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U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-KSB/A
 AMENDMENT NO. 2 TO
ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2006
 COMMISSION FILE NO. 0-28077
 GENELINK, INC.
 
  PENNSYLVANIA
    
    23-2795613(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employee
Identification No.)317 Wekiva Spring Road, #200
Longwood, FL
    
    32779(Address of principal executive offices)
    
    (Zip Code)
    
   
  þ o
 þ
 o þ
    Number of Shares of Common StockOutstanding on February 28, 2007
    
    
    44,104,055
 o þ




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##### 



TABLE OF CONTENTS
 PageITEM 1.
    
    DESCRIPTION OF BUSINESS
    
    
    1ITEM 2.
    
    PROPERTIES
    
    
    12ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    13ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    14ITEM 5.
    
    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    
    
    14ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS
    
    
    17ITEM 7.
    
    FINANCIAL STATEMENTS
    
    
    23ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    47ITEM 8A.
    
    CONTROLS AND PROCEDURES
    
    
    47ITEM 9.
    
    DIRECTORS AND EXECUTIVE OFFICERS
    
    
    48ITEM 10.
    
    EXECUTIVE COMPENSATION
    
    
    54ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
    
    
    55ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
    
    57ITEM 13.
    
    EXHIBITS, LIST AND REPORTS ON FORM 8-K
    
    
    57ITEM 14.
    
    PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    58CERTIFICATION OF CEO & CFO PURSUANT TO SECTION 302CERTIFICATION PURSUANT TO SECTION 906




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ITEM 1. DESCRIPTION OF BUSINESS.
 GENERAL
      TM
  1




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Oxidative Stress Profiles
     Oxidative Stress for Skin Health and Skin Aging Profile
   2




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Other SNP Profiles Developed by GeneLink
     DNA Banking
  3




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Affiliates
      4




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Intellectual Property
      Competition
   5




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Government Regulation
  Employees and Labor Relations
  Number ofCategory
    
    Employees and ConsultantsSales and Marketing
    
    
    3General and Administration, including Customer Service
    
    
    5Research and Development
    
    
    6
 RISK FACTORS
  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.
  6




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




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
    
    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.
  EXPECTED FUTURE DILUTION TO SHAREHOLDERS.
  THE COMPANY HAS A HISTORY OF LOSSES AND EXPECT CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.
  8




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IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME WIDESPREAD, WE MAY
HAVE LESS DEMAND FOR THE COMPANYS PRODUCTS.
  THE COMPANY HAS LIMITED SALES AND MARKETING EXPERIENCE.
  THE COMPANYS INDUSTRY IS HIGHLY COMPETITIVE AND IT MAY NOT HAVE THE RESOURCES REQUIRED TO
SUCCESSFULLY COMPETE.
  
    
    biotechnology, pharmaceutical, chemical and other companies;
    
    academic and scientific institutions;
    
    governmental agencies; and
    
    public and private research organizations.
  9




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THE MARKET FOR THE COMPANYS PRODUCTS AND SERVICES IS UNPROVEN.
  IF THE COMPANY IS UNSUCCESSFUL IN ESTABLISHING STRATEGIC ALLIANCES, ITS ABILITY TO DEVELOP AND
MARKET PRODUCTS AND SERVICES MAY BE DAMAGED.
  THE COMPANY HAS SIGNIFICANT FIXED OPERATING COSTS AND THE COMPANYS OPERATING RESULTS ARE SUBJECT
TO FLUCTUATIONS.
  VOLATILITY OF COMMON STOCK PRICE AND THIN TRADING MARKET.
  THE COMPANY MAY NOT BE ABLE TO ATTRACT AND RETAIN PROFESSIONAL STAFF.
  10




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THE COMPANY IS DEPENDENT ON KEY 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.
    11




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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.
  
    
    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.
  
    
    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
  12




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ITEM 3. LEGAL PROCEEDINGS
  John R. DePhillipo v. Robert P. Ricciardi
 John R. DePhillipo v. GeneLink, Inc.,
  13




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ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
  2006
    
    High
    
    Low1st Quarter
    
    $
    0.13
    
    
    $
    0.052nd Quarter
    
    
    0.09
    
    
    
    0.043rd Quarter
    
    
    0.06
    
    
    
    0.034th Quarter
    
    
    0.07
    
    
    
    0.04
 2005
    
    High
    
    Low1st Quarter
    
    $
    0.32
    
    
    $
    0.192nd Quarter
    
    
    0.26
    
    
    
    0.123rd Quarter
    
    
    0.22
    
    
    
    0.124th Quarter
    
    
    0.17
    
    
    
    0.06
  14




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EQUITY COMPENSATION PLAN INFORMATION
 Number ofsecurities remainingavailable for futureNumber of
    
    
    
    
    
    issuance undersecurities to be
    
    
    
    
    
    equityissued upon exercise
    
    Weighted-average
    
    compensation plansof outstanding
    
    exercise price of
    
    (excluding securitiesoptions, warrants
    
    outstanding options
    
    reflected in columnand rights
    
    warrants and rights
    
    (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equity
compensation
plans approved
by security
holders
    
    
    0
    
    
    
    
    
    
    
    6,000,000Equity
compensation
plans not
approved
by security
holders
    
    
    0
    
    
    
    
    
    
    
    0Total
    
    
    0
    
    
    
    
    
    
    
    6,000,000
 RECENT SALES OF UNREGISTERED SECURITIES.
   15




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16




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ITEM 6. MANAGEMENTS DISCUSSION AND ANALYSIS
 Critical Accounting Policies
 Stock options:
  Amortization of patents:
  Revenue and cost recognition:
  17




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Use of Estimates:
   Results of Operations
     18




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GeneLink
    
    DermageneticsInc.
    
    Inc.Net Revenues
    
    $
    57,333
    
    
    $
    118,641Operating expenses
    
    
    772,805
    
    
    
    196,445Other income
    
    
    2,011
    
    
    
    697Pre-tax earnings (loss)
    
    
    (507,254
    )
    
    
    (77,407
    )
  19




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GeneLink
    
    DermageneticsInc.
    
    Inc.Net Revenues
    
    $
    108,053
    
    
    $
    288,870Operating expenses
    
    
    1,242,348
    
    
    
    435,732Other income
    
    
    
    
    
    
    Pre-tax earnings (loss)
    
    
    (1,134,295
    )
    
    
    (146,862
    )
      20




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Liquidity and Capital Resources
     21




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22




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ITEM 7. FINANCIAL STATEMENTS
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    24Financial StatementsConsolidated Balance Sheets
    
    
    25-26Consolidated Statements of Operations
    
    
    27Consolidated Statements of Changes in Stockholders Equity (Deficiency)
    
    
    28Consolidated Statements of Cash Flows
    
    
    29-30Notes to Consolidated Financial Statements
    
    
    31-46
 23




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 24




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GENELINK, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
December 31, 2006 and 2005
 ASSETS
 2006
    
    
    2005CURRENT ASSETSCash and cash equivalents
    
    $
    149,695
    
    
    $
    15,275Accounts receivable
    
    
    32,185
    
    
    
    32,651Inventory
    
    
    5,772
    
    
    
    3,261Prepaid expenses
    
    
    14,421
    
    
    
    37,435Total current assets
    
    
    202,073
    
    
    
    88,622PROPERTY AND EQUIPMENT
    
    
    131,645
    
    
    
    147,519OTHER ASSETS
    
    
    214,763
    
    
    
    209,135Total assets
    
    $
    548,481
    
    
    $
    445,276
  25




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GENELINK, INC. AND SUBSIDIARY
 LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
December 31, 2006 and 2005
 2006
    
    
    2005CURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    365,590
    
    
    $
    429,165Accrued payroll taxes
    
    
    0
    
    
    
    7,454Accrued compensation
    
    
    725,804
    
    
    
    593,399Loans payable to officers
    
    
    18,000
    
    
    
    27,861Total current liabilities
    
    
    1,109,394
    
    
    
    1,057,879Convertible secured promissory notes payable
    
    
    298,390
    
    
    
    0Total liabilities
    
    
    1,407,784
    
    
    
    1,057,879STOCKHOLDERS 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
    
    
    
    366,896Additional paid in capital
    
    
    7,148,427
    
    
    
    6,910,160Stock warrants
    
    
    3,011,009
    
    
    
    2,961,809Accumulated deficit
    
    
    (11,121,074
    )
    
    
    (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)
    
    
    (859,303
    )
    
    
    (612,603
    )Total liabilities and stockholders equity
(deficiency)
    
    $
    548,481
    
    
    $
    445,276
  26




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GENELINK, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2006 and 2005
 2006
    
    
    2005Revenues:
    
    $
    175,674
    
    
    $
    396,923Cost of goods sold:
    
    
    65,421
    
    
    
    229,395Gross profit
    
    
    110,253
    
    
    
    167,528Expenses:General and administrative
    
    
    476,539
    
    
    
    802,984Consulting
    
    
    179,449
    
    
    
    177,633Professional fees
    
    
    173,590
    
    
    
    222,475Advertising and promotion
    
    
    14,369
    
    
    
    209,370Amortization and depreciation
    
    
    59,882
    
    
    
    36,223903,829
    
    
    
    1,448,685Operating loss
    
    
    (793,576
    )
    
    
    (1,281,157
    )Other income:
    
    
    2,708
    
    
    
    0Loss before provision for income taxes
    
    
    (790,868
    )
    
    
    (1,281,157
    )Deferred income tax benefit
    
    
    206,207
    
    
    
    228,287Provision for income taxes:
    
    
    0
    
    
    
    0Net loss
    
    $
    (584,661
    )
    
    $
    (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
  27




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GENELINK, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders Equity (Deficiency)
YEARS ENDED DECEMBER 31, 2006 AND 2005
 ADDITIONALCOMMON STOCK
    
    
    TREASURY
    
    
    PAID IN
    
    
    STOCK
    
    
    ACCUMULATEDSHARES
    
    
    AMOUNT
    
    
    STOCK
    
    
    CAPITAL
    
    
    WARRANTS
    
    
    DEFICIT
    
    
    TOTALBalance, 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
    
    
    
    146,107Fair value of options granted for services
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    11,520
    
    
    
    0
    
    
    
    11,520Fundraising 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
    
    
    
    16,000Issuance of common stock related to loan agreement
    
    
    200,000
    
    
    
    2,000
    
    
    
    0
    
    
    
    400
    
    
    
    0
    
    
    
    0
    
    
    
    2,400Issuance of common stock and stock warrants for services
    
    
    466,170
    
    
    
    4,662
    
    
    
    0
    
    
    
    85,932
    
    
    
    6,590
    
    
    
    0
    
    
    
    97,184Issuance of common stock and stock warrants pursuant to
private placement offerings
    
    
    2,250,000
    
    
    
    22,500
    
    
    
    0
    
    
    
    255,000
    
    
    
    172,500
    
    
    
    0
    
    
    
    450,000Net 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
    
    
    
    205,457Stock conversion discount related to convertible secured promissory notes
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    165,578
    
    
    
    
    
    
    
    
    
    
    
    165,578Fair value of options granted for services
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Commissions 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
    
    
    
    72,150Issuance of common stock and stock warrants for services
    
    
    100,000
    
    
    
    1,000
    
    
    
    0
    
    
    
    23,326
    
    
    
    0
    
    
    
    0
    
    
    
    24,326Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (584,661
    )
    
    
    (584,661
    )5,049,450
    
    
    
    50,494
    
    
    
    0
    
    
    
    72,689
    
    
    
    49,200
    
    
    
    (584,661
    )
    
    
    (246,700
    )Balance, December 31, 2006
    
    
    41,739,000
    
    
    $
    417,390
    
    
    $
    (315,055
    )
    
    $
    7,148,427
    
    
    $
    3,011,009
    
    
    $
    (11,121,074
    )
    
    $
    (859,303
    )
  28




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GENELINK, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006 and 2005
 2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (584,661
    )
    
    $
    (1,052,870
    )Adjustments to reconcile net loss to net
cash used in operating activities:Depreciation and amortization
    
    
    59,882
    
    
    
    36,223Common stock issued for fundraising services
    
    
    72,150
    
    
    
    97,184Common stock issued for services
    
    
    24,324
    
    
    
    0Common stock issued for loan agreement
    
    
    0
    
    
    
    2,400Warrants issued for services
    
    
    0
    
    
    
    16,000Fair value of options granted for
consulting services
    
    
    0
    
    
    
    39,420(Increase) decrease in assets:Accounts receivable
    
    
    466
    
    
    
    (9,412
    )Inventory
    
    
    (2,511
    )
    
    
    16,430Prepaid expenses
    
    
    23,014
    
    
    
    35,287Deposits and trademark
    
    
    0
    
    
    
    18,748Increase (decrease) in liabilities:Accounts payable and accrued expenses
    
    
    (63,574
    )
    
    
    333,365Accrued payroll taxes
    
    
    (7,454
    )
    
    
    (14,509
    )Accrued compensation
    
    
    132,405
    
    
    
    160,462Net cash used in operating activities
    
    
    (345,957
    )
    
    
    (321,272
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchase 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 ACTIVITIESRepayments of loans and notes payable
    
    
    (19,861
    )
    
    
    (186,038
    )Proceeds from convertible secured promissory
notes payable
    
    
    466,977
    
    
    
    0Common stock issued for bridge loans conversion
    
    
    205,457
    
    
    
    0Common stock issued for loan conversion
    
    
    0
    
    
    
    146,107Commissions paid for fundraising costs
    
    
    (129,550
    )
    
    
    0Private placement fundraising costs
    
    
    0
    
    
    
    (111,550
    )Proceeds from issuance of common stock
    
    
    0
    
    
    
    450,000Net cash provided by financing activities
    
    
    523,023
    
    
    
    298,519Net increase (decrease) in cash
    
    
    134,420
    
    
    
    (140,414
    )
  29




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GENELINK,
INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2006 and 2005
 2006
    
    
    2005Cash and cash equivalents:Beginning
    
    $
    15,275
    
    
    
    155,689Ending
    
    $
    149,695
    
    
    $
    15,275SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATIONCash payments for:Interest:
    
    $
    98,300
    
    
    $
    54,114Non-cash financing transactions:Common stock issued for services
    
    $
    96,476
    
    
    $
    97,184Refinancing of bridge loans payable
    
    $
    200,000
    
    
    $
    0Debt issuance costs related to convertible secured
promissory notes
    
    $
    180,898
    
    
    $
    0Stock conversion discount related to convertible
secured promissory notes
    
    $
    165,578
    
    
    $
    0
  30




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GENELINK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
 Note 1. Organization
    TM
  31




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Note 2. Summary of Significant Accounting Policies
 Principles of consolidation:
  Use of estimates:
  Cash and cash equivalents:
  Property and equipment:
  Revenue and cost recognition:
  32




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##### Table of Contents



Amortization of patents:
  Inventory:
  Income taxes:
  Long lived assets:
  Per share data:
 33




---



##### Table of Contents



Stock options:
  Recent accounting developments:
  Reclassifications:
  34




---



##### Table of Contents



Note 3. Property and Equipment
  2006
    
    
    2005Office furniture
    
    $
    1,154
    
    
    $
    1,154Office equipment
    
    
    57,494
    
    
    
    57,494Leasehold improvements
    
    
    85,420
    
    
    
    85,420Software
    
    
    96,079
    
    
    
    76,323240,147
    
    
    
    220,391Less accumulated depreciation
and amortization
    
    
    108,502
    
    
    
    72,872$
    131,645
    
    
    $
    147,519
  Note 4. Other Assets
  2006
    
    
    2005Patents and trademarks
    
    $
    273,279
    
    
    $
    250,389Less accumulated
amortization
    
    
    58,516
    
    
    
    41,254$
    214,763
    
    
    $
    209,135
   Year endingDecember 31,2007
    
    $
    16,7222008
    
    
    16,7222009
    
    
    16,7222010
    
    
    16,722
 35




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##### Table of Contents



Year endingDecember 31,2011
    
    
    16,722Thereafter
    
    
    131,153$
    214,763
 Note 5. Income Taxes
     Note 6. Stockholders Equity Transactions
 Common Stock
   36




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##### Table of Contents



Stock Options and Warrants
      37




---



##### Table of Contents



2006
    
    
    2005Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions/warrants outstanding
at beginning of year
    
    
    16,905,821
    
    
    $
    0.44
    
    
    
    20,818,937
    
    
    $
    0.51Granted
    
    
    1,640,000
    
    
    
    0.05
    
    
    
    3,010,704
    
    
    
    0.23Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    $
    0.44Options/warrants exercisable
at end of year
    
    
    14,954,306
    
    
    
    
    
    
    
    16,703,149Weighted-average fair value
of options granted during
the year
    
    
    
    
    
    $
    0.04
    
    
    
    
    
    
    $
    0.11
 38




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##### Table of Contents



Weighted-AverageNumber
    
    
    RemainingExercise
    
    Outstanding
    
    
    Contractual Life
    
    
    ExercisablePrice
    
    at 12/31/06
    
    
    (Years)
    
    
    Warrants0.05
    
    
    1,640,000
    
    
    
    4.61
    
    
    
    1,640,0000.20
    
    
    4,307,704
    
    
    
    3.07
    
    
    
    4,307,7040.25
    
    
    565,000
    
    
    
    2.71
    
    
    
    565,0000.40
    
    
    2,953,000
    
    
    
    1.54
    
    
    
    2,947,6590.45
    
    
    920,000
    
    
    
    1.12
    
    
    
    920,0000.50
    
    
    1,169,167
    
    
    
    1.49
    
    
    
    1,135,8270.60
    
    
    2,206,250
    
    
    
    1.89
    
    
    
    2,206,2500.75
    
    
    387,500
    
    
    
    0.77
    
    
    
    387,5001.00
    
    
    844,366
    
    
    
    0.44
    
    
    
    844,36614,922,987
    
    
    
    
    
    
    
    14,954,306
  2006
    
    2005Net loss:As reported
    
    $
    (584,661
    )
    
    $
    (1,052,870
    )Additional stock-based compensation
    
    
    
    
    
    
    Proforma
    
    
    (584,661
    )
    
    $
    (1,052,870
    )Net loss per common share:As reported
    
    $
    (0.01
    )
    
    $
    (0.03
    )Additional stock-based compensation
    
    
    
    
    
    
    Proforma
    
    
    (0.01
    )
    
    
    (0.03
    )
  Risk free interest rate of return
    
    
    7
    %Expected option life
    
    4-5.5 yrs.Expected dividends
    
    $
    0.00Expected volatility
    
    
    50
    %
 39




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##### Table of Contents



Private Placement Offerings
 1 2
 Note 7. Net Loss Per Share
   2006
    
    
    2005Net loss
    
    $
    (584,661
    )
    
    $
    (1,052,870
    )Weighted average number of common shares
outstanding for computing basic earning per share
    
    
    38,861,637
    
    
    
    35,806,407Dilutive effect of warrants and stock options after
application of the treasury stock method
    
    
    
    
    
    
    Weighted average number of common shares outstanding
for computing diluted earnings per share
    
    
    38,861,637
    
    
    
    35,806,407Net loss per share  basic and diluted
    
    $
    (0.01
    )
    
    $
    (0.03
    )
  Years Ended December 312006
    
    
    2005Warrants and stock options
    
    
    14,922,987
    
    
    
    16,905,821
 Note 8. Advertising
  40




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##### Table of Contents



Note 9. Rent
  Note 10. Related Party Transactions and Convertible Secured Promissory Notes
     41




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##### Table of Contents



Short Term Loans Payable
  2006
    
    
    2005Note payable, due July 27, 2005 with
interest at 6%. All interest and principal
due at maturity. Repayment terms extended
past due date by agreement.
    
    $
    
    
    
    $
    12,586Note 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.
    
    
    
    
    
    
    5,275Note payable, due no specific maturity with
no stated interest. All interest and principal
due at maturity.
    
    
    10,000
    
    
    
    10,000Note payable, no specific maturity with no stated
Interest. All interest and principal
due at maturity.
    
    
    8,000
    
    
    
    18,000
    
    
    
    27,681Less: Discount for warrants issued
    
    
    (
    )
    
    
    (
    )Total short term loans payable
    
    $
    18,000
    
    
    $
    27,861
 Employees and Consultants
   Convertible Secured Promissory Notes Payable
  42




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##### Table of Contents



2006
    
    
    2005Notes 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 issue discount
    
    
    (171,992
    )Less: Stock conversion discount
    
    
    (152,508
    )Less: Debt proceeds not received
    
    
    (205,000
    )
    
    
    Total short term loans payable
    
    $
    298,390
    
    
    
    
    Note 11. Segment Information
   GeneLink
    
    DermageneticsInc.
    
    Inc.2006Net Revenues
    
    $
    57,333
    
    
    $
    118,341Operating expenses
    
    
    772,805
    
    
    
    196,445Other income
    
    
    2,011
    
    
    
    697Pre-tax earnings (loss)
    
    
    (507,254
    )
    
    
    (77,407
    )
 43




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##### Table of Contents



GeneLink
    
    DermageneticsInc.
    
    Inc.2005Net Revenues
    
    $
    108,053
    
    
    $
    288,870Operating expenses
    
    
    1,242,348
    
    
    
    435,732Other income
    
    
    
    
    
    
    Pre-tax earnings (loss)
    
    
    (1,134,295
    )
    
    
    (146,862
    )
 Note 12. Going Concern
  Note 13. Commitments and Contingencies
  John R. DePhillipo v. Robert P. Ricciardi
 44




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##### Table of Contents



John R. DePhillipo v.
GeneLink, Inc.,
  Note 14. Subsequent Events
  45




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##### Table of Contents



Note 15. Quarterly Results of Operations (unaudited)
  First
    
    Second
    
    Third
    
    Fourth2006Sales
    
    $
    47,711
    
    
    $
    35,642
    
    
    $
    59,122
    
    
    $
    33,199Gross profit
    
    
    30,962
    
    
    
    14,556
    
    
    
    33,206
    
    
    
    (31,529
    )Net income (loss)
    
    
    (229,491
    )
    
    
    (255,928
    )
    
    
    (138,698
    )
    
    
    (39,456
    )Net income (loss)
per
common share
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.008
    )
    
    
    (0.001
    )2005Sales
    
    $
    55,581
    
    
    $
    133,602
    
    
    $
    76,850
    
    
    $
    30,000Gross 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
    )
 Note 16 Correction of an Error
   As previouslyreported
    
    As RestatedSelected Balance Sheet Data as of December 31, 2006:Convertible secured promissory notes payable
    
    $
    456,977
    
    
    $
    298,390Selected Operations Data for 2006:Interest expense
    
    $
    98,212
    
    
    $
    105,202Selected Cash Flows Data for 2006:Net loss
    
    $
    577,671
    
    
    $
    584,661Depreciation and amortization:
    
    $
    52,892
    
    
    $
    59,882
 46




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##### Table of Contents



ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 8A.
    
    CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
   Change In Internal Controls
  47




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##### Table of Contents



PART III
 
 ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS.
  Name
    
    Age
    
    PositionMonte E. Taylor
    
    56
    
    
    
    Chief Executive Officer, Acting
Chief Financial Officer,
DirectorRobert P. Ricciardi, Ph.D.
    
    60
    
    
    
    Chairman, Secretary,
Chief Science Officer, 
DirectorDr. Bernard L. Kasten, Jr.
    
    60
    
    
    
    Executive Chairman of the Board,
DirectorRobert Hoekstra
    
    56
    
    
    
    DirectorJohn H. Souza
    
    44
    
    
    
    Director
   48




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st st th
   49




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##### Table of Contents



Audit Committee
    Nominating Committee
  50




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance.
  Code of Ethics
  Compensation of Directors and Meeting of Directors
  Communications with the Board of Directors
  Material Proceedings with Directors, Officers and Holders of More Than Five Percent of the
Common Stock of the Company; Resignation of Directors
  John R. DePhillipo v. GeneLink, Inc.,
 51




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##### Table of Contents



REPORT FROM THE AUDIT COMMITTEE
   52




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53




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##### Table of Contents



ITEM 10. EXECUTIVE COMPENSATION
 SUMMARY COMPENSATION TABLE
 All OtherName and Principal
    
    
    
    
    
    Salary
    
    Compensation
    
    TotalPosition
    
    Year
    
    ($)
    
    ($)
    
    ($)Monte E. Taylor, Jr. Chief
    
    
    2006
    
    
    $
    90,000
    
    
    $
    22,486
    (2)
    
    $
    112,486Executive Officer(1)2005
    
    
    $
    90,000
    
    
    $
    20,795
    (2)
    
    $
    110,796Robert P. Ricciardi, Ph.D.,
    
    
    2006
    
    
    $
    116,924
    (3)
    
    
    
    
    
    $
    116,924Chief Science Officer2005
    
    
    $
    106,294
    (3)
    
    
    
    
    
    $
    106,294
 
 (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
  DIRECTOR COMPENSATION
  Employment Agreements with Executive Officers
  54




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##### Table of Contents



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 PRINCIPAL SHAREHOLDERS
    Number of Shares
    
    Approximate PercentageName
    
    Beneficially Owned
    
    Of Stock OutstandingJohn R. and Maria D. DePhillipo
100 S. Thurlow Avenue
Margate, New Jersey 08402
    
    4,716,585(1)
    
    
    10.7
    %Dr. Bernard L. Kasten, Jr.
317 Wekiva Spring Road, #200
Longwood, FL 32779
    
    3,512,859(2)
    
    
    7.5
    %Kenneth R. Levine
1776 Broadway
Suite 2000
New York, New York 10019
    
    2,935,632(3)
    
    
    6.7
    %Robert Hoekstra
317 Wekiva Spring Road, #200
Longwood, FL 32779
    
    2,784,696(4)
    
    
    6.1
    %Robert P. Ricciardi, Ph.D.
317 Wekiva Spring Road, #200
Longwood, FL 32779
    
    
    2,710,000
    
    
    
    6.1
    %John H. Souza
317 Wekiva Spring Road, #200
Longwood, FL 32779
    
    1,490,331(5)
    
    
    3.3
    %
 55




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##### Table of Contents



Number of Shares
    
    Approximate PercentageName
    
    Beneficially Owned
    
    Of Stock OutstandingMonte E. Taylor, Jr.
317 Wekiva Spring Road, #200
Longwood, FL 32779
    
    27,750(6)
    
    
    *Directors and Officers as a
Group
    
    10,525,636(2)(4)(5)(6)
    
    
    21.4
    %
 
 (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%. 56




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##### Table of Contents



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    
 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.
 Exhibit Number
    
    Description31.1
    
    Certification of Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 57




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
  Fees for Independent Auditors for Fiscal Years 2006 and 2005
  2005
    
    
    2006Audit Fees
    
    $
    22,000
    
    
    $
    22,000Audit-Related Fees
    
    
    0
    
    
    
    0Tax Fees
    
    
    0
    
    
    
    0All Other Fees
    
    
    0
    
    
    
    0Total Fees
    
    $
    22,000
    
    
    $
    22,000
   58




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##### Table of Contents



SIGNATURES
  GENELINK, INC.
RegistrantDate: May 30, 2008
    By:
    /s/ Monte E. Taylor, Jr.Monte E. Taylor, Jr.,Chief Executive Officer  Signatures
    
    Capacity
    
    Date/s/ Monte E. Taylor, Jr.

Monte E. Taylor
Chief Executive Officer
    
    Principal Executive Officer,
Principal Financial Officer
and Director
    
    May 30, 2008DirectorRobert P. Ricciardi, Ph.D.
DirectorExecutive Chairman and DirectorDr. Bernard L. Kasten, Jr./s/ Robert Hoekstra
    
    Director
    
    May 30, 2008Robert Hoekstra/s/ John H. Souza
    
    Director
    
    May 30, 2008John H. Souza
 59