consolidated balance sheets of GeneLink, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity (deficiency) and cash flows for the years then ended. These financial statements are the responsibility of the Companies’ management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of GeneLink, Inc. and Subsidiaries as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the financial statements, the Company has suffered recurring losses from operations which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 12. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Buckno, Lisicky & Company
Allentown, Pennsylvania
March 30, 2009

GENELINK, INC. AND SUBSIDIARIES

		2008				2007
CURRENT ASSETS
Cash and cash equivalents		$	435,197			$	972,371
Accounts receivable			713,565				35,327
Inventory			739,515				3,646
Prepaid expenses			53,688				11,273
Total current assets			1,941,965				1,022,617
PROPERTY AND EQUIPMENT			281,984				38,476
OTHER ASSETS			321,277				322,731
Total assets		$	2,545,226			$	1,383,824

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIENCY)
December 31, 2008 and 2007

		2008				2007
CURRENT LIABILITIES
Current maturity of long-term debt		$	60,269			$	0
Accounts payable and accrued expenses			2,034,322			$	439,399
Accrued compensation			218,664				144,168
Deferred revenue			161,727				100,922
Loans payable			18,000				18,000
Total current liabilities			2,492,982				702,489
Convertible secured promissory notes payable, net of debt issuance and stock conversion discounts			0				487,968
Total liabilities			2,492,982				1,190,457
STOCKHOLDERS’ EQUITY (DEFICIENCY)
Common stock, par value $0.01 per share; authorized:
125,000,000 and 75,000,000 shares as of December 31, 2008 and 2007, respectively; issued: 104,561,291 and 66,673,591 shares as of December 31, 2008 and 2007, respectively; outstanding: 100,202,132 and 66,267,422 shares as of December 31, 2008 and 2007, respectively			1,045,613				666,736
Additional paid in capital			12,235,833				8,277,692
Stock warrants			2,608,240				4,245,692
Accumulated deficit			(15,285,207	)			(12,681,698	)
Treasury stock, 4,359,159 and 406,169 shares as of December 31, 2008 and 2007, respectively, at cost			(552,235	)			(315,055	)
Total stockholders’ equity (deficiency)			52,244				193,367
Total liabilities and stockholders’ equity (deficiency)		$	2,545,226			$	1,383,824

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2008 and 2007

		2008				2007
Revenues:		$	6,377,443			$	97,744
Cost of goods sold:			1,812,488				70,809
Gross profit			4,564,955				26,935
Expenses:
Selling, general and administrative			6,749,406				1,268,022
Research and development			48,950				24,400
			6,798,356				1,292,422
OPERATING LOSS			(2,233,401	)			(1,265,487	)
OTHER EXPENSES
Debt conversion costs			229,025				48,053
Amortization and depreciation			87,053				58,406
Interest expense			57,030				188,678
			370,108				295,137
NET LOSS BEFORE PROVISION FOR INCOME TAXES			(2,603,509	)			(1,560,624	)
PROVISION FOR INCOME TAXES			0				0
NET LOSS		$	(2,603,509	)		$	(1,560,624	)
Loss per share, basic and diluted:		$	(0.03	)		$	(0.03	)
Weighted average common shares and diluted potential common shares			82,530,959				48,117,402

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity (Deficiency)
YEARS ENDED DECEMBER 31, 2008 AND 2007

														ADDITIONAL
		COMMON STOCK								TREASURY				PAID IN				STOCK				ACCUMULATED
		SHARES				AMOUNT				STOCK				CAPITAL				WARRANTS				DEFICIT				TOTAL
Balance, December 31, 2006			41,739,000			$	417,390			$	(315,055	)		$	7,148,427			$	3,011,009			$	(11,121,074	)		$	(859,303	)
Issuance of common stock and stock warrants related to convertible secured promissory notes			687,500				6,875				—				22,163				—				—				29,038
Conversion of secured promissory notes and accrued interest to common stock			5,093,024				50,931				—				203,722				—				—				254,653
Stock conversion discount related to convertible secured promissory notes			—				—				—				27,500				—				—				27,500
Issuance of common stock and stock warrants for fundraising services			68,750				688				—				(447,731	)			447,043								—
Issuance of common stock and warrants pursuant to private placement offering			19,085,329				190,852				—				970,306				270,240				—				1,431,398
Issuance of stock warrants as payment of accrued compensation			—				—				—				508,617				154,000				—				662,617
Commissions paid for fundraising costs			—				—				—				(155,312	)			—				—				(155,312	)
Issuance of stock warrants for services																			363,400				—				363,400
Net loss			—				—				—				—				—				(1,560,624	)			(1,560,624	)
			24,934,603				249,346				—				1,129,265				1,234,683				(1,560,624	)			1,052,670
Balance, December 31, 2007			66,673,603				666,736				(315,055	)			8,277,692				4,245,692				(12,681,698	)			193,367
Purchase of treasury stock from former officer											(237,180	)															(237,180	)
Fair value of vested stock warrants																			384,081								384,081
Conversion of secured promissory notes and accrued interest to common stock			17,640,813				176,408								705,633												882,041
Exercise of stock warrants			11,711,527				117,119								2,611,403				(2,021,533	)							706,989
Common stock issued for cash, net			8,535,000				85,350								641,105												726,455
Net loss																							(2,603,509	)			(2,603,509	)
			37,887,340				378,877				(237,180	)			3,958,141				(1,637,452	)			(2,603,509	)			(141,123	)
Balance, December 31, 2008			104,560,943				1,045,613				(552,235	)			12,235,833				2,608,240				(15,285,207	)			52,244

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended December 31, 2008 and 2007

		2008				2007
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(2,603,509	)		$	(1,560,624	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on abandonment of leasehold improvements			0				62,420
Depreciation and amortization			87,053				58,406
Amortization of discounts on loans payable			240,844				140,196
Fair value of options granted for services			384,081				363,400
Changes in assets and liabilities:
Accounts receivable			(678,238	)			(3,142	)
Inventory			(735,869	)			2,126
Prepaid expenses			(42,415	)			3,148
Other assets			13,700				(44,801	)
Deferred revenue			60,805				85,441
Accounts payable and accrued expenses			1,748,152				91,882
Accrued compensation			74,496				96,462
Net cash used in operating activities			(1,450,900	)			(705,086	)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures			(244,393	)			(6,633	)
Patent acquisition costs			(37,015	)			(84,194	)
Net cash used in investing activities			(281,408	)			(90,827	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and notes payable			54,582				272,462
Proceeds from issuance of common stock and warrants, net			726,455				1,431,400
Purchase of treasury stock			(237,180	)			0
Proceeds from exercise of stock warrants			706,989				0
Principal payments on capital lease obligations			(25,222	)			0
Principal payments on note payable			(30,490	)			0
Common stock issued for bridge loans conversion			0				70,038
Commissions paid for fundraising costs			0				(155,311	)
Net cash provided by financing activities			1,195,134				1,618,589

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2008 and 2007

		2008				2007
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			(537,174	)			822,676
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			972,371				149,695
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	435,197			$	972,371
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest:		$	2,988				0
Non-cash financing transactions:
Stock options and warrants granted for services		$	303,616			$	363,400
Common stock and warrants granted for fundraising		$	80,465			$	450,731
Conversion of secured promissory notes into common stock		$	487,968			$	0

See Notes to Consolidated Financial Statements

GENELINK, INC. AND SUBSIDIARIES

Note 1. Organization

GeneLink, Inc. (the “Company”) and its subsidiaries, Dermagenetics, Inc. and GeneWize Life Sciences, Inc., operate in Florida. The Company was organized under the laws of the Commonwealth of Pennsylvania and Dermagenetics, Inc. and GeneWize Life Sciences, Inc. were organized under the laws of the State of Delaware. The Company is the successor to a Delaware corporation organized under the same name on September 21, 1994. The Company’s offices are located in Longwood, Florida.

The Company was founded in response to the information being generated in the field of human molecular genetics. Scientists are discovering an increasing number of connections between genes and specific diseases or physical attributes and tendencies. The growth of scientific knowledge in this area has been accelerating as a direct result of the National Institutes of Health Genome Project.

The Company has developed and received a patent on a DNA Collection Kit^® for the collection of DNA specimens of clients. The kit is classified as a non-medical device.

The Company has also developed proprietary SNP-based genetic profiles (named GeneLink Nutragenetic Profile^TM and Dermagenetics^® profiles. These profiles provide a means of predicting an individual’s inherent genetic capacity to combat such conditions as oxidative stress and other important selected areas of physiologic health. The profiles, for example, can measure a person’s potential to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds. The Company’s profile assessment enables nutritional and skin care companies and health care professionals to recommend a specific and targeted regime of antioxidant vitamins, nutrients or skin care formulations that have been specifically designed to compensate for predicted deficiencies and to help provide individuals the best of health and appearance.

On December 12, 2007, the Company formed a new wholly owned subsidiary, GeneWize Life Sciences, Inc., to operate its direct sales efforts. GeneWize is the first direct selling company to focus exclusively on marketing nutritional supplements and skin care products specifically tailored to an individual’s genetic makeup.

GeneWize’s product offering in 2008 consisted of its foundational LifeMap Nutrition™ System. The LifeMap Nutrition™ System is the first comprehensive system of personalized (mass customized) nutritional supplement manufacturing based on genetic testing that measures single nucleotide polymorphisms (“SNPs”; pronounced “snips”) in DNA. GeneLink’s patented pending assessments, such as GeneLink Healthy Aging Assessment™ and Oxidative Stress, form the foundation. Genetic test results drive a proprietary algorithm that generates a nutritional report linked to an individual “titration matrix.” In order to help compensate for any predicted deficiencies, “genetically selected ingredients” and nutrients (SNPboosts™, or “snip boosts”) are titrated and blended into the individual nutritional formulation. Thus, each customer’s product is individually customized and manufactured, just for that customer.

GeneWize, as a direct selling company, offers customers the opportunity to participate in selling and distributing the products to others and receive compensation for doing so. These independent marketing affiliates must agree to and comply with the company’s policies related to sales and distribution of product, particularly as it relates to product claims or, in the case of recruiting other affiliates, income potential. In return for creating sales and complying with appropriate policies and regulations, GeneWize provides commissions and incentives. It also provides internet ordering sites, business management tools, marketing materials, training and events in support of these affiliates.

Note 2. Summary of Significant Accounting Policies

Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its Subsidiaries, each of which are wholly owned. All significant intercompany accounts and transactions have been eliminated in the consolidation.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents:

Highly liquid debt instruments purchased with a maturity of three months or less are considered to be cash equivalents. At times, cash and cash equivalents may exceed insured limits. The Company also maintains certain cash balances with Fifth Third Bancorp, which is FDIC insured up to $250,000.

Property and equipment:

Property and equipment are stated at cost. Expenditures for maintenance and repairs are charged against operations. Renewals and betterments that materially extend the life of the assets are capitalized. Depreciation is computed using the straight-line method over the estimated useful lives of 5 to 39 years of the related assets.

Revenue and cost recognition:

GeneLink receives separate fees for the kits and for the lab services. Upon entering into a distribution arrangement with GeneLink, a distributor will order kits at a price negotiated between GeneLink and the distributor. Upon the distributor receiving from a customer of such distributor an order for the underlying genetically guided skin care or nutrition product that the distributor is selling, a sample of the customer’s DNA will be obtained and the kit will be sent to the lab for analysis. At that time the distributor will be charged an agreed upon price for the lab services. This is an addition to the price of the kits.

The price of each of the kits and the lab services come about through arms-length negotiations between GeneLink and its distributors and are based upon the costs incurred by GeneLink for the kits and the lab services.

Upon termination of a distribution arrangement. GeneLink is not required to repurchase any kits remaining in the possession of the distributor. Typically, only a small number of kits are purchase at any time. The distributor has some period after the end of the distribution arrangement to sell off any remaining kits If it does, GeneLink will provide the lab services for each kit sold.

Revenue from genetic testing services is recognized when there is persuasive evidence of an arrangement, service has been rendered, the sales price is determinable and collectability is reasonably assured. Service is deemed to be rendered when the results have been reported to the individual who ordered the test. To the extent that tests have been prepaid but results have not yet been reported, recognition of all related revenue is deferred.

Revenue from product sales is recognized when there is persuasive evidence of an arrangement, delivery has occurred and title and risk of loss have transferred to the customer, the sales price is determinable and collectability is reasonably assured. The Company has no consignment sales. Product revenue is reduced for allowances and adjustments, including returns, discontinued items, discounts, trade promotions and slotting fees.

Revenue from distributor sales and marketing kits is recognized when there is persuasive evidence of an arrangement, delivery has occurred and title and risk of loss have transferred to the customer, the sales price is determinable and collectability is reasonably assured. To the extent that kits have been received from distributors but the related products or services have not been fully delivered, recognition of all related revenue is deferred. Consistent with its return policy, the Company recognizes revenues from the sales of products immediately upon shipment and transfer of title. It offers no returns but allows for refunds on a product for the first 90 days after an initial order as a ‘trial’ period. No refunds are offered on genetic assessments, marketing materials, non-customized products or on customized products beyond 90 days of initial order unless it constitutes the correction of a billing error.

Allowance for Sales Returns and Allowances:

The Company predominantly sells customized products and ships on an as-requested basis. As a consequence of customization, there is no resulting finished product inventory at the Company or any affiliate or distributor location for which to accrue returns allowance. The Company did maintain an inventory for sale of some marketing and sales materials for separate resale, but the amounts were immaterial. The Company does provide a refund policy, only on customized product, for up to 90 days.

The Company analyzes sales returns in accordance with SFAS No. 48, Revenue Recognition When Right of Return Exists. The Company is able to make reasonable and reliable estimates based on its history. The Company also monitors the buying patterns of the end-users of its products based on sales data received. The Company reviews its estimated product allowances based on historical refunds of its customers. The Company believes that this analysis creates appropriate estimates of expected future returns.

Accounts Receivable:

Accounts receivable include amounts due from credit card service partners, including any holdbacks or reserves, and to a lesser degree trade accounts receivable. A provision may be made for estimated bad trade debts based on management’s estimate of the amount of possible credit losses in the Company’s existing trade accounts receivable. As of December 31, 2008 and 2007, the Company has not recorded any reserve for bad debts from trade or credit receivables.

Intangible Assets and Amortization of Patents:

Legal and professional fees and expenses in connection with the filing of patent and trademark applications have been capitalized and are amortized over fifteen years on a straight-line basis. The Company has filed for and has patents pending in the USA and foreign countries on its method of DNA gathering. The Company also filed for and has patents pending on its three proprietary genetic indicator tests. The Company has a registered trademark for its name, logo, and the name “DNA Collection Kit^®.” In March 2001, the Company reached a Notice of Allowance of Patent on its method of DNA gathering, and has received trademark protection for its name, logo, and the name “DNA Collection Kit^®.”

Research and Development:

Research and development costs are expensed as incurred.

Inventory:

Inventory consists primarily of raw materials products for the custom nutritional products sold by GeneWize. Other inventories include marketing materials for distribution as well as DNA kits. Inventory is valued at the lower of cost (using the first-in, first-out method) or market. The shelf life of inventory items is generally one year.

Income taxes:

The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes” and FIN 48 “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109”, which requires the use of an asset and liability approach for financial accounting and reporting for income taxes and to consider the likelihood of a tax position to be accepted by federal and state taxing authorities. Under this method, deferred tax assets and liabilities are recognized based on the expected future tax consequences of temporary differences between the financial statement carrying amounts and tax basis of assets and liabilities as measured by the enacted tax rates that are expected to be in effect when taxes are paid or recovered.

Long lived assets:

The Company reviews for the impairment of long-lived assets and certain identifiable intangibles whenever events or changes indicate that the carrying amount of an asset may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of an asset and its eventual disposition are less than its carrying amount. The Company has not identified any such impairment losses during the years ended December 31, 2008 and 2007.

Per share data:

Effective November 12, 1998, the Company adopted SFAS No. 128, “Earnings Per Share.” The provisions of SFAS 128 establish standards for computing and presenting earnings per share (EPS). This standard replaces the presentation of primary EPS with a presentation of basic EPS. Additionally, it requires dual presentation of basic and diluted EPS for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the diluted EPS computation. 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. Diluted EPS for 2007 and 2006 excludes any effect from such securities, as their inclusion would be antidilutive.

Stock-Based Compensation:

The Company accounts for its stock-based compensation expense in accordance with SFAS No. 123 (Revised 2004), Share-Based Payment (SFAS No. 123R) using the modified prospective basis. SFAS No. 123R addresses all forms of share-based payment (SBP) awards, including shares issued under employee stock purchase plans, stock options, restricted stock and stock appreciation rights. SFAS No. 123R requires the Company to expense SBP awards with compensation cost for SBP transactions measured at fair value. SFAS No. 123R applies to new equity awards and to equity awards modified, repurchased or canceled after the effective date, January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered that are outstanding as of the effective date shall be recognized as the requisite service is rendered on or after the effective date. The compensation cost for that portion of awards shall be based on the grant-date fair value of those awards as calculated from the pro forma disclosures under SFAS No. 123. Additionally, the Company records an expense for the amount that the fair market value exceeds the purchase cost for common stock purchased pursuant to its employee stock purchase plan.

Recent Accounting Pronouncements:

In September 2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 was issued to provide consistency and comparability in determining fair value measurements and to provide for expanded disclosures about fair value measurements. The definition of fair value maintains the exchange price notion in earlier definitions of fair value but focuses on the exit price of the asset or liability. The exit price is the price that would be received to sell the asset or paid to transfer the liability adjusted for certain inherent risks and restrictions. Expanded disclosures are also required about the use of fair value to measure assets and liabilities. The effective date is for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company has not yet determined the impact, if any, of adopting this statement on its financial position, results of operations and cash flows.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115, which is effective for fiscal years beginning after November 15, 2007. The statement permits entities to choose to measure many financial instruments and certain other items at fair value. The Company has not yet determined the impact, if any, of adopting this statement on its financial position, results of operations and cash flows.

In July 2007, the Emerging Issues Task Force (EITF) issued EITF 07-3, “Accounting for Nonrefundable Advance Payments for Goods or Services to be Used in Future Research and Development Activities” (EITF 07-3). EITF 07-3 clarifies the accounting for nonrefundable advance payments for goods or services that will be used or rendered for research and development activities. EITF 07-3 states that such payments should be capitalized and recognized as an expense as the goods are delivered or the related services are performed. If an entity does not expect the goods to be delivered or the services rendered, the capitalized advance payment should be charged to expense. EITF 07-3 is effective for fiscal years beginning after December 15, 2007. The Company is currently evaluating the effect of EITF 07-3 on its financial statements but does not expect the adoption of EITF 07-3 to have a material effect on the Company’s financial position or results of operations.

In December 2007, the FASB issued Statement No. 141R, “Business Combinations,” which establishes principles for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired and liabilities assumed in a business combination, recognizes and measures the goodwill acquired in a business combination, and determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of a business combination. The Company is required to apply this Statement prospectively to business combinations for which the acquisition date is on or after January 1, 2009. Earlier application is not permitted.

In December 2007, the FASB ratified a consensus opinion reached by the EITF on EITF Issue 07-1, “Accounting for Collaborative Arrangements (EITF 07-1). The guidance in EITF 07-1 defines collaborative arrangements and establishes presentation and disclosure requirements for transactions within a collaborative arrangement (both with third parties and between participants in the arrangement).

The consensus in EITF 07-1 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2008. The consensus requires retrospective application to all collaborative arrangements existing as of the effective date, unless retrospective application is impracticable. The impracticability evaluation and exception should be performed on an arrangement-by-arrangement basis.

The Company intends to adopt EITF 07-1 effective January 1, 2009 and retrospectively apply the requirements of this consensus to its collaborative arrangements in existence on that date.

Reclassifications:

Certain amounts in the prior year’s financial statement have been reclassified to conform with the current year’s presentation.

Note 3. Property and Equipment

As of December 31, 2008 and 2007, property and equipment consisted of the following:

		2008				2007
Office furniture and equipment		$	82,803			$	50,598
Equipment			143,421				8,050
Leasehold improvements			6,781				0
Software			234,147				102,712
			467,152				161,360
Less accumulated depreciation and amortization			185,168				122,884
		$	281,984			$	38,476

Depreciation expense was $62,284 and $37,832 for the years ended December 31, 2008 and 2007, respectively.

Note 4. Other Assets

As of December 31, 2008 and 2007, other assets consisted of the following:

		2008				2007
Patents and trademarks		$	394,485			$	357,470
Deposits			31,101				41,001
Less accumulated amortization			104,309				79,540
		$	321,277			$	318,931

Amortization expense was $24,769 and $21,024 for the years ended December 31, 2008 and 2007, respectively.

The future estimated minimum amortization expense that will be charged to operations as of December 31, 2008 is as follows:

Year ending
December 31,
2009		$	27,199
2010			27,199
2011			27,199
2012			27,199
2013			27,199
Thereafter			258,491
		$	394,486

Note 5. Income Taxes

At December 31, 2008 and 2007, the Company had federal and state tax net operating loss carry forwards of approximately $19,569,000 and $16,794,000, respectively. The difference between the operating loss carry forwards on a tax basis and a book basis is due principally to differences in depreciation, amortization, and treatment of stock options. The federal carry forwards begin to expire in 2009 and the state carry forwards began to expire in 2003.

The Company had a net deferred tax asset of $3,910,000 and $2,180,000 at December 31, 2008 and 2007, respectively, primarily from net operating loss carry forwards. A valuation allowance was recorded to reduce the net deferred tax asset to zero. The deferred tax asset valuation allowance increased $1,730,000 for the year ended December 31, 2008 and $225,000 for the year ended December 31, 2007.

Note 6. Stockholders’ Equity Transactions

Common Stock

In November 2008, the Company issued a private placement memorandum for up to $1,000,000 of stock at a price of $0.10 per share. Through December 31, 2008, the Company issued secured $853,500 in gross proceeds and issued 8,535,000 shares of Common Stock pursuant to such private placement.

In June 2008, 1,562,500 warrants were exercised in cashless exercises in which the Company held back 425,564 warrants as payment for the exercise prices and issued 1,136,936 shares of Common Stock in connection with such exercises.

In June 2008, the holders of all of the outstanding convertible secured promissory notes (the “Notes”) issued by the company converted the Notes into shares of the Company’s Common Stock at a conversion price of $0.05 per share. The Notes were issued in consideration for certain loans provided to the Company by third parties between May 12, 2006 and June 6, 2007. $882,041 in principal and accrued interest of Notes were converted into 17,640,813 shares of Common Stock.

Effective May 9, 2008 through June 12, 2008, pursuant to a tender offer undertaken by the Company, holders of warrants, not including warrants issued to officers and directors of the Company in June 2007 and September 2007, were entitled to exercise their warrants at reduced exercise prices as follows:

Number of		Original Exercise Price				Revised
Existing Warrants		of Existing Warrants				Exercise Price
7,346,577		$0.075-$0.10				$0.05
4,872,704		$0.20-$0.25				$0.06
2,755,500		$0.40-$0.50				$0.08
2,246,250		$0.60-$1.00				$0.09

A total of 10,574,951 warrants were exercised in the tender offer for cash proceeds of $706,989.

Pursuant to an Order of Settlement dated May 13, 2008 (the “Settlement”), the Company and John R. DePhillipo settled all issues, claims and counterclaims each party may have with respect to the Action entitled, John R. DePhillipo v. GeneLink, Inc. (Superior Court of New Jersey Law Division: Atlantic County, Docket No. ATL-L-7479-05). Under the Settlement, the Company acquired 3,953,000 shares from Mr. DePhillipo and his family and paid Mr. DePhillipo and his family $0.06 per share, resulting in a purchase price of $237,180. Additionally, under the Settlement the Company paid Mr. DePhillipo $220,000. As part of the Settlement, the Company and Mr. DePhillipo delivered general releases to each other.

In August 2007, the Company issued a private placement memorandum for up to $1,700,000 of units consisting of restricted common stock at $.075 per share with an attached warrant to acquire ¹/4 of a share of common stock. The warrants are exercisable for 5 years at a price of $.10 per share. During November, 2007 the Company closed on $1,431,400 units with proceeds allocated to stock of $1,161,159 and attached warrants of $270,241.

In connection with this offering, the Company issued 2,575,250 of dealer warrants with 5 year terms. 515,050 of the dealer warrants have an exercise price of $.10 per share, while the remaining 2,060,200 are exercisable at $.075 per share.

The Company issued 68,750 and 68,750 shares of common stock for services rendered, valued at $3,688 and $688 for the years ended December 31, 2008 and 2007, respectively.

During the year ended December 31, 2008 and 2007, the Company issued $0 and $137,500 principal amount of convertible secured promissory notes and issued 0 and 687,500 shares of restricted Common Stock in connection with the issuance of the notes.

In June 2008, the holders of all of the outstanding convertible secured promissory notes (the “Notes”) issued by the company converted the Notes into shares of the Company’s Common Stock at a conversion price of $0.05 per share. The Notes were issued in consideration for certain loans provided to the Company by third parties between May 12, 2006 and June 6, 2007. $882,041 in principal and accrued interest of Notes were converted into 17,640,813 shares of Common Stock.

During 2007 the Company issued 5,093,024 shares of common stock as conversion of promissory notes and accrued interest. The value of the notes converted as of December 31, 2007 was $254,653.

In connection with the convertible secured promissory notes and shares of Common Stock issued, the Company issued 410,000 shares of Common Stock valued at $22,950, warrants to acquire 1,640,000 shares of Common Stock at an exercise price of $.05 valued at $49,200, and paid a cash commission of $57,400 to the Administrative Agent. The total costs of $129,550 have been recorded as a reduction of the proceeds in accordance with AICPA Technical Practice Aid 4110.01.

Stock Options and Warrants

The Financial Accounting Standards Board has issued SFAS No. 123R, which defines a fair value based method of accounting for an employee stock option and similar equity instruments and requires all entities to adopt that method of accounting for all of their employee stock compensation plans.

SFAS 123R requires the recognition of the fair value of stock at the dates stock options are granted to employees at exercise prices equal to the fair market value of our stock at the dates of grant. Generally, options are fully vested within three years from the grant date and have a term of 10 years. Performance awards are granted to officers and key employees are payable in shares of common stock. The number of performance award shares actually issued, if any, varies depending on the achievement of certain performance goals. In general, performance grants vest ratably over the service period. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. The Company provides newly issued shares and treasury stock to satisfy stock option exercise and for the issuance of performance awards.

During 2007 the Company granted options to Board members, executives and advisors in lieu of compensation in accordance with the Company’s Stock Option Plan. Options granted under this plan primarily vested over 4 years beginning in 2007. The options have terms of 10 years and a fair value based on the Company’s lattice valuation model of $.08/ share. The compensation recognized in relation to the issuance of these options for the years ended December 31, 2008 and 2007 is $384,081 and $363,400, respectively.

Effective May 9, 2008 through June 12, 2008, pursuant to a tender offer undertaken by the Company, holders of warrants, not including warrants issued to officers and directors of the Company in June 2007 and September 2007, were entitled to exercise their warrants at reduced exercise prices as follows:

Number of		Original Exercise Price		Revised
Existing Warrants		of Existing Warrants		Exercise Price
7,346,577		$0.075-$0.10		$	0.05
4,872,704		$0.20-$0.25		$	0.06
2,755,500		$0.40-$0.50		$	0.08
2,246,250		$0.60-$1.00		$	0.09

A total of 10,574,951 warrants were exercised in the tender offer for cash proceeds of $706,989.

In June 2008, 1,562,500 warrants were exercised in cashless exercises in which the Company held back 425,564 warrants as payment for the exercise prices and issued 1,136,936 shares of Common Stock in connection with such exercises.

In addition, in connection with an officer of the Company reducing deferred compensation due to him, the Company issued 1,400,000 in options to such officer in September 2007 at an exercise of $0.11 per share, to settle a deferred compensation liability with an advisor. The options issued with a 10 year term had a fair value of $154,000.

A summary of the status of the Company’s stock options and warrants as of December 31, 2008 and 2007, and changes during the years ending of those dates are presented below:

		2008								2007
		Weighted								Weighted
		Average				Exercise				Average				Exercise
		Shares				Price				Shares				Price
Options/warrants outstanding at beginning of year			31,043,535			$	0.19				14,992,987			$	0.38
Granted			7,112,249				0.37				17,721,581				0.08
Exercised			(12,137,453	)			(0.06	)			—				—
Expired			(2,995,000	)			(0.44	)			(1,671,033	)			(0.80	)
Cancelled			—				—				—				—
Options/warrants outstanding at end of year			23,023,331			$	0.17				31,043,535			$	0.19
Options/warrants exercisable at end of year			15,039,162								26,886,035
Weighted-average fair value of options granted during the year						$	0.38							$	0.11

The following table summarizes information about stock options and warrants outstanding at December 31, 2008:

						Weighted-Average
		Number				Remaining
Exercise		Outstanding				Contractual Life				Exercisable
Price		at 12/31/08				(Years)				Warrants
0.05			1,915,000				2.70				1,915,000
0.075			2,310,200				6.75				2,310,200
0.08			8,700,000				8.58				6,094,996
0.10			3,135,633				4.07				3,135,633
0.12			1,800,000				9.00				1,075,000
0.20			375,000				1.09				375,000
0.25			50,000				0.57				50,000
0.50			4,737,498				9.58				83,332
			23,023,331								15,039,162

Stock options were valued using a lattice model approach. Significant assumptions used to calculate the fair value of all options issued for services are as follows:

Risk free interest rate of return		4.5 - 5%
Expected option life		5 - 10 yrs.
Expected dividends		$0.00
Expected volatility		169 - 170%

Note 7. Net Loss Per Share

Earnings per share is calculated under the provisions of Statement of Financial Accounting Standards (SFAS) No. 128 “Earnings Per Share.”

Basic EPS is calculated using the weighted average number of common shares outstanding for the period and diluted EPS is computed using the weighted average number of common shares and dilutive common equivalent shares outstanding. Given that the Company is in a loss position, there is no difference between basic EPS and diluted EPS since the common stock equivalents would be antidilutive.

		2008				2007
Net loss		$	(2,603,509	)		$	(1,560,624	)
Weighted average number of common shares outstanding for computing basic earning per share			82,530,959				48,117,402
Dilutive effect of warrants and stock options after application of the treasury stock method			—				—
Weighted average number of common shares out- standing for computing diluted earnings per share			82,530,959				48,117,402
Net loss per share — basic and diluted		$	(0.03	)		$	(0.03	)

The following common stock equivalents are excluded from the earnings per share calculation as their effect would have been antidilutive:

		Years Ended December 31
		2008				2007
Warrants and stock options			23,023,331				31,043,535

Note 8. Advertising

The Company expenses the production costs of advertising when incurred. Advertising expense was $62,230 and $31,810 for the years ended December 31, 2008 and 2007, respectively.

Note 9. Rent

The Company leases its offices in Longwood, Florida. The lease is for a term of three years, ending December 2010, and provides for monthly rental payments of $5,500.

The future minimum lease payments that will be charged to operations as of December 31, 2008 is as follows:

Year ending
December 31,
2009		$	66,000
2010			66,000
		$	132,000

Note 10. Related Party Transactions and Convertible Secured Promissory Notes

In January 2006 the Company entered into an Exclusivity and Indemnity Agreement with First Equity Capital Securities, Inc. (“First Equity”), pursuant to which the Company granted First Equity the exclusive right to assist the Company in raising between $200,000 and $2,000,000 in debt financing and agreed to indemnify First Equity from any claims made as a result of First Equity providing services to or on behalf of the Company. This exclusive arrangement continued through May 2006. Kenneth R. Levine, a holder of greater than five percent (5%) of the Company’s outstanding common stock, is a principal and officer of First Equity.

In May 2006, December 2006, January 2007 and June 2007, pursuant to the terms of a Convertible Secured Loan Agreement, dated as of May 12, 2006 (as amended and supplemented, the “Loan Agreement”), the Company issued $965,390 principal amount of Notes.

The Company issued to First Equity Capital Securities, Inc., as Administrative Agent under the Loan Agreement, an aggregate of 435,000 shares of restricted Common Stock of the Company and warrants to acquire 1,740,000 shares of restricted Common Stock of the Company at an exercise price of $0.05 per share in connection with the issuance of the Notes. The Company also paid First Equity Capital Securities, Inc. a placement fee of $60,900, equal to 7% of all loans raised pursuant to the Loan Agreement. Kenneth R. Levine, a holder of more than five percent of the equity securities of the Company, is an officer and principal of First Equity Capital Securities, Inc. Mr. Levine purchased $69,078 of Notes and received 345,390 shares of restricted Common Stock of the Company in connection with the issuance of the Notes.

In December 2008, the Company issued $853,500 of Common Stock in a private placement, and in connection with such offering the Company issued to First Equity Capital Securities, Inc. warrants to acquire 597,250 shares of Common Stock and paid First Equity Capital Securities, Inc. a cash fee of $47,780.

A family trust of which Robert Hoekstra, a director of the Company, is a trustee, acquired 1,050,000 shares in this offering for a purchase price of $105,000.

Short Term Loans Payable

As of December 31, 2008, the Company has various shareholders of the Company who provided short term obligations, as follows:

		2008				2007
Note payable, due no specific maturity with no stated interest. All interest and principal due at maturity		$	10,000			$	10,000
Note payable, no specific maturity with no stated Interest. All interest and principal due at maturity			8,000				8,000
			18,000				18,000
Less: Discount for warrants issued			(—	)			(—	)
Total short term loans payable		$	18,000			$	18,000

Employees and Consultants

The Company is dependent on the services of Monte E. Taylor, Jr., its Chief Executive Officer. The Company is in the process of negotiating an employment agreement with Mr. Taylor. A new agreement has not been signed.

The Company has entered into a consulting agreement with Dr. Ricciardi (shareholder and officer) dated February 24, 1998. The initial term of the agreement was five (5) years.

Pursuant to an agreement dated September 27, 2007, Dr. Ricciardi agreed to reduce the accrued compensation payable to him to $90,000 as of September 30, 2007, payable when the Board of Directors of the Company determines that the Company’s financial position can accommodate such payments, and to reduce the compensation payable to him for future services to be rendered pursuant to the consulting arrangement to $30,000 per year, payable in monthly installments of $2,500 each commencing, October 2007 and payable on the last day of each month. The Company reimbursed Dr. Ricciardi $10,000 for legal fees incurred in connection with the litigation instituted by John R. DePhillipo, the former Chief Executive Officer and President of the Company against the Company and Dr. Ricciardi in connection with Mr. DePhillipo’s termination; released Dr. Ricciardi from any potential claims the Company may have against the directors and officers of the Company in connection with actions taken prior to the termination of Mr. DePhillipo’s employment; and issued Dr. Ricciardi a full-vested warrant to acquire 1,400,000 shares of Common Stock of the Company at an exercise price per share of $0.11, the closing price per share as of September 27, 2007. Dr. Ricciardi will remain eligible to receive additional option and warrant grants as a member of the Board of Directors and the Advisory Board of the Company.

Convertible Secured Promissory Notes Payable

As of December 31, 2007, the Company had various shareholders of the Company who provided convertible secured promissory note obligations, as follows:

		2008				2007
Notes payable, due May 12, 2011 with interest at 12%. All interest and principal due at maturity. All Company assets pledged as collateral		$	—			$	728,812
			—				728,812
Less: Debt issue discount			—				(105,864	)
Less: Stock conversion discount			—				(134,980	)
Less: Debt proceeds not received			—				—
Total short term loans payable		$	—			$	487,968

In connection with issuance of the convertible secured promissory notes, the Company has recognized a debt issuance discount as of December 31, 2008 and 2007 of $0 and $29,038, respectively, that is being amortized over the term of the notes. As of December 31, 2008 and 2007, the unamortized debt issuance discount is $0 and $134,980, respectively.

In connection with issuance of the convertible secured promissory notes, the Company has recognized a stock conversion discount as of December 31, 2008 and 2007 of $0 and $27,500, respectively, that is being amortized over the term of the notes. As of December 31, 2008 and 2007, the unamortized stock conversion discount is $0 and $105,864, respectively.

Interest expense related to notes payable is $283,036 and $192,723 for the years ended December 31, 2008 and 2007, respectively.

In June 2008, the holders of all of the outstanding convertible secured promissory notes (the “Notes”) issued by the company converted the Notes into shares of the Company’s Common Stock at a conversion price of $0.05 per share. The Notes were issued in consideration for certain loans provided to the Company by third parties between May 12, 2006 and June 6, 2007. $882,041 in principal and accrued interest of Notes were converted into 17,640,813 shares of Common Stock.

Note 11. Segment Information

The Company distinguishes its two main operating segments by entity and the types of products they sell.

The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments for the year ended December 31, 2008 and 2007:

										GeneWize Life
		GeneLink				Dermagenetics				Sciences
		Inc.				Inc.				Inc.
2008
Net Revenues		$	291,206			$	29,738			$	6,056,499
Operating expenses			1,973,028				40,113				6,980,049
Other income			12,238
Pre-tax earnings (loss)			(1,669,584	)			(10,375	)			(923,550	)
2007
Net Revenues			30,458			$	67,286
Operating expenses			1,479,300				190,648
Other income			10,956				624
Pre-tax earnings (loss)			(1,437,886	)			(122,738	)

Note 12. Going Concern

The Company’s financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company incurred a net loss of $2,603,509 and $1,560,624 for the years ended December 31, 2008 and 2007, respectively. The Company reported a deficit of $15,285,207 and $12,681,698 as of December 31, 2008 and 2007, respectively. The Company has announced marketing plans to enhance sales and, as a result, management believes that they will be able to generate sufficient revenue and cash flow for the Company to continue as a going concern. Should the Company be unable to continue as a going concern, assets and liabilities would require restatement on a liquidation basis that would differ materially from the going concern basis.

Note 13. Commitments and Contingencies

Effective October 14, 2005, we terminated the employment of John R. DePhillipo, our former Chief Executive Officer and President and a former director. In 2005, Mr. DePhillipo commenced two lawsuits allegedly arising out of his termination by us for “cause,” as defined in his Employment Agreement with us.

In an Action filed in the United States District Court for the Eastern District of Pennsylvania, John R. DePhillipo v. Robert P. Ricciardi, Civil Action No. 05-5906, Mr. DePhillipo alleged that Dr. Ricciardi, a Director and Officer of the Company, (1) caused Mr. DePhillipo’s employment with us to be wrongfully terminated and therefore is personally liable for all severance owed Mr. DePhillipo, in the amount of at least $75,000; (2) was personally liable for Mr. DePhillipo’s unpaid back salary of $84,000 simply because Dr. Ricciardi is an officer and/or director of the Company; and (3) acted sufficiently maliciously to justify punitive damages being assessed against Dr. Ricciardi of $10,000,000. Counsel for Dr. Ricciardi entered an answer to this action and subsequently the action against Dr. Ricciardi was dismissed with prejudice against Mr. DePhillipo in March 2006.

In a separate Action filed by Mr. DePhillipo against us in November 2005 in the Superior Court of New Jersey, Law Division, Atlantic County, John R. DePhillipo v. GeneLink, Inc., Docket No. ATL-L-7479-05, Mr. DePhillipo alleged that his termination by us “for cause” was improper and therefore he was entitled to in excess of $1,500,000 in severance pay under the terms of an employment agreement, allegedly entered into effective January 1, 2005 (the “Employment Agreement”) and an additional $84,000 in accrued and unpaid compensation. We filed an Answer denying the material allegations of the Complaint and asserted a number of affirmative defenses. We filed counterclaims against Mr. DePhillipo for breach of fiduciary duty, conversion, negligent misrepresentation, unjust enrichment and fraud while Mr. DePhillipo served as our Chief Executive Officer, President and Chief Financial Officer. The counterclaims sought recovery in excess of that sought by Mr. DePhillipo in the Complaint.

Pursuant to the Settlement, on May 13, 2008 we and Mr. DePhillipo settled all issues, claims and counterclaims each may have with respect to the Action. Under the Settlement, we acquired 3,953,000 shares from Mr. DePhillipo and his family and paid Mr. DePhillipo and his family $0.06 per share, resulting in a purchase price of $237,180. Additionally, under the Settlement we paid Mr. DePhillipo $220,000. As part of the Settlement, we and Mr. DePhillipo delivered general releases to each other.

On August 12, 2008, in an Action filed in the Philadelphia Court of Common Pleas, DePhillipo, et.al. v. GeneLink, Inc. t/a GeneLink Biosciences, Inc., et. al., Philadelphia County Court of Common Pleas, August Term 2008 No. 1128, Mr. DePhillipo and Maria DePhillipo, his spouse, filed suit against the Company, GeneWize and certain of the Company’s officers, directors and advisors. Mr. and Mrs. DePhillipo allege, among other things, that the Company and certain of these officers, directors and/or advisors fraudulently and/or negligently conspired to induce Mr. DePhillipo to enter into the Settlement and to cause Mr. and Mrs. DePhillipo to sell their shares of the Company’s common stock to the Company, that the Company and its counsel fraudulently and negligently misrepresented the Company’s financial condition to induce Mr. DePhillipo to enter into the Settlement and to cause Mr. and Mrs. DePhillipo sell their shares of the Company’s common stock, and that the Company failed to timely disclose information concerning the formation and operation of GeneWize. Mr. and Mrs. DePhillipo seek approximately $20 million in damages based upon an alleged value of the Company’s common stock of $5.00 per share. They also seek rescission of the Settlement and thus the return of the 3,953,000 shares of the Company’s common stock sold by them to us pursuant to the Settlement.

We have agreed to indemnify our offices, directors and advisors who have been named as defendants in the Action and will be liable for any costs or expenses incurred by or judgments entered against such defendant.

On October 1, 2008, the Company, as well as all of the other defendants, moved to dismiss the Action in its entirety through the filing of preliminary objections. These preliminary objections are currently pending before the court.

We and our Board of Directors deny the claims set forth in the Action and are vigorously defending the baseless claims made by Mr. and Mrs. DePhillipo.

Note 14. Quarterly Results of Operations (unaudited)

Below is a summary of the quarterly results of operations for each quarter of the years ended December 31, 2008 and 2007:

2008		First				Second				Third				Fourth
Sales		$	26,424			$	124,503			$	1,829,669			$	4,396,847
Gross profit			1,104				15,331				1,403,963				3,144,557
Net income (loss)			(448,250	)			(1,107,479	)			(513,472	)			(534,308	)
Net income (loss) per common share			(0.01	)			(0.01	)			(0.005	)			(0.005	)

2007		First				Second				Third				Fourth
Sales		$	31,385			$	27,182			$	26,150			$	13,027
Gross profit			6,262				6,935				14,252				(514	)
Net income (loss)			(359,792	)			(225,196	)			(550,747	)			424,889
Net income (loss) per common share			(0.01	)			(0.01	)			(0.01	)			(0.01	)

Note 15. Subsequent Events

In January 2009, the Company sold an additional 5,650,000 shares of restricted Common Stock of the Company at a purchase price of $0.10 per share pursuant to a continued Confidential Private Offering Memorandum, and received an aggregate gross amount of $565,000.

On February 26, 2009, the Company issued to an accredited investor $1,000,000 principal amount of Convertible Notes and issued 1,500,000 Warrants to acquire shares of Common Stock at an exercise price of $0.11 per share in connection therewith. The Warrants are exercisable on or after August 26, 2009 and on or before February 26, 2014. In March 2009, the Company issued an additional $200,000 of notes and issued 300,000 additional warrants in connection therewith.

The Convertible Notes mature on February 26, 2014 and bear interest at the rate of 8% per year through February 26, 2011 and thereafter bear interest at the rate of 10% per year. The Convertible Notes may not be prepaid without the approval of the holders of the Convertible Notes.

The Convertible Notes are convertible at the option of the holders of the Convertible Notes upon the earlier to occur of (a) August 26, 2009 or (b) the adoption and filing of an amendment to increase the capitalization of the Company to at least 175,000,000 shares of Common Stock (the “Initial Conversion Date”). Additionally, the Convertible Notes are exercisable at the option of the holders of the Convertible Notes at any time upon the occurrence of a Change in Control Event (as defined in the Convertible Notes). A mandatory conversion of the Convertible Notes will occur if after the Initial Conversion Date the closing price of the Common Stock of the Company is at least $0.50 per share for 30 consecutive trading days.

The conversion price for the Convertible Notes is $0.10 per share, subject to adjustment in the event of a stock split, combination, reclassification, reorganization or similar event.

Note 16. Industry Risk and Concentration

The business of marketing nutrition and skin care products is highly competitive and sensitive to the introduction of new products which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, distributors, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad. In addition, the Company anticipates that it will be subject to increasing competition in the future from sellers that utilize electronic commerce. Many of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than does the Company.

The Company’s present or future competitors may be able to develop products that are comparable or superior to those offered by the Company, adapt more quickly than the Company does to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than does the Company. For example, if the Company’s competitors develop skin care or nutritional treatments that prove to be more effective than our products, demand for our products could be reduced. Accordingly, the Company may not be able to compete effectively in our markets and competition may intensify. The Company is also subject to significant competition for the recruitment of distributors from other network marketing organizations, including those that market nutritional supplements and skin care products as well as other types of products.

The Company’s ability to be competitive will depend, in significant part, on its success in recruiting and retaining distributors through an attractive compensation plan, the maintenance of an attractive product portfolio and other incentives. The cannot ensure that the Company’s programs for recruitment and retention of distributors will be successful, and if they are not, the Company’s financial condition and operating results would be harmed.

In addition, the Company relies entirely on a limited number of third parties to supply raw materials, manufacture our products and perform laboratory tests on the Company’s behalf. In the event any of the Company’s third party suppliers, manufacturers or laboratories were to become unable or unwilling to continue to provide the Company with services and products in required volumes and at suitable quality levels, the Company would be required to identify and obtain acceptable replacement sources.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and other procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

With the participation of management, the Company’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of the design and operation of its disclosure controls and procedures at the conclusion of the fiscal quarter ended December 31, 2008. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange Commission.

Change In Internal Controls

There were no changes in the Company’s internal controls over financial reporting or, to the knowledge of the Company’s management, in other factors that have materially affected or are reasonably likely to materially affect internal controls over financial reporting during the fiscal quarter ended December 31, 2008.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the Company’s internal control over financial reporting as of December 31, 2008 using the criteria for effective control over financial reporting established in “Internal Control — Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2008, the Company maintained effective internal control over financial reporting.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

ITEM 9B. OTHER INFORMATION

Not applicable.

PART III

ITEM 10. DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to each of the executive officers and current directors of the Company is set forth below:

Name		Age				Position
Dr. Bernard L. Kasten, Jr.			63			Executive Chairman of the Board, Director
Monte E. Taylor, Jr.			60			Chief Executive Officer, Chief Financial Officer, Director
Douglas M. Boyle			42			Director
Robert Hoekstra			58			Director
James Monton			63			Director
Robert P. Ricciardi, Ph.D			63			Secretary, Chief Science Officer, Director
John H. Souza			47			Chief Operating Officer, Director

Dr. Kasten is currently the Chairman and a director of the Company. Dr. Kasten has been a scientific advisor to the Company since 1999 and a member of our Advisory Committee since 2001. Dr. Kasten is a graduate of Miami University (Oxford Ohio), BA Chemistry 1967, and the Ohio State University College of Medicine MD 1971. His residency was served at the University of Miami, Florida and fellowships at the National Institutes of Health Clinical Center and National Cancer Institute, Bethesda, Maryland. Dr. Kasten is a Diplomat of the American Board of Pathology with Certification in Anatomic and Clinical Pathology with sub-specialty certification in Medical Microbiology. Dr. Kasten is an author of “Infectious Disease Handbook” 1^st through 5th Editions 1994-2003 and the “Laboratory Test Handbook” 1^st through 4^th Editions 1984-1996 published by Lexi-Comp Inc., Hudson, Ohio. Dr. Kasten has been active with the College of American Pathologists (CAP) serving as Chairman of its Publication Committee from 1985-1993, its Management Resources Committee from 1993-1998 and its Chairman Internet Editorial Board from 1999-2003. Dr. Kasten received the College of American Pathologists Presidents Medal Awarded for Outstanding Service in 1989 and the College of American Pathologists Frank W. Hartman Award, in 1993 for Meritorious Service to the College (Founding CAP Today) the organization’s highly successful monthly tabloid magazine. Dr. Kasten’s professional staff appointments have included the Cleveland Clinic, Northeastern Ohio Universities College of Medicine, the Bethesda Hospitals and Quest Diagnostics. Dr. Kasten served eight years, 1996-2004, at Quest Diagnostics Incorporated [NYSE-DGX], where he was Chief Laboratory Officer; Vice-President of Business Development for Science and Medicine and Vice-President of Medical Affairs of a Quest Diagnostics wholly-owned subsidiary, MedPlus Inc. Dr. Kasten joined SIGA Technologies, Inc. [NASDAQ-SIGA] as a Board of Directors member in May 2003, and accepted the appointment as SIGA’s Chief Executive Officer in July of 2004, serving through April 2006. Dr. Kasten is Chairman of the Board of Cleveland Bio Labs Inc. [NASDAQ-CBLI], and also serves on the Board of Directors of Enzo Biochem [NYSE_ENZ], Lexi-Comp Inc and Riggs-Heinrich Media Inc.

Mr. Taylor currently is the Chief Executive Officer and Chief Financial Officer and a director of the Company. Mr. Taylor joined the Company as Director of Business Development in 2001. In such role, Mr. Taylor has focused his efforts in rolling out the Company’s products and technologies to the skin-care, skin health and nutrition industries worldwide. Prior to joining the Company, Mr. Taylor was a senior management consultant specializing in strategic marketing plans, business development and marketing communications for mid-size and Fortune 500 companies. Mr. Taylor has significant direct selling/MLM industry experience as a consultant, distributor and corporate trainer. Mr. Taylor received a masters degree in business administration from the Crummer School of Business at Rollins College.

Mr. Boyle is the President of Empirical Healthcare Consulting, LLC. He has over 20 years of professional experience in the areas of finance, operations, corporate governance and business turnarounds, including over 17 years of experience in the healthcare field as a financial and operational executive. He has served in executive roles in start-up, middle market and Fortune 500 companies, where he has held the titles of Chief Executive Officer, President, Chief Operations Officer and Chief Financial Officer, prior to which he worked as a Senior Auditor for KPMG Peat Marwick. Mr. Boyle also led the national financial revenue operations for Quest Diagnostics Incorporated, and was Chief Financial Officer for Doylestown Hospital and Health Care System and MediMax Incorporated. Mr. Boyle holds an MBA from Columbia University and a BS in Accounting from the University of Scranton.

Mr. Hoekstra is currently a director of the Company. Mr. Hoekstra a management consultant, organizational therapist and co-founder of Team Architects, an international management and relationship skills training company. Mr. Hoekstra is a co-creator and a certified instructor for “Redirecting Corporate America,” a management training course offered world wide since 1991. Formerly, he was the V.P. of Sales for U.S. Medical and President of the Hoekstra Agency. Mr. Hoekstra graduated from Loyola University, New Orleans with a B.S. in Psychology (Cum Laude).

Mr. Monton is currently a director of the Company. After graduating Magna Cum Laude from Michigan State University Honors College, Mr. Monton joined Procter & Gamble (P&G) in 1968 as a research scientist. He holds one of P&G’s key beauty care patents. He led a number of successful projects including the launch of Pantene Pro V, which has become the world’s largest beauty care brand. Mr. Monton worked for P&G in Europe from 1979 to 1982 where he helped lay the foundation for P&G becoming the most successful health and beauty care company in Europe. As a director in P&G’s Latin American organization from 1984 to 1988, he managed projects in the health, beauty, cleaning, and food industries. Mr. Monton worked at P&G’s Asian headquarters in Kobe, Japan from 1996 to 2001, leading much of P&G’s Asian Beauty Care organization and serving on the China Beauty Care Management Leadership Team. From 2001 until 2005, he was a Director in P&G’s External Relations Department where he led much of the company’s connections with the media and outside influencers. Mr. Monton retired from P&G in 2005 where he was honored for 37 years of outstanding service. Mr. Monton currently serves on the Boards of the Northern Kentucky University’s Business School and the International Business Center. He is a frequent speaker at international business seminars, guest lectures on management to MBA students, and sponsors scholarships for business students to work as interns outside the United States. Mr. Monton is a member of the Foreign Policy Leadership Council of Cincinnati and also uses his expertise to consult for companies on strategic management and organizational issues.

Dr. Ricciardi is currently the Chief Science Officer and a director of the Company. Dr. Robert Ricciardi is also Professor of Microbiology at the University of Pennsylvania. Dr. Ricciardi received his Ph.D. from the University of Illinois at Urbana and went on to Brandeis University and Harvard Medical School in the Department of Biological Chemistry where he was a Fellow of the American Cancer Society and a Charles A. King Trust Fellow. He developed one of the first techniques in molecular biology that has been widely used to map genes. While most of his research has centered on mechanisms of cancer, Dr. Ricciardi has developed and patented recombinant delivery systems for use as vaccines and new methods for identifying chemical therapeutics. Dr. Ricciardi has served as a consultant to The National Institutes of Health, Smith Kline and Beckman’s Department of Molecular Genetics, and Children’s Hospital of Philadelphia’s Department of Infectious Disease. He has authored 85 publications and was a NATO Visiting Professor at Ferrara Medical School in Italy. Dr. Ricciardi has been an invitational speaker at numerous scientific meetings and universities.

Mr. Souza is currently the Chief Operating Officer and a director of the Company. In the past 20 years, Mr. Souza has owned and operated manufacturing and distribution companies in the packaging and cosmetics fields, doing business with fortune 100 and 500 companies as well as retail spa outlets. Mr. Souza has held executive management positions in both the public and private sectors where he was responsible for operations, business development and mergers and acquisitions, and also has an extensive background in sales and marketing. Mr. Souza received a Bachelor of Science from Rochester Institute of Technology. Mr. Souza is also a Nationally Certified PT/NC.

Audit Committee

Dr. Kasten and Mr. Hoekstra comprised the Audit Committee for the fiscal year ended December 31, 2008. For the current fiscal year, Mr. Boyle (Chair) and Mr. Monton, who both are independent members of the Board of Directors, will serve on the Audit Committee for the fiscal year ending December 31, 2009. The Board of Directors has determined that Mr. Boyle, a director of the Company, is the audit committee financial expert as defined in section 3(a)(58) of the Exchange Act and the related rules of the SEC, based upon his professional and educational background as set forth above in this Item 10.

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. Prior to engagement of the independent auditor for the next year’s audit, management will submit a detailed description of the audit and permissible non-audit services expected to be rendered during that year for each of four categories of services described above to the Audit Committee for approval. In addition, management will also provide to the Audit Committee for its approval a fee proposal for the services proposed to be rendered by the independent auditor. Prior to the engagement of the independent auditor, the Audit Committee will approve both the description of audit and permissible non-audit services proposed to be rendered by the independent auditor and the budget for all such services. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service.

During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires separate pre-approval before engaging the independent registered public accounting firm. To ensure prompt handling of unexpected matters, the Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting. The four categories of services provided by the independent registered public accounting firm are as defined in the footnotes to the fee table set forth above.

Nominating Committee

The Board of Directors has not created a standing Nominating Committee. The directors are or have been actively involved in the Company’s business and all are able to contribute valuable insights into the identification of suitable candidates for nomination to the Board. As a result, the Company believes that it is in its best interest that the entire Board oversee the composition of the Board of Directors and therefore, the Company has not created a standing nominating committee of the Board. Recommendations to the Board of Directors are approved by a majority of directors. The full Board of Directors is responsible for identifying and evaluating individuals qualified to become Board members and to recommend such individuals for nomination. All candidates must possess an unquestionable commitment to high ethical standards and have a demonstrated reputation for integrity. Other facts considered include an individual’s business experience, education, civic and community activities, knowledge and experience with respect to the issues impacting the biogenetic industry and public companies, as well as the ability of the individual to devote the necessary time to service as a director.

The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by security holders. The Board of Directors will consider candidates recommended by shareholders. All nominees will be evaluated in the same manner, regardless of whether they were recommended by the Board of Directors, or recommended by a shareholder. This will ensure that appropriate director selection continues.

Section 16(a) Beneficial Ownership Reporting Compliance.

Based solely on the Company’s review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and written representations of the Company’s officers and directors, the Company believes that all reports required to be filed pursuant to the 1934 Act with respect to transactions in the Company’s Common Stock through December 31, 2008 were filed on a timely basis.

Code of Ethics.

The Company has adopted a code of conduct that applies to all employees, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. A copy of the Company’s code of conduct will be provided to anyone without charge upon request therefor.

Meeting of Directors

The Board of Directors met 8 times in 2008. Each director attended at least 75% of the meetings.

Communications with the Board of Directors

You may contact the Board of Directors as a group by writing to them c/o GeneLink, Inc., 317 Wekiva Springs Road, #200, Longwood, Florida 32779, Attention: Chairman. Any communications received will be forwarded to all Board members.

REPORT FROM THE AUDIT COMMITTEE

The Audit Committee is responsible for considering management’s recommendation of independent certified public accountants for each fiscal year, recommending the appointment or discharge of independent accountants to the board of directors and confirming the independence of the accountants. It is also responsible for reviewing and approving the scope of the planned audit, the results of the audit and the accountants’ compensation for performing such audit, reviewing the Company’s audited financial statements, and reviewing and approving the Company’s internal accounting controls and discussing such controls with the independent accountants.

In connection with the audit of the Company’s financial statements for the year ended December 31, 2008, the Audit Committee met with representatives from Buckno, Lisicky & Company, the Company’s independent auditors. The Audit Committee reviewed and discussed with the Company’s financial management and financial structure, as well as the matters relating to the audit required to be discussed by Statements on Auditing Standards 61 and 90.

In addition, the Audit Committee reviewed and discussed with the Company’s management the Company’s audited financial statements relating to year ended December 31, 2008.

Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the Company’s financial statements audited by Buckno, Lisicky & Company be included in the Company’s Annual Report on Form 10-K for year ended December 31, 2008.

ITEM 11. EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our compensation program for senior executives is administered by the Compensation Committee of our Board of Directors. The Compensation Committee is responsible for considering and making recommendations to the Board of Directors regarding executive compensation and is responsible for administering our stock option and executive incentive compensation plans. The Compensation Committee is committed to ensure that its compensation plan is consistent with our company goals and objectives and the long term interests of its shareholders.

Overview of Compensation Philosophy and Objectives

Our compensation programs are designed to deliver a compensation package which is competitive in attracting and retaining key executive talent in our industry. Different programs are geared to short and longer term performance with the goal of increasing shareholder value over the long term. To achieve these objectives, the Compensation Committee has established an incentive program commencing in 2009 for our executive officers based on meeting specific earnings criteria. More specifically, the Compensation Committee believes that our executive compensation should encompass the following:

	•		help attract and retain the most qualified individuals by being competitive with compensation packages paid to persons having similar responsibilities and duties in comparable businesses;
	•		motivate and reward individuals who help us achieve our short term and long term objectives and thereby contribute significantly to the success of our company;
	•		relate to the value created for shareholders by being directly tied to our financial performance and condition and the particular executive officer’s contribution; and
	•		reflect the qualifications, skills, experience, and responsibilities of the particular executive officer.

The Compensation Committee has approved a compensation structure for the named executive officers, determined on an individual basis, which incorporates four key components: base salary, bonuses commencing in 2009 based upon the annual performance of the Company, stock options and other benefits.

In connection with its compensation determinations, the Compensation Committee seeks the views of the Chief Executive Officer with respect to appropriate compensation levels of the other officers.

Executive Compensation Components

For the year ended December 31, 2008, the principal components of compensation for the named executive officers were annual base salary, stock options and other benefits.

Annual Base Salary

In general, base salary for each employee, including the named executive officers, is established based on the individual’s job responsibilities, performance and experience; our size relative to competitors; the competitive environment; a general view as to available resources of the Company and the compensation agreed to in employment agreements with the named executive officers.

Stock Options and Stock Awards

We provide a long term incentive opportunity for each of the named executive officers through awards of stock options. Our stock option program is a long term plan designed to create a link between executive compensation and our financial performance, provide an opportunity for increased equity ownership by executives, and maintain competitive levels of total compensation.

All stock options have been granted at an exercise price equal to or above the closing market price of our common stock on the date of grant. Stock options generally vest in four equal annual installments; however, options will immediately vest in full upon a change on control of the Company. Stock options expire ten years from date of grant.

Other Benefits

	•		Retirement Benefits. We are looking to establish a 401(k) plan for our employees. Named executive officers would be eligible to participate in these plans on the same terms as other eligible employees, subject to any legal limits on the amount that may be contributed by executives under the plans.
	•		Medical Benefits. Our employees have a choice of coverage options under our company-sponsored group health insurance plan. Each option covers the same services and supplies but differs in the quality of provider network.
	•		Life Insurance. We maintain a group life insurance plan that provides for basic life and accidental death and dismemberment coverage. We pay the premiums under this plan.
	•		Vacation. All employees are eligible for vacation based on years of service.
	•		Other Perquisites. Vehicle and car allowances have been provided for certain named executives.

Deductibility of Compensation Expenses

Pursuant to Section 162(m) under the Internal Revenue Code, certain compensation paid to executive officers in excess of $1 million is not tax deductible, except to the extent such excess constitutes performance-based compensation. The Compensation Committee has and will continue to carefully consider the impact of Section 162(m) when establishing incentive compensation plans and could, in certain circumstances, approve and authorize compensation that is not fully tax deductible.

Accounting and Tax Considerations

We consider the accounting implications of all aspects of our executive compensation program. Our executive compensation program is designed to achieve the most favorable accounting (and tax) treatment possible as long as doing so does not conflict with the intended plan design or program objectives.

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee of our Board of Directors currently consists of Dr. Bernard L. Kasten, Jr. and Robert Hoekstra. The Compensation Committee is responsible for considering and making recommendations to the Board of Directors regarding executive compensation and is responsible for administering our stock option and executive incentive compensation plans.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this report. Based on the review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
																						Non-Equity				Nonqualified
														Stock								Incentive Plan				Deferred				All Other
Name and										Bonus				Awards				Option				Compensation				Compensation				Compensation
principal position		Year				Salary ($)				($)				($)				Awards ($)				($)				Earnings ($)				($)				Total ($)
(a)		(b)				(c)				(d)				(e)				(f)				(g)				(h)				(i)				(j)
Monte E. Taylor, Jr.			2008			$	131,442			$	0			$	0			$	57,000	1		$	0			$	0			$	9,562	2		$	198,004
Chief Executive Officer			2007			$	102,500			$	0			$	0			$	158,000	1		$	0			$	0			$	13,170	2		$	273,670
Robert P.			2008			$	22,500			$	0			$	0			$	4,000	3		$	0			$	0			$	0			$	26,500
Ricciardi, Ph.D. Chief Science Officer			2007			$	97,500			$	0			$	0			$	6,000	3		$	0			$	0			$	0			$	103,500
John A. Souza			2008			$	91,506			$	0			$	0			$	49,000	4		$	0			$	0			$	8,455	2		$	148,961
Vice President of Business Development			2007			$	79,500			$	0			$	0			$	102,000	4		$	0			$	0			$	0			$	181,500
Dr. Bernard L.			2008			$	0			$	0			$	0			$	29,000	5		$	0			$	0			$	0			$	29,000
Kasten, Jr. Chairman			2007			$	0			$	0			$	0			$	75,000	5		$	0			$	0			$	0			$	75,000