<PAGE>   1




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

                                   FORM 10-QSB

                    QUARTERLY REPORT FOR THE QUARTERLY PERIOD
                               ENDED JUNE 30, 2001

                           COMMISSION FILE NO. 0-28077

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

     PENNSYLVANIA                                       23-2795613
     ------------                                      -------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


  100 S. Thurlow Street
   Margate, New Jersey                                   08402
 ------------------------------                        ----------
 (Address of principal executive offices)              (Zip Code)

                    ISSUER'S TELEPHONE NUMBER: (609) 823-6991



         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 ___

      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 August 7, 2000                        15,177,845
</TABLE>

         Transitional Small Business Disclosure Format    Yes ___  No X
<PAGE>   2
                                 GENELINK, INC.

PART I.    FINANCIAL INFORMATION

ITEM 1.    Financial Statements.

           Balance Sheets at June 30, 2001 (unaudited) and December 31, 2000

           Statements of Income for the three months and six months ended
           June 30, 2001 and 2000 (unaudited)

           Statements of Cash Flows for the six months ended June 30, 2001
           and 2000 (unaudited)

           Notes to Financial Statements (unaudited)


                                       2
<PAGE>   3
                                 GENELINK, INC.
                                 BALANCE SHEETS

                                     ASSETS

<TABLE>
<CAPTION>
                                               (UNAUDITED)
                                                JUNE 30,           DECEMBER 31,
                                                 2001                 2000
                                               ---------           ---------
<S>                                            <C>                 <C>
   CURRENT ASSETS
      Cash                                     $   4,116           $  13,804
      Accounts Receivable                          2,298               2,324
      Inventory                                   10,169              10,358
      Prepaid Expenses                            42,108              47,072
                                               ---------           ---------
   TOTAL CURRENT ASSETS                           58,691              73,558
                                               ---------           ---------
   FIXED ASSETS
      Office Furniture                             1,154               1,154
      Office Equipment                            16,246              16,246
      Leasehold Improvements                      50,000              50,000
                                               ---------           ---------
                                                  67,400              67,400
      Less:  Accumulated Depreciation            (18,926)            (17,022)
                                               ---------           ---------
   TOTAL FIXED ASSETS                             48,474              50,378
                                               ---------           ---------
   OTHER ASSETS
      Deposits                                       728                 840
      Patent                                       3,229               3,229
                                               ---------           ---------
                                                   3,957               4,069
      Less:  Accumulated Amortization             (1,247)             (1,139)
                                               ---------           ---------
   TOTAL OTHER ASSETS                              2,710               2,930
                                               ---------           ---------
   TOTAL ASSETS                                $ 109,875           $ 126,866
                                               =========           =========
</TABLE>

                 See accompanying notes to financial statements.


                                       3
<PAGE>   4
                                 GENELINK, INC.
                                 BALANCE SHEETS
                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>

                                                    (UNAUDITED)
                                                      JUNE 30,           DECEMBER 31,
                                                        2001                2000
                                                   -----------           -----------
<S>                                                <C>                   <C>
CURRENT LIABILITIES
      Accounts Payable & Accrued Expenses          $   131,993           $   131,997
      Accrued Payroll Taxes                             14,349                 4,960
      Accrued Interest Payable                             812                23,782
      Notes Payable - Current Portion                   15,000               448,757
                                                   -----------           -----------
TOTAL CURRENT LIABILITIES                              162,154               609,496
                                                   -----------           -----------
LONG-TERM LIABILITIES
      Accrued Compensation                             272,605               172,318
      Loans Payable Affiliates -
              Net of current portion                    48,000                43,230
                                                   -----------           -----------
TOTAL LONG-TERM LIABILITIES                            320,605               215,548
                                                   -----------           -----------
STOCKHOLDERS' EQUITY (DEFICIT)
      Common Stock, $.01 par value,
        75,000,000 shares authorized
        14,815,692 and 12,917,262 shares
        issued, 14,719,512 and 12,821,082
        outstanding as of June 30, 2001
      and December 31, 2000, respectively              148,157               129,172
      Treasury Stock, 96,180 shares                   (109,860)             (109,860)
      Additional Paid-in Capital                     4,973,614             4,336,631
      Stock Subscriptions Receivable                  (843,960)             (818,304)
      Stock Warrants                                    22,100                     0
      Deferred Compensation                           (200,000)             (400,000)
      Accumulated Deficit                           (4,362,935)           (3,835,817)
                                                   -----------           -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                  (372,884)             (698,178)
                                                   -----------           -----------
TOTAL LIABILITIES AND
     STOCKHOLDERS' EQUITY (DEFICIT)                $   109,875           $   126,866
                                                   ===========           ===========
</TABLE>

                 See accompanying notes to financial statements.


                                       4
<PAGE>   5
                                 GENELINK, INC.
                             STATEMENT OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   For The            For The            For The           For The
                                                 Three Months      Three Months        Six Months        Six Months
                                                    Ended              Ended              Ended             Ended
                                                June 30, 2001      June 30, 2000     June 30, 2001      June 30, 2000
                                                -------------      -------------     -------------      -------------
<S>                                             <C>                <C>                <C>                <C>
REVENUE                                         $      5,668       $      4,073       $     11,462       $     13,536
COST OF GOODS SOLD                                       615                641              1,224              1,494
                                                ------------       ------------       ------------       ------------
GROSS PROFIT                                           5,053              3,432             10,238             12,042
                                                ------------       ------------       ------------       ------------

EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE                   86,051             72,513            393,390            352,247
CONSULTING                                            32,221             44,550             51,192             65,420
PROFESSIONAL FEES                                     12,936             31,136             62,587             56,987
ADVERTISING AND PROMOTION                             15,671             13,740             25,280             17,695
AMORTIZATION AND DEPRECIATION                          1,006              1,431              2,013              2,683
                                                ------------       ------------       ------------       ------------
                                                     147,885            163,370            534,462            495,032
                                                ------------       ------------       ------------       ------------

INTEREST EXPENSE                                       4,884             28,631             17,047             46,558
                                                ------------       ------------       ------------       ------------
INTEREST INCOME                                           22                180                144                264
                                                ------------       ------------       ------------       ------------
NET LOSS BEFORE EXTRAORDINARY ITEM                  (147,694)          (188,389)          (541,127)          (529,284)
EXTRAORDINARY ITEM - FORGIVENESS OF DEBT                   0                  0             14,010                  0
                                                ------------       ------------       ------------       ------------
NET LOSS                                            (147,694)          (188,389)          (527,117)          (529,284)
                                                ============       ============       ============       ============
NET LOSS PER SHARE BASIC AND DILUTED            $      (0.01)      $      (0.02)      $      (0.04)    $        (0.05)
                                                ============       ============       ============       ============
Weighted average common shares and diluted
  potential common shares                         14,127,250         11,585,176         13,554,700         11,165,453
                                                ============       ============       ============       ============
</TABLE>

                 See accompanying notes to financial statements.


                                       5
<PAGE>   6
                                 GENELINK, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                FOR THE         FOR THE
                                                               SIX MONTHS     SIX MONTHS
                                                                 ENDED          ENDED
                                                              JUNE 30, 2001   JUNE 30, 2000
                                                              -------------   -------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES
    Net Loss                                                   $(527,117)      $(529,284)
    Adjustments to reconcile net loss
     to net cash used by operating activities
    Depreciation and Amortization                                  2,012           2,683
    Amortization of bond discount                                 36,243          38,876
    Fair value of compensation related to vested options         200,000         200,000
    Common Stock issued for services                              23,589          55,950
    Fair value of options granted for consulting services          7,710               0
    Accrued interest on Subordinated
      Debt converted to common stock                                   0             676
    (Increase) decrease in assets
        Accounts receivable                                           26           1,007
        Inventory                                                    189             260
        Prepaid expenses                                           4,964         (22,804)
        Deposits                                                     112             800
Increase (decrease) in liabilities
        Accounts payable & accrued expenses                       29,996          56,207
        Accrued payroll taxes                                      9,389           6,651
        Accrued interest                                          13,142           6,778
        Accrued compensation                                     100,287         102,625
                                                               ---------       ---------
    Net cash used by operating activities                        (99,458)        (79,575)
                                                               ---------       ---------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchase of property and equipment                                  0          (3,455)
   Decrease in Subscriptions Receivables                               0         (16,469)
                                                               ---------       ---------
     Net cash used by investing activities                             0         (19,924)
                                                               ---------       ---------
</TABLE>

                 See accompanying notes to financial statements.


                                       6
<PAGE>   7
                                 GENELINK, INC.
                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                          FOR THE          FOR THE
                                                         SIX MONTHS       SIX MONTHS
                                                           ENDED            ENDED
                                                        JUNE 30, 2001    JUNE 30, 2000
                                                        -------------    -------------
<S>                                                     <C>              <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans and notes payable                        4,770         12,730
Proceeds from Debentures Issued                                  0        110,000
Proceeds relating to issuance of common stock (net)         85,000         10,000
                                                         ---------       --------
Net cash provided by financing activities                   89,770        132,730
                                                         ---------       --------
NET INCREASE (DECREASE) IN CASH                             (9,688)        33,231

Cash, beginning of period                                   13,804          5,976
                                                         ---------       --------
Cash, end of period                                      $   4,116       $ 39,207
                                                         =========       ========

SUPPLEMENTAL DISCLOSURES

Income taxes paid                                        $       0       $      0
                                                         =========       ========
Interest paid                                            $       0       $      0
                                                         =========       ========
NON-CASH FINANCING TRANSACTIONS:
Conversion of Debt and accrued
  interest to Stock                                      $ 506,112       $107,008
                                                         ---------       --------
Accrued interest on Subscriptions
  Receivable                                             $  26,656       $ 22,537
                                                         ---------       --------
Decrease in accrued compensation
  payable - cashless exercise of options                 $       0       $ 60,000
                                                         ---------       --------
Conversion of Accounts Payable to Stock                  $  30,000       $      0
                                                         ---------       --------
Stock issued related to debenture
  financing                                              $       0       $ 66,175
                                                         =========       ========
</TABLE>


                 See accompanying notes to financial statements.


                                       7
<PAGE>   8
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

NOTE 1 -        DESCRIPTION OF ORGANIZATION AND SUMMARY OF SIGNIFICANT
                ACCOUNTING POLICIES

                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's cash
                reserves have decreased since the Company's private placement
                from $800,000 to approximately $4,100 and sales have not
                increased enough to support operations. The Company incurred an
                operating loss of $527,117 and $529,284 for the six months ended
                June 30, 2001 and 2000, respectively. The Company reported a
                deficit of $4,362,935 and $3,835,817 as of June 30, 2001 and
                December 31, 2000, respectively. The Company has announced
                marketing plans to enhance sales and, therefore, 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 which would differ materially from the going
                concern business.

                BUSINESS ORGANIZATION

                Genelink, Inc. (the Company) was organized in the Commonwealth
                of Pennsylvania to offer to the public the safe collection and
                preservation of a family's DNA material for later use by the
                family to determine genetic linkage. The Company is the
                successor by merger to a Delaware corporation organized under
                the same name on September 21, 1994. Prior to the merger, which
                occurred in February, 1995, the predecessor entity engaged in no
                operations. The Company's executive offices are located in
                Margate, New Jersey.

                BUSINESS DESCRIPTION

                The Company was founded in response to the information being
                generated in the field of human molecular genetics. Management
                believes that future generations could benefit from the DNA
                store of knowledge. For this reason, the Company has created a
                DNA banking service that stores DNA before and after an
                individual dies. This genetic history can help families
                determine if they are at risk for certain inherited diseases.
                Humans have over 100,000 genes, and there are more than 4,500
                diseases that are genetically based.

                This DNA can be used to establish whether or not the disease or
                disorder that caused death was genetic in origin. Scientists are
                discovering an increasing number of connections between genes
                and specific diseases. DNA, the hereditary material of life, is
                contained in all of the genes that make up who we are. If one of
                these genes is defective, it can cause disease. DNA banking
                shifts the

                                       8
<PAGE>   9
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)



                emphasis from diagnosis and treatment, to prediction and
                prevention. Because of the success of the Human Genome Project,
                genetics will increasingly affect all aspects of our human
                lives. Inherited diseases will be identified, and with reference
                DNA from an afflicted family member, location of the genes that
                cause the inherited disease will help a family physician
                predict, and possibly prevent, the occurrence in future
                generations. Also, while some genetic tests are available today,
                many more will be available in the future, and with more
                accuracy. Genelink's DNA Banking system is set up to assist in
                future genetic testing.

                  THE PRODUCT

                The Company has developed a DNA Collection Kit for the
                collection of DNA specimens of its clients. No licensing or
                training is necessary for the collection by the client of his or
                her DNA specimen. The collection process, which uses six swabs,
                is self administered and takes less than five minutes to
                complete. The client forwards the swabs to the University of
                North Texas Health Science Center at Fort Worth (UNTHSC) and
                completes and forwards a data form to the Company. Specimens can
                be collected during an individual's lifetime or up to 36 to 40
                hours after death. UNTHSC will store the DNA specimens for up to
                75 years. Upon the 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. More than one test can be made on
                the same DNA specimen.

                The Company has developed three proprietary genetic indicator
                tests (Genelink's Genesis I Program(TM)) and has filed three
                patent applications: (1) Assessment of Oxidative Stress (OS)
                Genes that can contribute to disease and aging; (2) Assessment
                of Oxidative Stress (OS) Genes to be used to genetically predict
                an individual's risk for skin aging; and (3) a SNPs based method
                to detect susceptibility to obesity. Specifically, these
                genetics based tests (on which patents are pending) are designed
                to measure single-nucleotide polymorphisms, or SNP's, which are
                small variations in DNA. The Company's patented DNA Collection
                Kit(R) will be used for the Program, which can assist
                nutritional companies and medical, health and anti-aging
                practitioners to offer a "more targeted" and improved approach
                to wellness/nutritional therapies.

                INTERIM FINANCIAL STATEMENTS

                These interim financials, which are unaudited, include all
                necessary adjustments which in the opinion of management are
                necessary in order to make the financial statements not
                misleading.

                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

                                       9
<PAGE>   10
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

                exceed insured limits. The Company maintains some cash balances
                with Merrill Lynch, which is SIPC insured up to $300,000.

                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.

                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 the related
                assets.

                REVENUE AND COST RECOGNITION

                Revenues are recorded when the kits are sold as opposed to when
                monies are received. The Company receives the entire
                non-refundable fee up front for the DNA kits and provides the
                DNA analysis testing at that time, then stores the specimen 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 purchase of kits,
                samples and delivery expense. The direct costs of kits are
                recognized at the time of sale to the customers as opposed to
                the time of purchase by Genelink, Inc. from vendor. Kits
                purchased by Genelink, Inc. not yet sold remain in inventory.

                AMORTIZATION OF PATENTS

                Legal and professional fees 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 United
                States and foreign countries on its method of DNA gathering,
                which patent application is pending in foreign countries. The
                Company has registered trademark for its name and logo and for
                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
                and logo and for the name "DNA Collection Kit".


                                       10
<PAGE>   11
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)


                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.

                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 six months ended June 30, 2001 and 2000.

                RECLASSIFICATIONS

                Certain balances not affecting net income have been reclassified
                to conform to the current year presentation.

                PER SHARE DATA

                Effective November 12, 1998, the Company adopted SFAS No. 128,
                Earnings Per Share. The provisions of SFAS No. 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 2001
                and 2000 excludes any

                                       11
<PAGE>   12
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)


                effect from such securities as their inclusion would be
                antidilutive. Per share amounts for all periods presented have
                been restated to conform with the provisions of SFAS No. 128.

                STOCK OPTIONS

                The Financial Accounting Standards Board has issued SFAS 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 must
                make pro forma disclosures of net income (loss) and, if
                presented, earnings (loss) per share, as if the fair value based
                method accounting defined in SFAS 123 had been adopted. The
                Company has elected to account for its stock-based compensation
                plans under APB 25.

NOTE 2 -        PROPERTY AND EQUIPMENT

                Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                               JUNE 30,        DECEMBER 31,
                                                                2001              2000
                                                                ----              ----
<S>                                                          <C>                <C>
                 Office Furniture                               1,154            $ 1,154
                 Office Equipment                              16,246             16,246
                 Leasehold Improvements                        50,000             50,000
                                                              -------            -------
                                                              $67,400            $67,400
                                                              =======            =======
</TABLE>


                Depreciation expense amounted to $1,905 and $2,575 for the six
                months ended June 30, 2001 and 2000, respectively.



                                       12
<PAGE>   13
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

NOTE 3 -        LOANS PAYABLE-AFFILIATES

                The Company's unsecured long-term debt consists of loans from
                various shareholders with no stated repayment terms.

<TABLE>
<CAPTION>
                                                  JUNE 30,          DECEMBER 31,
                                                    2001               2000
                                                    ----               ----
<S>                                               <C>                <C>
                 Total Obligations                $48,000            $43,230
                 Less: Current Portion                  0                  0
                                                  ------             -------
                                                  $48,000            $43,230
                                                  =======            =======
</TABLE>

NOTE 4 -        DEBENTURE-NOTES PAYABLE

                The Company entered into the following debenture notes payable
                with terms indicated below:

<TABLE>
<CAPTION>
                                                                                               Shares of Common
                                                                                               Stock Issued as
Amount of                                          Interest             Due                        Additional
Debenture         Date Issued                       Rate                Date                    Consideration
---------         -----------                       ----                ----                    -------------
<S>               <C>                             <C>                 <C>                      <C>
$  50,000         April 30, 1999                     12%               03-31-00                     50,000
$  15,000         April 30, 1999                     12%               03-31-00                     15,000
$  10,000         July 29, 1999                      12%               06-01-00                     10,000
$ 100,000         August 6, 1999                     12%               06-01-00*                   100,000
$  10,000         August 8, 1999                     12%               06-01-00                     10,000
$  15,000         November 15, 1999                  12%               03-31-00*                    15,000
$  50,000         December 3, 1999                   12%               06-01-00                     50,000
$  25,000         March 24, 2000                     12%               06-30-00                     25,000
$  10,000         March 29, 2000                     12%               06-30-00                     20,000
$  15,000         June 15, 2000                      10%               12-15-00                     25,000
$  50,000         June 23, 2000                      8.5%              12-24-00                     82,500
$  20,000         August 28, 2000                     9%               12-28-00                     25,000
$  50,000         September 6, 2000                   9%               01-06-01                     62,500
$  10,000         September 6, 2000                   9%               01-06-01                     12,500
$  10,000         September 6, 2000                   9%               01-06-01                     12,500
$  25,000         September 6, 2000                   9%               01-06-01                     31,250
$  25,000         September 19, 2000                  9%               01-19-01                     31,250
$  20,000         September 20, 2000                  9%               01-20-01                     25,000
$  25,000         September 26, 2000                  9%               01-26-01                     31,250
$  25,000         December 6, 2000                    9%               04-06-01                     31,250
$  20,000         December 20, 2000                   9%               04-20-01                     25,000
$  20,000         December 21, 2000                   9%               04-21-01                     25,000
---------
</TABLE>
<TABLE>
<S>                                                   <C>
$ 600,000                                             Total debentures issued.
 (585,000)                                            *Less amounts converted to stock.
---------
$  15,000
=========
</TABLE>



                                       13
<PAGE>   14
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

                Accrued interest payable on the debenture notes as of June 30,
                2001 and December 31, 2000 was $ 812 and $ 23,782, respectively.

                In connection with the Company issuing the debenture notes
                payable, additional shares of common stock were issued in
                amounts equal to the principal amount of the debenture. The fair
                market value of the amortizable debenture discounts was recorded
                net with the debenture notes payable and will be amortized over
                the life of the debenture.

                The Company's Amortizable Debenture Discounts were as follows:

<TABLE>
<CAPTION>
                                                                          JUNE 30,           DECEMBER 31,
                                                                            2001                2000
                                                                            ----                ----
<S>                                                                      <C>                 <C>
                 Original Amortizable Debenture Discount                 $246,448            $ 246,448
                 Less:  Cumulative Amortization/Interest Exp.             246,448             (210,206)
                                                                         --------            ---------
                 Net Amortizable Debenture Discounts                     $      0            $  36,242
                                                                         ========            =========
                                 The Company's Net Debenture
                                 Notes Payable were as follows:

                Original Debenture Notes issued                         $ 600,000             $ 600,000
                Less Amounts converted to stock                          (585,000)             (115,000)
                Net Amortizable Debenture Discounts                             0               (36,242)
                                                                        ---------             ---------
                Net Debenture Notes Payable                             $  15,000             $ 448,758
                                                                        =========             =========
</TABLE>


NOTE 5 -       OPERATING LEASES

                The Corporation has various noncancellable operating leases with
                terms of 24 to 36 months. The following is a schedule of future
                minimum rentals under the leases as of June 30, 2001 and
                December 31, 2000:

<TABLE>
<CAPTION>

                                 JUNE 30,          DECEMBER 31,
                                   2001              2000
                                 ------            ------
<S>                             <C>               <C>
                 2000            $    0            $1,158
                 2001               764               764
                                 ------            ------
                                 $  764            $1,922
                                 ======            ======
</TABLE>


                                       14
<PAGE>   15
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)
NOTE 6 - INCOME TAXES

                At June 30, 2001, the Company had significant federal and state
                tax net operating loss carryforwards of approximately
                $5,000,000. The difference between the operating loss
                carryforwards on a tax basis and a book basis is due principally
                to differences in depreciation, amortization, and development
                costs. The federal carryforwards will begin to expire in 2009
                and the state carryforwards will begin to expire in 2005.

                The Company had a net deferred tax asset of approximately
                $1,025,000 at June 30, 2001 primarily from net operating loss
                carryforwards. A valuation allowance was recorded to reduce the
                net deferred tax asset to zero.

NOTE 7 - SHAREHOLDERS' EQUITY TRANSACTIONS

                The Company's shareholder equity consists of the following:

                A. COMMON STOCK

                During the six months ended June 30, 2001 the Company issued
                236,667 shares of common stock and 236,667 warrants to purchase
                common stock for cash consideration of $85,000. This is pursuant
                to the private placement offerings from January and June, 2001.

                The Company issued 15,000 and 150,000 common shares of stock for
                consulting services valued at $3,900 and $28,050 for the six
                months ended June 30, 2001 and 2000, respectively.

                The Company issued 152,500 shares of common stock as additional
                consideration for Debenture Notes Payable valued at $51,175
                during the six months ended June 30, 2000.

                The Company converted $470,000 and $115,000 of Debenture Notes
                Payable and accrued interest of $36,112 into 1,486,763 and
                479,721 common shares of stock valued at $506,113 and $122,684
                at the dates of conversion during the six months ended June 30,
                2001 and 2000, respectively.


                                       15
<PAGE>   16
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

                B. COMMON STOCK

                Officers of the Company exercised Options to purchase 1,000,000
                shares of common stock. The Company received cash proceeds of
                $10,000 for one hundred thousand, $.10 Options. Six hundred
                thousand $.10 Options valued at $60,000 offset accrued
                compensation due to an officer and three hundred thousand, $.20
                Options, valued at a fair market price of $.28 at the exercise
                date, were recorded as additional subscriptions receivable and
                as compensation expense to an officer in the amounts of $60,000
                and $24,360, respectively.

                C. SUBSCRIPTION RECEIVABLE-OFFICERS

                Since its inception and until the execution of an employment
                agreement in early 1998, the Company advanced funds periodically
                to an officer. Subscription Receivable Officers represents loans
                and accrued interest of $843,960 and $818,304 at June 30, 2001
                and December 31, 2000, respectively. The loans accrue interest
                using the average applicable one-month Federal Rates (AFRs).

                The officer has executed notes payable to the Company to
                evidence his obligation on account of his loans. Under the terms
                of his obligation, in repayment thereof, the officer will have
                the right, at any time on or before December 31, 2003, to
                transfer to the Company, at the then fair market value, shares
                of the Company's common stock.

                Any transfer not in full satisfaction of the obligation will
                first be applied to accrued interest and then to principal. No
                payments of interest or principal shall be due on account of the
                loans prior to December 31, 2003. Fair market value of the
                Company's shares shall be equal to the average between the bid
                and ask price in the market in which it is publicly traded on
                the last date on which such trades occurred prior to the
                transfer of shares from the officer to the Company.

                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.

                D. TREASURY STOCK

                On March 17, 1999, the Company received 150,000 shares which
                were previously issued to consultants. These shares were
                recorded as treasury stock at the then fair market value of
                $135,000.


                                       16
<PAGE>   17
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

                Simultaneously on March 17, 1999 the Company assigned 75,000 of
                the aforementioned shares to an investment advisor to promote
                the Company stock and obtain additional funding. The Company
                valued the shares at the then fair market value of $67,500.

                E. STOCK OPTIONS AND WARRANTS

                The Financial Accounting Standards Board has issued SFAS 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 must make pro
                forma disclosures of net income (loss) and, if presented
                earnings (loss) per share, as if the fair value based method
                accounting defined in SFAS 123 had been adopted. The Company has
                elected to account for its stock-based compensation plans under
                APB 25.

                During September, 1997, an officer of the Company was granted
                options to acquire 1,200,000 Shares at $.10 per Share, for
                services provided to the Company from its inception, 400,000 of
                which vested upon the execution of the employment agreement with
                the remaining balance vesting in four (4) equal annual
                installments of 200,000 each commencing January, 1998.

                During September, 1997 the Company also issued another officer
                of the Company 1,000,000 options that will enable him to acquire
                shares of the Company's common stock exercisable at the price of
                $.10 per Share for services provided to the Company from its
                inception. These options will expire December 31, 2003 and will
                vest as follows:

                           200,000 shares at the execution of the agreement.

                           200,000 shares each January 1, beginning January 1,
                           1999, 2000, 2001, and 2002.

                Pursuant to APB No. 25 compensation has been recognized based
                upon the difference of the fair value of the Company's stock at
                grant date and the officers exercise price as follows:


                                       17
<PAGE>   18
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           Fair Value
                  Grant                                   of Options at    Exercise   Additional
                  Date          # of Options Granted      Date of Grant     Price     Compensation
                  ----          --------------------      -------------     -----     ------------
<S>                             <C>                       <C>              <C>        <C>
                  1997              2,200,000                 $  .60       $  .10      1,100,000
                  1998                      0                      0            0              0
</TABLE>

                In connection with the Company issuing the options to the
                officers noted above, the Company recorded a deferred
                compensation charge of $1,100,000 reflected in the equity
                section. The Company will record compensation expense based upon
                the vesting schedules of these options as noted below:

<TABLE>
<S>                             <C>
                 1998            $300,000
                 1999            $200,000
                 2000            $200,000
                 2001            $200,000
                 2002            $200,000
</TABLE>

                During 1999, the Company granted options to various consultants
                to purchase the Company's common stock at $.75 to $1.50 per
                share. These options expire in 2003 and 2004. Pursuant to FAS
                123, consulting expense of $173,044 was recorded based on the
                fair value of the options granted.

                On July 1, 1999, certain officers of the Company each received
                1,000,000 options to purchase shares of the Company's common
                stock, one cent par value, at the exercise price of $1.00 per
                share. Four hundred thousand options vested immediately with the
                remaining options vesting 200,000 each on January 1, 2000, 2001,
                and 2002. During the three months ended March 31, 2000, the
                Company also issued 25,000 stock options/warrants to purchase
                the Company's common stock at a price of $1.50 per share with
                expiration dates in 2003.

                On May 18, 2000, Dr. Robert Ricciardi exercised 600,000 options
                to acquire 600,000 shares of common stock at an exercise price
                of $.10 per share. The amount due to the Company, $60,000, was
                offset against monies the Company previously owed to Dr.
                Ricciardi for accrued compensation.

                On May 22, 2000, the Company established an incentive stock
                option plan pursuant to which the Company is entitled to issue
                options to acquire 2,500,000 shares of its stock. During the
                second quarter of 2000, the Company granted to John DePhillipo
                an option to acquire 500,000 shares of common stock at an
                exercise price of $.20 per share (equal to 110% of the per share
                fair market price as of the date of the grant). These options
                were vested on the date of issue, May 22, 2000.


                                       18
<PAGE>   19
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

                On May 22, 2000, the Company established a non-qualified stock
                option agreement in which it granted 300,000 shares to John
                DePhillipo. The option price was determined to be $.20 (110% of
                the fair market value of the company stock as of the date of the
                grant). These options vested immediately at the date of the
                grant.

                During the second quarter ended June 30, 2000, the Company
                issued options to acquire 10,000 shares of common stock at $1.00
                per share. These options vest 5,000 annually on April 17, 2000
                and April 17, 2001. These options were issued in consideration
                for marketing services to be rendered over the next two years.
                Pursuant to FAS 123, consulting expense of $11,326 was recorded
                based on the fair value of the options granted.

                During the quarter ended June 30, 2001, the Company issued
                warrants to acquire 12,000 shares of common stock at $1.00 per
                share and 40,000 shares of common stock at $.50 per share
                pursuant to consulting agreements. Of the warrants issued,
                12,000 vest in twelve monthly installments of 1,000 commencing
                June 1,2001, and the other 40,000 vest 20,000 on April 1, 2002
                and 20,000 on April 1, 2003. Pursuant to FAS 123, consulting
                expense of $60 was recorded based on the fair value of the
                options granted.

                On May 11, 2001, options granted during 2000 to acquire 25,000
                shares of common stock at $1.50 per share were cancelled. The
                Company issued replacement warrants to acquire 100,000 shares at
                $.35 per share.

                During the quarter ended March 31, 2001, the Company issued
                warrants to acquire 550,000 shares of common stock at $.44 per
                share pursuant to a consulting agreement. These warrants vest
                275,000 on January 17, 2001, and 275,000 on January 17, 2002.
                Pursuant to FAS 123, consulting expense of $52,250 was recorded
                based on the fair value of the options granted. This was charged
                against additional paid in capital as a fund raising
                expenditure.

                On January 30, 2001, options granted during 1999 to acquire
                100,000 shares of common stock at $1.50 per share were
                cancelled. The Company issued replacement warrants to acquire
                250,000 shares at $.33 per share.

                On January 23, 2001, the Company issued incentive stock options
                to two officers to acquire 1,500,000 shares of common stock at
                $.40 per share. These warrants expire on January 23, 2006 and
                vest 500,000 on January 23, 2001, 500,000 on January 23, 2002,
                350,000 on January 23, 2003, and 150,000 on January 23, 2004.


                                       19
<PAGE>   20
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)


                The following schedule summarizes the vested stock options and
                stock warrants activity and status as of June 30, 2001 and 2000
                and for the six month period ending June 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                 2001                   2000
                                                                 ----                   ----
<S>                                                            <C>                    <C>
                 Granted                                       7,766,375              5,244,375
                                                               =========              =========
                 Vested options outstanding at
                 beginning of the period                       2,018,195              2,133,195
                 Options vested during period                  2,001,000                805,000
                 Vested options exercised during
                 period                                                0               (600,000)
                 Cancelled                                      (125,000)                     0
                                                               ---------              ---------
                 Vested options outstanding at end
                 of period                                     3,894,195              2,338,195
                                                               =========              =========
</TABLE>

                A summary of outstanding options/warrants along with their
                exercise price and dates as of June 30, 2001 are as follows:

<TABLE>
<CAPTION>
EXERCISE     OPTIONS/WARRANTS              OUTSTANDING                         EXPIRATION
PRICE            GRANTED                 OPTIONS/WARRANTS                        DATE
-----        ----------------            ----------------                        ----
<S>          <C>                         <C>                                   <C>
$0.10             2,200,000                   478,820                           12/31/03
$0.20               800,000                   500,000                           12/31/05
$0.33               250,000                   250,000                           12/31/03
$0.35               100,000                   100,000                           04/11/06
$0.40             1,500,000                   500,000                           01/23/06
$0.44               550,000                   275,000                           01/17/06
$0.50                40,000                         0                           04/01/06
$0.75                45,000                    45,000                           12/31/04
$1.00                70,000                    70,000                           03/20/06
$1.00             2,010,000                 1,610,000                           12/31/03
$1.00                12,000                     1,000                           05/01/06
$1.50               189,375                    64,375                           12/31/03
                  ---------                 ---------
                  7,766,375                 3,894,195
                  =========                 =========
</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:



                                       20
<PAGE>   21
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

<TABLE>
<S>                                                           <C>
                           Net Loss:
                                    As reported                $(527,117)
                                    Proforma                    (708,117)

                           Net Loss per common share:
                                    As reported                $    (.04)
                                    Proforma                        (.05)
</TABLE>

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

<TABLE>
<S>                                                                         <C>
                                    Risk free interest rate of return        7%
                                    Expected option life                     4-5.5 yrs.
                                    Expected dividends                       $-0-
                                    Expected volatility                      50%
</TABLE>

                F. PRIVATE PLACEMENT OFFERING

                On January 1, 2001, Genelink, Inc. commenced a private placement
                offering of up to 2 million Units at a price of $.50 per Unit,
                under Rule 506 of Regulation D. Each Unit consists of one share
                of Common Stock and a Warrant to acquire one share of Common
                Stock at an exercise price of $1.00 per share. The proceeds will
                be used for working capital and for research and development
                expenditures in connection with the development of a new product
                line.

                On June 18, 2001, Genelink, Inc. commenced a private placement
                offering of up to 250,000 units at a price of $.30 per unit,
                under Rule 506 of Regulation D. Each unit consists of one share
                of Common Stock and a Warrant to acquire one share of Common
                Stock at an exercise price of $.50 per share. The proceeds will
                be used for working capital and to fund research and development
                relating to a new product line.

                NOTE 8 - 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.


                                       21
<PAGE>   22
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                 PERIOD ENDED JUNE  30                                2001                   2000
                 ----------------------                               ----                   ----
<S>                                                             <C>                      <C>
                 Net loss                                       $   (527,117)            $   (529,284)

                 Weighted average number of shares
                 of common stock and common
                 stock equivalents outstanding:

                 Weighted average number of common
                 shares outstanding for computing
                 Basic earnings per share                         13,554,700               11,165,453

                 Dilute effect of warrants and stock
                 options after application of the
                 treasury stock method                                     *                        *
                                                                ------------             ------------
                 Weighted average number of common
                 shares outstanding for computing
                 diluted earnings per share                       13,554,700               11,165,453
                                                                ============             ============
                 Net loss per share-basic & diluted             $       (.04)            $       (.05)
                                                                ============             ============
</TABLE>

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

<TABLE>
<CAPTION>
                  PERIOD ENDED JUNE 30                     2001           2000
                  --------------------                     ----           ----
<S>                                                      <C>            <C>
                  Warrants and stock options             3,894,195      2,338,195
</TABLE>


NOTE 9 -        ADVERTISING

                The Company expenses the production costs of advertising the
                first time the advertising takes place. Advertising expense was
                $25,280 and $12,128 for the six months ending June 30, 2001 and
                2000, respectively.

NOTE 10 -       RENT

                The Company leases its primary executive offices located in
                Margate, New Jersey at no cost from its officers. Rent expense
                for the six months ended June 30, 2001 and 2000 was $0.


                                       22
<PAGE>   23
                                 GENELINK, INC.
                          NOTES TO FINANCIAL STATEMENT
                                   (UNAUDITED)


NOTE 11 - TRANSACTIONS WITH RELATED PARTIES

                The Company has an agreement with the UNTHSC through March, 2006
                for the storage of the 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.

                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 and
                freeze and store the material in the refrigerated area
                maintained by the UNTHSC making it available for future
                retrieval.

                A portion of the Company's operations are conducted by
                Kelly/Waldron & Company in East Brunswick, New Jersey, which
                owns 289,333 Shares of the Company. Kelly/Waldon, which provides
                various services to members of the pharmaceutical industry, acts
                as the Company's back office, receiving orders and inquiries,
                processing data and preparing reports for the Company. Because
                of the Company's limited operations and the limited availability
                of funds, the Company's agreement with Kelly/Waldron does not
                require it to make any payments to Kelly/Waldron for its
                services. As its business increases the Company expects to
                commence payment of a management fee to Kelly/Waldron on terms
                to be agreed upon between the parties. As of March 31, 2000 the
                Company owed Kelly/Waldron $20,166. The agreement expired during
                2000 and no balance was due to Kelly/Waldron as of March 31,
                2001.

                CONSULTING

                The Company is dependent, to a large degree, on the services of
                John DePhillipo, its Chairman and Chief Executive Officer and
                the Company has entered into a five (5) year employment
                agreement dated February 24, 1998, with an initial annual base
                compensation of $137,500 in 1999, $151,250 in 2000 and $166,375
                in 2001. The Company has entered into a consulting agreement
                with Dr. Ricciardi (shareholder and officer) dated February 24,
                1998, which provides for initial compensation of $30,000 in
                1998, $60,000 in 1999, $66,000 in 2000, and $72,600 in 2001. The
                initial term of the Agreement is five (5) years.

NOTE 12 - COMMITMENT & CONTINGENCIES

                The Company is involved in a trademark opposition regarding the
                use of its trademark Genelink, however, management believes it
                will prevail in this matter, and will have no material adverse
                effect on the Company.


                                       23
<PAGE>   24
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

Statements in this Report that relate to future results and events are based on
the Company's current expectations. Actual results in future periods may differ
materially from those currently expected or desired because of a number of risks
and uncertainties. For a discussion of factors affecting the Company's business
and prospects, see "Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations - Factors Affecting the Company's Business
and Prospects."

Operating results for the six-month period ended June 30, 2001 are not
necessarily indicative of the results that may be expected for the full fiscal
year.

LIQUIDITY AND CAPITAL RESOURCES

For the six month period ended June 30, 2001, the Company's primary liquidity
requirements have been the implementation and funding of its sales and marketing
efforts, the payment of compensation to officers and other employees and the
payment of accounts payable. In the first six months of 2001, the Company has
raised $89,770, primarily through the issuance of common stock.

Cash and cash equivalents at June 30, 2001 amounted to $4,116 as compared to
$13,804 at December 31, 2000, a decrease of $9,688. During the first six months
of 2001, the Company's operating activities utilized $99,458, as compared to
$79,575 for the first six months of 2000. Cash utilized during these periods
resulted from Company's net losses for such periods.

Financing activities provided $89,770 for the six month period ended June 30,
2001 as compared to $132,730 for the six months ended June 30, 2000. Financing
activities in the six months ended June 30, 2001 resulted primarily from the
receipt of $85,000 as a result of the issuance of common stock throughout the
first six months of 2000, as the Company required additional funds for working
capital purposes.

The Company will require approximately $2,000,000 to implement its sales and
marketing strategy and to fund research and development expenses in the year
2001. The Company intends to raise funds through a private placement of
securities. Unless the Company can increase its revenues and increase its stock
price, it is unlikely that the Company will be able to secure such financing. If
the Company is not able to secure such additional required capital, it will
continue to realize negative cash flow and losses and it is unlikely that it
will be able to continue operations.


                                       24
<PAGE>   25
RESULTS OF OPERATIONS

The following table sets forth certain operating information regarding the
Company:

<TABLE>
<CAPTION>
                                         SIX MONTH            SIX MONTH
                                        PERIOD ENDED         PERIOD ENDED
                                       JUNE 30, 2001         JUNE 30, 2000

                                         (UNAUDITED)          (UNAUDITED)
                                         -----------          -----------
<S>                                    <C>                    <C>
Revenues                                 $  11,462             $  13,536

Cost of Goods Sold                       $   1,224             $   1,494

Net Earnings (Loss)                      $(527,117)            $(529,284)

Net Earnings (Loss) Per Share            $    (.04)            $    (.05)
</TABLE>


      The following summary table presents comparative cash flows of the Company
for the six months ended June 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                     SIX MONTH             SIX MONTH
                                    PERIOD ENDED         PERIOD ENDED
                                    JUNE 30, 2001        JUNE 30, 2000

                                     (UNAUDITED)          (UNAUDITED)
                                     -----------          -----------
<S>                                 <C>                   <C>
Net cash used in operating
activities                            $(99,458)            $ (79,575)

Net cash used by
investing activities                  $      0             $ (19,924)

Net cash provided by
financing activities                  $ 89,770             $ 132,780
</TABLE>


      The Company had cash balances totaling $4,116 at June 30, 2001 and $39,207
at June 30, 2000.


                                       25
<PAGE>   26
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2001 TO SIX MONTHS ENDED JUNE 30, 2000

FINANCIAL CONDITION

Assets of the Company decreased from $126,866 at December 31, 2000 to $109,875
at June 30, 2000, a decrease of $16,991. This decrease was primarily due to a
decrease in cash from $13,804 at December 31, 2000 to $4,116 at June 30, 2001
and a decrease in prepaid expenses from $47,072 at December 31, 2000 to $42,108
at June 30, 2001.

Liabilities decreased from $825,044 at December 31, 2000 to $482,759 at June 30,
2001, a decrease of $342,285. This decrease was primarily due to a decrease in
notes payable from $448,758 at December 31, 2000 to $15,000 at June 30, 2001, a
decrease of $433,758 resulting from the conversion of notes payable into common
stock, as partially offset by an increase in accrued compensation from $172,318
at December 31, 2000 to $272,605 at June 30, 2001, an increase of $100,287.

CURRENT YEAR PERFORMANCE AND EARNINGS OUTLOOK

Revenues. The total revenues for the six months ended June 30, 2001 were $11,462
as compared to $13,536 for the six months ended June 30, 2000, a decrease of
$2,074.

Expenses. Total expenses for the six months ended June 30, 2001 were $551,509 as
compared to $541,590 for the six months ended June 30, 2000, an increase of
$9,919, primarily resulting from an increase in selling, general and
administrative expenses from $352,247 for the six months ended June 30, 2000 to
$393,390 for the six months ended June 30, 2001, an increase of $41,153, an
increase in advertising and promotion expenses from $17,695 for the six months
ended June 30, 2000 to $25,280 for the six months ended June 30, 2001, an
increase of $7,585, and an increase in professional fees from $56,987 for the
six months ended June 30, 2000 to $62,587 for the six months ended June 30,
2001, an increase of $5,600, as partially offset by a decrease in interest
expense from $46,558 for the six months ended June 30, 2002 to $17,047 for the
six months ended June 30, 2001, a decrease of $29,511, and a decrease in
consulting fees from $65,420 for the six months ended June 30, 2000 to $51,192
for the six months ended June 30, 2001, a decrease of $14,228.

Losses. The Company incurred a loss before extraordinary items of $541,127 for
the six months ended June 30, 2001 as compared to a loss of $529,284 for the six
months ended June 30, 2000, an increase of $11,843. This increase in the amount
of losses incurred is primarily due to the $9,919 increase in expenses incurred
by the Company for the six months ended June 30, 2001 as compared to the six
months ended June 30, 2000.


                                       26
<PAGE>   27
FACTORS AFFECTING THE COMPANY'S BUSINESS AND PROSPECTS

There are a number of factors that affect the Company's business and the result
of its operations. These factors include general economic and business
conditions; the level of acceptance of the Company's products and services; the
rate and commercial applicability of advancements and discoveries in the
genetics field; and the Company's ability to enter into strategic alliances with
companies in the funeral home and genetics industries; the ability of the
Company to raise the financing necessary to implement its business and marketing
plan, to pay salaries to its officers and employees and to pay its accounts
payable.

PART II.          OTHER INFORMATION

Item 3. Exhibits and Reports on Form 8-K.

         (a)      Exhibits

         (b)      Reports on Form 8-K.

                  No reports on Form 8-K were filed during the quarter for which
                  this report is filed.

* * * * * *


                                       27
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         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                     GENELINK, INC.
                                      (Registrant)






Date: August 13, 2001                By:  /s/ John R. DePhillipo
                                        ---------------------------------------
                                          John R. DePhillipo, Chief Executive
                                          Officer and President


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