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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, 2010
 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. 000-30518
 GENELINK, INC.
 (Exact name of registrant specified in its charter)
 PENNSYLVANIA
    
    23-2795613(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)317 Wekiva Springs Road, #200Longwood, Florida
    
    32779(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
 o þ
  Number of Shares of Common StockOutstanding on May 3, 2010
    
    
    117,722,025




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Page No.PART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsConsolidated Balance Sheets at March 31, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Operations for the three months ended March 31, 2010 and 2009 (unaudited)
    
    
    4Consolidated Statements of Cash Flows for the three months ended March 31, 2010 and 2009 (unaudited)
    
    
    5Notes to Interim Consolidated Financial Statements
    
    
    6-9Exhibit 31.1Exhibit 32.1
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GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS
 (Unaudited)March 31,
    
    
    December 31,2010
    
    
    2009ASSETSCash and cash equivalents
    
    $
    269,073
    
    
    $
    196,857Accounts receivable
    
    
    511,961
    
    
    
    465,780Inventory
    
    
    342,229
    
    
    
    494,737Prepaid expenses
    
    
    132,482
    
    
    
    141,397Total current assets
    
    
    1,255,745
    
    
    
    1,298,771Property and equipment
    
    
    295,065
    
    
    
    302,887Other assets
    
    
    272,569
    
    
    
    279,139Total assets
    
    $
    1,823,379
    
    
    $
    1,880,797LIABILITIESCurrent maturity of long-term debt
    
    $
    14,582
    
    
    $
    36,079Accounts payable and accrued expenses
    
    
    1,302,428
    
    
    
    1,189,709Accrued compensation
    
    
    274,899
    
    
    
    206,272Deferred revenue
    
    
    312,005
    
    
    
    277,132Loans payable
    
    
    18,000
    
    
    
    18,000Total current liabilities
    
    
    1,921,914
    
    
    
    1,727,192Convertible promissory notes payable, net of issuance of debt and
stock conversion discounts
    
    
    908,017
    
    
    
    893,395Total liabilities
    
    
    2,829,931
    
    
    
    2,620,587SHAREHOLDERS EQUITY (DEFICIENCY)Common stock, $.01 par value, 250,000,000 shares authorized as
of March 31, 2010 and December 31, 2009; 121,311,695 and
118,861,347 shares issued as of March 31, 2010 and December 31,
2009, respectively; and 116,952,536 and 114,407,132 shares
outstanding as of March 31, 2010 and December 31, 2009,
respectively
    
    
    1,213,117
    
    
    
    1,188,617Additional paid in capital
    
    
    13,019,251
    
    
    
    12,969,561Stock warrants
    
    
    3,834,202
    
    
    
    3,656,227Accumulated deficit
    
    
    (18,520,887
    )
    
    
    (18,001,960
    )Treasury stock, 4,359,159 shares as of March 31, 2010 and December
31, 2009, at cost
    
    
    (552,235
    )
    
    
    (552,235
    )Total shareholders equity (deficiency)
    
    
    (1,006,552
    )
    
    
    (739,790
    )Total liabilities and shareholders equity (deficiency)
    
    $
    1,823,379
    
    
    $
    1,880,797
 See notes to the consolidated financial statements
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GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)
 Three months ended March 31,
    
    2010
    
    
    2009REVENUE
    
    $
    2,221,111
    
    
    $
    1,972,038COSTS OF GOODS SOLD
    
    
    851,078
    
    
    
    974,774GROSS PROFIT
    
    
    1,370,033
    
    
    
    997,264EXPENSESSelling, general and administrative
    
    
    1,814,675
    
    
    
    1,517,738Research and development
    
    
    0
    
    
    
    01,814,675
    
    
    
    1,517,738OPERATING LOSS
    
    
    (444,642
    )
    
    
    (520,474
    )OTHER EXPENSESAmortization and depreciation
    
    
    37,964
    
    
    
    27,974Interest expense
    
    
    36,321
    
    
    
    11,78174,285
    
    
    
    39,755NET LOSS BEFORE PROVISION FOR INCOME TAXES
    
    
    (518,927
    )
    
    
    (560,229
    )PROVISION FOR INCOME TAXES
    
    
    0
    
    
    
    0NET LOSS
    
    $
    (518,927
    )
    
    $
    (560,229
    )NET LOSS PER SHARE, BASIC & DILUTED
    
    $
    (0.004
    )
    
    $
    (0.01
    )Weighted average common shares
and diluted potential common
shares
    
    
    119,146,695
    
    
    
    105,094,902
 See notes to the consolidated financial statements.
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GENELINK, INC. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
 Three months ended March 31,
    
    2010
    
    
    2009CASH FLOWS FROM OPERATING ACTIVITIESNet loss
    
    $
    (518,927
    )
    
    $
    (560,229
    )Adjustments to reconcile net loss to net cash used in
operating activitiesDepreciation and amortization
    
    
    37,964
    
    
    
    27,974Amortization of discounts on loans payable
    
    
    14,621
    
    
    
    4,466Fair value of options granted for services
    
    
    25,000
    
    
    
    5,000Changes in operating assets and liabilitiesAccounts receivable
    
    
    (46,181
    )
    
    
    125,477Inventory
    
    
    152,508
    
    
    
    5,305Prepaid expenses
    
    
    8,915
    
    
    
    (47,822
    )Other assets
    
    
    0
    
    
    
    (8,280
    )Accounts payable and accrued expenses
    
    
    112,719
    
    
    
    (918,575
    )Accrued compensation
    
    
    68,627
    
    
    
    (9,699
    )Deferred revenue
    
    
    34,873
    
    
    
    0Net cash used in operating activities
    
    
    (109,881
    )
    
    
    (1,376,383
    )CASH FLOWS FROM INVESTING ACTIVITIESCapital expenditures
    
    
    (23,570
    )
    
    
    (8,414
    )Patent acquisition costs
    
    
    0
    
    
    
    (550
    )Net cash used in investing activities
    
    
    (23,570
    )
    
    
    (8,964
    )CASH FLOWS FROM FINANCING ACTIVITIESProceeds from loans and notes payable
    
    
    0
    
    
    
    1,200,000Proceeds from issuance of common stock and warrants, net
    
    
    245,000
    
    
    
    565,000Principal payments on capital lease obligations
    
    
    0
    
    
    
    (16,280
    )Principal payments on note payable
    
    
    (21,497
    )
    
    
    (18,319
    )Commissions paid for fundraising costs
    
    
    (17,836
    )
    
    
    (104,000
    )Net cash provided by financing activities
    
    
    205,667
    
    
    
    1,626,401NET DECREASE IN CASH AND CASH EQUIVALENTS
    
    
    72,216
    
    
    
    241,054Cash and cash equivalents, beginning of period
    
    
    196,857
    
    
    
    435,197Cash and cash equivalents, end of period
    
    $
    269,073
    
    
    $
    676,251SUPPLEMENTARY CASH FLOW INFORMATIONCash paid for interestNon-cash financing transactions:
    
    $
    0
    
    
    $
    0Stock warrants granted for fundraising
    
    $
    24,975
    
    
    $
    0
 See notes to 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 its subsidiaries,
GeneWize Life Sciences, Inc. and Dermagenetics, Inc.,
operate in Florida. The Company was organized under
the laws of the Commonwealth of Pennsylvania and
Dermagenetics, Inc. and GeneWize Life Sciences, Inc.
were 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s scientific foundation developed as a
result of discoveries in the field of human molecular
genetics. Research supported by the National Institute
of Health, including the Human Genome Project, as well
as academic, commercial research and research by the
scientists on GeneLinks Scientific Advisory Board,
enabled the identification of an increasing number of
connections between genes, SNPs (single-nucleotide
polymorphisms) and the specific function of enzymes
and receptors relating to nutrition and skin health.Specifically, the Company 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
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s laboratory assessments performed under
contract in leading genomics laboratories and have
been independently validated by the laboratories. In
March 2009, the Company expanded its international
network of qualified laboratories with the addition of
a highly automated United States based clinical
laboratory whose credentials include College of
American Pathologists CAP accreditation, CLIA
certification, and State of California licensure. The
enhanced laboratory capabilities will allow the
Company to accommodate the increased demand for
genetic testing and improve turnaround time.
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The Company has developed and received a patent on a
DNA Collection Kit® for the collection of DNA
specimens of clients. The kit is classified as a
non-medical device.On December 12, 2007, the Company formed a new wholly
owned subsidiary, GeneWize Life Sciences, Inc., to
operate its direct sales efforts. GeneWize is the
first direct selling company to focus exclusively on
marketing nutritional supplements and skin care
products specifically tailored to an individuals
genetic makeup.GeneWizes product offering in 2008 and first quarter
2009 consisted of its foundational Life Map
NutritionTM System. The LifeMap
NutritionTMSystem is the first
comprehensive system of personalized (mass customized)
nutritional supplement manufacturing based on genetic
testing that measures single nucleotide polymorphisms
(SNPs; pronounced snips) in DNA. GeneLinks
patented pending assessments, such as GeneLink Healthy
Aging AssessmentTMand Oxidative Stress,
form the foundation. Genetic test results drive a
proprietary algorithm that generates a nutritional
report linked to an individual titration matrix. In
order help compensate for any anticipated need for
additional supplementation, genetically selected
ingredients and nutrients (SNPboostsTM, or
snip boosts) are titrated and blended into the
individual nutritional formulation. Thus, each
customers product is individually customized and
manufactured, just for that customer.GeneWize, as a direct selling company, offers
customers the opportunity to participate in selling
and distributing the products to others and receive
compensation for doing so. These independent
marketing affiliates must agree to comply with the
Companys policies related to sales and distribution
of product, particularly as it relates to product
claims or, in the case of recruiting other affiliates,
income potential. In return for creating sales and
complying with appropriate policies and regulations,
GeneWize provides commissions and incentives. It also
provides internet ordering sites, business management
tools, marketing materials, training and events in
support of these affiliates.
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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-K of GeneLink, Inc. and Subsidiaries for the
year ended December 31, 2009.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, 2010 should not be regarded as
necessarily indicative of results that may be expected
for the year ended December 31, 2010.3  STOCKHOLDERS
EQUITY
TRANSACTIONS AND
CONVERTIBLE
SECURED
PROMISSORY NOTES
    
    During the three months ended March 31, 2010, the
Company sold 2,450,000 shares of restricted Common
Stock of the Company and issued 1,225,000 warrants to
purchase Common Stock of the Company at an exercise
price of $0.15 per share, at a purchase price of $0.10
per unit (each unit consisting of one share of Common
Stock and 1/2 of a warrant) pursuant to a Confidential
Private Offering Memorandum, and received an aggregate
gross amount of $245,000.In connection with the above offering, the Company
paid cash commissions of $11,600 and granted 145,000
and 72,500 warrants to acquire shares of Common Stock
at exercise prices of $0.10 and $0.15, respectively,
to First Equity Capital Securities, Inc., which has
been recorded as a reduction of the proceeds in
accordance with AICPA Technical Practice Aid 4110.01.
Kenneth R. Levine, a holder of more than five percent
of the equity securities of the Company, is an officer
and owner of First Equity Capital Securities, Inc.
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4  SUBSEQUENT EVENTS
    
    From April 1, 2010 through the date
of this filing, the Company sold an
additional 1,600,000 shares of
restricted Common Stock of the
Company and issued 800,000 warrants
to purchase Common Stock of the
Company at an exercise price of
$0.15 per share, at a purchase price
of $0.10 per unit (each unit
consisting of one share of Common
Stock and 1/2 of a warrant) pursuant
to a Confidential Private Offering
Memorandum, and received an
aggregate gross amount of $160,000.In connection with the above
offering, the Company paid cash
commissions of $12,400 and granted
155,000 and 77,500 warrants to
acquire shares of Common Stock at
exercise prices of $0.10 and $0.15,
respectively, to First Equity
Capital Securities, Inc., which will
be recorded in April as a reduction
of the proceeds in accordance with
AICPA Technical Practice Aid
4110.01. Kenneth R. Levine, a
holder of more than five percent of
the equity securities of the
Company, is an officer and owner of
First Equity Capital Securities,
Inc.In April 2010, the Company issued a
total of 69,000 options to
certain GeneWize sales affiliates in
connection with an incentive program
pursuant to which up to 250,000
options in the aggregate will be
issued to GeneWize sales affiliates.
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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
   GENERAL
    OVERVIEW
   10




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LIQUIDITY AND CAPITAL RESOURCES
     COMPARISON OF THREE MONTHS ENDED MARCH 31, 2009 TO THREE MONTHS ENDED MARCH 31, 2009
 Financial Condition
   Results of Operations
 Revenues
  11




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Gross Profit
 Expenses
 Operating Losses
 Net Losses
 Factors Affecting the Companys Business and Prospects
  Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Item 4.
    
    CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal Control Over Financial Reporting
   12




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PART II. OTHER INFORMATION
 Item 1.
    
    LEGAL PROCEDURES
 DePhillipo, et.al. v. GeneLink, Inc. t/a
GeneLink Biosciences, Inc., et. al.,
   Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 1 2
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Number of Shares
    
    
    Number of
    
    
    Number ofDate
    
    $ of Units Sold
    
    
    of Common Stock
    
    
    Warrants Issued
    
    
    InvestorsJanuary 8, 2010
    
    
    20,000
    
    
    
    200,000
    
    
    
    100,000
    
    
    
    1February 17, 2010
    
    
    75,000
    
    
    
    750,000
    
    
    
    375,000
    
    
    
    2February 18, 2010
    
    
    100,000
    
    
    
    1,000,000
    
    
    
    500,000
    
    
    
    2February 22, 2010
    
    
    25,000
    
    
    
    250,000
    
    
    
    125,000
    
    
    
    1March 26, 2010
    
    
    25,000
    
    
    
    250,000
    
    
    
    125,000
    
    
    
    1TOTAL
    
    $
    245,000
    
    
    
    2,450,000
    
    
    
    1,225,000
    
    
    
    6
  Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
  Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
  Item 5.
    
    OTHER INFORMATION
  Item 6.
    
    EXHIBITS AND REPORTS ON FORM 8-K.
 31.1
    
    
    Certificate of the Chief
Executive Officer and Principal
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.
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GENELINK, INC.
(Registrant)Date:  May 7, 2010
    By:
    /s/ Gary J. BeemanGary J. Beeman, Chief Executive Officer and Principal Financial Officer  15