United States

Securities and Exchange Commission

Washington, DC 20549

 

 

Form 8-K/A

 

 

Amendment No. 1 to Current Report

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

 

 

Date of Report: May 4, 2012

 

GeneLink, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

PA		00-30518		23-2795613
(State or other Jurisdiction of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

 

8240 Exchange Dr. Suite C1, Orlando, FL 32809

(Address of Principal Executive Offices)

 

Registrant’s telephone number, including area code: (800) 558-4363

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

EXPLANATORY NOTE

 

GeneLink, Inc. (the “Company”) is filing this Current Report on Form 8-K/A as Amendment No. 1 to its Current Report on Form 8-K on May 10, 2012 to include the Company’s earning’s release in its Item 2.02 disclosure and to disclose the details of restatements to the Company’s audited consolidated financial statements for the year ended December 31, 2010 and the Company’s unaudited consolidated financial statements contained within the Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010, June 30, 2010, September 30, 2010, March 31, 2011, June 30, 2011, and September 30, 2011 in its Item 4.02 disclosure. No other information contained in the Form 8-K is amended by this Form 8-K/A.

 

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On May 10, 2012, GeneLink, Inc. (the “Company”) issued a press release reporting its financial results for the year ended December 31, 2011 and the re-audit and restatement for the year ended December 31, 2010 (the “Earnings Release”). The Earnings Release is furnished as Exhibit 99.1 to this Current Report on Form 8-K. The information in this report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section, and shall not be incorporated by reference into any registration statement pursuant to the Securities Act of 1933, as amended.

 

 

ITEM 4.02 NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED AUDIT REPORT OR COMPLETED INTERIM REVIEW.

 

On May 4, 2012, the Board of Directors of GeneLink, Inc. (the “Company”), upon the recommendation of management after consulting with its independent auditors, concluded that the Company’s financial statements for the year ended December 31, 2010 and the Company’s unaudited consolidated financial statements contained within the Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2010, June 30, 2010, September 30, 2010, March 31, 2011, June 30, 2011, and September 30, 2011 could no longer be relied upon. The Company intends to file its restated financial statements for the year ended December 31, 2010 in conjunction with the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2011, which which is expected to be filed on Monday, May 14, 2012.

 

A re-audit of 2010 was required when, on March 5, 2012, the Company was notified that the Public Company Accounting Oversight Board (“PCAOB”) announced that it had suspended for one year the registration of Buckno Lisicky & Company, P.C. (“Buckno”). Buckno, the company’s prior independent registered accountants, was suspended for failure to timely file 2010 and 2011 annual reports with the PCAOB. As a result of that suspension, the SEC determined that the Company could no longer include the audit reports of Buckno in its SEC filings. A re-audit by a new firm was required to address 2010 comparative figures included in the 2011 Form 10-K filing.

 

The Company’s financial statements for the year ended December 31, 2010 will be restated to reflect the following:

 

The valuation of warrants and a beneficial conversion feature related to convertible debt issued in 2009 had been improperly calculated. The beneficial conversion feature (“BCF”) originally recorded was $150,000 but did not consider the fair value of the debt. As a result, the BCF should have been $406,395, an understatement of the BCF debt discount and additional paid-in capital of $256,395. In addition, warrants valued at $132,800 issued to the placement agent in connection with the convertible debt were improperly recorded as a reduction of additional paid-in capital versus loan costs. The Company determined that the amortization of the loan costs, warrant discount and BCF discount related to the convertible debt was improperly recorded and interest expense was understated by $83,491

 

In addition, the Company determined that certain prepaid balances at December 31, 2010 totaling $95,742 were overstated of which $80,000, net of accumulated depreciation of $29,000, should have been recorded as equipment. In addition, accounts payable and accrued expenses (excluding accrued compensation) were understated by $55,032. As a result, cost of sales, general and administrative expense and depreciation expense were understated by $18,615, $52,160 and 29,000, respectively. The Company also determined that intangible assets related to patents were overstated by $38,474 as of December 31, 2010, and amortization expense for 2010 was understated by $4,783.

 

In addition to the items noted above, the Company determined that certain reclassifications were required to correctly present its 2010 financial statements. These reclassifications included reclassifying accounts receivable of $99,000 to deferred revenue since both amounts were related to transactions with the same company and management determined right of offset existed. The Company also reclassified its insurance accrual of $27,504 from current maturity of long term-debt and reclassified this balance as a reduction of the related prepaid insurance balance.

 

The Company improperly presented loan costs related to the convertible debt as a reduction of the convertible debt, net of discounts and reclassified these to loan acquisition costs which was $145,821 as of December31, 2010. The Company was separately presenting the fair value of stock warrants issued on the statement of stockholders’ deficit which has been reclassified to additional paid-in capital. The Company improperly presented depreciation and amortization as other income (expense) which has been reclassified to operating expenses and increased the operating loss.

 

The impact of the above adjustments and reclassifications as of December 31, 2010 and for the year ended December 31, 2010 and the three months ended March 31, 2010, three and six months ended June 30, 2010 and three and nine months ended September 30, 2010 is set forth below:

 

 

Balance Sheets as of December 31, 2010 and September 30, 2010 (Unaudited),

June 30, 2010 (Unaudited), and March 31, 2010 (Unaudited)

 

		As Previously
		Reported				Adjustments				Reclassifications				As Restated
Accounts Receivable
As of December 31, 2010		$	404,624			$	–			$	(99,000	)		$	305,624
As of September 30, 2010			364,971				–				(99,000	)			265,971
As of June 30, 2010			439,600				–				(99,000	)			340,600
As of March 31, 2010			511,961				–				(99,000	)			412,961
Prepaid Expenses
As of December 31, 2010			209,801				(95,742	)			(27,504	)			86,555
As of September 30, 2010			224,120				(57,500	)			(47,175	)			119,445
As of June 30, 2010			138,546				(52,500	)			(250	)			85,796
As of March 31, 2010			132,482				(45,000	)			(14,582	)			72,900
Total Current Assets
As of December 31, 2010			1,267,420				(95,742	)			(126,504	)			1,045,174
As of September 30, 2010			1,226,638				(57,500	)			(146,175	)			1,022,963
As of June 30, 2010			1,310,623				(52,500	)			(99,250	)			1,158,873
As of March 31, 2010			1,255,745				(45,000	)			(113,582	)			1,097,163
Property & Equipment
As of December 31, 2010			205,163				51,000				–				256,163
As of September 30, 2010			231,498				56,000				–				287,498
As of June 30, 2010			263,138				61,000				–				324,138
As of March 31, 2010			295,065				66,000				–				361,065
Intangible Assets
As of December 31, 2010			279,160				(38,474	)			–				240,686
As of September 30, 2010			278,179				(23,084	)			–				255,095
As of June 30, 2010			284,749				(28,386	)			–				256,363
As of March 31, 2010			272,569				(33,689	)			–				238,880
Loan Costs, net of amortization
As of December 31, 2010			–				–				145,820				145,820
As of September 30, 2010			–				–				155,630				155,630
As of June 30, 2010			–				–				165,218				165,218
As of March 31, 2010			–				–				174,588				174,588
Total Assets
As of December 31, 2010			1,785,185				(83,216	)			19,316				1,721,285
As of September 30, 2010			1,736,315				(24,584	)			9,455				1,721,186
As of June 30, 2010			1,858,510				(19,886	)			65,968				1,904,592
As of March 31, 2010			1,823,379				(12,689	)			61,006				1,871,696

 

 

		As Previously Reported				Adjustments				Reclassifications				As Restated
Accounts payable and accrued expenses, excluding deferred compensation														–
As of December 31, 2010			1,231,240				55,032				–				1,286,272
Deferred Revenue
As of December 31, 2010			254,667				–				(99,000	)			155,667
As of September 30, 2010			303,044				–				(99,000	)			204,044
As of June 30, 2010			293,744				–				(99,000	)			194,744
As of March 31, 2010			312,005				–				(99,000	)			213,005
Total Current Liabilities
As of December 31, 2010			1,731,251				55,032				(126,504	)			1,659,779
As of September 30, 2010			1,817,414				–				(146,175	)			1,671,239
As of June 30, 2010			1,676,308				–				(99,250	)			1,577,058
As of March 31, 2010			1,921,914				–				(113,582	)			1,808,332
Convertible debt, net of discounts
As of December 31, 2010			951,503				(245,958	)			145,820				851,365
As of September 30, 2010			937,070				(268,150	)			155,630				824,550
As of June 30, 2010			922,574				(289,452	)			165,218				798,340
As of March 31, 2010			908,017				(309,879	)			174,588				772,726
Total Liabilities
As of December 31, 2010			2,682,754				(190,926	)			19,316				2,511,144
As of September 30, 2010			2,754,484				(268,150	)			9,455				2,495,789
As of June 30, 2010			2,598,882				(289,452	)			65,968				2,375,398
As of March 31, 2010			2,829,931				(309,879	)			61,006				2,581,058
Additional paid-in capital
As of December 31, 2010			14,863,493				389,192				3,686,077				18,938,762
As of September 30, 2010			14,356,893				389,192				3,725,577				18,471,662
As of June 30, 2010			14,059,765				389,192				3,466,136				17,915,093
As of March 31, 2010			13,019,251				389,192				3,834,202				17,242,645
Stock Warrants
As of December 31, 2010			3,686,077				–				(3,686,077	)			–
As of September 30, 2010			3,725,577				–				(3,725,577	)			–
As of June 30, 2010			3,466,136				–				(3,466,136	)			–
As of March 31, 2010			3,834,202				–				(3,834,202	)			–
Total stockholders' deficit
As of December 31, 2010			(897,568	)			107,708				–				(789,860	)
As of September 30, 2010			(1,018,169	)			242,653				–				(775,516	)
As of June 30, 2010			(740,352	)			266,792				–				(473,560	)
As of March 31, 2010			(1,006,552	)			281,491				–				(725,061	)

 

 

 

Statements of Operations

Year Ended December 31, 2010,

Three and Nine months ended September 30, 2010 (Unaudited)

Three and Six Months Ended June 30, 2010 (Unaudited), and

March 31, 2010 (Unaudited)

 

		As Previously
		Reported				Adjustments				Reclassifications				As Restated
Depreciation and amortization
For Year ended December 31, 2010		$	126,683			$	33,783			$	–			$	160,466
For three months ended September 30, 2010			38,179				8,698				–				46,877
For nine months ended September 30, 2010			116,641				8,093				–				124,734
Operating Loss
For Year ended December 31, 2010			(2,169,898	)			(104,558	)			(128,288	)			(2,402,744	)
For three months ended September 30, 2010			(822,970	)			(8,698	)			(38,743	)			(870,411	)
For nine months ended September 30, 2010			(1,761,970	)			(8,092	)			(116,038	)			(1,886,101	)
For three months ended June 30, 2010			(494,358	)			303				(39,011	)			(533,066	)
For six months ended June 30, 2010			(939,000	)			606				(77,304	)			(1,015,699	)
For three months ended March 31, 2010			(446,642	)			303				(38,293	)			(484,632	)
Interest Expense
For Year ended December 31, 2010			150,094				83,491				–				233,585
For three months ended September 30, 2010			36,032				15,441				–				51,473
For nine months ended September 30, 2010			110,565				45,011				–				155,576
For three months ended June 30, 2010			38,212				15,002				–				53,214
For six months ended June 30, 2010			74,533				29,570				–				104,103
For three months ended March 31, 2010			36,321				14,570				–				50891
Net Loss
For Year ended December 31, 2010			(2,446,675	)			(188,049	)			–				(2,634,724	)
For three months ended September 30, 2010			(897,181	)			(24,138	)			–				(921,319	)
For nine months ended September 30, 2010			(1,987,176	)			(53,104	)			–				(2,040,280	)
For three months ended June 30, 2010			(571,068	)			(14,699	)			–				(585,767	)
For six months ended June 30, 2010			(1,089,995	)			(28,966	)			–				(1,118,961	)
For three months ended March 31, 2010			(518,927	)			(14,267	)			–				(533,194	)
Earnings per share
For Year ended December 31, 2010			(0.02	)			–				–				(0.02	)
For three months ended September 30, 2010			(0.01	)			–				–				(0.01	)
For nine months ended September 30, 2010			(0.02	)			–				–				(0.02	)
For three months ended June 30, 2010			(0.00	)			–				–				(0.00	)
For six months ended June 30, 2010			(.0.01	)			–				–				(0.01	)
For three months ended March 31, 2010			(0.00	)			–				–				(0.00	)

The restatement adjustments and reclassifications as discussed above related to 2010 amounts also had an impact on the previously reported quarterly results for 2011 as follows:

 

Balance Sheets as of September 30, 2011, June 30, 2011 and March 31, 2011 (Unaudited)

 

		As Previously				Beginning Balance
		Reported				Restatement				Adjustments				Reclassifications				As Restated
Accounts Receivable
As of September 30, 2011		$	373,092			$	-			$	-			$	(99,000	)		$	274,092
As of June 30, 2011			363,366				-				-				(99,000	)			264,366
As of March 31,2011			397,220				-				-				(99,000	)			298,220
Prepaid Expenses
As of September 30, 2011			411,469				-				-				(50,813	)			360,656
As of June 30, 2011			291,126				-				-				(1,562	)			289,564
As of March 31,2011			261,329				-				-				(12,414	)			248,915
Total Current Assets
As of September 30, 2011			1,710,488				-				-				(149,813	)			1,560,675
As of June 30, 2011			1,403,834				-				-				(100,562	)			1,303,272
As of March 31,2011			1,224,014				-				-				(111,414	)			1,112,600
Property & Equipment
As of September 30, 2011			160,215				-				36,000				-				196,215
As of June 30, 2011			147,162				-				41,000				-				188,162
As of March 31,2011			175,383				-				46,000				-				221,383
Intangible Assets
As of September 30, 2011			257,220				-				(34,291	)			-				222,929
As of June 30, 2011			264,533				-				(36,382	)			-				228,151
As of March 31,2011			271,846				-				(37,427	)			-				234,419

 

 

 

 

 

		As Previously				Beginning Balance
		Reported				Restatement				Adjustments				Reclassifications				As Restated
Loan Costs, net of amortization
As of September 30, 2011			-				145,820				(20,784	)			-				125,036
As of June 30, 2011			-				145,820				(13,589	)			-				132,231
As of March 31,2011			-				145,820				(6,717	)			-				139,103
Total Assets
As of September 30, 2011			2,130,036				145,820				(19,075	)			(149,813	)			2,106.968
As of June 30, 2011			1,817,642				145,820				(8,971	)			(100,562	)			1,853,929
As of March 31,2011			1,673,784				145,820				1,857				(111,414	)			1,710,047
			-
Current maturity of long-term debt
As of September 30, 2011			50,813				-				-				(50,813	)			-
As of June 30, 2011			1,562				-				-				(1,562	)			-
As of March 31,2011			12,414				-				-				(12,414	)			-
Deferred Revenue																			-
As of September 30, 2011			233,534				-				-				(99,000	)			134,534
As of June 30, 2011			213,528				-				-				(99,000	)			114,528
As of March 31,2011			275,341				-				-				(99,000	)			176,341
Total Current Liabilities
As of September 30, 2011			1,675,219				-				-				(149,813	)			1,525,406
As of June 30, 2011			1,736,167				-				-				(100,562	)			1,635,605
As of March 31,2011			1,641,625				-				-				(111,414	)			1,530,211

 

 

 

 

 

		As Previously				Beginning Balance
		Reported				Restatement				Adjustments				Reclassifications				As Restated
Convertible debt, net of discounts
As of September 30, 2011			993,561				(100,138	)			42,179				-				935,602
As of June 30, 2011			979,595				(100,138	)			27,420				-				906,877
As of March 31,2011			965,576				(100,138	)			13,365				-				878,803
Total Liabilities
As of September 30, 2011			2,668,780				(100,138	)			42,179				(149,813	)			2,461,008
As of June 30, 2011			2,715,762				(100,138	)			27,420				(100,562	)			2,542,482
As of March 31,2011			2,607,201				(100,138	)			13,365				(111,414	)			2,409,014
Additional paid-in capital
As of September 30, 2011			16,682,782				-				-				4,047,387				20,730,169
As of June 30, 2011			15,796,437				-				-				3,882,422				19,678,859
As of March 31,2011			15,188,113				-				-				3,798,467				18,986,580
Warrants
As of September 30, 2011			4,047,387				-				-				(4,047,387	)			-
As of June 30, 2011			3,882,422				-				-				(3,882,422	)			-
As of March 31,2011			3,798,467				-				-				(3,798,467	)			-
Accumulated Deficit
As of September 30, 2011			(22,772,857	)			(281,484	)			(72,956	)			-				(23,127,297	)
As of June 30, 2011			(21,818,628	)			(281,484	)			(48,920	)			-				(22,149,032	)
As of March 31,2011			(20,017,094	)			(281,484	)			(24,037	)			-				(20,322,615	)

		As Previously				Beginning Balance
		Reported				Restatement				Adjustments				Reclassifications				As Restated
Total stockholders' deficit
As of September 30, 2011			(538,744	)			(281,484	)			(72,956	)			-				(893,184	)
As of June 30, 2011			(898,120	)			(281,484	)			(48,920	)			-				(1,228,524	)
As of March 31,2011			(933,417	)			(281,484	)			(24,037	)			-				(1,238,938	)

 

 

 

 

Statements of Operations

 

Three and Nine Months ended September 30, 2011 (Unaudited),

 

Three and Six Months ended June 30, 2011(Unaudited), and

 

Three Months ended March 31, 2011 (Unaudited)

 

 

		As Previously
		Reported				Adjustments				Reclassification				As Restated
Operating Loss
Three Months ended September 30, 2011		$	(880,009	)		$	(3,955	)		$	(32,874	)		$	(916,838	)
Nine Months ended September 30, 2011			(2,140,892	)			(11,86	)			(108,242	)			(2,261,000	)
Three Months ended June 30, 2011			(772,832	)			(3,956	)			(36,585	)			(813,373	)
Six Months ended June 30, 2011			(1,210,881	)			(7,911	)			(75,368	)			(1,294,160	)
Three Months ended March 31, 2011			(444,642	)			(3,955	)			(38,783	)			(487,380	)
Interest Expense
Three Months ended September 30, 2011			41,347				20,082				-				61,429
Nine Months ended September 30, 2011			125,088				61,091				-				186,179
Three Months ended June 30, 2011			42,116				20,927				-				63,043
Six Months ended June 30, 2011			83,741				41,009				-				124,750
Three Months ended March 31, 2011			41,625				20,082				-				61,707
Net Loss Three Months ended September 30, 2011			(954,230	)			(24,037	)			-				(978,267	)
Nine Months ended September 30, 2011			(2,090,890	)			(72,957	)			-				(2,163,847	)
Three Months ended June 30, 2011			(801,533	)			(24,883	)			-				(826,416	)
Six Months ended June 30, 2011			(1,369,992	)			(48,920	)			-				(1,418,912	)
Three Months ended March 31, 2011			(568,459	)			(24,037	)			-				(592,496	)
Earnings per share
Three Months ended September 30, 2011			(0.01	)			(0.00	)			-				(0.01	)
Nine Months ended September 30, 2011			(0.01	)			(0.00	)			-				(0.01	)
Three Months ended June 30, 2011			(0.01	)			(0.00	)			-				(0.01	)
Six Months ended June 30, 2011			(0.01	)			(0.00	)			-				(0.01	)
Three Months ended March 31, 2011			(0.00	)			(0.00	)			-				(0.00	)

 

 

 

 

 

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

 

 

 

Exhibit Number	Description
99.1	Press Release dated May 10, 2012 (incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed on May 10, 2012)

 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	GeneLink, Inc. (Registrant)
	By:	/s/ Bernard L. Kasten, Jr. M.D.
Dated: May 11, 2012		Bernard L. Kasten, Jr. M.D. Chief Executive Officer