<PAGE>

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                        ANNUAL REPORT FOR THE FISCAL YEAR
                             ENDED DECEMBER 31, 2006

                           COMMISSION FILE NO. 0-28077

                                 GENELINK, INC.
                 (Name of Small Business Issuer in its charter)

<TABLE>
<S>                                                          <C>
              PENNSYLVANIA                                        23-2795613
     (State or other jurisdiction of                           (I.R.S. Employee
     incorporation or organization)                          Identification No.)
</TABLE>

<TABLE>
<S>                                                               <C>
        Newport Financial Center
        113 Pavonia Avenue, #313
             Jersey City, NJ                                        07310
(Address of principal executive offices)                          (Zip Code)
</TABLE>

                    ISSUER'S TELEPHONE NUMBER: (800) 558-4363

          Securities registered under Section 12(b) of the Exchange Act

                                      None
          Securities Registered under Section 12(g) of the Exchange Act

                               Title of each class
                          Common Stock, $.01 par value

     Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes  X    No
          ---      ---
<PAGE>

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is not contained in this form, and no disclosure will 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-KSB
or amendment to this form 10-KSB. [X]

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

     State issuer's revenues for its most recent fiscal year. $175,674

     State the aggregate market value of the voting and non-voting common equity
held by non-affiliates computed by reference to the price at which the common
equity was sold, or the average bid and asked price of such common equity, as of
a specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act). $2,496,585.

     APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date.

Number of Shares of Common Stock Outstanding on February 28, 2007   44,104,055

     Transitional Small Business Disclosure Format Yes       No  X
                                                       ---      ---

     Statements in this Annual Report on Form 10-KSB may constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements involve a number of risks,
uncertainties and other factors that could cause actual results to differ
materially from those projected in such statements.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                             PAGE
                                                                             ----
<S>                                                                          <C>
ITEM 1.  DESCRIPTION OF BUSINESS .........................................     1
ITEM 2.  PROPERTIES ......................................................    12
ITEM 3.  LEGAL PROCEEDINGS ...............................................    13
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS .............    14
ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS ........    14
ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS ............................    17
ITEM 7.  FINANCIAL STATEMENTS ............................................    22
ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE ............................................    46
ITEM 8A. CONTROLS AND PROCEDURES .........................................    46
ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS ................................    47
ITEM 10. EXECUTIVE COMPENSATION ..........................................    53
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ..    54
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................    56
ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K ..........................    56
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES ..........................    57
</TABLE>
<PAGE>

ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

GeneLink, Inc. (the "Company" or "GeneLink") is a publicly-held Pennsylvania
corporation listed on the NASDAQ OTC Bulletin Board trading under the symbol
"GNLK." GeneLink is a bioscience company and was originally organized to offer
to the public the safe collection and preservation of a family's DNA material
for later use by the family to identify and potentially prevent inherited
diseases. More recently the Company has created a breakthrough methodology for
SNP (single nucleotide polymorphism)-based genetic profiling (patents issued and
pending) and intends to market and/or out-license these proprietary assessments
to companies that manufacture or market to the nutraceutical, personal care,
skin care and weight-loss industries.

The Company has never achieved a profit, having realized net losses each year,
including operating losses before provisions for income taxes of $2,114,619 in
2004, $1,281,157 in 2005 and $783,878 in 2006. There can be no assurance that
the Company will ever realize significant sales or become profitable.

The Company was 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. These findings are a direct result of the
National Institutes of Health Genome Project.

The Company's expansion into the bioscience field with its 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.

The Company has developed and received a patent on a non-invasive DNA Collection
Kit(R) 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(R) 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 scraping the
inside of the cheek) and takes less than five minutes to complete. 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(R) 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


                                       -1-

<PAGE>

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, the Company formed a wholly owned subsidiary, Dermagenetics, Inc., to
provide its genetically customized products and services to the skin and
personal care market.

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 regime 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 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

     Now, by simply swabbing the inside of one's mouth and sending the collected
sample to GeneLink's 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.


                                       -2-

<PAGE>

     The Company's 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(TM)) and
formulations designed to help alleviate specific oxidative stress and other
potential deficiencies in the skin.

OTHER SNP PROFILES DEVELOPED BY GENELINK

     The Company has 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. The Company has 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. The
Company's 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. The Company's
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.

     The Company has 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.

DNA BANKING

     The Company has ceased actively marketing DNA banking, wherein specimens
can be collected during an individual's lifetime or up to 36 to 40 hours after
death using the Company's DNA Collection Kit(R) for long-term storage at the
University of North Texas Health Science Center (the "Health Science Center").
The Health Science Center will continue to store the DNA specimen for 75 year
intervals for all existing clients who have sent in DNA for banking. Upon a
client's request, and upon the 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.


                                       -3-

<PAGE>

AFFILIATES

     The Company has entered into agreements with several laboratories pursuant
to which these laboratories perform SNP genotyping of samples provided by the
Company for any genetics-based products that the Company may develop.

     The Company has collaborated with Arch Personal Care Division of Arch
Chemicals, Inc. on the development of a new category of "genetic" skin care
formulations and an associated, personalized skin-testing system. This
collaboration occurred from late 2001 through 2005. Recently developed
formulations feature a family of active ingredients known as "SNP-Derms(R)"
designed to address some of the key, individual genetic characteristics that can
accelerate skin aging, skin wrinkling and other specific oxidative stress
deficiencies in the skin. The SNP-Derm(R) formulations may be offered in
combination with the Dermagenetics(R) Profiles that provide a measure of a
person's resistance to skin aging, skin irritation and tissue breakdown. Arch
Chemicals, Inc., with annual sales of approximately $1 billion, is a global
specialty chemicals company.

     The Company has a Distribution Agreement with Food Science Corporation to
develop and market personalized nutritional products linked to the Company's
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.

     In February 2006, the Company 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 the Company's technology in Australia and New
Zealand.

     The Company 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. The Company appointed
Dr. Robert P.K. Keller to the Company's Medical Advisory Board, and along with
Dr. Robert Keller, Dermagenetics has been appearing at Spa conventions and has
marketed the Company's DNA UltraCustom skin cream to Spas in the United States.
Currently, the Company is reevaluting its marketing efforts and plans related to
the Spa industry.


                                       -4-

<PAGE>

INTELLECTUAL PROPERTY

     The Company has received a patent on the Company's method of DNA gathering
(Patent #6,291,171). There is no assurance that the patent will prevent others
from gathering DNA in a similar manner.

     The Company has received trademark protection for the Company's name and
logo and for the name "DNA Collection Kit(R)."

     The Company has filed a series of U.S. patent applications relating to the
Company's DNA Collection Kit(R) and methods for assessing a human subject's
susceptibility to various medical conditions, including skin health, oxidative
damage, osteoporosis and other bone density disorders and obesity and for
methods of selecting and measuring the dosage of preventative agents for such
conditions. There can be no assurance that the Company will receive patent
protection on the Company's methods or procedures. The Company is 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.

     The Company's believes its 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 the Company's patented DNA Collection
Kit(R)) and sending the collected sample to the Company's laboratories -
consumers can be directed to personalized products - specifically formulated to
help compensate for their predicted deficiencies.

     The Company has received Australian Patent #2002230953 "Kits and Methods
for Assessing Oxidative Stress; Trademark: Dermagenetics #78398892 and 78398898
(for the Dermagenetics face design) and #78412723 for SNP Actives.

COMPETITION

     The Company's 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 the Company's
potential competitors have considerably greater financial technical, marketing
and other resources than the Company has which may allow these competitors to
discover important genes or successfully commercialize these discoveries before
the Company.

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


                                       -5-

<PAGE>

GOVERNMENT REGULATION

     Pursuant to a letter dated January 23, 1996, the Food and Drug
Administration has determined that the Company's kit is a device, but is not
subject to active regulations by the Center for Devices and Radiological Health.
However, any change in the current regulations could result in the kit becoming
a regulated device.

EMPLOYEES AND LABOR RELATIONS

     The Company consider its labor relations to be good, and none of its
employees is covered by a collective bargaining agreement. As of December 31,
2006, the Company employed or engaged individuals in the following areas:

<TABLE>
<CAPTION>
                                        Number of
          Category              Employees and Consultants
---------------------------     -------------------------
<S>                             <C>
Sales and Marketing                         3
General and Administration,
   including Customer Service               5
Research and Development                    6
</TABLE>

RISK FACTORS

     The Company's business and the value of its shares are subject to the risk
described above and certain additional risks described below.

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

     On October 14, 2005, the Company terminated the employment of John R.
DePhillipo, the former Chief Executive Officer of the Company. In November 2005,
Mr. DePhillipo brought suit against the Company alleging, among other things,
that he was terminated without cause, that the Company breached the terms of his
employment agreement and that he is entitled to receive $84,000 of back salary
and at least $1,500,000 of salary throughout the remainder of the term set forth
in such employment agreement. The Company has denied such allegations and has
brought counterclaims against Mr. DePhillipo alleging that Mr. DePhillipo was
terminated for cause, that Mr. DePhillipo breached his fiduciary duty to the
Company and alleging conversion, negligent misrepresentation and unjust
enrichment. If Mr. DePhillipo prevails in this litigation and obtains a judgment
against the Company for all or any substantial portion his claim, it is likely
that the Company will not be able to pay any such judgment and may be forced to
cease operations. As all of the Company's assets have been pledged to its
secured creditors, it is unlikely that the shareholders of the Company would
receive any distributions if the Company were forced to cease its operations and
liquidate in the event of Mr. DePhillipo prevailing in the litigation. See
"Litigation".


                                       -6-

<PAGE>

     IF THIS COMPANY DEFAULTS ON ITS OBLIGATIONS WITH RESPECT TO ITS SECURED OR
UNSECURED DEBT, ITS LENDERS AND CREDITORS COULD FORECLOSE UPON THE COMPANY'S
ASSETS.

     In 2006, the Company entered into a series of secured convertible loan
financings pursuant to which it has pledged all of its assets as collateral for
the repayment of the secured convertible loan obligations. The secured
convertible loan obligations mature on May 12, 2011. As of December 31, 2006,
$866,624 of principal and interest were outstanding on the secured convertible
loans. If the conditions to converting these loans are not met, it is unlikely
that the Company would be able to repay these loans without refinancing,
extending, modifying or converting such obligations. If the Company is unable to
repay its obligations with respect to such loans or to refinance, extend, modify
or convert such loans, the Lenders would be entitled to foreclose against such
collateral, and in such event the Company would be required to cease operations.

     Additionally, the Company owed $656,155 as of December 31, 2006 to Robert
Ricciardi for acquired compensation earned but not yet paid, and owed $365,590
of accounts payable and accrued expenses as of December 31, 2006. If the Company
is unable to generate sufficient revenues or raise sufficient funds to meet
these obligations as they become due, it may default upon these obligations and
may be required to cease its operations.

THE COMPANY NEEDS TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE, TO
CONTINUE ITS OPERATIONS.

     The Company has spent, and expects to continue to spend in the future,
substantial funds to complete its planned product development efforts and expand
its sales and marketing activities. The Company needs to raise additional funds
to implement its business plan, and cannot be certain that it will be able to
obtain additional financing on favorable terms or at all.

     Currently, the Company has sufficient funds to support its operations
through May 2007. If the Company cannot obtain $500,000 of financing to support
its operations for the balance of 2007, the Company may not be able to continue
its business and may be forced to cease operations. The Company will require
approximately $600,000 additional funds to finance marketing efforts throughout
the balance of 2007. The Company is in discussions with multiple potential
funding sources and anticipates receiving sufficient funding to continue
operations. There can be no assurance that the Company will be able to obtain
this required financing on favorable terms or at all.

     The Company's future capital requirements and the adequacy of available
funds will depend on numerous factors, including:

     -    the successful commercialization of the Company's existing products
          and services;

     -    progress in the Company's product development efforts;

     -    progress with regulatory affairs activities;


                                       -7-

<PAGE>

     -    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 the
          Company's products.

     If funds generated from the Company's operations, together with its
existing capital resources, are insufficient to meet current or planned
operating requirements, the Company will have to obtain additional funds through
equity or debt financing, strategic alliances with corporate partners and
others, or through other sources. The Company does 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.
Additionally, for so long as the Company's litigation with its former chief
executive officer remains outstanding, it is unlikely that the Company will be
able to obtain any financing on acceptable terms. If adequate funds are not
available, the Company 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 the
Company's rights to certain of its technologies, product candidates, products or
potential markets. Therefore, the inability to obtain adequate funds could have
a material adverse impact on the Company's business, financial condition, and
results of operations and its ability to remain in business.

EXPECTED FUTURE DILUTION TO SHAREHOLDERS.

     As discussed above, the Company believes it is likely that it will be
required to raise substantial 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.

THE COMPANY HAS A HISTORY OF LOSSES AND EXPECT CONTINUED LOSSES FOR THE
FORESEEABLE FUTURE.

     The Company commenced operations in 1994. The Company has incurred
significant losses to date and revenues have been limited. The Company's
expenses have exceeded revenues in each year since inception. Given planned
levels of operating expenses, the Company expects to continue to incur losses
for the foreseeable future. The Company's accumulated deficit as of December 31,
2006 was $11,114,084. The Company incurred a net loss of $577,671 for the fiscal
year ended December 31, 2006. The Company's expenses have consisted principally
of research and development, salaries and for general and administrative
expenses incurred while building its business infrastructure. The Company
expects to continue to experience significant operating losses in the future as
it continues research and development efforts and expands its marketing and
sales force in an effort to commercialize the Company's products and services.
The Company plans to increase operating expenses in anticipation of increasing
revenues. If the Company's revenue growth is slower than anticipated or
operating expenses exceed expectations, the Company's losses will significantly
increase. Even if the Company were to achieve profitability, it may not be able
to sustain or increase profitability on a quarterly or annual basis.


                                       -8-

<PAGE>

IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME
WIDESPREAD, WE MAY HAVE LESS DEMAND FOR THE COMPANY'S 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 the Company's services and products.

THE COMPANY HAS LIMITED SALES AND MARKETING EXPERIENCE.

     The Company has limited sales and marketing experience and may be unable to
successfully establish and maintain a significant sales and marketing
organization. Due to the relatively limited market awareness of the Company's
products, the Company believes that the marketing effort may be a lengthy
process.

THE COMPANY'S INDUSTRY IS HIGHLY COMPETITIVE AND IT MAY NOT HAVE THE RESOURCES
REQUIRED TO SUCCESSFULLY COMPETE.

     The biosciences and medical diagnostic industries are highly competitive.
The Company competes with companies in the United States and abroad that are
engaged in these fields: They include

     -    biotechnology, pharmaceutical, chemical and other companies;

     -    academic and scientific institutions;

     -    governmental agencies; and

     -    public and private research organizations.

     The Company's potential competitors in the United States and abroad are
numerous and include among others, major pharmaceutical and diagnostic
companies, consumer products companies, specialized biotechnology firms,
universities and other research institutions. Many of the Company's competitors
have considerably greater financial, technical, marketing and other resources
than does the Company. Furthermore, many of these competitors are more
experience than the Company is in discovering, commercializing and marketing
products. These greater resources may allow its competitors to discover
important genes or genetic markers before the Company does. If the Company does
not discover genes that are linked to a health risk, characterize their
functions, develop genetic tests and related information services based on such
discoveries, obtain regulatory and other approvals and launch these services or
products before its competitors, then the Company's ability to generate sales
and revenue will be reduced or eliminated, and could make the Company's services
and products obsolete. The Company expects competition to intensify in its
industry as technical advances are made and become more widely known.


                                       -9-

<PAGE>

THE MARKET FOR THE COMPANY'S PRODUCTS AND SERVICES IS UNPROVEN.

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

IF THE COMPANY IS UNSUCCESSFUL IN ESTABLISHING STRATEGIC ALLIANCES, ITS ABILITY
TO DEVELOP AND MARKET PRODUCTS AND SERVICES MAY BE DAMAGED.

     Entering into strategic alliances for the development and commercialization
of products and services based on the Company's discoveries is an important
element of its business strategy. The Company faces significant competition in
seeking appropriate partners. If the Company fails to establish strategic
alliances or other alternative arrangements, then its ability to develop and
market products and services will be damaged. In addition, the terms of any
future strategic alliances may be unfavorable to the Company or these strategic
alliances may be unsuccessful.

THE COMPANY HAS SIGNIFICANT FIXED OPERATING COSTS AND THE COMPANY'S OPERATING
RESULTS ARE SUBJECT TO FLUCTUATIONS.

     A high percentage of the Company's operating expenses, particularly
personnel, are fixed in advance of any particular year. As a result,
unanticipated variations in the number, or progress toward completion of the
Company's projects, or in employee utilization rates may cause significant
variations in operating results in any particular year and could result in
greater than expected losses for such year.

VOLATILITY OF COMMON STOCK PRICE AND THIN TRADING MARKET.

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

THE COMPANY MAY NOT BE ABLE TO ATTRACT AND RETAIN PROFESSIONAL STAFF.

     The Company's success will depend in large part upon its ability to
attract, retain, train and motivate highly skilled employees. The Company cannot
be certain that it will be successful in attracting a sufficient number of
highly skilled employees in the future, or that it will be successful in
retaining, training and motivating the employees it is able to attract. Any
inability to retain, train and motivate employees could impair the Company's
ability to adequately manage and complete its existing projects and to bid for
or obtain new projects. Hiring, training, motivating, retaining and managing
employees with the strategic, technical and creative skills the


                                      -10-

<PAGE>

Company needs is both time consuming and expensive. If the Company's employees
are unable to achieve expected performance levels, its business, financial
condition and results of operations could be adversely affected.

THE COMPANY IS DEPENDENT ON KEY PERSONNEL.

     The Company's 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 the Company's 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 the Company's business, financial condition
and results of operations. In the event of the loss of any such personnel, there
can be no assurance that the Company would be able to prevent the unauthorized
disclosure or use of its technical knowledge, practices or procedures by such
personnel.

THE COMPANY'S BUSINESS COULD BE ADVERSELY AFFECTED IF IT IS UNABLE TO PROTECT
ITS PROPRIETARY TECHNOLOGY OR SOMEONE CLAIMS THAT THE COMPANY IS INFRINGING ON
THEIR PROPRIETARY TECHNOLOGY.

     The Company's success depends, in part, upon its proprietary methodologies
and other intellectual property rights. There can be no assurance that the steps
taken by the Company to protect its proprietary information will be adequate to
deter misappropriation of its proprietary information or that the Company will
be able to detect unauthorized use and take appropriate steps to enforce its
intellectual property rights. In addition, although the Company believes that
its 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
the Company in the future, or that if asserted any such claim will be
successfully defended. A successful claim against the Company could materially
and adversely affect its business, financial condition and results of
operations.

     The Company's success will depend on its ability to obtain and protect
patents on its technology and to protect its trade secrets. The Company's
patents, which have been or may be issued, may not afford meaningful protection
for its technology and products. Others may challenge the Company's patents and,
as a result, the Company's patents could be narrowed, invalidated or
unenforceable. In addition, the Company's 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 the Company's that do not
conflict with the Company's patents. In order to protect or enforce the
Company's patent rights, the Company 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. The Company may also provoke third
parties to assert claims against us.

     The Company has received notice of an alleged patent infringement from an
Australian bioscience company, Genetic Technologies Limited (GTG), that they
have certain rights under filed patents to which GeneLink may be infringing
upon. Although it is the opinion of the Company's patent counsel that there is
no infringement, and that in the event there is an infringement, it will not
effect the Company's business because GTG's patents are not material to the
Company's technology, no assurance can be given that GTG would not prevail if it
brings


                                      -11-

<PAGE>

legal action against the Company or that the result of any such action would not
have a material adverse effect on the Company's business and prospects.

CONCENTRATION OF OWNERSHIP OF THE COMPANY'S COMMON STOCK AMONG THE COMPANY'S
EXISTING EXECUTIVE OFFICERS, DIRECTORS AND PRINCIPAL SHAREHOLDERS MAY PREVENT
NEW INVESTORS FROM INFLUENCING SIGNIFICANT CORPORATE DECISIONS.

     The Company's executive officers, directors and beneficial owners of 5% or
more of the Company's common stock and their affiliates, in aggregate,
beneficially own in excess of 26.3% of the Company's outstanding common stock.
As a result, if these persons act together, they would have the ability to
influence the outcome of all matters submitted to the Company's shareholders for
approval, including the election and removal of directors and any merger,
consolidation or sale of all or substantially all of the Company's assets. In
addition, such persons, if they act together, would have the ability to control
the management and affairs of the Company. Accordingly, this concentration of
ownership may harm the market price of the Company's common stock by:

     -    delaying, deferring or preventing a change in control of the Company;

     -    impeding a merger, consolidation, takeover or other business
          combination involving the Company; or

     -    discouraging a potential acquirer from making a tender offer or
          otherwise attempting to obtain control of the Company.

THE COMPANY'S ARTICLES OF INCORPORATION AND BYLAWS COULD DELAY OR DISCOURAGE A
TAKEOVER ATTEMPT.

     The Company's 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 the Company's 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 2. PROPERTIES

     The Company leases its principal offices in Jersey City, New Jersey. The
lease is for a term of six (6) months.


                                      -12-
<PAGE>

ITEM 3. LEGAL PROCEEDINGS

     Effective October 14, 2005, the Company terminated the employment of John
R. DePhillipo, the Company's former Chief Executive Officer and Chief Financial
Officer and a former director of the Company. Mr. DePhillipo commenced two
lawsuits allegedly arising out of his termination by the Company for "cause," as
defined in his Employment Agreement with the Company.

     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 the Company
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 Mr.
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. Under the terms of the Company's By-laws and
Pennsylvania law, the Company is obligated both to reimburse Mr. Ricciardi for
his costs of defending this action and is required to advance him the costs of
the expense of such a defense. Counsel for Dr. Ricciardi entered an answer to
this action and subsequently the action against Dr. Ricciardi was dismissed with
prejudice in March 2006. There is thus no further contingent liability with
regard to this matter.

     In a separate Action filed by Mr. DePhillipo against the Company 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 has alleged that his termination by the Company "for cause" was
improper and therefore he is 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. The Company has filed an Answer denying the
material allegations of the Complaint and asserting a number of affirmative
defenses. The Company believes Mr. DePhillipo's claims are without merit and
intends to vigorously defend against those claims. The Company has also filed
counterclaims against Mr. DePhillipo for breach of fiduciary duty, conversion,
negligent misrepresentation and unjust enrichment while Mr. DePhillipo served as
the Company's Chief Executive Officer, President and Chief Financial Officer.
The counterclaims seek recovery in excess of that sought by Mr. DePhillipo in
the Complaint.

     On January 18, 2007, Mr. DePhillipo resigned as a director of the Company.
Mr. DePhillipo in a letter to the Board of Directors of the Company alleged that
the Company has not properly accounted for or disclosed its source for funding
the costs of the litigation described above and alleged that a third party must
be funding the litigation; alleged that the terms of the recent financing
undertaken by the Company are unfair to the Company's shareholders and amounted
to the sale of the Company without shareholder approval; and alleged that the
use of the proceeds of the financings are not adequately described, including
any use of the proceeds to fund the costs of the litigation.

     The Board of Directors categorically denies each of Mr. DePhillipo's
unsubstantiated allegations and states that they are completely unfounded. The
Board of Directors expressly


                                      -13-

<PAGE>

confirms that the Company has not entered into an agreement with any third party
to fund the litigation or taken any steps which would amount to a sale of the
Company without shareholder approval. The Board of Directors further notes that
Mr. DePhillipo's resignation was pre-textual and tendered only after notice to
Mr. DePhillipo that he was not part of the proposed slate of nominees to a newly
constituted Board of Directors and after a meeting of the Board of Directors
during which Mr. DePhillipo was not appointed and elected as a nominee to remain
on the Board of Directors following the 2007 Annual Meeting of Shareholders.

     The Company has received a notice of an alleged patent infringement from an
Australian bioscience company, Genetic Technologies Limited (GTG), that they
have certain rights under filed patents to which GeneLink may be infringing
upon. It is the opinion of the Company's patent counsel that there is no
infringement, and that in the event there is an infringement, it will not effect
the Company's business because GTG's patents are not material to the Company's
technology. The Company received this notice in 2004, and there has been no
further action or contact on this matter.

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

     None.

                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     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.

<TABLE>
<CAPTION>
2006           High    Low
----          -----   -----
<S>           <C>     <C>
1st Quarter   $0.13   $0.05
2nd Quarter    0.09    0.04
3rd Quarter    0.06    0.03
4th Quarter    0.07    0.04
</TABLE>

<TABLE>
<CAPTION>
2005           High    Low
----          -----   -----
<S>           <C>     <C>
1st Quarter   $0.32   $0.19
2nd Quarter    0.26    0.12
3rd Quarter    0.22    0.12
4th Quarter    0.17    0.06
</TABLE>

     As of February 28, 2007, there were 158 holders of record of the Company's
Common Stock. The Company has never paid dividends and do not anticipate paying
any dividends in the future. The Company anticipates that it will retain all
future revenues for working capital purposes.


                                      -14-

<PAGE>

     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

<TABLE>
<CAPTION>
                                                                       Number of
                                                                 securities remaining
                          Number of                               available for future
                      securities to be                           issuance under 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)
-------------       --------------------   -------------------   ---------------------
<S>                 <C>                    <C>                   <C>
Equity
   compensation
   plans approved
   by security
   holders                     0                    --                  6,000,000
Equity
   compensation
   plans not
   approved
   by security
   holders                     0                    --                          0
                             ---                   ---                  ---------
Total                          0                    --                  6,000,000
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES.

     The Company issued 510,000, 466,170 and 303,000 shares of Common Stock for
consulting services rendered to the Company valued at $96,476, $97,184 and
$90,720 for the years ended December 31, 2006, 2005 and 2004, respectively.
These shares were issued in reliance upon Rule 506 of Regulation D under the
Securities Act of 1933.

     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.


                                      -15-

<PAGE>

     During the year ended December 31, 2005, the Company issued stock in
settlement of a debt agreement. The Company issued 640,369 shares of common
stock to settle $75,000 of debt and interest accrued on the note. These shares
were issued in reliance upon Rule 506 of Regulation D under the Securities Act
of 1933.

     The Company issued 510,000 and 466,170 shares of common stock for services
rendered, valued at $96,476 and $97,184 for the years ended December 31, 2006
and 2005, respectively. These shares were issued in reliance upon Rule 506 of
Regulation D under the Securities Act of 1933.

     During the year ended December 31, 2005, the Company issued 2,250,000
shares of common stock and 1,500,000 warrants to purchase common stock for
aggregate cash consideration of $450,000. These shares and warrants were issued
in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.
During the year ended December 31, 2005, the Company issued 640,369 shares in
exchange for the satisfaction of $75,000 principal amount of debt, plus accrued
interest. These shares were issued in reliance upon Rule 506 of Regulation D
under the Securities Act of 1933.

     During the year ended December 31, 2004, the Company issued 1,825,000
shares of common stock and 1,825,000 warrants to purchase Common Stock for cash
consideration of $365,000. These shares and warrants were issued as private
placements in reliance upon Rule 506 of Regulation D under the Securities Act of
1933.

     The Company has in prior public filings described certain related party
transactions as follows:

     On June 29, 2003, the Company issued 2,722,345 shares to John DePhillipo,
     the Company's Chief Executive Officer and President and a member of the
     Company's board of directors, and 723,530 shares to Maria DePhillipo, the
     spouse of John DePhillipo in satisfaction of accrued and unpaid salary. As
     of June 29, 2003, the Company owed John DePhillipo $544,469 and Maria
     DePhillipo $144,706 for accrued but unpaid salaries. As of December 31,
     2003, John DePhillipo owed the Company $697,664, plus interest, on account
     of subscriptions receivable and advances. Effective March 24, 2003, the
     Company's Board of Directors decided to grant John DePhillipo additional
     compensation to reflect the Board's desire to treat the shares issued June
     29, 2003 not as an issuance in satisfaction of accrued and unpaid salary
     but as additional compensation. Following this decision, the Company again
     owed John DePhillipo an aggregate of $544,469 for accrued but unpaid
     salary. The loan to Mr. DePhillipo was repaid in April 2004. These shares
     were issued in reliance upon Rule 506 of Regulation D under the Securities
     Act of 1933.

     Mr. DePhillipo's employment with the Company was terminated by the Company
on October 14, 2005. The transactions described above, which are being
investigated by the Company, are the subject of counterclaims filed by the
Company in the New Jersey Superior Court proceeding.


                                      -16-

<PAGE>

ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.

                          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 year ended December 31, 2006.

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 name, logo, and the name "DNA
Collection Kit(R)." 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:

Revenues are recorded when the kits are sold for GeneLink, Inc.'s products. The
Company receives a non-refundable fee for the DNA kits and provides DNA analysis
testing at that time, then stores the specimen for up to 75 years. If the client
requests the DNA specimen back at any time during the storage period, they will
be entitled to receive the specimen upon payment of an additional retrieval fee
but will not be entitled to any refund of the original storage fee. Direct costs
related to sale of kits include the purchase of kits, samples, and delivery
expenses. The direct costs of kits are recognized at time of sale to customers
as opposed to the time of purchase by GeneLink, Inc. from its vendors. Kits
purchased by GeneLink, Inc. and not yet sold remain in inventory. Revenues from
the proprietary genetic indicator tests are recognized partially when the kits
are sold, and subsequently when they are presented to the lab for testing.

The Company 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. Dermagenetics has been
appearing at Spa conventions and is currently selling the Company's DNA
UltraCustom skin cream to Spas in the United States. Revenues are recorded when
the skin cream kits are sold for Dermagenetics Inc.'s products.


                                      -17-

<PAGE>

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-KSB
for information on our judicial, regulatory and arbitration procedures.

                              RESULTS OF OPERATIONS

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2006 TO FISCAL YEAR ENDED DECEMBER
31, 3005.

     Assets. The Company's assets increased from $445,276 at December 31, 2005
to $714,393 at December 31, 2006, an increase of $269,117. This increase was
primarily due to an increase in cash from $15,275 at December 31, 2005 to
$149,695 at December 31, 2006, and an increase in prepaid debt issuance costs
from $0 at December 31, 2006 to $165,912 at December 31, 2006, related to the
convertible secured promissory notes financing. As of December 31, 2006, the
Company had not received all proceeds from the convertible secured promissory
notes payable. Accordingly, the Company has reduced the balance sheet liability
for the Notes by $205,000 at December 31, 2006. In connection with issuance of
the Notes, the Company has recognized debt issuance costs of $180,898 that are
being amortized over the term of the Notes. As of December 31, 2006, the
unamortized debt issuance costs are $165,912 and are included in "Other assets"
on the balance sheet.

     Liabilities. The Company's liabilities increased from $1,057,879 at
December 31, 2005 to $1,732,284 at December 31, 2006, an increase of $674,405.
This increase in liabilities was primarily due to an increase in long term loans
payable from $0 at December 31, 2005 to $622,890 at December 31, 2006 in
connection with the Company's issuance of convertible secured promissory notes
in 2006.

     Losses. The Company incurred an operating loss of $786,586 for the fiscal
year ended December 31, 2006, as compared to an operating loss of $1,281,157 for
the fiscal year ended December 31, 2005, a decrease of $494,571. This decrease
in losses was primarily due to a decrease in general and administrative expenses
from $802,984 for the fiscal year ended December 31, 2005 to $476,539 for the
fiscal year ended December 31, 2006, as the Company did not pay any compensation
to or expenses of its former chief executive officer and president or his wife
in 2006, and a decrease in advertising and promotion expenses $209,370 for the
fiscal


                                      -18-

<PAGE>
year ended December 31, 2005 to $14,369 for the fiscal year ended December 31,
2006, as the Company focused on the change in management and on obtaining
sufficient funding to develop and implement its new business plan. This decrease
in expenses was accompanied by a decrease in revenues from $396,923 for the
fiscal year ended December 31, 2005 to $175,674 for the fiscal year ended
December 31, 2006. The Company's gross margin dropped from $167,528 for the
fiscal year ended December 31, 2005 to $110,253 for the fiscal year ended
December 31, 2006. Gross profit margin increased from 42% to 63%.

     Revenues. The Company's total operating revenues for the fiscal year ended
December 31, 2006 were $175,674, as compared to $396,923 for the fiscal year
ended December 31, 2005, a decrease of $221,249.

     Expenses. Total expenses for fiscal year ended December 31, 2006 were
$962,260, as compared to $1,678,080 for the fiscal year ended December 31, 2005,
a decrease of $715,820. This decrease in expenses is primarily due to a decrease
in general and administrative expenses from $802,984 for the fiscal year ended
December 31, 2005 to $476,539 for the fiscal year ended December 31, 2006, as
the Company did not pay any compensation to or expenses of its former chief
executive officer and president or his wife in 2006, and a decrease in
advertising and promotion expenses $209,370 for the fiscal year ended December
31, 2005 to $14,369 for the fiscal year ended December 31, 2006, as the Company
focused on the change in management and on obtaining sufficient funding to
develop and implement its new business plan.

     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, 2006:

<TABLE>
<CAPTION>
                           GENELINK   DERMAGENETICS
                             INC.          INC.
                          ---------   -------------
<S>                       <C>         <C>
NET REVENUES              $  57,333     $118,341
OPERATING EXPENSES          765,815      196,445
OTHER INCOME                  2,011          697
PRE-TAX EARNINGS (LOSS)    (706,471)     (77,407)
</TABLE>

     The following table sets forth the net revenues, operating expenses and
pre-tax earnings of our segments for the year ended December 31, 2005:

<TABLE>
<CAPTION>
                            GENELINK    DERMAGENETICS
                              INC.           INC.
                          -----------   -------------
<S>                       <C>           <C>
NET REVENUES              $   108,053     $ 288,870
OPERATING EXPENSES          1,242,348       435,732
OTHER INCOME                       --            --
PRE-TAX EARNINGS (LOSS)    (1,134,295)     (146,862)
</TABLE>


                                      -19-

<PAGE>

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2005 TO FISCAL YEAR ENDED DECEMBER
31, 2004.

     Assets. The Company's assets decreased from $565,305 at December 31, 2004
to $445,276 at December 31, 2005, a decrease of $120,029. This decrease was
primarily due to a decrease in cash from $155,689 at December 31, 2004 to
$15,275 at December 31, 2005, a decrease of $140,414, as cash was used to
partially fund operating losses.

     Liabilities. The Company's liabilities increased from $764,599 at December
31, 2004 to $1,057,879 as of December 31, 2005, an increase of $293,280. This
increase in liabilities was primarily due to an increase in accrued compensation
from $432,937 at December 31, 2004 to $593,399 at December 31, 2005, an increase
of $160,462, and an increase in accounts payable and accrued expenses from
$95,800 at December 31, 2004 to $429,165 at December 31, 2005, an increase of
$333,365, resulting from the Company's inability to timely pay its obligations,
as partially offset by a decrease in loans payable from $213,899 at December 31,
2004 to $27,861 at December 31, 2005, a decrease of $186,038.

     Losses. The Company incurred an operating loss of $1,281,157 for the fiscal
year ended December 31, 2005, as compared to an operating loss of $2,114,619 for
the fiscal year ended December 31, 2004, a decrease of $833,462. This decrease
was primarily due to a decrease in general and administrative expenses from
$1,517,005 for the year ended December 31, 2004 to $802,984 for the year ended
December 31, 2005, a decrease of $714,021, primarily resulting from a $544,465
compensation expense charged to the Company's former Chief Executive Officer in
2004 (the "Additional Compensation Payment") which was used to partially repay a
receivable of $1,016,635 owed by such officer, which charge was not incurred in
2005. Losses for the Company for the year ended December 31, 2005 were
$1,052,870 as the Company realized $228,287 from the sale of New Jersey net
operating losses in December 2005. The company's gross margin dropped from 70%
for the fiscal year and December 31, 2004 to 42% for the fiscal year ended
December 31, 2005, as certain new agreements entered into by the Company
provided for lower margins than in prior years. This decrease in gross margin
reflects revenues realized by the Company from its DNA UltraCustom skin cream,
which has substantially lower gross margins than its DNA Collection Kits and
genetic tests. The Company hopes that its DNA UltraCustom skin cream will result
in repeat business from consumers, which would result in higher revenues and
profits, notwithstanding the lower gross margin realized by the Company for this
product.

     Revenues. The Company's total operating revenues for the fiscal year ended
December 31, 2005 were $396,923, compared to $304,637 for the fiscal year ended
December 31, 2004, an increase of $92,286, or 30%. This increase in revenues is
primarily due to the Company realizing additional sales in 2005 from
Dermagenetics(R) products and services, including the Company's DNA UltraCustom
skin cream.

     Expenses. Total expenses for fiscal year ended December 31, 2005 were
$1,678,080, a decrease of $741,176 from the Company's total expenses of
$2,419,256 for the fiscal year ended December 31, 2004. Decreased expenses are
primarily due to a decrease in general and


                                      -20-

<PAGE>

administrative expenses from $1,517,005 for the year ended December 31, 2004 to
$802,984 for the year ended December 31, 2005, a decrease of $714,021, primarily
resulting from the Additional Compensation Payment in 2004. The decrease in loss
was also attributable to a decrease in consulting fees from $393,961 for the
year ended December 31, 2004 to $177,633 for the year ended December 31, 2005, a
decrease of $216,328, and was partially offset by an increase in costs of goods
sold from $91,152 for the fiscal year ended December 31, 2004 to $229,395 for
the fiscal year ended December 31, 2005, an increase of $138,243, or 152%.

LIQUIDITY AND CAPITAL RESOURCES

     For 2006, the Company's primary liquidity requirement was the
implementation and funding of sales and marketing efforts and funding working
capital. For 2007, the Company's primary liquidity requirement will be the
funding of the Company's sales and marketing efforts and the payment of past
obligations of the Company.

     Cash and Cash Equivalents. On December 31, 2006, the Company's cash and
cash equivalents amounted to $149,695 as to compared to $15,275 at December 31,
2005, an increase of $134,420. During 2006, the Company's operating activities
utilized $345,957 as compared to utilizing $321,272 in 2005, an increase of
$24,685. Cash utilized during these periods resulted from the Company's net
losses for such periods and the payment of accounts payable.

     Investing activities utilized $42,646 in 2006, as compared to utilizing
$117,661 in 2005. Financing activities provided $523,023 in 2006, as compared to
$298,519 in 2005, primarily through the issuance of convertible secured
promissory notes (the "Notes"). The Company issued 4,139,452 shares of
restricted Common Stock in connection with the issuance of the Notes. The Notes
mature on May 12, 2011 and accrue interest at a rate of 12% per year. The Notes
convert at any time at the option of the holders at a price of $0.05 per share
and automatically convert at a price of $0.05 per share when contingent
liabilities of the Company are less than $100,000.

     As of December 31, 2006, the Company had not received all proceeds from the
convertible secured promissory notes payable. Accordingly, the Company has
recognized an asset "Convertible secured promissory notes proceeds receivable"
of $205,000 at December 31, 2006. In connection with issuance of the Convertible
Secured Promissory Notes, the Company has recognized debt issuance costs of
$180,898 that are being amortized over the term of the notes. As of December 31,
2006, the unamortized debt issuance costs are $165,912 and are included in
"Other assets" on the balance sheet.

     The Company will require approximately $1.1 million to fund the Company's
sales and marketing efforts and to pay existing obligations for the balance of
2007. If the Company cannot obtain this required financing, it is unlikely that
the Company will be able to continue its operations and/or be able to fully
implement its business plan.


                                      -21-
<PAGE>

ITEM 7. FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                           -----
<S>                                                                        <C>
Report of Independent Registered Public Accounting Firm                       23
Financial Statements
   Consolidated Balance Sheets                                             24-25
   Consolidated Statements of Operations                                      26
   Consolidated Statements of Changes in Stockholders' Equity
   (Deficiency)                                                               27
   Consolidated Statements of Cash Flows                                   28-29
   Notes to Consolidated Financial Statements                              30-45
</TABLE>


                                      -22-

<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

GeneLink, Inc. and Subsidiary
Jersey City, New Jersey

          We have audited the accompanying consolidated balance sheets of
GeneLink, Inc. and Subsidiary as of December 31, 2006 and 2005, 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 Subsidiary as of December 31, 2006 and 2005, 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
and has a net capital deficiency, which raise 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
April 5, 2007


                                      -23-

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2006 AND 2005

                                     ASSETS

<TABLE>
<CAPTION>
                                                      2006       2005
                                                    --------   --------
<S>                                                 <C>        <C>
CURRENT ASSETS
   Cash and cash equivalents                        $149,695   $ 15,275
   Accounts receivable                                32,185     32,651
   Inventory                                           5,772      3,261
   Prepaid expenses                                   14,421     37,435
                                                    --------   --------
      Total current assets                           202,073     88,622
                                                    --------   --------
PROPERTY AND EQUIPMENT                               131,645    147,519
                                                    --------   --------
OTHER ASSETS                                         380,675    209,135
                                                    --------   --------
      Total assets                                  $714,393   $445,276
                                                    ========   ========
</TABLE>

See Notes to Consolidated Financial Statements.


                                       24

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                           DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                        2006           2005
                                                    ------------   ------------
<S>                                                 <C>            <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses            $    365,590   $    429,165
   Accrued payroll taxes                                       0          7,454
   Accrued compensation                                  725,804        593,399
   Loans payable to officers                              18,000         27,861
                                                    ------------   ------------
      Total current liabilities                        1,109,394      1,057,879
   Convertible secured promissory notes payable          622,890              0
                                                    ------------   ------------
      Total liabilities                                1,732,284      1,057,879
                                                    ------------   ------------
STOCKHOLDERS' EQUITY (DEFICIENCY)
   Common stock, par value $0.01 per share;
      authorized: 75,000,000 shares as of
      December 31, 2006 and 2005 respectively;
      issued: 2006 41,739,000 shares and 2005
      36,689,550 shares; outstanding: 2006
      41,332,831 shares and 2005 36,283,381
      shares                                             417,390        366,896
   Additional paid in capital                          6,982,849      6,910,160
   Stock warrants                                      3,011,009      2,961,809
   Accumulated deficit                               (11,114,084)   (10,536,413)
   Treasury stock, 406,169 shares as of
      December 31, 2006 and 2005, respectively,
      at cost                                           (315,055)      (315,055)
                                                    ------------   ------------
      Total stockholders' equity (deficiency)         (1,017,891)      (612,603)
                                                    ------------   ------------
      Total liabilities and stockholders' equity
         (deficiency)                               $    714,393   $    445,276
                                                    ============   ============
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       25
<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                   2006          2005
                                               -----------   -----------
<S>                                            <C>           <C>
REVENUES:                                      $   175,674   $   396,923
COST OF GOODS SOLD:                                 65,421       229,395
                                               -----------   -----------
GROSS PROFIT                                       110,253       167,528
                                               -----------   -----------
EXPENSES:
   General and administrative                      476,539       802,984
   Consulting                                      179,449       177,633
   Professional fees                               173,590       222,475
   Advertising and promotion                        14,369       209,370
   Amortization and depreciation                    52,892        36,223
                                               -----------   -----------
                                                   896,839     1,448,685
                                               -----------   -----------
OPERATING LOSS                                    (786,586)   (1,281,157)
OTHER INCOME:                                        2,708             0
      Loss before provision for income taxes      (783,878)   (1,281,157)
   PROVISION FOR INCOME TAXES:                          --            --
DEFERRED INCOME TAX BENEFIT                        206,207       228,287
                                               -----------   -----------
NET LOSS                                       $  (577,671)  $(1,052,870)
                                               ===========   ===========
LOSS PER SHARE, BASIC AND DILUTED:             $     (0.01)  $     (0.03)
                                               ===========   ===========
   Weighted average common shares and
      diluted potential common shares           38,861,637    35,806,407
                                               ===========   ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       26

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                   COMMON STOCK                 ADDITIONAL
                              ---------------------   TREASURY    PAID IN      STOCK     ACCUMULATED
                                 SHARES     AMOUNT     STOCK      CAPITAL    WARRANTS      DEFICIT       TOTAL
                              -----------  --------  ---------  ----------  ----------  ------------  -----------
<S>                           <C>          <C>       <C>        <C>         <C>         <C>           <C>
BALANCE, DECEMBER 31, 2004     33,133,011  $331,330  $(315,055) $6,635,552  $2,632,422  $ (9,483,543) $  (199,294)
                               ==========  ========  =========  ==========  ==========  ============  ===========
Issuance of common stock and
   stock warrants related to
   loan conversion                640,369     6,404          0      44,826      94,877             0      146,107
Fair value of options
   granted for services                 0         0          0           0      11,520             0       11,520
Fundraising costs incurred              0         0          0     (32,500)          0             0      (32,500)
Fair value of options
   granted for fundraising
   services                             0         0          0     (79,050)     27,900             0      (51,150)
Fair value of options
   granted for services                 0         0          0           0      16,000             0       16,000
Issuance of common stock
   related to loan agreement      200,000     2,000          0         400           0             0        2,400
Issuance of common stock and
   stock warrants for
   services                       466,170     4,662          0      85,932       6,590             0       97,184
Issuance of common stock and
   stock warrants pursuant
   to private placement
   offerings                    2,250,000    22,500          0     255,000     172,500             0      450,000
Net loss                                0         0          0           0           0    (1,052,870)  (1,052,870)
                               ----------  --------  ---------  ----------  ----------  ------------  -----------
                                3,556,539    35,566          0     274,608     329,387    (1,052,870)    (413,309)
                               ----------  --------  ---------  ----------  ----------  ------------  -----------
BALANCE, DECEMBER 31, 2005     36,689,550  $366,896  $(315,055) $6,910,160  $2,961,809  $(10,536,413) $  (612,603)
                               ==========  ========  =========  ==========  ==========  ============  ===========
Issuance of common stock and
   stock warrants related to
   convertible secured
   promissory notes             4,539,450    45,394          0     160,063           0             0      205,457
Fair value of options
   granted for services                 0         0          0           0           0             0            0
Commissions paid for
   fundraising costs                    0         0          0    (129,550)          0             0     (129,550)
Issuance of common stock and
   stock warrants for
   fundraising services           410,000     4,100          0      18,850      49,200             0       72,150
Issuance of common stock and
   stock warrants for
   services                       100,000     1,000          0      23,326           0             0       24,326
Net loss                                0         0          0           0           0      (577,671)    (577,671)
                               ----------  --------  ---------  ----------  ----------  ------------  -----------
                                5,049,450    50,494          0      72,689      49,200      (577,671)    (405,288)
                               ----------  --------  ---------  ----------  ----------  ------------  -----------
BALANCE, DECEMBER 31, 2006     41,739,000  $417,390  $(315,055) $6,982,849  $3,011,009  $(11,114,084) $(1,017,939)
                               ==========  ========  =========  ==========  ==========  ============  ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       27

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                           2006         2005
                                                        ---------   ------------
<S>                                                     <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                             $(577,671)  $(1,052,870)
   Adjustments to reconcile net loss to net
      cash used in operating activities:
      Depreciation and amortization                        52,892        36,223
      Common stock issued for fundraising services         72,150        97,184
      Common stock issued for services                     24,324             0
      Common stock issued for loan agreement                    0         2,400
      Warrants issued for services                              0        16,000
      Fair value of options granted for
         consulting services                                    0        39,420
      (Increase) decrease in assets:
         Accounts receivable                                  466        (9,412)
         Inventory                                         (2,511)       16,430
         Prepaid expenses                                  23,014        35,287
         Deposits and trademark                                 0        18,748
      Increase (decrease) in liabilities:
         Accounts payable and accrued expenses            (63,574)      333,365
         Accrued payroll taxes                             (7,454)      (14,509)
         Accrued compensation                             132,405       160,462
                                                        ---------   -----------
            Net cash used in operating activities        (345,957)     (321,272)
                                                        ---------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                     (19,756)      (72,473)
   Patent acquisition costs
                                                          (22,890)      (45,188)
                                                        ---------   -----------
            Net cash used in investing activities         (42,646)     (117,661)
                                                        ---------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
   Repayments of loans and notes payable                  (19,861)     (186,038)
   Proceeds from convertible secured promissory
      notes payable                                       466,977             0
   Common stock issued for bridge loans conversion        205,457             0
   Common stock issued for loan conversion                      0       146,107
   Commissions paid for fundraising costs                (129,550)            0
   Private placement fundraising costs                          0      (111,550)
   Proceeds from issuance of common stock                       0       450,000
                                                        ---------   -----------
            Net cash provided by financing activities     523,023       298,519
                                                        ---------   -----------
            Net increase (decrease) in cash               134,420      (140,414)
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       28
<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                                          2006       2005
                                                        --------   --------
<S>                                                     <C>        <C>
Cash and cash equivalents:
   Beginning                                            $ 15,275    155,689
                                                        --------   --------
   Ending                                               $149,695   $ 15,275
                                                        ========   ========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
   Interest:                                            $ 98,300   $ 54,114
                                                        ========   ========
   Non-cash financing transactions:
   Common stock issued for services                     $ 96,476   $ 97,184
                                                        ========   ========
   Refinancing of bridge loans payable                  $200,000   $      0
                                                        ========   ========
   Debt issuance costs related to convertible secured
      promissory notes                                  $165,912   $      0
                                                        ========   ========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       29

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

NOTE 1.  ORGANIZATION

         GeneLink, Inc. (the "Company") and its subsidiary, Dermagenetics, Inc.,
         operate in New Jersey. The Company was organized under the laws of the
         Commonwealth of Pennsylvania and Dermagenetics, Inc. was 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 Jersey City, New Jersey.

         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. These findings are a direct result
         of the National Institutes of Health Genome Project.

         The Company has developed and received a patent on a DNA Collection
         Kit(R) 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(R) 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.

         In December 2004, the Company formed a wholly owned subsidiary,
         Dermagenetics, Inc., to service the custom skin care market. As of
         December 31, 2004 the subsidiary had no significant operations. The
         subsidiary commenced full operations during the first quarter of 2005.

NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         PRINCIPLES OF CONSOLIDATION:

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


                                       30

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         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 maintains
         certain cash balances with Merrill Lynch, which is SIPC insured up to
         $500,000.

         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:

         Revenues are recorded when the kits are sold for GeneLink, Inc.'s
         products. The Company receives a non-refundable fee for the DNA kits
         and provides DNA analysis testing at that time, then stores the
         specimen for up to 75 years. If the client requests the DNA specimen
         back at any time during the storage period, they will be entitled to
         receive the specimen upon payment of an additional retrieval fee but
         will not be entitled to any refund of the original storage fee. Direct
         costs related to sale of kits include the purchase of kits, samples,
         and delivery expenses. The direct costs of kits are recognized at time
         of sale to customers as opposed to the time of purchase by GeneLink,
         Inc. from its vendors. Kits purchased by GeneLink, Inc. and not yet
         sold remain in inventory. Revenues from the proprietary genetic
         indicator tests are recognized partially when the kits are sold, and
         subsequently when they are presented to the lab for testing.

         The Company 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.
         Dermagenetics has been appearing at Spa conventions and is currently
         selling the Company's DNA UltraCustom skin cream to Spas in the United
         States. Revenues are recorded when the skin cream kits are sold for
         Dermagenetics Inc.'s products.


                                       31

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         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(R)." 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(R)."

         INVENTORY:

         Inventory consists of kits held for resale. Inventory is valued at the
         lower of cost (using the first-in, first-out method) or market. The
         shelf life of the DNA kits is estimated by the Company to be in excess
         of 30 years.

         INCOME TAXES:

         The Company accounts for income taxes in accordance with Statement of
         Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income
         Taxes", which requires the use of an asset and liability approach for
         financial accounting and reporting for income taxes. 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. In December 2006 and
         2005, the Company sold net operating losses through the New Jersey
         Technology Business Tax Certified Transfer Program. See Note 5.

         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, 2006 and 2005.

         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


                                       32

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         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 2006 and 2005
         excludes any effect from such securities, as their inclusion would be
         antidilutive.

         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 year ended December 31, 2006.

         RECENT ACCOUNTING DEVELOPMENTS:

         In June 2006, the FASB issued FASB Interpretation (FIN) No. 48,
         Accounting for Uncertainty in Income Taxes. FIN No. 48 clarifies the
         accounting treatment for uncertainty in income taxes recognized in an
         enterprise's financial statements in accordance with SFAS No. 109,
         Accounting for Income Taxes. Generally, it prescribes a recognition
         threshold and measurement attribute for the financial statement
         recognition and measurement of a tax position taken or expected to be
         taken in a tax return. It also provides guidance on de-recognition,
         classification, interest and penalties, accounting in interim periods,
         disclosure and transition. FIN No. 48 is effective for fiscal years
         beginning after December 15, 2006. The Company is in the process of
         studying the potential financial impact from the adoption of FIN
         No. 48.

         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, 2006 and 2005, property and equipment consisted of
         the following:


                                       33

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                  2006       2005
                                --------   --------
<S>                             <C>        <C>
Office furniture                 $ 1,154   $  1,154
Office equipment                  57,494     57,494
Leasehold improvements            85,420     85,420
Software                          96,079     76,323
                                --------   --------
                                 240,147    220,391
Less accumulated depreciation
   and amortization              108,502     72,872
                                --------   --------
                                $131,645   $147,519
                                ========   ========
</TABLE>

         Depreciation and amortization expense was $36,170 and $21,471 for the
         years ended December 31, 2006 and 2005, respectively.

NOTE 4.  OTHER ASSETS

         As of December 31, 2006 and 2005, other assets consisted of the
         following:

<TABLE>
<CAPTION>
                                  2006       2005
                                --------   --------
<S>                             <C>        <C>
Patents and trademarks          $273,279   $250,389
Debt issuance costs              180,898          0
Organization costs                86,976     86,976
                                --------   --------
                                 541,153    337,365
Less accumulated
   amortization                  160,478    128,230
                                --------   --------
                                $380,675   $209,135
                                ========   ========
</TABLE>

         Amortization expense was $31,708 and $14,752 for the years ended
         December 31, 2006 and 2005, respectively.

         The future estimated minimum amortization expense that will be charged
         to operations as of December 31, 2006 is as follows:


                                       34

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
 Year ending
December 31,
------------
<S>            <C>
    2007       $ 54,642
    2008         54,642
    2009         54,642
    2010         54,642
    2011         30,954
 Thereafter     131,153
               --------
               $380,675
               ========
</TABLE>


                                       35
<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

NOTE 5.  INCOME TAXES

         At December 31, 2006 and 2005, the Company had federal and state tax
         net operating loss carry forwards of approximately $15,230,000 and
         $14,650,000, 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 $1,955,000 and $1,880,000
         at December 31, 2006 and 2005, 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 $75,000 for the year ended December 31,
         2006 and $210,000 for the year ended December 31, 2005.

         During December 2006, the Company received proceeds from the sale of
         net operating losses through the New Jersey Technology Business Tax
         Certified Transfer Program (the "Tax Transfer Program"). Through the
         Tax Transfer Program, the Company sold $224,160 of net operating loss
         benefits and received $206,207 of net proceeds from this sale.

         During December 2005, the Company received proceeds from the sale of
         net operating losses through the New Jersey Technology Business Tax
         Certified Transfer Program (the "Tax Transfer Program"). Through the
         Tax Transfer Program, the Company sold $265,450 of net operating loss
         benefits and received $228,287 of net proceeds from this sale.

NOTE 6.  STOCKHOLDERS' EQUITY TRANSACTIONS

         Common Stock

         The Company issued 510,000 and 466,170 shares of common stock for
         services rendered, valued at $96,476 and $97,184 for the years ended
         December 31, 2006 and 2005, respectively.

         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.

         During the year ended December 31, 2005, the Company issued 2,250,000
         shares of common stock and 1,500,000 warrants to purchase common stock
         for cash


                                       36

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         consideration of $450,000. This is pursuant to the private placement
         offerings in 2005. Using the Black-Scholes methodology, the warrants
         were valued at $300,000.

         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. However, during 2005 it also allows 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 made 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. The Company has elected to account for its
         stock-based compensation plans under APB 25 during 2005, but has
         adopted SFAS 123R for options transactions during 2006 and forward.

         During 2005, the Company relieved its Chief Executive Officer and
         President of his duties and all outstanding options, both vested and
         unvested, were cancelled in accordance with their terms.

         During the quarter ended March 31, 2005, the Company issued 200,000
         options to acquire common stock at $0.25 per share for fundraising. In
         addition, the Company issued 128,000 options to buy stock at $.040 per
         share for consulting services. These options vest in equal monthly
         installments for 24 months beginning in February 2005. Consulting
         expense of $0 and $11,520 were charged to the options for 2006 and
         2005, respectively.

         In the quarter ending June 30, 2005, the Company issued 200,000 options
         to buy stock at $0.50 per share for consulting services. The options
         vest in equal monthly installments for 24 months beginning in May,
         2005. Consulting expense related to this issuance was $16,000.

         A summary of the status of the Company's stock options and warrants as
         of December 31, 2006 and 2005, and changes during the years ending of
         those dates are presented below:


                                       37

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                        2006                    2005
                               ---------------------   ---------------------
                                            Weighted                Weighted
                                             Average                 Average
                                            Exercise                Exercise
                                 Shares       Price      Shares       Price
                               ----------   --------   ----------   --------
<S>                            <C>          <C>        <C>          <C>
Options/warrants outstanding
   at beginning of year        16,905,821    $ 0.44    20,818,937    $ 0.51
Granted                         1,640,000      0.05     3,010,704      0.23
Exercised                              --        --            --        --
Expired                        (3,552,834)    (0.49)   (3,323,820)    (0.31)
Cancelled                              --        --    (3,600,000)    (0.79)
                               ----------    ------    ----------    ------
Options/warrants outstanding
   at end of year              14,992,987    $ 0.38    16,905,821    $ 0.44
                               ==========    ======    ==========    ======
Options/warrants exercisable
   at end of year              14,954,306              16,703,149
Weighted-average fair value
   of options granted during
   the year                                  $ 0.04                  $ 0.11
</TABLE>

         The following table summarizes information about stock options and
         warrants outstanding at December 31, 2006:

<TABLE>
<CAPTION>
                           Weighted-
                            Average
              Number       Remaining
Exercise   Outstanding    Contractual   Exercisable
  Price    at 12/31/06   Life (Years)     Warrants
--------   -----------   ------------   -----------
<S>        <C>           <C>            <C>
  0.05       1,640,000       4.61         1,640,000
  0.20       4,307,704       3.07         4,307,704
  0.25         565,000       2.71           565,000
  0.40       2,953,000       1.54         2,947,659
  0.45         920,000       1.12           920,000
  0.50       1,169,167       1.49         1,135,827
  0.60       2,206,250       1.89         2,206,250
  0.75         387,500       0.77           387,500
  1.00         844,366       0.44           844,366
            ----------                   ----------
            14,922,987                   14,954,306
            ==========                   ==========
</TABLE>

         Had compensation cost of GeneLink, Inc.'s incentive stock options
         issued to officers been determined based on the fair value of options
         at the dates of award under the fair value method of SFAS 123, the
         Company's net loss and net loss per common share would have been
         reduced to the proforma amounts indicated below:


                                       38

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                                            2006         2005
                                         ---------   -----------
<S>                                      <C>         <C>
Net loss:
   As reported                           $(577,761)  $(1,052,870)
   Additional stock-based compensation          --            --
   Proforma                               (577,761)  $(1,052,870)
Net loss per common share:
   As reported                           $   (0.01)  $     (0.03)
Additional stock-based compensation             --            --
   Proforma                                  (0.01)        (0.03)
</TABLE>

         Significant assumptions used to calculate the fair value of all options
         issued for services are as follows:

<TABLE>
<S>                                 <C>
Risk free interest rate of return           7%
Expected option life                4-5.5 yrs.
Expected dividends                       $0.00
Expected volatility                        50%
</TABLE>

         Private Placement Offerings

         In March 2005, the Company issued a confidential private offering
         memorandum of up to 2,000,000 shares at $.20 per unit and a warrant to
         acquire 1/2 share of common stock at $.20 per share pursuant to Rule
         506 of Regulation D of the Securities Act of 1933.

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.

<TABLE>
<CAPTION>
                                                           2006          2005
                                                       -----------   ------------
<S>                                                    <C>           <C>
Net loss                                               $  (577,671)  $ (1,052,870)
Weighted average number of common shares
   outstanding for computing basic earning per share    38,861,637     35,806,407
Dilutive effect of warrants and stock options after
   application of the treasury stock method                     --             --
</TABLE>


                                       39

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<S>                                                    <C>           <C>
Weighted average number of common shares out-
   standing for computing diluted earnings per share    38,861,637     35,806,407
                                                       ===========   ============
Net loss per share - basic and diluted                 $     (0.01)  $      (0.03)
                                                       ===========   ============
</TABLE>

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

<TABLE>
<CAPTION>
                             Years Ended December 31
                             -----------------------
                                2006         2005
                             ----------   ----------
<S>                          <C>          <C>
Warrants and stock options   14,922,987   16,905,821
                             ==========   ==========
</TABLE>

NOTE 8.  ADVERTISING

         The Company expenses the production costs of advertising when incurred.
         Advertising expense was $14,369 and $209,370 for the years ended
         December 31, 2006 and 2005, respectively.

NOTE 9.  RENT

         The Company leases its offices in Jersey City, New Jersey on a
         month-to-month basis.

NOTE 10. RELATED PARTY TRANSACTIONS AND CONVERTIBLE SECURED PROMISSORY NOTES
         PAYABLE

         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 and January 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
         $877,890 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


                                       40

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         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
         $56,578.08 of Notes and received 282,890 shares of restricted Common
         Stock of the Company in connection with the issuance of the Notes.

         Robert Hoekstra, a director of the Company, purchased and holds
         $50,789.04 principal amount of Notes and Bernard L. Kasten, Jr., a
         director of the Company, purchased and holds $116,578.08 principal
         amount of Notes.

         Short Term Loans Payable

         As of December 31, 2006, the Company has various shareholders of the
         Company who provided short term obligations, as follows:

<TABLE>
<CAPTION>
                                                      2006      2005
                                                    -------   -------
<S>                                                 <C>       <C>
Note payable, due July 27, 2005 with
   interest at 6%. All interest and principal
   due at maturity. Repayment terms extended
   past due date by agreement                       $    --   $12,586
Note payable, due January 1, 2005 with
   interest at 6%. All interest and principal
   due at maturity                                       --        --
Note payable, due July 28, 2005 with
   interest at 6%. All interest and principal
   due at maturity. Repayment terms
   extended past due date by agreement                   --     5,275
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        --
                                                    -------   -------
                                                     18,000    27,681
Less: Discount for warrants issued                      (--)      (--)
                                                    -------   -------
Total short term loans payable                      $18,000   $27,861
                                                    =======   =======
</TABLE>

         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


                                       41

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         agreement with Mr. Taylor. A new agreement has not been signed. His
         current arrangement provides for annual compensation of $90,000 per
         year.

         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. As of December 31, 2006 and 2005,
         $710,323 and $593,399, respectively was owed to Dr. Ricciardi for
         services rendered under the consulting agreement.

         Convertible Secured Promissory Notes Payable

         As of December 31, 2006, the Company has various shareholders of the
         Company who provided convertible secured promissory note obligations,
         as follows:

<TABLE>
<CAPTION>
                                                          2006     2005
                                                       ---------   ----
<S>                                                    <C>         <C>
Notes payable, due May 12, 2011 with interest at 12%
   All interest and principal due at maturity. All
   Company assets pledged as collateral                $ 827,890    $--
                                                       ---------    ---
                                                         827,890     --
Less:  debt proceeds not received                       (205,000)    --
                                                       ---------    ---
Total convertible secured promissory notes payable     $ 622,890     --
                                                       =========    ===
</TABLE>

         In connection with issuance of the convertible secured promissory
         notes, the Company has recognized debt issuance costs of $180,898 that
         are being amortized over the term of the notes. As of December 31,
         2006, the unamortized debt issuance costs are $165,912 and are included
         in "Other assets" on the balance sheet.

         As of December 31, 2006, the Company has not received all proceeds from
         the notes payable. Accordingly, the Company has reduced the balance
         sheet liability for the convertible secured promissory notes by
         $205,000 at December 31, 2006.

NOTE 11. SEGMENT INFORMATION

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


                                       42
<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         The following table sets forth the net revenues, operating expenses and
         pre-tax earnings of our segments for the year ended December 31, 2006
         and 2005:

<TABLE>
<CAPTION>
                            GENELINK    DERMAGENETICS
                              INC.          INC.
                          -----------   -------------
<S>                       <C>           <C>
          2006
NET REVENUES              $    57,333     $ 118,341
OPERATING EXPENSES            765,815       196,445
OTHER INCOME                    2,011           697
PRE-TAX EARNINGS (LOSS)      (706,471)      (77,407)

          2005
NET REVENUES              $   108,053     $ 288,870
OPERATING EXPENSES          1,242,348       435,732
OTHER INCOME                       --            --
PRE-TAX EARNINGS (LOSS)    (1,134,295)     (146,862)
</TABLE>

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 operating
         loss of $577,671 and $1,052,870 for the years ended December 31, 2006
         and 2005, respectively. The Company reported a deficit of $11,114,084
         and $10,536,413 as of December 31, 2006 and 2005, 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, the Company terminated the employment of
         John R. DePhillipo, the Company's former Chief Executive Officer and
         Chief Financial Officer and a former director of the Company. Mr.
         DePhillipo commenced two lawsuits allegedly arising out of his
         termination by the Company.

         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,


                                       43

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

         Mr. DePhillipo alleged that Dr. Ricciardi, a Director and Officer of
         the Company, (1) caused Mr. DePhillipo's employment with the Company 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. Under the
         terms of the Company's By-laws and Pennsylvania law, the Company is
         obligated both to reimburse Dr. Ricciardi for his costs of defending
         this action and is required to advance him the costs of the expense of
         such a defense. Counsel for Dr. Ricciardi entered an answer to this
         action and subsequently the action against Dr. Ricciardi was dismissed
         with prejudice in March 2006. There is thus no further contingent
         liability with regard to this matter.

         In a separate Action filed by Mr. DePhillipo against the Company 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 has alleged that his termination by the
         Company "for cause" was improper and therefore he is 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. The Company has filed an Answer denying the material
         allegations of the Complaint and asserting a number of affirmative
         defenses. The Company believes Mr. DePhillipo's claims are without
         merit and intends to vigorously defend against those claims. The
         Company has also filed counterclaims against Mr. DePhillipo for breach
         of fiduciary duty, conversion, negligent misrepresentation and unjust
         enrichment while Mr. DePhillipo served as the Company's Chief Executive
         Officer, President and Chief Financial Officer. The counterclaims seek
         recovery in excess of that sought by Mr. DePhillipo in the Complaint.

         The Company has received a notice of an alleged patent infringement
         from an Australian bioscience company. It is the opinion of patent
         counsel that there is no infringement, and that in the event there is
         an infringement, management believes it will not have a material effect
         on the Company's business and financial position.

NOTE 14. SUBSEQUENT EVENTS

         In January 2007, the Company received $205,000 on account of the
         convertible secured promissory notes receivable and sold an additional
         $50,000 of Notes and issued 275,000 shares in connection therewith. In
         January 2007, holders of Notes converted $121,131 of Notes into
         2,422,625 shares of Common Stock at a conversion price of $0.05 per
         share.

NOTE 15. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     Below is a summary of the quarterly results of operations for each quarter
of the years ended December 31, 2006 and 2005:


                                       44

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2006 AND 2005

<TABLE>
<CAPTION>
                          First       Second      Third      Fourth
                        ---------   ---------   ---------   --------
<S>                     <C>         <C>         <C>         <C>
2006
Sales                   $  47,711   $  35,642   $  59,122   $ 33,199
Gross profit               30,962      14,556      33,206     31,529
Net income (loss)        (229,491)   (255,928)   (138,698)    46,456
Net income (loss) per
   common share             (0.01)      (0.01)     (0.008)    (0.001)

2005
Sales                   $  55,581   $ 133,602   $  76,850   $130,890
Gross profit              125,674      76,126      37,400    (71,672)
Net income (loss)        (371,488)   (361,123)   (282,574)   (37,685)
Net income (loss) per
   common share             (0.01)      (0.01)     (0.008)    (0.001)
</TABLE>


                                       45

<PAGE>

ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
     FINANCIAL DISCLOSURE.

     None.

ITEM 8A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

     The Company maintains disclosure controls and 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, and that
such information is accumulated and communicated to management, including the
Chief Executive Officer and Acting Chief Financial Officer, as appropriate, to
allow timely decisions regarding required disclosure. Management necessarily
applies its judgment in assessing the costs and benefits of such controls and
procedures, which, by their nature, can provide only reasonable assurance
regarding management's control objectives.

     With the participation of management, the Company's Chief Executive Officer
and Acting 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, 2006. Based upon this evaluation, the acting
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 significant changes in the Company's internal controls or, to
the knowledge of the Company's management, in other factors that could
significantly affect internal controls subsequent to the date of the Company's
most recent evaluation of its disclosure controls and procedures utilized to
compile information included in this filing.


                                       46

<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS.

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

<TABLE>
<CAPTION>
Name                         Age   Position
----                         ---   -----------------------------------------
<S>                          <C>   <C>
Monte E. Taylor               56   Chief Executive Officer, Acting
                                   Chief Financial Officer,
                                   Director

Robert P. Ricciardi, Ph.D.    60   Chairman, Secretary,
                                   Chief Science Officer, Director

Dr. Bernard L. Kasten, Jr.    60   Executive Chairman of the Board, Director

Robert Hoekstra               56   Director

John H. Souza                 44   Director
</TABLE>

     Mr. Taylor currently is the Chief Executive Officer and Acting 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 at 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 received a masters degree in business
administration from the Crummer School of Business at Rollins College.

     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.


                                       47

<PAGE>

     Dr. Kasten is the Executive Chairman of the Board. Dr. Kasten has been a
scientific advisor to the Company since 1999 and a member of the Company's
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" 1st through 5th Editions 1994-2003
and the "Laboratory Test Handbook" 1st through 4th 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 SeraCare Life Sciences, CytoLogic Inc, Lexi-Comp Inc, Riggs-Heinrich Media
Inc, Highway Composites LLC, Monroeville Industrial Molding Inc, PIPO Inc and
Cleveland Bio Labs Inc.

     Mr. Hoekstra is 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. Souza has been a business consultant with the Company since October
2004, working primarily with the Company's Dermagenetics, Inc. subsidiary as
Director of Business Development. 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.


                                       48

<PAGE>

Audit Committee

     The entire Board of Directors acted as the Audit Committee for the fiscal
year ended December 31, 2006. The Audit Committee does not have an audit
committee financial expert. The Company has not been able to attract qualified
members to serve on its Board of Directors who would qualify as financial
experts. For the fiscal year ending December 31, 2007, the Audit Committee will
consist of Dr. Kasten and Mr. Hoekstra, each of whom is independent.

     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


                                       49

<PAGE>

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, 2006 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 change upon request therefor.

Compensation of Directors and Meeting of Directors

     Directors of the Company are not paid any fees for service as directors of
the Company. The Board of Directors met six (6) times in 2006. 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., 113 Pavonia Avenue, #313, Jersey City, NJ 07310. Any
communications received will be forwarded to all Board members.

Material Proceedings with Directors, Officers and Holders of More Than Five
Percent of the Common Stock of the Company; Resignation of Directors

     Effective October 14, 2005, the Company terminated the employment of John
R. DePhillipo, the Company's former Chief Executive Officer and Chief Financial
Officer and a former member of the Board of Directors of the Company. Mr.
DePhillipo commenced a lawsuit against the Company allegedly arising out of his
termination by the Company for "cause," as defined in his Employment Agreement
with the Company.

     In an Action filed by Mr. DePhillipo against the Company 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 has
alleged that his termination by the Company "for cause" was improper and
therefore he is entitled to in excess of $1,500,000 in


                                       50

<PAGE>

severance pay under the terms of an employment agreement that Mr. DePhillipo
alleges was entered into effective January 1, 2005 (the "Employment Agreement"),
and an additional $84,000 in accrued and unpaid compensation. The Company has
filed an Answer denying the material allegations of the Complaint and asserting
a number of affirmative defenses. The Company believes Mr. DePhillipo's claims
are without merit and intends to vigorously defend against those claims. The
Company has also filed counterclaims against Mr. DePhillipo for breach of
fiduciary duty, conversion, negligent misrepresentation and unjust enrichment
while Mr. DePhillipo served as the Company's Chief Executive Officer, President
and Chief Financial Officer. The counterclaims seek recovery in excess of that
sought by Mr. DePhillipo in the Complaint.

     On January 18, 2007, Mr. DePhillipo resigned as a director of the Company.
Mr. DePhillipo in a letter to the Board of Directors of the Company alleged that
the Company has not properly accounted for or disclosed its source for funding
the costs of the litigation described above and alleged that a third party must
be funding the litigation; alleged that the terms of the recent financing
undertaken by the Company are unfair to the Company's shareholders and amounted
to the sale of the Company without shareholder approval; and alleged that the
use of the proceeds of the financings are not adequately described, including
any use of the proceeds to fund the costs of the litigation.

     The Board of Directors categorically denies each of Mr. DePhillipo's
unsubstantiated allegations and states that they are completely unfounded. The
Board of Directors expressly confirms that the Company has not entered into an
agreement with any third party to fund the litigation or taken any steps which
would amount to a sale of the Company without shareholder approval. The Board of
Directors further notes that Mr. DePhillipo's resignation was pre-textual and
tendered only after notice to Mr. DePhillipo that he was not part of the
proposed slate of nominees to a newly constituted Board of Directors and after a
meeting of the Board of Directors during which Mr. DePhillipo was not appointed
and elected as a nominee to remain on the Board of Directors following the
Annual Meeting.

                         REPORT FROM THE AUDIT COMMITTEE

     The entire Board of Directors acts as the Audit Committee for the year
ended December 31, 2006. The Audit Committee does not have an audit committee
financial expert. The Company has not been able to attract qualified members to
serve on its Board of Directors who would be independent and who would qualify
as financial experts. 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, 2006, 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.


                                       51

<PAGE>

     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, 2006.

     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-KSB for year ended December 31, 2006.

                                        Robert Hoekstra
                                        Dr. Bernard L. Kasten, Jr.
                                        Robert P. Ricciardi, Ph.D.
                                        John H. Souza
                                        Monte E. Taylor, Jr.


                                       52
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                        Salary        All Other
Name and Principal Position   Year       ($)       Compensation($)   Total($)
---------------------------   ----   -----------   ---------------   --------
<S>                           <C>    <C>           <C>               <C>
Monte E. Taylor, Jr. Chief
   Executive Officer(1)       2006   $ 90,000         $22,486(2)     $112,486
                              2005   $ 90,000         $20,795(2)     $110,796
Robert P. Ricciardi, Ph.D.,
   Chief Science Officer      2006   $116,924(3)           --        $116,924
                              2005   $106,294(3)           --        $106,294
</TABLE>

(1)  Mr. Taylor was appointed Chief Executive Officer effective October 14,
     2005.

(2)  Represents the cost of health insurance premiums provided from the Company.

(3)  This amount has accrued but has not been paid. As of December 31, 2006, the
     Company owed Dr. Ricciardi an aggregate of $656,155 for compensation earned
     but not received.

                  OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

     The named executive officers did not receive any option or other equity
awards in 2006 and do not hold any options or other equity awards as of December
31, 2006.

                              DIRECTOR COMPENSATION

     Directors are not compensated for their service as directors of the
Company.

Employment Agreements with Executive Officers

The company entered into a consulting agreement with Dr. Ricciardi on February
24, 1998, which provides for annual compensation of $116,924 in 2006, a ten
percent (10%) increase in compensation each year, continues for year to year,
and requires Dr. Ricciardi to perform eight (8) hours of consulting services per
week. The company has never had sufficient funds to pay Dr. Ricciardi his
compensation and as of December 31, 2006, the company owed Dr. Ricciardi
$656,155 in accrued compensation. Dr. Ricciardi's consulting agreement provides
for a change in control payment equal to two times the compensation in effect.


                                       53

<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

                             PRINCIPAL SHAREHOLDERS

         Security Ownership of Management and Certain Beneficial Owners

     The following table sets forth certain information as of February 28, 2007
regarding the ownership of Common Stock (i) by each person known by the Company
to be the beneficial owner of more than five percent of the outstanding Common
Stock, (ii) by each current officer and director of the Company, (iii) by each
nominee for director, and (iv) by all current officers and directors of the
Company as a group.

The beneficial owners and amount of securities beneficially owned have been
determined in accordance with Rule 13d-3 under the Exchange Act and, in
accordance therewith, includes all shares of the Company's Common Stock that may
be acquired by such beneficial owners within 60 days of February 28, 2007 upon
the exercise or conversion of any options, warrants or other convertible
securities. This table has been prepared based on 44,104,055 shares of Common
Stock outstanding on February 28, 2007. Unless otherwise indicated, each person
or entity named below has sole voting and investment power with respect to all
Common Stock beneficially owned by that person or entity, subject to the matters
set forth in the footnotes to the table below. Unless otherwise stated, the
beneficial owners exercise sole voting and/or investment power over their
shares.

<TABLE>
<CAPTION>
                                     Number of Shares      Approximate Percentage
Name                                Beneficially Owned      Of Stock Outstanding
-------------------------------   ----------------------   ----------------------
<S>                               <C>                      <C>
John R. and Maria D. DePhillipo    4,716,585(1)                     10.7%
100 S. Thurlow Avenue
Margate, New Jersey 08402

                                   3,512,859(2)                      7.5%
Dr. Bernard L. Kasten, Jr
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310

Kenneth R. Levine                  2,935,632(3)                      6.7%
1776 Broadway
Suite 2000
New York, New York 10019

Robert Hoekstra                    2,784,696(4)                      6.1%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310

Robert P. Ricciardi, Ph.D          2,710,000                         6.1%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310

John H. Souza                      1,490,331(5)                      3.3%
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310
</TABLE>


                                       54

<PAGE>

<TABLE>
<S>                               <C>                      <C>
Monte E. Taylor, Jr                   27,750(6)                        *
113 Pavonia Avenue, #313
Jersey City, New Jersey 07310

Directors and Officers as a       10,525,636(2)(4)(5)(6)            21.4%
Group
</TABLE>

(1)  Includes 3,235,885 shares of Common Stock held by John R. DePhillipo and
     1,010,700 shares of Common Stock held by Maria D. DePhillipo, his wife. Mr.
     DePhillipo disclaims beneficial ownership of the shares held by Maria D.
     DePhillipo. Includes 470,000 shares of Common Stock held by various family
     trusts for which Mrs. DePhillipo is the trustee, and each of Mr. and Mrs.
     DePhillipo disclaim any beneficial ownership of those shares.

(2)  Includes 2,533,299 shares of Common Stock issuable upon the conversion of
     Notes. As of February 28, 2007 Dr. Kasten held $126,664.92 of principal and
     accrued interest of Notes, which convert into Common Stock at $0.05 per
     share.

(3)  Includes 435,000 shares of Common Stock held by First Equity Capital
     Securities, Inc., of which Mr. Levine is a principal.

(4)  Includes 1,113,296 shares of Common Stock issuable upon the conversion of
     Notes. As of February 28, 2007, Mr. Hoekstra held $55,664.79 of principal
     and accrued interest of Notes, which convert into Common Stock at $0.05 per
     share. Includes currently exercisable warrants to acquire 270,455 shares of
     Common Stock. Includes 647,000 shares of Common Stock and warrants to
     exercise 500,000 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.

(5)  Includes currently exercisable warrants to acquire 605,661 shares of Common
     Stock.

(6)  Include 16,000 shares held by Mr. Taylor and various family members in
     joint tenancy.

(*)  Less than 1%.


                                       55

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     In May 2006, December 2006 and January 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 $877,890.40 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
$56,578.08 of Notes and received 282,890 shares of restricted Common Stock of
the Company in connection with the issuance of the Notes.

     Robert Hoekstra, a director of the Company, purchased and holds $50,789.04
principal amount of Notes and Bernard L. Kasten, Jr., a director of the Company,
purchased and holds $116,578.08 principal amount of Notes.

ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K

(1)  Financial Statements. The financial statements required to be filed are
     presented beginning on page 21.

(2)  Exhibits. The following Exhibits have been filed pursuant to Item 601 of
     Regulation S-B.

<TABLE>
<CAPTION>
Exhibit
 Number   Description
-------   -----------
<S>       <C>
31.1      Certification of Chief Executive Officer and Chief Financial Officer
          pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1      Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.
</TABLE>


                                       56

<PAGE>

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     Buckno, Lisicky & Company was the Company's independent public accountant
for 2006 and 2005.

FEES FOR INDEPENDENT AUDITORS FOR FISCAL YEARS 2006 AND 2005

     Set forth below are the fees billed for services rendered by Buckno,
Lisicky & Company in 2006 and 2005.

<TABLE>
<CAPTION>
                       2005      2006
                     -------   -------
<S>                  <C>       <C>
Audit Fees           $22,000   $22,000
Audit-Related Fees         0         0
                     -------   -------
Tax Fees                   0         0
All Other Fees             0         0
                     -------   -------
   Total Fees        $22,000   $22,000
                     =======   =======
</TABLE>

     Audit fees consist of fees billed for professional services rendered by the
Company's independent accountant for the audit of the Company's annual financial
statements, review of financial statements included in quarterly reports on Form
10-QSB and services that are normally provided by the independent accountant in
connection with statutory and regulatory filings or engagements.

     Audit Committee Pre-Approval Procedures. The function(s) of the audit
committee are currently performed by the full Board of Directors. The Board of
Directors approves the engagement of the independent auditors, and meets with
the independent auditors to approve the annual scope of accounting services to
be performed and the related fee estimates. It also meets with the independent
auditors, on a quarterly basis, following completion of their quarterly reviews
and annual audit and prior to our earnings announcements, if any, to review the
results of their work. During the course of the year, the chairman has the
authority to pre-approve requests for services that were not approved in the
annual pre-approval process. The chairman reports any interim pre-approvals at
the following quarterly meeting. At each of the meetings, management and the
independent auditors update the Board of Directors with material changes to any
service engagement and related fee estimates as compared to amounts previously
approved. During 2006, all audit and non-audit services performed by our
independent accountants were pre-approved by the Board of Directors in
accordance with the foregoing procedures.


                                       57

<PAGE>

                                   SIGNATURES

     In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized.

                                        GENELINK, INC.
                                        Registrant


Date: April 9, 2007                     By: /s/ Monte E. Taylor, Jr.
                                            ------------------------------------
                                            Monte E. Taylor, Jr.,
                                            Chief Executive Officer

     In accordance with the Exchange Act this report has been signed below by
the following persons on behalf of the registrant and in the capacities and the
dates indicated.

<TABLE>
<CAPTION>
        SIGNATURES                       CAPACITY                    DATE
--------------------------   -------------------------------   -----------------
<S>                          <C>                               <C>


/s/ Monte E. Taylor, Jr.     Principal Executive Officer,      April 9, 2007
--------------------------   Principal Financial Officer
Monte E. Taylor              and Director
Chief Executive Officer


/s/ Robert P. Ricciardi      Director                          April 9, 2007
--------------------------
Robert P. Ricciardi, Ph.D.
Director


/s/ Bernard L. Kasten, Jr.   Executive Chairman and Director
--------------------------
Dr. Bernard L. Kasten, Jr.


/s/ Robert Hoekstra          Director                          April 9, 2007
--------------------------
Robert Hoekstra


/s/ John H. Souza            Director                          April 9, 2007
--------------------------
John H. Souza
</TABLE>


                                       58