UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   Form 10-KSB
(Mark One)

[x]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the fiscal year ended September 30, 2007

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                  For the transition period from _____ to _____


                         Commission file number 0-02768


                                Genio Group, Inc.
                                -----------------
                 (Name of small business issuer in its charter)


                      Delaware                           22-3360133
                      --------                           ----------
          (State or other jurisdiction of             (I.R.S. Employer
           incorporation or organization)            Identification No.)


               400 Garden City Plaza
                  Garden City, NY                           11530
               ---------------------                        -----
      (Address of principal executive offices)            (Zip Code)


                     Issuer's telephone number: 516-873-2000


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

     Title of each class           Name of each exchange on which registered

            None                                 not applicable
    ---------------------                        --------------
    (Title of each class)


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

                    common stock, par value $0.001 per share
                    ----------------------------------------
                                (Title of class)

<PAGE>

Check whether the issuer is not required to file reports pursuant to Section 13
or (15(d) of the Exchange Act [ ]

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [x] No [ ]

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act) Yes [X] No [ ]

State issuer's revenues for its most recent fiscal year. $ 0 for the fiscal year
ended September 30, 2007.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked prices of such common equity, as of a
specified date within the past 60 days. The aggregate market value of the common
equity held by non-affiliates computed at the closing price of the registrant's
common stock on January 11, 2008 is approximately $.0013.

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 55,681,787 shares of common stock are
issued and outstanding at January 11, 2008.

                       DOCUMENTS INCORPORATED BY REFERENCE

None.

Transitional Small Business Disclosure Form (check one):  Yes ___   No _X_

                                       ii
<PAGE>

                                GENIO GROUP, INC.
                                   FORM 10-KSB
PART I
   Item 1.  Business ........................................................  2
   Item 2.  Properties ......................................................  8
   Item 3.  Legal Proceedings ...............................................  8
   Item 4.  Submission of Matters to a Vote of Security .....................  8
PART II
   Item 5.  Market for Common Equity and Related Stockholder Matters ........  8
   Item 6.  Management's Discussion and Analysis or Plan of Operation .......  9
   Item 7.  Financial Statements ............................................ 15
   Item 8.  Change in and Disagreements with Accountants on Accounting
            and Financial Disclosure ........................................ 15
   Item 8A. Controls And Procedures ......................................... 15
   Item 8B. Other Information ............................................... 15
PART III
   Item 9.  Directors, Executive Officers, Promoters and Control Persons;
            Compliance With Section 16(a) of the Exchange Act ............... 15
   Item 10. Executive Compensation .......................................... 16
   Item 11. Security Ownership of Certain Beneficial Owners and
            Management and Related Stockholder Matters ...................... 17
   Item 12. Certain Relationships and Related Transactions,
            and Director Independence ....................................... 17
   Item 13. Exhibits ........................................................ 18
   Item 14. Principal Accountant Fees and Services .......................... 19

         When used in this annual report, the terms the "Company," "Genio" "
we," "our," and "us" refers to Genio Group, Inc., a Delaware corporation, and
our subsidiaries.

       CERTAIN CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION

         Certain statements in this annual report contain or may contain
forward-looking statements that are subject to known and unknown risks,
uncertainties and other factors which may cause actual results, performance or
achievements to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
forward-looking statements were based on various factors and were derived
utilizing numerous assumptions and other factors that could cause our actual
results to differ materially from those in the forward-looking statements. These
factors include, but are not limited to, our ability to identify and consummate
a business combination with an operating entity, economic, political and market
conditions and fluctuations, government and industry regulation, U.S. and global
competition, and other factors. Most of these factors are difficult to predict
accurately and are generally beyond our control.

         You should consider the areas of risk described in connection with any
forward-looking statements that may be made in this annual report. Readers are
cautioned not to place undue reliance on these forward-looking statements and
readers should carefully review this annual report in its entirety, including
the risks described in "Risk Factors." Except for our ongoing obligations to
disclose material information under the Federal securities laws, we undertake no
obligation to release publicly any revisions to any forward-looking statements,
to report events or to report the occurrence of unanticipated events. These
forward-looking statements speak only as of the date of this annual report, and
you should not rely on these statements without also considering the risks and
uncertainties associated with these statements and our business.

                                        1
<PAGE>

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

OUR HISTORY

         We were originally organized under Delaware law in December 1969 as
Tyconda Minerals Corp. In 1983 we changed our name to Hy-Poll Technology, Inc.,
in 1995 we changed our name to Universal Turf, Inc., in 1999 we changed our name
to Universal Media Holdings,Inc., in 2002 we changed our name to National
Management Consulting, Inc. and in 2003, following the acquisition of Genio Inc.
and its subsidiaries (as described below), we changed our name to Genio Group,
Inc.

         On July 21, 2003, we acquired Genio Inc. (formerly Tele-V, Inc.) and
its subsidiaries through the issuance of an aggregate of 15,484,448 shares of
common stock, reflecting 65% of the 23,822,228 shares of our common stock of
outstanding after the closing. This transaction was accounted for as a reverse
acquisition. Subsequent to the acquisition, we adopted the capital structure of
Genio Inc. (our subsidiary).

         Prior to September 30, 2006, primarily due to the lack of financing,
Genio Group, Inc. (formerly National Management Consulting, Inc. and referred to
herein as "Genio" or the "Company") has closed all operations and terminated all
of its employees. One of the directors was appointed as the acting CEO and CFO
of the Company in order to orchestrate an orderly liquidation of the Company's
assets and seek settlement agreements with the creditors. As of May 23, 2006,
the Company has no employees.

         Historically, we have been a developer and marketer of entertainment
and leisure products. Currently, our purpose is to serve as a vehicle to acquire
an operating business and is currently considered a "shell" company inasmuch as
we are not generating revenues, do not own an operating business, and have no
specific plan other than to negotiate settlement agreements with creditors and
to engage in a merger or acquisition transaction with a yet-to-be identified
company or business.

         As a result of the wind down of our operations, we intend to seek to
acquire assets or shares of an entity actively engaged in business which
generates revenues, in exchange for our securities. Our purpose is to seek,
investigate and, if such investigation warrants, acquire an interest in business
opportunities presented to us by persons or firms who or which desire to seek
the perceived advantages our company may offer. We will not restrict our search
to any specific business, industry, or geographical location and we may
participate in a business venture of virtually any kind or nature. This
discussion of the proposed business is purposefully general and is not meant to
be restrictive of our virtually unlimited discretion to search for and enter
into potential business opportunities. We anticipate that we may be able to
participate in only one potential business venture because we have nominal
assets and limited financial resources. This lack of diversification should be
considered a substantial risk to our stockholders because it will not permit us
to offset potential losses from one venture against gains from another.

         We may seek a business opportunity with entities which have recently
commenced operations, or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to
develop a new product or service, or for other corporate purposes. We may
acquire assets and establish wholly-owned subsidiaries in various businesses or

                                        2
<PAGE>

acquire existing businesses as subsidiaries. We anticipate that the selection of
a business opportunity in which to participate will be complex and extremely
risky. Due to general economic conditions, rapid technological advances being
made in some industries and shortages of available capital, management believes
that there are numerous firms seeking the perceived benefits of a publicly
registered corporation. These perceived benefits may include facilitating or
improving the terms on which additional equity financing may be sought,
providing liquidity for incentive stock options or similar benefits to key
employees, providing liquidity (subject to restrictions of applicable statutes),
for all stockholders and other factors. Potentially, available business
opportunities may occur in many different industries and at various stages of
development, all of which will make the task of comparative investigation and
analysis of such business opportunities extremely difficult and complex.

         The analysis of new business opportunities will be undertaken by, or
under the supervision of, Mr. Steven A. Horowitz, our chief executive officer
and sole director, who may not be considered a professional business analyst.
Mr. Horowitz will be the key person in the search, review and negotiation with
potential acquisition or merger candidates. We intend to concentrate on
identifying preliminary prospective business opportunities which may be brought
to our attention through present associations of our officers and directors, or
by our stockholders. In analyzing prospective business opportunities, we will
consider such matters as the available technical, financial and managerial
resources; working capital and other financial requirements; history of
operations, if any; prospects for the future; nature of present and expected
competition; the quality and experience of management services which may be
available and the depth of that management; the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be anticipated to impact our proposed activities; the potential for
growth or expansion; the potential for profit; the perceived public recognition
of acceptance of products, services, or trades; name identification; and other
relevant factors. We will not acquire or merge with any company for which
audited financial statements cannot be obtained within the time period
prescribed by applicable rules of the Securities and Exchange Commission which
is presently four business days from the closing date of the transaction. This
requirement for readily available audited financial statement may require us to
preclude a transaction with a potential candidate which might otherwise be
beneficial to our stockholders.

         We will not restrict our search for any specific kind of company, but
may acquire a venture which is in its preliminary or development stage, which is
already in operation, or in essentially any stage of its corporate life. It is
impossible to predict at this time the status of any business in which we may
become engaged, in that such business may need to seek additional capital, may
desire to have its shares publicly traded, or may seek other perceived
advantages which we may offer. However, we do not intend to obtain funds in one
or more private placements to finance the operation of any acquired business
opportunity until such time as we have successfully consummated such a merger or
acquisition.

         We anticipate that we will incur nominal expenses in the implementation
of our business plan described herein. Because we have no capital with which to
pay these anticipated expenses, these expenses will be paid by certain
shareholders as interest-free loans. However, the only opportunity to have these
loans repaid will be from a prospective merger or acquisition candidate.
Repayment of any loans made on our behalf will not impede, or be made
conditional in any manner, to consummation of a proposed transaction.

                                        3
<PAGE>

         In implementing a structure for a particular business acquisition, we
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing agreement with another corporation or entity. We may also acquire
stock or assets of an existing business. On the consummation of a transaction,
it is probable that our present management and stockholders will no longer be in
control of our company. In addition, our directors may, as part of the terms of
the acquisition transaction, resign and be replaced by new directors without a
vote of our stockholders or may sell their stock. Any terms of sale of the
shares presently held by officers and/or directors will be also afforded to all
other stockholders on similar terms and conditions. Any and all such sales will
only be made in compliance with federal and applicable state securities laws.

         We anticipate that any securities issued in any such reorganization
would be issued in reliance upon exemption from registration under applicable
federal and state securities laws. In some circumstances, however, as a
negotiated element of a transaction, we may agree to register all or a part of
such securities immediately after the transaction is consummated or at specified
times thereafter. If such registration occurs, of which there can be no
assurance, it will be undertaken by the surviving entity after we have
successfully consummated a merger or acquisition and we are no longer considered
a "shell" company. Until such time as this occurs, we will not attempt to
register any additional securities. The issuance of substantial additional
securities and their potential sale into any trading market which may develop in
our securities may have a depressive effect on the value of our securities in
the future, if such a market develops, of which there is no assurance.

INTELLECTUAL PROPERTY

         Our Genio Cards(TM) embodied trademarks, trade names and copyrights
licensed to us by a third party, Marvel, which entitled us to use in the Genio
Cards(TM) globally recognized Marvel Super Heroes(TM) including Spider-Man(TM),
the Incredible Hulk(TM), X-Men(TM), Elektra(TM), Daredevil(TM) and the Fantastic
Four(TM). The Marvel license agreement relating to these rights expired on June
30, 2005.

         Our Mighty Beanz(TM) cards embodied artwork, logos and other
distinctive creative elements licensed to us by Spin Master, which entitles us
to manufacture and sell the Mighty Beanz(TM) cards within the United States and
Canada and by Moose Enterprises for the rest of the world. The Spin master
license agreement relating to these rights expired on April 30, 2006 and the
Moose Enterprises license agreement relating to these rights expires on January
31, 2007. All licensors have been notified of termination by virtue of
discussions made in the 1st qtr of 2005. These discussions were with respect to
converting accrued fees to equity of Genio.

         The Stargate SG-1(TM) and Stargate: Atlantis(TM) cards will embody
artwork, logos and other distinctive creative elements licensed to us by MGM
Consumer Products, a division of Metro-Goldwyn-Mayer, which entitles us to
manufacture and sell the Stargate(TM) cards throughout the world excluding
Japan, China and Hong Kong. The MGM license agreement relating to these rights
expired on August 18, 2006. This agreement is terminable upon the occurrence of
a number of events

         The TOMY UK products licensed under the agreement will embody artwork,
designs, concepts, logos and other distinctive creative elements licensed to us
by TOMY UK Ltd., which entitles us to sell their "Baby" and "Nursery" line
throughout the United States and Canada. The TOMY license agreement relating to

                                        4
<PAGE>

these rights extends through December 31, 2008, and shall extend for an
additional two years upon achievement of certain sales goals. This agreement is
terminable upon the occurrence of certain events, which may be curable under
remedies outlined in the contract.

EMPLOYEES

         We currently have no employees, aside from our sole director, CEO and
CFO.

RISK FACTORS

         Before you invest in our securities, you should be aware that there are
various risks. Additional risks and uncertainties not presently known to us or
that we currently believe to be immaterial may also adversely affect our
business. You should consider carefully these risk factors, together with all of
the other information included in this annual report before you decide to
purchase our securities. If any of the following risks and uncertainties develop
into actual events, our business, financial condition or results of operations
could be materially adversely affected and you could lose your entire investment
in our company.

WE CURRENTLY DO NOT HAVE AN OPERATING BUSINESS, BUT ALSO DO NOT INTEND TO PURSUE
A COURSE OF COMPLETE LIQUIDATION AND DISSOLUTION, AND ACCORDINGLY, THE VALUE OF
YOUR SHARES MAY DECREASE

         We currently do not have any operating business. We continue to incur
operating expenses while we consider alternative operating plans. These plans
may include business combinations with or investments in other operating
companies, or entering into a completely new line of business. We have not yet
identified any such opportunities, and thus, you will not be able to evaluate
the impact of such a business strategy on the value of your stock. In addition,
we cannot assure you that we will be able to identify any appropriate business
opportunities. Even if we are able to identify business opportunities that our
Board deems appropriate, we cannot assure you that such a strategy will provide
you with a positive return on your investment, and it may in fact result in a
substantial decrease in the value of your stock. These factors will
substantially increase the uncertainty, and thus the risk, of investing in our
shares.

WE HAVE LIMITED RESOURCES AND NO REVENUES FROM OPERATIONS, AND WILL NEED
ADDITIONAL FINANCING IN ORDER TO EXECUTE ANY BUSINESS PLAN; OUR AUDITORS HAVE
EXPRESSED DOUBT AS TO OUR ABILITY TO CONTINUE BUSINESS AS A GOING CONCERN.

         We have limited resources, no revenues from operations since January
2005 and our cash on hand may not be sufficient to satisfy our cash requirements
during the next twelve months. In addition, we will not achieve any revenues
(other than insignificant investment income) until, at the earliest, the
consummation of a merger and we cannot ascertain our capital requirements until
such time. There can be no assurance that determinations ultimately made by us
will permit us to achieve our business objectives. Our auditors have included an
explanatory paragraph in their report for the year ended September 30, 2007,
indicating that certain conditions raise substantial doubt regarding our ability
to continue as a going concern. The financial statements included in this annual
report do not include any adjustment to asset values or recorded amounts of
liability that might be necessary in the event we are unable to continue as a
going concern. If we are in fact unable to continue as a going concern,
shareholders may lose their entire investment in our common stock.

                                        5
<PAGE>

WE DEPEND SUBSTANTIALLY UPON A SINGLE EXECUTIVE OFFICER AND DIRECTOR, WHOSE
EXPERIENCE IS LIMITED, TO MAKES ALL MANAGEMENT DECISIONS.

         Our ability to effect a merger will be dependent upon the efforts of
our chief executive officer and sole director, Steven A. Horowitz.
Notwithstanding the importance of Mr. Horowitz, we have not entered into any
employment agreement or other understanding with Mr. Horowitz concerning
compensation or obtained any "key man" life insurance on any of his life. The
loss of the services of Mr. Horowitz will have a material adverse effect on our
business objectives. We will rely upon the expertise of Mr. Horowitz and do not
anticipate that we will hire additional personnel.

THERE IS COMPETITION FOR THOSE PRIVATE COMPANIES SUITABLE FOR A MERGER
TRANSACTION OF THE TYPE CONTEMPLATED BY MANAGEMENT.

         We are in a highly competitive market for a small number of business
opportunities which could reduce the likelihood of consummating a successful
business combination. We are and will continue to be an insignificant
participant in the business of seeking mergers with, joint ventures with and
acquisitions of small private and public entities. A large number of established
and well-financed entities, including small public companies and venture capital
firms, are active in mergers and acquisitions of companies that may be desirable
target candidates for us. Nearly all these entities have significantly greater
financial resources, technical expertise and managerial capabilities than we do;
consequently, we will be at a competitive disadvantage in identifying possible
business opportunities and successfully completing a business combination. These
competitive factors may reduce the likelihood of our identifying and
consummating a successful business combination.

         Even if we are able to identify business opportunities that our Board
deems appropriate, we cannot assure you that such a strategy will provide you
with a positive return on your investment, and may in fact result in a
substantial decrease in the value of your stock. In addition, if we enter into a
combination with a business that has operating income, we cannot assure you that
we will be able to utilize all or even a portion of our existing net operating
loss carryover for federal or state tax purposes following such a business
combination. If we are unable to make use of our existing net operating loss
carryover, the tax advantages of such a combination may be limited, which could
negatively impact the price of our stock and the value of your investment. These
factors will substantially increase the uncertainty, and thus the risk, of
investing in our shares.

FUTURE SUCCESS IS HIGHLY DEPENDENT ON THE ABILITY OF MANAGEMENT TO LOCATE AND
ATTRACT A SUITABLE ACQUISITION.

         The nature of our operations is highly speculative. The success of our
plan of operation will depend to a great extent on the operations, financial
condition and management of the identified business opportunity. While
management intends to seek business combination(s) with entities having
established operating histories, we cannot assure you that we will be successful
in locating candidates meeting that criterion. In the event we complete a
business combination, the success of our operations may be dependent upon
management of the successor firm or venture partner firm and numerous other
factors beyond our control.

                                        6
<PAGE>

WE HAVE NO EXISTING AGREEMENT FOR A BUSINESS COMBINATION OR OTHER TRANSACTION.

         We have no agreement with respect to engaging in a merger with, joint
venture with or acquisition of, a private or public entity. No assurances can be
given that we will successfully identify and evaluate suitable business
opportunities or that we will conclude a business combination. Management has
not identified any particular industry or specific business within an industry
for evaluation. We cannot guarantee that we will be able to negotiate a business
combination on favorable terms, and there is consequently a risk that funds
allocated to the purchase of our shares will not be invested in a company with
active business operations.

MANAGEMENT WILL CHANGE UPON THE CONSUMMATION OF A MERGER.

         After the closing of a merger or business combination, it is likely our
current management will not retain any control or managerial responsibilities.
Upon such event, Mr. Horowitz intends to resign his positions with us.

CURRENT SHAREHOLDERS WILL BE IMMEDIATELY AND SUBSTANTIALLY DILUTED UPON A MERGER
OR BUSINESS COMBINATION.

         To the extent that additional shares of common stock are issued in
connection with a merger or business combination, our shareholders could
experience significant dilution of their respective ownership interests.
Furthermore, the issuance of a substantial number of shares of common stock may
adversely affect prevailing market prices, if any, for the common stock and
could impair our ability to raise additional capital through the sale of equity
securities.

OUR COMMON STOCK IS A "PENNY STOCK" WHICH MAY RESTRICT THE ABILITY OF
SHAREHOLDERS TO SELL OUR COMMON STOCK IN THE SECONDARY MARKET.

         The SEC has adopted regulations which generally define "penny stock" to
be an equity security that has a market price, as defined, of less than $5.00
per share, or an exercise price of less than $5.00 per share, subject to certain
exceptions, including an exception of an equity security that is quoted on a
national securities exchange. Our common stock is not now quoted on a national
exchange but is traded on Nasdaq's OTC Bulletin Board ("OTCBB"). Thus, they are
subject to rules that impose additional sales practice requirements on
broker-dealers who sell these securities. For example, the broker-dealer must
make a special suitability determination for the purchaser of such securities
and have received the purchaser's written consent to the transactions prior to
the purchase. Additionally, the rules require the delivery, prior to the
transaction, of a disclosure schedule prepared by the SEC relating to the penny
stock market. The broker-dealer also must disclose the commissions payable to
both the broker-dealer and the registered underwriter, and current quotations
for the securities, and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, among other requirements, monthly statements must be
sent disclosing recent price information for the penny stock held in the account
and information on the limited market in penny stocks. The "penny stock" rules,
may restrict the ability of our shareholders to sell our common stock in the
secondary market.

                                        7
<PAGE>

OUR COMMON STOCK HAS BEEN THINLY TRADED, LIQUIDITY IS LIMITED, AND WE MAY BE
UNABLE TO OBTAIN LISTING OF OUR COMMON STOCK ON A MORE LIQUID MARKET.

         Our common stock is quoted on the OTCBB, which provides significantly
less liquidity than a securities exchange (such as the American or New York
Stock Exchange) or an automated quotation system (such as the Nasdaq National
Market or SmallCap Market). There is uncertainty that we will ever be accepted
for a listing on an automated quotation system or a securities exchange.

         Often there is currently a limited volume of trading in our common
stock, and on many days there has been no trading activity at all. The
purchasers of shares of our common stock may find it difficult to resell their
shares at prices quoted in the market or at all.

ITEM 2.  DESCRIPTION OF PROPERTY

         Our principal office is located at 400 Garden City Plaza, Garden City,
N.Y., 11530. We currently lease our office space on a month to month basis.

ITEM 3.  LEGAL PROCEEDINGS

         We are not a party to any pending or threatened legal proceedings.

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

         None.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

         Our common stock is quoted on the OTCBB under the symbol "GNOI." The
reported high and low bid prices for the common stock as reported on the OTCBB
are shown below for the periods indicated. The quotations reflect inter-dealer
prices, without retail mark-up, markdown or commission, and may not represent
actual transactions.

                                                     High              Low
                                                     ----              ---
Fiscal 2006

First quarter ended December 31, 2005                $0.022            $0.011
Second quarter ended March 31, 2006                  $0.025            $0.006
Third quarter ended June 30, 2006                    $0.02             $0.005
Fourth quarter ended September 30, 2006              $0.01             $0.00612

Fiscal 2007

First quarter ended December 31, 2006                $0.01             $0.01
Second quarter ended March 31, 2007                  $0.01             $0.01
Third quarter ended June 30, 2007                    $0.01             $0.00
Fourth quarter ended September 30, 2007              $0.00             $0.00

         On January 11, 2008, the last sale price of our common stock as
reported on the OTCBB was $0.0013 As of December 31, 2007, there were
approximately 888 record owners of our common stock.

                                        8
<PAGE>

         DIVIDEND POLICY

         We have never paid cash dividends on our common stock. Under Delaware
law, we may declare and pay dividends on our capital stock either out of our
surplus, as defined in the relevant Delaware statutes, or if there is no such
surplus, out of our net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. If, however, the capital of our
company, computed in accordance with the relevant Delaware statutes, has been
diminished by depreciation in the value of our property, or by losses, or
otherwise, to an amount less than the aggregate amount of the capital
represented by the issued and outstanding stock of all classes having a
preference upon the distribution of assets, we are prohibited from declaring and
paying out of such net profits any dividends upon any shares of our capital
stock until the deficiency in the amount of capital represented by the issued
and outstanding stock of all classes having a preference upon the distribution
of assets shall have been repaired.

         SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

         We do not have any equity compensation plan in effect.

         The following table sets forth securities authorized for issuance under
our stock option and equity compensation plans as of September 30, 2007.

                                                                 Number of
                                                                 securities
                                                                 remaining
                                                                 available for
                             Number of                           future issuance
                             securities to     Weighted          under equity
                             be issued upon    average           compensation
                             exercise of       exercise price    plans
                             outstanding       of outstanding    (excluding
                             options,          options           securities
                             warrants and      warrants and      reflected in
                             rights (a)        rights (b)        column (a)
                             --------------    --------------    ---------------
Plan category                      n/a              n/a                n/a

Equity compensation plans
approved by stockholder            n/a              n/a                n/a

Equity compensation plans
not approved by stockholder        n/a              n/a                n/a

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

OVERVIEW

         We were a start-up developer and marketer of entertainment and leisure
products. Since our inception, most of our revenues have been derived from our
card business. During the month of January 2005 our Board of Directors
determined to wind down the Company's operations as conducted to date due to the
lack of sufficient funding. The Company released all its employees other than
its CEO and one employee. The Company is currently evaluating several options
regarding its future financing of the registrant and its future operations. The
Company's auditors as part of their review continue to raise substantial doubt
about the Company's ability to continue as a going concern.

                                        9
<PAGE>

RESULTS OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2007 AND THE YEAR ENDED
SEPTEMBER 30, 2006.

         The following table sets forth our income statement data ($ in
thousands) for the periods indicated below.

                                                    Year Ended      Year Ended
                                                   September 30,   September 30,
                                                       2007            2006
                                                   ------------    ------------

General and administrative expenses ............   $     62,747    $    271,492
                                                   ------------    ------------

    Loss from operations .......................        (62,747)       (271,492)

Other income and (expense)
    Interest expense ...........................       (280,599)       (267,493)
                                                   ------------    ------------

Loss before provision for income taxes .........       (343,346)       (538,985)
Provision for income taxes .....................              0               0
                                                   ------------    ------------

NET LOSS .......................................   $   (343,346)   $   (538,985)
                                                   ============    ============

Basic and diluted earnings (loss) per share ....   $      (0.01)   $      (0.01)
                                                   ============    ============

Weighted-average shares outstanding-
    basic and diluted ..........................     55,681,787      55,681,787
                                                   ============    ============

         We did not have any net sales, cost of sales, gross profit or selling
expenses for the fiscal years ended September 30, 2007 and September 30, 2006.

         General and administrative decreased to $62,747 for the year ended
September 30, 2007 compared to $271,492 for the year ended September 30, 2006.
General and administrative expenses consist of professional fees in both periods
and to certain settlements in the year ended September 30, 2006.

         The Company reported a net loss of $343,346, or $(0.01) per share for
the year ended September 30, 2007 and a net loss $538,985, or ($0.01) per share
for the year ended September 30, 2006.

LIQUIDITY AND CAPITAL RESOURCES

         All of the Company's convertible debt is in default as of January 1,
2006.

         As of September 30, 2007, we had $3,321 in cash and cash equivalents.
Net cash used in operations for the fiscal year ended September 30, 2007 was $
$71,679 consisting of a net loss of $343,346 offset by an increase in accounts
payable and accrued expenses of $271,667. Total cash provided by financing
activities of $75,000 was he result of shareholder advances

                                       10
<PAGE>

         At September 30, 2007 we had an accumulated deficit of $19,509,830 and
the report from our independent registered public accounting firm on our audited
financial statements at September 30, 2007 contains an explanatory paragraph
regarding doubt as to our ability to continue as a going concern as a result of
our significant recurring losses from operations since inception. As discussed
earlier in this report, in fiscal 2005 and 2006 we wound down our operations and
are now seeking to acquire assets or shares of an entity actively engaged in
business which generates revenues, in exchange for our securities. We cannot
predict when, if ever, we will be successful in this venture and, accordingly,
we may be required to cease operations at any time. We do not have sufficient
working capital to pay our operating costs for the next 12 months. We will
require additional funds to pay our legal, accounting and other fees associated
with our company and its filing obligations under federal securities laws, as
well as to pay our other accounts payable generated in the ordinary course of
our business. We will also need funds to satisfy the approximate $4.3 million of
obligations on our balance sheet at September 30, 2006. We have no commitments
from any party to provide such funds to us. If are unable to obtain additional
capital as necessary until such time as we are able to conclude a business
combination, we will be unable to satisfy our obligations and otherwise continue
to meet our reporting obligations under federal securities laws. In that event,
our stock would no longer be quoted on the OTC Bulletin Board and our ability to
consummate a business combination with upon terms and conditions which would be
beneficial to our existing stockholders would be adversely affected.

IIG LOAN

         On May 4, 2004 the Company entered into a Loan and Security Agreement
with IIG Capital, LLC, as agent for IIG Trade Opportunities Fund N.V., as
lender. Pursuant to the loan agreement, IIG granted the Company a credit line of
up to $3,000,000 based on a percentage of certain receivables. This agreement
provides for interest, collateral management and account management fees. In the
event that such fees were less than $20,000 for the month, then the minimum
monthly fee of $20,000 was due. The Company defaulted on the terms of this
credit line. The interest rate on such line of credit is the greater of prime
rate plus 4.25 per annum or 8.75%. The default in interest rate shall be prime
rate plus 10% per annum. The Company is in dispute with the lender as to the
terms of the loan agreement and amounts due. The Company has settled the debt
with the lender for approximately $200,000, which $50,000 has been paid.

CRESTVIEW, OCEAN DRIVE CAPITAL AND TURQUOISE PARTNERS

         On November 1, 2004, we entered into an agreement with one of our
existing investors, Crestview Master, LLC, pursuant to which Crestview invested
in us an additional amount of $300,000 in the form of a convertible debenture.

         The debenture bears interest at 8% per annum with a maturity date of
December 31, 2005. The debenture is convertible into shares of our common stock
at a conversion price of $0.20 per share, subject to certain adjustments and
anti-dilution provisions. In addition, we issued to Crestview a warrant to
purchase up to 750,000 shares of our common stock at an exercise price of $0.40
per share. Contemporaneously with such investment, we amended the convertible
debentures and warrants previously issued to Crestview, Ocean Drive Equities and
Turquoise Partners. The maturity of the convertible debentures in the aggregate
mount of $1,500,000, previously issued to Crestview, Ocean Drive Equities and
Turquoise Partners, was extended until December 31, 2005 and their conversion
price has been reduced to $0.25 per share. The exercise price of the warrants
previously issued to Crestview, Ocean Drive Equities and Turquoise Partners has
been reduced to $0.60 per share.

                                       11
<PAGE>

         On February 15, 2005, the securities purchase agreements with Crestview
were amended again, pursuant to the Second Amendment, Extension and Addition to
Securities Purchase Agreement dated July 15, 2004 (the "Second Amendment").
Crestview has agreed to purchase a $200,000 Prime Plus 2% Convertible Debenture
due April 30, 2005. The material terms of the Second Amendment are as follows:

         o contemporaneous with such investment, the Company reduced the
conversion price of the Restated 8% Convertible Debenture in the principal
amount of $1,500,000 from $.25 to $.0075,

         o the exercise prices of the restated series A-1 warrants and A-2
warrants, each to purchase 900,000 shares of common stock were reduced from $.60
to $.05 per share,

         o the conversion price of the 8% convertible debenture due December 31,
2005 in the principal amount of $300,000 was reduced from $.20 to $.0075,

         o the exercise price of the 750,000 warrants related the $300,000 8%
convertible debenture was reduced from $.40 to $.05 per share,

         o Crestview has the right, but not the obligation, to appoint such
number of directors of the Company as shall constitute a majority of the Board
of Directors, until such time as the Crestview outstanding debentures have been
fully converted or paid in full, and

         o upon execution of the amendment Crestview shall execute and deliver a
release to each of the three former independent directors.

         This financing was also conditioned upon a certain other shareholder
arranging for another $150,000 investment of principal in a debenture and Shai
Bar-Lavi, our former CEO, rendering for cancellation, without consideration, all
shares owned by him or members of his immediate family. During the quarter ended
March 31, 2005, proceeds of $50,000 were received from the aforementioned
shareholder.

         On May 11, 2005, the securities purchase agreements with Turquoise
Partners, LLC, ("TP") were amended, pursuant to the First Amendment, Extension
and Addition to Securities Purchase Agreement dated July 15, 2004 (the "First
Amendment"). Therein TP agreed to purchase a $100,000 Prime plus 2% convertible
debenture due December 31, 2006. Highlights of this First Amendment were as
follows:

         o contemporaneous with such investment, the Company reduced the
conversion price of the restated 8% convertible debenture in the principal
amount of $150,000 from $.25 to $.0075,

         o the exercise prices of the restated series A-1 warrants and A-2
warrants, each to purchase 90,000 shares of common stock, were reduced from $.80
to $.05 per share,

         o the maturity date of the $150,000 8% convertible debenture was
extended to be due December 31, 2006, and

         o upon execution of the amendment TP shall execute and deliver a
release to each of the three former independent directors. The recent $100,000
from TP was received $50,000 in February 2005 and $50,000 in May 2005.

                                       12
<PAGE>

         These aforementioned debentures had been extended through to December
2006, and is currently being negotiated for a debt to equity conversion.

CRITICAL ACCOUNTING POLICIES

         The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
us to make estimates and judgements that affect the reported amount of assets
and liabilities, revenues and expenses, and related disclosure on contingent
assets and liabilities at the date of our financial at the date of our financial
statements. Actual results may differ from these estimates under different
assumptions and conditions.

         Critical accounting policies are defined as those that are reflective
of significant judgements and uncertainties, and potentially result in
materially different results under different assumptions and conditions. We
believe that our critical accounting policies are limited to those described
below. For a detailed discussion on the application of these and other
accounting policies see our note 2 to our consolidated financial statements.

Beneficial conversion features of debt issuances and equity issuances

         The Company has issued convertible debt with conversion terms into
common stock. The conversion terms are subject to valuations pursuant to EITF
98-5 and EITF 00-27, whereby the intrinsic value of such conversion terms into
common stock is to be recorded as a form of interest expense over the term of
the debt, while considering the conversion terms themselves or presented as a
deemed dividend on the statement of operations for preferred equity conversion
features. The calculated intrinsic value of the conversion terms are limited to
the total proceeds obtained in the financing.

Accounting for Income Taxes

         As part of the process of preparing our consolidated financial
statements we are required to estimate our income taxes. Management judgment is
required in determining our provision of our deferred tax asset. We recorded a
valuation for the full deferred tax asset from our net operating losses carried
forward due to the Company not demonstrating any consistent profitable
operations. In the event that the actual results differ from these estimates or
we adjust these estimates in future periods we may need to adjust such valuation
recorded.

Going Concern

         The financial statements of the Company have been prepared assuming
that the Company will continue as a going concern. The Company has had negative
working capital at year end. The Company is in default of its line of credit.
Those conditions raise substantial doubt about the abilities to continue as a
going concern. The financial statements of the Company do not include any
adjustments that might be necessary should the Company be unable to continue as
a going concern.

                                       13
<PAGE>

New Accounting Pronouncements

FASB 157 - Fair Value Measurements

         In September 2006, the FASB issued FASB Statement No. 157. This
Statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. The
fair value measurements of Level 3 assets and liabilities has been delayed for
one year, until November 15, 2008. Earlier application is permitted provided
that the reporting entity has not yet issued financial statements for that
fiscal year. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.

FASB 141(revised 2007) - Business Combinations

         In December 2007, the FASB issued FASB Statement No. 141 (revised
2007), Business Combinations. This Statement replaces FASB Statement No. 141,
Business Combinations. This Statement retains the fundamental requirements in
Statement 141 that the acquisition method of accounting (which Statement 141
called the purchase method) be used for all business combinations and for an
acquirer to be identified for each business combination. This Statement defines
the acquirer as the entity that obtains control of one or more businesses in the
business combination and establishes the acquisition date as the date that the
acquirer achieves control. This Statement's scope is broader than that of
Statement 141, which applied only to business combinations in which control was
obtained by transferring consideration. By applying the same method of
accounting--the acquisition method--to all transactions and other events in
which one entity obtains control over one or more other businesses, this
Statement improves the comparability of the information about business
combinations provided in financial reports.

         This Statement requires an acquirer to recognize the assets acquired,
the liabilities assumed, and any non-controlling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the Statement. That replaces Statement 141's
cost-allocation process, which required the cost of an acquisition to be
allocated to the individual assets acquired and liabilities assumed based on
their estimated fair values.

         This Statement applies to all transactions or other events in which an
entity (the acquirer) obtains control of one or more businesses (the acquirer),
including those sometimes referred to as "true mergers" or "mergers of equals"
and combinations achieved without the transfer of consideration, for example, by
contract alone or through the lapse of minority veto rights. This Statement
applies to all business entities, including mutual entities that previously used
the pooling-of-interests method of accounting for some business combinations. It
does not apply to: (a) The formation of a joint venture, (b) The acquisition of
an asset or a group of assets that does not constitute a business, (c) A
combination between entities or businesses under common control, (d) A
combination between not-for-profit organizations or the acquisition of a
for-profit business by a not-for-profit organization.

                                       14
<PAGE>

         This Statement applies prospectively to business combinations for which
the acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.

         All other new accounting pronouncements are deemed to be irrelevant.

ITEM 7.  FINANCIAL STATEMENTS

         Our financial statements are contained in pages F-1 through F-14, which
appear at the end of this annual report.

ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

         NONE.

ITEM 8A. CONTROLS AND PROCEDURES

         (a) Evaluation of Disclosure Controls and Procedures. Our Chief
Executive Officer who also serves as our Chief Financial Officer and is the sole
director of the Company, carried out an evaluation of the effectiveness of our
"disclosure controls and procedures" (as defined in the Exchange Act, Rules
13a-15(e) and 15-d-15(e)) as of the end of the period covered by this report
(the "Evaluation Date"). Based upon that evaluation, her concluded that, as of
the Evaluation Date, our disclosure controls and procedures are effective to
ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act (i) is recorded, processed, summarized and
reported, within the time periods specified in the SEC's rules and forms and
(ii) is accumulated and communicated to our management, including our chief
executive officer and our chief financial officer, as appropriate to allow
timely decisions regarding required disclosure.

         (b) There were no changes in our internal controls over financial
reporting that occurred during our fiscal fourth quarter that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.

ITEM 8B. OTHER INFORMATION

         None.

                                    PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

EXECUTIVE OFFICERS AND DIRECTORS

         Name              Age         Positions
         ----              ---         ---------
Steven A. Horowitz         48          Director, Chief Executive Officer
                                       and Chief Financial Officer

                                       15
<PAGE>

         STEVEN A. HOROWITZ, is a director, the chief executive and chief
financial officer of Genio since May 2006. Prior to that he (i) has been a
private investor since October 2004, and (ii) served as a director of
CDKnet.com, Inc., a Delaware corporation, from May 1998 through October 2004.
During that time he was also, (i) from May 1998 until August 2004, the Chairman
and CEO of CDKnet.com and (ii) from October 2002 through January 2004, serving
as the President, CEO and Chairman of the Board of Genio Group, Inc. He resigned
as an officer of Genio in September 2003 and as a director in January 2004. In
addition, since 1988, Mr. Horowitz has been affiliated with Moritt, Hock,
Hamroff & Horowitz, LLP, a Garden City, New York-based law firm. Mr. Horowitz
holds a degree from Hofstra University School of Law and a Master of Business
Administration degree in Accounting from Hofstra University School of Business.
Mr. Horowitz is an Adjunct Professor of Law at Hofstra University School of Law.
Mr. Horowitz is a member of the American Bar Association and the New York State
Bar Association.

         Directors are elected at our annual meeting of stockholders and hold
office for one year or until his or her successor is elected and qualified.

CODE OF ETHICS

         We have adopted a Code of Ethics and Business Conduct for Officers and
Directors (which applies to all our principal officers, including our CEO, CFO,
COO and principal accounting officer) and a Code of Ethics for Financial
Executives that applies to all of our executive officers, directors and
financial executives. Copies of these codes are filed as exhibits to this annual
report.

COMMITTEES OF THE BOARD OF DIRECTORS

         There currently are no committees of the Board of Directors

COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to us under Rule 16a-3(d) of the Securities Exchange Act of 1934, as
amended, during the fiscal year ended September 30, 2007 and Forms 5 and
amendments thereto furnished to us with respect to the fiscal year ended
September 30, 2007, as well as any written representation from a reporting
person that no Form 5 is required, we are not aware of any person that failed to
file on a timely basis, as disclosed in the aforementioned Forms, reports
required by Section 16(a) of the Securities Exchange Act of 1934 during the
fiscal year ended September 30, 2007.

ITEM 10. EXECUTIVE COMPENSATION

         At the end of our last fiscal year, the fiscal year ended September 30,
2007, Mr. Steven A. Horowitz was our sole director and executive officer in the
positions of chief executive officer and chief financial officer. Mr. Horowitz
does not receive any cash compensation for the services he renders on our
behalf.

STOCK OPTION INFORMATION

         There were no stock options issued to any of the Named Executives in
fiscal 2007.

                                       16
<PAGE>

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

         At December 31, 2007, there were 55,681,787 shares of our common stock
issued and outstanding. The following table sets forth, as of December 31, 2007,
information known to us relating to the beneficial ownership of these shares by:

         o  each person who is the beneficial owner of more than 5% of the
            outstanding shares of common stock;
         o  each director;
         o  each Named Executive; and
         o  all executive officers and directors as a group.

         Unless otherwise indicated, the address of each beneficial owner in the
table set forth below is care of 400 Garden City Plaza, Garden City, N.Y, 11530

         We believe that all persons named in the table have sole voting and
investment power with respect to all shares of beneficially owned by them. Under
securities laws, a person is considered to be the beneficial owner of securities
he owns and that can be acquired by him within 60 days from December 31, 2007
upon the exercise of options, warrants, convertible securities or other
understandings. We determine a beneficial owner's percentage ownership by
assuming that options, warrants or convertible securities that are held by him,
but not those held by any other person and which are exercisable within 60 days
of December 31, 2007, have been exercised or converted. Unless otherwise noted,
the address of each of these principal stockholders is our principal executive
offices.

          NAME OF                      AMOUNT AND NATURE OF           PERCENTAGE
      BENEFICIAL OWNER                 BENEFICIAL OWNERSHIP            OF CLASS
----------------------------           --------------------           ----------
Steven A Horowitz                            2,778,521                   4.99%

All executive officers
 and as a group (one person)                 2,778,521                   4.99%
__________________
(1) Includes 2,578,521 shares issuable upon conversion of certain outstanding
debentures beneficially owned by Mr. Horowitz.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
         INDEPENDENCE

         During the 2004 and 2005, Steven A. Horowitz and his affiliates (the
"Horowitz Group") have made loans to Genio in the aggregate principal amount of
$315,000 for which Genio has issued to them convertible debentures, due December
31, 2006, bearing interest at the rate of eight percent (8%) per annum (the
"Debentures"). Subject to a limitation on beneficial ownership, the Debentures
are currently convertible into shares of Genio's common stock at a conversion
price of $0.0075 per share. In addition, Genio has agreed to file a registration
statement covering the resale of the shares of common stock underlying the
Debentures.

         Since the beginning of our fiscal year ended September 30, 2007, Mr.
Horowitz has advanced an aggregate of $75,000 to Genio. These advances are due
on demand and do not bear interest.

         Genio's Board of Directors consists of solely of Steven A. Horowitz. He
is not independent as such term is defined by a national securities exchange or
an inter-dealer quotation system.

                                       17
<PAGE>

                                     PART IV

ITEM 13. EXHIBITS

3.1      Bylaws (1)
3.2      Certificate of Incorporation (2)
3.3      Certificate of Amendment (2)
3.4      Certificate of Amendment (2)
3.5      Certificate of Amendment (3)
3.6      Certificate of Amendment (4)
3.7      Certificate of Amendment (5)
4.2      Form of Warrant dated July 2003 with an exercise price of $1.50 (6)
4.3      Form of (A) Warrant dated November 2003 with an exercise price of $2.92
         (6)
4.4      Form of (B) Warrant dated November 2003 with an exercise price of $2.10
         (6)
4.5      Warrant issued to IIG Capital, LLC (6)
4.6      Form of Series A-1 Warrant issued to Crestview Master, LLC, Ocean Drive
         Capital, LLC and Turquoise Partners, LLC (7)
4.7      Form of Series A-6 Warrant issued to Crestview Master, LLC, Ocean Drive
         Capital, LLC and Turquoise Partners, LLC (7)
4.8      Form of Convertible Debenture dated July 13, 2004 issued to Crestview
         Master, LLC, Ocean Drive Capital, LLC and Turquoise Partners, LLC (7)
4.9      Prime Plus 2% Convertible Debentures Due April 10, 2005 issued to
         Crestview Master, LLC, Ocean Drive Capital, LLC and Turquoise Partners,
         LLC (8)
10.1     Form of Registration Rights Agreement dated November 2003 (6)
10.2     Form of Registration Rights Agreement dated July 2003 (6)
10.3     Loan and Security Agreement dated May 4, 2004 with IIG Capital, LLC (1)
10.4     Second Amendment, Extension and Addition to Securities Purchase
         Agreement dated July 15, 2004 (8)
14.1     Code of Ethics (9)
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 of Chief Executive Officer and Chief Financial Officer
         pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
__________________
*  filed herewith

(1)   Incorporated by reference to the Form 10-QSB filed with on May 17, 2004
(2)   Incorporated by reference to the Report on Form 8-K as filed on April 14,
      2000.
(3)   Incorporated by reference to the Report on Form 8-K/A as filed on June 30,
      2000.
(4)   Incorporated by reference to the Report on Form 8-K as filed on October
      30, 2002.
(5)   Incorporated by reference to the Form 10-QSB as filed on August 20, 2003.
(6)   Incorporated by reference to the Form 10-KSB as filed on January 13, 2004.
(7)   Incorporated by reference to the registration statement on Form SB-2 as
      filed on July 30, 2004.
(8)   Incorporated by reference to the Form 10-KSB as filed on February 17,
      2005.
(9)   Incorporated by reference to the Form 10-KSB as filed on January 13, 2004

                                       18
<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         Sherb & Co., LLP served as our independent registered public accounting
firm for the 2007 and 2006 fiscal years. The following table shows the fees that
were billed for the audit and other services provided by Sherb for the 2007 and
2006 fiscal years.

                                        Fiscal 2007         Fiscal 2006
                                        -----------         -----------
Audit Fees .........................      $12,000             $14,900
Audit-Related Fees .................         -                   -
Tax Fees ...........................         -                   -
All Other Fees .....................         -                   -
                                          -------             -------

         Total .....................      $12,000             $14,900
                                          =======             =======

         Audit Fees -- This category includes the audit of our annual financial
statements, review of financial statements included in our Form 10-QSB Quarterly
Reports and services that are normally provided by the independent auditors in
connection with engagements for those fiscal years. This category also includes
advice on audit and accounting matters that arose during, or as a result of, the
audit or the review of interim financial statements.

         Audit-Related Fees -- This category consists of assurance and related
services by the independent auditors that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported above under "Audit Fees." The services for the fees disclosed under
this category include consultation regarding our correspondence with the SEC and
other accounting consulting.

         Tax Fees -- This category consists of professional services rendered by
our independent auditors for tax compliance and tax advice. The services for the
fees disclosed under this category include tax return preparation and technical
tax advice.

         All Other Fees -- This category consists of fees for other
miscellaneous items.

         Our Board of Directors has adopted a procedure for pre-approval of all
fees charged by our independent auditors. Under the procedure, the Board
approves the engagement letter with respect to audit, tax and review services.
Other fees are subject to pre-approval by the Board, or, in the period between
meetings, by a designated member of Board. Any such approval by the designated
member is disclosed to the entire Board at the next meeting.

                                       19
<PAGE>

                                   SIGNATURES

         In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

                                  GENIO GROUP, INC.

January 14, 2008                  By: /s/  Steven A. Horowitz
                                      -----------------------
                                      Steven A. Horowitz, CEO, CFO,
                                      principal executive officer and
                                      principal financial and accounting 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
on the dates indicated.

      Signature                       Title                       Date
      ---------                       -----                       ----

/s/ Steven A. Horowitz         CEO, CFO and director         January 14, 2008
----------------------
Steven A. Horowitz

                                       20
<PAGE>


                       GENIO GROUP, INC. AND SUBSIDIARIES

                                    CONTENTS

                                                                            Page
                                                                            ----

Report of Independent Registered Public Accounting Firm .............        F-2

Consolidated Balance Sheet ..........................................        F-3

Consolidated Statements of Operations ...............................        F-4

Stockholders Deficiency in Assets ...................................        F-5

Consolidated Statements of Cash Flows ...............................        F-6

Notes to the Consolidated Financial Statements ......................  F-7 to 14


                                       F-1
<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------

Stockholders and Director
Genio Group, Inc. and subsidiaries
Garden City, NY

We have audited the accompanying consolidated balance sheet of Genio Group, Inc.
as of September 30, 2007, and the related consolidated statements of operations,
stockholders' deficiency in assets and cash flows for each of the years then
ended September 30, 2007 and 2006. 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 audit.

We conducted our audit 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. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Genio Group, Inc. as
of September 30, 2007, and the results of its operations and its cash flows for
each of the years then ended September 30, 2007 and 2006, in conformity with
accounting principles generally accepted in the United States.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described more fully in Note 1 to
the financial statements, the Company has suffered recurring losses from
operations, including a net loss of approximately $.3 and $.5 million for the
years ended September 30, 2007 and 2006, respectively, and has a substantial
working capital deficiency as of September 30, 2007. These factors raise
substantial doubt the Company's ability to continue as a going concern. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.


                                        /s/ Sherb & Co., LLP
                                        Sherb & Co., LLP
                                        Certified Public Accountants

New York, New York
January 11, 2008

                                       F-2
<PAGE>

                       GENIO GROUP, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET

                                                                   September 30,
                                                                       2007
                                                                   ------------
                                     ASSETS

CURRENT ASSETS
  Cash .........................................................   $      3,321
                                                                   ------------

                                                                   $      3,321
                                                                   ============

             LIABILITIES AND STOCKHOLDERS' DEFICEINCY IN ASSETS

CURRENT LIABILITIES
  Accounts payable and accrued expense .........................   $    706,770
  Interest payable on convertible debentures ...................        752,757
  8% Convertible debenture .....................................      2,400,000
  Advances from related parties ................................        242,324
  Line of credit payable .......................................        150,000
                                                                   ------------
                  Total current liabilities ....................      4,251,851

COMMITMENTS and CONTINGENCIES

STOCKHOLDERS' DEFICEINCY IN ASSETS
  Preferred stock, no par value, 2,000,000 shares authorized,
    0 shares issued ............................................              -
  Common stock - par value $.0001, per share; authorized,
    200,000,000 shares;  55,681,787shares issued and outstanding          5,568
  Additional paid in capital ...................................     15,255,732
  Accumulated deficit ..........................................    (19,509,830)
                                                                   ------------
                  Total stockholders' deficiency in assets .....     (4,248,530)
                                                                   ------------

                                                                   $      3,321
                                                                   ============

         The accompanying notes are an integral part of this statement.

                                       F-3
<PAGE>

                       GENIO GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                     Years Ended September 30,
                                                   ----------------------------
                                                       2007            2006
                                                   ------------    ------------

Revenues .......................................   $          -    $          -

General and administrative expenses ............         62,747         271,492
                                                   ------------    ------------

    Loss from operations .......................        (62,747)       (271,492)

Other income and (expense)
    Interest expense ...........................       (280,599)       (267,493)
                                                   ------------    ------------

Loss before provision for income taxes .........       (343,346)       (538,985)
Provision for income taxes .....................              0               0
                                                   ------------    ------------

NET LOSS .......................................   $   (343,346)   $   (538,985)
                                                   ============    ============

Basic and diluted earnings (loss) per share ....   $      (0.01)   $      (0.01)
                                                   ============    ============

Weighted-average shares outstanding-
    basic and diluted ..........................     55,681,787      55,681,787
                                                   ============    ============

         The accompanying notes are an integral part of this statement.

                                       F-4
<PAGE>
<TABLE>
                               GENIO GROUP, INC. AND SUBSIDIARIES
                               STOCKHOLDERS DEFICIENCY IN ASSETS
<CAPTION>
                                  Commn Stock
                             ---------------------    Additional
                               shares        par        Paid In      Accumulated
                             outstanding    value       Capital        Deficit        Total
                             -----------   -------   ------------   ------------   ------------
<S>                          <C>           <C>       <C>            <C>            <C>
Balance September 30, 2005    55,681,787   $ 5,568   $ 15,255,732   $(18,627,500)  $ (3,366,200)

Net loss .................             -         -              -       (538,985)      (538,985)
                             -----------   -------   ------------   ------------   ------------

Balance September 30, 2006    55,681,787     5,568     15,255,732    (19,166,485)    (3,905,185)

Net loss .................             -         -              -       (343,345)      (343,345)
                             -----------   -------   ------------   ------------   ------------

Balance September 30, 2007    55,681,787   $ 5,568   $ 15,255,732   $(19,509,830)  $ (4,248,530)
                             ===========   =======   ============   ============   ============

                 The accompanying notes are an integral part of this statement.

                                              F-5
</TABLE>
<PAGE>

                       GENIO GROUP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                       Years Ended September 30,
                                                       -------------------------
                                                          2007           2006
                                                       ---------      ---------
Cash flows from operating activities
  Net loss ........................................    $(343,346)     $(538,985)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
      Accounts payable and accrued expenses .......      271,667        330,435
                                                       ---------      ---------
          Net cash used in operating activities ...      (71,679)      (208,550)
                                                       ---------      ---------

Cash flows from financing activities
  Advances from related parties ...................       75,000        132,324
  Proceeds from line of credit ....................            -         71,813
                                                       ---------      ---------
          Net cash provided by financing activities       75,000        204,137
                                                       ---------      ---------

          NET INCREASE (DECREASE) IN CASH .........        3,321         (4,413)
Cash at beginning of period .......................            0          4,413
                                                       ---------      ---------

Cash at end of period .............................    $   3,321      $       -
                                                       =========      =========

Supplemental disclosures of cash flow information:
  Cash paid during the period for
      Interest ....................................    $       -      $       -
                                                       =========      =========
      Taxes .......................................    $       -      $       -
                                                       =========      =========

         The accompanying notes are an integral part of this statement.

                                       F-6
<PAGE>

                       GENIO GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                 For the years ended September 30, 2007 and 2006

ORGANIZATION

Primarily due to the lack of financing, Genio Group, Inc. and subsidiaries
referred to herein as "Genio" or the "Company" has closed all operations and
terminated all of its employees. A shareholder has assumed the position of CEO
and CFO of the Company in order to orchestrate an orderly liquidation of the
Company's assets, seek settlement agreements with the creditors and evaluate
potential merger candidates.

Genio was a developer and marketer of entertainment and leisure products. Genio
held a worldwide license with Marvel Enterprises, Inc. to manufacture and sell
specific categories of products built around the globally recognizable Marvel
Super Heroes(TM), including Spider-Man(TM), The Incredible Hulk(TM),
X-Men(TM),Elektra(TM), Daredevil(TM) and the Fantastic Four(TM). The Genio Card
collection was available in select national retailers in the United States.
Genio Cards consist of 360 illustrated cards that take children on a journey
through 30 subject categories: from the history of dinosaurs and attributes of
reptiles to facts about motor Sports and manmade landmarks.

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred net
losses of $343,346 and $538,985 for the years ended September 30, 2007 and
September 30, 2006, respectively. Additionally, the Company had a net working
capital deficiency and a shareholders' deficiency at September 30, 2007 and
negative cash flow from operations for the years ended September 30, 2007 and
2006. The Company is in default of its line of credit and substantially all of
its convertible debentures. These conditions raise substantial doubt about the
Company's ability to continue as a going concern.

Management expects to incur additional losses in the foreseeable future and
recognizes the need to raise capital to remain viable. The accompanying
consolidated financial statements do not include any adjustments that might be
necessary should the Company be unable to continue as a going concern

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Genio Group, Inc.
and its subsidiaries ("the Company"). Intercompany accounts and transactions
have been eliminated in consolidation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
which affect the reporting of assets and liabilities as of the dates of the
financial statements and revenues and expenses during the reporting period.
These estimates primarily relate to the sales recognition, allowance for
doubtful accounts, inventory obsolescence and asset valuations. Actual results
could differ from these estimates.

                                       F-7
<PAGE>

INCOME TAXES

The Company provides for deferred income taxes resulting from temporary
differences between the valuation of assets and liabilities in the financial
statements and the carrying amounts for tax purposes. Such differences are
measured by applying statutory tax rates and laws in effect at the balance sheet
date to the differences among book and tax basis of the assets and liabilities.

STOCK OPTIONS

The Company adopted Statement of Financial Accounting Standards (SFAS) 123R,
Share-Based Payment. Under this application, the Company is required to record
compensation expense using a fair-value-based measurement method for all awards
granted after the date of adoption and for the unvested portion of previously
granted awards that remain outstanding at the date of adoption. Per the
provisions of SFAS No. 123-R, the Company has adopted the policy to recognize
compensation expense on a straight-line attribution method.

The Company had no issuances of stock options or warrants in the past two years,
nor have any such prior issued options or warrants vest in the past two years.

CONCENTRATION OF CREDIT RISK

Periodically, the Company may hold cash in the bank in excess of $100,000, which
exceeds the FDIC insurance limits and is therefore uninsured.

NEW ACCOUNTING PRONOUNCEMENTS

FASB 157 - Fair Value Measurements

In September 2005, the FASB issued FASB Statement No. 157. This Statement
defines fair value, establishes a framework for measuring fair value in
generally accepted accounting principles (GAAP), and expands disclosures about
fair value measurements. This Statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is a
relevant measurement attribute. Accordingly, this Statement does not require any
new fair value measurements. However, for some entities, the application of this
Statement will change current practices. This Statement is effective for
financial statements for fiscal years beginning after November 15, 2007. Fair
valuation measurements for Level 3 type assets and liabilities have been delayed
for one year until November 15, 2008. Earlier application is permitted provided
that the reporting entity has not yet issued financial statements for that
fiscal year. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.

FASB 141(revised 2007) - Business Combinations

In December 2007, the FASB issued FASB Statement No. 141 (revised 2007),
Business Combinations. This Statement replaces FASB Statement No. 141, Business
Combinations. This Statement retains the fundamental requirements in Statement
141 that the acquisition method of accounting (which Statement 141 called the
purchase method) be used for all business combinations and for an acquirer to be
identified for each business combination. This Statement defines the acquirer as
the entity that obtains control of one or more businesses in the business
combination and establishes the acquisition date as the date that the acquirer
achieves control. This Statement's scope is broader than that of Statement 141,

                                       F-8
<PAGE>

which applied only to business combinations in which control was obtained by
transferring consideration. By applying the same method of accounting--the
acquisition method--to all transactions and other events in which one entity
obtains control over one or more other businesses, this Statement improves the
comparability of the information about business combinations provided in
financial reports.

This Statement requires an acquirer to recognize the assets acquired, the
liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date, measured at their fair values as of that date, with limited
exceptions specified in the Statement. That replaces Statement 141's
cost-allocation process, which required the cost of an acquisition to be
allocated to the individual assets acquired and liabilities assumed based on
their estimated fair values.

This Statement applies to all transactions or other events in which an entity
(the acquirer) obtains control of one or more businesses (the acquirer),
including those sometimes referred to as "true mergers" or "mergers of equals"
and combinations achieved without the transfer of consideration, for example, by
contract alone or through the lapse of minority veto rights. This Statement
applies to all business entities, including mutual entities that previously used
the pooling-of-interests method of accounting for some business combinations. It
does not apply to: (a) The formation of a joint venture, (b) The acquisition of
an asset or a group of assets that does not constitute a business, (c) A
combination between entities or businesses under common control, (d) A
combination between not-for-profit organizations or the acquisition of a
for-profit business by a not-for-profit organization.

This Statement applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2008. An entity may not apply it
before that date. Management believes this Statement will have no impact on the
financial statements of the Company once adopted.

FASB 160 - Noncontrolling Interests in Consolidated Financial Statements - an
amendment of ARB No. 51

In December 2007, the FASB issued FASB Statement No. 160 - Noncontrolling
Interests in Consolidated Financial Statements - an amendment of ARB No. 51.
This Statement applies to all entities that prepare consolidated financial
statements, except not-for-profit organizations, but will affect only those
entities that have an outstanding noncontrolling interest in one or more
subsidiaries or that deconsolidate a subsidiary. Not-for-profit organizations
should continue to apply the guidance in Accounting Research Bulletin No. 51,
Consolidated Financial Statements, before the amendments made by this Statement,
and any other applicable standards, until the Board issues interpretative
guidance.

This Statement amends ARB 51 to establish accounting and reporting standards for
the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this Statement was issued,
limited guidance existed for reporting noncontrolling interests. As a result,
considerable diversity in practice existed. So-called minority interests were
reported in the consolidated statement of financial position as liabilities or
in the mezzanine section between liabilities and equity. This Statement improves
comparability by eliminating that diversity.

                                       F-9
<PAGE>

A noncontrolling interest, sometimes called a minority interest, is the portion
of equity in a subsidiary not attributable, directly or indirectly, to a parent.
The objective of this Statement is to improve the relevance, comparability, and
transparency of the financial information that a reporting entity provides in
its consolidated financial statements by establishing accounting and reporting
standards that require: (a) The ownership interests in subsidiaries held by
parties other than the parent be clearly identified, labeled, and presented in
the consolidated statement of financial position within equity, but separate
from the parent's equity, (b) The amount of consolidated net income attributable
to the parent and to the noncontrolling interest be clearly identified and
presented on the face of the consolidated statement of income, (c) Changes in a
parent's ownership interest while the parent retains its controlling financial
interest in its subsidiary be accounted for consistently. A parent's ownership
interest in a subsidiary changes if the parent purchases additional ownership
interests in its subsidiary or if the parent sells some of its ownership
interests in its subsidiary. It also changes if the subsidiary reacquires some
of its ownership interests or the subsidiary issues additional ownership
interests. All of those transactions are economically similar, and this
Statement requires that they be accounted for similarly, as equity transactions,
(d) When a subsidiary is deconsolidated, any retained noncontrolling equity
investment in the former subsidiary be initially measured at fair value. The
gain or loss on the deconsolidation of the subsidiary is measured using the fair
value of any noncontrolling equity investment rather than the carrying amount of
that retained investment, (e) Entities provide sufficient disclosures that
clearly identify and distinguish between the interests of the parent and the
interests of the non-controlling owners.

This Statement is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008 (that is, January 1, 2009,
for entities with calendar year-ends). Earlier adoption is prohibited. This
Statement shall be applied prospectively as of the beginning of the fiscal year
in which this Statement is initially applied, except for the presentation and
disclosure requirements. The presentation and disclosure requirements shall be
applied retrospectively for all periods presented. Management believes this
Statement will have no impact on the financial statements of the Company once
adopted.

NOTE 2 - LOSS PER SHARE

Loss per share is computed in accordance with SFAS 128. Basic EPS is computed
using weighted average shares outstanding, while diluted EPS is computed using
weighted average shares outstanding plus shares representing stock distributable
under stock-based plans computed using the treasury stock method. The
outstanding warrants of 3,100,000 were not included in the effect of dilutive
stock because they had an anti-dilutive effect.

NOTE 3 - ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued expenses and other liabilities at September 30, 2007 consist of the
following:

         Accounts payable ..............   $ 309,520
         Accrued royalties .............      90,000
         Accrued penalties .............     200,000
         Accrued professional fees......      81,657
         Other .........................      25,593
                                           ---------
         Total .........................   $ 706,770
                                           =========

                                      F-10
<PAGE>

NOTE 4 - INCOME TAXES

At September 30, 2007, the Company had net operating loss carryforwards of
approximately $ 13,500,000 for book and tax purposes, expiring in year 2022
through 2026. These carryforwards are subject to possible limitation on annual
utilization if there are "equity structural shifts" or "owner shifts" involving
"5% shareholders" (as these terms are defined in Section 382 of the Internal
Revenue Code).

At this time, the Company does not believe it can reliably predict future
taxable profits. Accordingly, the increase in deferred tax assets to
approximately $4,700,000 has been reduced fully by the valuation allowance.

Reconciliation of income taxes shown in the financial statements and amounts
computed by applying the Federal income tax rate of 35% for the year ended
September 30, 2007 is as follows:

         Loss before income taxes ......................     $ 343,000
         Computed expected tax credit at 35% ...........       120,000

         Increase in NOL valuation .....................      (120,000)
         Provision of income taxes .....................     $       0

The Company has not filed their federal or state income tax returns for a few
years.

NOTE 5 - LINE OF CREDIT

On May 4, 2004 the Company entered into a loan and security agreement With IIG
Capital, LLC, as agent for IIG Trade Opportunities Fund N.V., as lender. The
negotiated outstanding balance under the line of credit at September 30, 2007
was $150,000.

The Company is in default on this agreement. In December 2005, the Company
agreed to settled its debt to IIG by the immediate payment of $50,000 in cash,
the issuance of a $25,000 note due on March 31, 2006 and the conversion of
approximately $125,000 of past due fees and interest into a convertible
debenture on terms similar to those of the Company's other convertible
debentures. As of September 30, 2007, the note and the debentures have not been
issued.

NOTE 6 - CONVERTIBLE DEBENTURES and OTHER - SUBSTANTIALLY ALL SUCH DEBT IS IN
DEFAULT AS OF JANUARY 1, 2007.

The Company has authorized and sold $2,650,000 of 8% convertible debenture due
December 31, 2006 (debentures). The Company has received $2,300,000. The balance
of $350,000 is to be received at an indeterminate date. Interest is payable
quarterly in arrears, at the Company's option, in cash or shares of Company
common stock. The Company is required to provide the debenture holders with 20
days prior written notice of the Company's election to issue common stock in
lieu of cash. Interest to date has never been paid and the liability has been
accrued. There is a late fee of 18% on the unpaid interest.

                                      F-11
<PAGE>

The debentures are convertible into shares of Company common stock at a fixed
conversion price of $0.0075 per share except for $100,000, which is convertible
into shares of the Company's common stock at $0.25 per share. The terms of the
debentures prohibit conversion if it would result in the holder, together with
its affiliates, beneficially owning in excess of 9.99% of outstanding shares of
the Company's common stock. A holder may waive the 9.99% limitation upon 61 days
prior written notice to the Company.

The debentures provide for a prepayment penalty in the amount of 120% of
principal.

One debenture holder has the right to appoint such number of directors of the
Company as will constitute a majority of the Board of Directors. This right
expires when the outstanding debentures have been fully converted or paid in
full.

In conjunction with the sale of the debentures, 2,850,000 warrants (warrants)
were issued to purchase shares of common stock of the Company. The warrants are
exercisable through July 14, 2009. The exercise prices of the warrant are as
follows: 750,000 at $0.0125 per share; 1,980,000 at $0.025 per share; 60,000 at
$0.80 per share; and 60,000 at $1.00 per share. The term of the warrants
prohibits the exercise of the warrants to the extent that exercise of the
warrants would result in the holder, together with its affiliates, beneficially
owning in excess of 9.99% of outstanding shares of the Company's common stock. A
holder may waive the 9.99% limitation upon 61 days prior written notice to the
Company.

The Company has granted registration rights to the debenture holders which
require the Company to file a registration statement with the Securities and
Exchange Commission covering the shares of common stock issuable upon conversion
of the debentures and exercise of the warrants. The registration of the
securities is to coincide with the date of the conversion of the debentures and
the exercise of the warrants.

Conversion of the debentures and/or exercise of the warrants is at the option of
the holders, subject to the ownership limitation.

The conversion of all of the debentures and exercise of all of the warrants
would result in the issuance of approximately an additional 300,000,000 shares
of common stock which would represent 85% of the Company's then issued and
outstanding shares. The number of authorized shares of the Company common stock
would have to be increased by approximately 160,000,000 shares to accommodate
the conversion of the debentures and the exercise of the warrants in full.

NOTE 7 - ADVANCES FROM RELATED PARTIES

Certain debenture holders, stockholders and officer have advanced the Company
$242,324, which $75,000 was advanced during the year ended September 30, 2007.
These advances are due on demand and do not bear interest.

                                      F-12
<PAGE>

NOTE 8 - STOCK OPTIONS and WARRANTS

A. Warrants

Warrant activity is summarized as follows:

                                                                Weighted Average
                                              Warrants           Exercise Price
                                              --------          ----------------
Outstanding at September 30, 2005            3,896,190               $0.92
   Issued .......................                    -                   -
   Expired or cancelled .........             (320,000)               1.30
   Exercised ....................                    -                   -
                                             ---------               -----
Outstanding at September 30, 2006            3,576,190               $0.89
   Issued .......................                    -                   -
   Expired or cancelled .........             (476,190)               2.10
   Exercised ....................                    -                   -
                                             ---------               -----
Outstanding at September 30, 2007            3,100,000               $0.71
                                             =========               =====

Weighted Average

The following table summarizes information about warrants outstanding and
exercisable at September 30, 2007:

                                           Weighted Average
                                            Remaining Life      Weighted Average
                               Shares          In Years          Exercise Price
                             ---------     ----------------     ----------------
Range of exercise price
$0.05 - $1.00 .........      2,850,000           1.875                $0.67
$1.01 - $1.50 .........        250,000           1.75                 $1.06
                             ---------           -----                -----
                             3,100,000           1.86                 $0.71
                             =========           =====                =====

All of the above warrants are exercisable.

B. Stock Option Plans

On October 1, 2005, the Company adopted Statement of Financial Accounting
Standards (SFAS) 123R, Share-Based Payment, under the modified prospective
method. The Company had previously accounted for stock-based compensation plans
under the fair value provisions of SFAS 123, the adoption of SFAS 123 did not
impact the Company's financial position or results of operations. Per the
provisions of SFAS No. 123R, the Company has adopted the policy to recognize
compensation expense on a straight-line attribution method.

                                      F-13
<PAGE>

Stock option activity for both qualified and unqualified options is summarized
as follows:

                                                                Weighted Average
                                               Options           Exercise Price
                                               -------          ----------------
Outstanding at September 30, 2005              450,000               $1.40
   Issued .......................                    -                   -
   Expired or cancelled .........             (450,000)               1.40
   Exercised ....................                    -                   -
                                              --------               -----
Outstanding at September 30, 2006                    0               $0.00
   Issued .......................                    -                   -
   Expired or cancelled .........                    -                   -
   Exercised ....................                    -                   -
                                              --------               -----
Outstanding at September 30, 2007                    0               $0.00
                                              ========               =====

NOTE 9 - CAPITAL STOCK

In July 2004, the Company agreed to issue 1,266,670 shares of common stock in
lieu of penalties attributed to the failure to file a timely registration and
obtain an effective registration on selected shares related to the certain
private placements conducted earlier. These shares have been valued at $912,002
or $.72 a share. These penalties satisfied with common stock have been recorded
as an expense in fiscal 2004. The Company had not settled with other
shareholders also entitled to penalties for the failure to obtain an effective
registration, as a consequence the Company is accruing penalties at $10,000 a
month. As of September 30, 2007, there was $200,000 accrued for such penalties.

NOTE 10 - FAIR VALUE OF FINANCIAL INSTRUMENTS

In view of the financial position of the Company, it is not practical to
estimate the fair value of the liabilities.

NOTE 11 - COMMITMENTS AND CONTINGENCIES

Lease commitments

The Company currently does not occupy any leased office space. The current
acting CEO / CFO, provides the use of his office for no charge. We have not
recorded the economic effects of the officer contribution, as it is deemed
immaterial.

Rent expense for the years ended September 30, 2007 and 2006 was $0 and $1,600,
respectively.

Litigation

Certain shareholders and creditors of the Company threatened to bring claims
against the Company in connection with the actions described in the Current
Reports on Form 8-K filed by the Company on November 24, 2004 and December
1, 2004.

                                      F-14