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 June 30, 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 August 4, 2008
    
    
    91,765,025




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PagePART I.
    
    FINANCIAL INFORMATIONITEM 1
    
    Financial Statements.Consolidated Balance Sheets at June 30, 2008 (unaudited)
    
    3and December 31, 2007Consolidated Statements of Income for the three months
    
    4and six months ended June 30, 2008 and 2007 (unaudited)Consolidated Statements of Cash Flows for the six months
    
    5-6ended June 30, 2008 and 2007 (unaudited)Notes to Interim Consolidated Financial Statements
    
    7-10
 2




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GENELINK, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
 (Unaudited)June 30, 2008
    
    December 31, 2007ASSETSCash and cash equivalents
    
    $
    822,513
    
    
    $
    972,371Accounts receivable
    
    
    280,787
    
    
    
    35,327Inventory
    
    
    149,904
    
    
    
    3,646Prepaid expenses
    
    
    171,049
    
    
    
    11,273Total current assets
    
    
    1,424,253
    
    
    
    1,022,617Property and equipment
    
    
    189,464
    
    
    
    38,476Other assets
    
    
    311,907
    
    
    
    322,731Total assets
    
    $
    1,925,624
    
    
    $
    1,383,824LIABILITIESCurrent maturity of capital lease obligation
    
    $
    28,544
    
    
    $
    0Accounts payable and accrued expenses
    
    
    571,286
    
    
    
    439,399Accrued compensation
    
    
    90,000
    
    
    
    144,168Deferred revenue
    
    
    1,145,349
    
    
    
    100,922Loans payable to officers
    
    
    18,000
    
    
    
    18,000Total current liabilities
    
    
    1,853,179
    
    
    
    702,489Convertible secured promissory notes payable, net of issuance of
debt and stock conversion discounts
    
    
    0
    
    
    
    487,968Total liabilities
    
    
    1,853,179
    
    
    
    1,190,457SHAREHOLDERS EQUITY (DEFICIENCY)Common stock, $.01 par value, 125,000,000 shares authorized as
of June 30, 2008 and December 31, 2007, respectively; 96,026,291
shares and 66,673,591 shares issued as of June 30, 2008 and
December 31, 2007 respectively; 91,667,122 shares and
66,267,422 shares outstanding as of June 30, 2008 and December
31, 2007, respectively
    
    
    960,263
    
    
    
    666,736Additional paid in capital
    
    
    11,594,728
    
    
    
    8,277,692Stock warrants
    
    
    2,308,359
    
    
    
    4,245,692Accumulated deficit
    
    
    (14,238,670
    )
    
    
    (12,681,698
    )Treasury stock, 4,359,169 shares and 406,169 shares as of June 30,
2008 and December 31, 2007 respectively, at cost
    
    
    (552,235
    )
    
    
    (315,055
    )Total shareholders equity (deficiency)
    
    
    72,445
    
    
    
    193,367Total liabilities and shareholders equity (deficiency)
    
    $
    1,925,624
    
    
    $
    1,383,824
 The accompanying notes are an integral part of the consolidated financial statements
 3




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##### 



GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
 For The
    
    For The
    
    For The
    
    For TheThree Months
    
    Three Months
    
    Six Months
    
    Six MonthsEnded
    
    Ended
    
    Ended
    
    EndedJune 30, 2008
    
    June 30, 2007
    
    June 30, 2008
    
    June 30, 2007REVENUE
    
    $
    124,503
    
    
    $
    27,682
    
    
    $
    152,960
    
    
    $
    59,067COST OF GOODS SOLD
    
    
    109,172
    
    
    
    20,747
    
    
    
    137,502
    
    
    
    45,870GROSS PROFIT
    
    
    15,331
    
    
    
    6,935
    
    
    
    15,458
    
    
    
    13,197EXPENSESSelling, general and administrative
    
    
    459,449
    
    
    
    124,090
    
    
    
    600,983
    
    
    
    275,975Debt conversion costs
    
    
    229,025
    
    
    
    0
    
    
    
    229,025
    
    
    
    0Consulting
    
    
    182,899
    
    
    
    36,000
    
    
    
    327,891
    
    
    
    67,648Professional fees
    
    
    156,685
    
    
    
    57,205
    
    
    
    293,009
    
    
    
    221,320Advertising and promotion
    
    
    71,057
    
    
    
    662
    
    
    
    84,459
    
    
    
    4,896Amortization and depreciation
    
    
    23,695
    
    
    
    14,174
    
    
    
    37,063
    
    
    
    28,3481,122,810
    
    
    
    232,131
    
    
    
    1,572,430
    
    
    
    598,187NET LOSS BEFORE PROVISION FOR
INCOME TAXES
    
    
    (1,107,479
    )
    
    
    (225,196
    )
    
    
    (1,556,972
    )
    
    
    (584,990
    )PROVISIONS FOR INCOME TAXES
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0NET LOSS
    
    $
    (1,107,479
    )
    
    $
    (225,196
    )
    
    $
    (1,556,972
    )
    
    $
    (584,990
    )NET LOSS PER SHARE, BASIC AND DILUTED
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.02
    )
    
    $
    (0.01
    )Weighted average common shares and diluted
potential common shares
    
    
    70,518,164
    
    
    
    44,703,974
    
    
    
    67,634,734
    
    
    
    42,998,189
 The accompanying notes are an integral part of the consolidated financial statements
 4




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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six months ended June 30
    
    2008
    
    2007CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (1,556,972
    )
    
    $
    (584,990
    )Adjustments to reconcile net loss
to net cash used by operating activitiesDepreciation and amortization
    
    
    37,063
    
    
    
    28,348Amortization of discounts on loans payable
    
    
    240,844
    
    
    
    40,478Fair value of options granted
    
    
    84,200
    
    
    
    0Changes in operating assets and liabilitiesAccounts receivable
    
    
    (245,460
    )
    
    
    994Inventory
    
    
    (146,258
    )
    
    
    1,491Prepaid expenses
    
    
    (159,776
    )
    
    
    3,148Deposits
    
    
    24,000
    
    
    
    0Accounts payable and accrued expenses
    
    
    285,116
    
    
    
    40,644Deferred Revenue
    
    
    1,044,427
    
    
    
    (8,815
    )Accrued compensation
    
    
    (54,168
    )
    
    
    64,308Net cash used by operating activities
    
    
    (446,984
    )
    
    
    (414,394
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (144,740
    )
    
    
    (6,025
    )Patent acquisition costs
    
    
    (25,488
    )
    
    
    (19,494
    )Net cash used by investing activities
    
    
    (170,228
    )
    
    
    (25,519
    )CASH FLOWS FROM FINANCING ACTIVITIESPrincipal payments on capital lease obligation
    
    
    (2,456
    )
    
    
    332,875Purchase of treasury stock
    
    
    (237,180
    )
    
    
    0Proceeds from exercise of stock warrants
    
    
    706,990
    
    
    
    0Net cash provided by financing activities
    
    
    467,354
    
    
    
    332,875
 The accompanying notes are an integral part of the consolidated financial statements
 5




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GENELINK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
 Six months ended June 30
    
    2008
    
    2007NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    (149,858
    )
    
    
    (107,038
    )Cash and cash equivalents, beginning of period
    
    
    972,371
    
    
    
    149,695Cash and cash equivalents, end of period
    
    $
    822,513
    
    
    $
    42,657SUPPLEMENTAL CASH FLOW INFORMATIONCash paid for interest
    
    $
    0
    
    
    $
    0Non-cash financing transactions:Equipment acquired under capital lease
    
    $
    31,000
    
    
    $
    0Stock warrants granted for services
    
    $
    84,200
    
    
    $
    0Common stock and stock warrants granted for fundraising
    
    $
    0
    
    
    $
    12,938Conversion of notes payable and accrued interest into
common stock
    
    $
    882,041
    
    
    $
    121,131
 The accompanying notes are an integral part of the consolidated financial statements
 6




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GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION
   ®
 ®
 2. BASIS OF PRESENTATION
   7




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GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 3. REVENUE RECOGNITION
    4.
    
    RELATED PARTY TRANSACTIONS, STOCKHOLDERS EQUITY TRANSACTIONS, AND CONVERTIBLE SECURED
PROMISSORY NOTES
    Number of
    
    Original 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
 8




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GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  John R. DePhillipo v. GeneLink, Inc.
 5. SUBSEQUENT EVENT
   John R. DePhillipo v. Robert P. Ricciardi
 John R. DePhillipo v. GeneLink,
Inc.,
 9




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GENELINK, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
   DePhillipo, et.al. v. GeneLink t/a GeneLink Biosciences, Inc., et. al.
  10




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   LIQUIDITY AND CAPITAL RESOURCES
     11




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COMPARISON OF THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2008 TO SIX MONTHS ENDED JUNE 30, 2007
 Financial Condition
   12




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Current Year Performance and Earnings Outlook
   .
  13




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GeneWize Life Sciences, Inc. Pre-Launch Activities
     FACTORS AFFECTING THE COMPANYS BUSINESS AND PROSPECTS
  14




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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
  PART II. OTHER INFORMATION
 LEGAL PROCEEDINGS
  John R. DePhillipo v. Robert P.
Ricciardi
 15




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John R. DePhillipo v. GeneLink, Inc.,
  DePhillipo, et.al. v. GeneLink t/a GeneLink
Biosciences, Inc., et. al.
 16




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UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  DEFAULTS UPON SENIOR SECURITIES
  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  OTHER INFORMATION
  EXHIBITS AND REPORTS ON FORM 8-K.
 Exhibit No.
    
    Description31.1
    
    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.
   GENELINK, INC.
    (Registrant)Date: August 15, 2008
    By:
    s/ Monte E. Taylor, Jr.Monte E. Taylor, Jr., Chief Executive
 Officer and Chief Financial Officer 17