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 THESECURITIES
      EXCHANGE ACT OF
1934
  For
      the fiscal year ended September 30,
2008
   ̈
                  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.
      Employerincorporation
      or organization)
                  
                  Identification
      No.)





400
      Garden City PlazaGarden
      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 registeredNone
                    
                    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)




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, 2008.





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 December 31, 2008 is approximately $.0003.





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 12, 2009.





DOCUMENTS
INCORPORATED BY REFERENCE





None.





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










GENIO
GROUP, INC.


FORM
10-KSB




PART
      IItem
      1.
                                                              Business
                                                              
                                                              2Item
      2.
                                                              Properties
                                                              
                                                              9Item
      3.
                                                              Legal
      Proeedings
                                                              
                                                              9Item
      4.
                                                              Submission
      of Matters to a Vote of Security
                                                              
                                                              9PART
      IIItem
      5.
                                                              Market
      for Common Equity and Related Stockholder Matters
                                                              
                                                              9Item
      6.
                                                              Management's
      Discussion and Analysis or Plan of Operation
                                                              
                                                              10Item
      7.
                                                              Financial
      Statements
                                                              
                                                              15Item
      8.
                                                              Change
      in and Disagreements with Accountants on Accounting and Financial
      Disclosure
                                                              
                                                              16Item
      8AT.
                                                              Controls
      And Procedures
                                                              
                                                              16Item
      8B.
                                                              Other
      Information
                                                              
                                                              17PART
      IIIItem
      9.
                                                              Directors,
      Executive Officers, Promoters and Control Persons;Compliance With
      Section 16(a) of the Exchange Act
                                                              
                                                              17Item
      10.
                                                              Executive
      Compensation
                                                              
                                                              19Item
      11.
                                                              Security
      Ownership of Certain Beneficial Owners and Management and Related
      Stockholder Matters
                                                              
                                                              19Item
      12.
                                                              Certain
      Relationships and Related Transactions, and Director
      Independence
                                                              
                                                              20Item
      13.
                                                              Exhibits
                                                              
                                                              20Item
      14.
                                                              Principal
      Accountant Fees and Services
                                                              
                                                              21




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




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.




2




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 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.




3




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.




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.




4




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.





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 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.




5




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, 2008, 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.





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 onsummating 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.




6




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.




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.




7




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.




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.




8




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
                    
                    
                    LowFiscal
      2007First
      quarter ended December 31, 2006
                    
                    $
                    0.01
                    
                    
                    $
                    0.01Second
      quarter ended March 31, 2007
                    
                    $
                    0.01
                    
                    
                    $
                    0.01Third
      quarter ended June 30, 2007
                    
                    $
                    0.01
                    
                    
                    $
                    0.00Fourth
      quarter ended September 30, 2007
                    
                    $
                    0.00
                    
                    
                    $
                    0.00Fiscal
      2008First
      quarter ended December 31, 2007
                    
                    $
                    0.0016
                    
                    
                    $
                    0.001Second
      quarter ended March 31, 2008
                    
                    $
                    0.003
                    
                    
                    $
                    0.0006Third
      quarter ended June 30, 2008
                    
                    $
                    0.009
                    
                    
                    $
                    0.0005Fourth
      quarter ended September 30, 2008
                    
                    $
                    0.002
                    
                    
                    $
                    0.0005




On
December 31, 2008, the last sale price of our common stock as reported on the
OTCBB was $.0003 As of December 31, 2008, there were approximately 888 record
owners of our common stock.





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.




9




SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS





We do not
have any equity compensation plan in effect.





The were
no securities authorized for issuance under our stock option and equity
compensation plans as of September 30, 2008.





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.




RESULTS
OF OPERATIONS FOR THE YEAR ENDED SEPTEMBER 30, 2008 AND THE YEAR ENDED SEPTEMBER
30, 2007.




We did
not have any net sales, cost of sales, gross profit or selling expenses for the
fiscal years ended September 30, 2008 and September 30, 2007.





General
and administrative decreased to $25,000 for the year ended September 30, 2008
compared to $62,747 for the year ended September 30, 2007. General and
administrative expenses consist of professional fees for the years ended
September 30, 2008 and 2007.





The
Company reported a net loss of $306,604, or $(0.01) per share for the year ended
September 30, 2008 and a net loss $343,346, or ($0.01) per share for the year
ended September 30, 2007.




10




LIQUIDITY
AND CAPITAL RESOURCES





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





As of
September 30, 2008, we had $0 in cash and cash equivalents. Net cash used in
operations for the fiscal year ended September 30, 2008 was $42,571 consisting
of a net loss of $306,604 offset by an increase in accounts payable and accrued
expenses of $264,033. Total cash provided by financing activities of $39,250 was
he result of shareholder advances




At
September 30, 2008 we had an accumulated deficit of $19,816,433 and the report
from our independent registered public accounting firm on our audited financial
statements at September 30, 2008 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 $4.6 million of
obligations on our balance sheet at September 30, 2008. 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.





On July
1, 2008, the Company entered into an agreement with a consultant whereby the
Company and the consultant would work to restructure the Company. In exchange
for its work, the Company agreed to pay the consultant $25,000. and 10% of any
and all cash consideration and 20% of all stock in a post restructured
company.





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.




11




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.





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




12




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.





These
aforementioned debentures had been extended and are 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.




13




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.


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.




14




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.





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.


15


ITEM
8. CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  NONE.
 
 ITEM
8A(T). CONTROLS AND PROCEDURES
 
 (a)  
Evaluation of Disclosure Controls and Procedures
 Our
management, with the participation of our sole chief executive officer and chief
financial officer, carried out an evaluation of the effectiveness of our
“disclosure controls and procedures” (as defined in the Securities Exchange Act
of 1934 (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, the chief executive officer and chief financial officer, whom
is our sole officer and director, 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 the chief executive officer and chief
financial officer, as appropriate to allow timely decisions regarding required
disclosure.
  Our
management, including our chief executive officer and chief financial officer,
does not expect that our disclosure controls and procedures or our internal
controls will prevent all errors and all fraud. A control system, no matter how
well conceived and operated, can provide only reasonable, not absolute,
assurance that the objectives of the control system are met. Further, the design
of a control system must reflect the fact that there are resource constraints
and the benefits of controls must be considered relative to their costs. Because
of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud,
if any, within Genio Group have been detected.
  (b) Management's Report on Internal
Control over Financial Reporting
 Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the
Exchange Act). Our management assessed the effectiveness of our internal control
over financial reporting as of September 30, 2008.  In making this
assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission in Internal
Control-Integrated Framework.  Our management has concluded that, as
of September 30, 2008, our internal control over financial reporting is
effective based on these criteria.  This annual report does not
include an attestation report of our registered public accounting firm regarding
internal control over financial reporting.  Management's report was
not subject to attestation by our registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management's report in
this annual report.”
  16
  (c)  
Changes in Internal Control over Financial Reporting
 There
were no changes in our internal controls over financial reporting that occurred
during the period covered by this report that has materially affected, or is
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
                        
                        PositionsSteven
      A. Horowitz
                        
                        49
                        
                        Director,
      Chief Executive Officerand
      Chief Financial
Officer
  17
 
 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
  18
 
 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, 2008, 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,
2008.
 
 ITEM 10.
EXECUTIVE COMPENSATION
 
 At the
end of our last fiscal year, the fiscal year ended September 30, 2008, 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
2008.
 
 ITEM 11.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
 
 At
December 31, 2008, there were 55,681,787 shares of our common stock issued and
outstanding. The following table sets forth, as of December 31, 2008,
information known to us relating to the beneficial ownership of these shares
by:
 
 o
 o
 o
 o
 
 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, 2008 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, 2008, have been exercised or converted. Unless otherwise noted,the
address of each of these principal stockholders is our principal executive
offices.
  19
  NAME OF
                      
                      AMOUNT AND NATURE OF
                      
                      
                      PERCENTAGEBENEFICIAL
OWNER
                      
                      BENEFICIAL OWNERSHIP
                      
                      
                      OF CLASSSteven
      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 thefiscal year ended September 30, 2005, Mr. Horowitz has advanced
an aggregrate of $112,324 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.
 
 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)
  20
  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 toCrestview 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
 
 ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
 
 Sherb
& Co., LLP served as our independent registered public accounting firm for
the 2008 and 2007 fiscal years. The following table shows the fees that were
billed for the audit and other services provided by Sherb for the 2008 and 2007
fiscal years.
 
 Fiscal 2008
                  
                  
                  Fiscal 2007Audit
      Fees
                  
                  $
                  12,000
                  
                  
                  $
                  12,000Audit-Related
      Fees
                  
                  
                  -
                  
                  
                  
                  -Tax
      Fees
                  
                  
                  -
                  
                  
                  
                  -All
      Other Fees
                  
                  
                  -
                  
                  
                  
                  -Total
                  
                  $
                  12,000
                  
                  
                  $
                  12,000
  21
 
 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.
 
 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
      13, 2009
                    By:
                    /s/  Steven A.
      HorowitzSteven
      A. Horowitz, CEO, CFO,principal
      executive officer andprincipal
      financial andaccounting
      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
      13, 2009Steven
      A. Horowitz
  22




GENIO
GROUP, INC. AND SUBSIDIARIES





CONTENTS





PageReport
      of Independent Registered Public Accounting Firm
                    F-2Consolidated
      Balance Sheet
                    F-3Consolidated
      Statements of Operations
                    F-4Consolidated
      Statement of Stockholders Deficiency in Assets
                    F-5Consolidated
      Statements of Cash Flows
                    F-6Notes
      to the Consolidated Financial Statements
                    F-7
      to 14








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, 2008, and the related consolidated statements of operations,
stockholders' deficiency in assets and cash flows for each of the years then
ended September 30, 2008 and 2007. 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, 2008, and the results of its operations and its cash flows for
each of the years then ended September 30, 2008 and 2007, 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 $.4 million for the years ended
September 30, 2008 and 2007 respectively, and has a substantial working capital
deficiency as of September 30, 2008. 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., LLPSherb
      & Co., LLPCertified
      Public Accountants





New York,
New York


January
12, 2009


F-2





GENIO
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
BALANCE SHEET





September 30, 2008CURRENT
      ASSETSTOTAL
      ASSETS
                            
                            $
                            0LIABILITIES
      AND STOCKHOLDERS' DEFICIENCY IN ASSETSCURRENT
      LIABILITIESCash
      Overdraft
                            
                            $
                            413Accounts
      payable and accrued expense
                            
                            
                            688,786Interest
      payable on convertible debentures
                            
                            
                            1,034,3608%
      Convertible debenture
                            
                            
                            2,400,000Advances
      from shareholders
                            
                            
                            281,574Line
      of credit payable
                            
                            
                            150,000Total
      current liabilities
                            
                            
                            4,555,133COMMITMENTS
      and CONTINGENCIESSTOCKHOLDERS'
      DEFICIENCY IN ASSETSPreferred
      stock, no par value, 2,000,000 shares authorized, 0 shares
      issuedCommon
      stock - par value $.0001, per share; authorized, 200,000,000
      shares;  55,681,787 shares issued and
outstanding
                            
                            
                            5,568Additional
      paid in capital
                            
                            
                            15,255,732Accumulated
      deficit
                            
                            
                            (19,816,433
                            )(4,555,133
                            )TOTAL
      LIABILITIES AND STOCKHOLDERS’ DEFICIENCY IN ASSETS
                            
                            $
                            0





The
      accompanying notes are an integral part of this
  statement.


F-3





GENIO
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF OPERATIONS





Year
      Ended
                                
                                
                                Year
      EndedSeptember 30,
                                
                                
                                September 30,2008
                                
                                
                                2007Net
      sales
                                
                                $
                                0
                                
                                
                                $
                                0Cost
      of sales
                                
                                
                                0
                                
                                
                                
                                0Gross
      profit
                                
                                
                                0
                                
                                
                                
                                0General
      and administrative expenses
                                
                                
                                25,000
                                
                                
                                
                                62,747Loss
      from operations
                                
                                
                                (25,000
                                )
                                
                                
                                (62,747
                                )Other
      income and (expense)Interest
      and penalties expense
                                
                                
                                (281,604
                                )
                                
                                
                                (280,599
                                )Loss
      before provision for income taxes
                                
                                
                                (306,604
                                )
                                
                                
                                (343,346
                                )Provision
      for income taxes
                                
                                
                                0
                                
                                
                                
                                0NET
      LOSS
                                
                                $
                                (306,604
                                )
                                
                                $
                                (343,346
                                )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





GENIO
GROUP, INC. AND SUBSIDIARIES


STOCKHOLDERS
DEFICIENCY IN ASSETS





Commn
      Stock
                                
                                
                                AdditionalShares
                                  Outstanding
                                
                                
                                Par
                                  Value
                                
                                
                                Paid
      in
                                  Capital
                                
                                
                                Accumulated
                                    Deficit
                                
                                
                                TotalBalance
      September 30, 2006
                                
                                
                                55,681,787
                                
                                
                                $
                                5,568
                                
                                
                                $
                                15,255,732
                                
                                
                                $
                                (19,166,483
                                )
                                
                                $
                                (3,905,183
                                )Net
      loss
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (343,346
                                )
                                
                                
                                (343,346
                                )Balance
      September 30, 2007
                                
                                
                                55,681,787
                                
                                
                                
                                5,568
                                
                                
                                
                                15,255,732
                                
                                
                                
                                (19,509,829
                                )
                                
                                
                                (4,248,529
                                )Net
      loss
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                
                                (306,604
                                )
                                
                                
                                (306,604
                                )Balance
      September 30, 2008
                                
                                
                                55,681,787
                                
                                
                                $
                                5,568
                                
                                
                                $
                                15,255,732
                                
                                
                                $
                                (19,816,433
                                )
                                
                                $
                                (4,555,133
                                )





The
accompanying notes are an integral part of this statement.


F-5





GENIO
GROUP, INC. AND SUBSIDIARIES


CONSOLIDATED
STATEMENTS OF CASH FLOWS





Year
      Ended
                                  
                                  
                                  Year
      EndedSeptember
      30,
                                  
                                  
                                  September
      30,2008
                                  
                                  
                                  2007Cash
      flows from operating activitiesNet
      loss
                                  
                                  $
                                  (306,604
                                  )
                                  
                                  $
                                  (343,346
                                  )Changes
      in assets and liabilitiesAccounts payable and accrued expense
                                  
                                  
                                  264,033
                                  
                                  
                                  
                                  271,667Net
      cash used in operating activities
                                  
                                  
                                  (42,571
                                  )
                                  
                                  
                                  (71,679
                                  )Cash
      flows from investing activitiesPurchase
      of furniture and equipmentNet
      cash used in investing activities
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0Cash
      flows from financing activitiesAdvances
      from shareholders
                                  
                                  
                                  39,250
                                  
                                  
                                  
                                  75,000Increase
      (decrease) in line of credit payableNet
      cash provided by financing activities
                                  
                                  
                                  39,250
                                  
                                  
                                  
                                  75,000NET
      INCREASE (DECREASE) IN CASH
                                  
                                  
                                  (3,321
                                  )
                                  
                                  
                                  3,321Cash
      at beginning of period
                                  
                                  
                                  3,321
                                  
                                  
                                  
                                  0Cash
      at end of period
                                  
                                  $
                                  0
                                  
                                  
                                  $
                                  3,321Supplemental
      disclosures of cash flow information:Cash
      paid during the period forInterest
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0Taxes
                                  
                                  
                                  0
                                  
                                  
                                  
                                  0





The
      accompanying notes are an integral part of this
  statement.


F-6





GENIO
GROUP, INC. AND SUBSIDIARIES


Notes to
Consolidated Financial Statements


For the
years ended September 30, 2008 and 2007





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 $ 306,604 and $ 343,346 for the years ended September 30, 2008 and
September 30, 2007, respectively. Additionally, the Company had a net working
capital deficiency and a shareholders' deficiency at September 30, 2008 and
negative cash flow from operations for the years ended September 30, 2008 and
2007. 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.


F-7





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.





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.




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.


F-8





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.





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
issued accounting pronouncement but not yet effective have been reviewed and are
not deemed to have a material financial impact on the Company once
adopted.


F-9





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, 2008 consist of the
following:





Accounts
      payable
                          
                          $
                          309,520Accrued
      royalties
                          
                          
                          90,000Accrued
      penalties
                          
                          
                          200,000Accrued
      professional fees
                          
                          
                          63,673Other
                          
                          
                          25,593Total
                          
                          $
                          688,786





NOTE 4 -
INCOME TAXES





At
September 30, 2008, the Company had net operating loss carryforwards of
approximately $13,800,000 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
$107,000 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,
2008 is as follows:





Loss
      before income taxes
                  
                  $
                  306,000Computed
      expected tax credit at 35%
                  
                  
                  107,000Increase
      in NOL valuation
                  
                  
                  (107,000
                  )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, 2008 was
$150,000.


F-10





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, 2008, 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.





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.


F-11





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 excluding interest and exercise of all
of the warrants would result in the issuance of approximately an additional
3,400,000,000 shares of common stock. The number of authorized shares of the
Company common stock would have to be increased by
approximately 3,300,000,000 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 $281,574,
which $39,250 was advanced during the year ended September 30, 2008. These
advances are due on demand and do not bear interest.





NOTE 8 -
STOCK OPTIONS and WARRANTS





A.
Warrants





Warrant
activity is summarized as follows:





WeightedAverageExercisePriceOutstanding
      at September 30, 2006
                          
                          
                          3,576,190
                          
                          
                          $
                          0.92Issued
                          
                          
                          -
                          
                          
                          
                          -Expired
      or cancelled
                          
                          
                          (476,190
                          )
                          
                          
                          1.30Exercised
                          
                          
                          -
                          
                          
                          
                          -Outstanding
      at September 30, 2007
                          
                          
                          3,100,000
                          
                          
                          $
                          0.71Issued
                          
                          
                          -
                          
                          
                          
                          -Expired
      or cancelled
                          
                          
                          -
                          
                          
                          
                          -Exercised
                          
                          
                          -
                          
                          
                          
                          -Outstanding
      at September 30, 2008
                          
                          
                          3,100,000
                          
                          
                          $
                          0.71


F-12




Weighted
Average
 
 The
following table summarizes information about warrants outstanding and
exercisable at September 30, 2008:


Weighted
                            Average
                          
                          
                          WeightedRemaining Life
                          
                          
                          AverageShares
                          
                          
                          In
      Years
                          
                          
                          Exercise PriceRange
      of exercise price$0.05
      - $1.00
                          
                          
                          2,850,000
                          
                          
                          
                          .875
                          
                          
                          $
                          0.67$1.01
      - $1.50
                          
                          
                          250,000
                          
                          
                          
                          .75
                          
                          
                          $
                          1.063,100,000
                          
                          
                          
                          .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.





There was
no stock option activity either both qualified and unqualified options for the
years ended September 30, 2008 and 2007.





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, 2008, 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, 2008 and 2007 was $0 and $0,
respectively.


F-13





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.





Other
Agreements





On July
1, 2008, the Company entered into an agreement with a consultant whereby the
Company and the consultant would work to restructure the Company. In exchange
for its work, the Company agreed to pay the consultant $25,000 and 10% of any
and all cash consideration and 20% of all stock in a post restructured
company.


F-14