ITEM 1. DESCRIPTION OF BUSINESS.

GENERAL

GeneLink, Inc. (“GeneLink, the “Company”, “we” or “us”) is a publicly-held Pennsylvania corporation listed on the NASDAQ OTC Bulletin Board trading under the symbol “GNLK.” We are a bioscience company originally organized to offer to the public the safe collection and preservation of a family’s DNA material for later use by the family to identify and potentially prevent inherited diseases. More recently we have created a breakthrough methodology for SNP (single nucleotide polymorphism) based genetic profiling (patents issued and pending) and we intend to market and/or license these proprietary assessments to companies that manufacture or market to the nutraceutical, personal care, skin care and weight-loss industries.

We have never achieved a profit, having realized net losses each year, including operating losses before extraordinary items of $1,281,157 in 2005, $790,868 in 2006 and $1,560,624 in 2007. There can be no assurance that we will ever realize significant sales or become profitable.

We were founded in response to the explosion of information being generated in the field of human molecular genetics. Scientists are discovering an increasing number of connections between genes and specific diseases or physical attributes and tendencies. The growth of scientific knowledge in this area has been accelerating as a direct result of the National Institutes of Health Genome Project.

Our expansion into the bioscience field with our innovative genetic profiles help companies create and deliver more effective products — personalized wellness and “quality of life” products tailored to their customer’s individual needs — based on the science of genetics, thereby allowing the consumer and/or their health care provider to determine what vitamin/nutritional supplements, skin-care products, and health care or weight loss regimens are best for their individual needs.

We have developed proprietary SNP-based genetic profiles (named GeneLink Nutragenetic Profile^TM and Dermagenetics^® profiles). These profiles provide a means of predicting an individual’s inherent genetic capacity to combat such conditions as oxidative stress and other important selected areas of physiologic health. The profiles, for example, can measure a person’s potential to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds.

Our profile assessment enables nutritional and skin care companies and health care professionals to recommend a specific and targeted regime of antioxidant vitamins, nutrients or skin care formulations that have been specifically designed to compensate for predicted deficiencies and to help provide individuals the best of health and appearance.

In 2004, we formed a wholly owned subsidiary, Dermagenetics, Inc., to provide our genetically customized products and services to the skin and personal care market. In 2007, we formed a wholly owned subsidiary, GeneWize Life Sciences, Inc., to provide our genetically customized products and services to the nutrition market. GeneWize intends to formally launch its service offerings in the third quarter of 2008.

Oxidative Stress Profiles

The Oxidative Stress (OS) Profile (US patent pending, Australian patent issued) provides a means of predicting an individual’s inherent genetic capacity to combat oxidative stress. The profile can measure a person’s potential to efficiently control oxygen free radical damage, eliminate hydrogen peroxide, protect and repair oxidized phospholipids and destroy harmful environmental compounds.

This profile information will enable nutritional and skin care companies to recommend a specific and targeted regime of antioxidant vitamins, nutrients or skin-care formulations that have been specifically designed to compensate for predicted deficiencies. Thus, the OS profile can be used to make rational choices to help optimize nutritional and skin care needs to provide the best of health and appearance.

The profile examines genes of the OS family for the existence of SNPs (naturally occurring variations in genes) that can result in an amino acid substitution in the protein that is encoded by that gene. If such a protein is an OS enzyme, it may be less efficient in enzymatic activity, in which case oxidative damage to cellular proteins and DNA accumulates over time. It appears that some tissues are more vulnerable than are others to oxidative stress. SNPs in other oxidative stress genes have been associated with heart disease, cancer, neurological degeneration and aging.

A search for SNPs has the advantage of identifying genetic variations that reduce an individual’s antioxidant defense capacity. It can detect changes that are life-long and predicted to chronically affect the ability to defend against oxidative stress, aging and age related disease. Genetic profiling information based on SNPs analyses can be used to design appropriate antioxidant vitamin, nutrient and skin-care formulations that are specifically tailored to each individual.

Oxidative Stress for Skin Health and Skin Aging Profile

By simply swabbing the inside of one’s mouth and sending the collected sample to our laboratory, an individual can have a skin or personal care formulation specifically designed to compensate for associated deficiencies.

Currently, when a person sees wrinkles or lines, he or she may begin to apply a variety of products and creams that contain antioxidants such as retinoids. This approach is only partially effective because it typically begins only after the signs of aging have appeared. A superior strategy is to predict certain causes of the aging of the skin and initiate a therapy that is designed to match the individual’s genetic pattern and genetic risk of skin aging. For example, individuals with moderate or high risk of oxidative stress could be encouraged to initiate a therapy much earlier — even before outward signs of skin aging.

Our Skin Health test for skin aging looks for SNPs in several key genes that are associated with oxidative stress, skin irritation, photo aging and an individual’s ability to naturally defend against environmental stresses. Skin health test results can be used to guide consumers to skin therapies or skin products containing unique active ingredients (SNPActives™) and formulations designed to help alleviate specific oxidative stresses and other potential deficiencies in the skin.

Other SNP Profiles Developed by the Company

We have also developed a Cardiovascular Risk Profile and an Osteopenia Susceptibility Profile. Cardiovascular disease claims more lives each year than the next five leading causes of death combined. We have recently developed a Cardiovascular Risk Profile, that analyzes a broad collection of genes believes to play an important part in heart health, according to the latest research. Our Cardiovascular Risk Profile is designed to identify SNPs associated with increased risk of developing high blood pressure, atherosclerosis, inflammation, problems with vascular integrity and coronary artery disease.

Osteopenia is a condition that often leads to osteoporosis, a disease characterized by low bone density. Osteoporosis is responsible for 1.5 million fractures each year (including fractures of the vertebrae, forearms, wrists and hips). According to the National Osteoporosis Foundation, 1 in 3 women and at least 1 in 12 men will develop osteoporosis during their lifetime. Our Osteopenia gene test looks for SNPs in several key genes that are associated with bone density. Since osteoporosis can develop undetected for decades, this test may be a tool to help determine the future risk for fractures and related clinical conditions such as spinal column compression and bone breaks with or without falls and guide early interventions or therapies that help combat or prevent the condition.

We have developed a NQ01 SNP profile. NQ01 is a protein that contributes to the recharging Coenzyme Q10. Coenzyme Q10 is a natural compound made by the human body that helps cells produce energy and protect against free radicals that can damage DNA and other molecules of the cell. The NQ01 assessment is complete, ready to market and a provisional patent has been filed. We have also developed a DNA Integrity and Repair Panel which is complete and ready to market. We have developed an Alzheimer/Dementia Panel that requires some additional clinical validation.

Proposed Direct Selling/MLM Marketing Channel

We expect to launch “GeneWize Life Sciences” in the third quarter of 2008. GeneWize Life Sciences is a wholly owned subsidiary that will be a specialized health, beauty and wellness company that markets to consumers by developing a network of affiliates and customers. This type of marketing is commonly called “referral marketing” or Direct Selling/MLM marketing. The Direct Selling/MLM channel typically supports and welcomes new technologies; its top product sales categories are nutritional products followed by skin care products. The industry as a whole is in an eight-year growth trend of about 5% annually. Worldwide industry sales are approaching $100 billion and U.S. sales in 2005 were approximately $30.5 billion. In the Direct Selling/MLM marketing model, affiliate/distributors pay the company a small fee for the right to market products and are paid commissions only after sales are made. We believe that there is potential for success in this channel in part due to the high differentiation of its “genetically guided” (customized) nutrition and skin care versus one-size-fits-all nutrition and skin-care products.

We have engaged a nationally recognized Direct Selling/MLM advisory group that specializes in developing and executing start-up and ongoing business strategies specifically for companies in this marketing channel. To help recruit affiliates/distributors, we intend to engage an experienced sales and marketing director and 3 or 4 support staff for marketing and management. We also expect to engage a nationally recognized Direct Selling/MLM branding and positioning agency that can assist us to develop media, marketing and branding strategies for this channel. Product manufacturing,

shipping and distributor kit fulfillment will be outsourced.

There is no guarantee that we will be able to meet the proposed timeline discussed above, that we will be successful in this marketing channel or that we will be able to attract a sufficient number of affiliate/distributors and/or customers.

Dermagenetics

We formed a subsidiary known as “Dermagenetics, Inc.” which has created and is distributing DNA UltraCustom skin cream, genetically designed to an individual’s needs, specifically to the spa industry. Currently, Dermagenetic is not actively marketing to the spa industry.

DNA Banking

We have ceased actively marketing DNA banking, wherein specimens can be collected during an individual’s lifetime or up to 36 to 40 hours after death using our DNA Collection Kit^® for long-term storage at the University of North Texas Health Science Center (the “Health Science Center”). The Health Science Center will continue to store the DNA specimen for a 75 year period, for all existing clients who have sent in DNA for banking. Upon a client’s request, and upon the payment of a retrieval fee, the stored DNA specimen can be retrieved and sent to a laboratory for testing. The Health Science Center is no longer obligated to receive and store any additional DNA specimens.

Affiliates and Licensing and Distribution Partners

We have entered into agreements with several laboratories pursuant to which these laboratories perform SNP genotyping of samples provided by us for any genetics-based products that we may develop.

In December 2007, we entered into a license and distribution agreement with Solgar Vitamin and Herb, pursuant to which Solgar will manufacture, market and distribute a line of premium genetically guided dietary supplements utilizing the Company’s Nutritional System™ to Solgar’s health food and specialty natural food retailers North America.

In June 2007, we entered into a license and distribution agreement with PhytoRich, LLC, pursuant to which PhytoRich will distribute our nutritional care and skin care systems to its medical practitioner customers.

In February 2006, we entered into a distribution agreement with Rejuvenation Plus Pty Ltd, an international skincare and cosmetics company, pursuant to which that company has been granted the exclusive right to distribute products based upon our technology in Australia and New Zealand.

We have a Distribution Agreement with Food Science Corporation to develop and market personalized nutritional products linked to our genetic profiling technology. Food Science has been a leader in nutritional research by setting new standards of quality in the formulation of nutritional supplements created exclusively for health care professionals and their patients. Food Science focuses on innovation and product effectiveness and serves a loyal client base of over 12,000 medical doctors, chiropractors, osteopaths and nutritionists.

Intellectual Property

On May 1, 2007, we received a U.S. patent for our proprietary method for assessing skin health in humans. We have filed a series of U.S. patent applications relating to the our DNA Collection Kit^® and methods for assessing a human subject’s susceptibility to various medical conditions, including skin health, oxidative damage, osteoporosis and other bone density disorders and obesity and for methods of selecting and measuring the dosage of preventative agents for such conditions. There can be no assurance that we will receive patent protection on our methods or procedures. We are negotiating licensing these proprietary assessments to companies that manufacture or market to the $100 billion plus nutraceutical, personal care, skin care, and weight-loss industries.

We believe that our gene profiles offer marketing companies the information they need to create and sell more effective products tailored to their customer’s individual needs — based on the science of genetics. By simply swabbing the inside of one’s mouth (using our patented DNA Collection Kit^®) and sending the collected sample to our laboratories — consumers can be directed to personalized products — specifically formulated to help compensate for their predicted deficiencies.

We have received Australian Patent #2002230953 “Kits and Methods for Assessing Oxidative Stress; Trademark: Dermagenetics #78398892 and 78398898 (for the Dermagenetics face design) and #78412723 for SNP Actives.

We have also developed and received a patent (Patent #6,291,171) on a non-invasive DNA Collection Kit^® for the collection of DNA specimens of clients. No licensing or training is necessary for the collection by a client of his or her DNA specimen. The DNA Collection Kit^® consists of several swabs, collection accessories, complete instructions and a mailing envelope; the kit and kit elements are bar coded to facilitate tracking, control and confidentiality. The collection process is self administered and non-invasive (the DNA specimen is obtained by swabbing the inside of the cheek) and takes less than five minutes to complete. The kit is classified as a non-medical device. There is no assurance that the patent will prevent others from gathering DNA in a similar manner.

We have received trademark protection for our name and logo and for the name “DNA Collection Kit®.”

Competition

Our potential competitors in the United States and abroad in the field of personalized nutrition and skin care are numerous and include, among others, major pharmaceutical and diagnostic companies, specialized biotechnology firms, universities and other research institutions. Many of our potential competitors have considerably greater financial technical, marketing and other resources than we do, which may allow these competitors to discover important genes or successfully commercialize these discoveries before we could.

The business of manufacturing, distributing and marketing nutritional supplements and personalized skin care and skin health products is highly competitive. Many of our competitors are substantially larger and have greater financial resources with which to manufacturer and market their products. The barriers to competition are low in these markets because the products are generally not protected

by patents. Our ability to remain competitive depends on the successful introduction, marketing, promotion, and addition of new offerings to our product line.

Government Regulations

Pursuant to a letter dated January 23, 1996, the Food and Drug Administration has determined that our kit is a device, but is not subject to active regulations by the Center for Devices and Radiological Health. However, any change in the current regulations could result in the kit becoming a regulated device.

Employees and Labor Relations

We consider our labor relations to be good, and none of our employees is covered by a collective bargaining agreement. As of March 1, 2008, we employed or engaged individuals in the following areas:

		Number of
Category		Employees and Consultants
Sales and Marketing		3
General and Administration, including Customer Service		5
Research and Development		7

Scientific Advisory Board

Our Scientific Advisory Board consists of Dr. Robert P. Ricciardi, Dr. Bernard L. Kasten, Dr. Harry Harrison, Dr. James Simpkins, Dr. Donald Cannon, Dr. Robert P.K. Keller and Dr. Robert L. Kagan. Dr. Ricciardi and Dr. Kasten are members of our Board of Directors.

RISK FACTORS

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

IF OUR FORMER CHIEF EXECUTIVE OFFICER PREVAILS WITH RESPECT TO HIS LITIGATION AGAINST US, WE MAY NOT BE ABLE TO PAY ANY JUDGMENT AND COULD BE FORCED TO CEASE OUR OPERATIONS.

On October 14, 2005, we terminated the employment of John R. DePhillipo, our former Chief Executive Officer and President. In November 2005, Mr. DePhillipo brought suit against us alleging, among other things, that he was terminated without cause, that we breached the terms of his employment agreement and that he is entitled to receive $84,000 of back salary and at least $1,500,000 of salary throughout the remainder of the term set forth in such employment agreement. We have denied such allegations and have brought counterclaims against Mr. DePhillipo alleging that Mr. DePhillipo was terminated for cause, that Mr. DePhillipo breached his fiduciary duty to us and alleging breach of fiduciary duty, conversion, negligent misrepresentation, unjust enrichment and fraud. The trial is currently scheduled to commence April 14, 2008. If Mr. DePhillipo prevails in this litigation and obtains a judgment against us for all or any substantial portion his claim, it is likely that we will not be able to pay any such judgment and may be forced to cease operations. As all of our assets have been pledged to our secured creditors, it is unlikely that our shareholders would receive any distributions if we were forced to cease its operations and liquidate in the event of Mr. DePhillipo prevailing in the litigation.

IF WE DEFAULT ON OUR OBLIGATIONS WITH RESPECT TO OUR SECURED OR UNSECURED DEBT, OUR LENDERS AND CREDITORS COULD FORECLOSE UPON OUR ASSETS.

In 2006 and 2007, we entered into a series of secured convertible loan financings pursuant to which we have pledged all of our assets as collateral for the repayment of the secured convertible loan obligations. The secured convertible loan obligations mature on May 12, 2011. As of December 31, 2007, $728,812 of principal and interest were outstanding on the secured convertible loans. These notes were convertible into 14,576,240 shares of our Common Stock as of December 31, 2007. If the conditions to converting these loans are not met, it is unlikely that we would be able to repay these loans without refinancing, extending, modifying or converting such obligations. If we are unable to repay our obligations with respect to such loans or to refinance, extend, modify or convert such loans, the Lenders would be entitled to foreclose against such collateral, and in such event we would be required to cease operations.

Additionally, we owed $583,567 of accounts payable and accrued expenses as of December 31, 2007. If we are unable to generate sufficient revenues or raise sufficient funds to meet these obligations as they become due, we may default upon these obligations and may be required to cease our operations.

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.

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

	•		the successful commercialization of our existing products and services;
	•		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
	•		the 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 HAVE A HISTORY OF LOSSES AND EXPECT 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 expect to continue to incur losses for the foreseeable future. Our accumulated deficit as of December 31, 2007 was $12,681,698. Our expenses have consisted principally of research and development, salaries and for general and administrative expenses incurred while building its business infrastructure. We expect to continue to experience significant operating losses in the future as we continue our research and development efforts and expand our marketing and sales force in an effort to commercialize our products and services. We plan to increase operating expenses in anticipation of increasing revenues. If our revenue growth is slower than anticipated or operating expenses exceed expectations, our losses will significantly increase. Even if we were to achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

OUR BUSINESS CURRENTLY DEPENDS PRIMARILY ON THE SUCCESS OF OUR LICENSING PROGRAM, WHICH IF UNSUCCESSFUL, WILL THREATEN OUR SURVIVAL.

     A principal element of our current business strategy is to enter into licensing arrangements with companies to manufacture products incorporating our technologies. We do not currently distribute or sell our products, although we do intend to do so in the foreseeable future. Thus, our current prospects are substantially dependent on the receipt of royalties from licensees of our technologies. We face challenges in entering into new license agreements. During discussions with potential licenses, significant negotiation issues arise from time to time. We can not be assured that prospective licensees will be persuaded during negotiations to enter into a license agreement with us, either at all or on terms acceptable to us.

     The royalties we receive from licensees depend on their efforts and expenditures over which we have no control. Because it is up to our licensees to decide when and if they will introduce products using our technology, we cannot predict when and if our licensees will generate substantial sales of such products. The amount and timing of royalty payments are dependent on the ability of our licensees to gain successful regulatory approval for, market and sell products incorporating our technologies. Failure of certain licensees to gain regulatory approval, if required, 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 licensees fail to pursue the development or marketing of these products as planned, our revenue and profits would 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 licensees 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 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.

WE HAVE A SIGNIFICANT NUMBER OF SECURITIES OUTSTANDING THAT ARE CONVERTIBLE INTO OUR COMMON STOCK, AND THE CONVERSION OF THESE SECURITIES COULD RESULT IN SUBSTANTIAL DILUTION TO EXISTING STOCKHOLDERS.

     We have issued convertible secured promissory notes that are convertible into shares of our common stock at $0.05 per share, which conversion prices could be substantially less than the market price of our common stock at the time of conversion. The issuance of stock at a price that is less than the market price could have an immediate adverse effect on the market price of our common stock. In addition, we have issued options and warrants to acquire shares of our common stock. See Note 10 to our audited financial statements included in this report for more information regarding the convertible secured promissory notes, options and warrants. We may issue additional convertible notes or warrants in connection with financing arrangements and may grant additional stock options that may further dilute our common stock. The exercise of such securities would have a dilutive effect on our common stock. Also, to the extent that shareholders

who acquire shares of our common stock under all the foregoing agreements sell those shares in the open market, the price of our shares may decrease due to additional shares in the market.

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

Although the our Common Stock is listed on the NASDAQ OTC Bulletin Board, 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 1998.

WE EXPECT FUTURE DILUTION TO SHAREHOLDERS AND INVESTORS.

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.

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 business and prospects. We are in the process of rebranding and repositioning our company and creating a network of independent distributors. 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 establishing a viable network of independent distributors, developing brand awareness and expanding our market presence. Our prospects for profitability must be considered in light of our evolving business model. These factors make it difficult to assess our prospects.

IF ETHICAL AND OTHER CONCERNS SURROUNDING THE USE OF GENETIC INFORMATION BECOME WIDESPREAD, WE MAY HAVE LESS DEMAND FOR THE 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 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. We are 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. Our ability to be competitive therefore will depend, in significant part, on our success in recruiting and retaining distributors through an attractive compensation plan, the maintenance of an attractive product portfolio and other incentives. We cannot ensure that our programs for recruitment and retention of distributors will be successful, and if they are not, our financial condition and operating results would be harmed.

THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNPROVEN.

The market for our products and services is at an early state of development and may not continue to grow. The general scientific community has only a limited understanding of the role of genes in predicting disease. The marketplace may never 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 limited success to date. We can achieve broad market acceptance only with substantial education about the benefits and limitations 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.

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 tests 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.

WE ARE DEPENDENT ON A LIMITED NUMBER OF INDEPENDENT SUPPLIERS, LABORATORIES AND MANUFACTURERS OF OUR PRODUCTS.

We rely entirely on a limited number of third parties to supply and manufacture our products and to perform laboratory tests on our behalf. Our manufacturers produce our products on a purchase order basis only and can terminate their relationships with us at will. These third parties may be unable to satisfy our supply requirements, manufacture our products on a timely basis, fill and ship our orders promptly, provide services at competitive costs or offer reliable products and services. The failure to meet of any of these critical needs would delay or reduce product shipment and adversely affect our revenues, as well as jeopardize our relationships with our independent distributors and customers. In the event any of our third party manufacturers were to become unable or unwilling to continue to provide us with products in required volumes and at suitable quality levels, we would be required to identify and obtain acceptable replacement manufacturing sources. There is no assurance that we would be able to obtain alternative manufacturing sources on a timely basis. An extended interruption in the supply of our products would result in decreased product sales and our revenues would likely decline. We believe that we can meet our current supply and manufacturing requirements with our current suppliers and manufacturers or with available substitute suppliers and manufacturers.

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 manufacturers 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 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. 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.

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

We have received notice of an alleged patent infringement from an Australian bioscience company, Genetic Technologies Limited (GTG), that it has certain rights under filed patents to which we may be infringing upon. Although it is the opinion of our patent counsel that there is no infringement, and that in the event there is an infringement, it will not effect our business because GTG’s patents are not material to our technology, no assurance can be given that GTG would not prevail if it brings legal action against us or that the result of any such action would not have a material adverse effect on our business and prospects.

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.

IN CONNECTION WITH THE PROPOSED DIRECT SALES BUSINESS OF OUR SUBSIDIARY, THE FAILURE TO RECRUIT, MAINTAIN AND MOTIVATE A LARGE BASE OF PRODUCTIVE INDEPENDENT DISTRIBUTORS COULD LIMIT ITS ABILITY TO GENERATE REVENUES.

We anticipate entering into the direct sales business through a newly formed subsidiary, GeneWize Life Sciences, Inc. To derive revenues, GeneWize will have to recruit and engage independent distributors. We cannot assure you that GeneWize will be successful in recruiting and retaining productive independent distributors, particularly since direct sales organizations usually experience high turnover rates of independent distributors. Typically, independent distributors can terminate their relationships at any time.

In recruiting and keeping independent distributors, GeneWize will be subject to significant competition from other direct sales organizations, both inside and outside its industry. Its ability to attract and retain independent distributors will be dependent on the attractiveness of its compensation plan, its product mix, and the support it offers to its independent distributors. Adverse publicity concerning direct sales marketing and public perception of direct selling businesses generally could negatively affect GeneWize’s ability to attract, motivate and retain independent distributors.

Based on our knowledge of the direct selling industry, we anticipate that GeneWize’s independent distributor organization will be headed by a relatively small number of key independent distributors who together with their downline network will be responsible for a disproportionate amount of revenues. We believe this structure is typical in the direct selling industry, as sales leaders emerge in these organizations. The loss of key independent distributors could adversely affect GeneWize’s revenues and could adversely affect GeneWize’s ability to attract other independent distributors.

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

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 GeneWize or its independent distributors will be in compliance with all of these regulations. A failure by GeneWize 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 GeneWize bad publicity, and tort claims arising out of governmental or judicial findings of fact or conclusions of law adverse to GeneWize. 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.

GeneWize’s marketing program will be subject to laws and regulations applicable to direct selling marketing organizations. These laws and regulations generally are directed at preventing fraudulent or deceptive schemes, often referred to as “pyramid” or “chain sales” schemes, by ensuring that product sales ultimately are made to consumers and that advancement within an organization is based on sales of the organization’s products rather than investments in the organization or other non-retail sales-related criteria. The regulations concerning these types of marketing programs do not include “bright line” rules and are inherently fact-based.

GeneWize may also be subject to the risk of private party challenges to the legality of its direct selling program. Direct selling programs of some other companies have been successfully challenged in the past. The challenges centered on whether the marketing programs of direct selling companies are investment contracts in violation of applicable securities laws and pyramid schemes in violation of applicable FTC rules and regulations.

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 GeneWize, the quality of GeneWize’s products or the prudence of taking GeneWize’s products. Changes in consumer attitudes based on adverse event reports could adversely affect the potential market for and sales of GeneWize’s products and make it more difficult to recruit and retain independent distributors and obtain endorsers.

ADVERSE PUBLICITY ASSOCIATED WITH GENEWIZE’S PRODUCTS, INGREDIENTS OR NETWORK MARKETING PROGRAM, OR THOSE OF SIMILAR COMPANIES, COULD HARM GENEWIZE’S FINANCIAL CONDITION AND OPERATING RESULTS.

Adverse publicity concerning any actual or purported failure of GeneWize or its independent distributors to comply with applicable laws and regulations regarding product claims and advertising, good manufacturing practices, the regulation of its network marketing program, the licensing of GeneWize ‘s products for sale in its target markets or other aspects of its business, whether or not resulting in enforcement actions or the imposition of penalties, could have an adverse effect on the goodwill of GeneWize and could negatively affect its ability to attract, motivate and retain distributors, which would negatively impact its ability to generate revenue.

We cannot ensure that all distributors will comply with applicable legal requirements relating to the advertising, labeling, licensing or distribution of its products.

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 new 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. On an on-going basis, we conduct internal audits of various aspects of our business and operations. These internal audits are conducted to ensure compliance with our policies and to strengthen our operations and related internal controls. 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 leases its principal offices in Longwood, Florida. The lease is for a term of three (3) years, ending December 2010, and provides for monthly rental payments of $5,500.48.

ITEM 3. LEGAL PROCEEDINGS Effective October 14, 2005, the Company terminated the employment of John R. DePhillipo, the Company’s former Chief Executive Officer and Chief Financial Officer and a former director of the Company. Mr. DePhillipo commenced two lawsuits allegedly arising out of his termination by the Company for “cause,” as defined in his Employment Agreement with the Company.

     In an Action filed in the United States District Court for the Eastern District of Pennsylvania, John R. DePhillipo v. Robert P. Ricciardi, Civil Action No. 05-5906, Mr. DePhillipo alleged that Dr. Ricciardi, a Director and Officer of the Company, (1) caused Mr. DePhillipo’s employment with the Company to be wrongfully terminated and therefore is personally liable for all severance owed Mr. DePhillipo, in the amount of at least $75,000; (2) was

personally liable for Mr. DePhillipo’s unpaid back salary of $84,000 simply because Mr. Ricciardi is an officer and/or director of the Company; and (3) acted sufficiently maliciously to justify punitive damages being assessed against Dr. Ricciardi of $10,000,000. Under the terms of the Company’s By-laws and Pennsylvania law, the Company is obligated both to reimburse Mr. Ricciardi for his costs of defending this action and is required to advance him the costs of the expense of such a defense. Counsel for Dr. Ricciardi entered an answer to this action and subsequently the action against Dr. Ricciardi was dismissed with prejudice in March 2006. There is thus no further contingent liability with regard to this matter.

     In a separate Action filed by Mr. DePhillipo against the Company in November 2005 in the Superior Court of New Jersey, Law Division, Atlantic County, John R. DePhillipo v. GeneLink, Inc., Docket No. ATL-L-7479-05, Mr. DePhillipo has alleged that his termination by the Company “for cause” was improper and therefore he is entitled to in excess of $1,500,000 in severance pay under the terms of an employment agreement, allegedly entered into effective January 1, 2005 (the “Employment Agreement”) and an additional $84,000 in accrued and unpaid compensation. The Company has filed an Answer denying the material allegations of the Complaint and asserting a number of affirmative defenses. The Company believes Mr. DePhillipo’s claims are without merit and intends to vigorously defend against those claims. The Company has also filed counterclaims against Mr. DePhillipo for breach of fiduciary duty, conversion, negligent misrepresentation, unjust enrichment and fraud while Mr. DePhillipo served as the Company’s Chief Executive Officer, President and Chief Financial Officer. The counterclaims seek recovery in excess of that sought by Mr. DePhillipo in the Complaint. The trial is currently scheduled to commence April 14, 2008.

     The Company has received a notice of an alleged patent infringement from an Australian bioscience company, Genetic Technologies Limited (GTG), that they have certain rights under filed patents to which GeneLink may be infringing upon. It is the opinion of the Company’s patent counsel that there is no infringement, and that in the event there is an infringement, it will not effect the Company’s business because GTG’s patents are not material to the Company’s technology. The Company received this notice in 2004, and there has been no further action or contact on this matter.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The Company’s common stock is listed on the NASDAQ and 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.

2006		High				Low
1st Quarter		$	0.13			$	0.05
2nd Quarter			0.09				0.04
3rd Quarter			0.06				0.03
4th Quarter			0.07				0.04

2007		High				Low
1st Quarter		$	0.07			$	0.05
2nd Quarter			0.11				0.04
3rd Quarter			0.20				0.09
4th Quarter			0.21				0.08

     As of March 10, 2008, there were 178 holders of record of the Company’s Common Stock. The Company has never paid dividends and do 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

Number of

securities remaining

available for future

Number of

issuance under

securities to be

equity

issued upon exercise

Weighted-average

compensation plans

of outstanding

exercise price of

(excluding securities

options, warrants

outstanding options

reflected in column

and rights

warrants and rights

(a))

Plan Category

(a)

(b)

(c)

Equity

compensation plans approved by security holders1

3,610,000

$

0.08

2,390,000

Equity

compensation plans not approved by security holders

4,890,000

$

0.09

0

Total

8,500,000

$

0.08

2,390,000

RECENT SALES OF UNREGISTERED SECURITIES.

     The Company issued 68,750 and 510,000, shares of Common Stock for consulting services rendered to the Company valued at $3,688 and $96,476 for the years ended December 31, 2007, and 2006, respectively. These shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933. In addition, the Company paid $155,312 in fundraising commissions related to private placements during 2007 that were charged to paid in capital.

     In August 2007, the Company issued a private placement memorandum for up to $1,700,000 of units consisting of restricted common stock at $.075 per share with an attached warrant to acquire ¹/4 of a share of common stock. The warrants are exercisable for 5 years at a price of $.10 per share. During November 2007, the Company closed on $1,431,400 of units with proceeds allocated to stock of $1,161,159 and attached warrants of $270,241. These shares and warrants were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

     In connection with this offering, the Company issued 2,575,250 of dealer warrants with 5 year terms. 515,050 of the dealer warrants have an exercise price of $.10 per share, while the remaining 2,060,200 are exercisable at $.075 per share.

     During the year ended December 31, 2007 and 2006, the Company issued $137,500 and $827,890 principal amount of convertible secured promissory notes and issued 687,500 and 4,539,450 shares of restricted Common Stock in connection with the issuance of the notes.

     During 2007 the Company issued 5,093,024 shares of common stock as conversion of promissory notes and accrued interest. The value of the notes converted as of December 31, 2007 was $254,653.

     During the year ended December 31, 2006, the Company issued $827,890 principal amount of convertible secured promissory notes and issued 4,139,452 shares of restricted Common Stock in connection with the issuance of the notes. The aggregate amounts recorded in connection with the issuance of the notes and the stock were $1,008,788, representing the $827,890 of gross proceeds of notes plus debt issuance costs related to the stock issuance of $180,898. The notes and shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

     In January 2006, the Company issued $200,000 of bridge notes in reliance upon Rule 506 of Regulation D under the Securities Act of 1933. The bridge notes were refinanced in June 2006 upon issuance of the convertible secured promissory notes referenced above.

     During the year ended December 31, 2005, the Company issued stock in settlement of a debt agreement. The Company issued 640,369 shares of common stock to settle $75,000 of debt and interest accrued on the note. These shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

     During the year ended December 31, 2005, the Company issued 2,250,000 shares of common stock and 1,500,000 warrants to purchase common stock for aggregate cash consideration of $450,000. These shares and warrants were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933. During the year ended December 31, 2005, the Company issued 640,369 shares in exchange for the satisfaction of $75,000 principal amount of debt, plus accrued interest. These shares were issued in reliance upon Rule 506 of Regulation D under the Securities Act of 1933.

ITEM 6.		MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Critical Accounting Policies

Stock options:

The Financial Accounting Standards Board has issued SFAS No. 123R, which defines a fair value based method of accounting for an employee stock option and similar equity instruments and encourages all entities to adopt that method of accounting for all of their employee stock compensation plans. However, it also temporarily allowed an entity to continue to measure compensation cost for those plans using the method of accounting prescribed by Accounting Principles Board Opinion No. 25 (APB 25). Entities electing to remain with the accounting in APB 25 must make proforma disclosures of net income (loss) and, if presented, earnings (loss) per share, as if the fair value based method of accounting defined in SFAS 123R had been adopted. As required, the Company has adopted SFAS No. 123R for the years ended December 31, 2007 and 2006.

Amortization of patents:

Legal and professional fees and expenses in connection with the filing of patent and trademark applications have been capitalized and are amortized over fifteen years on a straight-line basis. The Company has filed for and has patents pending in the USA and foreign countries on its method of DNA gathering. The Company has a registered trademark for its name, logo, and the name “DNA Collection Kit ®.” The Company also filed for and has patents pending on its three proprietary genetic indicator tests and has received a patent in Australia regarding its Oxidative Stress Profile.

Revenue and cost recognition:

GeneLink receives separate fees for the kits and for the lab services. Upon entering into a distribution arrangement with GeneLink, a distributor will order kits at a price negotiated between GeneLink and the distributor. Upon the distributor receiving from a customer of such distributor an order for the underlying genetically guided skin care or nutrition product that the distributor is selling, a sample of the customer’s DNA will be obtained and the kit will be sent to the lab for analysis. At that time the distributor will be charged an agreed upon price for the lab services. This is in addition to the price of the kits.

The price for each of the kits and the lab services come about through arms-length negotiations between GeneLink and its distributors and are based upon the costs incurred by GeneLink for the kits and the lab services.

Upon termination of a distribution arrangement, GeneLink is not required to repurchase any kits remaining in the possession of the distributor. Typically, only a small number of kits are purchased at any time. The distributor has some period after the end of the distribution arrangement to sell off any remaining kits. If it does, GeneLink will provide the lab services for each kit sold.

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.

Evaluation of liability in respect of litigation and regulatory proceedings is determined on a case-by-case basis and represents an estimate of probable losses after considering among other factors, the progress of each case, our experience and the experience of others in similar cases, and the opinions and views of legal counsel. Given the inherent difficulty of predicting the outcome of our litigation matters, particularly in cases in which claimants seek substantial or indeterminate damages, we cannot estimate losses or ranges of losses for cases where there is only a reasonable possibility that a loss may have been incurred. See “Legal Proceedings” in Part I, Item 3 of the Annual Report on Form 10-KSB for information on our judicial, regulatory and arbitration procedures.

Results of Operations

COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2007 TO FISCAL YEAR ENDED DECEMBER 31, 3006.

     Assets. The Company’s assets increased from $548,481 at December 31, 2006 to $1,383,824 at December 31, 2007, an increase of $835,343. This increase was primarily due to an increase in cash and cash equivalents from $149,695 at December 31, 2006 to $972,371 at December 31, 2007, an increase of $822,676. This increase of cash resulted from the sale of common stock and warrants by the Company in November 2007 in the amount of $1,431,398 , less fees and costs incurred in connection with such offering.

     Liabilities. The Company’s liabilities decreased from $1,407,784 at December 31, 2006 to $1,190,457 at December 31, 2007, a decrease of $217,327. This decrease in liabilities was primarily due to a decrease in accrued compensation from $710,323 at December 31, 2006 to $144,168 at December 31, 2007, a decrease of $566,155, relating to a decrease in $662,617 of accrued compensation owed to an officer and director of the Company. This decrease in liabilities was partially offset by an increase in convertible secured promissory notes payable, net of debt issuance and stock conversion discounts, from $298,390 at December 31, 2006 to $487,968 at December 31, 2007, an increase of $189,578, as Company issued $380,000 principal

amount of convertible secured promissory notes in 2007 and note holders converted $229,253 of notes into common stock of the Company in 2007; and an increase in accounts payable and accrued expenses from $365,590 at December 31, 2006 to $439,399 at December 31, 2007, an increase of $73,809. The $487,968 and $298,390 amount of convertible secured notes payable reflected on the balance sheets as of December 31, 2007 and 2006, respectively, are net of debt issuance costs and stock conversion discounts. The outstanding amount of convertible secured notes payable as of December 31, 2007 and 2006 was $728,812 and $827,890, respectively.

     Losses. The Company incurred an operating loss of $1,572,204 for the fiscal year ended December 31, 2007, as compared to an operating loss of $793,576 for the fiscal year ended December 31, 2006, an increase of $778,628. This increase in operating losses was primarily due to the incurring of $363,400 of expenses in connection with grants of options and warrants to officers and directors during the year ended December 31, 2007; an increase in professional fees from $173,590 for the year ended December 31, 2006 to $346,148 for the year ended December 31, 2007, an increase of $172,558, which increase relates to costs incurred in connection with the litigation brought against the Company by its former chief executive officer; an increase in selling, general and administrative expenses from $476,539 for the year ended December 31, 2006 to $644,948 for the year ended December 31, 2007, an increase of $168,409, of which $87,520 related to increased interest expenses associated with the Company’s convertible secured promissory notes; and the decrease in gross profits from $110,253 for the year ended December 31, 2006 to $23,551 for the year ended December 31, 2007.

     Revenues. The Company’s total operating revenues for the fiscal year ended December 31, 2007 were $97,744 as compared to $175,674 for the fiscal year ended December 31, 2006, a decrease of $77,930.

     Expenses. Total expenses for fiscal year ended December 31, 2007 were $1,669,948, as compared to $969,250 for the fiscal year ended December 31, 2006, an increase of $700,698. This increase in expenses is primarily due to the incurring of $363,400 of expenses in connection with grants of options and warrants to officers and directors during the year ended December 31, 2007, an increase in professional fees from $173,590 for the year ended December 31, 2006 to $346,148 for the year ended December 31, 2007, an increase of $172,558, which increase relates to costs incurred in connection with the litigation brought against the Company by its former chief executive officer; and an increase in selling, general and administrative expenses from $476,539 for the year ended December 31, 2006 to $644,948 for the year ended December 31, 2007, an increase of $168,409, of which $87,520 related to increased interest expenses associated with the Company’s convertible secured promissory notes.

     COMPARISON OF FISCAL YEAR ENDED DECEMBER 31, 2006 TO FISCAL YEAR ENDED DECEMBER 31, 3005.

Assets. The Company’s assets increased from $445,276 at December 31, 2005 to $548,481 at December 31, 2006, an increase of $103,250. This increase was primarily due to an increase in cash from $15,275 at December 31, 2005 to $149,695 at December 31, 2006.

     Liabilities. The Company’s liabilities increased from $1,057,879 at December 31, 2005 to $1,407,784 at December 31, 2006, an increase of $349,905. This increase in liabilities was primarily due to an increase in long term loans payable net of debt issuance and stock conversion costs from $0 at December 31, 2005 to $298,390 at December 31, 2006 in connection with the Company’s issuance of convertible secured promissory notes in 2006.

     Losses. The Company incurred an operating loss of $793,576 for the fiscal year ended December 31, 2006, as compared to an operating loss of $1,281,157 for the fiscal year ended December 31, 2005, a decrease of $487,581. This decrease in losses was primarily due to a decrease in general and administrative expenses from $802,984 for the fiscal year ended December 31, 2005 to $476,539 for the fiscal year ended December 31, 2006, as the Company did not pay any compensation to or expenses of its former chief executive officer and president or his wife in 2006, and a decrease in advertising and promotion expenses $209,370 for the fiscal year ended December 31, 2005 to $14,369 for the fiscal year ended December 31, 2006, as the Company focused on the change in management and on obtaining sufficient funding to develop and implement its new business plan. This decrease in expenses was accompanied by a decrease in revenues from $396,923 for the fiscal year ended December 31, 2005 to $175,674 for the fiscal year ended December 31, 2006. The Company’s gross margin dropped from $167,528 for the fiscal year ended December 31, 2005 to $110,253 for the fiscal year ended December 31, 2006. Gross profit margin increased from 42% to 62%.

     Revenues. The Company’s total operating revenues for the fiscal year ended December 31, 2006 were $175,674, as compared to $396,923 for the fiscal year ended December 31, 2005, a decrease of $221,249.

     Expenses. Total expenses for fiscal year ended December 31, 2006 were $969,250, as compared to $1,678,080 for the fiscal year ended December 31, 2005, a decrease of $708,830. This decrease in expenses is primarily due to a decrease in general and administrative expenses from $802,984 for the fiscal year ended December 31, 2005 to $476,539 for the fiscal year ended December 31, 2006, as the Company did not pay any compensation to or expenses of its former chief executive officer and president or his wife in 2006, and a decrease in advertising and promotion expenses $209,370 for the fiscal year ended December 31, 2005 to $14,369 for the fiscal year ended December 31, 2006, as the Company focused on the change in management and on obtaining sufficient funding to develop and implement its new business plan.

     Segment Operating Results

     The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments for the year ended December 31, 2007:

		GeneLink				Dermagenetics
		Inc.				Inc.
Net Revenues		$	30,458			$	67,286
Operating expenses			1,479,300				190,648
Other income			10,956				624
Pre-tax earnings (loss)			(1,437,886	)			(122,738	)

     The following table sets forth the net revenues, operating expenses and pre-tax earnings of our segments for the year ended December 31, 2006:

		GeneLink				Dermagenetics
		Inc.				Inc.
Net Revenues		$	57,033			$	118,641
Operating expenses			772,805				196,445
Other income			2,011				697
Pre-tax earnings (loss)			(713,461	)			(77,407	)

Liquidity and Capital Resources

     For 2007, the Company’s primary liquidity requirement was the implementation and funding of sales and marketing efforts and funding working capital. For 2008, the Company’s primary liquidity requirement will be the funding of the Company’s sales and marketing efforts and the payment of past obligations of the Company.

     Cash and Cash Equivalents. On December 31, 2007, the Company’s cash and cash equivalents amounted to $972,371 as to compared to $149,695 at December 31, 2006, an increase of $822,676. This increase resulted from the Company’s offerings of $1,431,400 of common stock and warrants, less fees and expenses, in November 2007. During 2007, the Company’s operating activities utilized $705,086 as compared to utilizing $296,523 in 2006, an increase of $408,563. Cash utilized during these periods resulted from the Company’s net losses for such periods and the payment of accounts payable.

     Investing activities utilized $90,827 in 2007, as compared to utilizing $42,646 in 2006. Financing activities provided $1,618,589 in 2007, as compared to $523,023 in 2006, primarily through the issuance of $1,431,400 of shares of common stock and warrants and the issuance of $342,500 of loans and notes payable, less $155,312 of cash costs associated with such issuances. The $487,968 and $298,390 of convertible secured promissory notes payable as of December 31, 2007 and 2006, respectively, as reflected on the Balance Sheet on page 29 are net of debt issuance and stock conversion discounts. The outstanding amount of convertible secured notes payable as of December 31, 2007 and 2006 were $728,812 and $827,890, respectively.

     The Company will require approximately $500,000 to $1,500,000 of working capital, depending on how quickly the Company’s distributors and GeneWize can commence and rollout their respective marketing and sales efforts, to fund the Company’s sales and marketing efforts and to pay existing oblig