<PAGE>

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

                                  FORM 10-KSB/A

                                (Amendment No. 1)

                        ANNUAL REPORT FOR THE FISCAL YEAR
                             ENDED DECEMBER 31, 2005

                           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 Povonia 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. $625,210.

     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). $1,735,202.

     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.

<TABLE>
<S>                                <C>
Number of Shares of Common Stock
   Outstanding on March 10, 2006   36,357,868
</TABLE>

     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>

EXPLANATORY NOTE

     GeneLink, Inc. (the "Company") is filing this Amendment No. 1. to its
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2005. Upon
reviewing the Form 10-KSB, the Company's independent auditors informed the
Company that a new note 15 needed to be added to the audited financial
statements. This Form 10-KSB/A amends Item 7 (including the adding of a new note
15) and the Company has included current certifications of its Acting Chief
Executive Officer and Acting Chief Financial Officer pursuant to Sections 302
and 906 of the Sarbanes-Oxley Act of 2002, filed as Exhibits 31.1 and 32.1 under
Item 13. Except as set forth in this Explanatory Note, this Form 10-KSB/A does
not reflect events that have occurred after April 7, 2006, nor does it amend or
update any other information set forth in the Company's Form 10-KSB originally
filed by the Company on April 7, 2006. The remaining information contained in
this Amendment No. 1 to Form 10-KSB, which consists of all other information
originally contained in the original Form 10-KSB filed by the Company, is not
amended hereby, but is included for the convenience of the reader.

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I                                                                      PAGE
------                                                                      ----
<S>        <C>                                                              <C>
Item 1.    Description Of Business.......................................     1
Item 2.    Properties....................................................    12
Item 3.    Legal Proceedings.............................................    12
Item 4.    Submission Of Matters To A Vote Of Security Holders...........    13

PART II
Item 5.    Market For Common Equity And Related Stockholder Matters......    13
Item 6.    Management's Discussion And Analysis..........................    15
Item 7.    Financial Statements..........................................    20
Item 8.    Changes In And Disagreements With Accountants On Accounting
              And Financial Disclosure...................................    44
Item 8a.   Controls And Procedures.......................................    44

PART III
Item 9.    Directors And Executive Officers..............................    45
Item 10.   Executive Compensation........................................    47
Item 11.   Security Ownership Of Certain Beneficial Owners And Management    49
Item 12.   Certain Relationships And Related Transactions................    50

PART IV
Item 13.   Exhibits, Finanical Statement Schedules, and Reports on
              Form 8-K...................................................    50
Item 14.   Principal Accounting Fees And Services........................    50
</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 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 extraordinary items of $1,139,366 in 2003,
$2,114,619 in 2004, and $1,281,157 in 2005. 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 to determine what vitamin/nutritional
supplements, skin-care products, and health care 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 skin care formulations that have been
specifically designed to compensate for predicted deficiencies and to help
provide individuals the best of health and appearance.


                                      -1-

<PAGE>

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 AGING PROFILE

     Now, by simply swabbing the inside of one's mouth and sending the collected
sample to the laboratory, a person can have a skin or personal care formulation
specifically designed to compensate for associated deficiencies.

     Currently, when a person sees wrinkles or lines, they 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 much better strategy is to predict 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. Additionally, 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.

     The Company's OS gene test for skin aging looks for SNPs in several key
genes that are associated with oxidative stress. Test results can be used to
guide consumers to skin therapies or


                                      -2-
<PAGE>

skin products containing unique active ingredients and formulations designed to
help alleviate specific oxidative stress 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.

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,


                                      -3-

<PAGE>

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 had an agreement with the Health Science Center through 2006
for the storage of the genetic material obtained using the Company's DNA
Collection Kit(R). The Health Science Center will continue to store any DNA
specimens after such date for the balance of the 75 year storage period, but
after March 2006 will no longer be obligated to receive and store any additional
DNA specimens.

     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.

     The Company has a distribution agreement with Enzymatic Therapy, Inc.
Enzymatic Therapy's medical practitioner division, Integrative Therapeutics, is
the leading supplier of clinically validated nutritional supplements to doctors
and health care professionals in the United States. Enzymatic Therapy
manufactures more than 200 natural medicines, nutritional supplements, vitamins
and herbal extracts distributed exclusively via independent health food stores
nationwide. Enzymatic Therapy and Integrative Therapeutics are part of a
portfolio of companies managed by North Castle Partners, LLC, a private equity
firm focused exclusively on the healthy living and aging marketplace.

     In addition, 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. Keller, Dermagenetics has been appearing at Spa conventions and is currently
selling the Company's DNA UltraCustom skin cream to Spas in the United States.


                                      -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 gene profiles offer companies the information they need to
create and sell more effective products - unique wellness and 'quality of life'
products tailored to their customer's individual needs - based on the science of
genetics. No longer will people be forced to speculate, guess or use trial and
error to determine which nutritional supplements or skin-care products are best
for them. 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 - people can be directed to personalized products -
specifically formulated to help compensate for 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

     Great Smokies Diagnostics Laboratory performs SNP testing and provides
information direct to physicians. On its website, Great Smokies does not claim
any patentable proprietary tests. Sciona Limited is a biotechnology company
located in the United Kingdom. Sciona performs SNP testing in order to recommend
proper foods, diet and nutrition for individuals. These companies have greater
financial resources than the Company, and the Company cannot predict whether
they will enter into markets similar to those that the Company intends to enter
into or how competitive their products and services will be to those offered by
the Company.

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.


                                      -5-

<PAGE>

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,
2005, the Company employed a total of 1 person, who is on a full time basis, and
10 consultants in the following areas:

<TABLE>
<CAPTION>
                                      Number of         Full Time
           Category             Employees/Consultants   Employees
           --------             ---------------------   ---------
<S>                             <C>                     <C>
Sales and Marketing                      1/1                0
General and Administration,
   including Customer Service            1/2                1
Research and Development                 0/7                0
</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 WILL NOT BE ABLE TO PAY ANY JUDGMENT
AND WOULD 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, it is likely that the Company will not be able to pay any
such judgment and will 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".

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

     In January 2006, the Company entered into a secured bridge loan financing
pursuant to which it has pledged all of its intellectual property assets as
collateral for the repayment of the


                                      -6-

<PAGE>

secured bridge loan obligations. The bridge loan obligations mature on December
31, 2006. If the Company is unable to repay its obligations with respect to such
loans, the Lenders will be entitled to foreclose against such collateral, and in
such event the Company would be required to cease 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 April 2006. If the Company cannot obtain $800,000 of financing to
support its operations for the balance of 2006, the Company may not be able to
continue its business and may be forced to cease operations. Although the
Company has engaged a financial advisor to assist the Company in attempting to
raise approximately $500,000 in April 2006, 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;

     -    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.


                                      -7-

<PAGE>

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,
2005 was $10,536,413. The Company incurred a net loss of $1,052,870 for the
fiscal year ended December 31, 2005. 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.

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.


                                      -8-

<PAGE>

THE COMPANY'S INDUSTRY IS HIGHLY COMPETITIVE AND WE 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.

     Many of the Company's competitors have much greater financial, technical,
research, marketing, sales, distribution, service and other resources. Moreover,
the Company's competitors may offer broader product lines and have greater name
recognition, and may offer discounts as a competitive tactic. In addition,
several development stage companies are currently making or developing products
and services that compete with or will compete with the Company's products and
services. The Company's competitors may develop or market technologies or
products that are more effective or commercially attractive than the Company's
current or future products and services, or that may render the Company's
technologies and products and services obsolete.

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


                                      -9-

<PAGE>

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 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


                                      -10-

<PAGE>

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 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.


                                      -11-

<PAGE>

ITEM 2. PROPERTIES

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

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 currently a 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.

     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


                                      -12-
<PAGE>

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>
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>

<TABLE>
<CAPTION>
2004           High    Low
----          -----   -----
<S>           <C>     <C>
1st Quarter   $0.65   $0.34
2nd Quarter    0.55    0.27
3rd Quarter    0.42    0.27
4th Quarter    0.39    0.21
</TABLE>

     As of March 10, 2006, there were 154 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 anticipate that it will retain all
future revenues for working capital purposes.

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


                                      -13-

<PAGE>

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                                                                   Number of
                                                                              securities remaining
                               Number of                              available for future issuance under
                           securities to be                                          equity
                         issued upon exercise     Weighted-average             compensation plans
                            of outstanding       exercise price of           (excluding securities
                          options, warrants     outstanding options           reflected in column
                              and rights        warrants and rights                   (a))
     Plan Category                (a)                   (b)                           (c)
     -------------       --------------------   -------------------   -----------------------------------
<S>                      <C>                    <C>                   <C>
Equity
   compensation
   plans approved
   by security holders          600,000                $0.40                            0

Equity
   compensation
   plans not
   approved
   by security
   holders                            0                   --                            0
                                -------                -----                          ---
Total                           600,000                $0.40                            0
</TABLE>

RECENT SALES OF UNREGISTERED SECURITIES.

     The Company issued 466,170, 303,000 and 1,006,500 common shares of stock
for consulting services rendered to the Company valued at $97,184, $90,720 and
$200,582 for the years ended December 31, 2005, 2004 and 2003, 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.

     During the year ended December 31, 2003, the Company issued 6,460,000
shares of common stock and 6,460,000 warrants to purchase common stock for cash
consideration of $1,723,000. These shares and warrants were issued in reliance
upon Rule 506 of Regulation D under the Securities Act of 1933.


                                      -14-

<PAGE>

     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.

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
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 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. The Company has elected to account for its stock-based
compensation plans under APB 25.

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)."


                                      -15-

<PAGE>

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.

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, 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


                                      -16-

<PAGE>

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 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%.


                                      -17-
<PAGE>

     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, 2005:

<TABLE>
<CAPTION>
                           GENELINK    DERMAGENETICS
                             INC.           INC.
                          ----------   -------------
<S>                       <C>            <C>
NET REVENUES              $  108,054     $ 288,870
OPERATING EXPENSES         1,242,349       435,732
OTHER INCOME                 228,287            --
PRE-TAX EARNINGS (LOSS)     (906,008)     (146,862)
</TABLE>

The only reportable segment for the years ended December 31, 2004 and 2003 was
GeneLink, Inc. See details previously included in Part I, Item 6 of Form 10-KSB.

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2004 TO FISCAL YEAR ENDED DECEMBER
31, 2003.

     Assets. The Company's assets decreased from $1,211,820 at December 31, 2003
to $565,305 at December 31, 2004, a decrease of $646,515. This decrease was
primarily due to a decrease in cash from $746,082 at December 31, 2003 to
$155,689 at December 31, 2004, a decrease of $590,393, as cash was used to fund
operations.

     Liabilities. The Company's liabilities increased from $471,366 at December
31, 2003 to $764,599 at December 31, 2004, an increase of $293,233. This
increase in liabilities was primarily due to an increase in loans payable from
$0 at December 31, 2003 to $213,899 at December 31, 2004, as we borrowed money
to partially fund operating expenses, and by an increase in accrued compensation
from $336,306 at December 31, 2003 to $432,937 at December 31, 2004.

     Losses. The Company incurred a loss of $2,114,619 before extraordinary
items for the fiscal year ended December 31, 2004, as compared to a loss of
$1,139,366 before extraordinary items for the fiscal year ended December 31,
2003, an increase of $975,253. This increase was primarily due to an increase in
general and administrative expenses from $794,613 for the year ended December
31, 2003 to $1,517,005 for the year ended December 31, 2004, an increase of
$722,392, primarily resulting from the Additional Compensation Payment. The
increase in losses was also attributable to increases in attorney fees,
professional fees and advertising and promotional fees during the fiscal year
ended December 31, 2004.

     Revenues. The Company's total revenues for the fiscal year ended December
31, 2004 were $304,637, compared to $128,205 for the fiscal year ended December
31, 2003, an increase of $176,432. This increase in revenues is primarily due to
realizing additional sales in 2004 from


                                      -18-

<PAGE>

Dermagenetics(R) products and services, particular to the spa industry.

     Expenses. The Company's total expenses for fiscal year ended December 31,
2004 were $2,328,104, an increase of $1,127,069 from total expenses of
$1,203,035 for the fiscal year ended December 31, 2003. Increased expenses are
primarily due to an increase in general and administrative expenses from
$794,613 for the year ended December 31, 2003 to $1,517,005 for the year ended
December 31, 2004, an increase of $722,392, primarily resulting from the
Additional Compensation Payment. The increase in loss was also attributable to
increases in attorney fees, professional fees and advertising and promotional
fees during the fiscal year ended December 31, 2004.

LIQUIDITY AND CAPITAL RESOURCES

     For 2005, the Company's primary liquidity requirement has been the
implementation and funding of sales and marketing efforts and the payment of
compensation to the Company's former chief executive officer, its acting chief
executive officer and another employee. For 2006, 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, 2005, the Company's cash and
cash equivalents amounted to $15,275 as to compared to $155,689 at December 31,
2004, a decrease of $140,414. During 2005, the Company's operating activities
utilized $321,272 as compared to utilizing $1,255,666 in 2004, a decrease of
$934,394. Cash utilized during these periods resulted from the Company's net
losses for such periods and payment of notes payable generated in prior years of
operations.

     Investing activities utilized $117,661 in 2005, as compared to utilizing
$94,525 in 2004. Financing activities provided $298,519 in 2005, as compared to
$759,798 in 2004, primarily through the issuance of common stock. In September
2005, the Company borrowed $215,000 in anticipation of the receipt of funds from
the sale of New Jersey net operating losses. The Company received net proceeds
of $228,287 from the sale of its net operation losses and used such proceeds to
pay the loan plus interest at the rate of 24% per annum in December 2005. The
Company issued 200,000 shares of restricted common stock in connection with the
loan.

The Company will require approximately $800,000 to fund the Company's sales and
marketing efforts and to pay existing obligations for the balance of 2006. In
January 2006, the Company entered into a Bridge Loan Agreement pursuant to which
the Company borrowed $200,000 and granted the Bridge Loan lenders a security
interest in al of its intellectual property. The Bridge Loan financing accrues
interest at a rate of 12% per year and matures on December 31, 2006. The Bridge
Loan automatically converts into any convertible debt issued by the Company in
the principal amount of $1,000,000 or more and converts at any time at the
option of the holders into shares of the Company's common stock at the rate of
$0.05 per share. The Company has engaged a financial advisor and is attempting
to raise approximately $500,000 in April 2006 in a Convertible Secured Loan
transaction (the "Convertible Loan Financing"). It is contemplated that any
Convertible Loan Financing and would require the Company to issue common stock
and/or warrants to the Lenders and the Company's financial advisor. There is no
assurance that the Company will be able to obtain additional financing, whether
on terms similar to those described


                                      -19-

<PAGE>

above or on any other terms, whether acceptable to the Company or not. If the
Company cannot obtain this required financing, it is unlikely that the Company
will be able to continue its operations.

ITEM 7. FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                 PAGE
                                                                -----
<S>                                                             <C>
Report of Independent Registered Public Accounting Firm            21

Financial Statements

   Consolidated Balance Sheets                                  22-23
   Consolidated Statements of Operations                           24
   Consolidated Statements of Changes in Stockholders' Equity      25
   (Deficiency)
   Consolidated Statements of Cash Flows                        26-27
   Notes to Consolidated Financial Statements                   28-43
</TABLE>


                                      -20-

<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, 2005 and 2004, 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, 2005 and 2004, 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 11 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
March 29, 2006


                                      -21-

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 2005 AND 2004

                                     ASSETS

<TABLE>
<CAPTION>
                                 2005       2004
                               --------   --------
<S>                            <C>        <C>
CURRENT ASSETS
   Cash and cash equivalents   $ 15,275   $155,689
   Accounts receivable           32,651     23,239
   Inventory                      3,261     19,691
   Prepaid expenses              37,435     72,722
                               --------   --------
      Total current assets       88,622    271,341
                               --------   --------
PROPERTY AND EQUIPMENT          147,519     96,517
                               --------   --------
OTHER ASSETS                    209,135    197,447
                               --------   --------
      Total assets             $445,276   $565,305
                               ========   ========
</TABLE>

                 See Notes to Consolidated Financial Statements.


                                      -22-
<PAGE>

                LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
                           DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                       2005           2004
                                                                   ------------   -----------
<S>                                                                <C>            <C>
CURRENT LIABILITIES
   Accounts payable and accrued expenses                           $    429,165   $    95,800
   Accrued payroll taxes                                                  7,454        21,963
   Loans payable                                                         27,861       213,899
                                                                   ------------   -----------
         Total current liabilities                                      464,480       331,662
   Accrued compensation                                                 593,399       432,937
                                                                   ------------   -----------
         Total liabilities                                            1,057,879       764,599
                                                                   ------------   -----------

STOCKHOLDERS' EQUITY (DEFICIENCY)
   Common stock, par value $0.01 per share;
      authorized: 75,000,000 shares as of December
      31, 2005 and 2004 respectively; issued: 2005
      36,689,550 shares and 2004 33,133,011 shares;
      outstanding: 2005 36,283,381 shares and
      2004 32,726,842 shares                                            366,896       331,330
   Additional paid in capital                                         6,910,160     6,635,552
   Stock warrants                                                     2,961,809     2,632,422
   Accumulated deficit                                              (10,536,413)   (9,483,543)
   Treasury stock, 406,169 shares as of
      December 31, 2005 and 2004, respectively, at cost                (315,055)     (315,055)
                                                                   ------------   -----------
         Total stockholders' equity (deficiency)                       (612,603)     (199,294)
                                                                   ------------   -----------
         Total liabilities and stockholders' equity (deficiency)   $    445,276   $   565,305
                                                                   ============   ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                      -23-

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                     2005          2004
                                                 -----------   -----------
<S>                                              <C>           <C>
REVENUES:                                        $   396,923   $   304,637
COST OF GOODS SOLD:                                  229,395        91,152
                                                 -----------   -----------
GROSS PROFIT                                         167,528       213,485
                                                 -----------   -----------

EXPENSES:
   General and administrative                        802,984     1,517,005
   Consulting                                        177,633       393,961
   Professional fees                                 222,475       228,274
   Advertising and promotion                         209,370       165,363
   Amortization and depreciation                      36,223        23,501
                                                 -----------   -----------
                                                   1,448,685     2,328,104
                                                 -----------   -----------
OPERATING LOSS                                    (1,281,157)   (2,114,619)

OTHER INCOME:
   Sale of New Jersey state net operating loss       228,287            --
                                                 -----------   -----------
      Loss before provision for income taxes      (1,052,870)   (2,114,619)
   PROVISION FOR INCOME TAXES:                            --            --
                                                 -----------   -----------
      NET LOSS                                   $(1,052,870)  $(2,114,619)
                                                 ===========   ===========

LOSS PER SHARE, BASIC AND DILUTED:               $     (0.03)  $     (0.07)
                                                 ===========   ===========
   Weighted average common shares and
      diluted potential common shares             35,806,407    31,286,924
                                                 ===========   ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                      -24-

<PAGE>

                          GENELINK, INC. AND SUBSIDIARY
     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                       COMMON STOCK                 ADDITIONAL      STOCK
                                   --------------------   TREASURY    PAID IN   SUBSCRIPTION
                                     SHARES     AMOUNT     STOCK      CAPITAL    RECEIVABLE
                                   ----------  --------  ---------  ----------  ------------
<S>                                <C>         <C>       <C>        <C>         <C>
BALANCE, DECEMBER 31, 2003         31,005,011  $310,050  $(205,860) $6,774,021  $(1,016,635)
                                   ==========  ========  =========  ==========  ===========
Cancellation of stock warrants              0         0          0      46,062            0
Issuance of warrants for
   commission                               0         0          0           0            0
Issuance of warrants as loan
   consideration                            0         0          0           0            0
Issuance of warrants                        0         0          0           0            0
Fair value of options granted
   for services                             0         0          0     448,000            0
Repayment of stock
   subscription receivable                  0         0   (109,195)   (779,271)   1,028,935
Interest accrued on
   subscriptions receivable                 0         0          0      12,300      (12,300)
Issuance of common stock for
   consulting                          72,000       720          0      21,600            0
Issuance of common stock and
   stock warrants for commissions      75,000       750          0        (750)           0
Issuance of common stock and
   stock warrants for services        156,000     1,560          0      66,840            0
Issuance of common stock and
   stock warrants pursuant to                                                             0
   private placement offerings      1,825,000    18,250          0      46,750            0
Net loss                                    0         0          0           0            0
                                   ----------  --------  ---------  ----------  -----------
                                    2,128,000    21,280   (109,105)   (138,469)   1,016,635
                                   ----------  --------  ---------  ----------  -----------
BALANCE, DECEMBER 31, 2004         33,133,011  $331,330  $(315,055) $6,635,552  $         0
                                   ==========  ========  =========  ==========  ===========
Issuance of common stock and
   stock warrants related to loan
   conversion                         640,369     6,404          0      44,826            0
Fair value of options granted for
   services                                 0         0          0           0            0
Fundraising costs incurred                  0         0          0     (32,500)           0
Fair value of options granted for
   fundraising services                     0         0          0     (79,050)           0
Fair value of options granted for
   services                                 0         0          0           0            0
Issuance of common stock related
   to loan agreement                  200,000     2,000          0         400            0
Issuance of common stock and
   stock warrants for services        466,170     4,662          0      85,932            0
Issuance of common stock and
   stock warrants pursuant to
   private placement offerings      2,250,000    22,500          0     255,000            0
Net loss                                    0         0          0           0            0
                                   ----------  --------  ---------  ----------  -----------
                                    3,556,539    35,566          0     274,608            0
                                   ----------  --------  ---------  ----------  -----------
BALANCE, DECEMBER 31, 2005         36,689,550  $366,896  $(315,055) $6,910,160  $         0
                                   ==========  ========  =========  ==========  ===========

<CAPTION>
                                                 DEFERRED
                                      STOCK        STOCK      ACCUMULATED
                                    WARRANTS   COMPENSATION     DEFICIT       TOTAL
                                   ----------  ------------  ------------  -----------
<S>                                <C>         <C>           <C>           <C>
BALANCE, DECEMBER 31, 2003         $2,247,802       $0       $ (7,368,924) $   740,454
                                   ==========      ===       ============  ===========
Cancellation of stock warrants        (48,188)       0                  0       (2,126)
Issuance of warrants for
   commission                           2,550        0                  0        2,550
Issuance of warrants as loan
   consideration                       53,058        0                  0       53,058
Issuance of warrants                   60,000        0                  0       60,000
Fair value of options granted
   for services                        17,200        0                  0      465,200
Repayment of stock
   subscription receivable                  0        0                  0      140,469
Interest accrued on
   subscriptions receivable                 0        0                  0            0
Issuance of common stock for
   consulting                               0        0                  0       22,320
Issuance of common stock and
   stock warrants for commissions           0        0                  0            0
Issuance of common stock and
   stock warrants for services              0        0                  0       68,400
Issuance of common stock and
   stock warrants pursuant to               0        0                  0            0
   private placement offerings        300,000        0                  0      365,000
Net loss                                    0        0         (2,114,619)  (2,114,619)
                                   ----------      ---       ------------  -----------
                                      384,620        0         (2,114,619)  (2,114,619)
                                   ----------      ---       ------------  -----------
BALANCE, DECEMBER 31, 2004         $2,632,422       $0       $ (9,483,543) $  (199,294)
                                   ==========      ===       ============  ===========
Issuance of common stock and
   stock warrants related to loan
   conversion                          94,877        0                  0      146,107
Fair value of options granted for
   services                            11,520        0                  0       11,520
Fundraising costs incurred                  0        0                  0      (32,500)
Fair value of options granted for
   fundraising services                27,900        0                  0      (51,150)
Fair value of options granted for
   services                            16,000        0                  0       16,000
Issuance of common stock related
   to loan agreement                        0        0                  0        2,400
Issuance of common stock and
   stock warrants for services          6,590        0                  0       97,184
Issuance of common stock and
   stock warrants pursuant to
   private placement offerings        172,500        0                  0      450,000
Net loss                                    0        0         (1,052,870)  (1,052,870)
                                   ----------      ---       ------------  -----------
                                      329,387        0         (1,052,870)    (413,309)
                                   ----------      ---       ------------  -----------
BALANCE, DECEMBER 31, 2005         $2,961,809       $0       $(10,536,413) $  (612,603)
                                   ==========      ===       ============  ===========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       25
<PAGE>

                          GENELINK, INC. AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                2005          2004
                                            -----------   -----------
<S>                                         <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                    $(1,052,870)  $(2,114,619)
Adjustments to reconcile net loss to net
cash used in operating activities:
   Depreciation and amortization                 36,223        23,501
   Common stock issued for services              97,184       110,202
   Common stock issued for commissions               --         2,550
   Common stock issued for loan agreement         2,400            --
   Warrants issued for services                  16,000            --
   Fair value of options granted for
      consulting services                        39,420       465,200
(Increase) decrease in assets:
   Accounts receivable                           (9,412)       20,317
   Inventories                                   16,430           350
   Prepaid expenses                              35,287       124,499
   Deposits and trademarks                       18,748            --
Increase (decrease) in liabilities:
   Accounts payable and accrued expenses        333,365        48,834
   Accrued payroll taxes                        (14,509)      (33,131)
   Accrued compensation                         160,462        96,631
                                            -----------   -----------
Net cash used in operating activities          (321,272)   (1,255,666)
                                            -----------   -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment              (72,473)      (37,936)
Patent acquisition costs                        (45,188)      (56,589)
                                            -----------   -----------
Net cash used in investing activities          (117,661)      (94,525)
                                            -----------   -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and notes payable                --       213,899
Repayments of loans and notes payable          (186,038)      180,899
Common stock issued for loan conversion         146,107            --
Private placement fundraising costs            (111,550)           --
Proceeds from issuance of common stock          450,000       365,000
                                            -----------   -----------
Net cash provided by financing activities       298,519       759,798
                                            -----------   -----------
Net decrease in cash and
cash equivalents                               (140,414)     (590,393)
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       26

<PAGE>

                                 GENELINK, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                       2005       2004
                                                     --------   --------
<S>                                                  <C>        <C>
Cash and cash equivalents:
Beginning                                             155,689    746,082
                                                     --------   --------
Ending                                               $ 15,275   $155,689
                                                     ========   ========
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
   Interest:                                         $ 54,114   $     --
                                                     ========   ========
Non-cash financing transactions:
Accrued interest on subscriptions receivable         $     --   $ 12,300
                                                     ========   ========
Common stock issued for services                     $ 97,184   $ 90,720
                                                     ========   ========
Acquisition of treasury stock                        $     --   $109,195
                                                     ========   ========
</TABLE>

                 See Notes to Consolidated Financial Statements


                                       27

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

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 ProfileTM 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.


                                       28

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

     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.

     AMORTIZATION OF PATENTS:


                                       29
<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          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
          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, 2005 and 2004.

     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


                                       30

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          and requires a reconciliation of the numerator and denominator of the
          diluted EPS computation. Diluted EPS reflects the potential dilution
          that could occur if securities or other contracts to issue common
          stock were exercised or converted into common stock. Diluted EPS for
          2005 and 2004 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 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
          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. The Company has
          elected to account for its stock-based compensation plans under APB
          25.

     RECENT ACCOUNTING DEVELOPMENTS:

          In December 2004, the FASB issued a revision to SFAS No. 123,
          Accounting for Stock-Based Compensation, SFAS No. 123-R, Share-Based
          Payment. SFAS No. 123-R focuses primarily on transactions in which an
          entity exchanges its equity instruments for employee services and
          generally establishes standards for the accounting for transactions in
          which an entity obtains goods or services in share-based payment
          transactions. SFAS No. 123-R is effective for the Company in 2006.
          Management is currently evaluating the effect of adoption of SFAS No,
          123-R and the effect on financial condition, results of operations or
          cash flows is yet to be determined.

     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, 2005 and 2004, property and equipment consisted of the
     following:

<TABLE>
<CAPTION>
                                  2005       2004
                                --------   --------
<S>                             <C>        <C>
Office furniture                $  1,154   $  1,154
Office equipment                  57,494     49,444
Leasehold improvements            85,420     85,420
</TABLE>


                                       31

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENT
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<S>                             <C>        <C>
Software                          76,323     11,900
                                --------   --------
                                 220,391    147,918
Less accumulated depreciation
   and amortization               72,872     51,401
                                --------   --------
                                $147,519   $ 96,517
                                ========   ========
</TABLE>

     Depreciation and amortization expense was $21,471 and $11,854 for the years
     ended December 31, 2005 and 2004, respectively.

NOTE 4. OTHER ASSETS

     As of December 31, 2005 and 2004, other assets consisted of the following:

<TABLE>
<CAPTION>
                           2005       2004
                         --------   --------
<S>                      <C>        <C>
Patents and trademarks   $250,389   $205,201
Organization costs         86,976     86,976
Deposits                       --     18,748
                         --------   --------
                          337,365    310,925
   Less accumulated
      amortization        128,230    113,478
                         --------   --------
                         $209,135   $197,447
                         ========   ========
</TABLE>

     Amortization expense was $14,752 and $11,647 for the years ended December
     31, 2005 and 2004, respectively.

     The future estimated minimum amortization expense that will be charged to
     operations as of December 31, 2005 is as follows:

<TABLE>
<CAPTION>
Year ending
December 31,
------------
<S>            <C>
    2006       $ 14,752
    2007         14,752
    2008         14,752
    2009         14,752
    2010         14,752
 Thereafter     135,375
               --------
               $209,135
               ========
</TABLE>


                                       32
<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

NOTE 5. INCOME TAXES

     At December 31, 2005 and 2004, the Company had federal and state tax net
     operating loss carry forwards of approximately $14,650,000 and $13,600,000,
     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 $1,880,000 and $1,670,000 at
     December 31, 2005 and 2004, 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 $210,000 for the year ended December 31, 2005 and $260,000 for
     the year ended December 31, 2004.

     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

          During the years ended December 31, 2005 and 2004, the Company issued
          2,250,000 and 1,825,000 shares of common stock and 1,500,000 and
          1,825,000 warrants to purchase common stock for cash consideration of
          $450,000 and $365,000, respectively. This is pursuant to the private
          placement offerings in 2005 and 2004. Using the Black-Scholes
          methodology, the warrants were valued at $300,000 and $172,500,
          respectively.

          The Company issued 466,170 and 303,000 shares of common stock for
          services rendered, valued at $97,184 and $90,720 for the years ended
          December 31, 2005 and 2004, respectively.

          During 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.

     Subscription Receivable-Officers

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


                                       33

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          Since its inception, the Company advanced funds periodically to its
          former Chief Executive Officer. Subscription Receivable-Officers
          represents officer's loans and accrued interest of $ 0 and $1,016,635
          at December 31, 2005 and December 31, 2004, respectively. The loans
          accrued interest using the average applicable monthly Federal Rates
          (AFRs).

          The Company recorded these subscription receivables as a contra-equity
          account in the Company's balance sheet in accordance with Staff
          Accounting Bulletin Topic 4G, with related interest income on these
          notes also being recorded in the Company's equity section.

          On June 29, 2003, the Company issued to John DePhillipo 2,722,345
          shares and Maria DePhillipo 723,530 shares in satisfaction of accrued
          and unpaid salary of $544,469 owed to John DePhillipo and $144,704
          owed to Maria DePhillipo. Effective March 24, 2004, the Board of
          Directors decided to provide additional compensation payable to John
          DePhillipo and Maria DePhillipo to reflect the desire of the Board to
          treat the shares issued June 29, 2003 to John DePhillipo not as
          issuances in satisfaction of accrued but unpaid salary but as
          additional compensation (the "Additional Compensation Payment"). To
          reflect the Additional Compensation Payment, the Corporation recorded
          $544,469 of additional compensation to John DePhillipo during March
          2004. The stock subscription receivable was repaid in 2004 in
          conjunction with a sale of treasury stock back to the Company by John
          DePhillipo. 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.

     Stock Options and Warrants

          The Financial Accounting Standards Board has issued SFAS No. 123,
          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 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 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 123 had been adopted. The Company has elected to
          account for its stock-based compensation plans under APB 25.


                                       34

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          During 2004, two officers were granted options to buy 1,000,000 shares
          of common stock for $0.40 per share. These options replaced expiring
          options of the same number to buy stock at $1.00 per share.

          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 $11,520 was charged to the options.

          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, 2005 and 2004, and changes during the years ending of
          those dates are presented below:

<TABLE>
<CAPTION>
                                         2005                    2004
                                ---------------------   ---------------------
                                             Weighted                Weighted
                                              Average                 Average
                                             Exercise                Exercise
                                  Shares       Price      Shares       Price
                                ----------   --------   ----------   --------
<S>                             <C>          <C>        <C>          <C>
Options/warrants outstanding
   at beginning of year         20,818,937    $ 0.51    16,795,188    $ 0.58
Granted                          3,010,704      0.23     6,449,999      0.48
Exercised                               --        --            --        --
Expired                         (3,323,820)    (0.31)     (295,000)    (0.39)
Cancelled                       (3,600,000)    (0.79)   (2,131,250)    (0.98)
                                ----------    ------    ----------    ------
Options/warrants outstanding
   at end of year               16,905,821    $ 0.44    20,818,937    $ 0.51
                                ==========    ======    ==========    ======
Options/warrants exercisable
   at end of year               16,703,149              19,898,937
Weighted-average fair value
   of options granted during
   the year                                   $ 0.11                  $ 0.23
</TABLE>


                                       35

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          The following table summarizes information about stock options and
          warrants outstanding at December 31, 2005:

<TABLE>
<CAPTION>
                         Weighted-Average
              Number         Remaining
Exercise   Outstanding   Contractual Life   Exercisable
  Price    at 12/31/05        (Years)         Warrants
--------   -----------   ----------------   -----------
<S>        <C>           <C>                <C>
  0.20       4,307,704         4.07           4,307,704
  0.25         565,000         3.71             565,000
  0.35         100,000         0.28             100,000
  0.40       4,053,000         1.88           3,983,663
  0.44         550,000         0.05             550,000
  0.45         920,000         2.12             920,000
  0.50       2,730,001         1.47           2,596,666
  0.60       2,206,250         2.89           2,206,250
  0.75         387,500         1.77             387,500
  1.00       1,086,366         1.27           1,086,366
            ----------                       ----------
            16,905,821                       16,703,149
            ==========                       ==========
</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:

<TABLE>
<CAPTION>
                                             2005          2004
                                         -----------   -----------
<S>                                      <C>           <C>
Net loss:
   As reported                           $(1,052,870)  $(2,114,619)
   Additional stock-based compensation            --      (312,500)
   Proforma                               (1,052,870)  $(2,427,119)
Net loss per common share:
   As reported                           $     (0.03)  $     (0.07)
Additional stock-based compensation               --         (0.01)
   Proforma                                    (0.03)        (0.08)
</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>


                                       36
<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

     Treasury Stock

          In relation to the settlement of the stock subscription receivable in
          2004, 209,989 shares of common stock valued at $109,195 was returned
          to the Company and recorded as treasury stock.

          The components of the repayment of the stock subscription receivable
          via the treasury stock transaction is as follows:

<TABLE>
<S>                                              <C>
Stock subscription receivable before repayment   $1,028,935

Less reductions in additional paid-in-capital:
   Accrued interest forgiven                       (331,271)
   Stock option compensation - J. DePhillipo       (544,919)
   Stock option compensation - M. DePhillipo        (43,550)
                                                 ----------
                                                   (919,740)
                                                 ----------
Less treasury stock sales by shareholder:
   Shares given to company by                    ----------
   J. DePhillipo 209,990 @ $0.52                   (109,195)
                                                 ----------
Stock subscription receivable after repayment    $       --
                                                 ==========
</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.


                                       37

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                           2005          2004
                                                       -----------   -----------
<S>                                                    <C>           <C>
Net loss                                               $(1,052,870)  $(2,114,619)

Weighted average number of shares of common
   stock and common stock equivalents outstanding               --            --
Weighted average number of common shares
   outstanding for computing basic earning per share    35,806,407    31,286,924
Dilutive effect of warrants and stock options after
   application of the treasury stock method                     --            --
</TABLE>

<TABLE>
<CAPTION>
                                                           2005          2004
                                                       -----------   -----------
<S>                                                    <C>           <C>
Weighted average number of common shares out-
   standing for computing diluted earnings per share    35,806,407    31,286,924
                                                       ===========   ===========
Net loss per share - basic and diluted                 $     (0.03)  $     (0.07)
                                                       ===========   ===========
</TABLE>

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

<TABLE>
<CAPTION>
                              Years Ended December 31
                             -------------------------
                                2005           2004
                             -----------   -----------
<S>                          <C>           <C>
Warrants and stock options   $16,905,821   $20,818,937
                             ===========   ===========
</TABLE>

NOTE 8. ADVERTISING

     The Company expenses the production costs of advertising when incurred.
     Advertising expense was $209,370 and $165,363 for the years ended December
     31, 2005 and 2004, respectively.

NOTE 9. RENT

     The Company leases its offices in Jersey City, New Jersey. The lease
     provides for a term of six (6) months, with rental payments of $98 per
     month.

NOTE 10. RELATED PARTY TRANSACTIONS

     The Company has an agreement with the UNTHSC through March 2006 for the
     storage of genetic material obtained using one of the Company's kits. Two
     (2) doctors associated with the UNTHSC own approximately 20,000 shares of
     the Company.


                                       38

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

     The Company has established protocols with the UNTHSC whereby the UNTHSC
     will receive a sample in an envelope enclosed with the kit, measure the
     quantity to assure that enough genetic material is present, analyze the
     sample to extract the DNA, freeze and store the material in the
     refrigerated area maintained by the UNTHSC making it available for future
     retrieval.

     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 continues 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.

     It is anticipated that First Equity will receive shares and warrants if it
     assists the Company in obtaining additional debt financing. First Equity
     did not receive any consideration in connection with the Bridge Loan
     Financing.

     Mr. Levine invested $40,000 in the Bridge Loan financing and in connection
     therewith received 80,000 shares of the Company's Common Stock. The Company
     has pledged its intellectual property to secure its payment obligations to
     all holders of the Bridge Loan notes, including Mr. Levine, pursuant to the
     terms of a Bridge Note Security Agreement and the holders of the Bridge
     Loan notes, including Mr. Levine, will be entitled to exercise any remedies
     granted to them under the terms of such security agreement upon the default
     by the Company of its obligations under the Bridge Loan financing.


                                       39

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

     Short Term Loans Payable

          As of December 31, 2005, the Company has various shareholders of the
          company who provided short term obligations, as follows:

<TABLE>
<CAPTION>
                                                       2005      2004
                                                     -------   --------
<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   $ 50,000

Note payable, due January 1, 2005 with
   interest at  6%.  All interest and principal
   due at maturity.                                       --     50,000

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     25,000

Note payable, due no specific maturity with
   no stated interest.  All interest and principal
   due at maturity.                                   10,000         --

Note payable, due January 31, 2005 with
   interest at  6%.  All interest and principal
   due at maturity.                                       --    100,000
                                                     -------   --------
                                                      27,861    225,000
Less: Discount for warrants issued                       (--)   (11,101)
                                                     -------   --------
Total short term loans payable                       $27,861   $213,899
                                                     =======   ========
</TABLE>

     Employees and Consultants

          The Company is dependent on the services of Monte E. Taylor, Jr., its
          acting Chief Executive Officer and acting Chief Financial Officer. The
          Company is in the process of negotiating an employment 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 is five (5) years. As of December 31, 2005 and 2004,
          $593,399 and $432,937, respectively was owed to Dr. Ricciardi for
          services rendered under the


                                       40
<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

          consulting agreement. The Company is in the process of renewing its
          agreement with Dr. Ricciardi. A new agreement has not yet been signed.

NOTE 11. SEGMENT INFORMATION

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

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

<TABLE>
<CAPTION>
                           GENELINK    DERMAGENETICS
                              INC.          INC.
                          ----------   -------------
<S>                       <C>          <C>
NET REVENUES              $  108,054     $ 288,870

OPERATING EXPENSES         1,242,349       435,732

OTHER INCOME                 228,287            --

PRE-TAX EARNINGS (LOSS)     (906,008)     (146,862)
</TABLE>

     The only reportable segment for the years ended December 31, 2004 and 2003
     was GeneLink, Inc.

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 $1,052,870 and
     $2,114,619 for the years ended December 31, 2005 and 2004, respectively.
     The Company reported a deficit of $10,536,413 and $9,483,543 as of December
     31, 2005 and 2004, 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.


                                       41

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

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 currently a 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, 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.


                                       42

<PAGE>

                                 GENELINK, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2005 AND 2004

NOTE 14. SUBSEQUENT EVENTS

     The Company will require approximately $800,000 to fund the Company's sales
     and marketing efforts and to pay existing obligations for the balance of
     2006. In January 2006, the Company entered into a Bridge Loan Agreement
     pursuant to which the Company borrowed $200,000 and pledged all of its
     intellectual assets as collateral. The Bridge Loan Financing accrues
     interest at a rate of 12% per year and matures on December 31, 2006.

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, 2005 and 2004:

<TABLE>
<CAPTION>
                           First        Second      Third       Fourth
                        -----------   ---------   ---------   ---------
<S>                     <C>           <C>         <C>         <C>
2005
Sales                   $   155,581   $ 133,602   $  76,850   $  30,000
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)

2004
Sales                   $    25,208   $  73,193   $ 157,054   $  49,182
Gross profit                  3,660      39,764     141,183      28,878
Net income (loss)        (1,125,317)   (332,967)   (179,108)   (477,227)
Net income (loss) per
   common share               (0.04)      (0.01)      (0.01)      (0.01)
</TABLE>


                                       43

<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
acting 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 acting Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of the design
and operation of its disclosure controls and procedures at the conclusion of the
fiscal quarter ended December 31, 2005. 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.


                                       44

<PAGE>

                                    PART III

ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS.

     Officers and Directors

     Information with respect to each of the executive officer and director is
     set forth below

<TABLE>
<CAPTION>
Name                        Age   Position
----                        ---   --------
<S>                         <C>   <C>
Monte E. Taylor             55    Acting Chief Executive Officer, Acting
                                  Chief Financial Officer, Director

Robert P. Ricciardi, Phd.   59    Chairman, Secretary, Treasurer, Director

John R. DePhillipo          64    Director
</TABLE>

On July 28, 2005, Monte E. Taylor, Jr. was elected to the Board of Directors.
Mr. Taylor was elected to fill a newly-created vacancy of the Board of Directors
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 in business administration from the Crammer School
of Business at Rollins College.

Dr. Ricciardi has been an officer and director of the company since its
formation in 1995. Dr. Robert Ricciardi is a Professor of Microbiology at the
University of Pennsylvania, where he served as Chairman of the Microbiology and
Virology Program of the Molecular Biology Graduate Group. He received his Ph.D.
from the University of Illinois at Urbana in cellular biology. He was a
postdoctoral fellow at Brandeis University and Harvard Medical School in the
Department of Biological Chemistry and was awarded fellowships by the American
Cancer Society, National Institute of Health and Charles A. King Trust. He
developed one of the first techniques in molecular biology that has been widely
used both to map genes and determine the proteins they encode. While most of his
research has centered on basic mechanisms of cancer, he has developed patented
recombinant delivery vectors for use as vaccines as well as mechanistic
screening methods to discover therapeutic drugs against cancers. 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 more than 80
publications, has been awarded a NATO Visiting Professorship at Ferrara Medical
School, Italy, and has been an invitational speaker at various scientific
meetings and universities.

     Mr. DePhillipo was an officer and director of the Company since its
formation in 1995 until his termination as Chief Executive Officer and Chief
Financial Officer, effective October 14, 2005. As the Chief Executive Officer of
the Company, Mr. DePhillipo had responsibility and oversight for business
collaborations and intellectual property and research and development


                                       45
<PAGE>

matters for the Company, and led the efforts to take the Company public in 1998.
From 1965 through 1990, Mr. DePhillipo was a real estate and land developer of
multi-million dollar projects. Mr. DePhillipo was a founder and the chief
executive officer of Applied Safety, the developer of the retro-fit airbag,
which was sold to Breed Technologies in 1994.

Audit Committee

     The entire Board of Directors acts as the Audit Committee. The Audit
Committee does not have an audit committee financial expert or any independent
directors. 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.

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 (the "1934 Act"), as amended 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, 2005 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.


                                       46

<PAGE>

ITEM 10. EXECUTIVE COMPENSATION

                             EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                      Long-Term Compensation
                                                                     -----------------------
                                                                              Awards
                                          Annual Compensation        -----------------------
                                   --------------------------------      (f)      Securities  Payouts
                                                            (e)      Restricted  Under-Lying    (h)        (i)
            Year             Year     (c)        (d)   Other Annual     Stock      Options/     LTIP     All Other
            (a)               (b)   Salary      Bonus  Compensation   Award(s)      SARs      Payouts  Compensation
Name and Principal Position  Year     ($)        ($)        ($)          ($)         (#)        ($)         ($)
---------------------------  ----  --------    ------  ------------  ----------  -----------  -------  ------------
<S>                          <C>   <C>         <C>     <C>           <C>         <C>          <C>      <C>
Monte E. Taylor, Jr.         2005  $ 90,000(3)     --         --         --             --       --          --
Acting Chief Executive       2004  $ 95,000(3)     --         --         --        500,000       --          --
Officer(1)                   2003  $103,000(3)     --         --         --             --       --          --

John R. DePhillipo, Chief    2005  $243,756        --         --         --             --       --      $3,600(6)
Executive Officer (2)        2004  $300,000    $5,000   $544,919(4)      --             --       --      $4,800(6)
                             2003  $334,814        --   $544,465(5)      --             --       --      $4,800(6)

Robert P. Ricciardi, Ph.D.,  2005  $106,294(7)     --         --         --             --       --          --
Treasurer                    2004  $ 96,631(7)     --         --         --             --       --          --
                             2003  $ 87,846(7)     --         --         --             --       --          --
</TABLE>

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

(2)  Mr. DePhillipo's employment with the Company terminated on October 14,
     2005.

(3)  Represents compensation payable pursuant to a consulting agreement.

(4)  Value of accrued compensation owed by the Company to Mr. DePhillipo offset
     against loans owed to the Company by Mr. DePhillipo.

(5)  Represents the value of common shares issued to Mr. DePhillipo in 2003.

(6)  Represents the cost of life insurance premiums provided from the Company.

(7)  This amount has accrued but has not been paid.


                                       47

<PAGE>

                      OPTION/SAR GRANTS IN LAST FISCAL YEAR

Individual Grants

<TABLE>
<CAPTION>
                                (b)                      (c)
                       Number of Securities   Percent of Total Options/          (d)             (e)
(a)                     Underlying Option/    SARs Granted to Employees   Exercise of Base   Expiration
Name                     SARs Granted (#)           in Fiscal Year           Price ($/Sh)       Date
----                   --------------------   -------------------------   ----------------   ----------
<S>                    <C>                    <C>                         <C>                <C>
Monte E. Taylor, Jr.             0                        0                      --              --
John R. DePhillipo               0                        0                      --              --
Robert P. Ricciardi              0                        0                      --              --
</TABLE>

                     AGGREGATED OPTION/SAR EXERCISES IN LAST
                    FISCAL YEAR AND F/Y-END OPTION/SAR VALUES

<TABLE>
<CAPTION>
                                                                             (d)                                  (e)
                                                               Number of Securities Underlying    Value of Unexercised In-the-Money
                               (b)                           Unexercised Options/SARs at Fiscal             Options/SARs at
         (a)           Shares Acquired On        (c)                    Year-End (#)                      Fiscal Year-End ($)
        Name               Exercise (#)     Value Realized        Exercisable/Unexercisable            Exercisable/Unexercisable
        ----           ------------------   --------------   ----------------------------------   ----------------------------------
<S>                    <C>                  <C>              <C>                                  <C>
Monte E. Taylor, Jr.            0                  --                           0/0                               0/0
John R. DePhillipo              0                  --                           0/0                               0/0
Robert P. Ricciardi             0                  --                     600,000/0                               0/0
</TABLE>

Employment Agreements with Executive Officers

     The Company is negotiating an employment agreement with Monte E. Taylor,
Jr., its acting chief executive officer and acting chief financial officer. A
new agreement has not been signed. Mr. Taylor's current arrangement with the
Company provides for annual compensation of $90,000.

     The Company has entered into a consulting agreement with Dr. Ricciardi
dated February 24, 1998, which provides for initial compensation of $30,000 per
year in 1998 and $60,000 per year in 1999, a ten percent (10%) increase in
compensation each year thereafter, an initial term of (5) years, the grant of
options to acquire 1,000,000 shares at an exercise price of $0.10 per share, and
requires Dr. Ricciardi to perform eight (8) hours of consulting services per
week. Dr. Ricciardi's consulting agreement provides for a change in control
payment equal to two times the compensation in effect.

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 four (4) times in 2005. Each director
attended each meeting via telephone conference.


                                       48
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

          Security Ownership of Management and Certain Beneficial Owners

     The following table sets forth certain information as of March 10, 2006
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 and (iii) by all
current officers and directors of the Company as a group. 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)              13.0%
100 S. Thurlow Avenue
Margate, NJ 08402

Kenneth R. Levine                    3,125,613 (2)               8.4%
1776 Broadway
Suite 1403
New York, NY 10019

Robert P. Ricciardi                  2,710,000                   7.5%
Newport Financial Center
113 Povonia Avenue, #313
Jersey City, NJ 07310

                                        11,250                      *
Monte E. Taylor, Jr.
Newport Financial Center
113 Povonia Avenue, #313
Jersey City, NJ 07310

                                     7,437,835 (1)              20.5%

Directors and Officers as a
Group
</TABLE>

(1)  Includes 3,235,885 shares held by John R. DePhillipo and 1,010,700 shares
     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 family trusts for which Mrs. DePhillipo is
     the trustee. Mr. and Mrs. DePhillipo each disclaims any beneficial
     ownership of these shares.

(2)  Includes currently exercisable warrants to acquire 987,869 shares of the
     Company's Common Stock.

*    less than 1%.


                                       49

<PAGE>

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     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
continues 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.

     It is anticipated that First Equity would receive shares and warrants if it
assists the Company in obtaining additional debt financing. First Equity did not
receive any consideration in connection with the Bridge Loan Financing.

     Mr. Levine invested $40,000 in the Bridge Loan financing and in connection
therewith received 80,000 shares of the Company's Common Stock. The Company has
pledged its intellectual property to secure its payment obligations to all
holders of the Bridge Loan notes, including Mr. Levine, pursuant to the terms of
a Bridge Note Security Agreement and the holders of the Bridge Loan notes,
including Mr. Levine, will be entitled to exercise any remedies granted to it
under the terms of such security agreement upon the default by the Company of
its obligations under the Bridge Loan financing.

ITEM 13.

(A)  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>
10.1             Bridge Loan Security Agreement dated January 12, 2006, by and
                 among the Company, the Holders, of $200,000 aggregate principal
                 amount of Bridge Loans, and Karen Levine, as Collateral Agent.

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>


                                       50

<PAGE>

(B)  REPORTS ON FORM 8-K

     On October 20, 2005, the Company filed a Current Report on Form 10-KSB with
respect to the termination of the employment of John R. DePhillipo, the former
Chief Executive Officer and Chief Financial Offer of the Company, the
appointment of Monte E. Taylor, Jr., as acting Chief Executive Officer and Chief
Financial Officer, and the relocation of the Company's executive offices.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

     Audit Fees

     Buckno, Lisicky & Company served as the Company's certified public
accountants for the years ended December 31, 2005 and 2004. Audit fees billed
during the years ended December 31, 2005 and 2004 were $19,000 each year. There
were no other services rendered by Buckno, Lisicky & Company during 2005 and
2004. Other services rendered by Buckno, Lisicky & Company during 2005 and 2004
related to quarterly reviews with fees of $3,000 each year.


                                       51

<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: May 10, 2006                      By: /s/ Monte E. Taylor, Jr.
                                            ------------------------------------
                                            Monte E. Taylor, Jr.,
                                            Acting Chief Executive Officer and
                                            President

     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,      May 10, 2006
-------------------------------------   Principal Financial Officer and
Monte E. Taylor                         Director
Acting Chief Executive Officer


/s/ Robert P. Ricciardi                 Director                          May 10, 2006
-------------------------------------
Robert P. Ricciardi
Chairman and Director


                                        Director
-------------------------------------
John R. DePhillipo
</TABLE>


                                       52