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U.S. SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File No. 000-30518
 GENELINK, INC.
  Pennsylvania
    
    23-2795613State of Incorporation
    
    I.R.S. Employer I.D. No.
 317 Wekiva Springs Road, #200
Longwood, FL 32779   (800) 588-4363
 None
 Common Stock, $.01 Par Value
  o þ
  o þ
  þ o
  o o
 o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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TABLE OF CONTENTS
 ITEM 1. DESCRIPTION OF BUSINESS
    
    
    2ITEM 1A. RISK FACTORS
    
    
    19ITEM 1B UNRESOLVED STAFF COMMENTS
    
    
    30ITEM 2. PROPERTIES
    
    
    30ITEM 3. LEGAL PROCEEDINGS
    
    
    30ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    32ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS
 AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    33ITEM 6 SELECTED FINANCIAL DATA
    
    
    39ITEM 7. MANAGEMENTS DISCUSSION AND
 ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    39ITEM 7A QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    47ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTS
    
    
    48ITEM 9. CHANGES IN AND
 DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    80ITEM 9A. CONTROLS AND PROCEDURES
    
    
    80ITEM 9B OTHER INFORMATION
    
    
    80ITEM 10. DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    81ITEM 11. EXECUTIVE COMPENSATION
    
    
    86ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    92ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    94ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    94ITEM 15. EXHIBITS
    
    
    95Exhibit 21Exhibit 31.1Exhibit 32.1




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FORWARD LOOKING STATEMENTS
   1




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ITEM 1.
    
    DESCRIPTION OF BUSINESS.
 Company Background
       2




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Market Conditions
   GeneLinks Market Positioning
      3




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Sales Channel/Market Development Roadmap
  Product Development Roadmap
  ®
  4




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The Science Behind GeneLink
        Genetically Guided Personalization of Nutrient and Skin Care
   5




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
    
    what they need,
    
    in the right amount, and
    
    not pay for or consume what they dont need.
  
    
    Genetic variations (SNPs) independently verified by world-recognized medical and scientific
institutions
    
    Ingredients already generally accepted as safe by the FDA; and
    
    Ingredients independently verified to be efficacious in addressing the deficiencies identified
through the SNPs.
    6




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Market Expansion: 2010 and Beyond
   Commercial History
      7




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GeneWize Life Sciences, Inc. Sales Channel
        8




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GeneLink Manufacturing
    Quality
   9




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Intellectual Property
     
    
    Oxidative Stress Assessment
    
    
    Lipid Metabolism Assessment/Metabolic Syndrome
    10




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
    
    Bone Density Assessment
    
    
    GeneLink Healthy Aging Assessment®
   
    
    GeneLink Nutragenetic Profile®
    
    
    CoQ10 Efficiency Assessment
   11




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
    
    Skin Health Assessment (also know as Dermagenetics® Skin Health Assessment)
    
    
    DNA Collection System
   Proprietary Technology
  
    
    Comprehensive Cardio Assessment
    12




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
    
    Dermagenetics®   Customized Skin Care System
    
    
    Nutragenetics Customized Nutritional Supplement System
     Development Pipeline
  
    
    Dementia and Alzheimers Assessment
    
    Metabolic Syndrome Assessment
    
    Macular Degeneration Assessment
  13




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
    
    Neurological Health Panel
    
    DNA Integrity and Repair Panel
    
    Next Generation DNA Collection Kit
 Regulation
 State and Federal Regulation
         14




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Federal Trade Commission Regulations
  FDA Regulation of Nutritional Supplements
  Privacy Protection and HIPAA
   15




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SCIENTIFIC ADVISORY BOARD
  Bernard L. Kasten, Jr. M.D.
  Dr. Robert P. Ricciardi, Ph.D.
   16




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Dr. Harold H. Harrison M.D., Ph.D., F.C.A.P.
  Dr. Robert P.K. Keller, M.D.
  Dr. Donald J. Cannon, Ph.D.
   17




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Dr. James W. Simpkins, Ph.D.
  Dr. Robert Kagan, M.D. F.C.A.P.
  Dr. Heather Mittiga, M.D.
   18




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ITEM 1A.
    
    RISK FACTORS
     
    
    the successful commercialization of our existing products and services;
    
    the development of adequate internal systems, manufacturing capabilities and laboratory
testing capabilities;
    
    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.
   19




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ITEM 1B
    
    UNRESOLVED STAFF COMMENTS
  
 ITEM 2.
    
    PROPERTIES
  
 ITEM 3.
    
    LEGAL PROCEEDINGS
   30




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John R. DePhillipo v. GeneLink, Inc.,
  DePhillipo,
et. al. v. GeneLink, Inc. t/a GeneLink Biosciences, Inc., et. al.
  31




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ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   32




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PART II
 
 ITEM 5.
    
    MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY
SECURITIES.
  2008
    
    High
    
    
    Low1st Quarter
    
    $
    0.12
    
    
    $
    0.072nd Quarter
    
    
    0.53
    
    
    
    0.073rd Quarter
    
    
    0.56
    
    
    
    0.224th Quarter
    
    
    0.35
    
    
    
    0.10
 2009
    
    High
    
    
    Low1st Quarter
    
    $
    0.17
    
    
    $
    0.072nd Quarter
    
    
    0.17
    
    
    
    0.123rd Quarter
    
    
    0.16
    
    
    
    0.094th Quarter
    
    
    0.19
    
    
    
    0.10
    33




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EQUITY COMPENSATION PLAN INFORMATION
 Number ofsecurities remainingavailable for futureNumber of
    
    
    
    
    
    
    issuance undersecurities to be
    
    
    
    
    
    
    equityissued upon exercise
    
    
    Weighted-average
    
    
    compensation plansof outstanding
    
    
    exercise price of
    
    
    (excluding securitiesoptions, warrants
    
    
    outstanding options
    
    
    reflected in columnand rights
    
    
    warrants and rights
    
    
    (a))Plan Category
    
    (a)
    
    
    (b)
    
    
    (c)Equity
compensation
plans approved
by security
holders1
    
    
    7,125,000
    (1)
    
    $
    0.12
    
    
    
    4,600,000Equity
compensation
plans not
approved
by security
holders
    
    
    22,225,624
    
    
    $
    0.15
    
    
    
    0Total
    
    
    29,350,624
    
    
    $
    0.14
    
    
    
    4,600,000
 
 (1)
    
    5,725,000 options were granted pursuant to the Companys 2007 Stock Option Plan and
1,400,000 options were granted pursuant to the Companys 2009 Stock Option Plan. RECENT SALES OF UNREGISTERED SECURITIES
   34




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Number of$ of Common
    
    
    Shares of
    
    
    Number ofDate
    
    Stock Sold
    
    
    Common Stock
    
    
    InvestorsJanuary 8, 2009
    
    $
    60,000.00
    
    
    
    600,000
    
    
    
    2January 15, 2009
    
    $
    5,000.00
    
    
    
    50,000
    
    
    
    1January 26, 2009 1
    
    $
    500,000.00
    
    
    
    5,000,000
    
    
    
    1June 12, 2009
    
    $
    22,500.00
    
    
    
    225,000
    
    
    
    2June 17, 2009
    
    $
    20,000.00
    
    
    
    200,000
    
    
    
    1June 29, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    
    1July 10, 2009
    
    $
    500.00
    
    
    
    5,000
    
    
    
    1July 23, 2009
    
    $
    12,500.00
    
    
    
    125,000
    
    
    
    1July 24, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    
    1July 28, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    
    1July 31, 2009
    
    $
    500.00
    
    
    
    5,000
    
    
    
    1August 18, 2009
    
    $
    70,000.00
    
    
    
    700,000
    
    
    
    2August 20, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    
    1August 26, 2009
    
    $
    3,000.00
    
    
    
    30,000
    
    
    
    1TOTAL
    
    $
    1,014,000.00
    
    
    
    10,140,000
    
    
    
    17
 1
    
    This investor also received a warrant to acquire 750,000 shares of Common Stock at
an exercise price of $0.11 per share.  1 2
  35




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Number of Shares
    
    
    Number of
    
    
    Number ofDate
    
    $ of Units Sold
    
    
    of Common Stock
    
    
    Warrants Issued
    
    
    InvestorsOctober 12, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    
    50,000
    
    
    
    1November 12, 2009
    
    $
    110,500.00
    
    
    
    1,105,000
    
    
    
    552,500
    
    
    
    4November 17, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    
    750,000
    
    
    
    2November 20, 2009
    
    $
    87,500.00
    
    
    
    875,000
    
    
    
    437,500
    
    
    
    3December 7, 2009
    
    $
    18,500.00
    
    
    
    185,000
    
    
    
    92,500
    
    
    
    3December 9, 2009
    
    $
    20,000.00
    
    
    
    200,000
    
    
    
    100,000
    
    
    
    1TOTAL
    
    $
    396,500.00
    
    
    
    3,965,000
    
    
    
    1,982,500
    
    
    
    14
  1 2
   36




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Number of
    
    
    Original Exercise Price
    
    RevisedExisting Warrants
    
    
    of Existing Warrants
    
    Exercise Price7,346,577
    
    
    $0.075-$0.10
    
    $
    0.054,872,704
    
    
    $0.20-$0.25
    
    $
    0.062,755,500
    
    
    $0.40-$0.50
    
    $
    0.082,246,250
    
    
    $0.60-$1.00
    
    $
    0.09
  John R. DePhillipo v. GeneLink, Inc.
  37




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1 4
     38




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ITEM 6
    
    SELECTED FINANCIAL DATA
  
 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
 me me
  
    
    We engaged a California-compliant lab which opened up an enormous market on hold at the end
of 2008 due to then-new regulatory compliance requirements
    
    We launched LifeMap meSkin Serum for an outside-in approach to anti-aging, complementing
the LifeMap meNutritions inside-out solution.
    
    We significantly enhanced our LifeMap meNutrition product to add additional active
ingredients, enabling a 30% list price increase on new customer product orders.
    
    We retained key experienced direct sales leadership.
    
    We rebranded products to the LifeMap me (made exclusively)brand.
   39




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Results of Operations
  Assets
  Liabilities
  Equity
  Revenues
  Cost of Goods Sold
   40




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Gross Margin
  Expenses
   Losses
   Assets
   41




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Liabilities
  Equity
  Revenues
     42




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Cost of Goods Sold
  Expenses
  Losses
   43




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Segment Operating Results
  GeneLink
    
    
    Dermagenetics
    
    
    GeneWize LifeInc.
    
    
    Inc.
    
    
    Sciences, Inc.Net Revenues
    
    $
    432,756
    
    
    $
    69,892
    
    
    $
    8,425,667Operating expenses
    
    
    1,919,909
    
    
    
    15,916
    
    
    
    9,715,494Other expense
    
    
    2,778
    
    
    
    0
    
    
    
    3,473Pre-tax earnings (loss)
    
    
    (1,484,375
    )
    
    
    53,976
    
    
    
    (1,286,354
    )
  GeneLink
    
    
    Dermagenetics
    
    
    GeneWize LifeInc.
    
    
    Inc.
    
    
    Sciences, Inc.Net Revenues
    
    $
    291,206
    
    
    $
    29,738
    
    
    $
    6,186,503Operating expenses
    
    
    1,973,028
    
    
    
    40,113
    
    
    
    7,111,053Other income
    
    
    12,238
    
    
    
    0
    
    
    
    0Pre-tax earnings (loss)
    
    
    (1,669,584
    )
    
    
    (10,375
    )
    
    
    (923,550
    )
 Liquidity and Capital Resources
  Cash and Cash Equivalents
    44




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Critical Accounting Policies
 Stock options:
  Intangible assets and amortization of patents:
  Revenue and cost recognition:
     45




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Allowance for sales returns and allowances:
    46




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Accounts receivable:
  Use of estimates:
   
 ITEM 7A
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   47




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ITEM 8.
    
    FINANCIAL STATEMENTS AND SUPPLEMENTS
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    49Financial Statements
    
    
    50-51Consolidated Balance SheetsConsolidated Statements of Operations
    
    
    52Consolidated Statements of Changes in Stockholders Equity
(Deficiency)
    
    
    53Consolidated Statements of Cash Flows
    
    
    54-55Notes to Consolidated Financial Statements
    
    
    56-79
  48




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     /s/ Buckno, Lisicky & CompanyAllentown, Pennsylvania
   49




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GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 December 31, 2009 and 2008
 ASSETS
 2009
    
    
    2008CURRENT ASSETSCash and cash equivalents
    
    $
    196,857
    
    
    $
    435,197Accounts receivable
    
    
    465,780
    
    
    
    713,565Inventory
    
    
    494,737
    
    
    
    739,515Prepaid expenses
    
    
    141,397
    
    
    
    53,688Total current assets
    
    
    1,298,771
    
    
    
    1,941,965PROPERTY AND EQUIPMENT
    
    
    302,887
    
    
    
    281,984OTHER ASSETS
    
    
    279,139
    
    
    
    321,277Total assets
    
    $
    1,880,797
    
    
    $
    2,545,226
   50




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##### Table of Contents



GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

December 31, 2009 and 2008
 LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
 2009
    
    
    2008CURRENT LIABILITIESCurrent maturity of long-term debt
    
    $
    36,079
    
    
    $
    60,269Accounts payable and accrued expenses
    
    
    1,189,709
    
    
    
    2,034,322Accrued compensation
    
    
    206,272
    
    
    
    218,664Deferred revenue
    
    
    277,132
    
    
    
    161,727Loans payable
    
    
    18,000
    
    
    
    18,000Total current liabilities
    
    
    1,727,192
    
    
    
    2,492,982Convertible secured promissory notes payable,
net of debt issuance and stock conversion
discounts
    
    
    893,395
    
    
    
    0Total liabilities
    
    
    2,620,587
    
    
    
    2,492,982STOCKHOLDERS EQUITY (DEFICIENCY)Common stock, par value $0.01 per share;
authorized: 250,000,000 and 125,000,000 shares
as of December 31, 2009 and 2008, respectively;
issued: 118,766,291 and 104,561,291 shares as
of December 31, 2009 and 2008, respectively;
outstanding: 114,407,132 and 100,202,132 shares
as of December 31, 2009 and 2008, respectively
    
    
    1,188,617
    
    
    
    1,045,613Additional paid in capital
    
    
    12,969,561
    
    
    
    12,235,833Stock warrants
    
    
    3,656,227
    
    
    
    2,608,240Accumulated deficit
    
    
    (18,001,960
    )
    
    
    (15,285,207
    )Treasury stock, 4,359,159 shares as of
December 31, 2009 and 2008, at cost
    
    
    (552,235
    )
    
    
    (552,235
    )Total stockholders equity (deficiency)
    
    
    (739,790
    )
    
    
    52,244Total liabilities and stockholders equity
(deficiency)
    
    $
    1,880,797
    
    
    $
    2,545,226
   51




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GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 Years Ended December 31, 2009 and 2008
 2009
    
    
    2008Revenues
    
    $
    8,561,455
    
    
    $
    6,377,443Cost of goods sold
    
    
    3,654,745
    
    
    
    1,812,488Gross profit
    
    
    4,906,710
    
    
    
    4,564,955Expenses:Selling, general and administrative
    
    
    7,324,149
    
    
    
    6,749,406Research and development
    
    
    44,788
    
    
    
    48,9507,368,937
    
    
    
    6,798,356OPERATING LOSS
    
    
    (2,462,227
    )
    
    
    (2,233,401
    )OTHER EXPENSESDebt conversion costs
    
    
    0
    
    
    
    229,025Amortization and depreciation
    
    
    125,622
    
    
    
    87,053Interest expense
    
    
    128,904
    
    
    
    57,030254,526
    
    
    
    370,108NET LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (2,716,753
    )
    
    
    (2,603,509
    )PROVISION FOR INCOME TAXES
    
    
    0
    
    
    
    0NET LOSS
    
    
    (2,716,753
    )
    
    
    (2,603,509
    )Loss per share, basic and diluted:
    
    $
    (0.03
    )
    
    $
    (0.03
    )Weighted average common shares and
diluted potential common shares
    
    
    111,837,694
    
    
    
    82,530,959
   52




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GENELINK, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Changes in Stockholders Equity (Deficiency)
 YEARS ENDED DECEMBER 31, 2009 AND 2008
 ADDITIONALCOMMON STOCK
    
    
    TREASURY
    
    
    PAID IN
    
    
    STOCK
    
    
    ACCUMULATEDSHARES
    
    
    AMOUNT
    
    
    STOCK
    
    
    CAPITAL
    
    
    WARRANTS
    
    
    DEFICIT
    
    
    TOTALBalance, December 31, 2007
    
    
    66,673,603
    
    
    
    666,736
    
    
    
    (315,055
    )
    
    
    8,277,692
    
    
    
    4,245,696
    
    
    
    (12,681,698
    )
    
    
    193,367Purchase of treasury stock from former officer
    
    
    
    
    
    
    
    
    
    
    (237,180
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (237,180
    )Fair value of vested stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384,081
    
    
    
    
    
    
    
    384,081Conversion of secured promissory notes and
accrued interest to common stock
    
    
    17,640,813
    
    
    
    176,408
    
    
    
    
    
    
    
    705,633
    
    
    
    
    
    
    
    
    
    
    
    882,041Exercise of stock warrants
    
    
    11,711,527
    
    
    
    117,119
    
    
    
    
    
    
    
    2,611,403
    
    
    
    (2,021,533
    )
    
    
    
    
    
    
    706,989Common stock issued for cash, net
    
    
    8,535,000
    
    
    
    85,350
    
    
    
    
    
    
    
    641,105
    
    
    
    
    
    
    
    
    
    
    
    726,455Net 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
    )
    
    
    52,244Issuance of stock warrants related to
convertible secured promissory notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,342
    
    
    
    
    
    
    
    175,342Stock conversion discount related to
convertible secured promissory notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    
    
    
    
    
    
    
    
    150,000Stock warrants issued for fundraising services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (272,730
    )
    
    
    272,730
    
    
    
    
    
    
    
    0Issuance of common stock and warrants
pursuant to private placement offerings
    
    
    14,105,000
    
    
    
    141,050
    
    
    
    
    
    
    
    951,309
    
    
    
    318,141
    
    
    
    
    
    
    
    1,410,500Commissions paid for fundraising costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (124,320
    )
    
    
    
    
    
    
    
    
    
    
    (124,320
    )Fair value of vested stock warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225,617
    
    
    
    
    
    
    
    225,617Exercise of stock warrants
    
    
    23,404
    
    
    
    234
    
    
    
    
    
    
    
    6,109
    
    
    
    (6,343
    )
    
    
    
    
    
    
    0Issuance of common stock for services
    
    
    172,000
    
    
    
    1,720
    
    
    
    
    
    
    
    23,360
    
    
    
    
    
    
    
    
    
    
    
    25,080Issuance of stock warrants for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    62,500
    
    
    
    
    
    
    
    62,500Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,716,753
    )
    
    
    (2,716,753
    )14,300,404
    
    
    
    143,004
    
    
    
    
    
    
    
    733,728
    
    
    
    1,047,987
    
    
    
    (2,716,753
    )
    
    
    (792,034
    )$
    118,861,347
    
    
    $
    1,188,617
    
    
    $
    (552,235
    )
    
    $
    12,969,561
    
    
    $
    3,656,227
    
    
    $
    (18,001,960
    )
    
    $
    (739,790
    )
   53




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##### Table of Contents



GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2009 and 2008
 2009
    
    
    2008CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (2,716,753
    )
    
    $
    (2,603,509
    )Adjustments to reconcile net loss to net cash used in
operating activities:Depreciation and amortization
    
    
    125,622
    
    
    
    87,053Amortization of discounts on loans payable
    
    
    48,735
    
    
    
    240,844Common stock issued for services
    
    
    25,080
    
    
    
    0Fair value of options granted for services
    
    
    288,117
    
    
    
    384,081Changes in assets and liabilities:Accounts receivable
    
    
    247,785
    
    
    
    (678,238
    )Inventory
    
    
    244,778
    
    
    
    (735,869
    )Prepaid expenses
    
    
    (87,709
    )
    
    
    (42,415
    )Other assets
    
    
    16,408
    
    
    
    13,700Deferred revenue
    
    
    115,405
    
    
    
    60,805Accounts payable and accrued expenses
    
    
    (844,613
    )
    
    
    1,748,152Accrued compensation
    
    
    (12,392
    )
    
    
    74,496Net cash used in operating activities
    
    
    (2,549,537
    )
    
    
    (1,450,900
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (120,243
    )
    
    
    (244,393
    )Patent acquisition costs
    
    
    (550
    )
    
    
    (37,015
    )Net cash used in investing activities
    
    
    (120,793
    )
    
    
    (281,408
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from convertible notes payable
    
    
    1,250,000
    
    
    
    54,582Proceeds from insurance notes payable
    
    
    95,460
    
    
    
    0Proceeds from issuance of common stock and warrants, net
    
    
    1,410,500
    
    
    
    726,455Purchase of treasury stock
    
    
    0
    
    
    
    (237,180
    )Proceeds from exercise of stock warrants
    
    
    0
    
    
    
    706,989Principal payments on capital lease obligations
    
    
    (36,177
    )
    
    
    (25,222
    )Principal payments on note payable
    
    
    (83,473
    )
    
    
    (30,490
    )Commissions paid for fundraising costs
    
    
    (204,320
    )
    
    
    0Net cash provided by financing activities
    
    
    2,431,990
    
    
    
    1,195,134
   54




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GENELINK, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 Years Ended December 31, 2009 and 2008
 2009
    
    
    2008NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (238,340
    )
    
    
    (537,174
    )CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    435,197
    
    
    
    972,371CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    196,857
    
    
    $
    435,197SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATIONCash payments for interest
    
    $
    0
    
    
    $
    2,988Non-cash financing transactions:Common stock issued for services
    
    $
    25,080
    
    
    $
    0Stock warrants granted for services
    
    $
    62,500
    
    
    $
    303,616Common stock and warrants granted for fundraising
    
    $
    272,729
    
    
    $
    80,465
   55




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GENELINK, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 YEARS ENDED DECEMBER 31, 2009 AND 2008
 Note 1. Organization
    TM
   56




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Note 2. Summary of Significant Accounting Policies
 The Accounting Standards Codification
  Principles of consolidation:
  Use of estimates:
   57




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Cash and cash equivalents:
  Property and equipment:
  Revenue and cost recognition:
       58




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##### Table of Contents



Allowance for Sales Returns and Allowances:
   Accounts Receivable:
   59




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Intangible Assets and Amortization of Patents:
  Research and Development:
  Shipping and Handling Costs:
  Presentation of Sales Taxes:
  Inventory:
  Income taxes:
   60




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Long lived assets:
  Per share data:
  Stock-Based Compensation:
   61




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##### Table of Contents



Recent Accounting Pronouncements:
 Fair Value Measurements
 The Fair Value Option for Financial
Assets and Financial Liabilities-Including an amendment of FASB Statement No. 115
     62




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63




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Reclassifications:
  Note 3. Property and Equipment
  2009
    
    
    2008Office furniture and equipment
    
    $
    81,050
    
    
    $
    82,803Equipment
    
    
    157,003
    
    
    
    143,421Leasehold improvements
    
    
    6,781
    
    
    
    6,781Software
    
    
    342,563
    
    
    
    234,147587,397
    
    
    
    467,152Less accumulated depreciation
and amortization
    
    
    284,510
    
    
    
    185,168$
    302,887
    
    
    $
    281,984
   64




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##### Table of Contents



Note 4. Other Assets
  2009
    
    
    2008Patents and trademarks
    
    $
    395,035
    
    
    $
    394,485Deposits
    
    
    14,693
    
    
    
    31,101Less accumulated
amortization
    
    
    130,589
    
    
    
    104,309$
    279,139
    
    
    $
    321,277
   Year endingDecember 31,2010
    
    $
    27,1992011
    
    
    27,1992012
    
    
    27,1992013
    
    
    27,1992014
    
    
    27,199Thereafter
    
    
    128,451$
    264,446
 Note 5. Income Taxes
    65




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##### Table of Contents



Note 6. Stockholders Equity Transactions
 Common Stock
  Number of$ of Common
    
    
    Shares of
    
    
    Number ofDate
    
    Stock Sold
    
    
    Common Stock
    
    
    InvestorsJanuary 8, 2009
    
    $
    60,000.00
    
    
    
    600,000
    
    
    2January 15, 2009
    
    $
    5,000.00
    
    
    
    50,000
    
    
    1January 26, 2009 1
    
    $
    500,000.00
    
    
    
    5,000,000
    
    
    1June 12, 2009
    
    $
    22,500.00
    
    
    
    225,000
    
    
    2June 17, 2009
    
    $
    20,000.00
    
    
    
    200,000
    
    
    1June 29, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    1July 10, 2009
    
    $
    500.00
    
    
    
    5,000
    
    
    1July 23, 2009
    
    $
    12,500.00
    
    
    
    125,000
    
    
    1July 24, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    1July 28, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    1July 31, 2009
    
    $
    500.00
    
    
    
    5,000
    
    
    1August 18, 2009
    
    $
    70,000.00
    
    
    
    700,000
    
    
    2August 20, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    1August 26, 2009
    
    $
    3,000.00
    
    
    
    30,000
    
    
    1TOTAL
    
    $
    1,014,000.00
    
    
    
    10,140,000
    
    
    17
 1
    
    This investor also received a warrant to acquire 750,000 shares of Common Stock at
an exercise price of $0.11 per share.   66




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1 2
 Number of Shares
    
    
    Number of
    
    
    Number ofDate
    
    $ of Units Sold
    
    
    of Common Stock
    
    
    Warrants Issued
    
    
    InvestorsOctober 12, 2009
    
    $
    10,000.00
    
    
    
    100,000
    
    
    
    50,000
    
    
    1November 12, 2009
    
    $
    110,500.00
    
    
    
    1,105,000
    
    
    
    552,500
    
    
    4November 17, 2009
    
    $
    150,000.00
    
    
    
    1,500,000
    
    
    
    750,000
    
    
    2November 20, 2009
    
    $
    87,500.00
    
    
    
    875,000
    
    
    
    437,500
    
    
    3December 7, 2009
    
    $
    18,500.00
    
    
    
    185,000
    
    
    
    92,500
    
    
    3December 9, 2009
    
    $
    20,000.00
    
    
    
    200,000
    
    
    
    100,000
    
    
    1TOTAL
    
    $
    396,500.00
    
    
    $
    3,965,000
    
    
    
    1,982,500
    
    
    14
  1 2
  67




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Number of
    
    Original Exercise Price
    
    
    RevisedExisting Warrants
    
    of Existing Warrants
    
    
    Exercise Price7,346,577
    
    
    $0.075-$0.10
    
    
    $
    0.054,872,704
    
    
    $0.20-$0.25
    
    
    $
    0.062,755,500
    
    
    $0.40-$0.50
    
    
    $
    0.082,246,250
    
    
    $0.60-$1.00
    
    
    $
    0.09
   68




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John R. DePhillipo v. GeneLink,
Inc.
     Stock Options and Warrants
    69




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##### Table of Contents



Number of
    
    Original Exercise Price
    
    
    RevisedExisting Warrants
    
    of Existing Warrants
    
    
    Exercise Price7,346,577
    
    
    $0.075-$0.10
    
    
    $
    0.054,872,704
    
    
    $0.20-$0.25
    
    
    $
    0.062,755,500
    
    
    $0.40-$0.50
    
    
    $
    0.082,246,250
    
    
    $0.60-$1.00
    
    
    $
    0.09
     70




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##### Table of Contents



2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    Exercise
    
    
    Average
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions/warrants outstanding
at beginning of year
    
    
    23,023,331
    
    
    $
    0.17
    
    
    
    31,043,535
    
    
    $
    0.19Granted
    
    
    9,310,875
    
    
    
    0.12
    
    
    
    7,112,249
    
    
    
    0.37Exercised
    
    
    (50,000
    )
    
    
    (0.25
    )
    
    
    (12,137,453
    )
    
    
    (0.06
    )Expired
    
    
    (125,000
    )
    
    
    (0.20
    )
    
    
    (2,995,000
    )
    
    
    (0.44
    )Cancelled
    
    
    (150,000
    )
    
    
    (0.15
    )
    
    
    
    
    
    
    Options/warrants outstanding
at end of year
    
    
    32,009,206
    
    
    $
    0.16
    
    
    
    23,023,331
    
    
    $
    0.17Options/warrants exercisable
at end of year
    
    
    24,002,535
    
    
    
    
    
    
    
    15,039,162Weighted-average fair value
of options granted during
the year
    
    
    
    
    
    $
    0.10
    
    
    
    
    
    
    $
    0.38
  Weighted-AverageNumber
    
    
    RemainingExercise
    
    Outstanding
    
    
    Contractual Life
    
    
    ExercisablePrice
    
    at 12/31/09
    
    
    (Years)
    
    
    Warrants0.05
    
    
    1,915,000
    
    
    
    1.70
    
    
    
    1,915,0000.075
    
    
    2,310,200
    
    
    
    5.85
    
    
    
    2,310,2000.08
    
    
    8,700,000
    
    
    
    7.58
    
    
    
    7,622,4940.10
    
    
    4,043,633
    
    
    
    3.39
    
    
    
    4,043,6330.11
    
    
    4,833,750
    
    
    
    4.66
    
    
    
    3,833,7500.12
    
    
    2,900,000
    
    
    
    8.55
    
    
    
    1,775,0000.15
    
    
    2,294,125
    
    
    
    5.29
    
    
    
    2,144,1250.16
    
    
    25,000
    
    
    
    9.42
    
    
    
    25,0000.20
    
    
    250,000
    
    
    
    .15
    
    
    
    250,0000.50
    
    
    4,737,498
    
    
    
    8.58
    
    
    
    83,33332,009,206
    
    
    
    
    
    
    
    24,002,535
  Risk free interest rate of return
    
    4.5 - 5
    %Expected option life
    
    5 - 10 yrs.Expected dividends
    
    $0.00Expected volatility
    
    138 - 170
    %
  71




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##### Table of Contents



Note 7. Net Loss Per Share
   2009
    
    
    2008Net loss
    
    $
    (2,716,753
    )
    
    $
    (2,603,509
    )Weighted average number of common shares
outstanding for computing basic earning per share
    
    
    111,837,694
    
    
    
    82,530,959Dilutive 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
    
    
    111,837,694
    
    
    
    82,530,959Net loss per share  basic and diluted
    
    $
    (0.03
    )
    
    $
    (0.03
    )
  Years Ended December 31,2009
    
    
    2008Warrants and stock options
    
    
    32,009,206
    
    
    
    23,023,331
 Note 8. Advertising
  Note 9. Rent
   72




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##### Table of Contents



Year endingDecember 31,2010
    
    $
    66,000$
    66,000
 Note 10. Related Party Transactions and Convertible Secured Promissory Notes
      73




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##### Table of Contents



Short Term Loans Payable
  2009
    
    
    2008Note payable, due no specific maturity with
no stated interest. All interest and principal
due at maturity.
    
    $
    10,000
    
    
    $
    10,000Note payable, no specific maturity with no stated
Interest. All interest and principal
due at maturity.
    
    
    8,000
    
    
    
    8,00018,000
    
    
    
    18,000Less: Discount for warrants issued
    
    
    (
    )
    
    
    (
    )Total short term loans payable
    
    $
    18,000
    
    
    $
    18,000
 Employees and Consultants
    74




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##### Table of Contents



Convertible Secured Promissory Notes Payable
  2009
    
    
    2008Notes payable, due February 26, 2011 with interest
at 8% through February 11, 2011 and thereafter at
10%. All interest and principal due at maturity.
All Company assets pledged as collateral.
    
    $
    1,250,000
    
    
    $
    1,250,000
    
    
    
    Less: Debt issue discount
    
    
    230,891
    
    
    
    Less: Stock conversion discount
    
    
    125,714
    
    
    
    Total short term loans payable
    
    $
    893,395
    
    
    $
    
      75




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##### Table of Contents



Note 11. Segment Information
   GeneWize LifeGeneLink
    
    
    Dermagenetics
    
    
    SciencesInc.
    
    
    Inc.
    
    
    Inc.2009Net Revenues
    
    $
    432,756
    
    
    $
    69,892
    
    
    $
    8,425,667Operating expenses
    
    
    1,919,909
    
    
    
    15,916
    
    
    
    9,715,494Other income
    
    
    2,778
    
    
    
    0
    
    
    
    3,473Pre-tax earnings (loss)
    
    
    (1,484,375
    )
    
    
    53,976
    
    
    
    (1,286,354
    )2008Net Revenues
    
    $
    291,206
    
    
    $
    29,738
    
    
    $
    6,186,503Operating expenses
    
    
    1,973,028
    
    
    
    40,113
    
    
    
    7,110,053Other income
    
    
    12,238
    
    
    
    0
    
    
    
    0Pre-tax earnings (loss)
    
    
    (1,669,584
    )
    
    
    (10,375
    )
    
    
    (923,550
    )
 Note 12. Going Concern
  Note 13. Commitments and Contingencies
   76




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John R. DePhillipo v.
GeneLink, Inc.,
  DePhillipo, et. al. v. GeneLink, Inc. t/a GeneLink Biosciences, Inc., et. al.
   77




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Note 14. Quarterly Results of Operations (unaudited)
  2009
    
    First
    
    
    Second
    
    
    Third
    
    
    FourthSales
    
    $
    1,972,038
    
    
    $
    2,113,177
    
    
    $
    2,134,504
    
    
    $
    2,341,736Gross profit
    
    
    997,264
    
    
    
    1,175,645
    
    
    
    1,265,176
    
    
    
    1,468,625Net income (loss)
    
    
    (560,229
    )
    
    
    (820,637
    )
    
    
    (783,794
    )
    
    
    (552,093
    )Net income (loss)
per
common share
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.006
    )
    
    
    (0.006
    )
 2008
    
    First
    
    
    Second
    
    
    Third
    
    
    FourthSales
    
    $
    26,424
    
    
    $
    124,503
    
    
    $
    1,829,669
    
    
    $
    4,396,847Gross profit
    
    
    1,104
    
    
    
    15,331
    
    
    
    1,403,963
    
    
    
    3,144,557Net 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
    )
 Note 15. Subsequent Events
    78




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Note 16. Industry Risk and Concentration
      79




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ITEM 9.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Change In Internal Controls
  Managements Annual Report on Internal Control over Financial Reporting
    
 ITEM 9B
    
    OTHER INFORMATION
   80




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PART III
 
 ITEM 10.
    
    DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
  Name
    
    Age
    
    PositionBernard L. Kasten, Jr. M.D.
    
    63
    
    Executive Chairman of the Board, DirectorGary J. Beeman
    
    56
    
    Chief Executive OfficerDouglas Boyle
    
    42
    
    DirectorRobert Hoekstra
    
    60
    
    DirectorJames Monton
    
    63
    
    DirectorRobert P. Ricciardi, Ph.D.
    
    62
    
    Secretary, Chief Science Officer, DirectorJohn H. Souza
    
    47
    
    Chief Operating Officer, Director
   81




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82




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Audit Committee
    83




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Nominating Committee
   Section 16(a) Beneficial Ownership Reporting Compliance.
   84




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##### Table of Contents



Code of Ethics.
  Meeting of Directors
  Communications with the Board of Directors
  REPORT FROM THE AUDIT COMMITTEE
     
  85




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##### Table of Contents



ITEM 11.
    
    EXECUTIVE COMPENSATION
 Compensation Discussion and Analysis
  Overview of Compensation Philosophy and Objectives
  
    
    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.
   Executive Compensation Components
   86




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##### Table of Contents



Annual Base Salary
  Stock Options and Stock Awards
   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.
  87




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##### Table of Contents



Deductibility of Compensation Expenses
  Accounting and Tax Considerations
  REPORT OF COMPENSATION COMMITTEE
    
  88




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##### Table of Contents



EXECUTIVE COMPENSATION
 SUMMARY COMPENSATION TABLE
 Non-Equity
    
    
    NonqualifiedStock
    
    
    
    
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherName and
    
    
    
    
    
    
    
    
    
    Bonus
    
    
    Awards
    
    
    Option
    
    
    Compensation
    
    
    Compensation
    
    
    Compensationprincipal position
    
    Year
    
    
    Salary ($)
    
    
    ($)
    
    
    ($)
    
    
    Awards ($)
    
    
    ($)
    
    
    Earnings ($)
    
    
    ($)
    
    
    Total ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)
    
    
    (i)
    
    
    (j)Monte E. Taylor, Jr.
    
    
    2009
    
    
    $
    150,169
    
    
    $
    0
    
    
    $
    0
    
    
    $
    45,000
    3
    
    $
    0
    
    
    $
    0
    
    
    $
    10,556
    4
    
    $
    205,725Chief Executive
Officer 1
    
    
    2008
    
    
    $
    131,442
    
    
    $
    0
    
    
    $
    0
    
    
    $
    57,000
    3
    
    $
    0
    
    
    $
    0
    
    
    $
    9,562
    4
    
    $
    198,004David L. Macdonald
    
    
    2009
    
    
    $
    4,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    11,000
    5
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    15,000Interim Chief
Executive
Officer2John A. Souza
    
    
    2009
    
    
    $
    114,373
    
    
    $
    0
    
    
    $
    0
    
    
    $
    37,000
    6
    
    $
    0
    
    
    $
    0
    
    
    $
    8,307
    4
    
    $
    159,680Vice President of
Business
Development
    
    
    2008
    
    
    $
    91,506
    
    
    $
    0
    
    
    $
    0
    
    
    $
    49,000
    6
    
    $
    0
    
    
    $
    0
    
    
    $
    8,455
    2
    
    $
    148,961
 
 1
    
    M. Taylor served as Chief Executive Officer of the Company until December 28,
2009 and served as Chief Executive Officer of GeneWize Life Sciences, Inc., a wholly-owned
subsidiary of the Company, until January 29, 2010.2
    
    On December 28, 2009, Mr. Macdonald became Interim Chief Executive Officer of the
Company.3
    
    On June 1, 2007, Mr. Taylor received a fully vested warrant to acquire 1,600,00
shares of common stock of an exercise price of $0.08 per share and received options to acquire
1,500,000 shares of common stock at an exercise price of $0.08 per share, which options vest in
four equal annual installments of 375,000 each, commencing June 1, 2007. On May 20, 2008, Mr.
Taylor received options to acquire 350,000 shares of Common Stock at an exercise price of $0.12 per
share.4
    
    Represents the cost of health insurance premiums provided from the Company.5
    
    On December 28, 2009, Mr. Macdonald received fully vested options to acquire 100,000
shares of common stock at an exercise price of $0.11 per share.6
    
    On June 1, 2007, Mr. Souza received a fully-vested warrant to acquire 1,000,000
shares of common stock at an exercise price of $0.08 per share, and received options to acquire
1,100,000 shares of common stock at an exercise price of $$0.08 per share, which options vest in
four equal installments of 275,000 each, commencing June 1, 2007. On May 20, 2008, Mr. Souza
received options to acquire 350,000 shares of Common Stock. On July 28, 2008, Mr. Souza received
options to acquire 1,483,333 shares of Common Stock of which 383,333 options vest on each of July
28, 2011 and July 28, 2012, 383,374 options vest on July 28, 2013 and 333,333 options vest upon the
Company becoming listed on the NASDAQ or National Market or national stock exchange.  89




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
 OPTION AWARDS
 Equity Incentive PlanAwards: Number ofSecuritiesNumber of Securities
    
    
    UnderlyingNumber of Securities Underlying
    
    
    Underlying Unexercised
    
    
    Unexercised
    
    
    OptionUnexercised Options (#)
    
    
    Options (#)
    
    
    Unearned Options
    
    
    Exercise Price
    
    
    Option ExpirationName
    
    Exercisable
    
    
    Unexercisable
    
    
    (#)
    
    
    ($)
    
    
    Date(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)Monte E. Taylor, Jr.
    
    
    2,135,000
    
    
    
    0
    
    
    
    0
    
    
    $
    0.08
    
    
    April 29, 2010350,000
    
    
    
    0
    
    
    
    0
    
    
    $
    0.12
    
    
    April 29, 2010David L. Macdonald
    
    
    100,000
    
    
    
    0
    
    
    
    0
    
    
    $
    0.11
    
    
    December 25, 2019John H. Souza
    
    
    1,825,000
    
    
    
    275,000
    (1)
    
    
    0
    
    
    $
    0.08
    
    
    June 1, 2017350,000
    
    
    
    0
    
    
    
    0
    
    
    $
    0.12
    
    
    May 20, 20180
    
    
    
    1,150,000
    (2)
    
    
    333,333
    (3)
    
    $
    0.50
    
    
    July 28, 2018
 (1)
    
    275,000 options vest on June 1, 2010.(2)
    
    383,333 options vest on each of July 28, 2011 and July 28, 2012, 383,334
options vest on July 28, 2013.(3)
    
    These options vest upon the Company becoming listed on the NASDAQ
National Market or national stock exchange.  90




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##### Table of Contents



DIRECTOR COMPENSATION
  DIRECTOR COMPENSATION
 Change inPensionValueandNon-Equity
    
    
    NonqualifiedFees
    
    
    Stock
    
    
    Options
    
    
    Incentive Plan
    
    
    Deferred
    
    
    All OtherEarned
    
    
    Awards
    
    
    Awards
    
    
    Compensation
    
    
    Compensation
    
    
    Compensation
    
    
    TotalName
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)
    
    
    ($)(a)
    
    (b)
    
    
    (c)
    
    
    (d)
    
    
    (e)
    
    
    (f)
    
    
    (g)
    
    
    (h)Bernard L. Kasten,
Jr. M.D.
    
    $
    0
    
    
    $
    0
    
    
    $
    17,000
    (1)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    17,000Douglas M. Boyle
    
    $
    0
    
    
    $
    0
    
    
    $
    6,000
    (2)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    6,000Robert Hoekstra
    
    
    0
    
    
    
    0
    
    
    $
    14,000
    (3)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    $
    14,000James Monton
    
    $
    0
    
    
    $
    0
    
    
    $
    10,500
    (4)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    10,500Robert P.
Ricciardi, Ph.D.
    
    $
    27,500
    
    
    $
    0
    
    
    $
    4,000
    (5)
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    31,500
 (1)
    
    On June 1, 2007, Dr. Kasten received a fully-vested amount to acquire
750,000 shares of Common Stock at an exercise price of $0.08 per share and received options to
acquire 850,000 shares of Common Stock at an exercise price of $0.08 per share, which options vest
in four equal annual installments of 282,500 each, commencing June 1, 2007. On May 20, 2008, Dr.
Kasten received a fully-vested option to acquire 100,000 shares of Common Stock at an exercise
price of $0.12 per share. On July 28, 2008, Dr. Kasten received options to acquire 1,120,833
shares of Common Stock at an exercise price of $0.50 per share, of which 262,500 options vest on
each of July 28, 2011, July 28, 2012 and July 28, 2013, and 333,333 options vest upon the Company
becoming listed on the NASDAQ National Market or a national stock exchange.(2)
    
    On September 30, 2009, Mr. Boyle received options to acquire 200,000
shares of Common Stock at an exercise price of $0.11 per share, of which 50,000 options vested on
September 30, 2009 and 50,000 options vest on each of September 30, 2010, September 30, 2011 and
September 30, 2012.(3)
    
    On May 20, 2008, Mr. Hoekstra received options to acquire 500,000 shares
of Common Stock, an exercise of which 200,000 options vested on May 20, 2008, 100,000 options
vested on May 20, 2009, and 100,000 options vest on each of May 20, 2010 and May 20, 2011.  91




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##### Table of Contents



(4)
    
    On August 17, 2009, Mr. Monton received options to acquire 100,000 shares
of Common Stock at an exercise price of $0.12 per share, of which 25,000 options vested on August
17, 2009, and 25,000 shares vest on each of August 17, 2010, August 17, 2011 and August 17, 2012.(5)
    
    On June 1, 2007, Dr. Ricciardi received a fully-vested option to acquire
25,000 shares of common stock at an exercise price of $0.08 per share and received options to
acquire 200,000 shares of common stock at an exercise price of $0.08 per share, which options vest
in four equal annual installments of 50,000 each, commencing June 1, 2007. On September 30, 2007,
in connection with the amendment to Dr. Ricciardis consulting agreement, Dr. Ricciardi received a
fully-vested warrant to acquire 1,400,000 shares of common stock at an exercise price of $0.11 per
share. Compensation Committee Interlocks and Insider Participation
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
 PRINCIPAL SHAREHOLDERS
     92




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##### Table of Contents



Number of Shares
    
    
    Approximate PercentageName
    
    Beneficially Owned
    
    
    Of Stock OutstandingChesed Congregation of America
    
    
    11,463,090
    (1)
    
    
    9.0
    %One State Street Plaza, 29th Floor
New York, NY 10004Kenneth R. Levine
    
    
    6,302,046
    (2)
    
    
    5.4
    %2 Oaklawn Road
Short Hills, NJ 07078Robert Hoekstra
    
    
    6,160,104
    (3)
    
    
    5.2
    %317 Wekiva Spring Road, #200
Longwood, Florida 32779Bernard L. Kasten, Jr. M.D.
    
    
    5,659,929
    (4)
    
    
    4.8
    %4380 27th Court, SW #104
Naples, FL 34116Robert P. Ricciardi, Ph.D.
    
    
    4,260,000
    (5)
    
    
    3.6
    %317 Wekiva Spring Road, #200
Longwood, Florida 32779John H. Souza
    
    
    3,642,005
    (6)
    
    
    3.1
    %317 Wekiva Spring Road, #200
Longwood, Florida 32779James A. Monton
    
    
    610,000
    (7)
    
    
    *11489 Grandstone Lane
Cincinnati, Ohio 45249Douglas M. Boyle
    
    
    50,000
    (8)
    
    
    *111 Weatherly Street
Dalton, Pennsylvania, 18414Gary J. Beeman
    
    
    0
    
    
    
    *317 Wekiva Spring Road, #200
Longwood, Florida 32779Directors and Officers as a Group
    
    
    18,882,038
    (3)(4)(5)(6)(7)(8)
    
    
    15.3
    %
 (1)
    
    Includes 10,838,090 shares of Common Stock issuable upon the conversion of
convertible notes as of March 15, 2010. Chesed holds $1,000,00 principal balance of convertible
notes, which have accrued $83,809 of interest through March 15, 2010 and convert at a conversion
price of $0.10 per share.(2)
    
    Includes 6,182,046 shares held directly and 70,000 shares held in a retirement plan. Includes
currently exercisable options and warrants to acquire 50,000 shares of Common Stock.(3)
    
    Includes currently exercisable options and warrants to acquire 725,000 shares of Common Stock.
Includes 2,550,000 shares of Common Stock and warrants to acquire 250,000 shares of Common Stock
held by a family trust for which Mr. Hoekstra is a trustee. Mr. Hoekstra disclaims beneficial
ownership of those shares and warrants.(4)
    
    Includes currently exercisable options and warrants to acquire 1,412,500 shares of Common
Stock.(5)
    
    Includes currently exercisable options and warrants to acquire 1,550,000 shares of Common
Stock.(6)
    
    Includes currently exercisable warrants to acquire 2,175,000 shares of Common Stock.(7)
    
    Includes currently exercisable options and warrants to acquire 75,000 shares of Common Stock.(8)
    
    Includes currently exercisable options and warrants to acquire 50,000 shares of Common Stock(*)
    
    Less than 1%  93




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##### Table of Contents



ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
     .
 1 2
 
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   94




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##### Table of Contents



Fees for Independent Auditors for Fiscal Years 2009 and 2008
  2009
    
    
    2008Audit Fees
    
    $
    22,000
    
    
    $
    22,000Audit-Related Fees
    
    
    0
    
    
    
    0Tax Fees
    
    
    0
    
    
    
    0All Other Fees
    
    
    0
    
    
    
    0Total Fees
    
    $
    22,000
    
    
    $
    22,000
   
 ITEM 15.
    
    EXHIBITS
 (1)
    
    Financial Statements. The financial statements required to be filed are
presented beginning on page 36.
 (2)
    
    Exhibits. The following Exhibits have been filed pursuant to Item 601 of
Regulation S-K.
 Exhibit Number
    
    Description21
    
    
    Subsidiaries of the Registrant31.1
    
    
    Certification of Chief Executive Officer and Principal
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
  95




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##### Table of Contents



SIGNATURES
  GENELINK, INC.
RegistrantDate: March 30, 2010
    /s/ Gary J. BeemanChief Executive Officer  Signatures
    
    Capacity
    
    Date/s/ Gary J. Beeman

Gary J. Beeman
    
    Principal Executive
Officer, Principal
Financial Officer and
Principal Accounting
Officer
    
    March 30, 2010/s/ Douglas M. Boyle

Douglas M. Boyle
    
    Director
    
    March 30, 2010/s/ Robert Hoekstra

Robert Hoekstra
    
    Director
    
    March 30, 2010/s/ Bernard L. Kasten, Jr. M.D.

Bernard L. Kasten, Jr. M.D.
    
    Chairman and Director
    
    March 30, 2010/s/ James Monton

James Monton
    
    Director
    
    March 30, 2010/s/ Robert P. Ricciardi

Robert P. Ricciardi, Ph.D.
    
    Director
    
    March 30, 2010John H. Souza
    
    Director
  96