10-K/A 1 form10ka.htm GENELINK INC 10-K A NO 1 12-31-2012

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑K/A

(Amendment No.1)

(Mark One)

x	ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2012

o	TRANSITION REPORT UNDER 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 as specified in its charter)

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

8250 Exchange Drive Suite 120 Orlando, Florida		32809 (Zip Code)
(Address of principal executive offices)

	(407) 680-1150
Registrant’s telephone number, including area code

Securities registered under Section 12(b) of the Exchange Act:

None

Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.01 Par Value

(Title of class)

Indicate by check mark if the registrant is well-known season issuer, as defined in Rule 405 of the Securities Act

Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act

Yes o No x

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 o No x

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in rule 12b-2 of the Exchange Act (Check one):

	Large accelerated filer o	Accelerated filer o

	Non-accelerated filer o	Smaller reporting company x
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12B-12 of the Exchange Act).

Yes o No x

Aggregate market value of common stock held by non-affiliates of the Registrant, as of June 30, 2012 was approximately $4,102,214 on the closing price of the common stock of the Nasdaq OTC Bulletin Board.

As of March 20, 2013, there were 253,352,022 shares of the issuer's common stock, $.01 par value, outstanding.

Explanatory Note

GeneLink, Inc. (the "Company") is filing this Amendment No. 1 to Annual Report on Form 10-K/A (the "Amended Filing") to our Annual Report on Form 10-K for the year ended December 31, 2012, originally filed with the Securities and Exchange Commission (the "SEC") on April 1, 2014 (the "Original Filing"), in response to comment letters received from the SEC (the "SEC Comment Letters"). This Amended Filing sets forth the Original Filing, as modified and superseded where necessary, as follows

To provide the name of our auditor, Hancock Askew &Co., LLP,which was inadvertently left off the prior audit report. There is not a change in the audit report except for the signature of that firm.

To provide additional information in Footnote 6. related to the fair value of equity instruments.

To provide additional information in Footnote 11. related to detail analysis of the gain on sale of subsidiary.

To add additional information to management's discussion and analysis of the financial statements including a detailed variance analysis for Cost of Goods Sold, Operating Losses, Net Losses, and a detailed explanation of the Valuation of intangible and other long-lived assets.

Except for the foregoing amended information or where otherwise noted, this Form 10-K/A does not reflect events that occurred after the Original Filing or modify or update those disclosures affected by subsequent events.

This Amended Filing should be read in conjunction with the Original Filing and the Company's other filings made with the SEC subsequent to the filing of the Original Filing.

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ITEM 1.	DESCRIPTION OF BUSINESS.	2
ITEM 1A.	RISK FACTORS	19
ITEM 2.	PROPERTIES	30
ITEM 3.	LEGAL PROCEEDINGS	30
ITEM 5.	MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.	31
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	33
ITEM 7A	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	40
ITEM 8.	FINANCIAL STATEMENTS AND SUPPLEMENTS	40
ITEM 9A.	CONTROLS AND PROCEDURES	64
ITEM 11.	EXECUTIVE COMPENSATION	68
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS	72
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE	73
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	74
ITEM 15.	EXHIBITS	75

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FORWARD LOOKING STATEMENTS

The statements, other than statements of historical or present facts included in this annual report are forward looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical or present facts, that address activities, events, outcomes and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate or anticipate (and other similar expressions) will, should or may occur in the future are forward-looking statements. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, but not limited to, “may”, “will”, “expect”, “estimate”, “anticipate” or “believe”. These forward-looking statements are based on management’s current belief, based upon currently available information, as to the outcome and timing of future events. Although we believe that the expectations and assumptions reflected in the forward-looking statements are reasonable, they involve risks and uncertainties that are difficult to predict and, in many cases, beyond our control. Our forward-looking statements speak only as of the date on which this annual report was filed with the Securities and Exchange Commission (“SEC”). We expressly disclaim any obligation to issue any updates or revisions to our forward-looking statements, even if subsequent events cause our expectations to change regarding the matters discussed in those statements, or if we believe that our actual results, performance or achievements will likely differ from the anticipated results, performance or achievements that are expressed or implied by our forward-looking statements, and such differences might be significant and materially adverse to our shareholders. Many important factors that could cause such a difference are described in this Form 10-K in Part I, Item 1A, Risk Factors, which you should review carefully. Please consider our forward-looking statements in light of those risks as you read this annual report.

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ITEM 1.

DESCRIPTION OF BUSINESS.

Company Background

GeneLink, Inc. (“GeneLink”, the “Company”, “we” or “us”) is a Pennsylvania corporation that became a publicly traded company in 1999. It is listed on the NASDAQ OTC Bulletin Board under the symbol “GNLK.”

The Science Behind GeneLink

Genomic science formally began in 1990 with the establishment of the Human Genome Project., a project, a project that used a form of technology which a member of the GeneLink Scientific Advisory Board created for mapping genes of the human genome from both a physical and functional standpoint. This enormous undertaking was the combined effort between the United States Department of Energy and the National Institutes of Health. The project was based on the mission of pursuing a greater understanding of individual health risks.

The Human Genome Project showed that our physical uniqueness is largely due to variations in our DNA called single nucleotide polymorphisms or SNPs. The DNA between any two humans is about 99.1% identical. Except for identical twins, variations in just a small fraction of our DNA account for the major ways in which one human is different from another. Scientists have identified about 1.4 million locations where single-base DNA differences occur in humans.

SNPs in part explain why people react differently to different types or amounts of medicines. For example, patients can react differently to the same heart medication, such as a “beta-blockers”, pain medications, cancer chemotherapies, etc. We all know examples of individual DNA differences from our own day-to-day experiences with medications or foods that don’t seem compatible with us. Because SNPs can affect the structure and function of proteins and enzymes, they can influence how efficiently a medicine is absorbed and metabolized. A current focus of the pharmaceutical industry is to use the science of SNPs to help determine which drugs are most suitable for any given patient – this is known as pharmacogenomics. GeneLink’s scientists have spent over a decade pursuing nutragenetic (vitamins and supplements), dermagenetic (skin care) and pharmacogenomic (medical) research, resulting in a significant pipeline of research and future opportunities.

GeneLink Corporate Development History

For the early part of its existence, GeneLink was a developmental stage company engaged in the development of genetics-based assessments for pharmaceutical applications and DNA storage (banking) for that purpose. Beginning in 1999, the Company expanded its focus to include non-medical, consumer-oriented applications of its proprietary genetic assessments. GeneLink filed a series of patents starting in 2001 which support the Company’s proprietary position in genetic-based assessments and products. The Company determined that the better business model was to provide products to customers that provided quality, user-level assessment capabilities and nutrition-based and topical-based solutions from resulting DNA-based findings.

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Nutragenetics and Dermagenetics are combinations of the science of genetics with nutrition and skin care that reveal personalized information regarding an individual’s status. These provide the basis for selecting dietary, nutritional and skin care programs. Nutragenetics and Dermagenetics use SNP assessments to identify areas of an individual’s genetic make-up that could benefit from the use of dietary supplements to help achieve and maintain optimal health by assisting in the choice of desirable combinations of nutrients, vitamins and topical key ingredients matched to his or her unique genetic make-up. This new and revolutionary SNP science is making it possible to personalize and tailor wellness and skin care products.

As pharmacogenomics is acknowledged to be the future of curative medicine, GeneLink believes that Nutragenetics and Dermagenetics are the future of the wellness industry. GeneLink is not only positioned as the leader in the industry, but also the inventor, through its genetic assessments and patents of key intellectual property in the field, giving it a head start in this important and emerging market.

Genetically Guided Product Personalization:

GeneLink’s Nutragenetic and Dermagenetic DNA assessments examine a variety of genes responsible for making proteins that play a very important role in our overall health. These include genes related to oxidation, heart and circulatory health, immune health, bone health, pulmonary health, , defense against environmental pollutants, collagen breakdown, photo-aging, skin slacking, and the appearance of wrinkles.

The vitamin and supplement industry is now over 50 years old. The market leaders remain the decades-old “multi-vitamins” that have been known as the marketplace standards. With over half of the population of the United States taking nutritional supplements and using topical skin care products, the vast majority are uncertain as to what they are using and why..

GeneLink’s innovations have led the Company to develop a proprietary mass- customization product manufacturing system for nutritional supplements and skin care product delivery. This mass customization is the process of manufacturing “one at a time” formulations based on an individual’s DNA signature.

The competitive advantage is simple. GeneLink offers carefully selected and monitored ingredients from the highest quality suppliers. This by itself would not be proprietary. It merely positions the Company as a high-quality supplier. However, unlike the rest of the nutrition and skincare industry, the Company has the ability to provide its customers, on an individual by individual basis, the ability to determine and obtain:

what they need,

in specific amount

without paying for or consuming what they don’t need.

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Utilizing genetics, GeneLink adds a completely unique dimension – the ability to respond to some of an individual’s genetic deficiencies. In addition to GeneLink’s own proprietary science and discoveries, in order to protect its customers, GeneLink uses only:

Genetic variations (SNPs) independently verified by world-recognized medical and scientific institutions

Ingredients already generally accepted as safe by the FDA; and

Ingredients independently verified to be efficacious in supporting overall health in specific areas identified through the SNP assessments.

Our products are centered on natural organic compounds and non-FDA nutraceuticals with an emphasis on getting the proper nutrients delivered to each individual’s specific needs. The public long have been taught the value of good nutrition and been told that vitamins are good for them, yet few know which ones are really necessary, how much are necessary, or whether their bodies can actually absorb them effectively. GeneLink scientists, along with top research institutions, have discovered that each person has a unique "genetically determined" body chemistry. All humans have minor DNA variations that can cause the body to be unable to produce some essential proteins for normal, healthy development. Even small variations in an individual’s genes can have a profound influence on how well he or she responds to food, physical activity, environmental stresses and medicines. That is why vitamins and supplements are important to support the body in maintaining and achieving optimal health and allowing his or her cells to consistently have the right fuel to do their jobs.

To determine each person’s individual genetic makeup, a GeneLink customer performs a simple swab inside their cheek using familiar cotton swabs, then mails in the swabs to the GeneLink lab for DNA analysis where 12 key DNA markers for major indicators are measured. The Company then formulates and manufactures a monthly supply of an all-natural, organically-based customized nutritional supplements or skin care product for that customer based on his/her DNA assessments. Although the Company does not make any medical claims regarding its products, many customers report positive results.

GeneLink is an industry game-changer, well-positioned in a market searching for solutions to soaring healthcare costs. It is truly a wellness company in a sea of disease-treatment companies. In its simplest form, GeneLink delivers a new generation of nutrition and skin care products in personally-customized forms, manufactured specifically to key elements of the individual’s DNA.

In doing so, GeneLink utilizes some of the most significant, highest quality and most scientifically supported ingredients available. In the case of nutrition, the current DNA-customized nutritional supplement product may utilize up to 89 ingredients. GeneLink skin serum currently contains up to 16 naturally-derived plant-based ingredients. Each user gets what he or she needs, nothing he or she does not need, and can now know what will work best for his or her individual body - saving cost, eliminating guesswork, and providing peace of mind.

GeneLink’s history since 2008 of providing genetically customized nutrition and skin care solutions to more than 30,000 people is compelling evidence of the marketplace viability of the Company’s approach to personalized health and wellness.

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Although GeneLink’s approach is unique, the scientific underpinnings are independently verified and established by the scientific community. Furthermore, as a science company, GeneLink continues to design its assessments and products to benefit from new breakthroughs in relevant SNPs and compensatory ingredients. GeneLink is currently working on additional targeted SNP assessments - the next generation of solutions to add to its initial 12 SNP assessments panel for a more expanded view on an individual’s health and wellness.

In layman’s terms, over time GeneLink should be able to see deeper and deeper into the layers of health issues revealed by genetic information - then deliver more and more finely-tuned formulations.

Aside from a continual expansion of its initial product offering, this process will result in the ultimate goal of “condition specific” nutraceuticals - much like the vast array of pharmaceutical medicines we are familiar with today, but with targeted accuracy and without the effects of synthesized chemicals that often have severe and unwanted side effects.

GeneLink’s Market Positioning

GeneLink is a pioneer in genetically-guided personal care products. Its Scientific Advisory Board is comprised of world-recognized scientists and researchers in the fields of biotechnology, genomics, molecular biology, chemistry, medicine, clinical laboratory medicine and nutritional sciences. As a group they have over 600 peer reviewed publications and abstracts, numerous awards, dozens of patents and distinguished careers with some of the world’s foremost public and private biosciences corporations and universities. GeneLink possesses five (5) patents and has seven (7) patents pending. Twenty-one (21) trademarks have been registered to date.1.The first area is that of mass market consumers. The Company’s recently divested direct selling subsidiary, ForU International (“ForU”), formerly GeneWize Life Sciences, Inc. (“GeneWize”), continues to market the Company’s nutritional supplement and skin care products. Pursuant to a licensing and distribution agreement, geneMe, LLC markets GeneLink products direct to consumers via internet and direct response marketing channels and additional mass market opportunities are planned domestically and internationally.

The second area will be a targeted application of GeneLink products into specialty vocational markets such as physicians, fitness, sports and athletes. This will be achieved through GeneLink’s own distribution efforts and brands as well as in conjunction with outside market partners currently serving the target audiences. GeneLink is currently pursuing the medical practitioner channel through its own Dermagenetics^® branded products and distribution subsidiary.

The third area is private label and licensing applications of GeneLink genetic assessments and various product formulations into existing and new sales channels worldwide such as large health-care networks that require their own branding.

The fourth area of development is a research effort focused on developing genetic assessments linked to medical or “pharmacogenomics” applications to specific conditions. This area of GeneLink’s developmental pipeline incorporates important research areas such as genetic assessments on matters such as Alzheimer’s and Dementia, cardiovascular disease, bone density loss and ADHD. These developments, if resulting in products, would be subject to FDA review.

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The Business Numbers

Revenues:

Historically revenues grew from $100,000 in 2007, to $6.4 million in 2008 and $8.6 million in 2009. Challenges and transitions in its leadership caused GeneWize to lose momentum in 2010 and corporate revenues slipped to $7.8 million and $4.7 million in 2011. The sale of GeneWize to Capsalus Corporation and the subsequent transition of GeneLink to a wholesale model impacted gross revenues and operating margins in 2012, reducing revenues to $2.1 million in 2012.

Interest by distribution partners, coupled with exceptional customer product acceptance and loyalty, has been very encouraging. Through private labeling and licensing, GeneLink believes it does not need to compete with the existing market, but rather merely needs to partner with and support existing segments or players in that market with its new personalized products. Targeted condition- specific products outside of the nutrition and skin care markets have also been identified and could provide significant additional upside opportunities as they are developed and marketed.

Since proving the acceptance of its products since 2008, many market opportunities have become available to the Company, both domestically and globally. Through the continued addition and development of market partners, as well as continued new product introductions, GeneLink expects to grow in 2013 and is targeting sustainable profitability around the fourth quarter of 2013. Growth is expected to continue through channel expansion in the U.S. and also by entering into interested international markets.

Sales Channel/Market Development:

In 2011, GeneLink refocused its efforts from direct selling to strategic partnering by linking with existing distribution channels via private labeled products and licensing. In October 2011, the Company signed definitive agreements to sell its GeneWize direct selling subsidiary to Capsalus Corp (WELL.OB) and to have them continue as a licensing and distribution partner. That sale was consummated on February 10, 2012. In selling GeneWize to Capsalus, GeneWize moved from subsidiary to market partner and distributor to the direct selling marketplace. GeneWize continues to sell Lifemap Me nutritional supplements and skincare through its “brand partner” affiliates. Capsalus has rebranded GeneWize as ForU.

In July 2011, the Company signed a license and distribution agreement with geneMe, LLC, a company led by Robert Trussell, founder and co-chair of Tempur-Pedic, Inc. Mr. Trussell’s group is focusing on direct response opportunities such as long and short form commercials (a/k/a infomercials) and other direct response opportunities of its own unique branding of GeneLink technology and products.

In 2012, the Company re-launched its Dermagenetics line to address the needs of the medical and professional markets. Future plans include foreign licensing and opportunities in high-end retail avenues designed to integrate and support the larger mass retail base.

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The Company looks to build each of these channels, leveraging distinctive and unique products and branding, in a way which will provide sustainable mutual benefit and synergies for all markets.

Current Product Lines and Extensions:

Since 2008, the focus of GeneLink and GeneWize had been the GeneWize Me nutrition system and GeneWize Me skincare system orders consisting of a twelve-gene and a six-gene DNA assessment and a one month supply of GeneWize Essentials non-customized product. A DNA customized product is manufactured after the results of the DNA assessments are provided by the lab. Depending upon the specific product, a customer generally pays $99 to $129 per month for the customized nutrition or $49 to $99 per month for the customized skin serum.

In March 2011, the Company expanded its product offerings through GeneWize. New products included a DNA supportive weight management product and additional complementary skin care products which create a complete skin care regimen.

In early 2012, the Company began its soft re-launch of its high-end Dermagenetics® brand. These products involve additional customization offered through physicians and medical professionals. In addition it is in the process of developing additional and modified products to meet other product needs as requested by ForU and geneMe.

Product development efforts continue to look at additional ways to leverage the Company’s current SNP technologies for additional product offerings. In addition, research continues into new condition-specific pharmacogenomic applications. As mentioned above, this area of GeneLink’s developmental pipeline incorporates areas such as of weight management, cardiovascular health, bone health, Neurological and other significant applications.

Market Expansion: 2013 and Beyond

Since the commercial launch in August 2008 of its initial nutraceutical solution, the Company has performed nearly 30,000 genetic assessments and delivered approximately 200,000 units of customized product. GeneLink has delivered something no company has before: “mass personalization” of genetically customized products at an affordable price. With increased volumes and additional targeted investment in systems, manufacturing and lab capacities, costs can be further reduced, allowing for increased margins and more attractive market pricing, which the Company believes will afford access to more customer channels and marketing opportunities.

Based on this early commercial success, GeneLink has been approached by numerous potential partners seeking to market its products. These include potential partners outside of the United States. Based upon interested received to date, GeneLink believes it will have the opportunity to expand through partnerships and licensing relationships outside of the United States. With genetic assessment and personal wellness customization predicted to grow into 2013 and beyond, GeneLink is equipping itself to expand with the anticipated market demand.

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GeneLink Manufacturing: Current and Future

GeneLink established the first commercially viable DNA-guided nutrition and skin care production process. Large pharmaceutical and skin care providers manufacture very large volumes of one single formula product, shipped to warehouses for storage until it is ordered by a customer or distribution channel. Some products are on the shelf for months, because it saves the manufacturer money. GeneLink manufactures and delivers a new, individually-customized product for each customer as orders are received, so ingredient freshness is assured and the customer receives the exact product formulation that his or her body needs. GeneLink has invested considerable time and energy in designing a reliable delivery process and is the first to address the challenge of delivering customized wellness products.

The Company’s methodology is scalable for the foreseeable future, and it is currently planning to further automate manufacturing to decrease cost, expand capacity, increase the level of customization, and allow for even greater degrees of customization. Increased customization would provide GeneLink with additional competitive and financial advantages as it facilitates tailoring ingredients to an order at a fraction of the cost a customer would pay if purchasing such ingredient independently elsewhere.

QUALITY AND CONFIDENTIALITY

Committed to quality, GeneLink products are made in a clean room environment, with pharmaceutical grade ingredients and fully FDA compliant processes. In addition, GeneLink is also committed to customer confidentiality. All DNA samples are processed using bar coded identifiers to protect privacy and confidentiality of all customer information. In addition, all DNA samples are destroyed after genotyping.

INTELLECTUAL PROPERTY

GeneLink has a compilation of issued and pending patents that center on using DNA analysis for the purpose of customizing nutrition and skin care formulations for wellness and anti-aging. Patents that focus on certain medical diseases and conditions are in various stages of application.

On November 20, 2012, GeneLink was granted a U.S. Patent for "Kits and Methods for Assessing Skin Health" – the fifth patent to be granted from a family of patent applications filed by GeneLink in the U.S. and abroad. GeneLink is the first (and only) company to be granted a patent for a therapeutic skin health regimen linked to DNA-based skin health assessment.

DNA Assessments/DNA Assessments Developed by GeneLink:

To support its vision, GeneLink has developed an impressive portfolio of DNA-based assessments to measure pre-dispositions to diseases and aging processes. Although GeneLink does not attempt to diagnose or predict any disease or medical condition, these assessments are utilized to develop proprietary, individually tailored supplement products to support specific needs of an individual’s genetic tendencies discovered in the assessment process and help an individual achieve optimal health :

Healthy Aging Assessment

The GeneLink Healthy Aging® is a twelve gene-SNP panel containing a cross section of some of the most important basic functional health areas including oxidation, bone health, cardiovascular health, lipid metabolism and includes genes that play multiple functions in immune response and detoxification.

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The Healthy Aging Assessment represents a "foundational health assessment" for clinicians, patients or consumers interested in using their personal genetics information to create an integrative strategy to help maximize overall health.

CoQ10 Efficiency Assessment

CoQ10 is a powerful antioxidant very important to cardiovascular health, neuronal health, skin health; also functions in the protection against environmental toxins. GeneLink’s CoQ10 Efficiency Assessment is designed to help determine which form of CoQ10 an individual is able to efficiently use, the fully oxidized form of COQ10 called Ubiquinone or the active form of CoQ10 called Ubiquinol.

Many people (approximately 30% of the population) may not be able to efficiently use the more popular form of CoQ10 (Ubiqionone) and would likely benefit from utilizing Ubiquinol, the active form of the antioxidant.

Oxidative Stress Assessment

GeneLink’s Oxidative Stress Assessment is a DNA-based tool designed to help measure an individual's inherent genetic capacity to combat oxidation. This assessment measures and helps predict the body’s ability to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds and pollutants.

This assessment specifically looks for variations (known as SNPs) in key oxidative stress genes. SNPs predict inefficient enzymatic activity that, over time, can result in oxidative damage (also known as free radical damage) to cellular proteins and DNA. SNPs in oxidative stress genes have been associated with, premature aging.

Oxidative Stress Assessment results are effective when used to create a "customized or targeted" antioxidant supplement regimen for patients or consumers.

GeneLink Nutragenetic Profile

GeneLink’s Nutragenetics Nutritional Assessment is designed to identify variations (SNPs) in propensity for: oxidation; environmental challenges; cardiovascular health; detoxification; immune health; neurological health: pulmonary health, and bone health.

This powerful assessment represents an excellent starting place for clinicians, patients or consumers interested in using their personal genetic information to create an integrative strategy to help minimize potential health risks.

Depending upon the marketing channel, assessment result presentations may vary.

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Skin Health Assessment (also known as Dermagenetics Skin Health Assessment)

GeneLink’s patented Dermagenetics Skin Health Assessment is a "first of its kind" skin-health assessment that helps identify variations in key genes related to skin aging, wrinkling and overall skin health; it is designed to specifically measure important gene-SNPs associated with elasticity, photo-aging, oxidation, the skin’s ability to tolerate environmental pollutants, and the appearance of fine lines and wrinkles.

This breakthrough assessment provides information that forms the foundation for the first and only scientifically proven customized skin care system genetically matched to an individual’s DNA.

The Dermagenetics Skin Health Assessment provides information that can be used to help guide the selection of compensatory active ingredients (SNPactives^®) which can be used to help guide customized therapies or regimens.

Proprietary Systems:

Dermagenetics^® Customized Skin Care System

First introduced in 2005, the Dermagenetics^® Skin Care System was the first comprehensive system of personalized (mass customized) skin care product manufacturing based on genetic assessment that measures SNPs in DNA.

GeneLink’s patented Dermagenetics^® Skin Health Assessment is the foundation of skin health: Genetic assessment results drive a proprietary formula that generates a skin health report linked to an individual "titration matrix" or “recipe” for each person’s skin-care formulation. Next, the genetically-guided ingredients called SNPBoost^®(natural nutrient compounds which have been shown to help compensate for genetic deficiencies) are infused into the individual skin care or cosmetic product.

The Dermagenetics^® Skin Care System is the first and only customized skin care system genetically matched to an individual’s DNA.

Nutragenetics Customized Nutritional Supplement System

The Nutragenetics Nutritional Care System is the first comprehensive system of personalized (mass customized) nutritional supplement manufacturing based on a genetic assessment that measures SNPs in DNA.

GeneLink’s patented pending assessment, such as Healthy Aging and Oxidative Stress, form the foundation of the customized nutritional supplements: Genetic assessment results drive a proprietary analysis that generates a nutritional report linked to an individual "titration matrix" or “recipe” for each person’s customized supplements.

In order to help provide support "genetically selected ingredients" and nutrients (called SNPBoosts^®) are blended into the individual nutritional formulation.

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The Nutragenetics Nutritional Care System is the first customized nutritional and optimal health system where nutritional supplement ingredients and products are genetically matched to an individual's DNA.

Patented, Self-Administered DNA Collection System

GeneLink offers a patented, FDA reviewed, non-invasive, self-administered DNA collection system. The process is easy to understand, simple to do and takes just a few minutes. No invasive procedures are involved so anyone, clinicians or consumers, can use this collection system.

A person simply swabs the inside of his or her mouth (inner cheek) with the provided swabs and mails the swabs back to GeneLink's laboratories in the special envelopes. Everything, along with easy-to-follow instructions is included. All materials and forms are bar coded with a unique ID number to insure privacy and confidentiality. All GeneLink DNA assessment panels utilize this DNA collection system.

Development Pipeline:

GeneLink‘s scientists continue to research and develop DNA testing and products for a growing list of condition-specific products including the following:

Dementia and Alzheimer’s Assessment

Metabolic Syndrome Assessment

Macular Degeneration Assessment

Neurological Health Panel

DNA Integrity and Repair Panel

Next Generation DNA Collection Kit

Scientific Advisory Board

The Scientific Advisory Board (“SAB”) is comprised of leading scientists and researchers in the fields of biotechnology, genomics, molecular biology, chemistry, medicine, clinical laboratory medicine, pediatrics, and nutritional sciences. As a group, the SAB has published over 600 peer reviewed publications and abstracts, numerous awards, dozens of patents, distinguished careers and affiliations with some of the world’s foremost public and private biosciences corporations and universities.

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Bernard L. Kasten, Jr., M.D.

Effective December 30, 2010, Dr. Kasten was appointed the Chief Executive Officer of the Company. Dr. Kasten is also the Executive Chairman of the Board of Directors of the Company. Dr. Kasten has been a scientific advisor to the Company since 1999 and a member of the Company's Advisory Committee since 2001. Dr. Kasten is a graduate of Miami University (Oxford Ohio), BA Chemistry 1967, and the Ohio State University College of Medicine, MD 1971. His residency was served at the University of Miami, Florida and fellowships at the National Institutes of Health Clinical Center and National Cancer Institute, Bethesda, Maryland. Dr. Kasten is a Diplomat of the American Board of Pathology with Certification in Anatomic and Clinical Pathology with sub-specialty certification in Medical Microbiology. Dr. Kasten is an author of "Infectious Disease Handbook" 1st through 5th Editions 1994-2003 and the "Laboratory Test Handbook" 1st through 4th Editions 1984-1996 published by Lexi-Comp Inc., Hudson, Ohio. Dr. Kasten has been active with the College of American Pathologists (CAP) serving as Chairman of its Publication Committee from 1985-1993, its Management Resources Committee from 1993-1998 and its Chairman Internet Editorial Board from 1999-2003. Dr. Kasten received the College of American Pathologists Presidents Medal Awarded for Outstanding Service in 1989 and the College of American Pathologists Frank W. Hartman Award, in 1993 for Meritorious Service to the College (Founding CAP Today) the organization's highly successful monthly tabloid magazine. Dr. Kasten's professional staff appointments have included the Cleveland Clinic, Northeastern Ohio Universities College of Medicine, the Bethesda Hospitals and Quest Diagnostics. Dr. Kasten served eight years, 1996-2004, at Quest Diagnostics Incorporated [NYSE-DGX], where he was Chief Laboratory Officer; Vice-President of Business Development for Science and Medicine and Vice-President of Medical Affairs of a Quest Diagnostics wholly-owned subsidiary, MedPlus Inc. Dr. Kasten joined SIGA Technologies, Inc. [NASDAQ-SIGA] as a Board of Directors member in May 2003, and accepted the appointment as SIGA's Chief Executive Officer in July of 2004, serving through April 2006. Dr. Kasten is Chairman of the Board of Cleveland Bio Labs Inc. [NASDAQ-CBLI], and also serves on the Board of Directors of CytoLogic Inc, Lexi-Comp Inc, Riggs-Heinrich Media Inc, Highway Composites LLC, Monroeville Industrial Molding Inc, PIPO Inc and Cleveland Bio Labs Inc.

Robert Ricciardi, Ph.D.

Dr. Robert Ricciardi is a founder of GeneLink and is a Professor of Microbiology at the University of Pennsylvania, where he is a Graduate Group Chairman. He received his Ph.D. from the University of Illinois at Urbana. He was a Postdoctoral Fellow at Brandeis University and Harvard Medical School in the Department of Biological Chemistry where he was awarded Fellowships by the American Cancer Society, National Institutes of Health and the Charles A. King Trust. He developed one of the first genomic technologies, which was used widely to discover and map many hundreds of genes by identifying the proteins they encode. Most of Dr. Ricciardi’s research has centered on understanding basic mechanisms of cancer. He identified one of the first gene activators from a virus that can make cells cancerous by enabling them to escape the immune system. These studies, in turn, disclosed a key mechanism that modulates NF-kappa-B, the master regulator of the immune system. Dr. Ricciardi has also developed and received patents on recombinant delivery vectors for potential use as vaccines and gene therapy. In addition, Dr. Ricciardi discovered new replication proteins from human viruses that cause cancer (KSHV) and possibly chronic fatigue (HHV-6). He is applying a rapid mechanistic assay he developed (U.S. Patent) that is being used to screen tens of thousands of compounds from chemical libraries in order to discover therapeutics that will inhibit these and other disease related human viruses. Dr. Ricciardi has served as a consultant to Children’s Hospital of Philadelphia, Smith Kline Pharmaceuticals, and the NIH, and was awarded a NATO Visiting Professorship at Ferrara Medical School and has been an invitational speaker at numerous international scientific meetings and universities. He has authored 93 publications.

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Harold H. Harrison M.D., Ph.D., F.C.A.P.

Dr. Harrison has served as Corporate Medical Director of Genetic Services for Quest Diagnostics, and as overall Medical Director for the biochemical, molecular, cytogenetic, and HLA laboratories of Genetrix, Inc., a national genetic services company that was acquired by Genzyme Genetics in 1997. A Clinical Pathologist with subspecialty training in all areas of genetic services and a Ph.D. in biochemical genetics, Dr. Harrison is a Fellow of the College of American Pathologists and a member of the American College of Medical Genetics and American Society of Human Genetics. He holds medical licenses in six states (AZ, CA, IL, NJ, NV, and NY), and laboratory director's licensure in NJ and NY. A former faculty member at the Univ. of Chicago Pritzker School of Medicine, Dr. Harrison has over 80 publications and abstracts, and several OMIM/GDB citations for his and collaborators' genetic discoveries. Dr. Harrison currently holds a clinical faculty appointment with the University of Arizona Medical School.

Dr. Stefanie May Heinrich

Dr. Heinrich has joined GeneLink as Director of Genomics. Dr. Heinrich has a Diploma in Biochemistry from the department of human genetics at the Ruhr University Bochum, Germany. She received her Ph.D at the Dr.-von-Haunerschen Children’s Hospital in Munich, Germany, in the department of pneumology and served as a researcher at the department of human genetics at the Justus-Liebig University in Giessen, Germany.

Virginia Bank

Ms. Bank has significant experience in the dietary supplement and functional food industries and began her career as a natural products chemist with a research company (Hauser, Inc.) which focused on developing natural product extracts and purified plant compounds for the dietary supplement, pharmaceutical and food industries. She is considered an industry expert in antioxidant research and throughout her career has been researching and developing plant-based functional ingredients for a variety of nutritional supplement applications. Ms. Bank holds four U.S. patents pertaining to antioxidants and their applications and is a contributing editor for Prepared Foods/NutraSolutions Magazine. She received her bachelor’s degree in Chemistry and a Master’s Degree in Science Education from the University of Colorado, Boulder.

Donald J. Cannon, Ph.D.

Dr. Cannon received his A.B. in Chemistry from Harvard College and a M.A. in Medical Sciences and a Ph.D in Biochemistry from Boston University. He has been on the faculty at the Medical Schools at the University of Hawaii, University of Arkansas, and Marshall University where he has lectured to medical, graduate, nursing and allied health students and was director of the Pathology residency program at Marshall University. He has directed laboratories and performed research at the Boston Biomedical Research Institute, the Little Rock, Arkansas VAMC and the Bethesda Hospitals in Cincinnati. Dr. Cannon has served as Laboratory Director in Forensic Toxicology, National Manager of Operations Excellence and National Manager of Special Projects in Business Ventures at Quest Diagnostics. He has over 130 publications and book chapters, and is an active member of the American Association for Clinical Chemistry, the Association of Clinical Scientists and the National Academy of Clinical Biochemistry. He has been invited and has continued to lecture on a number of topics in various countries and locales. Dr. Cannon has received numerous awards related to clinical laboratory medicine, laboratory management and teaching. He is currently Professor of Chemistry and Director of the Forensic Sciences program at the University of Tampa.

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James W. Simpkins, Ph.D.

Dr. James W. Simpkins received his B. S, and M. S. degrees from the University of Toledo and in 1977 received a Ph.D. Degree in Physiology from Michigan State University. He joined the faculty at the University of Florida, College of Pharmacy in 1997 and rose through the ranks to the position of Professor of Pharmacodynamics. He has served as Chairman of the Department of Pharmacodynamics, Chairman of the Department of Pharmaceutics, Associate Dean for Research and Graduate Studies and Director, Center for the Neurobiology of Aging at the University of Florida. In 1996, Dr. Simpkins was appointed as the Frank Duckworth Professor of Drug Discovery at the University of Florida. He has more than 295 peer-reviewed publications, a dozen patents for his discoveries and has edited two texts on Alzheimer's disease therapy. He also served as the Director of the University of Florida Drug Discovery Group for Alzheimer's disease, which has sustained funding by the National Institute on Aging to support research in the pharmacotherapy for Alzheimer's disease. In 1999 he was appointed to the Medical and Scientific Advisory Council of the National Alzheimer's Association. In July 2000, he became the Chair of the Department of Pharmacology and Neuroscience and Director, Institute for Aging and Alzheimer's Disease Research at the University of North Texas Health Science at Fort Worth.

Robert Kagan, M.D. F.C.A.P.

Dr. Kagan is Board Certified in Clinical Pathology, Nuclear Medicine and Hyperbaric Medicine. He received his medical degree from Georgetown University School of Medicine. He is Past President of the Florida Association of Nuclear Physicians and Past Chairman of the Board of the Nuclear Medicine Resource Committee of the College of American Pathologists.

Heather Mittiga, MD

Dr. Mittiga is a Board Certified Pediatrician. She received her medical degree from Case Western Reserve University, College of Medicine, served her residency at the University of Pittsburgh Children’s Hospital and fellowship at the Cincinnati Children’s Hospital Medical Center. Her practice interests include pediatric wellness, child and adolescent nutrition. Dr. Mittiga assists the GeneLink formulation team in determining proper nutrients, efficacy, and safety levels for pediatric, youth and teen products.

Margaret Palazzolo

Ms. Palazzolo has 13 years of experience designing, implementing and managing research studies and 10 years in conducting data analysis. Her work has been concentrated in both social sciences and medical research. Most recently she has undertaken a new area, network analysis. She is currently working with GeneLink to determine the effects of several newly developed products. She is a full time employee at Cincinnati Children's Hospital Medical Center (CCHMC) in the James M. Anderson Center for Health Care Excellence where she is piloting new technology solutions to enable reliable population management for patients with chronic conditions. In addition she is part of a team of researchers from the Massachusetts Institute of Technology and CCHMC studying the development of health care providers' communication networks to determine what factors predict perfect care. This research, the first of its kind, is being applied at CCHMC in teams caring for patients with chronic conditions. She graduated in 1999 from the University of Cincinnati with her Master's of Science degree.

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Kenneth R. Levine

Mr. Levine is the President of First Equity Capital Securities, Inc., a FINRA and SEC registered firm and the Company’s investment banker since 2003. Mr. Levine was formerly an attorney with the law firm of Simpson, Thacher and Bartlett and currently serves as a member of the board of directors of Chiliad, Inc., as well as a series of five health and wellness focused non-profit organizations. Mr. Levine is a graduate of Harvard College as well as Fordham University School of Law where he currently serves on the Dean’s Planning Council. He serves as business advisor to the Company’s Scientific Advisory Board, and attends Board of Directors and Audit Committee meetings as a non-voting participant.

FINANCIAL AND BUSINESS ADVISOR

REGULATION

State and Federal Regulation

GeneLink offers a variety of DNA based predictive assessments designed to measure SNPs. SNPs are slight variations in an individual’s genetic makeup. GeneLink assessments are not intended to diagnose, treat or cure any disease and are intended for education purposes only.

The Company’s state-of-the-art genetic testing technologies are designed to accurately assess these genetic variations and ultimately provide information that can help guide the selection of nutritional supplements and customized skincare products. In North America, the laboratories contracted by us have appropriate accreditations for the jurisdictions in which they are located. The assessment protocols and test results are independently validated by the laboratories performing the tests. Appropriate accreditations, licenses, and permits are obtained by the individual laboratories as required.

GeneLink’s predictive assessments may be subject to regulation at both a State and a Federal level. The Centers for Medicare and Medicaid Services (CMS) regulates most laboratory testing performed on humans in the U.S. through the Clinical Laboratory Improvement Amendments (CLIA). The Division of Laboratory Services, within the Survey and Certification Group, under the Center for Medicaid and State Operations (CMSO) has the responsibility for implementing the CLIA Program.

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Certain states such as New York and California have more stringent regulations for clinical laboratories and broader definitions as to what testing is regulated. International jurisdictions also may impose regulations on the conditions under which testing is performed on their residents. Some states may require a physician order for the testing.

GeneLink endeavors to maintain compliance with all relevant State and Federal regulations. Historically and currently, due to unique, state specific regulatory requirements GeneLink DNA assessment services have not been available for the residents of New York. The Company continues to actively seek the appropriate approvals to provide testing in New York and in all other jurisdictions, both domestic and international.

GeneLink’s DNA sample collection kit is appropriately classified as a specimen transport and storage container under 21 C.F.R. § 864.3250. Products covered by this classification regulation are defined as follows:

A specimen transport and storage container, which may be empty or prefilled, is a device intended to contain biological specimens, body waste, or body exudates during storage and transport in order that the matter contained therein can be destroyed or used effectively for diagnostic examination. If prefilled, the device contains a fixative solution or other general purpose reagent to preserve the condition of a biological specimen added to the container. This section does not apply to specimen transport and storage containers that are intended for use as part of an over-the-counter test sample collection system for drugs of abuse testing.

Products falling within 21 C.F.R. § 864.3250 are Class I devices and are exempt from the Federal Drug Administration’s (FDA) 510(k) requirement. Our sample collection kit utilizes absorbent tipped swabs for specimen collection, and such swabs are considered Class I, 510(k)-exempt devices, pursuant to 21 C.F.R. § 880.6025.

As the regulatory environment evolves, our Scientific Advisory Board members and our outside retained counsel monitor current regulatory requirements and assist us and our contract laboratories in maintaining compliance with all applicable regulatory requirements.

Existing State, Federal, or international regulations may change, be modified or expanded in any jurisdiction. If our genetic assessment was deemed to require a specific approval by the FDA or other regulatory agency, additional costs might be incurred by us and delay of introduction of new assessments might ensue and current testing services could be impaired.

Recent Regulatory Developments

In July 2010, the FDA held a public workshop on its proposal to extend formal regulatory oversight to laboratory developed tests (LDTs). In the public meeting notice the FDA cited a variety of safety concerns related to current LDTs, noting that the tests have become increasingly complex and utilized for significant medical decisions, sometimes in place of similar tests that have been reviewed and approved by the FDA. It is possible that the FDA may require all LDTs to undergo some form of pre-market clearance as a medical device. However, no formal guidance has yet been issued discussing the nature of the changes the FDA may make with respect to the regulation of LDTs, nor the scope of potential regulation. Legislation has also been introduced in Congress that could affect the framework for regulatory approval of LDTs.

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As part of the FDA’s evolving position on the regulation of LDTs, the FDA has begun issuing letters to a number of companies that primarily related to direct to consumer (DTC) genetic testing products. On September 13, 2010, GeneWize received such a letter. In these letters, the FDA expresses concern about consumers making medical decisions in reliance on genetic tests that have not undergone the FDA’s premarket review. GeneLink and GeneWize filed a timely response to the FDA’s request, expressing the Company’s position and belief that its assessment does not constitute a regulated medical device. The FDA has not responded to the Company on the matter.

The U.S. Government Accounting Office (GAO) issued a report in July 2010 to the effect that DTC tests are misleading to consumers and that the test results are further complicated by deceptive marketing practices. Later that month, the U.S. House of Representatives Committee on Energy and Commerce held a hearing on the public health implications of DTC genetic testing. In the course of broader public testimony at the hearing, representatives from GAO made reference to allegedly improper marketing practices utilized by an independent distributor of GeneWize products. The Federal Trade Commission (FTC) may also examine aspects of marketing of DTC tests.

The Company continues to closely monitor potential changes to the overall regulatory environment to ensure its activities are compliant with applicable requirements. This regulatory environment includes federal as well as state matters regarding DTC testing. The Company has engaged in discussions with the FDA in order to assure compliance, and will pursue additional opportunities for discussion as warranted.

Federal Trade Commission Regulations and Matters

Marketing and advertising practices in the dietary supplement arena are subject to Federal Trade Commission (FTC) regulation. Enforcement actions have been undertaken by the FTC against companies alleged to have made false and misleading marketing statements. The FTC actions have resulted in consent decrees and required monetary payments by the involved parties. We believe that we currently are in compliance with all relevant FTC regulations. New regulations may be promulgated as a result of new legislation or by changing enforcement policy in any of the relevant regulatory agencies. We endeavor to proactively anticipate changes in the regulatory environment and to maintain appropriate compliance.

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During 2012, the staff of the FTC (the “staff”) investigated the Company for potential violations of Sections 5 and 12 of the Federal Trade Commission Act, 15 U.S.C. Sections 45 and 52, in connection with the advertising, marketing and sale of its DNA Assessments and genetically customized nutritional supplements and skin repair serum products. The Company believes its advertising and marketing are lawful and appropriate.

Following discussions with the staff, on October 26, 2012, in order to resolve this matter, the Company entered into a proposed consent decree with the Federal Trade Commission with regard to the FTC’s investigation. The proposed order is subject to approval by the Commissioners of the FTC.

The resolution of this matter may involve limitations on GeneLink’s activities, including but not limited to restrictions on the Company’s marketing claims and practices and the institution of monitoring obligations. These restrictions are also anticipated to apply to the marketing claims and practices of GeneLink’s marketing partners and distributors. The pending consent agreement does not include any fine and/or economic redress.

There is no guarantee that the Commissioners will accept the proposed consent degree as negotiation between the Company and the staff. If the Company and the FTC cannot reach a consensual resolution, the FTC may commence an action, either administrative or judicial, in which the FTC could seek various remedies, including limitations on the Company’s business and/or financial redress.

FDA Regulation of Nutritional Supplements

The Dietary Supplement Health and Education Act of 1984 (DSHEA) amended the Federal Food Drug and Cosmetic Act, defined dietary supplements including vitamins and minerals, and provided a regulatory framework to ensure safe quality dietary supplements and the dissemination of accurate information about such products. Under DSHEA dietary supplements are regulated as foods. The FDA is prohibited from regulating the active ingredients in dietary supplements as food additives or drugs unless product claims trigger a declaration drug status. GeneLink’s supplements are all currently accepted as safe and are not regulated as drugs. New ingredients will not be added to our product offerings unless they are accepted by the FDA. If any individual ingredient becomes subject to additional FDA regulation GeneLink would look to replace it with a suitable substitute without material impact on the usefulness or marketability of the specific GeneLink or other market partner product.

Privacy Protection and HIPAA

GeneLink is committed to meeting the ideals for confidentiality of individuals’ personal information as expressed in the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and maintains strict confidentiality regarding clients’ identity and the security of their results.

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ITEM 1A.

RISK FACTORS

Our business and the value of our shares are subject to the risks described above and certain risks described below.

THE COMPANY MAY NOT BE ABLE TO RESOLVE THE CURRENT INVESTIGATION WITH THE FTC ON SATISFACTORY TERMS.

In March 2011, we received a Civil Investigative Demand (“CID”) consisting of interrogatories and a request to produce documents from the FTC as part of its investigation into unnamed persons engaged directly or indirectly in the advertising or marketing of dietary supplements, foods, drugs, devices, or any other product or service intended to provide a health benefit or to affect the structure or function of the body. We expended significant resources in 2011 and into 2012 as the staff of the FTC (the “staff”) investigated the Company for potential violations of Sections 5 and 12 of the Federal Trade Commission Act, 15 U.S.C. Sections 45 and 52, in connection with the advertising, marketing and sale of its DNA Assessments and genetically customized nutritional supplements and skin repair serum products. The Company believes its advertising and marketing are lawful and appropriate.

There is no guarantee that the Commissioners will accept the proposed consent decree as negotiation between the Company and the staff. If the Company and the FTC cannot reach a consensual resolution, the FTC may commence an action, either administrative or judicial, in which the FTC could seek various remedies, including limitations on the Company’s business and/or financial redress.

OUR CONVERTIBLE NOTES BECOME DUE IN 2014 AND WE DO NOT HAVE SUFFICIENT FUNDS TO PAY THE PRINCIPAL THE ACCRUED INTEREST ON SUCH CONVERTIBLE NOTES WHEN THEY BECOME DUE.

In February and March 2009, the company issued an aggregate of $1,250,000 principal amount of convertible notes which are due on February 26, 2014. Interest accrued on the convertible notes at the rate of eight percent (8%) per year through February 26, 2011 and thereafter accrue interest at the rate of ten percent (10%) per year until maturity. The convertible notes will automatically convert into shares of our common stock at a price of $0.10 per share if the closing price of the shares of our common stock is at least $0.50 per share for thirty (30) consecutive trading days. Based on the recent closing price of our common stock, it is unlikely that the requirements for mandatory conversion provisions will be met and accordingly we will owe the holders of the convertible notes an aggregate of $1,698,208 ($1,250,000 of principal plus $448,208 of accrued interest) with respect to the convertible notes on February 26, 2014. Unless our cash flow from operations between now and the February 26, 2014 maturity date are sufficient to meet this obligation, we will be required to raise additional capital to meet these obligations. If we cannot raise sufficient capital, we will default on our obligations under the convertible notes and the holders of the convertible notes will be entitled to all of the remedies set forth therein including obtaining a judgment against the Company. If we are unable to pay the amounts due on the convertible notes upon maturity and the holders of the convertible notes are able to obtain a judgment against us, it likely would either prevent or make it more difficult for us to obtain additional funding in the future, and if we are unable to obtain sufficient funding we may be required to cease our operations.

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IN ORDER TO RAISE ADDITIONAL CAPITAL WE WILL NEED TO INCREASE OUR AUTHORIZED CAPITAL STOCK.

We will need to raise additional funds in order to continue operations in 2013. After taking into account the outstanding number of shares of common stock that we have issued and that are outstanding, plus the amount of shares of common stock to be issued in this Offering, plus all outstanding or anticipated to be outstanding options and warrants to acquire shares of our common stock, plus the amount of shares of common stock issuable upon the conversion of convertible debt, as discussed above, we will not have sufficient number of authorized but unissued shares of common stock available to meet our anticipated future financing needs. Accordingly, we will need to obtain the approval of our shareholders at our 2013 Annual Meeting of Shareholders, scheduled for May 31, 2013 to increase the number of shares of our authorized capital stock. Although we anticipate that our shareholders will approve the proposal to increase our authorized capital stock, there is no guarantee that we will obtain such required shareholder approval. If we are unable to obtain the approval of our shareholders to increase our authorized capital stock at the 2013 Annual Meeting of Shareholders then we will be unable to make additional offerings of shares of our common stock in order to fund our required capital needs for the balance of 2013, and in such event it is possible that we would be forced to cease our operations.

OUR INDEPENDENT AUDITORS HAVE EXPRESSED DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN.

Our independent registered public accounting firm has expressed doubt about our ability to continue as a going concern in their report on our December 31, 2012 financial statements. Our continuance as a going concern is dependent upon our ability to raise capital. There is no assurance that we will be able to raise adequate capital or generate sufficient cash from operations to continue as a going concern.

WE NEED TO RAISE ADDITIONAL CAPITAL, WHICH MAY NOT BE AVAILABLE, TO CONTINUE OUR OPERATIONS.

We have spent, and expect to continue to spend in the future, substantial funds to complete our planned product development efforts and expand our sales and marketing activities. We need to raise additional funds to implement our business plan, and cannot be certain that we will be able to obtain additional financing on favorable terms or at all.

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Our future capital requirements and the adequacy of available funds will depend on numerous factors, including:

the successful commercialization and licensing of our existing products and services;

the development of adequate internal systems, manufacturing capabilities and laboratory testing capabilities;

progress in our product development efforts;

progress with regulatory affairs activities;

the growth and success of effective sales and marketing activities;

the cost of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and

development of strategic alliances for the marketing of our products.

If funds generated from our operations are insufficient to meet current or planned operating requirements, we will have to obtain additional funds through equity or debt financing, strategic alliances with corporate partners and others, or through other sources. We do not have any committed sources of additional financing, and cannot provide assurance that additional funding, if necessary, will be available on acceptable terms, if at all. If adequate funds are not available, we may have to delay, scale-back or eliminate certain aspects of its operations or attempt to obtain funds through arrangements with collaborative partners or others. This may result in the relinquishment of our rights to certain of our technologies, product candidates, products or potential markets. Therefore, the inability to obtain adequate funds could have a material adverse impact on our business, financial condition, and results of operations and our ability to remain in business. We believe it is likely that we will be required to raise additional amounts to fund future operations. If additional funds are raised through issuing equity securities or debt securities convertible into equity, dilution to shareholders may occur.

WE HAVE A HISTORY OF LOSSES AND MAY HAVE CONTINUED LOSSES FOR THE FORESEEABLE FUTURE.

We commenced operations in 1994. We have incurred significant losses to date and revenues have been limited. Our expenses have exceeded revenues in each year since inception. Given planned levels of operating expenses, we may continue to incur losses for the foreseeable future. Our accumulated deficit as of December 31, 2012 was $27,612,062. Our expenses historically have consisted principally of salaries, general and administrative expenses incurred while building its business infrastructure and research and development expenses. We plan to control operating expenses while expending reasonable amounts on business development. If our revenue growth is slower than anticipated or operating expenses exceed expectations, our losses will significantly increase. Currently, we believe that our monthly operating loss has been reduced and we expect this trend to continue, eventually resulting in profitability. Even if we were to achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

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IF OUR OUTSIDE SUPPLIERS AND MANUFACTURERS FAIL TO SUPPLY RAW MATERIALS AND PRODUCTS IN SUFFICIENT QUANTITIES AND IN A TIMELY FASHION, OUR BUSINESS COULD SUFFER.

Currently, we have one exclusive supplier of raw materials for our nutritional supplements and one exclusive supplier for our skin care products. The loss of a supplier or a significant disruption or interruption in our supply of raw materials would have a material adverse effect on the manufacturing and packaging of our products. Furthermore, any increases in the costs of raw materials would adversely affect our products margins if we are unable to pass along such higher costs in the form of price increases, or to otherwise achieve cost efficiencies in manufacturing distribution. As we grow, we will be required to identify alternative sources for raw materials and for manufacturing, and there is no assurance that we will be able to identify appropriate alternative sources of raw materials and manufacturing that will be sufficient to meet our needs.

While we require that our manufacturers verify the accuracy of the contents of our products, we do not have the expertise or personnel to monitor the production of products by these third parties. We rely exclusively, without independent verification, on certificates of analysis regarding product content provided by our third party suppliers and limited safety testing by them. We cannot be assured that these outside manufacturing will continue to supply products to us reliably in the compositions we require. Errors in the manufacture of our products could result in product recalls, significant legal exposure, adverse publicity, decreased revenues and loss of distributors and endorsers.

WE DO NOT OWN OUR OWN CERTIFIED GENETIC LABORATORY, SO WE MUST RELY ON INDEPENDENT THIRD-PARTIES FOR OUR LABORATORY SERVICES.

All genetic tests that are undertaken on our behalf in connection with the sale of our products and services are undertaken by independent third-party laboratories that are certified in all appropriate jurisdictions. There is no assurance that these outside laboratories will continue to reliably provide laboratory services to us at the level of quality that we require or that such laboratories will maintain their required certifications and licenses needed to provide such services to us. If these laboratories stop providing such services to us, there is no assurance that we would be able to obtain alternative laboratory services on a timely basis that will meet the level of quality that we require. Any extensive interruption in the supply of laboratory services to us would result in loss of sales.

IF OUR FORMER GENETIC TESTING LABORATORY PREVAILS IN ITS CLAIMS AGAINST US, WE WILL NOT HAVE SUFFICIENT FUNDS TO MEET SUCH OBLIGATION.

In 2012, we switched our provider of genetic testing laboratory services. Our former provider of genetic testing laboratory services claims that we owe it approximately $150,000 under our arrangement with such company due to the failure to meet certain minimum volume requirements. Although we believe that we have valid defenses to these claims and do not owe our former laboratory any amounts, there is no assurance that we will be able to resolve such a dispute amicably or on terms that are acceptable to us. If our former laboratory prevails in its claims against us, we will not have sufficient funds to pay the amounts that such former laboratory claims are owed to it by us, and we would either be required to raise additional funds to pay such amounts or to use funds that would otherwise be used to help to continue operations and to expand our business to satisfy such obligation.

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A FORMER CONSULTANT HAS BROUGHT ACTION AGAINST US FOR ALLEGED BREACH OF CONTRACT

In November 2012, we were sued in the Circuit Court for the 11^th Judicial Circuit in and for Miami – Dade County, Florida by a former consultant, alleging breach of contract and unjust enrichment. In January 2013, we filed a motion to dismiss the complaint. The complaint that was filed does not state an amount that the former consultant is seeking from us. Although we believe that this amount is less than $25,000, we are unable at this time to determine the amount alleged to be owed by us to the former consultant. If we are unable to amicably resolve this matter or resolve it on terms that are acceptable to us, then we will be required to raise additional funds to pay such amounts or to use funds that would otherwise be used to help to continue operations and to expand our business to satisfy such obligation.

THE INTERNAL MANUFACTURING CAPABILITIES AND POTENTIAL DEVLOPMENT OF AN IN-HOUSE CERTIFIED GENETIC LABORATORY SERVICES COULD BE SUBJECT TO REGULATORY, ECONOMIC AND OTHER RISKS ASSOCIATED WITH SUCH VENTURES.

As we grow, we have developed internal capabilities to manufacture some or all finished products sold to our customers and are required to comply with the requirements and directives of governmental agencies, including the FDA and environmental laws. Violation of any of these requirements could result in financial penalties and other enforcement actions and could require us to halt our in-house manufacturing operations until violations are cured. The costs required to cure any incidents of non-compliance, to resolve enforcement actions that might be initiated by a government authority or to satisfy any new legal or other requirements with respect to the manufacturing of our raw materials and products could have a material adverse effect on our business, financial conditions and results of operations. If we decide to acquire or build a laboratory to use for our in-house purposes, we would be subject to the oversight of various federal and state governmental agencies, and we would be required to become certified in various federal and state jurisdictions. The laboratory certification process is a lengthy and costly process and there is no assurance that we will obtain any or all such certifications. If we operate our own laboratory, such operations would be subject to power failures, the breakdown, failure or substandard performance of equipment, the improper installation or operation of equipment, and natural and other disasters, and there can be no assurance that the occurrence of any of these or any other operational problems at any laboratories that we might operate would not have a material adverse effect on our business, financial condition and results of operations.

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OUR BUSINESS CURRENTLY DEPENDS PRIMARILY ON THE SUCCESS OF PRODUCT SALES BY THIRD PARTY MARKET PARTNERS AND OUR LICENSING AND DISTRIBUTION PROGRAM, WHICH IF UNSUCCESSFUL, WILL THREATEN OUR SURVIVAL.

A key element of our current business strategy is to enter into licensing arrangements with companies to sell our products. We face challenges in entering into new license and distribution agreements. During discussions with potential market partners, significant negotiation issues arise from time to time. We cannot be assured that prospective market partners will be persuaded during negotiations to enter into agreements with us, either at all or on terms acceptable to us. In addition, although to date the existence of our subsidiaries and market partners has not been seen by potential licensing partners as competition to their plans, this could be a barrier to new partners.

The sales revenue and royalties we receive from market partners depend on their efforts and expenditures, over which we have no control. Because it is up to our market partners to decide when and if they will introduce products using our technology, we cannot predict when and if our agreements will generate substantial sales of such products. The amount and timing of wholesale sales or royalty payments are dependent on the ability of our market partners to gain successful regulatory approval for, market and sell products incorporating our technologies. Failure of certain market partners to obtain or maintain regulatory approval or market acceptance for such products could have a material adverse effect on our business, financial condition and results of operations.

If one or more of our market partners fails to pursue the development or marketing of these products as planned, our revenue and profits could be adversely affected. We do not control the timing and other aspects of the development or commercialization of products incorporating our licensed technologies because our market partners may have priorities that differ from ours or their development or marketing efforts may be unsuccessful, resulting in delayed or discontinued products. Hence, the amount and timing of wholesale sales or royalty payments received by us will fluctuate, and such fluctuations could have a material adverse effect on our business, financial condition and results of operations.

EXISTING SHAREHOLDERS MAY FACE DILUTION FROM OUR FINANCING EFFORTS.

We are presently dependent on raising capital from external sources to execute our business plan. We plan to issue capital stock to meet our capital requirements. We may not be able to sell these securities, particularly under the current market conditions. If we were to sell our capital stock, we might be forced to sell shares at a depressed market price, which could result in substantial dilution to existing shareholders. In addition, shares of newly issued capital stock may have rights, privileges and preferences superior to those of our common shareholders.

OUR LIMITED OPERATING HISTORY AND RECENT CHANGE IN MARKETING STRATEGY MAKE IT DIFFICULT TO EVALUATE OUR PROSPECTS.

We have a limited operating history on which to evaluate our current business and prospects. There is no assurance that we will achieve significant sales as a result of this new strategy. We also may not be successful in addressing our operating challenges such as expanding our market presence. Although we have developed our business plans in an attempt to address these issues, our prospects for profitability have been considered in light of our evolving business model. These factors make it difficult to assess our prospects.

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THE GLOBAL ECONOMIC DOWNTURN COULD RESULT IN A REDUCED DEMAND FOR OUR PRODUCTS AND INCREASED VOLATILITY IN OUR STOCK PRICE.

Uncertainty about current and future economic conditions may cause consumers to reign in their spending generally, the impact of which may be that they stop or delay their purchases of our genetic assessments and consumer products. If these general economic conditions persist or continue to worsen, our future operating results could be adversely affected, particularly relative to our current expectations. In addition, reduced consumer spending may drive us and our competitors to offer additional products at promotional prices, which would have a negative impact on gross profit. A continued softening in consumer sales may adversely affect our industry, business and results of operations. Additionally, due to the weak economic conditions and tightened credit environment, some of our distributors may not have the same purchasing power, leading to lower purchases of our products for placement into distribution channels. Consequently, demand for our products could be materially different from expectations, which could negatively affect our results of operations and cause our stock price to decline.

In addition, financial market volatility or credit market disruptions may limit our access to capital and may also negatively affect our customers’ and our vendors’ ability to obtain credit to finance their businesses on acceptable terms. As a result, our customers’ needs and ability to purchase our products may decrease, and our vendors may increase their prices, reduce their output or change their terms of sale. Any inability of customers to pay us for our products, or any demands by vendors for different payment terms, may adversely affect our operations and cash flow.

Declining economic conditions may also increase our costs. If the economic conditions do not improve or continue to deteriorate, our results of operations or financial condition could be adversely affected. Over the past months, we have taken significant steps to cut costs and restructure our pricing, resulting in increasing profit margins. Further increases in profit margins are a major focus of our management and plans. In addition, despite the current economic conditions, our current customer base has proven to be extremely loyal and stabile, a fact that the management attributes to the desirability of our products.

GENELINK AND ITS SUBSIDIARIES MAY BECOME AFFECTED BY LAWS, GOVERNMENTAL REGULATIONS, ADMINISTRATIVE DETERMINATIONS, COURT DECISIONS AND SIMILAR CONSTRAINTS WHICH COULD MAKE COMPLIANCE COSTLY AND SUBJECT GENELINK AND ITS SUBSIDIARIES TO ENFORCEMENT ACTIONS BY GOVERNMENTAL AGENCIES.

The marketing and performing of genetic testing and the formulation, manufacturing, packaging, labeling, holding, storage, distribution, advertising and sale of nutritional and skin care products are affected by extensive laws, governmental regulations and policies, administrative determinations, court decisions and similar constraints at the federal, state and local levels. There can be no assurance that GeneLink, its subsidiaries or its independent distributors will be in compliance with all of these regulations. A failure by GeneLink, its subsidiaries or its distributors to comply with these laws and regulations could lead to governmental investigations, civil and criminal prosecutions, administrative hearings and court proceedings, civil and criminal penalties, injunctions against product sales or advertising, civil and criminal liability for GeneLink or its subsidiaries, bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to GeneLink or its subsidiaries. In addition, the adoption of new regulations and policies or changes in the interpretations of existing regulations and policies may result in significant new compliance costs or discontinuation of product sales and may adversely affect the marketing of our products, resulting in decreases in revenues.

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The GAO issued a report in July 2010 to the effect that direct to consumer tests are misleading to consumers and that the test results are further complicated by deceptive marketing practices. In March of 2011, we received interrogatories and a request to produce documents from the FTC as part of its investigation into unnamed persons engaged directly or indirectly in the advertising or marketing of dietary supplements, foods, drugs, devices, or any other product or service intended to provide a health benefit or to affect the structure or function of the body. We believe that this request is related to the July 2010 report referenced above.

In 2003, the FDA proposed a new regulation to require current Good Manufacturing Practice guidelines (“cGMPs”) in the manufacture, packing, holding, and distribution of nutritional supplements. The proposed rules would establish minimum standards that must be met by all companies that manufacture, package, and hold nutritional supplements in the United States. Violation of those standards would render the products in question presumptively adulterated and unlawful to sell. The proposed cGMPs would require manufacturers to follow procedures that would track nutrients from source to finished product, test nutrients for identity, purity, quality, strength, and composition at each stage of production, and record full compliance with specific regulations governing production, manufacture, and holding of nutritional supplements. We expect that the cGMPs will increase GeneWize’s product costs by requiring its various contract manufacturers to expend additional capital and resources on quality control testing, new personnel, plant redesign, new equipment, facilities placement, recordkeeping and ingredient and product testing. The FDA and some state agencies invite the public to complain if they experience any adverse effects from the consumption of nutritional supplements. These complaints may be made public. Regardless of whether complaints of this kind are substantiated or proven, public release of complaints of this type may have an adverse effect upon public perception of GeneLink and its subsidiaries, the quality of their products or the prudence of taking their products. Changes in consumer attitudes based on adverse event reports could adversely affect the potential market for and sales of products and make it more difficult to recruit and retain independent distributors and obtain endorsers.

WE ARE SUBJECT TO GOVERNMENT REGULATION, CHANGES TO WHICH MAY SIGNIFICANTLY IMPACT OUR BUSINESS PROSPECTS, ABILITY TO FUNCTION, AND WHICH COULD SIGNIFICANTLY INCREASE OUR COSTS AND DELAY INTRODUCTION OF FUTURE SERVICES AND PRODUCTS.

Changes in existing regulations at either the state or federal level could require advance regulatory approval of genetic risk assessment tests, resulting in a substantial curtailment or even prohibition of our activities without regulatory approval. If our genetic tests ever require regulatory approval, on either a state or federal level, then the costs of introduction may increase or marketing and sales of products may be significantly delayed. In September 2006, the FDA issued draft guidelines pursuant to which it would require pre-market review of certain types of genetic assessments. Although we do not think that our genetic tests are covered by the draft guidelines, the FDA is currently evaluating and could assert pre-market review of all types of genetic tests.

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IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME WIDESPREAD, WE MAY HAVE LESS DEMAND FOR OUR PRODUCTS.

Genetic testing has raised ethical issues regarding confidentiality and the appropriate uses of the resulting information. For these reasons, governmental authorities may call for limits on or regulation of the use of genetic testing or prohibit testing for genetic predisposition to certain conditions, particularly for those that have no known cure. Any of these scenarios could reduce the potential markets for our services and products.

DUE TO THE HIGH LEVEL OF COMPETITION IN OUR INDUSTRY, WE MIGHT FAIL TO DEVELOP NEW CHANNELS OF DISTRIBUTION OR TO RETAIN OUR CUSTOMERS AND DISTRIBUTORS, WHICH WOULD HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.

The business of marketing skin care and nutrition products is highly competitive and sensitive to the introduction of new products which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, distributors, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad. In addition, we anticipate that we will be subject to increasing competition in the future from sellers that utilize electronic commerce. Many of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than we do. Our present or future competitors may be able to develop products that are comparable or superior to those we offer, adapt more quickly than we do to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than we do. For example, if our competitors develop skin care or nutritional treatments that prove to be more effective than our products, demand for our products could be reduced. Accordingly, we may not be able to compete effectively in our markets and competition may intensify.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNPROVEN.

The market for our products and services is at an early stage of development and may not continue to grow. The marketplace may never fully accept our products and services, and we may never be able to sell our products and services at a profit. Our efforts to commercialize our intellectual property have had measured success to date, and we currently are serving approximately 2,000 continuing monthly consumers. We believe that we can achieve broad market acceptance only with efforts by our market partners at substantial education about the benefits of our products and services.

NEW PRODUCTS MAY RENDER OUR PRODUCTS OBSOLETE AND OUR SALES MAY SUFFER.

The skin care and nutritional supplement markets historically have been influenced by “fad” products that became popular due to changing consumer tastes and media attention. Our products may be rendered obsolete by changes in popular tastes as well as media attention on new products or adverse media attention on skin care and nutritional supplements, which could reduce our sales. It may be difficult for us to change our product line to adapt to changing tastes. In addition, other “fad” food regimens, such as low carbohydrate diets, may decrease the overall popularity and use of our products, as well as result in higher returns of our products, thereby increasing our expenses. Nevertheless, it is our hope that the significance and scientific validity of genetic personalization is a substantive and overarching development which will help us to distinguish our products and offerings.

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THE SALE OF OUR PRODUCTS INVOLVES PRODUCT LIABILITY AND RELATED RISKS THAT COULD EXPOSE US TO SIGNIFICANT INSURANCE AND LOSS EXPENSES.

We face an inherent risk of exposure to product liability claims if the use of our products results in, or is believed to have resulted in, illness or injury. Most of our products contain combinations of ingredients, and there is little long-term experience with the effect of these combinations. In addition, interactions of these products with other products, prescription medicines and over-the-counter drugs have not been fully explored or understood and may have unintended consequences. While our third party manufacturers perform tests in connection with the formulations of our products, these assessments are not designed to evaluate the inherent safety of our products.

Although we maintain product liability insurance, it may not be sufficient to cover product liability claims and such claims could have a material adverse effect on our business. The successful assertion or settlement of an uninsured claim, a significant number of insured claims or a claim exceeding the limits of our insurance coverage would harm us by adding further costs to our business and by diverting the attention of our senior management from the operation of our business. Even if we successfully defend a liability claim, the uninsured litigation costs and adverse publicity may be harmful to our business.

Any product liability claim may increase our costs, and adversely affect our revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase our costs through higher insurance premiums and deductibles, and may make it more difficult to secure adequate insurance coverage in the future. In addition, our product liability insurance may fail to cover future product liability claims, which if adversely determined could subject us to substantial monetary damages.

To date we have performed over 30,000 genetic assessments and supplied over 170,000 units of customized product without any such claims being brought forward.

WE ARE DEPENDENT ON KEY PERSONNEL.

Our success will depend in large part upon the continued services of a number of key employees and consultants. The loss of the services of any of these individuals could have a material adverse effect on us. In addition, if one or more of our key employees or consultants leaves to join a competitor or to form a competing company, the loss of such personnel and any resulting loss of existing or potential clients to any such competitor could have a material adverse effect on our business, financial condition and results of operations. The Company has non-disclosure agreements in place with key personnel. However, in the event of the loss of any such personnel, there can be no assurance that we would be able to prevent the unauthorized disclosure or use of our technical knowledge, practices or procedures by such personnel.

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OUR COMMON STOCK PRICE IS VOLATILE AND WE HAVE A THIN TRADING MARKET.

Although our common stock is listed on the NASDAQ OTC Bulletin Board under the symbol “GNLK”, recently daily trading volume of our Common Stock has generally been limited. The prices for securities of biosciences companies have historically been volatile. The trading price of our Common Stock has experienced considerable fluctuation since we began public trading in 1999.

OUR BUSINESS COULD BE ADVERSELY AFFECTED IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY OR IF SOMEONE CLAIMS THAT WE ARE INFRINGING ON HIS OR HER PROPRIETARY TECHNOLOGY.

Our success depends, in part, upon our proprietary methodologies and other intellectual property rights. There can be no assurance that the steps taken by us to protect our proprietary information will be adequate to deter misappropriation of our proprietary information or that we will be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. In addition, although we believe that our services and products do not infringe on the intellectual property rights of others, there can be no assurance that such a claim will not be asserted against us in the future, or that if asserted any such claim will be successfully defended. A successful claim against us could materially and adversely affect our business, financial condition and results of operations.

Our success will depend on our ability to obtain and protect patents on our technology and to protect our trade secrets. Our patents, which have been or may be issued, may not afford meaningful protection for our technology and products. Others may challenge our patents and, as a result, our patents could be narrowed, invalidated or unenforceable. In addition, our current and future patent applications may not result in the issue of patents in the United States or foreign countries. Competitors may develop products similar to our products that do not conflict with our patents. In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, such as infringement suits or interference proceedings. These lawsuits could be expensive, take significant time and divert management’s attention from other business concerns. We may also provoke third parties to assert claims against us.

INTERRUPTIONS TO OR FAILURE OF OUR INFORMATION PROCESSING SYSTEMS MAY DISRUPT OUR BUSINESS AND OUR SALES MAY SUFFER.

We are dependent on our information processing systems to timely process customer orders, oversee and manage our distributor network and control our inventory, and for our distributors to communicate with their customers and distributors in their network. Interruptions to or failure of our information processing systems may be costly to fix and may damage our relationships with our customers and distributors, and cause us to lose customers and distributors. If we are unable to fix problems with our information processing systems in a timely manner our sales may suffer. Although we allocated significant resources to expanding our systems and infrastructure, there is no guarantee that such systems and infrastructure could prove to be insufficient unless further improved and expanded, especially if we experience a large increase in business.

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WE ARE SUBJECT TO, AMONG OTHER THINGS, REQUIREMENTS REGARDING THE EFFECTIVENESS OF INTERNAL CONTROL OVER FINANCIAL REPORTING AND OUR FAILURE TO IDENTIFY OR CORRECT DEFICIENCIES AND AREAS OF WEAKNESS IN THE COURSE OF THESE AUDITS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

We are required to comply with various corporate governance and financial reporting requirements under the Sarbanes-Oxley Act of 2002, as well as rules and regulations adopted by the Securities and Exchange Commission and the Public Company Accounting Oversight Board. We expect to spend significant amounts of time and money on compliance with these rules. Our failure to correct any noted weaknesses in internal controls over financial reporting could result in the disclosure of material weaknesses which could have a material adverse effect upon the market value of our stock. There can be no assurance that these internal audits will uncover all material deficiencies or areas of weakness in our operations or internal controls. If left undetected and uncorrected, such deficiencies and weaknesses could have a material adverse effect on our financial condition and results of operations.

OUR ARTICLES OF INCORPORATION AND BYLAWS COULD DELAY OR DISCOURAGE A TAKEOVER ATTEMPT.

Our articles of incorporation and bylaws contain provisions that may delay or discourage a takeover attempt that a shareholder might consider in their best interest, including takeover attempts that might result in a premium being paid on shares of our Common Stock. These provisions, among other things provide that only the board of directors or president may call special meetings of the shareholders; and establish certain advance notice procedures for nominations of candidates for election as directors and for shareholder proposals to be considered at shareholders’ meetings.

ITEM 2.

PROPERTIES

The Company had leased its principal offices in Longwood, Florida. The lease is for a term of one (1) year, ending December 14, 2012 and provides for monthly rental payments of $5,141. In April 2012 this lease was assumed by our former subsidiary, GeneWize. In December 2011, the Company leased new office and production facilities in Orlando, Florida with the lease term commencing upon occupancy in mid-2012. The lease is for a term of five years with monthly rental payments of $16,577.

ITEM 3.

LEGAL PROCEEDINGS

In September 2009, the Company brought action against two prior law firms in New Jersey Superior Court, alleging that their failure to timely provide legal services and make or authorize required filings caused the Company to lose valuable Japanese and U.S. patent rights. In March 2010, the Company voluntarily dismissed one of the law firms from the action. In August 2010, the remaining law firm filed a counterclaim for alleged unpaid legal fees owed to it by the Company. The defendant attempted to remove the matter to U.S. District Court, but in it was remanded back to the New Jersey Superior Court. The defendant appealed the remand decision, but in 2012 the Federal Circuit dismissed the defendants appeal. In July 2012 the parties have agreed to mutually dismiss all claims against each other with prejudice. As of March 21, 2013 the settlement arrangements were still in progress.

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As noted above in Item 1, Federal Trade Commission Regulation and Matters, on October 26, 2012, the Company entered into a proposed consent order with the staff of the Federal Trade Commission with regard to an ongoing investigation. The order is subject to approval by the full Commission.

PART II

ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The Company’s common stock is listed on the NASDAQ OTC Bulletin Board under the System “GNLK”. Set forth below, for the periods indicated, is the range of high and low bid information for the Company’s common stock for the past 2 years, when the Company’s common stock began trading. These quotations reflect inter-dealer prices without retail mark-up, mark-down or commission, and may not represent actual transactions.

2012	High		Low
1^st Quarter	$	0.07	$	0.04
2^nd Quarter		0.05		0.02
3^rd Quarter		0.04		0.02
4^th Quarter		0.04		0.00

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2011	High		Low
1^st Quarter	$	0.12	$	0.04
2^nd Quarter		0.15		0.06
3^rd Quarter		0.11		0.07
4^th Quarter		0.09		0.05

As of March 3, 2013 there were 218 holders of record of the Company’s Common Stock. The Company has never paid dividends and does not anticipate paying any dividends in the future. The Company anticipates that it will retain all future revenues for working capital purposes.

The payment of cash dividends in the future will be at the discretion of the Board of Directors and will depend upon such factors as earnings levels, capital requirements, the Company’s financial condition and other factors deemed relevant to the Board of Directors. In addition, the Company’s ability to pay dividends may become limited under future loan agreements which may restrict or prohibit the payment of dividends.

EQUITY COMPENSATION PLAN INFORMATION

The following equity compensation plan information is as of December 31, 2012:

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)			Weighted-average exercise price of outstanding options warrants and rights (b)		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)
Equity compensation plans approved by shareholders⁽¹⁾		17,035,000	¹	$	0.08		4,965,000
Equity compensation plans not approved by shareholders		4,945,833		$	.18	None

⁽¹⁾ 5,275,000 options were granted pursuant to the Company’s 2007 Stock Option Plan, 5,100,000 options were granted pursuant to the Company’s 2009 Stock Option Plan and 6,660,000 were granted pursuant to the Company’s 2011 Stock Option Plan.

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ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis in conjunction with our consolidated financial statements and related notes in Item 8 in this Annual Report on Form 10-K.

Overview

During 2012, the Company took major steps to strategically realign from a direct sales focus to its roots as a science and solutions company. The Company refocused attention to its core competence at science and customized product manufacturing, while looking to strategic relationships with proven market partners to drive retail sales.

On October 13, 2011, in furtherance of these objectives, the Company entered into a stock purchase agreement for the sale of its subsidiary, GeneWize Life Sciences, Inc., (“GeneWize”) to Capsalus Corp (OTCBB: WELL.OB), accompanied with a separate licensing and distribution agreement with Gene Elite LLC for the direct selling and network marketing channels with GeneWize. The sale of GeneWize was completed February 10, 2012.

In July 2011, the Company signed definitive licensing and distribution agreements with a direct response market partner group led by Tempur-Pedic founder and vice-chair Robert Trussell. The group continued through 2011 and the first half of 2012 preparing systems, producing its direct response strategies, resources and offers and began market testing late in 2012. As a result no significant revenues from this distribution channel are reflected in 2012.

In 2012, Company revenues continued to slide from 2011 levels, as GeneWize, the Company’s major distribution partner, continued to be challenged. In addition, changes in the ownership of GeneWize announced in late 2011 and consummated in early 2012 caused uncertainty for sales affiliates, reducing enrollments and product sales.

Subsequent to the sale of GeneWize, the Company’s pricing decreased to reflect the wholesale nature of the sales to its distribution partners. Operating costs also decreased significantly due to reduced commissions and other costs of operating GeneWize. Overall, due to the shift to a wholesale model, the year’s uncertain climate for GeneWize affiliates and a delayed launch of the direct response channel, revenues decreased by 54% in 2012 as compared to 2011. As a result we were unable to achieve positive cash flow during the year.

The operating cost reductions from the sale of GeneWize were offset in 2012 by continuing challenges in the form of regulatory oversight. In 2011 The Company received a Civil Investigative Demand consisting of interrogatories and a request to produce documents from the FTC as part of its investigation into unnamed persons engaged directly or indirectly in the advertising or marketing of dietary supplements, foods, drugs, devices, or any other product or service intended to provide a health benefit or to affect the structure or function of the body. The Company spent significant time, effort and over $674,000 in legal support complying with the interrogatories and document request, a demonstration of its commitment to compliance with the current and developing consumer genomic regulatory environment.

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In spite of the challenges of 2012, we raised $1,504,000 in additional equity to meet our continuing needs. We believe continued interest by investors in a difficult economy indicate the strength of the future of the Company’s science, products and strategic focus.

In addition to added equity capital, the Company received $500,000 in funds in February 2012 from the licensing and distribution agreement related to GeneWize and $500,000 from the sale of GeneWize. Proceeds from the sale of GeneWize and related licensing and distribution agreements were invested in infrastructure support for what the Company expects will be new levels of sales in 2013. The Company has made continued investments in its information technology infrastructure and will focus on ensuring sufficient and efficient production capacity is available to support increased volumes. The investment in production infrastructure should help increase per-unit product margins as Company volume grows.

With new and reinvigorated market partners as well as new products and market opportunities, the Company believes 2013 presents new opportunities to grow in a developing marketplace of consumer genomics.

Results of Operations

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2012 TO FISCAL YEAR ENDED DECEMBER 31, 2011.

Assets

The Company’s assets decreased by $1,324,864 from $ 2,779,665 to $1,454,801 due largely to the sale of GeneWize in 2012 combined with decreases in inventory and cash. Inventory decreased as manufacturing moved in-house and the Company gained tighter control over its ordering and usage. Cash decreased due to the continuing losses from operations.

Liabilities

The Company’s liabilities decreased $144,504 from $4,260,658 to $4,116,154, primarily due to the sale of GeneWize which reduced liabilities by approximately $554,000. This decrease was partially offset by increased deferred licensing fees related to the licensing of GeneWize sales and the increases in accrued interest increased related to the convertible notes. At December 31, 2012, the amount reflected on the Company’s balance sheet for the Convertible Notes was $1,089,547, which is net of unamortized warrant and beneficial conversion discounts totaling $160,453. The face value of the notes is $1,250,000.

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Equity

The Company raised additional funds through fundraising efforts during the year ended December 31, 2012 and 2011. The Company realized $1,504,000 and $2,299,320 from the sale of common stock during the year ended December 31, 2012 and 2011, respectively.

Revenues

The Company’s revenues decreased from $4,684,577 in 2011 to $ 2,136,142 in 2012, a decrease of $2,548,435, or 54%.

The decrease is primarily due to the sale of GeneWize and the conversion to a wholesale business model in February 2012 which reduced pricing of products from retail to wholesale levels, accounting for virtually all of the revenue reduction. In addition, GeneWize, our primary market partner, experienced a reduction in product sales as its marketing affiliates experienced additional uncertainties relating to the sale. Also the Company continued to feel the impact of consumer responses toward the Company’s premium-priced product in the context of ongoing public concerns of the overall economy.

Cost of Goods Sold

Cost of goods sold decreased from $1,734,831 in 2011 to $1,671,459 in 2012, a decrease of $63,372 or 4%. Five major categories account for the variance:

Moving production in-house resulted in $178,509 of expenses and included depreciation expense of $38,041, production labor of $68,955, facilities expense of $45,230, and equipment and supplies expense of $26,283.

Our inventory count at the end of the year resulted in a $55,291 inventory adjustment.

The Company’s DNA Testing COGS increased $213,110 in 2012 as compared to 2011. $200,000 of this is due to charges by the lab for failing to meet contract minimums.

$36,027 of costs was attributed to the launch of Dermagenetics.

These increases in COGS were offset by a $544,129 decrease as a result of the GeneWize sale and shifting the business model being a wholesale provider of the Company’s product lines. Of the decrease, $117,855 was due to lower shipping costs while $91,506 was due to reduced marketing materials. The remaining decrease of approximately $334,000 was due the decrease in sales in 2012 as compared to 2011.

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Gross Margin

Gross margin decreased from $2,949,746 in 2011 to $464,683 in 2012 due to the reduction to wholesale product pricing combined with the increased cost of sales from lab tests and start-up on in-house manufacturing.

Operating Expenses

Operating expenses decreased from $6,516,361 in 2011 to $3,933,680 in 2012, a reduction of $2,582,680 or 40%. With the sale of GeneWize and subsequent move to a wholesale business model, the company was able to reduce expenses. Because the Company was no longer responsible for GeneWize sales, marketing, or commissions, the savings were significant. The most relevant expense reductions included $1,429,130 in reduced commissions, $396,883 in reduced salaries and benefits, $205,403 in reduced IT and software related expenses, a reduction $175,708 in credit card transaction fees from 2011 to 2012, and $127,002 in reduced event promotion expense. Legal costs fees related to the costs of complying with requests by regulatory authorities, while still significant, decreased $377,250 in 2012. A large decrease of $316,281 was due to fewer consultants being utilized in 2012 as compared to 2011. Moving facilities and bring production in-house accounted for $157,848 in additional expenses in 2012 as compared to 2011 which offset those decreases noted previously. These expenses included facilities, equipment, IT and utilities. Also, by bringing production in house, depreciation and amortization for new equipment and the additional facilities increased $40,216 or 30%. Research and Development increased in $116,308 as a result of adding a full-time employee and developing the Dermagenetics product line. Accounting and auditing fees were $77,567 higher in 2012 due to the unexpected resignation of the Company’s previous auditor, a re-audit of 2011, and the resulting restatement thereof. The final factor affecting operating losses was a $65,517 adjustment for the abandonment of patents. The Company initially pursued legal action against legal counsel in relation to the failure to process certain patent applications but eventually the cost of such litigation caused the Company to discontinue legal proceedings resulting in the abandonment of certain European Union patents which the company felt would most likely not be utilized in the future by the Company’s current sales partners

Losses

The Company continued to incur operating losses from unsupported corporate overhead costs of GeneLink. The Company had net operating losses in 2012 in the amount of $3,468,997, a decrease of $ 97,618 or 3% from 2011 operating losses. $292,525 and $ 356,925 resulted from non-cash charges relating to the granting of options in 2012 and 2011, respectively. Net losses in 2012 were $3,051,747, a decrease of $778,449 or 20% as compared to 2011. This was due to gains on the sale of GeneWize of $669,054, settlement of a lawsuit with the Company’s previous intellectual property law firm for $77,742, and $65,271 in additional interest expense as a result of the advanced purchase order of $750,000 from GeneWize.

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Segment Operating Results

In 2011 and prior, the Company distinguished its two main operating segments by entity and the types of products they sell. GeneLink developed and manufactured genetically customized supplements and skin care products for sale in a variety of market channels. GeneWize was the marketing subsidiary which sold GeneLink’s products in the multi-level direct selling channel. GeneWize was sold to Capsalus Corporation on February 10, 2012. For 2012, the Company only operates in one segment following the sale.

The following table sets forth certain financial information for our segments for the years ended December 31, 2012 and December 31, 2011.

	GeneLink			GeneWize			Inter- Segment			Total
Year Ended December 31, 2012
Revenue	$	1,785,346		$	520,098		$	(169,302	)	$	2,136,142
Less: Intersegment revenue		( 169,302	)					169,302			-
Revenue from external customers	$	1,616,044		$	520,098			-		$	2,136,142

Net Loss	$	(2,975,518	)	$	(76,229	)		-		$	(3,051,747	)

Depreciation and amortization	$	169,048		$	5,945			-		$	174,993

Capital expenditures	$	241,966			-			-		$	241,966

Segment Assets at 12/31/2012	$	1,454,801			-			-		$	1,454,801
Year Ended December 31, 2011
Revenue	$	1,879,441		$	4,661,886		$	(1,856,749	)	$	4,684,577
Less: Intersegment revenue		( 1,856,749	)				$	1,856,749			-
Revenue from external customers	$	22,692		$	4,661,886			-		$	4,684,577

Net Loss	$	(3,153,389	)	$	(676,807	)		-		$	(3,830,196	)

Depreciation and amortization	$	51,104		$	83,673			-		$	134,777

Capital expenditures	$	41,327			-			-		$	41,327

Segment Assets at 12/31/2011	$	2,304,929		$	585,692			-		$	2,779,665

Liquidity and Capital Resources

For 2012, the Company’s primary liquidity requirement was the funding of the Company’s corporate overhead and improvements in the Company’s infrastructure. In addition to funding operations, the development of an in-house manufacturing facility and the facilities lease entered into on December 30, 2011 required approximately $240,000 in leasehold improvements and equipment purchases in the first half of 2012.

In 2012, the Company raised $1,504,000 from the issuance of common stock. In addition, during 2012 the Company received $1.0 million in cash payments related to license fees and proceeds from the sale of GeneWize and collected approximately $165,000 in payments related to the sale of GeneWize.

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On December 31, 2012, the Company’s cash and cash equivalents amounted to $158,468 as compared to $740,769 at December 31, 2011, a decrease of $582,301. During 2012, the Company’s operating activities utilized $2,383,607 as compared to utilizing $2,901,093 in 2011, a decrease of $517,486. Cash utilized during these periods resulted from the Company’s net losses for such periods.

Investing activities provided $297,306, as compared to utilizing $41,327 in 2011. Financing activities provided $1,504,000 in 2012 as compared to providing $3,253,890 in 2011, through issuance of common stock less cash costs associated with such offerings.

The Company believes that it needs approximately $1,500,000 of working capital for the balance of 2013 to fund the Company’s sales and marketing efforts and infrastructure improvement, product development, partner support efforts and to pay existing obligations. If the Company cannot obtain this required financing, it is unlikely that the Company will be able to fully implement its business plan.

Critical Accounting Policies, Estimates and Assumptions

We consider our accounting policies related to revenue recognition, impairment of intangible assets and stock based compensation to be critical accounting policies. A number of significant estimates, assumptions, and judgments are inherent in our determination of when to recognize revenue, how to evaluate our intangible assets, and stock-based compensation expense. These estimates, assumptions and judgments include deciding whether the elements required to recognize revenue from a particular arrangement are present, estimating the fair value of an intangible asset, which represents the future undiscounted cash flows to be derived from the intangible asset, and estimating the useful life and volatility of stock awards granted. We base our estimates and judgments on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates.

Valuation of intangible and other long-lived assets:

We assess the carrying value of intangible and other long-lived assets at least annually, which requires us to make assumptions and judgments regarding the future cash flows related to these assets. The assets are considered to be impaired if we determine that the carrying value may not be recoverable based upon our assessment of events or changes in circumstances such as:

■

the asset’s ability to continue to generate income from operations and positive cash flow in future periods;

■

loss of legal ownership or title to the asset;

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■

significant changes in our strategic business objectives and utilization of the asset(s); and

■

the impact of significant negative industry or economic trends.

If the assets are considered to be impaired, the impairment we recognize is the amount by which the carrying value of the assets exceeds the fair value of the assets. In addition, we base the useful lives and related amortization or depreciation expense on our estimate of the period that the assets will generate revenues or otherwise be used by us. We also periodically review the lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the technologies. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase.

Revenue Recognition:

We recognize revenue from the sales of goods and from license and distribution agreements. Each element of revenue recognition requires a certain amount of judgment to determine if the following criteria have been met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller’s price to the buyer is fixed or determinable; (iv) collectability is reasonably assured, and (v) both title and the risks and rewards of ownership are transferred to the buyer. We are required to make significant estimates involving our recognition of revenue from license fees which depend upon our interpretation of the specific terms of each individual arrangement and our judgment to determine if the arrangement has more than one deliverable and how each of these deliverables should be measured and allocated to revenue. In addition, we have to make significant estimates about the useful life of the goods and services transferred to determine when the risk and rewards of ownership have transferred to the buyer to decide the period of time to recognize revenue. In certain circumstances we are required to make judgments about the reliability of third party sales information and recognition of revenue before actual cash payments have been received. Changes to these assumptions or market conditions could cause changes in revenues.

Share-Based Compensation:

Share-based compensation expense is significant to our financial position and results of operations, even though no cash is used for such expense. In determining the period expense associated with unvested options, we estimate the fair value of each option at the date of grant. We believe it is important for investors to be aware of the high degree of subjectivity involved when using option pricing models to estimate share-based compensation. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by our stock price as well as assumptions regarding a number of complex and subjective variables. These variables include, but are not limited to, our valuation methodology, the expected term, expected stock price volatility over the term of the awards, the risk-free interest rate, expected dividends and pre-vesting forfeitures. If any one of these factors changes and we employ different assumptions in future periods, the compensation expense that we record could differ significantly from what we have recorded in the current period.

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For share-based awards, we estimated the expected term by considering various factors including the vesting period of options granted, employees’ historical exercise, and post-employment termination behavior; however, due to the limited history of our Company, such data is limited. We estimated the expected life will be substantially longer than the vesting period given the early stage nature of our operations and accordingly have used the contractual life as the expected term. Our estimated volatility was derived using our historical stock price volatility. We have never declared or paid any cash dividends on our Common Stock and currently do not anticipate paying such cash dividends. The risk-free interest rate is based upon U.S. Treasury securities with remaining terms similar to the expected term of the share-based awards. For criteria share based award with vesting contingent upon meeting a market condition, we also make assumptions as to the probability of the market condition being met.

ITEM 7A

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Any long-term notes the Company has issued for financing have had fixed interest rates. As a result, our exposure to market risk caused by fluctuations in interest ratio is minimal.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTS

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INDEX TO FINANCIAL STATEMENTS

	Page

Report of Independent Registered Certified Public Accounting Firm	42

Financial Statements
Consolidated Balance Sheets	43
Consolidated Statements of Operations	44
Consolidated Statements of Stockholders’ Deficit	45
Consolidated Statements of Cash Flows	46
Notes to Consolidated Financial Statements	47

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REPORT OF INDEPENDENT REGISTERED CERTIFIED PUBLIC ACCOUNTING FIRM

Board of Directors

GeneLink, Inc.

Orlando, FL

We have audited the accompanying consolidated balance sheets of GeneLink, Inc., (“the Company”) as of December 31, 2012 and 2011, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for each of the two years in the period ended December 31, 2012. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of GeneLink, Inc. at December 31, 2012 and 2011, and the consolidated results of its operations and its cash flows for each of the two years in the period ended December 31, 2012, in conformity with accounting principles generally accepted in the United States.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred significant net losses in 2012 and 2011, has a working capital deficit and a significant accumulated deficit. These items raise substantial doubt as to the Company’s ability to continue as a going concern. Management's plans in regard to these matters are discussed further in Note 13. These consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Respectfully submitted,

/s/ Hancock Askew & Co., LLP

Savannah, GA

March 29, 2013

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GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

	December 31,
	2012			2011
CURRENT ASSETS
Cash and cash equivalents	$	158,468		$	740,769
Accounts Receivable, net		77,966			235,458
Inventory		393,588			562,191
Prepaid Expenses		50,258			244,248
Current portion of Prepaid Sales Incentive		92,000			76,667
Total Current Assets		772,280			1,859,333

Property and Equipment		257,769			167,812
Prepaid Sales Incentives		291,330			383,333
Intangible Assets		54,905			235,587
Loan Costs, net of accumulated amortization of $154,100 and $108,544		58,703			104,257
Other Assets		19,814			29,343

Total Assets	$	1,454,801		$	2,779,665

LIABILITIES AND SHAREHOLDERS DEFICIT
CURRENT LIABILITIES
Accounts payable	$	1,019,372		$	1,370,849
Accrued interest		463,815			304,457
Accrued compensation		34,698			94,188
Other accrued expenses		139,827			103,370
Deferred revenue		21,352			208,279
Advances from purchaser of subsidiary		-			204,500
Current portion of deferred revenue-license fees		150,000			-
Due to shareholder		10,000			10,000
Total current liabilities		1,839,064			2,295,643

Non-refundable advance deposit for licensing agreement		725,043			750,000
Deferred revenue – license fees		462,500			250,000
Convertible notes payable, net of discounts – related parties		1,089,547			965,015

Total Liabilities		4,116,154			4,260,658

STOCKHOLDERS’ DEFICIT
Common stock, par value $0.01 per share; authorized 350,000,000 shares; issued: 257,711,181 and 204,944,485 shares; outstanding: 253,352,022 and 200,585,326 shares		2,577,112			2,049,448
Additional paid in capital		22,925,832			21,582,109
Accumulated deficit		(27,612,062	)		(24,560,315	)
Treasury stock, 4,359,159 shares, at cost		(552,235	)		(552,235	)
Total stockholders’ deficit		(2,661,353	)		(1,480,993	)

Total liabilities and stockholders’ deficit	$	1,454,801		$	2,779,665

See Notes to Consolidated Financial Statements

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GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended December 31,
	2012			2011

Revenues	$	2,136,142		$	4,684,577

Cost of goods sold		1,671,459			1,734,831

Gross profit		464,683			2,949,746

Operating Expenses:
Selling, general and administrative		3,442,362			6,247,084
Research and development		250,808			134,500
Depreciation and amortization		174,993			134,777
Loss on abandonment of patents		65,517			-

		3,933,680			6,516,361

OPERATING LOSS		(3,468,997	)		(3,566,615	)

OTHER INCOME (EXPENSE)
Gain on sale of subsidiary		669,054			-
Gain on settlement of lawsuit		77,742			-
Interest expense		(331,085	)		(265,814	)
Interest income		1,539			2,233

		417,250			(263,581	)

NET LOSS	$	(3,051,747	)	$	(3,830,196	)

Loss per common share – basic and diluted	$	(0.01	)	$	(0.02	)

Weighted average common shares – basic and diluted		214,447,037			180,567,494

See Notes to Consolidated Financial Statements

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GENELINK, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Deficit

YEARS ENDED DECEMBER 31, 2012 AND 2011

	COMMON STOCK						ADDITIONAL PAID IN			ACCUMULATED			TREASURY
	SHARES			AMOUNT			CAPITAL			DEFICIT			STOCK			TOTAL

Balance, January 1, 2011		155,373,185			1,553,735			18,938,762			(20,730,119	)		(552,235	)		(789,857	)

Issuance of common stock pursuant to private placement offerings, net of offering costs		48,770,000			487,700			1,811,620			–			–			2,299,320
Exercise of stock options and warrants		501,300			5,013			(4,943	)		–			–			70
Stock-based compensation		–			–			356,925			–			–			356,925
Issuance of common stock for services		300,000			3,000			19,745			–			–			22,745
Issuance of stock warrants for license and distribution agreement		–			–			460,000			–			–			460,000
Net loss		–			–			–			(3,830,196	)		–			(3,830,196	)

Balance, December 31, 2011		204,944,485		$	2,049,448		$	21,582,109		$	(24,560,315	)	$	(552,235	)	$	(1,480,993	)

Issuance of common stock pursuant to private placement offerings, net of offering costs		52,500,000			525,000			979,000			-			-			1,504,000
Exercise of stock options and warrants		28,160			282			(282	)		-			-			-
Stock-based compensation		-			-			292,525			-			-			292,525
Issuance of common stock for services		1,497,226			14,973			59,889			-			-			74,862
Other adjustments		(1,258,690	)		(12,591	)		12,591			-			-			-
Net loss		-			-			-			(3,051,747	)		-			(3,051,747	)
Balance, December 31, 2012		257,711,181		$	2,577,112		$	22,925,832		$	(27,612,062	)	$	(552,235	)	$	(2,661,353	)

See Notes to Consolidated Financial Statements

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GENELINK, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended December 31,
	2012			2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,051,747	)	$	(3,830,196	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		174,993			134,777
Depreciation included in cost of goods sold		38,003			-
Amortization of debt discounts		124,533			113,649
Amortization of loan origination costs		45,554			41,565
Common stock issued for services		74,862			22,745
Gain on sale of subsidiary		(669,054	)		-
Gain on settlement of lawsuit		(77,742	)		-
Loss on abandonment of patents		65,517
Amortization of prepaid sales incentives		76,670
Amortization of customer deposit		(24,957	)
Amortization of deferred license fees		(137,500	)
Stock-based compensation		292,525			356,925
Changes in assets and liabilities:
Accounts receivable		(74,789	)		70,166
Inventory		170,770			(338,495	)
Prepaid expenses		128,836			(157,693	)
Other assets		9,536			4,100
Accounts payable and accrued expenses		34,345			492,404
Accrued compensation		(3,781	)		(113,652	)
Deferred revenue		(80,181	)		52,612
Deferred revenues – license fees		500,000			250,000

Net cash used in operating activities		(2,383,607	)		(2,901,093	)

CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures		(241,966	)		(41,327	)
Proceeds from sale of subsidiary, net of cash transferred		539,272			-
Long-term receivable related to sale of subsidiary, net		(164,358	)		-
Collections on receivable from sale of subsidiary		164,358			-
Net cash provided (used) in investing activities		297,306			(41,327	)

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from advances from purchaser		0			204,500
Proceeds from issuance of common stock and warrants, net		1,504,000			2,299,320
Proceeds from exercise of stock options		0			70
Proceeds from non-refundable advance deposit		0			750,000

Net cash provided by financing activities		1,504,000			3,253,890

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(582,301	)		311,470
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		740,769			429,299

CASH AND CASH EQUIVALENTS, END OF PERIOD	$	158,468		$	740,769

SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for interest	$	1,642		$	4,752
Conversion of accrued consulting fees to common stock	$	0		$	90,000
Issuance of warrants in exchange for prepaid sales incentives	$	0		$	460,000

See Notes to Consolidated Financial Statements

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GENELINK, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2012 AND 2011

Note 1.

Organization

The Company is a genetics-based, personal healthcare firm that has developed DNA assessments measuring personal DNA tendencies that can have a significant impact on overall wellness of an individual client or customer. These small differences in DNA, called SNP’s (“snips”) can indicate genetic variants that may not be performing at optimal levels and can be linked to aging and other wellness issues. GeneLink scientists use the DNA assessments information on each client and then formulate products to optimize health and wellness within the normal ranges. As discussed further in Note 11, the Company divested its interest in its wholly-owned subsidiary, GeneWize Life Sciences, Inc. (“GeneWize”), effective February 10, 2012 as part of a strategic realignment of its business to offer its products through third-party market partners, and to refocus efforts on research, development and manufacturing of custom products for those market partners.

Note 2.

Summary of Significant Accounting Policies

Principles of consolidation:

The consolidated financial statements include the accounts of GeneLink, Inc. and its wholly-owned Subsidiaries. All significant intercompany accounts and transactions have been eliminated in the consolidation.

Use of estimates:

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and cash equivalents:

Highly liquid instruments purchased with a maturity of three months or less are considered to be cash equivalents. At times, cash and cash equivalents may exceed federally insured limits. The Company has not experienced any losses on such accounts. All non-interest bearing cash balances were fully insured at December 31, 2012 due to a temporary federal program in effect from December 31, 2010 through December 31, 2012. Under the program, there is no limit to the amount of insurance for eligible accounts. Beginning 2013, insurance coverage will revert to $250,000 per depositor at each financial institution, and the Company's non-interest bearing cash balances may again exceed federally insured limits. The Company had $381,277 of interest-bearing amounts on deposit in excess of federally insured limits at December 31, 2011 and no excess of interest-bearing amounts on deposit in excess of federally insured limits at December 31, 2012.

Accounts Receivable:

Trade accounts receivable primarily represent amounts due from distributors of our products. The company performs credit evaluations of each customer on an ongoing basis and generally does not require collateral or charge interest or fees on balances. As of December 31, 2012 and 2011, the Company has not recorded an allowance for doubtful accounts as management determined all amounts are collectible.

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Inventory:

Inventory is valued at the lower of cost (using the first-in, first-out method) or market. Inventory consists primarily of raw materials for the custom nutritional and skincare products sold by the Company. Cost is determined on a specific identification basis. Work in process and finished goods inventory are insignificant in relation to the raw material inventory since production process is short and goods are manufactured to order and shipped shortly after completion. The cost of finished goods inventory includes the cost of materials, third-party contract manufacturing and overhead. In the event that the Company identifies excess, obsolete or unsalable inventory, its value is

written down to net realizable value.

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 or the lesser of the expected life or term of the lease as to leasehold improvements as noted below:

Office furniture and equipment	3 - 5 years
Equipment	3 - 5 years
Leasehold improvements	5 years
Software	3 - 5 years

Intangible Assets:

Intangible assets include costs incurred to apply and obtain patents for its products. Patents are amortized upon approval by regulatory authorities over the estimated useful life of the asset, generally fifteen years on a straight-line basis.

Deferred Loan Costs:

Loan acquisition costs are amortized over the term of the debt using the effective interest method.

Long lived assets:

The Company reviews its long-lived assets and certain identifiable intangibles for impairment 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 is less than its carrying amount. The Company recorded $65,517 of impairment loss from abandonment of patents in the year ended December 31, 2012 and had not identified any such impairment losses during the year ended December 31, 2011.

Revenue recognition:

The Company recognizes revenues from the sales of products upon shipment. Revenue is recognized when there is persuasive evidence of an arrangement, delivery has occurred and title and risk of loss have transferred to the customer, the sales price is determinable and collectability is reasonably assured.

For direct sales to consumers by the Company’s subsidiary, GeneWize, prior to its sale in 2012, revenue was reduced for refunds on certain products during the trial period which is the first 60 days after the initial order is shipped. The Company recorded a reserve for refunds based on historical refunds provided to customers which is recorded as a reduction of revenue and is included in accrued expenses on the accompanying balance sheet. The Company received advance payments from these consumer sales which was recorded as deferred revenue until shipment occurs.

Prepaid sales incentives and deferred revenue-license fees represent prepaid fees that are deferred and recognized over the term of the underlying agreement with licensees.

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The Company recognizes revenue from licensing agreements as earned, which is generally when products are shipped from distributors, over the term of the agreement.

Research and Development:

Research and development costs are expensed as incurred.

Advertising

The Company expenses advertising when incurred. Advertising expense was $28,924 and $57,825 for the years ended December 31, 2012 and 2011, respectively.

Stock-Based Compensation:

Stock-based compensation is recorded for recognition of the cost of employee or director services received in exchange for an award of equity instruments in the financial statements and is measured based on the grant date fair value of the award. The stock-based compensation expense is recognized over the period during which an employee is required to provide service in exchange for the award (typically, the vesting period).

The Company estimates the fair value of each option award issued under its stock option plans on the date of grant using a lattice option-pricing model that uses the following assumptions:

The Company estimates the volatility of its common stock at the date of grant based on the historical volatility of its common stock for a period commensurate with the expected life. These historical periods may exclude portions of time when unusual transactions occurred.

The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures.

For shares that vest contingent upon achievement of certain performance criteria, an estimate of the probability of achievement is applied in the estimate of fair value. If the goals are not met, no compensation cost is recognized and any previously recognized compensation cost is reversed.

The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future.

The risk-free interest rate is based upon a treasury security with a maturity comparable to the contractual term of the options.

In addition, the Company separates the grants into homogeneous groups and analyzes the assumptions for each group and computes the expense for each group utilizing these assumptions.

	Assumptions for Awards Granted in Years Ended December 31,
	2012			2011

Expected volatility		180-182	%		144-203	%
Risk-free interest rate		4.50	%		4.5-5.0	%
Expected dividend yield		0	%		0	%
Expected life in years		5.0-10.0			5.0 – 10.0

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Earnings per share:

Basic loss per share is calculated using the weighted average number of common shares outstanding for the period and diluted is computed using the weighted average number of common shares and dilutive common equivalent shares outstanding. Given that the Company is in a net loss position, there is no difference between basic and diluted weighted average shares since the common stock equivalents would be antidilutive.

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

	Year Ended December 31,
	2012		2011

Options		21,980,833		19,631,833
Warrants		24,248,042		22,552,458
Debt conversion shares		16,794,583		15,544,583
Debt conversion warrants		1,875,000		1,875,000

Income taxes:

The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2008 through December 31, 2012.

Derivative Financial Instruments:

The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risk. Terms of convertible debt and equity instruments are reviewed to determine whether or not they contain embedded derivative instruments that are required to be accounted for separately from the host contract, and recorded on the balance sheet at fair value. The fair value of derivative liabilities, if any, is required to be revalued at each reporting date, with corresponding changes in fair value recorded in current period operating results. An evaluation of specifically identified conditions is made to determine whether the fair value of warrants issued is required to be classified as equity or as a derivative liability.

Beneficial Conversion and Warrant Valuation:

The Company records a beneficial conversion feature (“BCF”) related to the issuance of convertible debt instruments that have conversion features at fixed rates that are in-the-money when issued. The Company also records the fair value of warrants issued in connection with debt instruments. The BCF for the convertible instruments is recognized and measured by allocating a portion of the proceeds to warrants, based on their relative fair value, and as a reduction to the carrying amount of the convertible instrument equal to the intrinsic value of the conversion feature. The discounts recorded in connection with the BCF and warrant valuation are recognized for convertible debt as interest expense over the term of the debt using the effective interest method.

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Fair Value of Financial Instruments:

The Company’s financial instruments are recorded at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair value:

Level 1 – Valuation based on quoted market prices in active markets for identical assets and liabilities.

Level 2 – Valuation based on quoted market prices for similar assets and liabilities in active markets.

Level 3 – Valuation based on unobservable inputs that are supported by little or no market activity, therefore requiring management’s best estimate of what market participants would use as fair value.

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2012. The Company uses the market approach to measure fair value of its Level 1 financial assets. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s convertible notes payable approximate their carrying value based upon current rates available to the Company.

In 2009, the Company issued Convertible Notes and warrants to a group of accredited investors (see Note 8). The Company engaged a third party to complete a valuation of the warrants issued to the placement agent and note holders and the conversion feature under the Convertible Notes which are recorded as debt costs and debt discounts on the accompanying balance sheets. The valuation was completed using Level 2 inputs.

During 2011, the Company issued warrants in connection with a license and distribution agreement (see Note 11) and engaged a third party to complete a valuation of those warrants which were recorded as Prepaid Sales Incentive on the accompanying balance sheet. The valuation was completed using Level 2 inputs.

Industry Risk and Concentration:

The business of marketing nutrition and skin care products is highly competitive and sensitive to the introduction of new products which may rapidly capture a significant share of the market. These market segments include numerous manufacturers, distributors, marketers, retailers and physicians that actively compete for the business of consumers both in the United States and abroad. In addition, the Company anticipates that it will be subject to increasing competition in the future from sellers that utilize electronic commerce. Many of these competitors have longer operating histories, significantly greater financial, technical, product development, marketing and sales resources, greater name recognition, larger established customer bases and better-developed distribution channels than does the Company.

The Company’s present or future competitors may be able to develop products that are comparable or superior to those offered by the Company, adapt more quickly than the Company does to new technologies, evolving industry trends and standards or customer requirements, or devote greater resources to the development, promotion and sale of their products than does the Company. For example, if the Company’s competitors develop skin care or nutritional treatments that prove to be more effective than our products, demand for our products could be reduced. Accordingly, the Company may not be able to compete effectively in our markets and competition may intensify. The Company is also subject to significant competition for the recruitment of distributors from other network marketing organizations, including those that market nutritional supplements and skin care products as well as other types of products.

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The Company’s ability to be competitive will depend, in significant part, on its success in recruiting and retaining market partners through the maintenance of an attractive product portfolio and other incentives. The Company cannot ensure that its programs for recruitment and retention of partners will be successful, and if they are not, the Company’s financial condition and operating results would be harmed.

The Company sells its products through a limited number of distributors. Certain of these distributors, together with entities under their common control, each individually accounted for greater than 10% of total revenues and greater than 10% of accounts receivable as follows: Revenues for 2012 and accounts receivable as of December 31, 2012 from GeneWize, our former subsidiary were $1,476,000 and $77,811, respectively which accounted for 69% of our net sales for the year and 100% of our outstanding accounts receivable at year end. No other customers were more than 10% of sales and revenues generated outside the United States were less than 10% of total revenues for all years presented.

The Company relies entirely on a limited number of third parties to supply raw materials, manufacture our products and perform laboratory tests on the Company’s behalf. In the event any of the Company’s third party suppliers, manufacturers or laboratories was to become unable or unwilling to continue to provide the Company with services and products in required volumes and at suitable quality levels, the Company would be required to identify and obtain acceptable replacement sources.

Recent accounting pronouncements

In July 2012, the Financial Accounting Standards Board completed an accounting standards update entitled "ASU 2012-02, Intangibles - Goodwill and Other" that revises the requirements around how entities test indefinite-lived intangible assets, other than goodwill, for impairment. The guidance will allow entities to first assess qualitative factors to determine whether it is necessary to perform a quantitative impairment test. If entities determine, on the basis of qualitative factors, that the fair value of the indefinite-lived intangible asset is more likely than not greater than the carrying amount, a quantitative calculation would not be needed. The Company will adopt this standard in the first quarter of 2013 and does not expect the adoption of this standard to have an impact on its consolidated financial statements.

Note 3.

Property and Equipment

Property and equipment consisted of the following:

	December 31,
	2012			2011

Office furniture and equipment	$	4,135		$	85,651
Machinery & equipment		288,105			301,091
Leasehold improvements		169,629			6,781
Software		21,946			343,902
Less accumulated depreciation		(226,046	)		(569,613	)
	$	257,769		$	167,812

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Depreciation expense was $98,258 and $129,707 for the years ended December 31, 2012 and 2011, respectively. For the year ended December 31, 2012, $38,003 of depreciation was included in cost of goods sold. No depreciation expense was included in cost of goods sold for the year ended December 31, 2011 as manufacturing operations were contracted to a third party vendor.

Note 4.

Intangible Assets

Intangible assets consisted of the following:

	December 31,
	2012			2011
Patents approved	$	77,574		$	70,556
Patents pending		115,237			188,298
Less accumulated amortization		(137,906	)		(23,267	)
	$	54,905		$	235,587

Amortization expense related to patents was $114,738 and $5,070 for the years ended December 31, 2012 and 2011, respectively. 2012 amortization expense includes a charge of $106,000 related to accelerated amortization as a result in the change of estimated useful lives of certain patents. In addition, $65,517 in patent costs were written off in the year ended December 31, 2012 due to impairment of their estimated future value.

The future estimated amortization expense on patents and other intangible assets that will be charged to operations as of December 31, 2012 is as follows:

Year ending December 31,
2013	$	11,901
2014		9,190
2015		8,235
2016		7,697
2017		2,758
Thereafter		15,124
	$	54,905

Note 5.

Income Taxes

Because of the Company's history of net operating losses, it has not paid income taxes since its inception and the Company had no material unrecognized tax benefits that could affect the Company's financial statements as of December 31, 2012 or 2011. The Company's deferred tax assets primarily consist of net operating loss, or NOL, carryforwards, stock compensation items and deferred revenue. Realization of deferred tax assets is dependent upon a number of

factors, including future earnings

Components of deferred tax assets (liabilities) are as follows:

	December 31,
	2012			2011
Stock compensation	$	856,000		$	713,900
Other components		148,000			137,200
Net operating loss carryforwards		6,778,000			7,826,700
		7,782,000			8,677,800
Valuation Allowance		(7,782,000	)		( 8,677,800	)
	$	-		$	-

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The reconciliation of income tax attributable to operations computed at the United States federal statutory rate and the actual tax provision of zero results primarily from the change in the valuation allowance.

As of December 31, 2012, the Company had net operating loss carry forwards for federal and state income tax purposes of approximately $17,958,000 which expire in various amounts between 2014 and 2031. A portion of the net operating loss carryforwards may be subject to certain limitations of the Internal Revenue Code section 382 which would restrict the annual utilization in future periods due to changes in ownership in prior periods. The Company has evaluated its ability to realize the deferred tax assets on its balance sheet and has established a valuation allowance at December 31, 2011and 2012. The valuation allowance decreased by $895,800 during 2012 due to the sale of GeneWize and its related tax loss carryforward.

Note 6.

Stockholders' Equity

Common Stock

During 2012, the Company sold an aggregate of 52,500,000 of shares of Common Stock in private placement offerings, at a price of $0.03 per share for net proceeds of $1,504,000. Costs incurred in the offerings were $71,000. The Company issued warrants to purchase 5,041,667 shares of Common Stock at an exercise price of $0.03 per share to First Equity Capital Securities, Inc., as placement agent. 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. and a member of the Scientific Advisory Board.

During 2012, 400,000 warrants were issued as partner incentives to Joel Guerin in connection with the Company’s distribution agreement with geneME.

During 2011, the Company sold an aggregate of 48,770,000 of shares of Common Stock in private placement offerings, at a price of $0.05 per share for net proceeds of $2,299,320. Costs incurred in the offerings were $139,180. The Company issued warrants to purchase 3,104,500 shares of Common Stock at an exercise price of $0.05 per share to First Equity Capital Securities, Inc., as placement agent. 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. and a member of the Scientific Advisory Board.

As discussed in Note 11, during 2011 the Company issued 8,000,000 non-performance warrants in connection with the license and distribution agreement.

The Company issued 1,497,226 shares of common stock for services rendered during the year ended December 31, 2012. The fair value per share was based upon market transactions in our stock and was determined to be $.05 per share which resulted in an expense charge of ,$74,862 in aggregate.

The Company issued 300,000 shares of common stock for services rendered, valued at $22,745 or $0.075 per share on November 1, 2011 which was the only grant for services for the year ended December 31, 2011. The fair value per share was based upon market transactions in our stock.

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Warrants

Warrants outstanding as of December 31, 2012 are as follows:

Warrant Description	Shares		Exercise Price		Expiration Date

Placement Agent Fees		12,490,542	$	0.03-$0.15		2013-2017
Partner performance warrants		400,000	$	0.05		2017
License fees		8,000,000	$	0.10-$0.45		2016
Private Placement warrants		3,357,500	$	0.10-$0.15		2013-2016
Total warrants		24,248,042

The following table summarizes the activity of the stock warrants outstanding for the years ended December 31, 2011 and 2012:

	Shares Under Warrant

Balance, January 1, 2011		13,087,958
Warrants Issued		11,104,500
Warrants Exercised		(1,640,000	)
Warrants Expired		-
Balance, December 31, 2011		22,552,458
Warrants Issued		5,441,667
Warrants Exercised		(100,000	)
Warrants Expired		(3,646,083	)
Balance, December 31, 2012		24,248,042

During 2012, 100,000 warrants were exercised for 28,160 common shares.

Stock Option Plans

In 2007, the Company adopted a stock options plan (the “2007 Plan”) that provides for the grant of incentive stock options and nonqualified stock options, and reserved 6,000,000 shares of the Company’s Common Stock for future issuance under the 2007 Plan. The option price must be at least 100% of market value at the date of the grant and the options have a maximum term of 10 years. Options granted vest over varying terms at the discretion of the Board. The Company typically grants selected key employees, Board members and consultants to the Company awards. As of December 31, 2012, options to purchase 5,050,000 shares of common stock were vested and exercisable under the 2007 Plan.

On June 1, 2009, the Company adopted a stock option plan (the “2009 Plan”) that provides for the grant of incentive stock options and nonqualified stock options, and reserved 6,000,000 shares of the Company’s Common Stock for future issuance under the 2009 Plan. The option price must be at least 100% of market value at the date of the grant and the options have a maximum term of 10 years. Options granted vest over varying terms at the discretion of the Board. The Company typically grants stock options to selected key employees, Board members and consultants to the Company. As of December 31, 2012, options to purchase 3,906,250 shares of common stock were vested and exercisable under the 2009 Plan.

On May 20, 2011, the Company adopted a stock option plan (the “2011 Plan”) that provides for the grant of incentive stock options and nonqualified stock options, and reserved 10,000,000 shares of the Company’s Common Stock for future issuance under the 2011 Plan. The option price must be at least 100% of market value at the date of the grant and the options have a maximum term of 10 years. Options granted vest at the discretion of the Board, typically over a three year period or based on achievement of performance criteria. The Company typically grants stock options to selected key employees, Board members and consultants to the Company. As of December 31, 2012, options to purchase 2,674,375 shares of common stock were vested and exercisable under the 2011 Plan.

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In addition, the Board has, from time to time granted stock options outside of the above named plans (“Board-designated options”). At December 31, 2012 and December 31, 2011, 4,945,833 shares were outstanding under Board-designated options. As of December 31, 2012, options to purchase 4,350,000 shares of common stock were vested and exercisable under the Board-designated options.

The average fair value of options granted at market during 2012 and 2011 was $0.04 and $0.09 per option, respectively. The aggregate intrinsic value of the outstanding options at December 31, 2012 was $0.

The following table summarizes activity of the stock options outstanding for the years ended December 31, 2012 and 2011:

	Shares Under Option			Weighted Average Exercise Price
Balance, January 1, 2011		15,682,833		$	0.13
Options granted at market		4,900,000			0.09
Options exercised		(1,000	)		0.07
Options forfeited or expired		(950,000	)		0.08

Balance, December 31, 2011		19,631,833			0.12
Options granted at market		3,060,000			0.04
Options forfeited or expired		(711,000	)		0.08

Balance, December 31, 2012		21,980,833		$	0.11

Of the 21,980,833 options outstanding at December 31, 2012, 15,980,625 are vested and exercisable. At December 31, 2012, the weighted average exercise price of vested options outstanding was $0.11, the weighted average remaining contractual term (in years) was 6.44 and the aggregate intrinsic value was $0.

A summary of the non-vested shares as of December 31, 2012 and changes during the year ending December 31, 2012 and 2011 is presented below:

	Non-Vested Shares			Weighted Average Grant-Date Fair Value
Non-vested at January 1, 2011		5,820,333		$	0.19
Granted		4,900,000			0.08
Vested		(3,412,000	)		0.16
Non-vested at January 1, 2012		7,308,333		$	0.14
Granted		3,060,000			0.04
Vested		(4,118,125	)		0.07
Cancelled		(250,000	)		0.08
Non-vested at December 31, 2012		6,000,208		$	0.07

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As of December 31, 2012, the total future compensation cost related to non-vested awards expected to vest is estimated to be approximately $234,200, $126,200 and $52,950 for the years ending December 31, 2013, 2014, and 2015 respectively.

The total fair value of shares vested during the years ended December 31, 2012 and 2011 was approximately $292,525 and $356,925, respectively.

No tax benefit was recognized related to share-based compensation expense since the Company has never reported taxable income and has established a full valuation allowance to offset all of the potential tax benefits associated with its deferred tax assets.

Note 7.

Leases

The Company leases its office space and manufacturing facility under various operating leases which have terms expiring on various dates from 2013 through 2017.

Future minimum lease payments with terms in excess of one year as of December 31, 2012 are as follows:

Year ending December 31,
2013	$	202,404
2014		208,476
2015		214,730
2016		221,172
2017		93,287
	$	940,069

Rent expense during the years ended December 31, 2012 and 2011 was approximately $135,680 and $64,900, respectively.

Note 8.

Convertible Notes Payable – Related Parties

In February 2009, the Company entered into Convertible Note agreements (the “Convertible Notes”) with a limited number of accredited investors who are shareholders of the company. Pursuant to the Convertible Notes, the Company sold an aggregate of $1,250,000 in principal and 1,875,000 warrants (the “2009 Note Warrants”) to purchase shares of the Company’s common stock. The Convertible Notes are payable in full on February 26, 2014 and incurred simple interest, payable monthly, at the rate of 8.0% per year through February 26, 2011, and thereafter incur simple interest at the rate of 10.0% per year through maturity. The Convertible Notes may only be prepaid upon approval of the holders and are convertible at the option of the holders. A mandatory conversion of the Convertible Notes will occur if the closing price of the Company’s Common Stock is at least $0.50 per share for 30 consecutive trading days. The conversion price on the Convertible Notes is $0.10 per share, subject to adjustment under standard anti-dilution provisions, as defined in the agreements.

The 2009 Note Warrants are exercisable at any time at an exercise price of $0.11 per share and expire on February 26, 2014. The 2009 Note Warrants become immediately exercisable upon the occurrence of a Change in Control Event, as defined in the warrant agreement. The 2009 Note Warrants contain a cashless exercise provision.

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Using a simulation model of discounted cash flows, the relative fair value of the Convertible Notes was calculated to be $1,328,325. The fair value of the 2009 Note Warrants was calculated to be $204,750. The fair value of the 2009 Note Warrants was calculated using binomial lattice valuation model with the following assumptions: Expected life in years: 5; Estimated volatility: 138% - 163%; Risk-free interest rate: 4.98%; Dividend yield: 0%.

The proceeds from the Convertible Notes have been discounted for the relative fair value of the 2009 Note Warrants of $166,395, which was recorded as additional paid-in capital. The warrant discount is being amortized over the life of the Convertible Notes using the effective interest method. For the years ended December 31, 2011 and 2012, $34,248 and $37,536 of the warrant discount was amortized to interest expense, respectively. The total fair value allocated to the Convertible Notes was $1,083,605, of which $406,395 was allocated to a beneficial conversion feature (“BCF”) and was recorded in additional paid-in capital. A BCF is recorded as a debt discount when the consideration allocated to the convertible security, divided by the number of common shares into which the security converts, is below the fair value of the common stock at the date of issuance of the convertible instruments. The BCF is being amortized to interest expense over the life of the Convertible Notes using the effective interest method. Amortization of the BCF amounted to $79,379 and $86,997 during the years ended December 31, 2011 and 2012, respectively.

The Company paid $80,000 cash to the placement agent in conjunction with the Convertible Notes issuance. The placement agent also received 1,265,000 warrants at an exercise price of $.11 per share as additional compensation. The fair value of the warrants issued to the placement agent totaled $132,800, the value of which, along with the $80,000 in cash, was recorded by the Company as debt issuance costs. The debt issuance costs are being amortized over the life of the Convertible Notes using the effective interest method. For the years ended December 31, 2011 and 2012, $41,565 and $45,554 of the debt issuance costs was amortized to interest expense. The remaining unamortized debt issuance costs balance was $104,256 and $58,703 for the years ended December 31, 2011 and 2012, respectively.

The total principal balance outstanding on the 2009 Notes was $1,250,000 at both December 31, 2011 and 2012. The total unamortized discounts resulting from the warrant and BCF were $284,985 and $160,453 at December 31, 2011 and 2012, respectively.

Note 9.

Related Party Transactions

Placement Agent Fees

As discussed in Note 6, in connection with private placement offerings of its common stock during 2012 and 2011, the Company paid its placement agent, a company owned by a more than 5% stockholder and officer of the Company, $71,000 and $78,720, respectively. In addition, during 2011 this placement agent was issued warrants to purchase 3,104,500 shares of Common Stock at an exercise price of $0.05 per share and during 2012 warrants to purchase 5,041,667 shares of Common Stock at an exercise price of $0.03 per share.

Consulting Fees

The Company entered into a consulting agreement with a shareholder and officer of the Company for scientific advisory services. The agreement provides for annual payments of $30,000, payable $2,500 per month. As of December 31, 2012, amounts owed to the shareholder were $2,500 and were included in accounts payable.

The Company also entered into a consulting agreement with a shareholder to provide strategic and business development assistance. The agreement provides for annual payments of $60,000 payable $5,000 per month. At December 31, 2012, amounts owed to the shareholder for consulting fees were $30,000 and were included in accounts payable. As of December 31, 2011, amounts owed to the shareholder for consulting fees were $59,861 and were included in accounts payable. On March 2, 2012, the shareholder converted the amounts owed as of such date for accrued fees to 1,197,220 shares of common stock.

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Due to Shareholder

A shareholder advanced the Company $10,000 which was due as of December 31, 2012 and 2011. Such advance does not bear interest and is due upon demand.

Note 10.

Segment Information

In 2011 and 2012, the Company distinguished its two main operating segments by entity and the types of products they sell. GeneLink develops and manufactures genetically customized supplements and skin care products for sale in a variety of market channels. GeneWize was the marketing subsidiary which sells GeneLink’s products in the multi-level direct selling channel. As noted in Note 11, GeneWize was sold on February 10, 2012. Subsequent to the sale of GeneWize, the company only operates in one reporting segment. The following table sets forth the net revenues, operating expenses and net losses of our segments for the years ended December 31, 2012 and 2011

	GeneLink			GeneWize*			Inter-Segment			Total
Year Ended December 31, 2012
Revenue	$	1,785,346		$	520,098		$	(169,302	)	$	2,136,142
Less: Intersegment revenue		( 169,302	)					169,302			-
Revenue from external customers	$	1,616,044		$	520,098			-		$	2,136,142

Net Loss	$	(2,975,518	)	$	(76,229	)		-		$	(3,051,747	)

Depreciation and amortization	$	169,048		$	5,945			-		$	174,993

Capital expenditures	$	241,966			-			-		$	241,966

Segment Assets at December 31, 2012	$	1,454,801			-			-		$	1,454,801

Year Ended December 31, 2011
Revenue	$	1,879,441		$	4,661,886		$	(1,856,749	)	$	4,684,577
Less: Intersegment revenue		( 1,856,749	)				$	1,856,749			-
Revenue from external customers	$	22,692		$	4,661,886			-		$	4,684,577

Net Loss	$	(3,153,389	)	$	(676,807	)		-		$	(3,830,196	)

Depreciation and amortization	$	51,104		$	83,673			-		$	134,777

Capital expenditures	$	41,327			-			-		$	41,327
Segment Assets at December 31, 2011	$	2,304,929		$	585,692			-		$	2,779,665

*2012 amounts are for the period from January 1, 2012 through the sale on February 10, 2012

Note 11:

Sale of Subsidiary and Licensing Agreements

On October 13, 2011, the Company entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Capsalus Corp. (“Capsalus”), pursuant to which the Company agreed to sell 100% of the stock of its wholly-owned subsidiary, GeneWize Life Sciences, Inc. (“GeneWize”). The Stock Purchase Agreement provided for a purchase price of $500,000 payable at the closing, plus an earn-out of between $1.5 million and $4.5 million, subject to the performance of GeneWize after the closing. The earn-out amount is calculated as the greater of $25,000 per month or 10% to 15% of GeneWize monthly gross revenues, payable monthly through April, 2017. The effective date of the closing was February 10, 2012 which was the date final documents were completed following approval of the transaction by the shareholders of GeneLink. Due to continuing involvement with GeneWize subsequent to the sale, this transaction was not accounted for as a discontinued operation.

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GeneLink recorded a gain on sale of subsidiary as of February 10, 2012. Consideration for the sale included the $500,000 cash received from Capsalus and an additional $39,272 for working capital. Additional consideration included the earn-out amount which was valued at $164,358, the Company’s estimate of net present value of probable cash collections under the agreement. The total consideration of $703,630 was offset by net liabilities and related costs of sale resulting in a gain on sale of $669,054.

The table below provides a detail of the calculation of the Gain on Sale.

Consideration Paid
Cash paid at closing	500,000
Working Capital settlement items	39,272
Present Value of earn-out deemed collectible	164,358
Total Consideration	703,630

Carrying Amount of Assets less Liabilities of GeneWize
Assets	498,148
Liabilities	(793,815	)
Total Carrying Amount	(295,667	)
Transaction Expenses	240,243
Net Gain on Sale Recorded in Q1	759,054
Working Capital settlement items noted in Q2	90,000

Gain on sale for 2012	669,054

The assets and liabilities sold were accounted for at our carrying amounts for such items on the February 10, 2012 date of sale. Assets consisted of Cash $90,000, Accounts Receivable $254,000, Prepaid expenses $101,000, and fixed assets of $53,000. Liabilities consisted of debt of $374,000, trade payables of $324,000, accrued wages and commissions of $40,000 and accrued sales taxes and other expenses of $55,000. GeneLink, GeneWize and Capsalus also entered into an Interim Management Agreement dated October 13, 2011, pursuant to which Capsalus managed the operation of GeneWize until the closing date of February 10, 2012. Pursuant to the Interim Management Agreement, Capsalus was responsible for all expenses and received all revenues of GeneWize from October 1, 2011 through the date of closing. Capsalus advanced $204,500 to GeneWize prior to December 31, 2011 to fund operations which was recorded as “Advances from Purchaser” on the accompanying balance sheet at December 31, 2011 and an additional $75,000 was advanced to GeneWize by Capsalus prior to the closing of the sale of GeneWize. This amount was assumed by GeneWize in February 2012 upon the closing of the sale of GeneWize.

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On October 13, 2011, GeneLink entered into a License and Distribution Agreement (the “LDA”) with Gene Elite LLC (“Gene Elite”) which expires in 2017 with successive five-year renewal options provided Gene Elite meets sales and performance criteria. Pursuant to the LDA, GeneLink granted Gene Elite the exclusive right to sell certain skin care and nutrition products in the direct sales, multi- level marketing (MLM) and athletic formula channels. Pursuant to the LDA, the Company received $1,500,000 in license fees, of which $1,000,000 (the “Up-front fee”) was received during 2011 and $500,000 was received on February 10, 2012, the closing date of the sale of GeneWize. The LDA provides for $750,000 of the Up-front fee as a Nonrefundable Advance Deposit which accrues interest at 4% per year and will be paid through product credits or issuance of common stock at market price, at the discretion of Gene Elite. The remaining $750,000 of the license fees was recorded as “Deferred Revenue - License Fees” on the accompanying balance sheet, which will be recognized over the term of the LDA beginning on February 10, 2012. As of December 31, 2012 the remaining balance in deferred revenue was $612,500 and $137,500 of the deferred revenue has been amortized into revenue during 2012.

In connection with the LDA, GeneLink and Gene Elite entered into a Warrant Purchase Agreement dated October 13, 2011 pursuant to which GeneLink granted Gene Elite warrants to purchase (i) 6,000,000 shares of common stock of GeneLink at an exercise price of $0.10 per share and (ii) 2,000,000 shares of common stock of GeneLink at an exercise price of $0.45 per share (collectively, the “non-performance warrants”). In addition, and, subject to certain performance requirements being satisfied, Gene Elite was granted warrants to purchase 6,000,000 shares of common stock of GeneLink at an exercise price of $0.20 per share (the “performance warrants”). The 8,000,000 shares underlying the non-performance warrants, valued at $460,000 at issue date, are accounted for as “Prepaid Sales Incentives” on the accompanying balance sheet and will be amortized over the life of the licensing agreement. As of December 31, 2012, $383,330 of the prepaid sales incentive remained on the balance sheet as an asset and $76,670 was amortized into expense during 2012.

The non-performance warrants were valued using a Binomial Lattice Option Valuation Technique (“Binomial”) and the following assumptions:

Fair market value of asset	$	0.06
Exercise price	$	0.10 - .0.45
Expected life		5.0 Years
Equivalent volatility		164	%
Expected dividend yield		0	%
Risk-free rate		4.5	%

The issuance date of the performance warrants was the date of closing, February 10, 2012, and management currently does not expect the performance warrants to be earned.

On February 10, 2012, GeneLink, Gene Elite and GeneWize entered into a sub-licensing and distribution agreement (SLDA) which grants GeneWize the exclusive rights contained in the LDA to market and sell certain skin care and nutrition products in the direct sales, multi- level marketing (MLM) and athletic formula channels. The term of the SLDA is concurrent with the term of the LDA including the successive renewal options granted under the LDA.

Through December 31, 2012, Capsalus has paid $165,900 of the earn-out amount. Capsalus has failed to pay any earn-out due subsequent to June 30, 2012. The Company is in discussions with Capsalus regarding this receivable.

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Note 12.

Contingencies

In March 2011, the Company received a Civil Investigative Demand (“CID”) consisting of interrogatories and a request to produce documents from the FTC as part of its investigation into unnamed persons engaged directly or indirectly in the advertising or marketing of dietary supplements, foods, drugs, devices, or any other product or service intended to provide a health benefit or to affect the structure or function of the body. The Company expended significant resources in 2011 and into 2012 in an attempt to comply with this request.

During 2012, the staff of the FTC (the “staff”) investigated the Company for potential violations of Sections 5 and 12 of the Federal Trade Commission Act, 15 U.S.C. Sections 45 and 52, in connection with the advertising, marketing and sale of its DNA Assessments and genetically customized nutritional supplements and skin repair serum products. The Company strongly believes its advertising and marketing are lawful and appropriate.

Following additional discussions with the staff, on October 26, 2012, in order to resolve this matter, the Company entered into a proposed consent decree with the Federal Trade Commission with regard to the FTC’s investigation. The proposed order is subject to approval by the full Commission.

In the fourth quarter of 2012, we switched our provider of genetic testing laboratory services. Our former provider of genetic testing laboratory services claims that we owe it approximately $150,000 under our arrangement with such company due to the alleged failure to meet certain minimum volume requirements. We believe that we have valid defenses to these claims and do not owe our former laboratory such amounts.

Note 13.

Going Concern and Management’s Plans

The opinions of the Company’s independent registered public accounting firm on the audited financial statements as of and for the years ended December 31, 2012 and 2011 contain an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern.

The Company has a working capital deficit of $1,066,784, has incurred recurring operating losses since inception including a loss of $3.0 million in 2012 and had an accumulated deficit at December 31, 2012 of $27,612,062. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

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To execute the Company's growth plans, it may need to seek additional funding through public or private financings, including debt or equity financings, and through other means, including collaborations and license agreements. Additional financing may not be available when needed, or if available, the Company may not be able to obtain financing on favorable terms. The Company's ability to continue as a going concern is dependent upon the achievement of its marketing plans to enhance sales and its ability to raise capital. Management continues to work with existing market partners as well as pursuing additional distribution opportunities. Management also believes it has the opportunities before it to increase sales which will provide a foundation for raising additional capital. The Company’s financial statements have been prepared on the basis that it is a going concern, which assumes continuity of operations and the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments that might result if the Company was forced to discontinue its operations.

Note 14.

Subsequent Events

On January 28, 2013 GeneLink accepted the resignation of Susan Hunt as Interim Chief Financial Officer of the Company effective as of February 8, 2013. An interim Chief Financial Officer, Dr. Bernard L. Kasten, Jr., M.D. was appointed effective February 8, 2013.

In November 2012, we were sued in the Circuit Court for the 11th Judicial Circuit in and for Miami – Dade County, Florida by a former consultant, alleging breach of contract and unjust enrichment. In January 2013, we filed a motion to dismiss the complaint. The complaint that was filed does not state an amount that the former consultant is seeking from us. Although we believe that this amount is less than $25,000, we are unable at this time to determine the amount alleged to be owed by us to the former consultant. On March 14, 2013, the Court granted GeneLink’s Motion to Dismiss or in the Alternative a More Definite Statement. No additional amount has been accrued as of December 31, 2012 related to this suit.

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ITEM 9A.

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and other procedures that are designed to ensure that information required to be disclosed in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

With the participation of management, the Company’s Chief Executive Officer and the Chief Financial Officer evaluated the effectiveness of the design and operation of its disclosure controls and procedures at the conclusion of the fiscal quarter ended December 31, 2012. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective in ensuring that material information required to be disclosed is included in the reports that it files with the Securities and Exchange Commission.

Change In Internal Controls over Financial Reporting

During the fiscal quarter ended December 31, 2012 there were no changes in our internal controls over financial reporting that we believe could materially affect, or is reasonably likely to affect, our internal controls over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Management assessed the Company’s internal control over financial reporting as of December 31, 2012 using the criteria for effective control over financial reporting established in “Internal Control – Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management believes that, as of December 31, 2012, the Company maintained effective internal control over financial reporting.

This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this annual report.

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PART III

ITEM 10.

DIRECTORS; EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to each of the executive officers and current directors of the Company is set forth below

Name	Age	Position

Bernard L. Kasten, Jr. M.D.	66	Chief Executive Officer, Chairman of the Board, Director

Douglas Boyle, DBA, CPA, CMA	46	Director

James Monton	67	Director

Robert P. Ricciardi, Ph.D.	66	Secretary, Chief Science Officer, Director

Michael Smith	46	Senior Vice President of Operations

Effective December 30, 2010, Dr. Kasten was appointed the Chief Executive Officer and President of the Company. Dr. Kasten is also the Executive Chairman of the Board of Directors of the Company. Dr. Kasten has been a scientific advisor to the Company since 1999 and a member of the Company's Scientific Advisory Board since 2001. Dr. Kasten is a graduate of Miami University (Oxford Ohio), BA Chemistry 1967, and the Ohio State University College of Medicine, MD 1971. His residency was served at the University of Miami, Florida and fellowships at the National Institutes of Health Clinical Center and National Cancer Institute, Bethesda, Maryland. Dr. Kasten is a Diplomat of the American Board of Pathology with Certification in Anatomic and Clinical Pathology with sub-specialty certification in Medical Microbiology. Dr. Kasten is an author of "Infectious Disease Handbook" 1st through 5th Editions 1994-2003 and the "Laboratory Test Handbook" 1st through 4th Editions 1984-1996 published by Lexi-Comp Inc., Hudson, Ohio. Dr. Kasten has been active with the College of American Pathologists (CAP) serving as Chairman of its Publication Committee from 1985-1993, its Management Resources Committee from 1993-1998 and its Chairman Internet Editorial Board from 1999-2003. Dr. Kasten received the College of American Pathologists Presidents Medal Awarded for Outstanding Service in 1989 and the College of American Pathologists Frank W. Hartman Award, in 1993 for Meritorious Service to the College (Founding CAP Today) the organization's highly successful monthly tabloid magazine. Dr. Kasten's professional staff appointments have included the Cleveland Clinic, Northeastern Ohio Universities College of Medicine, the Bethesda Hospitals and Quest Diagnostics. Dr. Kasten served eight years, 1996-2004, at Quest Diagnostics Incorporated [NYSE-DGX], where he was Chief Laboratory Officer; Vice-President of Business Development for Science and Medicine and Vice-President of Medical Affairs of a Quest Diagnostics wholly-owned subsidiary, MedPlus Inc. Dr. Kasten joined SIGA Technologies, Inc. [NASDAQ-SIGA] as a Board of Directors member in May 2003, and accepted the appointment as SIGA's Chief Executive Officer in July of 2004, serving through April 2006. Dr. Kasten is Chairman of the Board of Cleveland Bio Labs Inc. [NASDAQ-CBLI], and also serves on the Board of Directors of CytoLogic Inc, Lexi-Comp Inc, Riggs-Heinrich Media Inc, Highway Composites LLC, Monroeville Industrial Molding Inc, PIPO Inc and Cleveland Bio Labs Inc.

Dr. Boyle is currently a director of the Company. Dr.. Boyle is the Accounting Department Chair and a Professor at the University of Scranton. He has over 25 years of professional experience in the areas of finance, operations, corporate governance and business turnarounds, including over 18 years of experience in the healthcare field as a financial and operational executive. He has served in executive roles in start-up, middle market and Fortune 500 companies, where he has held the titles of Chief Executive Officer, President, Chief Operations Officer and Chief Financial Officer, prior to which he worked as a Senior Auditor for KPMG Peat Marwick. Dr. Boyle also led the national financial revenue operations for Quest Diagnostics Incorporated, and was Chief Financial Officer for Doylestown Hospital and Health Care System and MediMax Incorporated. Dr. Boyle also serves on the board of directors for Allied Services Healthcare System and Chiliad, Incorporated. He holds a DBA from Kennesaw State University. an MBA from Columbia University and a BS in Accounting from the University of Scranton.

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Mr. Monton is currently a director of the Company. After graduating Magna Cum Laude from Michigan State University Honors College, Mr. Monton joined Procter & Gamble (P&G) in 1968 as a research scientist. He holds one of P&G’s key beauty care patents. He led a number of successful projects including the launch of Pantene Pro V, which has become the world’s largest beauty care brand. Mr. Monton worked for P&G in Europe from 1979 to 1982 where he helped lay the foundation for P&G becoming the most successful health and beauty care company in Europe. As a director in P&G’s Latin American organization from 1984 to 1988, he managed projects in the health, beauty, cleaning, and food industries. Mr. Monton worked at P&G’s Asian headquarters in Kobe, Japan from 1996 to 2001, leading much of P&G’s Asian Beauty Care organization and serving on the China Beauty Care Management Leadership Team. From 2001 until 2005, he was a Director in P&G’s External Relations Department where he led much of the company’s connections with the media and outside influencers. Mr. Monton retired from P&G in 2005 where he was honored for 37 years of outstanding service. Mr. Monton currently serves on the Boards of the Northern Kentucky University’s Business School and the International Business Center. He is a frequent speaker at international business seminars, guest lectures on management to MBA students, and sponsors scholarships for business students to work as interns outside the United States. Mr. Monton is a member of the Foreign Policy Leadership Council of Cincinnati and also uses his expertise to consult for companies on strategic management and organizational issues.

Dr. Ricciardi is the founder of GeneLink and is a Professor of Microbiology at the University of Pennsylvania, where he is a Graduate Group Chairman. He received his Ph.D. from the University of Illinois at Urbana. He was a Postdoctoral Fellow at Brandeis University and Harvard Medical School in the Department of Biological Chemistry where he was awarded Fellowships by the American Cancer Society, National Institutes of Health and the Charles A. King Trust. He developed one of the first genomic technologies, which was used widely to discover and map many hundreds of genes by identifying the proteins they encode. Most of Dr. Ricciardi’s research has centered on understanding basic mechanisms of cancer. He identified one of the first gene activators from a virus that can make cells cancerous by enabling them to escape the immune system. These studies, in turn, disclosed a key mechanism that modulates NF-kappa-B, the master regulator of the immune system. Dr. Ricciardi has also developed and received patents on recombinant delivery vectors for potential use as vaccines and gene therapy. In addition, Dr. Ricciardi discovered new replication proteins from human viruses that cause cancer (KSHV) and possibly chronic fatigue (HHV-6). He is applying a rapid mechanistic assay he developed (US Patent) that is being used to screen tens of thousands of compounds from chemical libraries in order to discover therapeutics that will inhibit these and other disease related human viruses. Dr. Ricciardi has served as a consultant to Children’s Hospital of Philadelphia, Smith Kline Pharmaceuticals, the NIH, and was awarded a NATO Visiting Professorship at Ferrara Medical School and has been an invitational speaker at numerous international scientific meetings and universities. He has authored nearly 100 publications.

Mr. Smith has spent more than 25 years either building startups or working for high growth companies. Michael’s career started with budgeting for The American-Water System. He followed that position with a couple of Information Technology and Operations roles, both as a consultant and corporate executive, most notably Tempur-Pedic. Michael led both domestic and global implementation and operations teams as the company grew from $17 million to $1B billion. He has spent his entire career leading, organizing, and implementing all facets of a company’s operations including sales, customer service, manufacturing, and finance. Michael’s real passion and direction is utilizing his serial entrepreneur background to help companies structure themselves to prepare for high volume due to the results of the Sales and Marketing efforts of the company. With two plus years of direct experience in both the GeneLink and their market partner brands Dermagenetics, geneME, and foru, Michael is a natural fit for GeneLink’s business model. Michael happily moved his family to Florida in March of 2012 to assume his current role.

Section 16(a) Beneficial Ownership Reporting Compliance.

Based solely on the Company’s review of certain reports filed with the Securities and Exchange Commission pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”), and written representations of the Company’s officers and directors, the Company believes that all reports required to be filed pursuant to the 1934 Act with respect to transactions in the Company’s Common Stock through December 31, 2012 were filed on a timely basis.

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Code of Ethics

We adopted a Code of Ethics within the meaning of Item 406(b) of SEC Regulation S-K. This Code of Ethics applies to our principal executive officer, principal financial officer and principal accounting officer. This Code of Ethics is publicly available on our website. If we make substantive amendments to this Code of Ethics or grant any waiver, including any implicit waiver, we will disclose the nature of such amendment or waiver on our website or in a report on Form 8-K within four days of such amendment or waiver.

Meeting of Directors

The Board of Directors met ten times in 2012. Each director attended at least 75% of the meetings.

Communications with the Board of Directors

You may contact the Board of Directors as a group by writing to them c/o GeneLink, Inc., 8250 Exchange Drive, Suite 120, Orlando, Florida 32809, Attention: Chairman. Any communications received will be forwarded to all Board members.

Audit Committee Financial Expert

Our Board of Directors has determined that at least one person serving on the Audit Committee is an “audit committee financial expert” as defined under Item 407(d)(5) of SEC Regulation S-K. Our Board of Directors has determined that Dr. Douglas Boyle, the Chair of the Audit Committee, is an “audit committee financial expert” and is independent as defined under applicable SEC and Nasdaq rules.

Audit Committee

Dr. Boyle (Chair) and Mr. Monton, who both are independent members of the Board of Directors, served on the Audit Committee for the fiscal year ended December 31, 2012. The Board of Directors has determined that Dr. Boyle, a director of the Company, is the audit committee financial expert as defined in section 3(a)(58) of the Exchange Act and the related rules of the SEC, based upon his professional and educational background as set forth above in this Item 10.

Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation and overseeing the work of the independent auditor. In recognition of this responsibility, the Audit Committee has established a policy to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm. Prior to engagement of the independent auditor for the next year’s audit, management will submit a detailed description of the audit and permissible non-audit services expected to be rendered during that year. In addition, management will also provide to the Audit Committee for its approval a fee proposal for the services proposed to be rendered by the independent auditor. Prior to the engagement of the independent auditor, the Audit Committee will approve both the description of audit and permissible non-audit services proposed to be rendered by the independent auditor and the budget for all such services. The fees are budgeted and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service.

During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires separate pre-approval before engaging the independent registered public accounting firm. To ensure prompt handling of unexpected matters, the Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.

Nominating Committee

The Board of Directors has not created a standing Nominating Committee. The directors are or have been actively involved in the Company’s business and all are able to contribute valuable insights into the identification of suitable candidates for nomination to the Board. As a result, the Company believes that it is in its best interest that the entire Board oversee the composition of the Board of Directors and therefore, the Company has not created a standing nominating committee of the Board. Recommendations to the Board of Directors are approved by a majority of directors. The full Board of Directors is responsible for identifying and evaluating individuals qualified to become Board members and to recommend such individuals for nomination. All candidates must possess an unquestionable commitment to high ethical standards and have a demonstrated reputation for integrity. Other facts considered include an individual’s business experience, education, civic and community activities, knowledge and experience with respect to the issues impacting the biogenetic industry and public companies, as well as the ability of the individual to devote the necessary time to service as a director.

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The Board of Directors does not have a formal policy with regard to the consideration of any director candidates recommended by security holders. The Board of Directors will consider candidates recommended by shareholders. All nominees will be evaluated in the same manner, regardless of whether they were recommended by the Board of Directors, or recommended by a shareholder. This will ensure that appropriate director selection continues.

ITEM 11.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our compensation program for senior executives is administered by the Compensation Committee of our Board of Directors. The Compensation Committee is responsible for considering and making recommendations to the Board of Directors regarding executive compensation and is responsible for administering our stock option and executive incentive compensation plans. The Compensation Committee is committed to ensure that its compensation plan is consistent with our company goals and objectives and the long term interests of its shareholders.

Overview of Compensation Philosophy and Objectives

Our compensation programs are designed to deliver a compensation package which is competitive in attracting and retaining key executive talent in our industry. Different programs are geared to short and longer term performance with the goal of increasing shareholder value over the long term. The Compensation Committee believes that our executive compensation should encompass the following:

help attract and retain the most qualified individuals by being competitive with compensation packages paid to persons having similar responsibilities and duties in comparable businesses;

motivate and reward individuals who help us achieve our short term and long term objectives and thereby contribute significantly to the success of our company;

relate to the value created for shareholders by being directly tied to our financial performance and condition and the particular executive officer’s contribution; and

reflect the qualifications, skills, experience, and responsibilities of the particular executive officer.

The Compensation Committee has approved a compensation structure for the named executive officers, determined on an individual basis, which incorporates three key components: base salary , stock options and other benefits.

In connection with its compensation determinations, the Compensation Committee seeks the views of the Chief Executive Officer with respect to appropriate compensation levels of the other officers.

Executive Compensation Components

For the year ended December 31, 2012, the principal components of compensation for the named executive officers were annual base salary, stock options and other benefits.

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Annual Base Salary

In general, base salary for each employee, including the named executive officers, is established based on the individual’s job responsibilities, performance and experience; our size relative to competitors; the competitive environment; a general view as to available resources of the Company and the compensation agreed to in employment agreements with the named executive officers.

Stock Options

We provide a long term incentive opportunity for each of the named executive officers through awards of stock options. Our stock option program is a long term plan designed to create a link between executive compensation and our financial performance, provide an opportunity for increased equity ownership by executives, and maintain competitive levels of total compensation.

All stock options have been granted at an exercise price equal to or above the closing market price of our common stock on the date of grant. Stock options generally vest in four equal annual installments; however, options will immediately vest in full upon a change on control of the Company. Stock options expire ten years from date of grant.

Other Benefits

Healthcare Benefits. Our employees have a choice of coverage options under our company-sponsored group health insurance plan. Each option covers the same services and supplies but differs in the quality of provider network.

Life Insurance. We maintain a basic group life insurance plan that provides for basic life and accidental death and dismemberment coverage. We pay the premiums under this plan.

Vacation and paid time off. All employees are eligible for paid vacation based on years of service as well as sick and other personal time.

Other Perquisites. Nutritional and skin care products are made available for certain executives and immediate family.

Retirement Benefits. We have yet to establish a 401(k) plan for our employees but it is anticipated. Named executive officers would be eligible to participate in these plans on the same terms as other eligible employees, subject to any legal limits on the amount that may be contributed by executives under the plans.

Deductibility of Compensation Expenses

Pursuant to Section 162(m) under the Internal Revenue Code, certain compensation paid to executive officers in excess of $1 million is not tax deductible, except to the extent such excess constitutes performance-based compensation. The Compensation Committee has and will continue to carefully consider the impact of Section 162(m) when establishing incentive compensation plans and could, in certain circumstances, approve and authorize compensation that is not fully tax deductible.

Accounting and Tax Considerations

We consider the accounting implications of all aspects of our executive compensation program. Our executive compensation program is designed to achieve the most favorable accounting (and tax) treatment possible as long as doing so does not conflict with the intended plan design or program objectives.

REPORT OF COMPENSATION COMMITTEE

The Compensation Committee of our Board of Directors currently consists of Mr. Monton (Chair) and Dr. Boyle. The Compensation Committee is responsible for considering and making recommendations to the Board of Directors regarding executive compensation and is responsible for administering our stock option and executive incentive compensation plans.

The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this report. Based on the review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K.

	COMPENSATION COMMITTEE

	James Monton (Chair) Dr. Douglas M. Boyle

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE
Name and principal position	Year	Salary ($)	Bonus ($)	Stock Awards ($)	Option Awards ($)	Non-Equity Incentive Plan Compensation ($)	Nonqualified Deferred Compensation Earnings ($)	All Other Compensation ($)	Total ($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Bernard L. Kasten Jr.,	2012	15,954	-	-	71,938			7,768	95,660
M.D. Chief Executive Officer (1)	2011	15,152	-	-	201,563	-	-	8,229	224,944
John A. Webb,	2012	99,130	-	-	27,750	-	-	5,989	132,869
CFO/ Vice President of Operations (2)	2011	110,000	19,250	-	69,813	-	-	11,543	210,606
Susan Hunt, Interim CFO (3)	2012	71,193	-	-	3,000			3,287	77,480

NOTE: SOME LINE ITEMS DELETED AT END OF TABLE

¹ Dr. Kasten was appointed Chief Executive Officer on December 30, 2010. Dr. Kasten’s compensation as CEO is presently set at minimum wage, and includes health care benefits. No employment contract exists for Dr. Kasten. Because of the late appointment in 2010, all compensation for that year relates to service as Chairman of the Board of Directors for that year.

² Mr. Webb was appointed Chief Financial Officer on June 1, 2011. His employment provides for a base salary of $110,000 plus healthcare and vacation benefits. The agreement also allows for certain bonus, separation and termination provisions. Mr. Webb received a bonus of $19,250 in 2011. Mr. Webb’s employment ended on July 13, 2012. Separation compensation of $27,500 is included in base pay amounts.

³Ms. Hunt was appointed Interim Chief Financial Officer on July 13, 2012. Her base salary is $75,000 plus healthcare and vacation benefits.

NOTE: FOOTNOTE 5 DELETED.

Agreements with Executive Officers

The Company entered into a consulting agreement with Dr. Robert Ricciardi (shareholder and officer) dated February 24, 1998. The initial term of the agreement was five (5) years. Pursuant to an agreement dated September 27, 2007, Dr. Ricciardi agreed to reduce the accrued compensation payable to him to $90,000 as of September 30, 2007, payable when the Board of Directors of the Company determines that the Company’s financial position can accommodate such payments, and to reduce the compensation payable to him for future services to be rendered pursuant to the consulting arrangement to $30,000 per year, payable in monthly installments of $2,500 each commencing, October 2007 and payable on the last day of each month. On January 18, 2011, Dr. Ricciardi chose to apply and convert to common stock his accrued compensation of $90,000 to 1,800,000 shares in the Confidential Private Placement.

John A. Webb, former CFO and Vice President of Operations, entered into an employment agreement with the Company effective February 16, 2010. His position at the time was Controller for the Company. Pursuant to this employment agreement, Mr. Webb received an annual base salary of $110,000, is entitled to receive annual bonuses based on personal and Company performance and is entitled to receive severance payments if he is terminated without cause. Mr. Webb received bonuses in 2011 of $19,250, and no bonus was received for 2012. Mr. Webb’s employment terminated July 13, 2012 and he received severance payments of $27,500 through November 16, 2012 and continued health insurance coverage through September 30, 2012.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END

OPTION AWARDS
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)		Number of Securities Underlying Unexercised Options (#) Unexercisable (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)	Option Exercise Price ($) (e)		Option Expiration Date (f)
Bernard L. Kasten, Jr., M.D.		1,625,000				$	0.08	June 1, 2017
Bernard L. Kasten, Jr., M.D		100,000				$	0.12	May 20, 2018
Bernard L. Kasten, Jr., M.D.		325,000		495,833		$	0.50	July 28, 2018
Bernard L. Kasten, Jr., M.D		1,012,500		337,500		$	0.08	July 7, 2020
Bernard L. Kasten, Jr., M.D		218,750		218,750		$	0.10	January 25, 2021
Bernard L. Kasten, Jr., M.D		300,000		800,000		$	0.08	May 20, 2021
Bernard L. Kasten, Jr., M.D		25,000		75,000		$	0.03	September 1, 2022
John A. Webb		250,000				$	0.50	July 28, 2018
John A. Webb		250,000				$	0.13	February 16, 2020
John A. Webb		262,500				$	0.10	January 25, 2021
John A. Webb		100,000				$	0.08	May 20, 2021
John A. Webb		137,500				$	0.06	January 1, 2022
Susan Hunt		37,500		112,500		$	0.02	July 1, 2022

NOTE: SOME LINE ITEMS DELETED AT END OF TABLE

DIRECTOR COMPENSATION

Directors do not receive any cash compensation for their service as directors of the Company or for attending any meetings.

DIRECTOR COMPENSATION
Name (a)	Fees Earned ($) (b)		Stock Awards ($) (c)	Options Awards ($) (d)		Non-Equity Incentive Plan Compensation ($) (e)	Change in Pension Value and Nonqualified Deferred Compensation ($) (f)	All Other Compensation ($) (g)	Total ($) (h)
Douglas M. Boyle , DBA(1)					15,000					15,000
James A. Monton (2)					3,000					3,000
Robert P. Ricciardi, Ph.D. (3)		30,000			3,000					33,000
Bernard L. Kasten, M.D. (4)					3,000					48,000

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⁽¹⁾ On September 1, 2012 Dr. Boyle received options to acquire 500,000 shares of Common Stock at an exercise price of $0.03 per share, of which one fourth vested immediately and one fourth vest additionally on each of the next three anniversary dates thereafter.

⁽²⁾ On September 1, 2012 Mr. Monton received options to acquire 100,000 shares of Common Stock at an exercise price of $0.03 per share, of which one fourth vested immediately and one fourth vest additionally on each of the next three anniversary dates thereafter.

⁽³⁾ On September 1, 2012 Dr. Ricciardi received options to acquire 100,000 shares of Common Stock at an exercise price of $0.03 per share, of which one fourth vested immediately and one fourth vest additionally on each of the next three anniversary dates thereafter. Dr. Ricciardi also received a stipend of $30,000 for consulting services to the Company.

⁽⁴⁾On September 1, 2012 Dr. Kasten received options to acquire 100,000 shares of Common Stock at an exercise price of $0.03 per share, of which one fourth vested immediately and one fourth vest additionally on each of the next three anniversary dates thereafter. Dr. Kasten also serves as CEO of GeneLink and additional compensation information is included in the executive compensation table above.

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth certain information as of March 3, 2013 regarding the ownership of Common Stock (i) be each person known by the Company to be the beneficial owner of more than 5% of the outstanding Common Stock, (ii) by each current officer and director of the Company, (iii) by each nominee for director, and (iv) by all current officers and directors of the Company as a group.

The beneficial owners and amount of securities beneficially owned have been determined in accordance with Rule 13d-3 under the Exchange Act and, in accordance therewith, includes all shares of the Company’s Common Stock that may be acquired by such beneficial owners within 60 days of March 3, 2013 upon the exercise or conversion of any options, warrants or other convertible securities. This table has been prepared based on 253,352,022 shares of Common Stock outstanding on March 3, 2013. Unless otherwise indicated, each person or entity named below has sole voting and investment power with respect to all Common Stock beneficially owned by that person or entity, subject to matters set forth in the footnotes to the table below.

Name	Number of Shares Beneficially Owned		Approximate Percentage Of Stock Outstanding
John A. Marshall 3330 Willowfork Place Katy, TX 77494		41,666,667		16.3%
Kenneth R. Levine 2 Oaklawn Road Short Hills, NJ 07078		26,130,706⁽¹⁾		9.7%
Robert Trussell 167 W. Main Street Suite 1500 Lexington, KY 40507		16,166,667⁽²⁾		6.3%
Gene Elite, LLC 1481 North Ocean Boulevard Pompano Beach, FL 33062		14,000,000⁽³⁾		5.3%
Chesed Congregation of America One State Street Plaza, 29^th Floor New York, NY 10004		13,958,334⁽⁴⁾		5.2%
Bernard L. Kasten, Jr. M.D. 4380 27^th Court S.W., Apt. 104 Naples, FL 34116		13,084,894⁽⁵⁾		5.0%
Robert P. Ricciardi, Ph.D. 831 Newhall Road Kennett Square, PA 19348		6,635,000⁽⁶⁾		2.6%
James Monton 11489 Grandstone Lane Cincinnati, Ohio 45249		1,337,500⁽⁷⁾		*
Douglas M. Boyle, DBA 111 Weatherly Street Dalton, PA 18414		925,000⁽⁸⁾		*
Michael Smith 3732 Winding Lake Cir Orlando, FL 32835		125,000⁽⁹⁾		*
Directors, Officers and Management as a Group		22,107,394^{(5)(6)(7)(8)⁽⁹⁾}		8.4%

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(1)

Includes 10,566,219 shares and currently exercisable options to acquire 643,750 shares of Common stock and 350,000 shares of Common Stock held by a retirement plan for Mr. Levine. Also includes 1,300,000 shares and currently exercisable warrants to acquire 13,270,737 shares of Common Stock held by First Equity Capital Securities, Inc. (FECS) of which Mr. Levine is president and owner.

(2)

Includes 16,166,667 shares and currently exercisable warrants to acquire 875,000 shares of Common Stock.

(3)

Includes 6,000,000 shares and currently exercisable warrants to acquire 8,000,000 shares of Common Stock.

(4)

Includes 13,333,334 shares of Common Stock issuable upon the conversion of convertible notes as of February 28, 2013. Chesed holds $1,000,000 principal balance of convertible notes, which have accrued $333,334 of interest through February 28, 2013 and convert at an exercise price of $.10 per share.

(5)

Includes 9,169,269 shares and currently exercisable options to acquire 3,916,625 shares of Common Stock.

(6)

Includes 4,510,000 shares and currently exercisable options and warrants to acquire 2,125,000 shares of Common Stock.

(7)

Includes 775,000 shares and currently exercisable options and warrants to acquire 512,500 shares of Common Stock.

(8)

Includes 925,000 currently exercisable options and warrants to acquire 550,000 shares of Common Stock.

(9)

Includes 125,000 currently exercisable options to acquire 125,000 shares of Common Stock

*less than1%

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE

During the year ended December 31, 2012, the Company sold 52,500,000 shares of restricted Common Stock of the Company at an exercise price of $0.03 per share pursuant to a Confidential Private Offering Memorandum, and received an aggregate gross amount of $1,504,000.

In connection with the above offering, the Company incurred a total of $71,000 in placement fees and expenses and issued warrants to acquire 5,041,667 shares of Common Stock at an exercise price of $0.03 per share to First Equity Capital Securities, Inc., as placement agent, in connection with the sale of some of these units. Kenneth R. Levine, a holder of more than five percent of the equity securities of the Company and a member of the Company’s Scientific Advisory Board, is an officer and owner of First Equity Capital Securities, Inc.

During the year ended December 31, 2011, the Company sold 48,270,000 shares of restricted Common Stock of the Company at an exercise price of $0.05 per share pursuant to a Confidential Private Offering Memorandum, and received an aggregate gross amount of $2,413,500.

In connection with the above offering, the Company incurred a total of $125,180 in placement fees and expenses and issued warrants to acquire 3,104,500 shares of Common Stock at an exercise price of $0.05 per share to First Equity Capital Securities, Inc., as placement agent, in connection with the sale of some of these units. Kenneth R. Levine, a holder of more than five percent of the equity securities of the Company and a member of the Company’s Scientific Advisory Board, is an officer and owner of First Equity Capital Securities, Inc.

First Equity Capital Securities, Inc. has been engaged by the Company to advise and support the Board and the Company with regard to numerous issues, including but not limited to, strategic business development, financial and operating issues, and legal relationships. First Equity Capital Securities, Inc. receives a $5,000 per month stipend for the services described above that it renders to the Company’s Board of Directors, payable when the Company has sufficient capital to make such payments. First Equity Capital Securities, Inc. has the right to convert any accrued and unpaid monthly stipend payments into common stock of the Company pursuant to the current Private Offering Memorandum or other offerings of the Company.. As of December 31, 2011, the Company had accrued $59,861 in such monthly stipend payments owed to First Equity which it has agreed to convert into common stock. On March 2, 2012, First Equity converted its accrued stipend for 2011 and the first three months of 2012 amounting to $74,361 in exchange for 1,497,226 restricted shares of GeneLink common stock. Such shares were issued into the name Kenneth R. Levine, principal and owner of First Equity. On March 15, 2012, GeneLink paid to First Equity a consulting fee in the amount of $80,000 in consideration for First Equity's work in relation to the transactions resulting in the Stock Purchase Agreement, the LDA and the closing thereof. GeneLink has agreed that certain legal fees incurred by First Equity are related to private placement services provided First Equity to GeneLink. During the year ended December 31, 2012 GeneLink reimbursed First Equity $105,647 for such legal fees.

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ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

REPORT FROM THE AUDIT COMMITTEE

The Audit Committee is responsible for considering management’s recommendation of independent certified public accountants for each fiscal year, recommending the appointment or discharge of independent accountants to the board of directors and confirming the independence of the accountants. It is also responsible for reviewing and approving the scope of the planned audit, the results of the audit and the accountants’ compensation for performing such audit, reviewing the Company’s audited financial statements, and reviewing and approving the Company’s internal accounting controls and discussing such controls with the independent accountants.

In connection with the audit of the Company’s financial statements for the year ended December 31, 2012 and December 31, 2011, the Audit Committee met with representatives from Hancock Askew & Co., LLP, the Company’s independent auditors. The Audit Committee reviewed and discussed with the Company’s financial management and financial structure, as well as the matters relating to the audit required to be discussed by Statements on Auditing Standards 61 and 90.

Based upon the review and discussions described above, the Audit Committee recommended to the Board of Directors that the Company’s financial statements audited by Hancock Askew & Co., LLP be included in the Company’s Annual Report on Form 10-K for year ended December 31, 2012 and December 31, 2011.

	Dr. Douglas M. Boyle (Chair)

	James Monton

Hancock Askew & Co., LLP was the Company’s independent public accountant for the years ended December 31, 2012 and December 31, 2011. Hancock Askew & Co., LLP audited the 2012 and 2011 statements included in the 2012 10-K statement.

Fees for Independent Auditors for Fiscal Years 2012 and 2011.

Set forth below are the fees billed by Hancock Askew & Co.,LLP for 2012 and 2011.

	2012		2011
Audit Fees:
Hancock Askew & Co. LLP	$	48,500	$	25,000

Total	$	48,500	$	25,000

Audit fees consist of fees billed for professional services rendered by the Company’s independent accountant for the audit of the Company’s annual financial statements, review of financial statements included in quarterly reports on Form 10-Q and services that are normally provided by the independent accountant.

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ITEM 15.

EXHIBITS

(1)

Financial Statements. The financial statements required to be filed are presented beginning on page 44.

(2)

Exhibits. The following Exhibits have been filed pursuant to Item 601 of Regulation S-K.

Exhibit Number	Description

21	Subsidiaries of the Registrant

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2	Certification of 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.

NOTE: ITEM 31.1 DELETED

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SIGNATURES

In accordance with Section 12 of the Securities Exchange Act of 1934, the registrant caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

	GENELINK, INC.
	Registrant

Date: November 14, 2013	/s/Bernard L. Kasten, Jr., M.D.
	Bernard L. Kasten, Jr., M.D.
	Chief Executive Officer

In accordance with the Exchange Act this report has been signed below by the following persons on behalf of the registrant and in the capacities and the dates indicated.

Signatures	Capacity	Date

/s/ Bernard L. Kasten, Jr., M.D.	Director	November 14, 2013
Bernard L. Kasten, Jr., M.D.	Principal Executive Officer

/s/ Ofer Fridfertig	Director	November 14, 2013
Ofer Fridfertig

/s/ Geoffrey Haar	Director	November 14, 2013
Geoffrey Haar

/s/ Robert P. Ricciardi	Director	November 14, 2013
Robert P. Ricciardi, Ph.D.

/s/ Michael G. Smith	Principal Financial Officer	November 14, 2013
Michael G. Smith