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U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-KSB
 ANNUAL REPORT FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2007
 COMMISSION FILE NO. 0-28077
 GENELINK, INC.
  PENNSYLVANIA
    
    23-2795613(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employee
Identification No.)317 Wekiva Spring Road, #200, Longwood, Florida
    
    32779(Address of principal executive offices)
    
    (Zip Code)
   
  
 o
 þ o
 þ
 o þ
    Number of Shares of Common Stock 
Outstanding on March 11, 2008
    
    66,341,921Transitional Small Business Disclosure Format
    
    Yes o No þ




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TABLE OF CONTENTS
 PageITEM 1.
    
    DESCRIPTION OF BUSINESS
    
    
    1ITEM 2.
    
    PROPERTIES
    
    
    16ITEM 3.
    
    LEGAL PROCEEDINGS
    
    
    16ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    17ITEM 5.
    
    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
    
    
    17ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
    
    
    20ITEM 7.
    
    FINANCIAL STATEMENTS
    
    
    25ITEM 8.
    
    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    48ITEM 8A.
    
    CONTROLS AND PROCEDURES
    
    
    48ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE; COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
    
    
    49ITEM 10.
    
    EXECUTIVE COMPENSATION
    
    
    54ITEM 11.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
    
    
    57ITEM 12.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
    
    
    59ITEM 13.
    
    EXHIBITS
    
    
    59ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
    
    
    60Certification of Chief Executive Officer and Chief Financial OfficerCertification pursuant to 18 U.S.C. Section 1350




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ITEM 1. DESCRIPTION OF BUSINESS.
 GENERAL
     TM ®
   1




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




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Other SNP Profiles Developed by the Company
    Proposed Direct Selling/MLM Marketing Channel
   3




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Dermagenetics
  DNA Banking
 ®
 Affiliates and Licensing and Distribution Partners
      4




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Intellectual Property
 ®
 ®
  ® ®
  Competition
   5




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Government Regulations
  Employees and Labor Relations
  Number ofCategory
    
    Employees and ConsultantsSales and Marketing
    
    3General and Administration, including Customer Service
    
    5Research and Development
    
    7
 Scientific Advisory Board
  6




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RISK FACTORS
  IF OUR FORMER CHIEF EXECUTIVE OFFICER PREVAILS WITH RESPECT TO HIS LITIGATION AGAINST US, WE MAY
NOT BE ABLE TO PAY ANY JUDGMENT AND COULD BE FORCED TO CEASE OUR OPERATIONS.
  IF WE DEFAULT ON OUR OBLIGATIONS WITH RESPECT TO OUR SECURED OR UNSECURED DEBT, OUR LENDERS AND
CREDITORS COULD FORECLOSE UPON OUR ASSETS.
   7




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WE NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE, TO CONTINUE OUR OPERATIONS.
   
    
    the successful commercialization of our existing products and services;
    
    progress in our product development efforts;
    
    progress with regulatory affairs activities;
    
    the growth and success of effective sales and marketing activities;
    
    the cost of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights; and
    
    the development of strategic alliances for the marketing of our products.
  WE HAVE A HISTORY OF LOSSES AND EXPECT CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.
  8




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OUR BUSINESS CURRENTLY DEPENDS PRIMARILY ON THE SUCCESS OF OUR LICENSING PROGRAM, WHICH IF
UNSUCCESSFUL, WILL THREATEN OUR SURVIVAL.
    WE HAVE A SIGNIFICANT NUMBER OF SECURITIES OUTSTANDING THAT ARE CONVERTIBLE INTO OUR COMMON STOCK,
AND THE CONVERSION OF THESE SECURITIES COULD RESULT IN SUBSTANTIAL DILUTION TO EXISTING
STOCKHOLDERS.
  9




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OUR COMMON STOCK PRICE IS VOLATILE AND WE HAVE A THIN TRADING MARKET.
  WE EXPECT FUTURE DILUTION TO SHAREHOLDERS AND INVESTORS.
  OUR LIMITED OPERATING HISTORY AND RECENT CHANGE IN MARKETING STRATEGY MAKE IT DIFFICULT TO EVALUATE
OUR PROSPECTS.
  IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME WIDESPREAD, WE MAY
HAVE LESS DEMAND FOR THE OUR PRODUCTS.
  DUE TO THE HIGH LEVEL OF COMPETITION IN OUR INDUSTRY, WE MIGHT FAIL TO RETAIN OUR CUSTOMERS AND
DISTRIBUTORS, WHICH WOULD HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.
  10




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THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNPROVEN.
  NEW PRODUCTS MAY RENDER OUR PRODUCTS OBSOLETE AND OUR SALES MAY SUFFER.
  THE SALE OF OUR PRODUCTS INVOLVES PRODUCT LIABILITY AND RELATED RISKS THAT COULD EXPOSE US TO
SIGNIFICANT INSURANCE AND LOSS EXPENSES.
  11




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WE ARE DEPENDENT ON A LIMITED NUMBER OF INDEPENDENT SUPPLIERS, LABORATORIES AND MANUFACTURERS OF
OUR PRODUCTS.
   WE ARE DEPENDENT ON KEY PERSONNEL.
  12




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OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY OR
SOMEONE CLAIMS THAT WE ARE INFRINGING ON THEIR PROPRIETARY TECHNOLOGY.
    INTERRUPTIONS TO OR FAILURE OF OUR INFORMATION PROCESSING SYSTEMS MAY DISRUPT OUR BUSINESS AND OUR
SALES MAY SUFFER.
  13




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IN CONNECTION WITH THE PROPOSED DIRECT SALES BUSINESS OF OUR SUBSIDIARY, THE FAILURE TO RECRUIT,
MAINTAIN AND MOTIVATE A LARGE BASE OF PRODUCTIVE INDEPENDENT DISTRIBUTORS COULD LIMIT ITS ABILITY
TO GENERATE REVENUES.
    GENEWIZE MAY BECOME AFFECTED BY LAWS, GOVERNMENTAL REGULATIONS, ADMINISTRATIVE DETERMINATIONS,
COURT DECISIONS AND SIMILAR CONSTRAINTS WHICH COULD MAKE COMPLIANCE COSTLY AND SUBJECT GENEWIZE TO
ENFORCEMENT ACTIONS BY GOVERNMENTAL AGENCIES.
  14




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ADVERSE PUBLICITY ASSOCIATED WITH GENEWIZES PRODUCTS, INGREDIENTS OR NETWORK MARKETING PROGRAM, OR
THOSE OF SIMILAR COMPANIES, COULD HARM GENEWIZES FINANCIAL CONDITION AND OPERATING RESULTS.
  15




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WE ARE SUBJECT TO, AMONG OTHER THINGS, REQUIREMENTS REGARDING THE EFFECTIVENESS OF INTERNAL CONTROL
OVER FINANCIAL REPORTING AND OUR FAILURE TO IDENTIFY OR CORRECT DEFICIENCIES AND AREAS OF WEAKNESS
IN THE COURSE OF THESE AUDITS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
  OUR ARTICLES OF INCORPORATION AND BYLAWS COULD DELAY OR DISCOURAGE A TAKEOVER ATTEMPT.
  
 ITEM 2. PROPERTIES
  
 ITEM 3. LEGAL PROCEEDINGS
 John R. DePhillipo v. Robert P. Ricciardi
 16




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John R. DePhillipo v. GeneLink, Inc.,
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  PART II
 
 ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
  17




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2006
    
    High
    
    Low1st Quarter
    
    $
    0.13
    
    
    $
    0.052nd Quarter
    
    
    0.09
    
    
    
    0.043rd Quarter
    
    
    0.06
    
    
    
    0.034th Quarter
    
    
    0.07
    
    
    
    0.04
 2007
    
    High
    
    Low1st Quarter
    
    $
    0.07
    
    
    $
    0.052nd Quarter
    
    
    0.11
    
    
    
    0.043rd Quarter
    
    
    0.20
    
    
    
    0.094th Quarter
    
    
    0.21
    
    
    
    0.08
   EQUITY COMPENSATION PLAN INFORMATION
 Number ofsecurities remainingavailable for futureNumber of
    
    
    
    
    
    issuance undersecurities to be
    
    
    
    
    
    equityissued upon exercise
    
    Weighted-average
    
    compensation plansof outstanding
    
    exercise price of
    
    (excluding securitiesoptions, warrants
    
    outstanding options
    
    reflected in columnand rights
    
    warrants and rights
    
    (a))Plan Category
    
    (a)
    
    (b)
    
    (c)Equitycompensation
plans approved
by security
holders1
    
    
    3,610,000
    
    
    $
    0.08
    
    
    
    2,390,000Equitycompensation
plans not
approved
by security
holders
    
    
    4,890,000
    
    
    $
    0.09
    
    
    
    0Total
    
    
    8,500,000
    
    
    $
    0.08
    
    
    
    2,390,000
 
 1
    
    Granted pursuant to the Companys 2007 Stock Option Plan. 18




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RECENT SALES OF UNREGISTERED SECURITIES.
  1 4
       19




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ITEM 6.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
 Critical Accounting Policies
 Stock options:
  Amortization of patents:
  Revenue and cost recognition:
  20




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Use of Estimates:
   Results of Operations
    21




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22




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GeneLink
    
    DermageneticsInc.
    
    Inc.Net Revenues
    
    $
    30,458
    
    
    $
    67,286Operating expenses
    
    
    1,479,300
    
    
    
    190,648Other income
    
    
    10,956
    
    
    
    624Pre-tax earnings (loss)
    
    
    (1,437,886
    )
    
    
    (122,738
    )
 23




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GeneLink
    
    DermageneticsInc.
    
    Inc.Net Revenues
    
    $
    57,033
    
    
    $
    118,641Operating expenses
    
    
    772,805
    
    
    
    196,445Other income
    
    
    2,011
    
    
    
    697Pre-tax earnings (loss)
    
    
    (713,461
    )
    
    
    (77,407
    )
 Liquidity and Capital Resources
     24




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ITEM 7. FINANCIAL STATEMENTS
 INDEX TO FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    
    26Financial StatementsConsolidated Balance Sheets
    
    
    27-28Consolidated Statements of Operations
    
    
    29Consolidated Statements of Changes in Stockholders Equity (Deficiency)
    
    
    30Consolidated Statements of Cash Flows
    
    
    31-32Notes to Consolidated Financial Statements
    
    
    33-47
 25




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
     
 26




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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
 ASSETS
    
    2007
    
    
    2006CURRENT ASSETSCash and cash equivalents
    
    $
    972,371
    
    
    $
    149,695Accounts receivable
    
    
    35,327
    
    
    
    32,185Inventory
    
    
    3,646
    
    
    
    5,772Prepaid expenses
    
    
    11,273
    
    
    
    14,421Total current assets
    
    
    1,022,617
    
    
    
    202,073PROPERTY AND EQUIPMENT
    
    
    38,476
    
    
    
    131,645OTHER ASSETS
    
    
    322,731
    
    
    
    214,763Total assets
    
    $
    1,383,824
    
    
    $
    548,481
  27




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GENELINK, INC. AND SUBSIDIARIES
 LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIENCY)
December 31, 2007 and 2006
 2007
    
    
    2006CURRENT LIABILITIESAccounts payable and accrued expenses
    
    $
    439,399
    
    
    $
    365,590Accrued compensation
    
    
    144,168
    
    
    
    710,323Deferred revenue
    
    
    100,922
    
    
    
    15,481Loans payable
    
    
    18,000
    
    
    
    18,000Total current liabilities
    
    
    702,489
    
    
    
    1,109,394Convertible secured promissory notes payable, net of
debt issuance and stock conversion discounts
    
    
    487,968
    
    
    
    298,390Total liabilities
    
    
    1,190,457
    
    
    
    1,407,784STOCKHOLDERS EQUITY (DEFICIENCY)Common stock, par value $0.01 per share;
authorized: 125,000,000 and 75,000,000 shares as
of December 31, 2007 and 2006 respectively;
issued: 2007
66,673,591 shares and 2006 41,738,988 shares;
outstanding: 2007 66,267,422 shares and
2006 41,332,819 shares
    
    
    666,736
    
    
    
    417,390Additional paid in capital
    
    
    8,277,692
    
    
    
    7,148,427Stock warrants
    
    
    4,245,692
    
    
    
    3,011,009Accumulated deficit
    
    
    (12,681,698
    )
    
    
    (11,121,074
    )Treasury stock, 406,169 shares as of
December 31, 2007 and 2006, respectively, at cost
    
    
    (315,055
    )
    
    
    (315,055
    )Total stockholders equity (deficiency)
    
    
    193,367
    
    
    
    (859,303
    )Total liabilities and stockholders equity (deficiency)
    
    $
    1,383,824
    
    
    $
    548,481
  28




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GENELINK, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended December 31, 2007 and 2006
 2007
    
    
    2006Revenues:
    
    $
    97,744
    
    
    $
    175,674Cost of goods sold:
    
    
    70,809
    
    
    
    65,421Gross profit
    
    
    26,935
    
    
    
    110,253Expenses:Selling general and administrative
    
    
    644,948
    
    
    
    476,539Fair value of options and warrants granted
    
    
    363,400
    
    
    
    0Consulting
    
    
    154,427
    
    
    
    179,449Professional fees
    
    
    346,148
    
    
    
    173,590Advertising and promotion
    
    
    31,810
    
    
    
    14,369Amortization and depreciation
    
    
    58,406
    
    
    
    59,8821,599,139
    
    
    
    903,829Operating loss
    
    
    (1,572,204
    )
    
    
    (793,576
    )Other income:
    
    
    11,580
    
    
    
    2,708Loss before provision for income taxes
    
    
    (1,560,024
    )
    
    
    (790,868
    )Provision for income taxes:Deferred income tax benefit
    
    
    0
    
    
    
    206,207Net loss
    
    $
    (1,560,624
    )
    
    $
    (584,661
    )Loss per share, basic and diluted:
    
    $
    0.03
    
    
    $
    (0.01
    )Weighted average common shares and
diluted potential common shares
    
    
    48,117,402
    
    
    
    38,861,637
  29




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GENELINK, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders Equity (Deficiency)
YEARS ENDED DECEMBER 31, 2007 AND 2006
 ADDITIONALCOMMON STOCK
    
    
    TREASURY
    
    
    PAID IN
    
    
    STOCK
    
    
    ACCUMULATEDSHARES
    
    
    AMOUNT
    
    
    STOCK
    
    
    CAPITAL
    
    
    WARRANTS
    
    
    DEFICIT
    
    
    TOTALBalance, December 31, 2005
    
    
    36,689,550
    
    
    $
    366,896
    
    
    $
    (315,055
    )
    
    $
    6,910,160
    
    
    $
    2,961,809
    
    
    $
    (10,536,413
    )
    
    $
    (612,603
    )Issuance of common stock
and stock warrants related
to convertible secured
promissory notes
    
    
    4,539,450
    
    
    
    45,394
    
    
    
    0
    
    
    
    160,063
    
    
    
    0
    
    
    
    0
    
    
    
    205,457Stock conversion discount
related to convertible
secured promissory notes
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    165,578
    
    
    
    0
    
    
    
    0
    
    
    
    165,578Fair value of options
granted for services
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Commissions paid for
fundraising costs
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (129,550
    )
    
    
    0
    
    
    
    0
    
    
    
    (129,550
    )Issuance of common stock
and stock warrants for
fundraising services
    
    
    410,000
    
    
    
    4,100
    
    
    
    0
    
    
    
    18,850
    
    
    
    49,200
    
    
    
    0
    
    
    
    72,150Issuance of common stock
and stock warrants for
services
    
    
    100,000
    
    
    
    1,000
    
    
    
    0
    
    
    
    23,326
    
    
    
    0
    
    
    
    0
    
    
    
    24,326Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (584,661
    )
    
    
    (584,661
    )5,049,450
    
    
    
    50,494
    
    
    
    0
    
    
    
    238,267
    
    
    
    49,200
    
    
    
    (584,661
    )
    
    
    (246,700
    )Balance, December 31, 2006
    
    
    41,739,000
    
    
    $
    417,390
    
    
    $
    (315,055
    )
    
    $
    7,148,427
    
    
    $
    3,011,009
    
    
    $
    (11,121,074
    )
    
    $
    (859,303
    )Issuance of common stock
and stock warrants related
to convertible secured
promissory notes
    
    
    687,500
    
    
    
    6,875
    
    
    
    0
    
    
    
    22,163
    
    
    
    0
    
    
    
    0
    
    
    
    29,038Conversion of secured
promissory notes and
accrued interest to
common stock
    
    
    5,093,024
    
    
    
    50,931
    
    
    
    0
    
    
    
    203,722
    
    
    
    0
    
    
    
    0
    
    
    
    254,653Stock conversion discount
related to convertible
secured promissory notes
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    27,500
    
    
    
    0
    
    
    
    0
    
    
    
    27,500Issuance of common stock
and stock warrants for
fundraising services
    
    
    68,750
    
    
    
    688
    
    
    
    0
    
    
    
    (447,731
    )
    
    
    447,043
    
    
    
    0
    
    
    
    0Issuance of common stock
and warrants pursuant to
private placement offering
    
    
    19,085,329
    
    
    
    190,852
    
    
    
    0
    
    
    
    970,308
    
    
    
    270,240
    
    
    
    0
    
    
    
    1,431,400Issuance of stock warrants
as payment of accrued
compensation
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    508,614
    
    
    
    154,000
    
    
    
    0
    
    
    
    662,614Commissions paid for
fundraising costs
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (155,311
    )
    
    
    0
    
    
    
    0
    
    
    
    (155,311
    )Issuance of stock warrants
for services
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    363,400
    
    
    
    0
    
    
    
    363,400Net loss
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (1,560,624
    )
    
    
    (1,560,624
    )24,934,603
    
    
    
    249,346
    
    
    
    0
    
    
    
    1,129,265
    
    
    
    1,234,683
    
    
    
    (1,560,624
    )
    
    
    1,052,670Balance, December 31, 2007
    
    
    66,673,603
    
    
    $
    666,736
    
    
    $
    (315,055
    )
    
    $
    8,277,692
    
    
    $
    4,245,692
    
    
    $
    (12,681,698
    )
    
    $
    193,367
  30




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GENELINK, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007 and 2006
 2007
    
    
    2006CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,560,624
    )
    
    $
    (584,661
    )Adjustments to reconcile net loss to net
cash used in operating activities:Loss on abandonment of leasehold improvements
    
    
    62,420
    
    
    
    0Depreciation and amortization
    
    
    58,406
    
    
    
    59,882Amortization of discounts on loans payable
    
    
    140,196
    
    
    
    49,434Common stock and warrants issued for fundraising
services
    
    
    0
    
    
    
    72,150Common stock issued for services
    
    
    0
    
    
    
    24,326Fair value of options and warrants granted for
services
    
    
    363,400
    
    
    
    0Changes in assets and liabilities:Accounts receivable
    
    
    3,142
    
    
    
    466Inventory
    
    
    2,126
    
    
    
    (2,511
    )Prepaid expenses
    
    
    3,148
    
    
    
    23,014Other assets
    
    
    (26,728
    )
    
    
    0Deferred revenue
    
    
    85,441
    
    
    
    0Accounts payable and accrued expenses
    
    
    73,809
    
    
    
    (63,574
    )Accrued payroll taxes
    
    
    0
    
    
    
    (7,454
    )Accrued compensation
    
    
    96,462
    
    
    
    132,405Net cash used in operating activities
    
    
    (705,086
    )
    
    
    (296,523
    )CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment
    
    
    (6,633
    )
    
    
    (19,756
    )Patent acquisition costs
    
    
    (84,194
    )
    
    
    (22,890
    )Net cash used in investing activities
    
    
    (90,827
    )
    
    
    (42,646
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from loans and notes payable
    
    
    272,462
    
    
    
    417,543Common stock issued for bridge loans conversion
    
    
    70,038
    
    
    
    205,457Commissions paid for fundraising costs
    
    
    (155,311
    )
    
    
    (129,550
    )Repayments of loans and notes payable
    
    
    0
    
    
    
    (19,861
    )Proceeds from issuance of common stock and warrants
    
    
    1,431,400
    
    
    
    0Net cash provided by financing activities
    
    
    1,618,589
    
    
    
    473,589
  31




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GENELINK, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, 2007 and 2006
 2007
    
    
    2006NET INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    822,676
    
    
    
    134,420CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    149,695
    
    
    
    15,275CASH AND CASH EQUIVALENTS, END OF PERIOD
    
    $
    972,371
    
    
    $
    149,695SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATIONCash payments for:Interest:
    
    $
    0
    
    
    $
    98,300Non-cash financing transactions:Common stock issued for services
    
    $
    0
    
    
    $
    96,476Refinancing of bridge loans payable
    
    $
    0
    
    
    $
    200,000Debt issuance costs related to convertible secured
promissory notes
    
    $
    0
    
    
    $
    180,898Stock conversion discount related to convertible
secured promissory notes
    
    $
    0
    
    
    $
    165,578Stock options and warrants granted for services
    
    $
    363,400
    
    
    $
    0Common stock and warrants granted for fundraising
    
    $
    450,731
    
    
    $
    0
  32




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##### Table of Contents



GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2007 AND 2006
 Note 1.
    
    OrganizationGeneLink, Inc. (the Company) and its subsidiaries, Dermagenetics, Inc. and GeneWize
Life Sciences, Inc., operate in Florida. The Company was organized under the laws of
the Commonwealth of Pennsylvania and Dermagenetics, Inc. and GeneWize Life Sciences,
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 Longwood, Florida.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.
The growth of scientific knowledge in this area has been accelerating as a direct
result of the National Institutes of Health Genome Project.The Company has developed and received a patent on a DNA Collection Kit ®  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 ®  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.On December 12, 2007, the Company formed a new wholly owned subsidiary, GeneWize Life
Sciences, Inc., to operate its direct sales efforts. As of December 31, 2007, the
subsidiary had no significant operations.
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##### Table of Contents



Note 2.
    
    Summary of Significant Accounting PoliciesPrinciples 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.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.Accounts receivable and allowance for bad debts:GeneLink estimates potential bad debts using the allowance
method.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:GeneLink receives separate fees for the kits and for the lab services. Upon entering
into a distribution arrangement with GeneLink, a distributor will order kits at a price
negotiated between GeneLink and the distributor. Upon the distributor receiving from
a customer of such distributor an order for the underlying genetically guided skin care
or nutrition product that the distributor is selling, a sample of the customers DNA
will
be obtained and the kit will be sent to the lab for analysis. At that time the
distributor
will be charged an agreed upon price for the lab services. This is in addition to the
price of the kits.The price for each of the kits and the lab services come about through arms-length
negotiations between GeneLink and its distributors and are based upon the costs
incurred by GeneLink for the kits and the lab services.Upon termination of a distribution arrangement, GeneLink is not required to repurchase
any kits remaining in the possession of the distributor. Typically, only a small number
 34




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##### Table of Contents



of kits are purchased at any time. The distributor has some period after the end of the
distribution arrangement to sell off any remaining kits. If it does, GeneLink will
provide the lab services for each kit sold.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 ® . 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 ® .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 and FIN 48
Accounting for Uncertainty in Income Taxes  an Interpretation of FASB Statement No.
109, which requires the use of an asset and liability approach for financial
accounting and reporting for income taxes and to consider the likelihood of a tax
position to be accepted by federal and state taxing authorities. Under this method,
deferred tax assets and liabilities are recognized based on the expected future tax
consequences of temporary differences between the financial statement carrying amounts
and tax basis of assets and liabilities as measured by the enacted tax rates that are
expected to be in effect when taxes are paid or recovered. In December 2006, 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, 2007 and 2006.
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##### Table of Contents



Per share data:Effective November 12, 1998, the Company adopted SFAS No. 128, Earnings Per Share.
The provisions of SFAS 128 establish standards for computing and presenting earnings
per share (EPS). This standard replaces the presentation of primary EPS with a
presentation of basic EPS. Additionally, it requires dual presentation of basic and
diluted EPS for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the diluted EPS 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 2007 and 2006 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, during 2005 it also allows an
entity to continue to measure compensation cost for those plans using the method of
accounting prescribed by Accounting Principles Board Opinion No. 25 (APB 25).
Entities electing to remain with the accounting in APB 25 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
during 2005, but has adopted SFAS 123R for options transactions during 2006 and
forward.Recent accounting developments:In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty
in Income Taxes  an Interpretation of FASB Statement No. 109, (FIN 48), which
clarifies the accounting for uncertainties in tax positions. FIN 48 requires
financial statement recognition of the impact of a tax position, if that position is
more likely than not to be sustained on examination, based on the technical merits of
the position. The provisions of FIN 48 is effective for financial statements issued
for fiscal years beginning after December 15, 2006. The Company adopted FIN 48
effective January 1, 2007.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
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As of December 31, 2007 and 2006, property and equipment consisted of the following:
 2007
    
    
    2006Office furniture
    
    $
    1,154
    
    
    $
    1,154Office equipment
    
    
    57,494
    
    
    
    57,494Leasehold improvements
    
    
    0
    
    
    
    85,420Software
    
    
    102,712
    
    
    
    96,079161,360
    
    
    
    240,147Less accumulated depreciation
and amortization
    
    
    122,884
    
    
    
    108,502$
    38,476
    
    
    $
    131,645
  Note 4.
    
    Other AssetsAs of December 31, 2007 and 2006, other assets consisted of the following:
 2007
    
    
    2006Patents and trademarks
    
    $
    357,470
    
    
    $
    250,389Deposits
    
    
    41,001
    
    
    
    0Less accumulated
amortization
    
    
    79,540
    
    
    
    41,254$
    318,931
    
    
    $
    209,135
   Year endingDecember 31,2008
    
    $
    21,0242009
    
    
    21,0242010
    
    
    21,0242011
    
    
    21,0242012
    
    
    21,024Thereafter
    
    
    252,350$
    357,470
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##### Table of Contents



Note 5.
    
    Income TaxesAt December 31, 2007 and 2006, the Company had federal and state tax net operating
loss carry forwards of approximately $16,794,000 and $15,230,000, 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 $2,180,000 and $1,955,000 at December 31,
2007 and 2006, 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 $225,000 for the year ended December
31, 2007 and $75,000 for the year ended December 31, 2006.During December 2006, the Company received proceeds from the sale of net operating
losses through the New Jersey Technology Business Tax Certified Transfer Program (the
Tax Transfer Program). Through the Tax Transfer Program, the Company sold $224,160
of net operating loss benefits and received $206,207 of net proceeds from this sale.
 Note 6.
    
    Stockholders Equity TransactionsCommon StockIn August 2007, the Company issued a private placement memorandum for up to $1,700,000
of units consisting of restricted common stock at $.075 per share with an attached
warrant to acquire 1/4 of a share of common stock. The warrants are exercisable for 5
years at a price of $.10 per share. During November, 2007 the Company closed on
$1,431,400 units with proceeds allocated to stock of $1,161,159 and attached warrants
of $270,241.In connection with this offering, the Company issued 2,575,250 of dealer warrants with
5 year terms. 515,050 of the dealer warrants have an exercise price of $.10 per share,
while the remaining 2,060,200 are exercisable at $.075 per share.The Company issued 68,750 and 510,000 shares of common stock for services rendered,
valued at $3,688 and $96,476 for the years ended December 31, 2007 and 2006,
respectively.During the year ended December 31, 2007 and 2006, the Company issued $137,500 and
$827,890 principal amount of convertible secured promissory notes and issued
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##### Table of Contents



687,500 and 4,539,450 shares of restricted Common Stock in connection with the issuance
of the notes.During 2007 the Company issued 5,093,024 shares of common stock as conversion of
promissory notes and accrued interest. The value of the notes converted as of December
31, 2007 was $254,653.During the year ended December 31, 2006, 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.In connection with the convertible secured promissory notes and shares of Common Stock
issued, the Company issued 410,000 shares of Common Stock valued at $22,950, warrants
to acquire 1,640,000 shares of Common Stock at an exercise price of $.05 valued at
$49,200, and paid a cash commission of $57,400 to the Administrative Agent. The total
costs of $129,550 have been recorded as a reduction of the proceeds in accordance with
AICPA Technical Practice Aid 4110.01.Stock Options and WarrantsThe Financial Accounting Standards Board has issued SFAS No. 123R, which defines a fair
value based method of accounting for an employee stock option and similar equity
instruments and requires all entities to adopt that method of accounting for all of
their employee stock compensation plans.SFAS 123R requires the recognition of the fair value of stock at the dates stock
options are granted to employees at exercise prices equal to the fair market value of
our stock at the dates of grant. Generally, options are fully vested within three
years from the grant date and have a term of 10 years. Performance awards are granted
to officers and key employees are payable in shares of common stock. The number of
performance award shares actually issued, if any, varies depending on the achievement
of certain performance goals. In general, performance grants vest ratably over the
service period. The Company recognizes the stock-based compensation expense over the
requisite service period of the individual grantees, which generally equals the vesting
period. The Company provides newly issued shares and treasury stock to satisfy stock
option exercise and for the issuance of performance awards.During 2007 the Company granted options to Board members, executives and advisors in
lieu of compensation in accordance with the Companys Stock Option Plan. Options
granted under this plan primarily vested over 4 years beginning in 2007. The options
have terms of 10 years and a fair value based on the Companys lattice valuation model
of $.08/ share. The compensation recognized in relation to the issuance of these
options as of December 31, 2007 is $363,400.In addition, in connection with an officer of the Company reducing deferred
compensation due to him, the Company issued 1,400,000 in options to such officer in
September 2007 at an exercise of $0.11 per share, to settle a deferred compensation
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##### Table of Contents



liability with an advisor. The options issued with a 10 year term had a fair value of
$154,000.A summary of the status of the Companys stock options and warrants as of December 31,
2007 and 2006, and changes during the years ending of those dates are presented below:
 2007
    
    
    2006Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageExercise
    
    
    
    
    
    
    ExerciseShares
    
    
    Price
    
    
    Shares
    
    
    PriceOptions/warrants outstanding
at beginning of year
    
    
    14,992,987
    
    
    $
    0.38
    
    
    
    16,905,821
    
    
    $
    0.44Granted
    
    
    16,721,581
    
    
    
    0.08
    
    
    
    1,640,000
    
    
    
    0.05Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expired
    
    
    (1,671,033
    )
    
    
    (0.80
    )
    
    
    (3,552,834
    )
    
    
    (0.49
    )Cancelled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Options/warrants outstanding
at end of year
    
    
    30,043,535
    
    
    $
    0.19
    
    
    
    14,992,987
    
    
    $
    0.38Options/warrants exercisable
at end of year
    
    
    26,886,035
    
    
    
    
    
    
    
    14,954,309Weighted-average fair value
of options granted during
the year
    
    
    
    
    
    $
    0.11
    
    
    
    
    
    
    $
    0.04
  Weighted-AverageNumber
    
    
    RemainingExercise
    
    Outstanding
    
    
    Contractual Life
    
    
    ExercisablePrice
    
    at 12/31/07
    
    
    (Years)
    
    
    Warrants0.05
    
    
    1,915,000
    
    
    
    3.70
    
    
    
    1,915,0000.075
    
    
    3,460,200
    
    
    
    6.88
    
    
    
    3,460,2000.08
    
    
    7,700,000
    
    
    
    9.42
    
    
    
    4,542,5000.10
    
    
    5,286,381
    
    
    
    4.88
    
    
    
    5,286,3810.20
    
    
    4,307,704
    
    
    
    2.07
    
    
    
    4,307,7040.25
    
    
    565,000
    
    
    
    1.71
    
    
    
    565,0000.40
    
    
    2,953,000
    
    
    
    0.54
    
    
    
    2,953,0000.45
    
    
    920,000
    
    
    
    0.12
    
    
    
    920,0000.50
    
    
    690,000
    
    
    
    0.96
    
    
    
    690,0000.60
    
    
    2,206,250
    
    
    
    0.89
    
    
    
    2,206,2501.00
    
    
    40,000
    
    
    
    1.17
    
    
    
    40,00030,043,535
    
    
    
    
    
    
    
    26,886,035
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Risk free interest rate of return
    
    
    4.5-5
    %Expected option life
    
    5-10yrs.Expected dividends
    
    $
    0.00Expected volatility
    
    
    169-170
    %
 Note 7.
    
    Net Loss Per ShareEarnings 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.
 2007
    
    
    2006Net loss
    
    $
    (1,560,624
    )
    
    $
    (584,661
    )Weighted average number of common shares
outstanding for computing basic earning per share
    
    
    48,117,402
    
    
    
    38,861,637Dilutive effect of warrants and stock options after
application of the treasury stock method
    
    
    
    
    
    
    Weighted average number of common shares out-
standing for computing diluted earnings per share
    
    
    48,117,402
    
    
    
    38,861,637Net loss per share  basic and diluted
    
    $
    (0.03
    )
    
    $
    (0.01
    )
  Years Ended December 312007
    
    
    2006Warrants and stock options
    
    
    30,043,535
    
    
    
    14,922,987
 Note 8.
    
    AdvertisingThe Company expenses the production costs of advertising when incurred. Advertising
expense was $31,810 and $14,369 for the years ended December 31, 2007 and 2006,
respectively.
 41




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Note 9. Rent
  Note 10. Related Party Transactions and Convertible Secured Promissory Notes
     Short Term Loans Payable
  42




---



##### Table of Contents



2007
    
    
    2006Note payable, due no specific maturity with
no stated interest. All interest and principal
due at maturity.
    
    $
    10,000
    
    
    $
    10,000Note payable, no specific maturity with no stated
Interest. All interest and principal
due at maturity.
    
    
    8,000
    
    
    
    8,00018,000
    
    
    
    18,000Less: Discount for warrants issued
    
    
    (
    )
    
    
    (
    )Total short term loans payable
    
    $
    18,000
    
    
    $
    18,000
 Employees and Consultants
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Convertible Secured Promissory Notes Payable
  2007
    
    
    2006Notes payable, due May 12, 2011 with
interest at 12%. All interest and
principal due at maturity. All Company
assets pledged as collateral.
    
    $
    728,812
    
    
    $
    827,890728,812
    
    
    
    827,890Less: Debt issue discount
    
    
    (105,864
    )
    
    
    (171,992
    )Less: Stock conversion discount
    
    
    (134,980
    )
    
    
    (152,508
    )Less: Debt proceeds not received
    
    
    
    
    
    
    (205,000
    )Total short term loans payable
    
    $
    487,968
    
    
    $
    298,390
    Note 11. Segment Information
   GeneLink
    
    DermageneticsInc.
    
    Inc.2007Net Revenues
    
    $
    30,458
    
    
    $
    67,286Operating expenses
    
    
    1,479,300
    
    
    
    190,648
 44




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##### Table of Contents



GeneLink
    
    DermageneticsInc.
    
    Inc.Other income
    
    
    10,956
    
    
    
    624Pre-tax earnings (loss)
    
    
    (1,437,886
    )
    
    
    (122,738
    )2006Net Revenues
    
    $
    57,033
    
    
    $
    118,341Operating expenses
    
    
    772,805
    
    
    
    196,445Other income
    
    
    2,011
    
    
    
    697Pre-tax earnings (loss)
    
    
    (713,461
    )
    
    
    (77,407
    )
 Note 12. Going Concern
  Note 13. Commitments and Contingencies
  John R. DePhillipo v. Robert P. Ricciardi
 45




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##### Table of Contents



John R. DePhillipo v.
GeneLink, Inc.,
    Year endingDecember
31,2008
    
    $
    66,0002009
    
    
    66,0002010
    
    
    66,000Thereafter
    
    
    0$
    198,000
 46




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##### Table of Contents



Note 14. Quarterly Results of Operations (unaudited)
  First
    
    Second
    
    Third
    
    Fourth2007Sales
    
    $
    31,385
    
    
    $
    27,182
    
    
    $
    26,150
    
    
    $
    13,027Gross profit
    
    
    6,262
    
    
    
    6,935
    
    
    
    14,252
    
    
    
    (514
    )Net income (loss)
    
    
    (359,792
    )
    
    
    (225,196
    )
    
    
    (550,747
    )
    
    
    (424,889
    )Net income (loss)
per
common share
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.01
    )2006Sales
    
    $
    47,711
    
    
    $
    35,642
    
    
    $
    59,122
    
    
    $
    33,199Gross profit
    
    
    30,962
    
    
    
    14,556
    
    
    
    33,206
    
    
    
    (31,529
    )Net income (loss)
    
    
    (229,491
    )
    
    
    (255,928
    )
    
    
    (138,698
    )
    
    
    39,456Net income (loss)
per
common share
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    (0.008
    )
    
    
    (0.001
    )
 47




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##### Table of Contents



ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
  
 ITEM 8A. CONTROLS AND PROCEDURES.
 Evaluation of Disclosure Controls and Procedures
   Change In Internal Controls
  Managements Annual Report on Internal Control over Financial Reporting
    48




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##### Table of Contents



PART III
 
 ITEM 9.
    
    DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS AND CORPORATE GOVERNANCE;
COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT
  Name
    
    
    Age
    
    PositionMonte E. Taylor
    
    
    57
    
    
    Chief Executive Officer, Acting
Chief Financial Officer,
DirectorRobert P. Ricciardi, Ph.D.
    
    
    61
    
    
    Secretary,
Chief Science Officer, DirectorDr. Bernard L. Kasten, Jr.
    
    
    61
    
    
    Executive Chairman of the Board, 
DirectorRobert Hoekstra
    
    
    57
    
    
    DirectorJohn H. Souza
    
    
    45
    
    
    Director
   49




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st st th
   50




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##### Table of Contents



Audit Committee
    Nominating Committee
  51




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##### Table of Contents



Section 16(a) Beneficial Ownership Reporting Compliance.
  Code of Ethics
  Compensation of Directors and Meeting of Directors
      52




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##### Table of Contents



Communications with the Board of Directors
  REPORT FROM THE AUDIT COMMITTEE
     
 53




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ITEM 10. EXECUTIVE COMPENSATION
 SUMMARY COMPENSATION TABLE
 SUMMARY COMPENSATION TABLE
 NonqualifiedNon-Equity
    
    DeferredName and principal
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock
    
    Option
    
    Incentive Plan
    
    Compensation
    
    All Otherposition
    
    Year
    
    Salary ($)
    
    Bonus ($)
    
    Awards ($)
    
    Awards ($)
    
    Compensation ($)
    
    Earnings ($)
    
    Compensation ($)
    
    Total ($)(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (h)
    
    (i)
    
    (j)Monte E. Taylor, Jr.
    
    
    2007
    
    
    $
    102,500
    
    
    $
    0
    
    
    $
    0
    
    
    $
    158,000
    1
    
    $
    0
    
    
    $
    0
    
    
    $
    13,170
    2
    
    $
    273,670Chief Executive Officer
    
    
    2006
    
    
    $
    90,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    22,462
    2
    
    $
    112,462Robert P. Ricciardi, Ph.D.
    
    
    2007
    
    
    $
    97,500
    3
    
    $
    0
    
    
    $
    0
    
    
    $
    6,000
    3
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    103,500Chief Science Officer
    
    
    2006
    
    
    $
    116,924
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    116,924John A. Sousa
    
    
    2007
    
    
    $
    79,500
    
    
    $
    0
    
    
    $
    0
    
    
    $
    102,000
    4
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    181,500Vice President of
Business Development
    
    
    2006
    
    
    $
    75,000
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    0
    
    
    $
    75,000
 
 1
    
    On June 1, 2007, Mr. Taylor received a fully vested warrant to
acquire 1,600,00 shares of common stock of an exercise price of $0.08 per share
and received options to acquire 1,500,000 shares of common stock at an exercise
price of $0.08 per share, which options vest in four equal annual installments
of 375,000 each, commencing June 1, 2007.2
    
    Represents the cost of health insurance premiums
provided from the Company.3
    
    On June 1, 2007, Dr. Ricciardi received a fully-vested
warrant to acquire 25,000 shares of common stock at an exercise price of $0.08
per share and received options to acquire 200,000 shares of common stock at an
exercise price of $0.08 per share, which options vest in four equal annual
installments of 50,000 each, commencing June 1, 2007. On September 30, 2007,
in connection with the amendment to Dr. Ricciardis consulting agreement, Dr.
Ricciardi received a fully-vested warrant to acquire 1,400,000 shares of common
stock at an exercise price of $0.11 per share.4
    
    On June 1, 2007, Mr. Sousa received a fully vested
warrant to acquire 1,000,000 shares of common stock at an exercise price of
$0.08 per share, and received options to acquire 1,100,000 shares of common
stock at an exercise price of $0.08 per share, which options vest in four equal
installments of 275,000 each, commencing June 1, 2007. 54




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##### Table of Contents



OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
 OPTION AWARDS
 EquityIncentivePlanAwards:Number of
    
    Number of
    
    Number ofSecurities
    
    Securities
    
    SecuritiesUnderlying
    
    Underlying
    
    Underlyi ngUnexercised Options
    
    Unexercised
    
    Unexercised
    
    Option(#)
    
    Options (#)
    
    Unearned
    
    Exercise
    
    Option ExpirationName
    
    Exercisable
    
    Unexercisable
    
    Options (#)
    
    Price ($)
    
    Date(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)Monte E. Taylor, Jr.
    
    
    1,975,000
    
    
    
    1,125,000
    1
    
    
    0
    
    
    $
    0.08
    
    
    June 1, 2012Robert P. Ricciardi, Ph.D.
    
    
    75,000
    
    
    
    150,000
    2
    
    
    0
    
    
    $
    0.08
    
    
    June 1, 20121,400,000
    
    
    
    0
    
    
    
    0
    
    
    $
    0.11
    
    
    September 30, 2012John H. Souza
    
    
    1,275,000
    
    
    
    825,000
    3
    
    
    0
    
    
    $
    0.08
    
    
    June 1, 2012
 
 1
    
    The remaining unvested options vest in equal annual
installments of 375,000 options each on June 1, 2008, 2009 and 2010.2
    
    The remaining unvested options vest in equal annual
installments of 50,000 options each on June 1, 2008, 2009 and 2010.3
    
    The remaining unvested options vest in equal annual
installments of 275,000 options each on June 1, 2008, 2009 and 2010. 55




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##### Table of Contents



DIRECTOR COMPENSATION
  DIRECTOR COMPENSATION
 Non-Equity
    
    Non-QualifiedIncentive
    
    Deferred
    
    AllFees Earned or
    
    Stock
    
    Option
    
    Plan
    
    Compensation
    
    OtherName
    
    Paid in Cash ($)
    
    Awards ($)
    
    Awards ($)
    
    Compensation ($)
    
    Earnings ($)
    
    Compensation ($)
    
    Total ($)(a)
    
    (b)
    
    (c)
    
    (d)
    
    (e)
    
    (f)
    
    (g)
    
    (j)Robert Hoekstra
    
    $
    0
    
    
    
    0
    
    
    $
    2,000
    1
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    $
    2,000Dr. Bernard L. Kasten
    
    $
    0
    
    
    
    0
    
    
    $
    79,000
    2
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    $
    79,000
 
 1.
    
    On June 1, 2007, Mr. Hoekstra received options to acquire 100,000 shares of common
stock at an exercise price of $0.08 per share, which options vest in four equal annual
installments of 25,000 each commencing June 1, 2007.2.
    
    On June 1, 2007, Dr. Kasten received a fully-vested warrant to acquire 750,000
shares of common stock at an exercise price of $0.08 per share and received options to acquire
750,000 shares of common stock at an exercise price of $0.08 per share, which options vest in
four equal annual installments of 187,500 each commencing June 1, 2007. Employment Agreements with Executive Officers
    56




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##### Table of Contents



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 PRINCIPAL SHAREHOLDERS
    57




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##### Table of Contents



Number of Shares
    
    Approximate PercentageName
    
    Beneficially Owned
    
    Of Stock OutstandingDr. Bernard L. Kasten, Jr.
4380 27th Court, SW #104
Naples, FL 34116
    
    
    4,912,859
    (1)
    
    
    7.0
    %Robert P. Ricciardi, Ph.D.
317 Wekiva Spring Road, #200
Longwood, Florida 32779
    
    
    4,185,000
    (2)
    
    
    6.2
    %Kenneth R. Levine 
2 Oaklawn Road 
Short Hills, NJ 07078
    
    
    3,321,882
    (3)
    
    
    5.0
    %Robert Hoekstra 
317 Wekiva Spring Road, #200 
Longwood, Florida 32779
    
    
    3,162,196
    (4)
    
    
    4.6
    %John H. Souza 
317 Wekiva Spring Road, #200 
Longwood, Florida 32779
    
    
    2,726,331
    (5)
    
    
    4.0
    %Monte E. Taylor, Jr. 
317 Wekiva Spring Road, #200 
Longwood, Florida 32779
    
    
    2,002,250
    (6)
    
    
    2.9
    %Directors and Officers as a
Group
    
    
    16,988,638
    (1)(2)(4)(5)(6)
    
    
    21.9
    %
 
 (1)
    
    Includes 2,883,299 shares of Common Stock issuable upon the conversion of notes. Includes
currently exercisable options and warrants to acquire 987,500 share of Common Stock.(2)
    
    Includes currently exercisable options and warrants to acquire 1,475,000 shares of Common
Stock.(3)
    
    Includes 478,750 shares of Common Stock held by First Equity Capital Securities, Inc., of
which Mr. Levine is a principal.(4)
    
    Includes 1,363,296 shares of Common Stock issuable upon the conversion of Notes. Includes
currently exercisable options and warrants to acquire 295,455 shares of Common Stock. Includes
647,000 shares of Common Stock and warrants to exercise 500,000 shares of Common Stock held by a
family trust for which Mr. Hoekstra is a trustee. Mr. Hoekstra disclaims beneficial ownership of
those shares and warrants.(5)
    
    Includes currently exercisable warrants to acquire 1,881,661 shares of Common Stock.(6)
    
    Include 16,000 shares held by Mr. Taylor and various family members in joint tenancy. Includes
currently exercisable options and warrants to acquire 1,975,000 shares of Common Stock. 58




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##### Table of Contents



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
     
 ITEM 13. EXHIBITS
 (1)
    
    Financial Statements. The financial statements required to be filed are
presented beginning on page 28.(2)
    
    Exhibits. The following Exhibits have been filed pursuant to Item 601 of
Regulation S-B.
 Exhibit Number
    
    Description31.1
    
    Certification of Chief Executive Officer and Chief
Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
 59




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  Fees for Independent Auditors for Fiscal Years 2007 and 2006
  2006
    
    
    2007Audit Fees
    
    $
    22,000
    
    
    $
    22,000Audit-Related Fees
    
    
    0
    
    
    
    0Tax Fees
    
    
    0
    
    
    
    0All Other Fees
    
    
    0
    
    
    
    0Total Fees
    
    $
    22,000
    
    
    $
    22,000
   60




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##### Table of Contents



SIGNATURES
  GENELINK, INC.
RegistrantDate: April 11, 2008
    By:
    Monte E. Taylor, Jr.Monte E. Taylor, Jr., Chief
Executive Officer  Signatures
    
    Capacity
    
    Date/s/ Monte E. Taylor, Jr.

Monte E. Taylor 
Chief Executive Officer
    
    Principal Executive
Officer, Principal
Financial Officer and
Director
    
    April 11, 2008/s/ Robert P. Ricciardi

Robert P. Ricciardi, Ph.D. 
Director
    
    Director
    
    April 11, 2008/s/ Bernard L. Kasten, Jr.

Dr. Bernard L. Kasten, Jr.
    
    Executive Chairman and Director
    
    April 11, 2008/s/ Robert Hoekstra

Robert Hoekstra
    
    Director
    
    April 11, 2008/s/ John H. Souza

John H. Souza
    
    Director
    
    April 11, 2008
 61