U.S. SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from
_________ to _________
 Commission File No. 0-28077
 GENELINK, INC.
 
  PENNSYLVANIA
    
    23-2795613(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)317 Wekiva Spring Road, #200
Longwood, Florida
    
    32779(Address of principal executive offices)
    
    (Zip Code)
  
  þ o
  Large accelerated filer oAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company þ o þ
  Number of Shares of Common Stock
Outstanding on May 9, 2008
    
    
    66,341,921




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Page No.PART I.
    
    FINANCIAL INFORMATIONITEM 1.
    
    Financial Statements.Consolidated Balance Sheets at March 31, 2008 (unaudited) and December 31, 2007
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2008 and 2007 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the three months ended March 31, 2008 and 2007 (unaudited)
    
    
    5-6Notes to Interim Consolidated Financial Statements
    
    
    7-10
  2




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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 (Unaudited)March 31,
    
    December 31,2008
    
    2007ASSETSCash and cash equivalents
    
    $
    483,666
    
    
    $
    972,371Accounts receivable
    
    
    53,497
    
    
    
    35,327Inventory
    
    
    33,737
    
    
    
    3,646Prepaid expenses
    
    
    35,864
    
    
    
    11,273Total current assets
    
    
    606,764
    
    
    
    1,022,617Property and equipment
    
    
    65,764
    
    
    
    38,476Other assets
    
    
    342,641
    
    
    
    322,731Total assets
    
    $
    1,015,169
    
    
    $
    1,383,824LIABILITIESAccounts payable and accrued expenses
    
    $
    507,175
    
    
    $
    439,399Accrued compensation
    
    
    144,168
    
    
    
    144,168Deferred revenue
    
    
    100,922
    
    
    
    100,922Loans payable
    
    
    18,000
    
    
    
    18,000Total current liabilities
    
    
    770,265
    
    
    
    702,489Convertible secured promissory notes payable, net of issuance of
debt and stock conversion discounts
    
    
    499,787
    
    
    
    487,968Total liabilities
    
    
    1,270,052
    
    
    
    1,190,457SHAREHOLDERS EQUITY (DEFICIENCY)Common stock, $.01 par value, 125,000,000 shares authorized as
of March 31, 2008 and December 31, 2007; 66,673,591 shares
issued as of March 31, 2008 and December 31, 2007; and
66,267,422 outstanding as of March 31, 2008 and December 31,
2007
    
    
    666,736
    
    
    
    666,736Additional paid in capital
    
    
    8,277,692
    
    
    
    8,277,692Stock warrants
    
    
    4,245,692
    
    
    
    4,245,692Accumulated deficit
    
    
    (13,129,948
    )
    
    
    (12,681,698
    )Treasury stock, 406,169 shares as of March 31, 2008 and December
31, 2007, at cost
    
    
    (315,055
    )
    
    
    (315,055
    )Total shareholders equity (deficiency)
    
    
    (254,883
    )
    
    
    (193,367
    )Total liabilities and shareholders equity (deficiency)
    
    $
    1,015,169
    
    
    $
    1,383,824
 The accompanying notes are an integral part of the consolidated financial statements
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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 Three months ended March 31,
    
    2008
    
    
    2007REVENUE
    
    $
    26,424
    
    
    $
    31,385COSTS OF GOODS SOLD
    
    
    25,315
    
    
    
    25,123GROSS PROFIT
    
    
    1,109
    
    
    
    6,262EXPENSESSelling, general and administrative
    
    
    141,769
    
    
    
    151,883Consulting
    
    
    144,993
    
    
    
    31,648Professional fees
    
    
    133,880
    
    
    
    164,115Advertising and promotion
    
    
    15,349
    
    
    
    4,234Amortization and depreciation
    
    
    13,368
    
    
    
    14,174449,359
    
    
    
    366,054NET LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (448,250
    )
    
    
    (359,792
    )PROVISION FOR INCOME TAXES
    
    
    0
    
    
    
    0NET LOSS
    
    $
    (448,250
    )
    
    $
    (359,792
    )NET LOSS PER SHARE, BASIC & DILUTED
    
    $
    (0.01
    )
    
    $
    (0.01
    )Weighted average common shares and diluted
potential common shares
    
    
    66,673,591
    
    
    
    42,256,942
 The accompanying notes are an integral part of the consolidated financial statements.
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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three months ended March 31,
    
    2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (448,250
    )
    
    $
    (359,792
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    13,368
    
    
    
    14,174Amortization of discounts on loans payable
    
    
    11,819
    
    
    
    31,324Changes in operating assets and liabilitiesAccounts receivable
    
    
    (18,170
    )
    
    
    834Inventory
    
    
    (30,091
    )
    
    
    813Prepaid expenses
    
    
    (24,591
    )
    
    
    3,148Deposits
    
    
    (6,000
    )
    
    
    0Accounts payable and accrued expenses
    
    
    67,776
    
    
    
    3,410Accrued compensation
    
    
    0
    
    
    
    27,219Net cash used in operating activities
    
    
    (434,139
    )
    
    
    (278,870
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (34,447
    )
    
    
    0Patent acquisition costs
    
    
    (20,119
    )
    
    
    (17,215
    )Net cash used in investing activities
    
    
    (54,566
    )
    
    
    (17,215
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from loans and note payable
    
    
    0
    
    
    
    228,400Net cash provided by financing activities
    
    
    0
    
    
    
    228,400
 The accompanying notes are an integral part of the consolidated financial statements.
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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Three months ended March 31,
    
    2008
    
    
    2007NET DECREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (488,705
    )
    
    $
    (67,685
    )Cash and cash equivalents, beginning of period
    
    
    972,371
    
    
    
    149,695Cash and cash equivalents, end of period
    
    
    483,666
    
    
    $
    82,010SUPPLEMENTARY CASH FLOW INFORMATIONCash paid for interest
    
    $
    0
    
    
    $
    0Non-cash financing transactions:Common stock issued for fund raising
    
    $
    0
    
    
    $
    1,500Stock warrants granted for fundraising
    
    $
    0
    
    
    $
    4,000Conversion of notes payable and accrued interest
to common stock
    
    $
    0
    
    
    $
    121,131
 The accompanying notes are an integral part of the consolidated financial statements.
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GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1
 DESCRIPTION OF ORGANIZATIONOrganizationGeneLink, Inc. (the Company) and
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. 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. These
findings are a direct result of the
National Institute of Health Genome
Project. 
The Company has developed
proprietary SNP-based genetic
profiles (named GeneLink
Nutragenetic Profile® 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.The Company has received a U.S.
patent for its proprietary method
for assessing skin health in humans
and has received an Australian
patent for the Companys Kits and
Methods for Assessing Oxidative
Stress. The Company has developed
and received a U.S. patent on a DNA
Collection Kit ® for the collection
of DNA specimens of clients. The
kit is classified as a non-medical
device.
 7




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2
 BASIS OF PRESENTATION
    
    The accompanying unaudited
consolidated financial statements
have been prepared by the Company in
accordance with the instructions to
Form 10-Q and Article 10 of
Regulation S-X relating to interim
financial statements. Accordingly,
they do not include all of the
information and footnotes required
by generally accepted accounting
principles for complete financial
statements and should be read in
conjunction with the consolidated
financial statements and notes
thereto included in the Annual
Report on Form 10-KSB of GeneLink,
Inc. and Subsidiaries for the year
ended December 31, 2007. 
In the opinion of management, all
adjustments (consisting of normal
recurring accruals) necessary to
present fairly the information set
forth in the accompanying
consolidated financial statements
have been included. The results
reported in these consolidated
financial statements for the
three-month period ended March 31,
2008 should not be regarded as
necessarily indicative of results
that may be expected for the year
ending December 31, 2008.3  REVENUE RECOGNITION
    
    GeneLink receives separate fees for
the kits and for the lab services.
Upon entering into a distribution
agreement 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 Company
recognizes revenue upon completion
of the lab services. Fees received
from the sale of kits are deferred
until the lab services have been
completed on those kits. Upon
termination of a distribution
arrangement, GeneLink is not
required to repurchase any kits
remaining in the possession of the
distributor.4  RELATED PARTY TRANSACTIONS
AND CONVERTIBLE SECURED
PROMISSORY NOTES
    
    As of March 31, 2008 and December 31, 2007, the Company has various shareholders
of the Company who provided convertible secured promissory note obligations (the
Notes), as follows:
 March 31, 2008
    
    
    December 31, 2007Notes payable, due May 12, 2011
with interest at 12%. All
interest and principal due at
maturity. All Company assets
pledged as collateral.
    
    $
    728,812
    
    
    $
    728,812Less: Debt issue discount
    
    
    (130,986
    )
    
    
    (105,864
    )
 8




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March 31, 2008
    
    
    December 31, 2007Less: Stock conversion discount
    
    
    (98,039
    )
    
    
    (134,980
    )Total short term loans payable
    
    $
    499,787
    
    
    $
    487,968
 The Notes were issued in consideration for certain loans provided to the Company
by third parties between May 12, 2006 and June 6, 2007, after the termination of
Mr. DePhillipo as the Companys Chief Executive Officer and President.In connection with issuance of the Notes, the Company has recognized a debt
issuance discount as of March 31, 2008 and December 31, 2007 of $0 and $29,038,
respectively, that is being amortized over the term of the Notes. As of March
31, 2008 and December 31, 2007, the unamortized debt issuance discount is
$98,039 and $134,980, respectively.In connection with issuance of the Notes, the Company has recognized a stock
conversion discount as of March 31, 2008 and December 31,
2007 of $0 and $27,500,
respectively, that is being amortized over the term of the Notes. As of March
31, 2008 and December 31, 2007, the unamortized stock conversion discount is
$130,986 and $105,864, respectively.5
 SUBSEQUENT
EVENTS
    
    Pursuant to an Order of Settlement dated May 13, 2008
(the Settlement), GeneLink, Inc. (the Company) and
John R. DePhillipo have agreed to settle all issues,
claims and counterclaims each party may have with
respect to the Action entitled, John R. DePhillipo v.
GeneLink, Inc.(Superior Court of New Jersey Law
Division: Atlantic County, Docket No. ATL-L-7479-05).
As part of the Settlement, the Company and Mr.
DePhillipo will deliver general releases to each other.The Settlement required Mr. DePhillipo to tender all
shares of stock in the Company which Mr. DePhillipo held
as of April 14, 2008 either directly, indirectly,
beneficially or otherwise as well as the shares of stock
in the Company held by Mr. DePhillipos wife, Maria
DePhillipo; the shares of stock in the Company held by
certain of Mr. DePhillipos sons; the shares of stock in
GeneLink held by any trust that either Mr. DePhillipo or
Maria DePhillipo operate or control; and the shares of
stock of GeneLink held by any other family member.
Under the Settlement, on May 14, 2008 the Company
purchased 3,953,000 shares of the Companys common stock
from Mr. DePhillipo and his family at a price of $0.06
per share, resulting in an aggregate purchase price of
$237,180. The 3,953,000 shares purchased by the Company
from Mr. DePhillipo and his family will be treated as
treasury shares. Additionally, the Company has agreed
under the Settlement to pay Mr. DePhillipo $220,000 on
or before June 13, 2008.In accordance with the terms of the Notes, upon
consummation of the
 9




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Settlement, the Notes will
automatically convert into shares of the Companys
Common Stock at a conversion price of $0.05 per share.
As of June 13, 2008, $882,041 in principal and accrued
interest of Notes will be outstanding, and assuming that
the settlement is consummated in accordance with the
terms of the Settlement as of such date, the Notes will
convert into an aggregate of 17,640,813 shares of Common
Stock on that date.Effective May 14, 2008 through June 12, 2008, holders of
warrants, not including warrants issued to officers and
directors of the Company in June 2007 and September
2007, will be entitled to exercise their warrants at
reduced exercise prices as follows:
 Number of
    
    Current Exercise Price
    
    RevisedExisting Warrants
    
    of Existing Warrants
    
    Exercise Price7,346,577
    
    $0.075-$$0.10
    
    $0.054,872,704
    
    $0.20-$0.25
    
    $0.062,755,500
    
    $0.40-$0.50
    
    $0.082,246,250
    
    $0.60-$1.00
    
    $0.09
 10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   LIQUIDITY AND CAPITAL RESOURCES
     COMPARISON OF THREE MONTHS ENDED MARCH 31, 2008 TO THREE MONTHS ENDED MARCH 31, 2007
 Financial Condition
  11




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Current Year Performance
 Revenues
 Expenses .
 Losses
 Factors Affecting the Companys Business and Prospects
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
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Changes in Internal Control Over Financial Reporting
  PART II. OTHER INFORMATION
 LEGAL PROCEDURES
 John R. DePhillipo v.
GeneLink, Inc.
  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  DEFAULTS UPON SENIOR SECURITIES
  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  13




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OTHER INFORMATION
  EXHIBITS AND REPORTS ON FORM 8-K.
 (a)
    
    Exhibit No.
 31.1
    
    Certificate of the Chief Executive Officer and Chief Financial Officer
pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    Certification pursuant to 18
U.S.C. Section 1350, as adopted
pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
 (b)
    
    Reports on Form 8-KNone
  14




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GENELINK, INC.
(Registrant)Date:  May 19, 2008
    By:
    s/ Monte E. Taylor, Jr.Monte E. Taylor, Jr., Chief ExecutiveOfficer and Chief Financial Officer 15