InoLife Technologies (OTCBB:INOL) has tried building a business around DNA testing for ancestry and genetic testing for medications.

But the struggling Raleigh, North Carolina-based penny stock has moved beyond its DNA-testing roots. It has acquired a company and product line developing anti-aging skin cream.

InoLife acquired Stemtide, a small Texas bitoech company that claims to leverage stem cells to reverse aging, repair and grow skin, and fight acne. To acquire Stemtide, InoLife committed 50 million shares of its stock and 10 percent of residual profits from skin cream sales.

InoLife currently trades at a penny per share, making that stock worth $500,000.

Anti-aging skin cream may not seem to mesh with InoLife’s line of DNA testing for ancestry and genetic testing for medications. But CEO Gary Berthold said the deal broadens InoLife’s portfolio.

“We’re like any other company, we’re trying to diversify,” he said.

InoLife needs to jump start its cash flow. As noted in InoLife’s annual report, the company’s independent auditor has raised doubts about the company’s ability to continue as a going concern. InoLife generated no revenue in fiscal 2011 ending March 31 and reported a net loss of $1.4 million for the fiscal year. The company’s largest expense in the fiscal year was $1.2 million for consulting services. Most of those consultants are being paid through the issuance of InoLife common stock.

InoLife has no research and development activities. Berthold, whose experience includes management positions at veterinary product companies PharmaCom BioVet (OTC:PHMB.PK) and InoVet, said that outside of the Stemtide acquisition, the company’s technologies come from a university which he declined to identify.

Berthold described InoLife as a healthcare marketing company that acquires products that can be brought to the market for both humans and animals. No InoLife product has been formally evaluated by the U.S. Food and Drug Administration.

“Our products are not diagnostic products,” Berthold said. “They’re for informational purposes, to be interpreted by a medical professional for his or her patient.”

InoLife’s current product line includes a genetic test for the drug Plavix to test whether a patient will respond to the antiplatelet drug, which is used to prevent heart attacks and strokes.

So far, InoLife has recorded no sales of any tests. Berthold said that the company has taken orders for tests but many of those tests are currently sitting on shelves. InoLife does not recognize revenue until a test has been used and the appropriate payer has paid the bill, which can take months.

Berthold declined to discuss details of the Stemtide acquisition. But the deal does give InoLife an additional revenue opportunity at a time when its current revenue streams lie stagnant. Berthold said that the market for skin care products is projected to reach $274 billion in North America and Europe by 2013. But the skin care market is already saturated with numerous products and it will be up to Inolife to differentiate itself in a crowded field with well established players.

InoLife needs to improve its cash situation soon. The company’s annual report states that as of March 31, it had just $170,546 in cash on hand – not enough for a year’s expenses.

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