U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                   FORM 10-KSB

[X]  Annual report under Section 13 or 15 (d) of the Securities Exchange Act of
     1934 for the fiscal year ended September 30, 2004

[ ]  Transition report under Section 13 or 15 (d) of the Securities Exchange Act
     of 1934 for the transition period from _____________to _____________

                        Commission File Number 000-28459
                                               ---------

                                GENIO GROUP, INC.
                 (Name of Small Business Issuer in Its Charter)
<TABLE>
<CAPTION>
<S>                                <C>                                        <C>

                                                                                 22-3360133
                                                                                 ----------
                                                                              (I.R.S. Employer
           Delaware                    15 East 26th Street, Suite 1711,       Identification No.)
-------------------------------              New York, New York
(State or Other Jurisdiction of              ------------------                     10010
Incorporation or Organization)     (Address of Principal Executive Offices)       ---------
                                                                                  (Zip code)
</TABLE>

                                 (212) 897-6914
--------------------------------------------------------------------------------
                (Issuer's Telephone Number, Including Area Code.)

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

                                                       Name of Each Exchange
   Title of Each Class                                  on Which Registered
   -------------------                                  -------------------
           NONE                                                 N/A

<TABLE>
<S>                                                            <C>
Securities registered under Section 12(g) of the Exchange Act: Common Stock, par value, $0.0001
                                                               --------------------------------
                                                                        (Title of class)
</TABLE>

Check whether the issuer:  (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 past 90 days.
Yes           No  X
    ---          ---

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  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. ____

State issuer's revenues for its most recent fiscal year:  $3,999,735

The  aggregate  market  value  of  the  voting  and  non-voting  stock  held  by
non-affiliates  of the  registrant  as of February 10, 2005,  was  approximately
$384,274.  For purposes of this computation,  all executive officers,  directors
and 10% stockholders were deemed affiliates.  Such a determination should not be
construed as an admission that such 10% stockholders are affiliates.

         As of February 10,  2005,  there were  27,843,588  shares of the common
stock, no par value, of the registrant issued and outstanding.

Documents Incorporated by Reference: None

Transitional Small Business Disclosure Format: Yes           No  X
                                                   ---          ---


<PAGE>





                                TABLE OF CONTENTS

                                                                            Page

Recent Developments..........................................................  2

Item

PART I

Item 1     Description of Business ..........................................  4
Item 2     Description of Properties.........................................  8
Item 3     Legal Proceedings.................................................  8
Item 4     Submission of Matters to a Vote of Security Holders...............  8

PART II

Item 5     Market for Common Equity and Related Stockholders Matters.........  8
Item 6     Management's Discussion and Analysis.............................. 12
Item 7     Financial Statements.............................................. 16
Item 8     Changes and Disagreements with Accountants........................ 17
Item 8A    Controls and Procedures........................................... 17

PART III

Item 9     Directors, Executive Officers, Promoters and Control Persons...... 18
Item 10    Executive Compensation............................................ 21
Item 11    Security Ownership of Certain Beneficial Owners and Management.... 24
Item 12    Certain Relationships and Related Transactions.................... 25
Item 13    Exhibits and Reports on Form 8-K.................................. 25
Item 14    Principal Accountant Fees and Services............................ 27




<PAGE>

                               RECENT DEVELOPMENTS

         Restatement

         The Company has determined  that a portion,  approximately  $660,000 of
the revenues and costs of sales  related to the sales  recorded in the Company's
results of operations  for the quarters  ended March 31, 2004 and June 30, 2004,
respectively,  and reported in the quarterly  results of operations in Company's
quarterly  reports on Form 10-QSB for the fiscal  quarters  ended March 31, 2004
and June 30, 2004,  respectively  (the  "Interim  Financial  Statements"),  were
subject to a right of return by the customer.  Pursuant to SFAS No. 48, "Revenue
Recognition  When Right of Return Exists,"  revenue subject to a right of return
and the related cost of sales should be recorded  only upon the  fulfillment  of
certain conditions,  including payment. Accordingly, it appears that no revenues
or costs  related to these  sales  should have been  recorded  in the  Company's
results of operations until the Company received payment  therefor.  The Company
received  nominal  payments  of less  than  $50,000  during  the  quarter  ended
September  30,  2004  against the sales  recorded in the quarter  ended June 30,
2004.  In November  2004,  $50,000 was received  against the sale in the quarter
ended  March 31,  2004.  The  Company  does not  believe it is  entitled  to any
additional  amounts  with  respect  to any of these  sales.  Although  there are
significant  amounts of inventory  held by these  customers,  this inventory has
been written down to its estimated realizable value as of September 30, 2004.

         On November 19, 2004, the Company's independent public accounting firm,
Radin Glass & Co., LLP ("Radin  Glass"),  determined  with  management  that the
Interim Financial  Statements should no longer be relied upon and to restate the
Interim  Financial  Statements.  On  November  22,  2004,  the  Company's  Audit
Committee and Board of Directors met and discussed the foregoing with management
and Radin Glass.  The Audit Committee and the Board of Directors  concurred with
the  recommendation  of  management  and Radin  Glass to restate  the  financial
statements and concluded that the Interim Financial Statements  previously filed
for the interim  periods ended March 31, 2004 and June 30, 2004 should no longer
be relied upon. The Audit Committee has conducted an independent  review of this
matter and the Company's related internal controls.

         Because the Company has not yet  concluded its review and its effect on
its Interim Financial Statements,  its independent public accounting firm, Radin
Glass,  has not completed its review in  accordance  with  Statement on Auditing
Standards No. 100,  "Interim  Financial  Information,"  in  connection  with the
Company's  restated  Interim  Financial  Statements.  Upon  finalization  of the
assessments  described above, the Registrant will file amended quarterly reports
on Form 10-QSB for the fiscal  quarters  ended March 31, 2004 and June 30, 2004.
The Company expects to do so soon after the filing of this annual report on Form
10-KSB for the year ended September 30, 2004.

         Cessation of Operations and Change of Control

         During the month of January  2005 the Board of Directors of the Company
has 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 Chief Executive Officer and one employee who is assisting in finalizing
the audit.  The Company is currently  evaluating  several options  regarding its
future financing of the company and its future operations.

         On  February  15,  2005 we entered  into an  agreement  with  Crestview
Master,  LLC, pursuant to which Crestview invested in certain notes and warrants
of the Company that upon conversion will grant Crestview control of the Company.
See "Recent  Sales of  Unregistered  Securities."

         Unless  otherwise  noted in this  Annual  Report  on Form  10-KSB,  the
information  set  forth  herein  relates  to the  Company's  fiscal  year  ended
September 30, 2004.



                                       2
<PAGE>

                                     PART I

         Throughout  this Annual  Report on Form  10-KSB,  the terms "we," "us,"
"our,"  "Genio"  and "our  company"  refer  to Genio  Group,  Inc.,  a  Delaware
corporation,  and, unless the context indicates  otherwise,  includes our direct
and indirect  wholly-owned  subsidiaries,  Genio Inc.  (formerly Tele-V,  Inc.),
Genio Cards LLC, Tele-V Media, LLC and Tele-V, LLC.

                           FORWARD LOOKING STATEMENTS

         In addition to  historical  information,  this Annual  Report  contains
forward-looking  statements  within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. When used in this Annual Report, the words "believe," "may," "will,"
"should," "expect,"  "anticipate," "plan",  "continue," "estimate," "project" or
"intend" and similar expressions identify  forward-looking  statements regarding
events,  conditions and financial  trends in connection  with our future plan of
operations, business strategy, operating results and financial position. Current
shareholders  and prospective  investors are cautioned that any  forward-looking
statements  are not  guarantees  of  future  performance.  Such  forward-looking
statements by their nature involve substantial risks and uncertainties,  certain
of which are beyond our control,  and actual  results for future  periods  could
differ  materially  from those  discussed in this Annual Report,  depending on a
variety of important factors.  Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's opinions only as
of the date hereof. We undertake no obligation to revise or publicly release the
results of any revision to these forward-looking statements.



                                       3
<PAGE>

                                     PART I

Item 1.    Description of Business

History

         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.  We have  accounted  for this  transaction  as a
reverse acquisition. Our capital structure has been recapitalized to account for
the  equity  structure  subsequent  to the  acquisition  as if Genio  Inc.  (our
subsidiary)  had been the issuer of the common stock for all periods  presented.
The financial  statements  presented primarily represent the operations of Genio
Inc. (formerly Tele-V,  Inc.) from its inception date, May 14, 2003 to September
30, 2003 and from October 1, 2003 to September 30, 2004.

         Our subsidiaries are Genio, Inc. (formerly Tele-V,  Inc.), Genio Cards,
LLC, Tele-V,  LLC and Tele-V Media,  LLC. Tele-V,  LLC was initially formed as a
distribution  company for a physical fitness and vitamin line. Tele-V Media, LLC
was initially formed for certain media-related  business. This company has never
conducted any business operations.

         We amended the  certificate of  incorporation  of our company to change
the name from  National  Management  Consulting,  Inc. to Genio  Group,  Inc. on
September  15,  2003,   following  the   acquisition   of  Genio  Inc.  and  its
subsidiaries.  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. and, in October of 2002, we changed
our name to National Management Consulting, Inc.

Cessation of Operations

         During the month of January  2005 the Board of Directors of the Company
has 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 Chief Executive Officer and one employee who is assisting in finalizing
the audit.  The Company is currently  evaluating  several options  regarding its
future financing of the company and its future operations.

         The Company's  auditors have included in their audit report a paragraph
raising  substantial  doubt about the  company's  ability to continue as a going
concern.


General

         Until we  ceased  our  operations,  we were a  start-up  developer  and
marketer  of  entertainment  and  leisure  products  whose  management  team has
experience in consumer product  marketing.  We had several  products,  including
playing cards,  toys and baby and nursery  products  manufactured by TOMY in the
United Kingdom. Since our inception, most of our revenues have been derived from
our card business.

         Our Playing Cards Business.  Our Company holds a worldwide license with
Marvel  Enterprises,  Inc. and Marvel  Characters,  Inc. to manufacture and sell
specific  categories of products built around the globally  recognizable  Marvel
Super Heroes(R),  including Spider-Man(TM),  The Incredible Hulk(TM), X-Men(TM),
Elektra(TM),  Daredevil(TM) and the Fantastic Four(TM).  We launched the sale of
the Genio Card(TM) collection in August 2003. In February 2004 we entered into a
license  agreement  with Spin  Master,  Ltd.,  a  Canadian  developer  and North
American distributor of Mighty Beanz(TM), for the use of Mighty Beanz characters
in a Genio  Cards(TM)  series that we  launched in April 2004.  In March 2004 we
entered  into a  licensing  agreement  with  Moose  Enterprises  Pty Ltd for the
distribution of Mighty Beanz(TM) in the rest of the world outside North America.
A significant  portion of our revenues  during the year ended September 30, 2004
were derived from our Genio Card(TM) and Mighty Beanz(TM) cards. In October 2004
we sold a portion of our  remaining  inventory of Genio Cards to an  independent
liquidator for $83,384.

         In August 2004 we entered into a Joint Venture  Distribution  Agreement
with Salo S.A. of Chile to bring an English-language  version of Latin America's
top-selling  collectible card game, Myths and Legends, to North America starting
in October 2004.



                                       4
<PAGE>

         In September 2004 we entered into a license agreement with MGM Consumer
Products,  a unit of  Metro-Goldwyn-Mayer  Studios  Inc.,  pursuant  to which we
secured  the rights to  produce  and market  trading-card  games  based on MGM's
popular "Stargate SG-1" and "Stargate: Atlantis" television series.

         Our Toy Business.  On May 27, 2004 we signed an exclusive  agreement to
market,  promote,  distribute  and sell Gupi  products in the United  States and
Canada.  Gupi is a high-tech,  electronic guinea pig that looks,  feels and acts
like a real guinea pig. As part of the  agreement,  we were granted the right of
first refusal to secure distribution rights in additional  countries  throughout
the world.

         The Company has designed a line of pliable  PVC,  scent  infused  (i.e.
strawberry,  vanilla) products referred to as "Genio Jelly." The initial product
to be introduced is a double watch set, with an interchangeable  timepiece, sold
in a single package.  The rights to this line of products have been  transferred
to Steve Lux, our former Chief Executive  Officer,  as part of the settlement we
entered into with him upon his termination in January 2005.

         Our TOMY  line of  Products.  On  November  8, 2004 we  entered  into a
License  Agreement  with  TOMY UK  Ltd.,  a  manufacturer  of baby  and  nursery
products, including baby and toddler monitors, baby carriers, changing bags, bed
rails,  feeding  products and a line of products  called  "Natural  Sensations."
Pursuant to the  agreement,  TOMY  granted us an  exclusive  right to sell their
products in North America until December 31, 2008.

         Our Candy Business.  On September 1, 2004 we entered into a Royalty and
Merchandising  Agreement to manufacture  and distribute a candy  dispenser to be
known as Ooze Dudes.

Customers

         We sold our Genio Cards(TM) and Mighty  Beanz(TM) to major retailers in
the United States including Wal-Mart,  Target, K-Mart,  Walgreens,  Zany Brainy,
Toys-R-Us, CVS, and Blockbuster. During the year ended September 30, 2004, three
different retailers,  Rite-Aid,  Wal-Mart and Tomy, each accounted for more than
10% of our sales.

Sales and Marketing

         Our products  were marketed  domestically  through our own sales force.
Sales were made directly to major  retailers or their  independent  distributors
responsible for managing the store display area related to trading cards.

         We entered into a fulfillment  services  agreement,  through our wholly
owned subsidiary Genio Inc. (formerly Tele-V, Inc.) with .com Distribution Corp.
("Dotcom") dated June 4, 2003,  whereby Dotcom received fees for any fulfillment
services provided pursuant to the agreement.

         The term of the fulfillment services agreement expires on June 4, 2006.
The  fulfillment  services  agreement shall be  automatically  renewed for three
additional  one-year terms  commencing  after the expiration of the initial term
unless either party does not want to renew the agreement.

         Dotcom has the right,  upon prior written  consent to subcontract  with
other  individuals  and/or  businesses  for any and all services  required to be
performed in connection with the fulfillment services agreement.  Subject to the
foregoing  restrictions,  Dotcom has the right to increase its fees upon written
notice in accordance with any rate increases by such subcontractors.

         Domestic

         We began a U.S.  television  advertising  campaign in November  2003 to
generate  consumer  awareness of our Genio  Cards(TM).  In May 2004 we commenced
placing  commercials  on  national  children's  television  networks  for Mighty
Beanz(TM).



                                       5
<PAGE>

         International

         On September  30, 2003 we entered  into a  distribution  and  marketing
agreement with Tomy UK Limited,  a division of TOMY,  Japan,  one of the world's
largest toy companies.  The agreement  provides for distribution of our products
in the United Kingdom, British Islands and Southern Ireland.

         TOMY agreed to purchase  minimum  aggregate  amounts of our products as
specified below. If TOMY fails to purchase the minimum aggregate  amounts,  then
it shall no longer have the  exclusive  right to market and sell our products in
the territories or use the advertising and promotional materials developed by or
for us in connection  with our products in the  territories.  TOMY guaranteed to
purchase  $251,300 of our products as an initial order and further intends,  but
did not guarantee,  the purchase of additional  products in the aggregate amount
of $979,400  (such amount  includes the $251,300) and $1,439,850 for the periods
ending June 30, 2004 and June 30, 2005 respectively.

         The term of the agreement  expires on June 30, 2005 with the option for
one additional  year. Our failure to deliver  products ordered by TOMY, which is
not cured  within 30 days from the receipt of notice from TOMY of such  failure,
shall be a cause for termination of the distribution agreement by TOMY.

Intellectual Property

         Our Genio  Cards(TM)  embody  trademarks,  trade  names and  copyrights
licensed to us by a third party,  Marvel,  which entitles 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 extends through
June 30, 2005.  This agreement is terminable  upon the occurrence of a number of
events. Our failure to manufacture and sell meaningful  quantities of each item,
class, part or category of the children's  educational cards and supporting book
or our failure to  manufacture  and sell the  children's  educational  cards and
supporting book using each character of Marvel for any  consecutive  three month
period shall give Marvel the right to terminate  the license  specifically  with
respect to any such item, class, part or category of the children's  educational
cards and  supporting  book not so used and/or with respect to any  character of
Marvel not so used. Further, as a result of our failure to pay Marvel the sum of
$500,000 in  royalties  on or before June 30, 2004,  the Marvel  license  became
non-exclusive  for the  remainder  of the term of the  agreement.  There  are no
assurances  that our Marvel  license will be extended on reasonable  terms or at
all.

         Our Mighty Beanz(TM) cards embody 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 extends  through April 30, 2006 and
the Moose Enterprises license agreement relating to these rights extends through
January 31, 2007.

         The  Myths and  Legends  card  products  sold  under the joint  venture
distribution agreement with Salo S.A. are embodied with artwork, logos and other
distinctive creative elements owned by Salo which we license.

         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
extends  through  August  18,  2006.  This  agreement  is  terminable  upon  the
occurrence of a number of events.

         The TOMY UK products  licensed under the agreement will embody artwork,
designs,  concepts, logos and other distinctive creative elements licensed to us
by TOMY UK  Ltd.,  which  entitles  us to sell its  "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.



                                       6
<PAGE>

Governmental Regulation

         Our products  are subject to the  provisions  of the  Consumer  Product
Safety Act and the Federal  Hazardous  Substances Act and all of the regulations
promulgated  thereunder.  The  Consumer  Product  Safety  Act  and  the  Federal
Hazardous  Substances  Act enable the  Consumer  Product  Safety  Commission  to
exclude  products from the consumer  market that fail to comply with  applicable
product safety regulations or otherwise create a substantial risk of injury, and
articles  that contain  excessive  amounts of banned  hazardous  substance.  The
Consumer  Product  Safety  Commission  may also  require the  repurchase  by the
manufacturer of articles that are banned.  Similar laws exist in some states and
cities and in various international markets.

Manufacturing

         Initially we contracted with third parties for a portion of our art and
design work.  After September 30, 2003 we hired two full-time  artists and still
use contract artists to assist in product design.

         We employed a single printing broker for the production of our products
including  such  specialty  work as the  addition of  holographic  images to the
cards.  This broker employed the brother of our Chief Operating  Officer,  Yaron
Ben-Horin.  Products  sold in Europe  have  been  translated  into the  relevant
languages and were manufactured by a printer in Milan, Italy.

         Through  our  wholly-owned  subsidiary  Genio Inc.  we entered  into an
agreement  dated December 23, 2003 with Gamelab,  LLC whereby  Gamelab agreed to
create the game design and art direction  for a collectible  card game using the
Mighty  Beanz(TM)  characters  and designs.  Gamelab  completed  such work on in
February  2004.  We agreed to pay  Gamelab  $30,000  and a 1% royalty of our net
revenue  derived  from  the  game,  until  such  time  that  Gamelab  was paid a
cumulative royalty of $10,000.

Competition

         In our card  business,  we  competed  for sales as well as counter  and
shelf  space  with  large  corporations  in the  publishing  and toy  industries
including  corporations such as Fleer,  Upper Deck, Topps, 4 Kids  Entertainment
and Hasbro  (Wizards of the  Coast).  These  corporations  and almost all of our
competition have substantially greater resources than we do.

Employees

         We employed 13 people as of September  30, 2004.  None of our employees
is represented by a union and we believe our relationship  with our employees is
good.  During the end of 2004 and  January  2005 we released  all our  employees
except for our new Chief Executive Officer and one additional employee.

Off Balance Sheet Arrangements

We have no off balance sheet arrangements.



                                       7
<PAGE>

Item 2.    Description of Property

         Our offices are at 15 E. 26th Street,  Suite 1711,  New York,  New York
10010. We occupy approximately 4,500 sq. feet of space pursuant to sub-lease and
pay $10,500 per month in rent. Our current facilities, together with third party
fulfillment services, are adequate for our current level of operations.

Item 3.    Legal Proceedings

         We  are  not  a  party  to  any  material  legal  proceedings.  Certain
cerditiors and  shareholders  of the Company  threatened to bring claims against
the Company in connection with the  Restatement  described in the Section headed
"Recent Developments."

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 shares are listed on the Over-the-Counter  Bulletin Board or
OTC BB and trade under the symbol "GNOI.OB" As a result of our failure to timely
file our annual report on Form 10-KSB for the year ended  September 30, 2004, on
January 19, 2005,  our symbol  changed to  "GNOIE.OB." On February 10, 2005, the
last reported sale price of our common shares was $0.03 per share.

         The following table sets forth, on a per share basis, the range of high
and low bid information for the common stock on the OTC Bulletin Board:

                                                        High            Low

Year Ended September 30, 2003
     First Quarter (October through December)          $0.23          $0.004
     Second Quarter (January through March)             0.85           0.13
     Third Quarter (April through June)                 1.99           0.25
     Fourth Quarter (July through September)            7.70           1.86

Year Ending September 30, 2004
     First Quarter (October through December)          $6.10           $1.30
     Second Quarter (January through March)             2.10            0.87
     Third Quarter (April through June)                 1.20            0.46
     Fourth Quarter (July through September)            0.92            0.29

         The  quotations  reflect  interdealer  prices  without  retail  markup,
markdown,   or  a  commission,   and  may  not  necessarily   represent   actual
transactions.

         As of  February  10,  2005,  there were  27,843,588  shares  issued and
outstanding and 887 registered holders of our common shares.

Dividends

         Genio has not paid any  dividends on its common stock since  inception.
Genio does not anticipate declaration or payment of any dividends at any time in
the foreseeable future.

Recent Sales of Unregistered Securities

         On July 21,  2003 we issued  15,484,448  shares of our common  stock to
four  shareholders  of Genio Inc. and its  subsidiaries  who are related to each
other but were not related to us at the time of the  exchange.  The exchange was
negotiated  directly  with the  recipients  of the shares  without  any  general
solicitation.  The  securities  we issued


                                       8
<PAGE>

are  "restricted"  securities and the  certificates  representing the securities
bear a legend to that  effect.  No brokers  were  retained to assist us in these
transactions.  The  offering is claimed to be exempt  under  Section 4(2) of the
Securities Act of 1933, as amended.

         We  completed a private  placement  of  3,000,000  shares of our common
stock and 3,000,000 warrants on July 23, 2003. Each warrant allows the holder to
acquire an additional share of our common stock for $1.50 until July 23, 2005. A
total of 19 investors  purchased  2,000,000  of the shares and  2,000,000 of the
warrants  directly  from us and six  investors  purchased  1,000,000  shares and
500,000  warrants  from us through  Vfinance  Investments,  Inc.,  a  registered
broker-dealer,  who acted as our placement agent. The placement agent received a
commission of $80,000 and 500,000 warrants,  which are identical to the warrants
issued to the  investors,  as a placement fee. The offering was made without any
general  solicitation and each investor  represented in the securities  purchase
agreement  that they were  "accredited"  investors  as defined in Rule 501(a) of
Regulation D under the  Securities  Act of 1933, as amended.  The  securities we
issued  are  "restricted"  securities  and  the  certificates  representing  the
securities  bear a legend to that effect.  No brokers were retained to assist us
with the  offering.  The  offering  is  claimed  to be exempt  under Rule 506 of
Regulation D, Section 4(2) of the Securities Act of 1933, as amended.

         On September 26, 2003 we issued  895,000  shares of our common stock to
several  persons  we believe  are  accredited  investors.  827,500 of the shares
issued  were  issued  to 14  unaffiliated  consultants  for  different  types of
consulting services under various consulting agreements. We issued the remaining
67,500 shares to settle  various  claims that arose prior to July 2003.  Each of
these  transactions  was  negotiated  directly  with the recipient of the shares
without any general  solicitation.  The  securities  we issued are  "restricted"
securities and the  certificates  representing  the securities  bear a legend to
that effect.  No brokers were retained to assist us in these  transactions.  The
offering is claimed to be exempt  under  Section 4(2) of the  Securities  Act of
1933, as amended.

         We completed a private  placement of 476,190 shares of our common stock
on December 8, 2003 and received proceeds of $1,000,000. The investors also were
issued  238,095  Class A warrants  and  476,190  Class B  warrants.  The Class A
warrants  allow the  investors to acquire an  additional  238,095  shares of our
common  stock  for $2.92  per  share  for a period  of five  years.  The Class B
warrants  allow the  investors to acquire an  additional  476,190  shares of our
common stock for $2.10 per share during the period  commencing  December 8, 2003
and ending the earlier of January 8, 2005 or 30 trading days after the effective
date of the registration statement covering our shares of common stock issued to
the  investors  in the  placement.  The  offering  was made  without any general
solicitation  and purchased by six  investors,  each of whom  represented in the
securities  purchase agreement that they were "accredited"  investors as defined
in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended. The
securities  we  issued  are   "restricted"   securities  and  the   certificates
representing  the  securities  bear a legend to that  effect.  No  brokers  were
retained to assist us with the  offering.  The  offering is claimed to be exempt
under Rule 506 of Regulation D under the Securities Act of 1933, as amended.

         In July 2004 we issued  1,266,670 shares of our common stock to several
persons  who  purchased  our  shares  of  common  stock  as part of the  private
placements in July 2003 and December 2003 to settle various claims that arose in
connection with such person's right to register the shares they purchased.  Each
of these  transactions was negotiated  directly with the recipient of the shares
without any general  solicitation.  The  securities  we issued are  "restricted"
securities and the  certificates  representing  the securities  bear a legend to
that effect.  No brokers were retained to assist us in these  transactions.  The
offering is claimed to be exempt  under  Section 4(2) of the  Securities  Act of
1933, as amended.

         On July 13, 2004 we entered into an agreement  with  Crestview  Master,
LLC,  ("Crestview") pursuant to which Crestview invested in us $1,500,000 in the
form of a convertible  debenture.  The debenture is  convertible  into shares of
common  stock at a  conversion  price of $0.50 per  share,  subject  to  certain
adjustments and anti-dilution  provisions.  In addition,  we granted Crestview a
warrant to purchase up to 900,000 shares of common stock at an exercise price of
$0.80 per share and a warrant to purchase up to 900,000  shares of common  stock
at an  exercise  price of $1.00 per share.  The  offering  was made  without any
general  solicitation  and  purchased by an investor,  whom  represented  in the
securities purchase agreement it is an "accredited"  investor as defined in Rule
501(a) of  Regulation  D under  the  Securities  Act of 1933,  as  amended.  The
securities  we  issued  are   "restricted"   securities  and  the   certificates
representing  the  securities  bear a legend to that  effect.  The  offering  is
claimed  to be  exempt  under  Rule 506 of  Regulation  D,  Section  4(2) of the
Securities Act of 1933, as amended.





                                       9
<PAGE>

         On July 22, 2004 we entered into an agreement with Ocean Drive Capital,
LLC  pursuant  to  which  Ocean  invested  in us  $100,000  on  terms  that  are
substantially  identical to those of the Crestview investment.  We granted Sloan
Securities  a warrant to  purchase  up to 600,000  shares of common  stock at an
exercise price of $0.80 per share and a warrant to purchase up to 600,000 shares
of common stock at an exercise  price of $1.00 per share.  The offering was made
without any general  solicitation and purchased by one investor that represented
in the securities  purchase  agreement that it was an  "accredited"  investor as
defined in Rule 501(a) of  Regulation  D under the  Securities  Act of 1933,  as
amended.   The  securities  we  issued  are  "restricted"   securities  and  the
certificates  representing  the  securities  bear a legend to that  effect.  The
offering is claimed to be exempt under Rule 506 of Regulation D, Section 4(2) of
the Securities Act of 1933, as amended.

         On July 30, 2004 we entered into an agreement with Turquoise  Partners,
LLC  pursuant  to which  Turquoise  invested  in us  $150,000  on terms that are
substantially  identical to those of the Crestview investment.  We granted Sloan
Securities  a warrant  to  purchase  up to 90,000  shares of common  stock at an
exercise  price of $0.80 per share and a warrant to  purchase up to 90 shares of
common  stock at an exercise  price of $1.00 per share.  The  offering  was made
without any general  solicitation and purchased by one investor that represented
in the securities purchase agreement that it was "accredited" as defined in Rule
501(a) of  Regulation  D under  the  Securities  Act of 1933,  as  amended.  The
securities  we  issued  are   "restricted"   securities  and  the   certificates
representing  the  securities  bear a legend to that  effect.  The  offering  is
claimed  to be  exempt  under  Rule 506 of  Regulation  D,  Section  4(2) of the
Securities Act of 1933, as amended.

         On  November  1,  2004 we  entered  into an  agreement  with one of our
existing investors,  Crestview Master, LLC, pursuant to which Crestview invested
$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 amount of $1,500,000,  previously issued
to Crestview and its  affiliates,  has been extended until December 31, 2005 and
the conversion  price has been reduced to $0.25 per share. The exercise price of
the warrants  previously issued to Crestview and its affiliates has been reduced
to $0.60 per share.  The offering was made without any general  solicitation and
purchased by investors that  represented in the  securities  purchase  agreement
that they were "accredited"  investors as defined in Rule 501(a) of Regulation D
under the  Securities  Act of 1933,  as amended.  The  securities  we issued are
"restricted" securities and the certificates  representing the securities bear a
legend to that  effect.  The  offering is claimed to be exempt under Rule 506 of
Regulation D, Section 4(2) of the Securities Act of 1933, as amended.

         On February 15, 2005, we further amended the agreements with Crestview.
In connection  therewith:  (i) Crestview has agreed to purchase a $150,000 Prime
Plus 2% Convertible  Debenture due April 30, 2005, (ii) the conversion  price of
the Restated 8% Convertible  Debenture in the principal amount of $1,500,000 was
reduced from $.25 to $.023, (iii) the exercise prices of the Restated Series A-1
warrants and A-2 warrants,  each to purchase 900,000 shares of common stock, was
reduced  from  $.60 to $.05  per  share,  (iv)  the  conversion  price of the 8%
Convertible  Debenture due December 31, 2005 in the principal amount of $300,000
was reduced from $.20 to $.023,  (v) the exercise price of the 750,000  warrants
related to the $300,000 8%  Convertible  Debenture was reduced from $.40 to $.05
per share,  (vi)  Crestview  shall have 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 (vii) Crestview  agreed
to  execute  and  deliver a  release  to each of the  three  former  independent
directors.  The  consummation  of this  agreement  is subject  to the  following
conditions:  (a)  certain  other  shareholder  will invest  alongside  Crestview
another  $150,000 of principal in a Prime Plus 2% Convertible  Debenture and (b)
Mr.  Bar-Lavi,  our former  Chief  Executive  Officer,  shall have  rendered for
cancellation without consideration all shares beneficially owned by him.


                                       10
<PAGE>

         Pursuant to our licensing  agreement with Spin Master dated January 23,
2004,  we granted Spin Master  30,000  shares of  restricted  common stock and a
warrant to purchase 200,000 shares of common stock at a price per share of $1.30
and we issued to Moose 20,000 shares of restricted common stock. Pursuant to our
licensing  agreement  with Moose dated April 3, 2004,  we granted  Moose  25,000
shares of restricted  common stock and a warrant to purchase  120,000  shares of
common stock. The 25,000 shares have not been issued to Moose to date.

         During the fiscal year ended  September 30, 2004 we also issued 350,000
shares of common  stock to CB  Associates,  LLC,  24,000  shares to Jaffoni  and
Collins,  200,000  shares  to Mr.  Cary  Kolopsky  and  100,000  shares to Sloan
Securities.  Theses  shares  were issued in  connection  with  various  services
provided by the recipients of the shares.


Stock Option Plans

         Information  Concerning the Plan and Other Company Equity  Compensation
         Plans

         The following  table sets forth  information  concerning  the number of
shares  of  our  common  stock  that  may be  issued  under  all  of our  equity
compensation plans existing on September 30, 2004:

<TABLE>
<CAPTION>

                                                        Equity Compensation Plan Information

                                                                                             Number of securities
                                                                                            remaining available for
                                Number of securities to be    Weighted average exercise      future issuance under
                                  issued upon exercise of       price of outstanding       equity compensation plans
                                    outstanding options         options, warrants and        (excluding securities
                                    warrants and rights                rights              reflected in column (a))
<S>                                      <C>                            <C>                            <C>
Plan Category                               (a)                          (b)                             (c)

Equity compensation plans                    0                            -                            0
approved by security holders

Equity compensation plans not            3,125,000                      $2.00                          0
approved by security holders

Total                                    3,125,000                      $2.00                          0
</TABLE>


                                       11
<PAGE>

Item 6.    Management's Discussion and Analysis of Financial Condition and
           Results of Operations

            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

         The following  discussion  and analysis of our financial  condition and
results  of  operations  should  be  read  in  conjunction  with  our  financial
statements  and  related   notes.   This   discussion   and  analysis   contains
forward-looking  statements  that involve  risks and  uncertainties.  Our actual
results could differ materially from those anticipated in these  forward-looking
statements as a result of certain factors.

Overview

         We are a start-up  developer and marketer of entertainment  and leisure
products.  We have several products,  including playing cards, toys and baby and
nursery  products  manufactured  by  TOMY  in  the  United  Kingdom.  Since  our
inception, most of our revenues have been derived from our card business.

         During the month of January  2005 the Board of Directors of the Company
has 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 Chief Executive Officer and one employee who is assisting in finalizing
the audit.  The Company is currently  evaluating  several options  regarding its
future financing of the registrant and its future operations.

         The Company's  auditors have included in their audit report a paragraph
raising  substantial  doubt about the  company's  ability to continue as a going
concern.

Critical Accounting Policies

         We have  identified  the  policies  below as critical  to our  business
operations and the  understanding  of our results of operations.  The impact and
any  associated  risks related to these  policies on our business  operations is
discussed throughout Management's Discussion and Analysis of Financial Condition
and Results of Operations  where such policies  affect our reported and expected
financial results.

Revenue Recognition

         Revenue  related to sales of our products is generally  recognized when
products are shipped, the title and risk of loss has passed to the customer, the
sales price is fixed or determinable and  collectibility is reasonably  assured.
Sales made with a return  privilege  are  accounted  for  pursuant  to SFAS # 48
"Revenue Recognition When Right of Return Exists." Accordingly, we have deferred
revenue  recognition  of  certain  shipments  until  the  retailer  has sold the
underlying  product. As of September 30, 2004 and September 30, 2003 we deferred
$0 and $0.4 million of revenue, respectively.

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.



                                       12
<PAGE>


Stock-Based Compensation

         SFAS 123, Accounting for Stock-Based  Compensation,  as amended by SFAS
148,  Accounting  for  Stock-Based  Compensation--  Transition  and  Disclosure,
encourages,  but does not  require,  companies to record  compensation  cost for
stock  based  employee  compensation  plans at fair  value.  We have  chosen  to
continue to account for stock-based  employee  compensation  using the intrinsic
value method  prescribed  in Accounting  Principles  Board (APB) Opinion No. 25,
Accounting  for  Stock  Issued  to  Employees,   and  Related   Interpretations.
Accordingly,  compensation  cost for  stock  options  granted  to  employees  is
measured as the excess,  if any, of the quoted  market price of our stock at the
date of the grant over the amount an employee must pay to acquire the stock.

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 123 (revised 2004) - Share-Based Payments

         In December 2004, the FASB issued a revision to FASB Statement No. 123,
Accounting for Stock Based Compensation.  This Statement  supercedes APB Opinion
No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance.   This  Statement   establishes   standards  for  the  accounting  for
transactions  in which an entity  exchanges its equity  instruments for goods or
services.  It also addresses  transactions in which an entity incurs liabilities
in  exchange  for  goods or  services  that are  based on the fair  value of the
entity's  equity  instruments  or that may be settled by the  issuance  of those
equity   instruments.   This  Statement  focuses  primarily  on  accounting  for
transactions in which an entity obtains employee services in share-based payment
transactions.  This  Statement  does not  change  the  accounting  guidance  for
share-based  payment  transactions with parties other than employees provided in
Statement 123 as originally  issued and EITF Issue No.  96-18,  "Accounting  for
Equity Instruments That Are Issued to Other Than Employees for Acquiring,  or in
Conjunction  with Selling,  Goods or Services."  This Statement does not address
the accounting for employee share  ownership  plans,  which are subject to AICPA
Statement of Position 93-6,  Employers'  Accounting for Employee Stock Ownership
Plans.

         A public entity will  initially  measure the cost of employee  services
received in exchange for an award of liability  instruments based on its current
fair value;  the fair value of that award will be  re-measured  subsequently  at
each reporting date through the  settlement  date.  Changes in fair value during
the requisite  service period will be recognized as compensation  cost over that
period.  A nonpublic  entity may elect to measure its liability  awards at their
intrinsic value through the date of settlement.

         The  grant-date  fair  value of  employee  share  options  and  similar
instruments will be estimated using the  option-pricing  models adjusted for the
unique characteristics of those instruments (unless observable market prices for
the same or similar instruments are available).

         The notes to the  financial  statements  of both  public and  nonpublic
entities will disclose  information to assist users of financial  information to
understand the nature of  share-based  payment  transactions  and the effects of
those transactions on the financial statements.

         The  effective  date  for  public  entities  that do not  file as small
business  issuers  will be as of the  beginning  of the first  interim or annual
reporting  period that begins after June 15, 2005. For public entities that file
as small business  issuers and nonpublic  entities the effective date will be as
of the  beginning of the first  interim or annual  reporting  period that begins
after December 15, 2005. Management intends to comply with this Statement at the
scheduled  effective date for the relevant financial  statements of the Company.


                                       13
<PAGE>

Management  believes  the effects of adopting  this  revision to FASB 123,  will
approximate recording those amounts currently reported as compensation herein on
a pro-forma basis as allowed under FASB 123.

Results of Operations

         The  following  table  sets  forth  our  income  statement  data  as  a
percentage of net sales for the periods indicated below.

<TABLE>
<CAPTION>
                                       Year Ended September   Period From May 14, 2003 (inception)
                                             30, 2004                 to September 30, 2003
<S>                                           <C>                            <C>
 Net sales                                    100.0%                         100.0%
 Cost of sales                                 73.9%                          53.8%
                                                                              -----
 Gross profit                                  26.1%                          46.2%
 Selling expenses                              69.3%                          67.0%
 General and administrative expenses           97.3%                          63.4%
 Equity based compensation                     40.3%                         336.9%
 Depreciation and amortization                   .3%                           0.1%
                                              ------                          -----
 Net loss from operations                    (181.2%)                       (421.3%)
 Other income and (expense)                   (67.4%)                         (3.9%)
</TABLE>

         Results of  Operations  for the year ended  September  30, 2004 and the
period from May 14, 2003 (Inception) to September 30, 2003.

         Net sales  increased  $2.7  million to $4.0  million for the year ended
September  30,  2004  from  $1.3  million  for the  period  from  May  14,  2003
(inception) to September 30, 2003. The increase in sales consisted  primarily of
full year revenues of Genio cards and Mighty Beanz card products  compared to an
approximately 4.5 month period ended September 30, 2003.

         Cost of sales for the year ended  September  30,  2004  increased  $2.3
million to $3.0  million  from $0.7  million  for the period  from May 14,  2003
(inception)  to September  30, 2003.  Cost of sales  consists of those  expenses
directly related to the production of Genio Cards and Mighty Beanz card products
and associated costs including direct card production costs.

         Gross profit for the year ended September 30, 2004 was $1.0 million, or
26% as a percentage of net sales.  Gross margin decreased as a percentage of net
sales  to 26% in  2004  from  46% in 2003  primarily  due to the  write-down  of
inventory related to a lower of cost or market adjustment.

         Selling expenses were $2.8 million, or 69% of sales, for the year ended
September 30, 2004  consisting  of shipping  expenses,  royalties,  advertising,
marketing and publicity.  Selling expenses increased slightly as a percentage of
sales  by 2% from  67% of sales in 2003.  Genio  incurred  selling  expenses  to
promote and launch Genio Cards and Mighty Beanz card  products  through  various
marketing mediums.

         General and administrative expenses increased from 63% of sales for the
period from May 14, 2003  (inception)  to September 30, 2003 to 97% of sales for
the year ended September 30, 2004, to $3.9 million.  General and  administrative
expenses  consist of payroll and payroll  taxes,  professional  fees,  rent, bad
debts and travel. The increase is primarily related to the impact of a full year
of general and  administrative  expenses coupled with  significant  professional
fees.

         Equity  based  compensation  was $1.6  million and $4.4 million for the
year ended  September 30, 2004 and the period from May 14, 2003  (inception)  to
September 30, 2003, respectively,  consisting of costs for the issuance of stock
options  and for  consultants  who were paid for their  services  in our  common
stock.

         The Company reported a net loss of $10.0 million,  or $(0.38) per share
for the year ended September 30, 2004 and a net loss of $5.5 million, or ($0.22)
per share for the period from May 14, 2003 (inception) to September 30, 2003.



                                       14
<PAGE>


Liquidity and Capital Resources

Overview

         As of September 30, 2004, we had $418,970 in cash and cash equivalents.
Net  cash  used  in  operations  for the  year  ended  September  30,  2004  was
approximately  $3  million  consisting  of a net  loss  of  approximately  $10.0
partially  offset by  non-cash  adjustments  of $4.6  million  in common  stock,
options and warrants  issued,  bad debts of $0.8 million and an inventory  write
down of $1.5  million as well as an  increase  in  accounts  payable and accrued
expenses of $0.8 million.  Total cash  provided by financing  activities of $2.9
million was  primarily  the result of the proceeds  from the common stock issued
and the proceeds from convertible debentures and the line of credit.

IIG Loan

         On May 4, 2004 we 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 us a credit line of up to $3,000,000
based on our  receivables.  The amount  outstanding  from time to time under the
loan agreement  shall not exceed 75% of the net face amount of certain  eligible
receivables,  plus  30% of the  face  amount  of  certain  qualified  delinquent
receivables,  minus reserves as set forth in the loan agreement. As of September
30, 2004, the maximum  availability  under the loan agreement was  approximately
$300,000,  of which  $256,442 has been drawn down by us.

In  connection  with the loan  agreement  we granted  IIG a warrant to  purchase
250,000 shares of our common stock at an exercise price of $1.0625 per share.

Crestview, Ocean Drive Capital and Turquoise Partners

         On July 13, 2004 we entered into an agreement  with  Crestview  Master,
LLC,  pursuant to which  Crestview  invested in us  $1,500,000  in the form of a
convertible  debenture.  The  debenture  bears  interest  at 8% per annum with a
maturity date of July 31, 2005.  The debenture  was  convertible  into shares of
common  stock at a  conversion  price of $0.50 per  share,  subject  to  certain
adjustments and anti-dilution  provisions.  In addition,  we granted Crestview a
warrant to purchase up to 900,000 shares of common stock at an exercise price of
$0.80 per share and a warrant to purchase up to 900,000  shares of common  stock
at an exercise price of $1.00 per share.

         The terms of the  convertible  note prohibit  conversion of the note to
the extent that conversion of the note would result in the holder, together with
its affiliates, beneficially owning in excess of 9.99% of our outstanding shares
of common  stock.  A holder may waive the 9.99%  limitation  upon 61 days' prior
written notice to us.

         The terms of the warrant prohibit exercise of the warrant to the extent
that  exercise of the warrant  would  result in the  holder,  together  with its
affiliates,  beneficially owning in excess of 9.99% of our outstanding shares of
common  stock.  A holder  may  waive the 9.99%  limitation  upon 61 days'  prior
written notice to us.

         On July 22, 2004 we entered into an agreement with Ocean Drive Capital,
LLC pursuant to which Ocean Drive Capital,  LLC invested in us $100,000 on terms
that  are  substantially  identical  to those of the  Crestview  investment.  We
granted  Sloan  Securities a warrant to purchase up to 600,000  shares of common
stock at an  exercise  price of $0.80 per share and a warrant to  purchase up to
600,000 shares of common stock at an exercise price of $1.00 per share.

         On July 30, 2004 we entered into an agreement with Turquoise  Partners,
LLC  pursuant  to which  Turquoise  invested  in us  $150,000  on terms that are
substantially  identical  to  those  of the  Crestview  investment.  We  granted
Turquoise  a  warrant  to  purchase  up to 90,000  shares of common  stock at an
exercise  price of $0.80 per share and a warrant to purchase up to 90,000 shares
of common stock at an exercise price of $1.00 per share.

         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  note 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


                                       15
<PAGE>


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
amount of $1,500,000,  previously issued to Crestview,  Ocean Drive Equities and
Turquoise  Partners,  has been  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, we further amended the agreements with Crestview.
In connection  therewith:  (i) Crestview has agreed to purchase a $150,000 Prime
Plus 2% Convertible  Debenture due April 30, 2005, (ii) the conversion  price of
the Restated 8% Convertible  Debenture in the principal amount of $1,500,000 was
reduced from $.25 to $.023, (iii) the exercise prices of the Restated Series A-1
warrants and A-2 warrants,  each to purchase 900,000 shares of common stock, was
reduced  from  $.60 to $.05  per  share,  (iv)  the  conversion  price of the 8%
Convertible  Debenture due December 31, 2005 in the principal amount of $300,000
was reduced from $.20 to $.023,  (v) the exercise price of the 750,000  warrants
related to the $300,000 8%  Convertible  Debenture was reduced from $.40 to $.05
per share,  (vi)  Crestview  shall have 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 (vii) Crestview  agreed
to  execute  and  deliver a  release  to each of the  three  former  independent
directors.  The  consummation  of this  agreement  is subject  to the  following
conditions:  (a)  certain  other  shareholder  will invest  alongside  Crestview
another  $150,000 of principal in a Prime Plus 2% Convertible  Debenture and (b)
Mr.  Bar-Lavi  (our former CEO),  shall have rendered for  cancellation  without
consideration all shares  beneficially  owned by him or members of his immediate
family except for 250,000 shares and 3,000,000  shares as to which Mr.  Bar-Lavi
acts as a trustee.


                                       16
<PAGE>

Item 7.    Financial Statements



                       Genio Group, Inc. and subsidiaries

                                    CONTENTS
--------------------------------------------------------------------------------

                                                                     Page
                                                                     ----

REPORT OF INDEPENDENT REGISTERED PUBLIC
         ACCOUNTING FIRM                                             F - 2

CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheet                                           F - 3

Consolidated Statements of Operations                                F - 4

Consolidated Statements of Changes in Stockholders' Deficit          F - 5

Consolidated Statements of Cash Flows                                F - 6

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS                       F - 7 to 28















                                      F-1
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


Board of Directors and Stockholders
Genio Group, Inc. and Subsidiaries

         We have audited the  accompanying  consolidated  balance sheet of Genio
Group,  Inc.  and  subsidiaries  as of  September  30,  2004,  and  the  related
consolidated statements of operations, stockholder's deficit, and cash flows for
the year ended September 30, 2004 and the period ended September 30, 2003. 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 PCAOB
(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  principles  used  and  significant
estimates  made by  management,  as well as  evaluating  the  overall  financial
statement  presentation.  We believe that our audits provides a reasonable basis
for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly, in all material  respects,  the consolidated  financial  position of the
Company as of September  30, 2004,  and the results of its  operations  and cash
flows for the year ended  September 30, 2004 and the period ended  September 30,
2003  in  conformity  with  generally  accepted  accounting  principles  (United
States).

         The accompanying  financial statements have been prepared assuming that
Genio Group,  Inc. and  subsidiaries  will continue as a going concern.  As more
fully described in Note 1, the Company has incurred  recurring  operating losses
and  will  have to  obtain  additional  capital  to  sustain  operations.  These
conditions raise  substantial doubt about the Company's ability to continue as a
going concern.  Management's plans in regard to these matters are also described
in Note 1. The financial  statements do not include any  adjustments  to reflect
the possible effects on the  recoverability  and classification of assets or the
amounts and  classification  of liabilities  that may result from the outcome of
this uncertainty.


                                               /s/ RADIN,GLASS & CO., LLP
                                                   RADIN, GLASS & CO, LLP
                                                   Certified Public Accountants

New York, New York
February 11, 2005

                                      F-2
<PAGE>
                     GENIO GROUP, INC. and Subsidiaries
                         CONSOLIDATED BALANCE SHEET
                             September 30, 2004

<TABLE>
<CAPTION>
                                   ASSETS
<S>                                                                    <C>
CURRENT ASSETS
  Cash and cash equivalents                                            $    418,970
  Accounts receivable, net                                                  184,771
  Inventories, net                                                          168,577
  Prepaid expenses                                                            9,703
                                                                       ------------
          Total current assets                                              782,021

FURNITURE AND EQUIPMENT  - at cost,
    less accumulated depreciation and amortization of $1,439                 15,823

Intangible assets, net                                                       15,000
                                                                       ------------

                                                                       $    812,844

                   LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
  Accounts payable and accrued expense                                 $  1,430,710
  8% Convertible debenture due July 14, 2005                              1,750,000
  Line of credit payable                                                    256,442
                                                                       ------------
          Total current liabilities                                       3,437,152

COMMITMENTS and CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Common stock - par value $.0001, per share; authorized,
  200,000,000 shares;  27,843,588 shares issued and outstanding               2,784
  Additional paid in capital                                             14,664,745
  Accumulated deficit                                                   (15,491,097)
  Unearned compensation                                                  (1,800,740)
                                                                       ------------
          Total stockholders' deficit                                    (2,624,308)
                                                                       ------------
                                                                       $    812,844
                                                                       ============
</TABLE>


The accompanying notes are an integral part of this statement.


                                      F-3

<PAGE>
                        GENIO GROUP, INC and subsidiaries
                      CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                                    For the period
                                                                                     May 14, 2003
                                                                 Year Ended         (Inception) to
                                                                September 30,        September 30,
                                                                    2004                  2003
                                                                ------------         ------------
<S>                                                             <C>                  <C>
Net sales                                                       $  3,999,735         $  1,292,352
Cost of sales                                                      2,957,073              694,646
                                                                ------------         ------------
          Gross profit                                             1,042,662              597,706

Selling expenses                                                   2,772,775              866,276
General and administrative expenses                                3,891,146              819,168
Equity based compensation                                          1,612,757            4,354,080
Depreciation and amortization                                         13,232                2,344
                                                                ------------         ------------
          Loss from operations                                    (7,247,248)          (5,444,162)

Other income and (expense)
    Interest expense                                              (1,685,375)                  --
    Shares issued and accrued for registration penalties          (1,012,002)                  --
    Miscellaneous                                                    (52,310)             (50,000)
                                                                ------------         ------------
Loss before provision for income taxes                            (9,996,935)          (5,494,162)
Provision for income taxes                                                 0                    0
                                                                ------------         ------------
NET LOSS                                                          (9,996,935)          (5,494,162)
                                                                ============         ============
Basic and diluted earnings (loss) per share                           ($0.38)              ($0.22)
                                                                ============         ============
Weighted-average shares outstanding-
    basic and diluted                                             26,482,419           24,901,277
                                                                ============         ============
</TABLE>


The accompanying notes are an integral part of this statement.



                                      F-4


<PAGE>
                        Genio Group, Inc and subsidiaries
                 Consolidated Statement of Stockholder's Deficit


<TABLE>
<CAPTION>
                                                 Common Stock                                        Unearned
                                            Shares        Amount         APIC        Deficit       Compensation       Total
                                          ----------      ------    -----------    ------------     -----------    -----------
<S>                                         <C>          <C>           <C>            <C>             <C>             <C>
Balance May 14, 2003 (Inception)            0            $0            $0             $0              $0              $0

Recapitalization                          21,849,728       2,184         11,775              --              --         13,959

Common shares issued for services            895,000          90      2,404,925              --        (142,525)     2,262,490

Value of options issued                           --          --      2,608,999              --        (517,494)     2,091,505

Stock issued in private placement          3,000,000         300      2,919,640              --              --      2,919,940

Net loss post recapitalization                    --          --             --      (5,494,162)             --     (5,494,162)
                                          ----------      ------    -----------    ------------     -----------    -----------
Balance September 30, 2003                25,744,728      $2,574     $7,945,339     ($5,494,162)      ($660,019)    $1,793,732

Common shares issued for services            909,000          91      1,354,516              --        (243,000)     1,111,607
Common shares issued for
    registration penalties                 1,266,670         127        911,875              --              --        912,002

Amortization                                      --          --             --              --       1,320,384      1,320,384
Common shares retired pursuant
    to settlements                          (553,000)        (56)      (283,991)             --              --       (284,047)

Value of options and warrants issued              --          --      3,795,554              --      (2,218,105)     1,577,449

Stock issued in private placement            476,190          48        941,452              --              --        941,500

Net loss                                          --          --             --      (9,996,935)             --     (9,996,935)
                                          ----------      ------    -----------    ------------     -----------    -----------
Balance September 30, 2004                27,843,588      $2,784    $14,664,745    ($15,491,097)    ($1,800,740)   ($2,624,308)
                                          ==========      ======    ===========    ============     ===========    ===========
</TABLE>


The accompanying notes are an integral part of this statement.


                                      F-5

<PAGE>
             GENIO GROUP, INC and subsidiaries
           CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                                                         For the period
                                                                                          May 14, 2003
                                                                       Year Ended        (Inception) to
                                                                      September 30,       September 30,
                                                                           2004                2003
                                                                       -----------         -----------
Cash flows from operating activities
<S>                                                                    <C>                 <C>
  Net loss                                                             ($9,996,935)        ($5,494,162)
  Adjustments to reconcile net loss to net
  cash used in operating activities
    Depreciation and amortization                                           13,232               2,344
   Write down of inventory                                               1,495,438
   Reserve for returns and bad debts                                       836,148
    Common stock, stock options and warrants issued                      4,637,395           4,354,080
    Changes in assets and liabilities
      Accounts receivable                                                   44,749          (1,040,668)
      Inventories                                                         (566,613)         (1,097,402)
      Prepaid expenses and other current assets and intangibles            161,678            (196,381)
      Accounts payable and accrued expense                                 797,498             647,086
      Deferred revenue                                                    (433,367)            433,367
                                                                       -----------         -----------
          Net cash used in operating activities                         (3,010,777)         (2,391,736)
                                                                       -----------         -----------

Cash flows from investing activities
    Purchase of furniture and equipment                                    (31,748)            (14,062)
    Deferred financing costs                                               (20,000)
    Loss on disposal of equipment                                           19,411
                                                                       -----------         -----------
          Net cash used in investing activities                            (32,337)            (14,062)
                                                                       -----------         -----------

Cash flows from financing activities
    Common stock issued, net                                               941,500           2,919,940
    Proceeds from issuance of convertible debentures                     1,750,000
    Proceeds from line of credit                                           256,442
                                                                       -----------         -----------
          Net cash provided by financing activities                      2,947,942           2,919,940
                                                                       -----------         -----------

          NET INCREASE (DECREASE) IN CASH                                  (95,172)            514,142
Cash at beginning of period                                                514,142                   0
                                                                       -----------         -----------

Cash at end of period                                                  $   418,970         $   514,142
                                                                       ===========         ===========
Supplemental disclosures of cash flow information:
    Cash paid during the period for
        Interest                                                       $    65,563         $         0
        Taxes                                                               12,691                   0
Noncash investing and financing transactions:

        Shares issued for penalties                                    $   912,002         $         0
       Equity issued for services and debt                               5,150,161         $ 5,014,014

The accompanying notes are an integral part of this statement.
</TABLE>

                                      F-6
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


ORGANIZATION

Subsequent to year end,  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 but one
of its  employees.  One of the  directors  resigned as the chairman of the audit
committee and 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.

Genio was a developer and marketer of entertainment and leisure products.  Genio
holds 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.

On July 21,  2003,  the Company  acquired  Genio Inc.  (formerly  Tele-V,  Inc.)
through the  issuance of an  aggregate  of  15,484,448  shares of common  stock,
reflecting 65% of the 23,822,228  shares of common stock  outstanding  after the
closing. For accounting purposes, the transaction is reflected as if the Company
was acquired by Genio Inc.  with the business of Genio Inc.  being the successor
entity.  The  acquisition  was accounted for as a reverse  acquisition  with the
management of Genio  controlling and operating the Company after the acquisition
date. The financial  statements  presented primarily represent the operations of
Genio Inc. and its  subsidiaries  from its  inception  date,  May 14,  2003,  to
September 30, 2003.

In addition,  the capital  structure of Genio has been  recapitalized to account
for the equity structure  subsequent to the acquisition as if Genio had been the
issuer of the common stock for all periods presented.

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 $9,996,935 and  $5,494,162  for the year ended  September 30, 2004 and
for  the  stub  period  May  14,  2003  to  September  30,  2003,  respectively.
Additionally,   the  Company  had  a  net  working  capital   deficiency  and  a
shareholders'  deficiency  at  September  30, 2004 and  negative  cash flow from
operations for the year ended  September 30, 2004 and the period ended September
30,


                                      F-7
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


2003. The Company is in default of its line of credit.  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.

CASH EQUIVALENTS

The Company  considers  investments  in highly  liquid debt  instruments  with a
maturity of three months or less to be cash equivalents.

INVENTORIES

The Company's  inventory  consists  entirely of finished goods.  Inventories are
stated at lower of cost or market. Cost is determined on the first-in, first-out
basis.

FURNITURE AND EQUIPMENT

Furniture and equipment are stated at cost.  Depreciation  is computed using the
straight-line  method.  Estimated  useful lives used in  computing  depreciation
range from three to five years for  equipment  and  furniture  and the remaining
lease  period for  leasehold  improvements.  In  accordance  with SFAS 144,  the
Company periodically evaluates the carrying value of its furniture and equipment
for circumstances which may indicate impairment.

REVENUE RECOGNITION

Revenue related to sales of the Company's wholesale products was recognized when
products  were  shipped,  the title and risk of loss has passed to the customer,
the  sales  price is fixed or  determinable  and  collectibility  is  reasonably
assured. Sales made with a return privilege are accounted for pursuant to SFAS #
48  "Revenue  Recognition  When Right of Return  Exists."  The  Company had only
commenced shipments as of September 30, 2003, the amount of future returns could
not be reasonably estimated at that time.

The  Company  also has sold a separate  and  unrelated  product  directly to the
consumer via an infomercial.  These sales, which were not material, are recorded
upon  notification  of such  merchandise  being sold and the sales  order  being
filled by an independent fulfillment center.



                                      F-8
<PAGE>
                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


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  accounts  for  stock-based  compensation  plans  under  Accounting
Principles  Board Opinion 25, (APB 25)  Accounting for Stock Issued to Employees
and the related interpretation,  for which no compensation cost is recognized as
of the grant when the  estimated  fair  value of stock  options  issued  with an
exercise  price equal to or greater  than the fair value of the common  stock on
the date of grant.  The  Company  uses the  "intrinsic"  method for  determining
compensation  expense for new options whereby expense is recorded for the quoted
market price of the stock issued, or in the case of options,  for the difference
between the stock's  quoted market price on the date of the grant and the option
exercise  price.  When the  market  price at the date of the grant  exceeds  the
exercise  price of the  underlying  shares,  compensation  expense is  recorded.
Statement of Financial  Accounting  Standards No. 123 (SFAS 123)  Accounting for
Stock-Based  Compensation,  as  amended by  Statement  of  Financial  Accounting
Standards  No.  148  (SFAS  148)  Accounting  for  Stock-Based   Compensation  -
Transition  and  Disclosure,  requires  that  companies,  which do not  elect to
account for stock-based  compensation as prescribed by this statement,  disclose
the pro-forma effects on earnings and earnings per share as if SFAS 123 has been
adopted.

If the recognition provisions of SFAS 123 using the Black-Scholes option pricing
model,   the  resulting   pro-forma  net  income  (loss)   available  to  common
shareholders,  and pro-forma net income (loss) available to common  shareholders
per share would be as follows:


<TABLE>
<CAPTION>
        ------------------------------------------- ------------------- -------------------
                                                    For   the   year    For  the  period
                                                    ended September     ended September
                                                    30, 2004            30, 2003
        ------------------------------------------- ------------------- -------------------
<S>                                                    <C>                 <C>
        Net    loss     available     to    common
        shareholders, as reported                      $(9,996,935)        $(5,494,162)


                                       F-9
<PAGE>
                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


        ------------------------------------------- ------------------- -------------------
        Add:   Stock-based   compensation  expense
        included in the reported  net income,  net
        of related tax effects                                               949,587
        ------------------------------------------- ------------------- -------------------
        Deduct:  Stock-based compensation,  net of
        tax                                               ( 37,202)         (949,587)
        ------------------------------------------- ------------------- -------------------
        Net    loss     available     to    common
        shareholders, pro-forma                       $(10,034,137)        $(5,494,162)
        ------------------------------------------- ------------------- -------------------

        ------------------------------------------- ------------------- -------------------
        Basic earnings per share:
        ------------------------------------------- ------------------- -------------------
        As reported -                                    $ (.38)             $ (.22)
        ------------------------------------------- ------------------- -------------------
        Pro-forma -                                      $ (.38)             $ (.22)
        ------------------------------------------- ------------------- -------------------
</TABLE>


         The above stock-based employee compensation expense has been determined
         utilizing a fair value method, the Black-Scholes option-pricing model.

         In  accordance  with SFAS 123,  the fair value of each option grant has
         been  estimated  as of the date of the grant  using  the  Blach-Scholes
         option pricing model with the following weighted average assumptions:

<TABLE>
<CAPTION>
        -------------------- --------------------------------- ---------------------------------------------
                                                                      For Years Ended September 30,
        -------------------- --------------------------------- ----------------------- ---------------------
                                                                        2004                   2003
        -------------------- --------------------------------- ----------------------- ---------------------
<S>                                                                    <C>                     <C>
                             Risk free interest rate                   4.00%                   4.3%
        -------------------- --------------------------------- ----------------------- ---------------------
                             Expected life                           2-3 years              2-3 years
        -------------------- --------------------------------- ----------------------- ---------------------
                             Dividend rate                             0.00%                  0.00%
        -------------------- --------------------------------- ----------------------- ---------------------
                             Expected volatility                       41.0%                  76.0%
        -------------------- --------------------------------- ----------------------- ---------------------
</TABLE>





CONCENTRATION OF CREDIT RISK

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



                                      F-10
<PAGE>
                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


NEW ACCOUNTING PRONOUNCEMENTS

FASB 132 -  Employers'  Disclosure  about  Pensions  and Other  Post  Retirement
Benefits

In December  2003, the FASB revised SFAS No. 132  Employers'  Disclosures  about
Pensions and Other Post Retirement  Benefits.  This revision requires additional
disclosures  to those in the original  SFAS No. 132 about  assets,  obligations,
cash flows and net periodic  benefit cost of deferred  benefit pension plans and
other deferred benefit post-retirement plans. The required information should be
provided  separately  for pension  plans and for other  post-retirement  benefit
plans.  This  statement  revision is  effective  for fiscal  year  ending  after
December 14, 2003 and interim  periods  beginning  after  December 15, 2003. The
adoption  of this  revision  is not  expected  to have a material  impact on our
results of  operations,  financial  position  or  disclosures.  The  Company has
adopted the above new accounting pronouncement.

FASB 151 -  Inventory Costs

In November  2004,  the FASB issued FASB  Statement  No. 151,  which revised ARB
No.43,relating  to inventory  costs.  This revision is to clarify the accounting
for abnormal  amounts of idle  facility  expense,  freight,  handling  costs and
wasted  material  (spoilage).  This  Statement  requires  that  these  items  be
recognized  as a current  period  charge  regardless  of  whether  they meet the
criterion  specified  in ARB  43.  In  addition,  this  Statement  requires  the
allocation of fixed production  overheads to the costs of conversion be based on
normal  capacity of the production  facilities.  This Statement is effective for
financial  statements for fiscal years  beginning  after June 15, 2005.  Earlier
application  is permitted  for  inventory  costs  incurred  during  fiscal years
beginning after the date of this Statement is issued.  Management  believes this
Statement  will have no impact on the  financial  statements of the Company once
adopted.


FASB 152 - Accounting for Real Estate Time-Sharing Transactions

In December  2004,  the FASB issued FASB  Statement  No. 152,  which amends FASB
Statement  No.  66,  Accounting  for  Sales of Real  Estate,  to  reference  the
financial  accounting  and  reporting  guidance  for  real  estate  time-sharing
transactions  that is  provided  in AICPA  Statement  of  Position  (SOP)  04-2,
Accounting for Real Estate Time-Sharing Transactions. This Statement also amends
FASB Statement No. 67,  Accounting  for Costs and Initial  Rental  Operations of
Real Estate Projects,  to state that the guidance for (a) incidental  operations
and (b)  costs  incurred  to  sell  real  estate  projects  does  not  apply  to
real-estate time-sharing  transactions.  The accounting for those operations and
costs is subject to the guidance in SOP 04-2.  This  Statement is effective  for
financial statements for fiscal years beginning after June 15, 2005.  Management
believes this Statement  will have no impact on the financial  statements of the
Company once adopted.




                                      F-11
<PAGE>
                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


FASB 153 - Exchanges of Nonmonetary Assets

In December  2004,  the FASB  issued FASB  Statement  No.  153.  This  Statement
addresses the  measurement of exchanges of nonmonetary  asstes.  The guidance in
APB Opinion No. 29,  Accounting for  Nonmonetary  Transactions,  is based on the
principle that  exchanges of nonmonetary  assets should be measured based on the
fair value of the assets  exchanged.  The  guidance  in that  Opinion,  however,
included certain exceptions to that principle.  This Statement amends Opinion 29
to eliminate  the  exception  for  nonmonetary  exchanges of similar  productive
assets and replaces it with a general  exception  for  exchanges of  nonmonetary
assets  that do not  have  commercial  substance.  A  nonmonetary  exchange  has
commercial  substance  if the future  cash flows of the entity are  expected  to
change  significantly  as a result of the exchange.  This Statement is effective
for financial statements for fiscal years beginning after June 15, 2005. Earlier
application is permitted for nonmonetary asset exchanges  incurred during fiscal
years beginning after the date of this Statement is issued.  Management believes
this  Statement  will have no impact on the financial  statements of the Company
once adopted.


FASB 123 (revised 2004) - Share-Based Payments

In  December  2004,  the FASB  issued a  revision  to FASB  Statement  No.  123,
Accounting for Stock Based Compensation.  This Statement  supercedes APB Opinion
No. 25, Accounting for Stock Issued to Employees, and its related implementation
guidance.   This  Statement   establishes   standards  for  the  accounting  for
transactions  in which an entity  exchanges its equity  instruments for goods or
services.  It also addresses  transactions in which an entity incurs liabilities
in  exchange  for  goods or  services  that are  based on the fair  value of the
entity's  equity  instruments  or that may be settled by the  issuance  of those
equity   instruments.   This  Statement  focuses  primarily  on  accounting  for
transactions in which an entity obtains employee services in share-based payment
transactions.  This  Statement  does not  change  the  accounting  guidance  for
share-based  payment  transactions with parties other than employees provided in
Statement 123 as originally  issued and EITF Issue No.  96-18,  "Accounting  for
Equity Instruments That Are Issued to Other Than Employees for Acquiring,  or in
Conjunction  with Selling,  Goods or Services."  This Statement does not address
the accounting for employee share  ownership  plans,  which are subject to AICPA
Statement of Position 93-6,  Employers'  Accounting for Employee Stock Ownership
Plans.

A nonpublic  entity  will  measure  the cost of  employee  services  received in
exchange for an award of equity  instruments  based on the grant-date fair value
of those instruments, except in certain circumstances.

A public entity will initially measure the cost of employee services received in
exchange for an award of liability  instruments based on its current fair value;
the fair value of that award will be re-measured  subsequently at each reporting
date through the  settlement  date.  Changes in fair value during the  requisite
service  period will be  recognized  as  compensation  cost over that period.  A
nonpublic  entity may elect to measure its liability  awards at their  intrinsic
value through the date of settlement.



                                      F-12
<PAGE>
                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


The grant-date fair value of employee share options and similar instruments will
be  estimated   using  the   option-pricing   models  adjusted  for  the  unique
characteristics  of those instruments  (unless  observable market prices for the
same or similar instruments are available).

The notes to the financial statements of both public and nonpublic entities will
disclose information to assist users of financial  information to understand the
nature of share-based payment transactions and the effects of those transactions
on the financial statements.

The  effective  date for  public  entities  that do not  file as small  business
issuers  will be as of the  beginning of the first  interim or annual  reporting
period that begins after June 15, 2005.  For public  entities that file as small
business  issuers and nonpublic  entities the  effective  date will be as of the
beginning  of the first  interim or annual  reporting  period that begins  after
December  15,  2005.  Management  intends to comply with this  Statement  at the
scheduled  effective date for the relevant financial  statements of the Company.
Management  believes  the effects of adopting  this  revision to FASB 123,  will
approximate recording those amounts currently reported as compensation herein on
a pro-forma basis as allowed under FASB 123.

NOTE 2 -  RESTATEMENT

         The Company has determined  that a portion,  approximately  $660,000 of
the revenues and costs of sales  related to the sales  recorded in the Company's
results of operations  for the quarters  ended March 31, 2004 and June 30, 2004,
respectively,  and  reported  in the  quarterly  results  of  operations  in the
Company's  quarterly  reports on Form 10-QSB for the fiscal quarters ended March
31,2004 and June 30, 2004,  respectively (the "Interim  Financial  Statements"),
were  subject  to a right  of  return  by the  customer.  Pursuant  to SFAS  No.
48,"Revenue Recognition When Right of Return Exists," revenue subject to a right
of  return  and the  related  cost of sales  should  be  recorded  only upon the
fulfillment of certain  conditions,  including payment.  Accordingly,  should be
that no revenues or costs  related to these sales  should have been  recorded in
the  Company's  results of  operations  until the  Registrant  received  payment
therefore. The Company received nominal payments of less than $50,000 during the
quarter ended September 30, 2004 against the sales recorded in the quarter ended
March 31, 2004. In November 2004,  $50,000 was received  against the sale in the
quarter ended March 31, 2004. The Company does not believe it is entitled to any
additional  amounts  with  respect  to any of these  sales.  Although  there are
significant  amounts of inventory  held at these  customers,  this inventory has
been written down to its estimated realizable value as of September 30, 2004.

The Company has not filed its amended  quarterly  reports on Form 10-QSB for the
fiscal quarters ended March 31, 2004 and June 30, 2004.


NOTE 3 -  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 common
stock  equivalents  were not  included in the effect of dilutive  stock  options
because they had an anti-dilutive effect.



                                      F-13
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


NOTE 4 -  ACCOUNTS RECEIVABLE

Accounts receivable at September 30, 2004 consisted of the following:

          Gross receivables                  $ 1,020,919

          Allowance for returns                 (480,409)
          Allowance for doubtful accounts       (355,739)
                                             -----------

          Accounts receivable, net           $   184,771
                                             ===========

The allowance  for doubtful  accounts  reflects the  Company's  best estimate of
probable losses by specific allowance for known troubled accounts.

NOTE 5 -  INVENTORIES

Inventories at September 30, 2004,  consisted  entirely of finished products and
shipping supplies as follows:

          Gross inventory               $ 1,664,015
          Allowance for saleability      (1,495,438)
                                        -----------

          Inventory, net                $   168,577
                                        ===========

Inventories  are stated at lower of cost or market.  Cost is  determined  on the
first-in, first-out basis.



                                      F-14
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004



NOTE 6 -  FURNITURE AND EQUIPMENT, NET

Furniture and equipment at September 30, 2004, consisted of the following:

          Showroom Display            $  8,362

          Molds                          8,900

          Accumulated depreciation      (1,439)
                                      --------

          Net                         $ 15,823
                                      ========

During the year ended  September  30, 2004,  the Company  recorded a loss on the
disposal of  equipment  totaling  $19,411  (cost of $28,548  net of  accumulated
depreciation of $9,137).

NOTE 7 -  INTANGIBLE ASSETS

Intangible  assets consist of deferred  financing  costs and are being amortized
over a one year period.

NOTE 8 -  ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accrued  expenses and other  liabilities  at  September  30, 2004 consist of the
following:

          Accounts payable             $  848,726
          Accrued expenses                232,510
          Accrued royalties               155,000
          Accrued penalties               100,000
          Accrued payroll and taxes        16,386
          Accrued interest                 28,570
          Other                            49,518
                                       ----------

          Total                        $1,430,710
                                       ==========

NOTE 9 -  INCOME TAXES

At September  30, 2004,  the Company had net  operating  loss  carryforwards  of
approximately  $12,600,000  for book and tax  purposes,  expiring  in year  2022
through 2024. 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).

                                      F-15
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


At this time,  the  Company  does not  believe it can  reliably  predict  future
taxable profits.  Accordingly, the increase in deferred tax assets of $3,399,000
to approximately $4,800,000 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 34% for the year ended
September 30, 2004 is as follows:

          ---------------------------------------------------    -----------
          Loss before income taxes                               $(9,996,935)
          ---------------------------------------------------    -----------
          Computed expected tax credit at 34%                      3,399,000
          ---------------------------------------------------    -----------
          Operating loss for which no benefits were provided      (3,399,000)
          ---------------------------------------------------    -----------
          Provision of income taxes                              $        --
          ---------------------------------------------------    -----------

NOTE 10 - EMPLOYEE BENEFIT PLANS

The Company provides all employees with  non-contributory  healthcare  benefits.
The Company has no other benefit plans at this time.

NOTE 11 - 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.
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. As of  September  30,  2004,  $256,442  was owed on such
credit line. In connection  with the loan  agreement we granted IIG a warrant to
purchase  250,000 shares of our common stock at an exercise price of $1.0625 per
share. Such warrants were valued at $212,491 and expensed. 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 is
attempting to settle the debt with the lender.

NOTE 12 - CONVERTIBLE DEBENTURES

On July 15,  2004,  the Company  issued a  convertible  debenture  to  Crestview
Master,  LLC.  in the  principal  amount  of  $1,500,000  pursuant  to a private
placement transaction with Crestview.  The convertible debenture matures on July
14,  2005  and  bears  interest  at the rate of eight  percent  (8%) per  annum.
Interest is payable  quarterly at the Company's  option in cash or shares common
stock. The note is convertible into shares of common stock at a fixed conversion
price of $0.50 per share. In connection with the issuance of the debenture,  the
Company entered into a registration  rights agreement with Crestview,  the terms
of which  require  that  the  Company  file a  registration  statement  with the
Commission covering the shares of common stock underlying the debenture.

                                      F-16
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


The Company may, at its sole option,  require the  conversion of the  debentures
if,  after the  180th day  anniversary  of the date on which  this  registration
statement  is  declared  effective  by the  Commission  (A) the volume  weighted
average price for each of any 20 consecutive  Trading Days, which 20 consecutive
Trading Day period shall have commenced only after the Effective  Date,  exceeds
$2.00,  adjusted for any stock  splits,  reverse  splits and the like  occurring
after the original issue date of the debenture,  or (B) at any time, the Company
completes a public  offering  of its common  stock with (1)  aggregate  proceeds
equal to or  greater  than  $20,000,000  and (2) a price per share of its common
stock equal to or greater  than $2.00,  adjusted for any stock  splits,  reverse
splits and the like occurring after the original issue date of the debenture.

The terms of the convertible note prohibit  conversion of the note to the extent
that  conversion  of the note  would  result in the  holder,  together  with its
affiliates,  beneficially  owning in excess  of 9.99% of  outstanding  shares of
common  stock.  A holder  may  waive the 9.99%  limitation  upon 61 days'  prior
written notice to the Company.

In connection with the foregoing, we issued warrants to Crestview Master, LLC to
purchase  up to  1,800,000  shares of our  common  stock  pursuant  to a private
placement transaction with Crestview. Crestview may exercise the warrant through
July 14, 2009.  The  exercise  prices under the warrant are $0.80 per share with
respect to 900,000  shares  and $1.00 per share with  respect to 900,000  shares
acquired  upon  exercise  of the  warrant.  The  terms of the  warrant  prohibit
exercise of the warrant to the extent that  exercise of the warrant would result
in the holder,  together with its affiliates,  beneficially  owning in excess of
9.99% of  outstanding  shares  of  common  stock.  A holder  may waive the 9.99%
limitation  upon 61 days'  prior  written  notice to us. See  subsequent  events
footnote for amendment to the terms of this convertible debenture.

On July 22, 2004 we entered into an agreement  Ocean Drive  Capital  pursuant to
which  Ocean Drive  Capital  invested  $100,000 on terms that are  substantially
identical to those of the Crestview investment.  The Company granted Ocean Drive
Capital a warrant to purchase up to 60,000 shares of common stock at an exercise
price of $0.80 per share and a warrant to purchase up to 60,000 shares of common
stock at an exercise price of $1.00 per share.

On July 30, 2004 we entered  into an  agreement  with  Turquoise  Partners,  LLC
pursuant to which Turquoise  invested  $150,000 on terms that are  substantially
identical to those of the Crestview investment.  The Company granted Turquoise a
warrant to purchase up to 90,000 shares of common stock at an exercise  price of
$0.80 per share and a warrant to purchase up to 90,000 shares of common stock at
an exercise price of $1.00 per share.

NOTE 13 - STOCK OPTIONS and WARRANTS

A. Warrants

                                      F-17
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


Warrant activity is summarized as follows:

                                               Weighted
                                               Average
                                               Warrants     Exercise Price
                                               ---------      --------
    Inception May 2003
            Issued                             3,000,000      $   1.50
            Expired or cancelled                      --            --
            Exercised                                 --            --
                                               =========      ========
          Outstanding at September 30, 2003    3,000,000      $   1.50
            Issued                             3,384,285    .80 - 2.92
            Expired or cancelled                      --            --
            Exercised                                 --            --
                                               ---------      --------
          Outstanding at September 30, 2004    6,384,285      $   1.37
                                               =========      ========

The following  table  summarizes  information  about  warrants  outstanding  and
exercisable at September 30, 2004:


<TABLE>
<CAPTION>
                                                                 Outstanding
                                           -------------------------------------------------------
                                                                   Weighted-              Weighted-
                                                                    Average                average
                                                                   Remaining               exercise
                                             Shares              life in years              price
                                           ---------                  ----                   -----
<S>                                        <C>                        <C>                    <C>
    Range of exercise prices
           $0.80                           2,100,000                  4.88                   $0.80
           $1.06                             250,000                  4.67                    1.06
           $1.31                             320,000                  1.75                    1.31
           $1.50                           3,000,000                  0.75                    1.50
           $2.10                             476,190                  0.75                    2.10
           $2.92                             238,095                  4.25                    2.92
                                           ---------                  ----                   -----
                                           6,384,285                  1.48                   $1.37
                                           =========                  ====                   =====
</TABLE>

All of the above warrants are exercisable.

B. Stock Option Plans

The  Company  accounts  for its stock  option  issued  under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," under which no compensation  expense
is  recognized,  provided such

                                      F-18
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


stock  options were issued at market  price.  The Company  adopted SFAS No. 123,
"Accounting for Stock-Based Compensation' for disclosure purposes;  accordingly,
no  compensation  expense is recognized in the results of operations for options
granted at fair market value as required by APB Opinion No. 25.

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

                                                             Weighted
                                                          Average Exercise
                                                  ------------------------------
                                                     Shares           Price
                                                     ------           -----
   Inception May 2003
           Granted                                  1,696,000          $1.50
           Exercised                                       --             --
           Expired or cancelled                            --             --
                                                    ---------          -----
   Outstanding at September 30, 2003                1,696,000          $1.50
          Granted                                   1,500,000          $2.53
          Exercised                                        --             --
          Expired or cancelled                        (71,000)         $1.50
                                                    ---------          -----
   Outstanding at September 30, 2004                3,125,000          $2.00

Information,  at date of  issuance,  regarding  stock option  grants  during the
year ended September 30, 2004:

                                                                  Weighted-
                                                                   Average
                                                  Weighted-  -------------------
                                                   Average   Exercise     Fair
                                                   Shares      Price      Value
                                                   ------      -----      -----
   Year ended September 30, 2004
   Exercise price is equal to market price      1,500,000      $2.53     $1.33

The  following  table   summarizes   information   about  warrants  and  options
outstanding and exercisable at September 30, 2004:

<TABLE>
<CAPTION>

                                                           Outstanding and exercisable
                                     ---------------------------------------------------------------
                                                   Weighted-average   Weighted-Average
                                       Number       remaining life       Exercise          Number
                                     Outstanding       in years           Price          Exercisable
                                     -----------   ----------------   ----------------   -----------

  Range of exercise prices:
<S>                                   <C>                <C>               <C>          <C>
       $.01 to $1.00                  2,450,000          3.51              .88          2,312,501
       $1.01 - $1.50                  4,620,000          1.79             1.46          4,570,000
       $2.00 - $3.00                  2,439,285          1.50             2.52          1,414,285
                                    -----------                                         ---------
                                      9,509,285                                         8,296,786
</TABLE>


                                      F-19
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


The compensation expense attributed to the issuance of the stock options will be
recognized  as they are earned.  These stock options are  exercisable  for three
years from the grant.


NOTE 14 - CAPITAL STOCK

On July 21, 2003, the Company  acquired  Genio Inc.  through the issuance by the
Company of an aggregate of 15,484,448 shares of common stock,  reflecting 65% of
the 23,822,228 shares of common stock in total outstanding post-closing with the
management of Genio Inc. controlling and operating the Company. This transaction
has been  accounted  for as a reverse  acquisition  by Genio  Inc.  The  capital
structure  of the  Company  has been  recapitalized  to  account  for the equity
structure  subsequent to the acquisition as if Genio Inc. had been the issuer of
the common stock for all periods presented.

In July 2003 the Company,  through a private  placement of its equity securities
to accredited  investors  raised an aggregate total of $3 million in proceeds in
such private  placement by issuing 3 million  shares of restricted  common stock
and warrants to acquire 3 million shares of common stock at an exercise price of
$1.50 per share,  exercisable for an eighteen month period. The proceeds of such
private  offering  were  utilized by the Company for  development  and inventory
purchases for its Genio Card.

In connection with the private  placement of common stock, the Company agreed to
file a  registration  statement for the resale of the common stock and shares of
common stock  underlying  the warrants by October 21, 2003.  The Company has not
filed said  registration  statement and is required to pay penalties at the rate
of $30,000 for each 30 days the filing is late. The  registration  statement was
not  effective  by January 21,  2004,  the  Company was  required to pay monthly
penalties at the rate of 1% of the market value of the securities.

During the period ended September 30, 2003, the Company issued  1,752,500 shares
at various prices in lieu of cash for services provided by consultants and other
professionals. The Company valued these shares using the closing price per share
of the Company's  common stock on the date the  underlying  shares were granted.
The Company valued these  services  $3,309,625,  which  $3,167,276 was expensed.
Another  $2,608,999  was  recorded  for options  issued,  which  $2,091,505  was
expensed.  The portion of the  aforementioned  equity  rights not expensed  were
recorded as unearned compensation at September 30, 2003.

In November  2003,  the Company,  based upon review of financial  statements and
other information,  entered into a rescission agreement with certain individuals
who had sold their


                                      F-20
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


membership and or stock interests in certain companies to Tele-V prior to the TV
Acquisition.  In  connection  with this  rescission  agreement,  the  applicable
purchase  agreements for  acquisition of membership  interests and capital stock
were  transferred  back to the  original  owners and three  hundred  fifty eight
thousand  (358,000)  shares of restricted  Company common stock were returned to
the Company for cancellation and forfeiture.  Further a loan from the Company to
one of the company's in the amount of $75,000 was forgiven.  In conjunction with
this  transaction,  the Company  mutually  terminated an employment  contract by
paying  severance of $30,000 and by allowing the  terminated  employee to retain
two hundred thousand (200,000) options to acquire Company common stock. Further,
the  terminated  employee  will be  entitled  to  delivery  of 71,000  shares of
restricted  common stock of the Company that the terminated  employee would have
received had he remained employed by the Company through January 17, 2004.

On December  8, 2003 the Company  received  subscription  agreements  for a $1.0
million private  placement of 476,190 shares of its common stock at the price of
$2.10 per share.  Investors  received Class A warrants to acquire 238,095 shares
of common  stock at $2.92 per share,  exercisable  for five years,  and warrants
Class B which permit the investors to purchase an additional  476,190 shares for
$2.10 during the period ending the earlier of 13 months following the closing or
30 trading days after the effective  date of a registration  statement  covering
the shares.

In the third quarter ended June 30, 2004, the Company entered into two licensing
agreements  for the  Company to  distribute  certain  branded  products of other
manufacturers. The Company issued 50,000 shares of its common stock and warrants
to purchase another 320,000 shares of common stock at $1.08.  These payments for
the  licensing  agreements  were  valued at  $353,606  and  recorded to unearned
compensation to be amortized over the term of such agreements.

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
aforementioned private placements.  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, 2004, there was $100,000 accrued for such penalties.

In the third and fourth  quarters of fiscal  2004,  the Company  issued  167,500
shares for  settlements on terminated  service  agreements for which an $116,626
was recorded as an expense,  another 95,000 shares were returned to treasury for
settlements on terminated  service  agreements for which a $74,037  reduction to
consulting fees was recorded.

During the year ended  September 30, 2004,  the Company issued 520,500 shares of
common  stock  at  various  prices  in lieu of cash  for  services  provided  by
consultants and other  professionals.  The Company valued these shares using the
closing price per share of the Company's common stock on the date the underlying
shares were granted, which amounted to


                                      F-21
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


$988,971.  Approximately,  $745,971 of such amount was  expensed in fiscal 2004,
while the balance was recorded as unearned  compensation.  There were also stock
options  granted at  exercise  prices  ranging  from  $1.50 to $2.74,  valued at
$3,795,554,  which  $1,577,449  has been expensed this fiscal year.  The Company
also issued 150,000 stock options to three of its directors,  which vest over 24
months at an exercise price of $.60 per share.


NOTE 15 - SEGMENT AND GEOGRAPHIC INFORMATION

The  Company  had two  reportable  business  segments:  a  worldwide  license to
manufacture  and sell  specific  categories  of  products  based  upon  globally
recognized  entertainment  characters  and the other was a retail sales endeavor
for a few unrelated consumer products,  which was not a significant segment. The
consumer  product  segment  for  the  sale of  these  consumer  products  can be
summarized  as  follows,  while  the  balance  of the  assets,  liabilities  and
operations are attributed to the sales of  entertainment  characters  represents
the  remainder of the  Company's  reported  balance  sheet and  operations,  not
presented.

                                Consumer Products
                                -----------------

Identifiable Assets:

Accounts receivable                 $       0
Inventory                              43,577
Total assets                        $  43,577


Identifiable Liabilities:

Accts payable & accrued liab        $  43,765
Total liabilities                   $  43,765

Sales                               $ 196,741
Cost of sales                          78,770
General & admin & other               203,860
Net (loss) income                   $ (86,678)


NOTE 16 - ACQUISITION OF TELE-V (Genio Cards)

On July 9, 2003,  the Company  entered into a definitive  acquisition  agreement
with Tele-V, Inc., a New York corporation ("TV"), its principal  shareholder and
all of its subsidiaries and affiliates  (collectively,  "TV"), to acquire all of
the  capital  stock  of TV (the  "Acquisition").  TV is a  direct  response  and
marketing  firm which also holds a  worldwide  license to  manufacture  and sell


                                      F-22
<PAGE>


                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


specific categories of products based upon certain entertainment characters. The
definitive  acquisition agreement (the "TV Agreement") provided that the Company
acquire all of the outstanding  capital stock of TV in exchange for the issuance
of a majority of the issued and  outstanding  common stock of National.  On July
21, 2003, the Company  completed the TV Acquisition and TV became a wholly-owned
subsidiary of the Company.  At the closing,  the  shareholders  of TV were to be
issued  an  aggregate  of  15,484,448  shares  of the  Company's  common  stock,
reflecting  65% of the  23,822,228  shares of common stock in total  outstanding
post-closing.  The Company also  provided a total of $2,000,000 in funding to TV
for working capital and product development. The Company secured the capital for
TV through a private placement of its equity securities to accredited investors.

The terms of the acquisition were negotiated between the officers of the Company
and  Shai  Bar-Lavi.  At the time of the  negotiations,  there  was no  material
relationship between the Company or any of its directors, officers or affiliates
and TV or its management

Effective  upon the closing of the TV Acquisition  Shai Bar-Lavi  (Bar-Lavi) who
was the  Chairman  and Chief  Executive  Officer of TV,  joined  the  Company as
Chairman of the Board of Directors and as CEO. On July 21, 2003, the Company and
Bar-Lavi  entered  into  an two  year  employment  agreement.  Pursuant  to this
agreement, Mr. Bar-Lavi shall be entitled to a base salary of $180,000 per annum
and participation in Company benefit programs.

Effective  July 21, 2003,  the Company and Yaron  Ben-Horin  entered into an two
year employment  agreement.  Pursuant to this agreement,  Mr.  Ben-Horin  became
Chief Operating Officer of the Company and shall be entitled to a base salary of
$100,000  per annum and  participation  in Company  benefit  programs as well as
incentive compensation based upon certain established parameters.

The Company has entered into a Licensing Agreement with Marvel Characters,  Inc.
and  Marvel  Enterprises,  Inc.,  under  which the  Company  has agreed to pay a
licensing  fee and royalty in exchange  for the use of a worldwide  license with
Marvel Enterprises, Inc. to manufacture and sell specific categories of products
built around the globally recognizable Marvel Super Heroes(R).


NOTE 17 - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying value of cash, accounts  receivable  approximates fair value due to
their short-term nature. In view of the financial position of the Company, it is
not practical to estimate the fair value of the liabilities.



                                      F-23
<PAGE>


                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


NOTE 18 - COMMITMENTS AND CONTINGENCIES

Lease commitments

The Company currently leases its primary office space on a month to month lease.
Rent  expense  for the  year  ended  September  30,  2004 and the  period  ended
September 30, 2003 was $156,870 and $48,272, respectively.

In October 2004, the Company  entered a lease agreement for office space for the
period November 1, 2004 through  December 31, 2005 at $10,500 a month. A $21,000
security deposit has been made with the execution of the lease.

Royalty / License Agreements

The Company has a license from Marvel Characters,  Inc. and Marvel  Enterprises,
Inc. for the  worldwide  rights to use the Marvel  universe of characters in the
sale and  promotion  of the  Company's  product.  The Company  has two  separate
merchandising  agreements,  whereby the  Company  licensed  certain  proprietary
subject matter to be used in the sale and promotion of the Company's product.

Advertising and marketing  expenses (which encompass media spending and consumer
promotions  costs)  included in selling,  general  and  administrative  expenses
amounted to  approximately  $1,128,000 for the year ended September 30, 2004 and
$447,000 for the period ended September 30, 2003.

Consulting Agreements

The Company has entered into a part-time sales consulting agreement  terminating
on June 30, 2005. This agreement requires a monthly  non-recoverable  payment of
$7,500 per month through  December 31, 2003. The above minimum  monthly  payment
shall be offset against commissions earned on sales of product at 1/2 of 1%.

The Company has a revenue share agreement with an unrelated entity that provides
for 5% of net sales on Genio products up to an aggregate of $20,000,000 in Genio
product  sales.  The Company paid $41,882 and  $118,907,  respectively,  for the
period ended September 30, 2003 and the year ended September 30, 2004, under the
terms of this agreement.

Employment Agreements

The Company has employment  agreements with four of its executive officers.  All
of the officers  under these  agreements  have resigned or have been  terminated
post year end.



                                      F-24
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


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.


NOTE 19 - MAJOR CUSTOMERS/SUPPLIER

The Company had sales to three major US retailers which  individually  represent
greater then 10% of total sales.  These three major  customers  represent 44% of
the total accounts receivable.  The Company believes that the loss of any one of
these  customers  could have an adverse  effect on results.  The Company had one
major supplier, that was a related entity.

NOTE 20 - OTHER TRANSACTIONS

During the quarter  ended June 30,  2003,  and prior to the reverse  merger with
Genio,  management  of the  Company  commenced  a series  of  transactions  that
resulted in significant  changes to the assets and operations of the Company. As
a result of these series of transactions  the Company (a) exited the business of
leasing employees by selling its Humana  subsidiary,  and (b) negotiated several
settlements with several creditors (CDKNet.com, Inc. and Steven A. Horowitz, the
President and a Director of the Company).

Diversified Capital and CDKNet

On October 22, 2002, as amended on January 5, 2003, the Company  entered into an
Asset Purchase  Agreement wherein the Company  purchased from CDKNet.com,  Inc.,
certain assets, namely the entity known as Diversified Capital Holdings, LLC and
certain assets of the entity known as the CDKNet, LLC. The owners of Diversified
Capital Holdings,  LLC ("Diversified") and certain  stockholders and officers of
CDKNet.com,  Inc.  were also  stockholders  and  officers  of the  Company.  The
purchase  price was $339,000 for the assets in the form of a secured  promissory
note that bears interest at the rate of five percent (5%), payable monthly until
February 2006.  The assets  acquired  included  stock  positions in small public
companies,  and certain debt  instruments.  Effective June 30, 2003, the Company
reached  an  agreement  to fully  settle  its  obligations  under  the Note with
CDKNet.com,  Inc. On July 21, 2003, the Company and CDKNet.com,  Inc. executed a
settlement agreement (the "CDK Settlement"),  pursuant to which the CDK Note has
been settled in full without any cash payment by the Company in exchange for (i)
the Company's releasing any right, title and interest to 34,750 shares of Series
A  preferred  stock  of  CDK.net.com,   Inc.  held  by  an  escrow  agent;  (ii)
cancellation of license of technology held by the Company from CDKNet,  LLC; and
(iii)  assignment  by the Company of its right,  title,  and interest in certain
promissory  notes held by the Company and certain  marketable  securities.  As a
result of this  transaction  between  entities  that have  common  control,  the
Company recorded an increase to additional paid in capital of $196,310.



                                      F-25
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


Humana Trans Services Group, Ltd.

On October 22,  2002,  (effective  date of October 1, 2003) the Company  entered
into a Stock Purchase  Agreement with the  shareholders of Humana Trans Services
Group,  Ltd.  ("Humana"),  a New York  corporation  engaged in the  business  of
leasing employees.

In April  2003,  the  Company  decided  that  Humana did not meet the  Company's
strategic  direction  and  sold the  operations.  Pursuant  to a Stock  Purchase
Agreement dated as of April 30, 2003 (the "Stock Purchase  Agreement"),  between
the Company,  and Humana Trans Services  Holding Corp., a newly formed  Delaware
corporation  ("Purchaser")  whose principal  officer and stockholder is James W.
Zimbler  ("JWZ"),  a former  officer and  director  of the Company who  resigned
effective  March 31, 2003,  the Company sold all the capital  stock of Humana to
the Purchaser. The Purchaser agreed to pay a purchase price of $255,000 of which
$25,000 was paid to the  Company at the closing and the balance of $230,000  was
to be paid over a two-year period  pursuant to a secured  promissory note issued
by Purchaser and JWZ (the "Purchaser's  Note"). As security for the repayment of
the Purchaser's  Note, JWZ pledged certain stock owned by him including  500,000
shares of common stock of the Company and the Purchaser  pledged all of Humana's
capital  stock with all of such  securities  delivered  to an escrow  agent.  In
addition,  separate from such pledge of securities, in conjunction with the sale
by the Company of Humana's  capital stock to the  Purchaser,  JWZ agreed,  among
other things,  to return to the Company  1,750,000 shares of common stock of the
Company owned by JWZ (the  "Returned  Shares") and the Company was released from
any  obligations to JWZ. The Company  received the Returned  Shares from JWZ and
has cancelled and retired such Returned Shares.

On July 10, 2003,  the Company agreed to restructure  the  transaction  with the
Purchaser and JWZ and entered into a Settlement  Agreement  dated July 10, 2003,
(the  "Settlement  Agreement"),  whereby in consideration of the satisfaction of
the Purchaser's Note and exchange of mutual releases,  JWZ agreed to transfer to
the Company,  all right,  title and ownership to 325,000 shares of the Company's
common stock and 34,750 shares of Series A Preferred  Stock of CDKnet.com  owned
by JWZ (collectively, the "Forfeited Securities"), with the transfer from escrow
of the Forfeited Securities effective upon the escrow agent's determination that
there  are no  valid  third  party  claims  that  affect  any  of the  Forfeited
Securities.  The Stock Purchase Agreement and the Settlement  Agreement resulted
in no net gain or loss to the Company.


NOTE 21 - RELATED PARTY TRANSACTIONS

TACTICA

On September 7, 2004, the Company wired  $150,000 to a subsidiary of IGIA,  Inc.
("Tactica"), a public company. IGIA was an affiliate of the then Chief Executive
Officer. These monies were an investment pursuant to a "Distribution  Agreement"
dated  September  7, 2004,  which  expired on October 31,  2004.  The funds were
invoiced at $68,354 for the  purchase of 3,386  vacuum  cleaners and $81,646 for
"media advertising",  per invoice from Tactica. The total disbursements  related
to this Distribution


                                      F-26
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


Agreement  amounted to $343,896,  through October 20, 2004. On October 21, 2004,
Tactica  filed for  bankruptcy.  As of  September  30,  2004,  there were vacuum
cleaners  held in inventory by the Company in the amount of $43,577,  which were
sold after  year end.  The  Company  has been paid the  proceeds  from the sale.
Through  September  30, 2004 there was  approximately  an $80,000 loss  recorded
related to this  Distribution  Agreement,  which excludes  revenues and expenses
incurred post September 30, 2004.


NOTE 22 - FOURTH QUARTER ADJUSTMENTS - UNAUDITED

The Company  recorded  reserves to inventory in the amount of  $1,495,000 in the
fourth quarter.

The common  shares  issued for  registration  penalties  recorded  in the fourth
quarter  amounted  to  $912,000,  which was  offset by an  accrual  recorded  of
$49,000.

Allowances for bad debts and returns  recorded in the fourth quarter were in the
amount of $836,000.

NOTE 23 - SUBSEQUENT EVENTS - UNAUDITED

$500,000 CONVERTIBLE DEBENTURE

On November 1, 2004,  the  registrant  entered into an agreement with one of its
existing investors,  Crestview Master, LLC, pursuant to which Crestview invested
$500,000 in the form of a convertible debenture. The debenture bears interest at
8% per annum with a maturity date of December 31, 2005.  The note is convertible
into shares of common stock at a conversion price of $0.20 per share, subject to
certain adjustments and anti-dilution  provisions.  In addition,  the registrant
issued to  Crestview a warrant to  purchase  up to 750,000  shares of its common
stock at an exercise  price of $0.40 per share.  Only $300,000 of such debenture
was received.

Contemporaneously  with such investment,  the registrant 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
amount of $1,500,000,  previously  issued to Crestview and its  affiliates,  has
been extended until December 31, 2005 and the conversion  price has been reduced
to $0.25 per share.  The  exercise  price of the warrants  previously  issued to
Crestview and its affiliates has been reduced to $0.60 per share.

$150,000 CONVERTIBLE DEBENTURE

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 "Second Amendment".  Crestview
has agreed to purchase a $150,000 Prime Plus 2% Convertible  Debenture due April
30,  2005.   Highlights   of  this  Second   Amendment   are  as  follows;   (a)
contemporaneous  with such investment,  the Company reduced the conversion price


                                      F-27
<PAGE>

                       GENIO GROUP, INC. and subsidiaries
                   Notes to Consolidated Financial Statements
   For the period ended September 30, 2003 and year ended September 30, 2004


of the Restate 8%  Convertible  Debenture in the principal  amount of $1,500,000
from $.25 to $.023,  (b) the exercise  prices of the Restate 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,  (c) the  conversion  price of the 8%  Convertible
Debenture due December 31, 2005 in the principal  amount of $300,000 was reduced
from $.20 to $.023,  (d) the exercise price of the750,000  warrants  related the
$300,000 8% Convertible  Debenture was reduced from $.40 to $.05 per share,  (e)
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, (f) Upon execution of the amendment  Crestview
shall  execute  and  deliver a release to each of the three  former  independent
directors.

Additional  terms for this  financing  were  another  shareholder  shall or will
arrange for another  $150,000  investment  of principal in a debenture  and Shai
Bar-Lavi,  former CEO shall have rendered for cancellation without consideration
all shares owned by him or members of his immediate family.

Conversion of the  debentures or exercise of the  aforementioned  warrants is at
the option of the holder,  hence the beneficial  conversion feature and repriced
warrants will be expensed upon  valuations  of such equity  rights,  but will be
limited to the principal amount of such debentures.
These  debentures  also  carry a  prepayment  penalty  in the  amount of 120% of
principal.

If such debentures were converted there would be an additional 84,782,609 shares
issued,  resulting  in  greater  than 50% of the shares  outstanding,  after the
conversion.


                                      F-28
<PAGE>


Item 8.    Changes in and Disagreements with Accountants on Accounting and
           Financial Disclosure

         There have been no  disagreements  with  accountants  on accounting and
financial disclosures from the inception of the Company through the date of this
Annual Report.

Item 8A.   Disclosure Controls and Procedures

         During  the year  ended  September  30,  2004  and  during  the  months
thereafter,  the  Company  determined  that the  functioning  of the  disclosure
controls and procedures was inadequate and, accordingly, the Form 10-Q's for the
quarters ended March 31, 2004 and June 30, 2004 would need to be restated.  As a
result of the errors  noted the Board of Directors  performed an  investigation.
Subsequent  thereto,  all of the  officers  have  been  replaced.  Prior to this
replacement of management, the Company believes that material weaknesses existed
in both the controls  over  financial  reporting  and controls  over  paperwork,
especially  including  customer  contracts.  A material weakness is defined as a
reportable  condition  in which the  design or  operation  of one or more of the
internal  control  components does not reduce to a relatively low level the risk
that misstatements caused by error or fraud in amounts that would be material in
relation to the financial statements being audited may occur and not be detected
within a timely  period by employees in the normal  course of  performing  their
assigned functions.

         Management is responsible for  establishing  and  maintaining  adequate
internal  controls  over  financial  reporting.  During the 90 days prior to the
issuance of this report,  management has evaluated  internal  controls,  as they
related to the  Company as it is now being  wound  down.  In view of the winding
down of  operations,  the  Company  does not  believe  that it is  necessary  to
remediate all of the material  weakness that have been disclosed.  Management is
working to correct the weaknesses in financial  reporting controls and paperwork
control where relevant to the continuing operations.



                                       17
<PAGE>

                                    PART III

Item 9.    Directors, Executive Officers, Promoters, Control Persons and
           Compliance with Section 16(a) of the Exchange Act of the Registrant

         Officers and Directors

         Our directors,  executive officers, and significant employees and their
respective  ages and positions with the Company as of September 30, 2004 were as
follows:
<TABLE>
<CAPTION>

Name                         Age       Position

<S>                          <C>       <C>
Shai Bar-Lavi (1)            45        Chairman of the Board and Chief Executive Officer

Andrew J. Schenker (2)       44        Chief Financial Officer, Senior Vice President, Secretary
                                       and Director

Yaron Ben-Horin (3)          35        Chief Operating Officer

Bruce Holland (4)            52        Executive Vice President - Sales

Susan Eisner (5)             58        President

Matthew Cohen (6)            46        Director

Timothy R. Curran (7)        49        Director

Gary Mankoff (8)             59        Director
</TABLE>

(1)      Mr. Bar-Lavi  resigned from the position of Chief Executive  Officer on
         November 1, 2004. He was replaced by Steven Lux who resigned on January
         17, 2005.

(2)      Mr. Schenker  resigned from the positions of Chief  Financial  Officer,
         Senior Vice President, Secretary and Director on January 17, 2005.

(3)      Yaron Ben-Horin  resigned from his position of Chief Operating  Officer
         on January 10, 2005.

(4)      Mr. Holland's employment with the Company was terminated on December 3,
         2004.

(5)      Ms.  Eisner  resigned  from her  position as  President on December 28,
         2004.

(6)      Matthew Cohen was appointed Chief  Executive  Officer of the Company on
         January 17, 2005.

(7)      Mr.  Curran resigned from the Board of Directors on January 17, 2005.

(8)      Mr. Mankoff resigned from the Board of Directors on January 17, 2005.

         Shai Bar-Lavi had been our Chairman and Chief  Executive  Officer since
July 2003  upon our  acquisition  of Genio  Inc.  (formerly  Tele-V,  Inc.).  On
November 1, 2004 Mr.  Bar-Lavi  transitioned  his  position  of Chief  Executive
Officer. Prior to the acquisition,  Mr. Bar-Lavi was the sole member and manager
of Tele-V,  LLC from May 2002 through July 2003.  He was also  previously  Chief
Executive  Officer of  ElbitVflash  Inc.,  a  subsidiary  of Elron  Technologies
(Nasdaq:  ELRN),  from January 2000 through  January 2003,  where he oversaw the
development  of  technology  and  marketing  applications,  including the Vflash
Messaging technology and NowCode wireless  advertising.  From April 1999 through
January 2000 he was the Chief Executive Officer of CDKnet,  LLC where he oversaw
development of CDK multimedia technology and Mixfactory online CD customization.
He previously owned a television production company, Top Line Communications and
served as President Partner of Shalom America,  a television  station carried by
Time Warner cable from 1989 to 1998.

         Andrew J.  Schenker  served as a director from October 2002 to November
2003 at which time he  resigned  from the Board and  became our Chief  Financial
Officer and Senior Vice President. He was elected director again in May 2004. He
was also the President of CDKnet.com,  Inc.  January 2002 to June 2004 and was a
director of CDKnet.com  from May 1998 to June 2004. He was also the sole officer
and  director of Dominix,  Inc.  from April 2002 to May 2004.  From 1986 through
2001 at Symbol Technologies, Inc., a New York Stock Exchange listed


                                       18
<PAGE>

company he held several management level financial positions.  His last position
at Symbol was as General Manager for Education Marketing-Worldwide.

         Yaron  Ben-Horin  has been our Chief  Operating  Officer since July 21,
2003. On November 8, 2004 as part of a  reorganization  his title was changed to
Senior Vice  President - Product  Development.  From September 2002 to July 2003
Mr. Ben-Horin was a manager of Tele-V, LLC. From December 1999 to September 2002
he served as Vice President,  Operations and Creative  Director at NowMarketing,
Inc., a marketing technology company.  Previously, from 1996 to December 1999 he
was a consultant to Internet, technology and advertising firms.

         Bruce Holland has been our Executive Vice President since July 2003. On
November 8 his title was  changed to Senior  Vice  President  - Sales.  Prior to
joining  Genio,  Mr.  Holland  served  as  President  of the  Birchcrest-Holland
Corporation.  This company was a National  Marketing and Sales organization that
sold to major mass merchants, drug, specialty, and food retailers. Mr. Holland's
expertise is bringing new products to market.  Before this, he was president and
shareholder of The Resource  Corporation,  which  manufactured  and sold leisure
products and toys to mass retailers. Also during this time, he was president and
shareholder of the One-Tech  Corporation,  a computer  accessories  manufacturer
specializing in children's  products.  Mr. Holland spent 14 years as the CEO and
owner  of ACW  Industries,  which  was  the  largest  distributor  of  inorganic
chemicals in New England. He is a member of the Rhode Island Bar Association. He
is also a graduate of Suffolk University Law School and Brown University.

         Susan Eisner was our President  from November 2003 to November 1, 2004.
Effective  November 1, 2004, she has transitioned to the position of Senior Vice
President  - Business  Development.  From 1989 to April 2003,  she held  several
executive  positions at 4 Kids  Entertainment,  Inc., a New York Stock  Exchange
listed licensing and  entertainment  company with her most recent position being
Senior Vice  President  of  Licensing  where she  supervised  all  domestic  and
international  licensing programs for the Pokemon brand, including the licensing
of the popular  trading card series with Wizards of the Coast and the  licensing
and  marketing of toys,  television  series and movies based on the  characters.
Prior to joining 4 Kids  Entertainment,  Inc.  Ms.  Eisner  served more than ten
years as the  Business  Development  Manager  for the  Golden  Nugget  Hotel and
Casino, managing the New York office for the Atlantic City property. Previously,
Ms. Eisner worked in the record industry holding marketing positions with Motown
Records,  Elektra/Asylum  Records  and  Infinity  Records in Los Angeles and New
York.

         Matthew  Cohen joined our Board of Directors on August 1, 2004,  and is
the chairman of our Audit Committee.  He has been the Chief Financial Officer of
Sea Aerosupport,  Inc. since May 2004. Mr. Cohen  specializes in the development
of financial and operational  infrastructure,  and corporate recovery work. Some
of  his   responsibilities   include  the   implementation  and  interfacing  of
information  systems  indigenous to the aviation  business.  He also manages all
treasury functions, human resource management, payroll and management reporting.
Mr. Cohen sits on the Board of Directors of three public companies.

         Timothy R. Curran  joined our Board of  Directors on August 1, 2004 and
is the chairman of our Nominating / Corporate Governance Committee. From 2001 to
date, Mr. Curran has engaged in entrepreneurial  activities. He was an executive
officer of Symbol  Technologies,  Inc.  from 1984 to 2001.  During that time, he
developed the strategic and  operational  plans that enabled the company to grow
from $3 million to over $1.4  billion.  He held  various  positions  in finance,
distribution,  operations  and  sales  management.  His last  position  was Vice
President and General Manager, Worldwide Distribution. Mr. Curran is a Certified
Public  Accountant  licensed in New York  State,  he also serves on the Board of
Directors  and is  President  of the Long  Island  Players  Club,  a  non-profit
recreational organization.

         Gary Mankoff joined our Board of Directors on August 1, 2004 and is the
chairman of our Compensation Committee.  Since July 2002, Mr. Mankoff has served
as Chief Operating Officer of AGI Media, a unit of MeadWestvaco Corp.'s Consumer
Packaging Group,  focused on packaging for media and entertainment  applications
throughout the United States and Europe. Previously,  from December 2000 to July
2002 he served as vice  president/general  manager of AGI Media's U.S.  division
and has held a number of senior management  positions in the home  entertainment
industry.



                                       19
<PAGE>

         All directors serve for a term of two years or until his/her  successor
is elected and  qualified.  All officers  hold office until the first meeting of
the board of directors after the annual meeting of  stockholders  next following
his/her election or until his/her successor is elected and qualified. A director
or officer may also resign at any time.

         Recent Developments

         On January 17, 2005 three of the  directors of the Company - Timothy R.
Curran,  Gary Mankoff and Andrew J. Schenker,  resigned from their  positions as
directors of the  Registrant.  Mr.  Schenker also resigned from his positions as
Chief  Financial  Officer,  Senior Vice President and  Secretary.  At such time,
Steven Lux, the Chief  Executive  Officer of the Company,  resigned as well. The
Board of Directors of the Registrant appointed Matthew J. Cohen as the Company's
new  Chief  Executive  Officer.  During  December  2004 and  January  2005,  the
employment of Bruce Holland,  our Senior Vice President Sales;  Susan Eisner, or
Senior Vice President - Business Development and Yaron Ben-Horin our Senior Vice
President - Product Development, has been terminated.

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  have  previously  been  filed as
exhibits to the Form 10-KSB for the fiscal year ended September 30, 2003.

Committees of the Board of Directors

         On  September  22,  2004,  our  Board  of  Directors  formed  an  Audit
Committee, Compensation Committee and Nominating/Corporate Governance Committee,
all of which were comprised of our three  independent  directors,  Gary Mankoff,
Timothy  Curren and  Matthew  Cohen.  The Board of  Directors  has also  adopted
charters for each of the committees.  As a result of the resignation of three of
our directors on January 17, 2005, we no longer have active Audit,  Compensation
and Nominating/Corporate Governance Committees.

Section 16(a) Beneficial Ownership Reporting Compliance

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's  directors and  executive  officers,  and persons who own
more than 10% of the Company's  Common Stock,  to file with the  Securities  and
Exchange  Commission  (the "SEC")  initial  reports of ownership  and reports of
changes in ownership of Common Stock and other equity securities of the Company.
Officers,  directors  and  greater  than 10%  shareholders  are  required by SEC
regulations to furnish the Company with copies of all Section 16(a) reports they
file.  Based solely on the Company's review of the copies of such reports by it,
the Company believes that during fiscal 2004 all such filings were made,  except
that: (i) Susan Eisner, our President,  inadvertently failed to file on a timely
basis a Form 3 with respect to her holdings as of November 3, 2003, the date she
became an  officer;  (ii)  Andrew J.  Schenker,  our  Chief  Financial  Officer,
inadvertently  failed  to file on a timely  basis a Form 3 with  respect  to his
holdings  as of November  3, 2003,  the date he became an  officer;  (iii) Yaron
Ben-Horin, our Chief Operating Officer, inadvertently failed to file on a timely
basis a Form 3 with  respect to his  holdings as of July 21,  2003,  the date he
became an officer,  (iv) Steve Lux, our President and Chief  Executive  Officer,
inadvertently  failed  to file on a timely  basis a Form 3 with  respect  to his
holdings  as of  November  1, 2004,  the date he became an officer  and (v) Gary
Mankoff,  Timothy  Curren and Matthew  Cohen  inadvertently  failed to file on a
timely basis a Form 3 with respect to their respective  holdings as of August 1,
2004, the date they became directors of the Company.



                                       20
<PAGE>

Item 10.   Executive Compensation

         The following table sets forth information  concerning the compensation
received  by the Chief  Executive  Officer  and the  Company's  four most highly
compensated  executive  officers other than the Chief Executive Officer who were
serving as executive officers on September 30, 2004:

Summary Compensation Table
<TABLE>
<CAPTION>

Name and                                                      Other Annual
Principal                                                     Compensation   Restricted       Options    LTIP       All Other
Position                   Year    Salary ($)    Bonus ($)    ($)            Stock Awards      SARs     Payouts    Compen-sation
<S>                        <C>    <C>              <C>          <C>              <C>            <C>        <C>          <C>
Shai Bar-Lavi              2004   175,576          0            0                0              0          0            0
 Chief Executive           2003    76,154 (1)      0            150,000 (2)      0              0          0            0
 Officer
                           2002    0               0            0                0              0          0            0

Susan Eisner               2004    160,334         0            0                0              $282,000   0            0
 President                 2003    0               0            0                0              0          0            0
                           2002    0               0            0                0              0          0            0

Andrew J. Schenker         2004    122,067         0            0                0              $141,000   0            0
 Chief Financial           2003    0               0            0                0              0          0            0
 Officer
                           2002    0               0            0                0              0          0            0

Yaron Ben-Horin            2004    136,923         0            0                0              $200,046   0            0
 Chief Operating           2003    0               0            0                0              $100,222   0            0
 Officer
                           2002    0               0            0                0              0          0            0

Bruce Holland              2004    120,923         0            0                0              0          0            0
 Senior Vice President     2003    0               0            0                0              0          0            0
 - Product Development
                           2002    0               0            0                0              0          0            0
</TABLE>

(1)      Salary paid by us pursuant to Mr. Bar-Lavi's  employment agreement with
         us and in connection  with Mr.  Bar-Lavi's  employment  by Genio,  Inc.
         (formerly Tele-V, Inc.) and its subsidiaries prior to the merger.
(2)      Payments for services  provided by, and  reimbursement  of expenses of,
         Mr. Bar-Lavi and certain entities under his control.



                                       21
<PAGE>

Stock Options.

         The following  table sets forth  information on grants of stock options
during  fiscal  2004  for  our  executive  officers  and  directors.   No  stock
appreciation rights were granted during such period to such persons.

<TABLE>
<CAPTION>

                          Number of       Percent of Total
                         Securities       Options Granted                                                Potential
                         Underlying       to Employees in    Exercise Price                              Realizable
                       Options Granted          Year            ($/Share)         Expiration Date          Value
<S>                       <C>                  <C>                <C>                <C>  <C>
Shai Bar-Lavi             0                    0                  N/A                N/A                     $        0
Susan Eisner              900,000              60.0%              2.76               11/3/2008               $1,269,000
Andrew Schenker           450,000              30.00%             2.76               11/3/2008               $  634,500
Bruce Holland             0                    0                  N/A                N/A                     $        0
Matthew Cohen             50,000               3.33%              0.60               8/1/2006                $   29,762
Timothy Curren            50,000               3.33%              0.60               8/1/2006                $   29,762
Matthew Cohen             50,000               3.33%              0.60               8/1/2006                $   29,762
</TABLE>

         None of our executive officers exercised options during fiscal 2004.

         On October 28,  2003,  we granted Ms.  Eisner an option to acquire nine
hundred thousand (900,000) shares of our restricted common stock, at an exercise
price per share equal to the average  closing  price of the common  stock during
the forty  (40) day  period  from  November  3, 2003,  vesting  and  exercisable
according to the  following  schedule:  100,000  options  upon  execution of the
agreement  and 100,000  options  each  vesting  and  exercisable  following  the
completion  of six  (6)  months,  twelve  (12)  months,  eighteen  (18)  months,
twenty-four (24) months and thirty (30) months of employment and 300,000 options
vesting following  completion of the thirty-six (36) months of the initial term.
Provided such options have vested,  the options will be  exercisable  for a five
(5) year term  commencing  from November 3, 2003 and Ms. Eisner will be entitled
to piggyback  registration  rights to register the common stock  underlying  the
option grant in the event Genio files a  registration  statement to register any
stock options for other employees under an employee stock option plan.

         On November 3, 2003, we granted Mr.  Schenker an option to acquire four
hundred and fifty thousand  (450,000) shares of our restricted  common stock, at
an exercise  price per share equal to the common  stock  average  closing  price
during the forty (40) day period from November 3, 2003,  vesting and exercisable
according  to the  following  schedule:  75,000  options  upon  execution of the
agreement  and  75,000  options  each  vesting  and  exercisable  following  the
completion of twelve (12) months, eighteen (18) months, twenty-four (24) months,
thirty  (30)  months  and  thirty-six  (36)  months of the  initial  term of the
employment  agreement.  Provided such options have vested,  the options shall be
exercisable  for a five (5) year term  commencing  from November 3, 2003 and Mr.
Schenker  will be  entitled to  piggyback  registration  rights to register  the
common  stock  underlying  the  option  grant  in  the  event  that  we  file  a
registration  statement to register any stock options for other  employees under
an employee stock option plan.

Employee Pension, Profit Sharing or Other Retirement Plans.

         We do not have a defined  benefit,  pension plan,  profit  sharing,  or
other retirement plan.

Compensation of Directors.

         We pay our independent  directors $5,000 per fiscal quarter and each of
our independent  directors was granted an option to purchase 50,000 shares.  Our
non-independent  directors do not receive  compensation for their service on the
board.



                                       22
<PAGE>

         Employment Contracts.

         We entered into an employment  agreement with Mr.  Bar-Lavi,  effective
July 21,  2003,  pursuant to which Mr.  Bar-Lavi  was serving as Chairman of our
board of directors and Chief Executive  Officer.  Effective  November 8, 2004 he
has transitioned out of his position as Chief Executive Officer. The term of the
employment  agreement  is two-years  and  provides for renewal  options of up to
three successive  one-year terms. Mr.  Bar-Lavi's  salary under the agreement is
$180,000 annually.  At the board's  discretion,  he may receive additional bonus
compensation.  We may terminate Mr. Bar-Lavi's employment immediately for cause,
as  defined  in  the  agreement,  or  without  cause.  Upon  termination  of Mr.
Bar-Lavi's  employment  without  cause,  Mr.  Bar-Lavi  will  be  entitled  to a
severance  payment as disclosed in the  agreement.  Mr.  Bar-Lavi is entitled to
participate,  if eligible, in certain benefit programs as are generally provided
by us to all of our  employees.  We will pay all  premiums  and  other  costs in
connection with a life insurance policy as well as those expenses related to the
lease and  insurance  of an  automobile  for Mr.  Bar-Lavi  subject  to  certain
restrictions.  Mr. Bar-Lavi is subject to certain  confidentiality,  non-compete
and non-solicitation provisions as set forth in the agreement. Mr. Bar-Lavi must
disclose and assign to us any know-how,  discoveries,  inventions,  improvements
and the like made received or conceived by Mr.  Bar-Lavi  during the term of his
employment  with us.  On  November  1,  2004,  Mr.  Bar-Lavi  resigned  as Chief
Executive  Officer and  President of the  Company.  He continues to serve as the
Chairman of the Company's Board of Directors.

         The Board had approved the hiring of Mr. Lux as our President and Chief
Executive  Officer  effective,  November 1, 2004.  Although a formal  employment
agreement has not been entered into as of this time,  Mr. Lux has agreed and the
Board has  approved  payment to Mr. Lux of an annual  salary of $180,000  and an
auto  allowance  including  expenses up to $1,000.  Mr. Lux is also  eligible to
participate  in any  management  bonus plan and is  entitled  to such  benefits,
including health insurance and vacation which are, or will be, provided to other
senior  executives  of ours.  Mr. Lux will be awarded a stock  option  incentive
grant of 750,000 shares with a vesting plan to be determined by the Compensation
Committee. Mr. Lux resigned effective January 17, 2005.

         We  entered  into  an  employment  agreement  with  Ms.  Susan  Eisner,
effective November 3, 2003 pursuant to which she was the Company's President. On
November  1, 2004,  her title was  changed to Senior  Vice  President - Business
Development.  The term of the employment  agreement is three-years  and provides
for renewal options of up to two successive  one-year terms. Ms. Eisner's salary
under the  agreement  is $180,000  annually.  In  addition,  we also granted Ms.
Eisner an option to acquire 900,000 shares of our restricted  common stock,  the
terms of which are described in "Executive  Compensation - Stock Options" below.
Further,  Ms. Eisner is eligible to participate in any management bonus plan and
is entitled to such benefits,  including health insurance and vacation that are,
or will be,  provided to other senior  executives  of ours. We may terminate Ms.
Eisner's  employment  for cause as  defined  in the  agreement.  In the event we
terminate Ms.  Eisner's  employment  without cause or Ms. Eisner  terminates her
employment  for cause Ms.  Eisner is entitled to certain  severance  payments as
disclosed in the  agreement.  In  addition,  upon such  termination,  any vested
options  plus  100,000  additional  and  previously  unvested  options  shall be
exercisable  for only  twelve  months  following  the date of  termination.  Any
remaining  unvested  options  on the date of  termination  shall be  immediately
cancelled.  During the initial  term,  or any  renewal  term and for a period of
twelve months following the expiration or earlier  termination of such term, Ms.
Eisner may not (i) solicit,  employ or interfere  with any of our  relationships
with any person who, at the time thereof,  is or shall be an employee of ours or
who is under some other contractual  relationship with us, nor may she interfere
with or seek to adversely  alter our  relationship  with,  solicit or divert any
supplier,  licensee or  distributor  of ours; or (ii) seek or obtain  employment
with or provide services to any of the parties to the Marvel license  agreement.
Ms. Eisner resigned in December 2004.

         We entered into an employment  agreement  with Mr. Andrew J.  Schenker,
effective  November 3, 2003,  pursuant  to which Mr.  Schenker is serving as our
Chief Financial Officer and Senior Vice President.  The agreement provides for a
three-year term and for renewal options of up to two successive  one-year terms.
Mr. Schenker's salary under the agreement is $135,000 annually.  Mr. Schenker is
eligible  for a  discretionary  annual  bonus to be  awarded  by our  board,  is
eligible to  participate  in any  management  bonus plan and is entitled to such
benefits,  including  health  insurance  and  vacation  which  are,  or will be,
provided to other senior  executives of ours.  In addition,  we also granted Mr.
Schenker an option to acquire 450,000 shares of our restricted common stock, the
terms of which are described in "Employee  Compensation - Stock Options"  below.
We  may  terminate  Mr.  Schenker's  employment  for  cause  as  defined  in the
agreement,  in which case any unvested  options will be cancelled and forfeited.
We may also terminate Mr. Schenker's  employment without cause in which case Mr.
Schenker  shall be entitled to certain  severance  payments as  disclosed in the
agreement.  During the initial  term,  for any renewal  term


                                       23
<PAGE>

and  for  a  period  of  twelve  months  following  the  expiration  or  earlier
termination of such term, Mr. Schenker may not (i) solicit,  employ or interfere
with any of our  relationships  with any person who, at the time thereof,  is or
shall be an employee of ours or who is under some other contractual relationship
with us, nor may he interfere with or seek to adversely  alter our  relationship
with,  solicit or divert any supplier,  licensee or distributor of ours; or (ii)
seek or obtain  employment with or provide services to any of the parties to the
Marvel license agreement. Mr. Schenker resigned in January 2005.

         We entered into an employment  agreement with Mr. Yaron  Ben-Horin July
21, 2003,  pursuant to which he was the company's  Chief Operating  Officer.  On
November  8, 2004,  his title was  changed to Senior  Vice  President  - Product
Development.  The employment agreement is for a two-year term and provides for a
renewal option of up to three successive  one-year terms. Mr. Ben-Horin's salary
under the agreement is $100,000  annually.  The agreement  further  provides for
cash bonus  compensation  as  disclosed  therein.  In addition,  his  employment
agreement  grants him an option to acquire 250,000 shares of our common stock at
an  exercise  price of $1.50 per share,  which  shall vest as  disclosed  in the
agreement. If Mr. Ben-Horin resigns or is terminated for cause on or before July
21, 2005, such options will be cancelled  immediately and all options which were
not  vested  prior  to the  date  of such  resignation  or  termination  will be
immediately  cancelled.  In addition, if Mr. Ben-Horin terminates his employment
without  cause or if his  employment  with us does not  continue  for any reason
subsequent  to the  expiration of the  agreement,  the options that have not yet
vested as of the date of such  termination or expiration will be accelerated and
become immediately exercisable and all of Mr. Ben-Horin's options will terminate
ninety days from the date of such  termination or  expiration.  We may terminate
Mr. Ben-Horin's  employment  immediately for cause, as defined in the agreement.
Upon  termination  of Mr.  Ben-Horin's  employment  without  cause  by  us,  Mr.
Ben-Horin  is  entitled  to  certain  severance  payments  as  disclosed  in the
agreement.  Mr.  Ben-Horin  is entitled to  participate  in, if  eligible,  such
benefit  programs as are generally  provided by us to all of our  employees.  We
shall also pay for Mr.  Ben-Horin's  expenses related to the lease and insurance
of an automobile  subject to certain  restrictions.  Mr. Ben-Horin is subject to
certain   confidentiality,   non-compete  and  non-solicitation   provisions  as
disclosed  in  the  agreement.  With  respect  to  any  know-how,   discoveries,
inventions,  improvements  and the like,  such items must be disclosed to us and
Mr.  Ben-Horin  must  assign  any  rights he may have in such  items to us.  Mr.
Ben-Horin resigned in December 2004.

         No  other  executives  or  employees  of the  Company  have  employment
contracts.

         In an attempt to reduce our expenses,  on August 24, 2004,  Ms. Eisner,
Mr.  Ben-Horin and Mr. Schenker agreed to defer any salary in excess of $120,000
per year until January 2005. Mr.  Bar-Lavi  agreed to defer any salary in excess
of $60,000 per year for a similar period.

Item 11.   Security Ownership of Certain Beneficial Owners

         The following table sets forth, as of September 30, 2004, the number of
and percent of our common  stock  beneficially  owned by (a) all  directors  and
nominees,  naming  them,  (b) our  executive  officers,  (c) our  directors  and
executive  officers as a group,  without  naming them, and (d) persons or groups
known by us to own beneficially five percent (5%) or more of our common stock:

               Name and Address         Amount and Nature of           Percent
             of Beneficial Owner*       Beneficial Ownership          of Class
             --------------------       --------------------          --------

DIRECTORS AND OFFICERS:

Shai Bar-Lavi                              12,105,176 (1)              42.7%
Andrew J. Schenker                            300,000 (2)               **
Susan Eisner                                  305,000 (3)               **
Yaron Ben-Horin                               650,000 (4)              2.3%
Matthew Cohen                                  50,000 (5)               **
Timothy R. Curran                              50,000 (5)               **
Gary Mankoff                                   50,000 (5)               **
Bruce Holland                                       0                   **

                                       24
<PAGE>

5% OR MORE HOLDERS:

Steven A. Horowitz

    400 Garden City Plaza                   1,580,445 (6)              5.6%
    Garden City, NY 11530

Helen of Troy, LLC                          3,000,000 (7)              10.6%
      One Helen of Troy Plaza
      El Paso, Texas 79912

Crestview Master, LLC                      11,550,000 (8)              28.9%
      95 Revere Drive, Suite A
      Northbrook, IL 60062

All executive officers and                 13,510,176                 46.44%
directors as a group (9 persons)


* Unless otherwise indicated,  the address of each beneficial owner is c/o Genio
Group,  Inc., 15 E. 26th Street,  Suite 1711, New York, New York 10010.  ** Less
than 1%.

         (1)      Comprised of: (i) 719,228  shares of common stock owned by Mr.
                  Bar-Lavi,  (ii) 1,798,060 shares owned by Anna Sachs Bar-Lavi,
                  Mr.  Bar-Lavi's  wife,  (iii) 1,078,288 shares of common stock
                  held by several  trusts for Mr.  Bar-Lavi's  children of which
                  Mr.  Bar-Lavi  and his  wife  serve  as  co-trustees  and (iv)
                  7,789,833  shares of common  stock held in trusts of which Mr.
                  Bar-Lavi is trustee.

         (2)      Comprised  of:  (i)  150,000  shares of common  stock and (ii)
                  150,000 shares underlying options exercisable within 60 days.

         (3)      Comprised of (i) 5,000 shares of common stock (based on a Form
                  4 filed by Ms.  Eisner on March 22,  2004) and 300,000  shares
                  underlying options exercisable within 60 days.

         (4)      Comprised  of: (i) 500,000  shares of common  stock,  and (ii)
                  150,000 shares underlying options exercisable within 60 days.

         (5)      Comprised  of 50,000  shares  underlying  options  exercisable
                  within 60 days.

         (6)      Based on a Form 4 filed by Mr. Horowitz on October 31, 2003.

         (7)      Based on a  Schedule  13D filed by Helen of Troy,  LLC on June
                  14, 2004.  Helen of Troy granted Mr.  Bar-Lavi an  irrevocable
                  proxy to vote the  shares it owns  until the later of (i) July
                  31,  2005  and  (ii) the  time  that  Helen of Troy no  longer
                  beneficially owns such shares.

         (8)      Comprised   of:  (i)  8,500,000   shares   issuable  upon  the
                  conversion of a convertible  debenture,  which is  exercisable
                  within 60 days of the date  hereof and (ii)  3,050,000  shares
                  issuable upon the exercise of warrants  exercisable  within 60
                  days of the date hereof.

Item 12.   Certain Relationships and Related Transactions

         The Company has entered  into  employment  agreements  with each of Mr.
Bar-Lavi,  Ms. Eisner,  Mr. Schenker and Mr.  Ben-Horin,  which are described in
"Executive Compensation - Employment Contracts".

         On  September  7,  2004,   the  Company   wired   $150,000  to  Tactica
("Tactica"),  a subsidiary of IGIA, Inc., a publicly traded company. IGIA was an
affiliate  of  Mr.  Bar-Lavi.  This  amount  was  an  investment  pursuant  to a
"Distribution  Agreement"  dated September 7, 2004, which expired on October 31,
2004.  The funds were  invoiced  at $68,354  for the  purchase  of 3,386  vacuum
cleaners  and $81,646 for "media  advertising",  per invoice from  Tactica.  The
total disbursements related to this Distribution Agreement amounted to $343,896,
through October 20, 2004. On October 21, 2004, Tactica filed for bankruptcy.  As
of  September  30,  2004,  there were vacuum  cleaners  held in inventory by the
Company in the amount of  $43,577,  which were sold after year end.  The Company
has been paid the proceeds from the sale.  Through September 30, 2004, there was
approximately an $80,000 loss recorded related to this  Distribution  Agreement,
whch excludes revenues and expenses incurred post September 30, 2004.



                                       25
<PAGE>

Item 13.   Exhibits and Reports on Form 8-K

 a. Exhibits

         The Exhibits are included as part of this registration statement.  Each
item that is  incorporated by reference form a previous filing is indicated by a
number in parenthesis. Items electronically filed with this filing are indicated
with an "F." Each item that has an exhibit number highlighted by an asterisk (*)
is a management contract or compensation plan.

<TABLE>
Exhibit No     Description                                                         Identifiers

<S>            <C>
3.1            By-laws                                                             (1)

3.2            Certificate of Incorporation, dated December 24, 1969, of Tyconda   (2)
               Minerals Corp. (DE)

3.3            Certificate of Amendment, dated May, 1983, changing name from       (2)
               Tyconda Minerals Corp. to Hy-Poll Technology, Inc.

3.4            Certificate of Amendment, dated September 22, 1996, changing name   (2)
               from Hy-Poll Technology, Inc. to Universal Turf, Inc.

3.5            Certificate of Amendment, dated November 10, 1999, changing name    (3)
               from Universal Turf, Inc. to Universal Media Holdings, Inc.

3.6            Certificate of Amendment, dated October 23, 2002, changing name     (4)
               from Universal Media Holdings, Inc. to National Management
               Consulting, Inc.

3.7            Certificate of Amendment, dated July 21, 2003, changing name from   (5)
               National Management Consulting, Inc. to Genio Group, Inc.

4.1            Specimen Stock Certificate                                          (6)

4.2            Form of Warrant, dated July 2003, having an exercise price of       (6)
               $1.50

4.3            Form of (A) Warrant, dated November 2003, having an exercise        (6)
               price of $2.92 per share

4.4            Form of (B) Warrant, dated November 2003, having an exercise        (6)
               price of $2.10 per share

4.5            Warrant, dated May 4, 2004, having an exercise price of $1.0625     (6)
               per share issued to IIG Capital, LLC

4.6            Form of Series A-1 Warrant, dated July 13, 2004, issued by the      (7)
               Company to Crestview Master, LLC, Ocean Drive Capital, LLC and
               Turquoise Partners, LLC


4.7            Form of Series A-2 Warrant, dated July 13, 2004, issued by the      (7)
               Company to Crestview Master, LLC, Ocean Drive Capital, LLC and
               Turquoise Partners, LLC


                                       26
<PAGE>


4.8            Form of Convertible Debenture, dated July 13, 2004, issued by the   (7)
               Company to Crestview Master, LLC, Ocean Drive Capital, LLC and
               Turquoise Partners, LLC

4.9            Prime Plus 2% Convertible Debenture, Due April 30, 2005 issued to
               Crestview Capital Master, LLC, dated February 15, 2005

10.1           Form of Registration Rights Agreement, dated November, 2003         (6)

10.2           Form of Registration Rights Agreement, dated July, 2003             (6)

10.3           Revenue Share Agreement, dated June 18, 2003, between
               GilGlobal Inc. and Tele-V

10.4           Loan and Security Agreement, dated May 4, 2004, between the
               Company and IIG Capital, LLC

10.5           Second Amendment, Extension and Addition to Securities Purchase
               Agreement, dated July 15, 2004.

31.1           Certification of Chief Executive, Principal Financial and
               Accounting Officer

32             Certificate of Chief Executive Officer and Principal Accounting
               Officer as required by 18 U.S.C. Section 1350
</TABLE>

--------------
* To be filed by amendment.

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


Item 14. Principal Accountants' Fees and Services

Audit Fees

         For the fiscal years ended  September  30, 2004 and September 30, 2003,
Radin Glass billed the Company $42,000 and $50,900,  respectively,  for services
rendered for the audit of the Company's annual financial  statements included in
its report on Form 10-KSB and the reviews of the financial  statements  included
in its reports on Form 10-QSB filed with the SEC.



                                       27
<PAGE>

Audit Related Fees

         For each of the fiscal years ended September 30, 2004 and September 30,
2003,  Radin  Glass  billed  the  Company  $24,044  and  $0,  respectively,  for
assistance with SB-2 registration filings.

Tax Fees

         For the fiscal years ended  September  30, 2004 and September 30, 2003,
Radin Glass billed the Company $0 and $5,500,  respectively,  in connection with
the preparation of tax returns and the provision of tax advice.

All Other Fees

         There were no other fees paid to Radin  Glass  during the fiscal  years
ended September 30, 2004 and September 30, 2003.

         All of the above fees were  approved by the Board of  Directors  of the
Company.

         The  Board  of  Directors  has  considered  whether  the  provision  of
non-audit  services  by  Radin  Glass is  compatible  with  maintaining  auditor
independence.

         None of the  services  provided  to the  Company  by Radin  Glass  were
approved  by the Audit  Committee  pursuant  to the  exception  under  paragraph
(c)(7)(ii)(c) of rule 2-01 of Regulation S-X.



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<PAGE>

                                   SIGNATURES

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

                                                Genio Group, Inc.

                                                /s/ Matthew J. Cohen
                                                --------------------------------
                                                By:   Matthew J. Cohen, Chief
                                                      Executive Officer
                                                Date: February 17, 2005

         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:

<TABLE>
<CAPTION>

<S>                                      <C>                                    <C>
/s/ Matthew J. Cohen                     Director and Chief Executive Officer   February 17, 2005
------------------------------------     (Principal Executive, Financial and
Matthew J. Cohen                         Accounting Officer)

</TABLE>








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