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


                                  FORM 10QSB/A


|X|  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

                  For The Quarterly Period Ended March 31, 2006

|_|  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

             For The Transition Period from __________ To _________

                  Commission file number    027831

                      Genesis Capital Corporation of Nevada
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in its Charter)

            Nevada                                              911947658
----------------------------                              ----------------------
(State or Other Jurisdiction                                (I.R.S. Employer
       of Incorporation                                   Identification Number)

              One NE First Avenue, Suite 205, Ocala, Florida 34470
              ----------------------------------------------------
                    (Address of principal executive offices)

                                 (352) 867-5183
                            -------------------------
                            Issuer's telephone number

              ----------------------------------------------------
              (Former Name, former address and former fiscal year,
                          if changed since last report)

Check whether the Registrant (1) has filed all reports required by Section 13 or
15(d) of the Securities  Exchange Act of 1934 during the preceding 12 months (or
for such shorter  period that the  Registrant was required to file such reports)
and (2) has been subject to such filing  requirements  for the past 90 days: Yes
|X| No |_|


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



    APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
                              PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required by Section
12, 13, or 15(d) of the Exchange Act after the  distribution of securities under
a plan confirmed by a court

Yes [ ]   No [ ]

                      APPLICABLE ONLY TO CORPORATE ISSUERS

State the number shares  outstanding  of each of the issuer's  classes of common
stock, as of the latest practicable date:

         As of May 10, 2006, there were  467,949,688  shares of the Registrant's
Common Stock, $0.001 par value per share, outstanding.

Transitional Small Business Disclosure Format Yes |_| No |X|
<PAGE>
                      Genesis Capital Corporation of Nevada

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                                TABLE OF CONTENTS

                          PART I FINANCIAL INFORMATION

Item 1. Financial Statements. ..............................................

Item 2. Management's Discussion and Analysis or Plan of
Operation...................................................................

Item 3. Controls and Procedures.............................................

                            PART II OTHER INFORMATION

Item 1. Legal Proceedings...................................................

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.........

Item 3. Defaults upon Senior Securities.....................................

Item 4. Submission of Matters to a Vote of Securities Holders...............

Item 5. Other Information...................................................

Item 6. Exhibits and Reports on Form 8K.....................................




























                                        2
<PAGE>
THIS  REPORT   CONTAINS   FORWARDLOOKING   STATEMENTS  THAT  INVOLVE  RISKS  AND
UNCERTAINTIES.  SUCH STATEMENTS ARE BASED ON CURRENT EXPECTATIONS,  ASSUMPTIONS,
ESTIMATES AND  PROJECTIONS  ABOUT THE COMPANY AND ITS  INDUSTRY.  FORWARDLOOKING
STATEMENTS  ARE  SUBJECT TO KNOWN AND  UNKNOWN  RISKS,  UNCERTAINTIES  AND OTHER
FACTORS  THAT  MAY  CAUSE  ACTUAL  RESULTS,  LEVELS  OF  ACTIVITY,  PERFORMANCE,
ACHIEVEMENTS  AND PROSPECTS TO BE MATERIALLY  DIFFERENT FROM THOSE  EXPRESSED OR
IMPLIED BY SUCH FORWARDLOOKING  STATEMENTS. THE COMPANY UNDERTAKES NO OBLIGATION
TO UPDATE  PUBLICLY  ANY  FORWARDLOOKING  STATEMENTS  FOR ANY REASON EVEN IF NEW
INFORMATION BECOMES AVAILABLE OR OTHER EVENTS OCCUR IN THE FUTURE.

                                     PART I
                              FINANCIAL INFORMATION

Item 1.  Financial Statements













































                                        3
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA

              INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS










 CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

 Balance Sheet as of March 31, 2006 (Unaudited)                               5

 Statements of Operations for the Six and Three Months
 ended March 31, 2006 and 2005 (Unaudited)                                    6

 Statement  of Changes  in  Stockholders'  (Deficit)  for the Six Months
 ended March 31, 2006 and 2005 (Unaudited)                                    7

 Statement of Changes in Temporary Equity for the Six months ended March
 31, 2006 and 2005 (Unaudited)                                                8

 Statements of Cash Flows for the Six months ended
 March 31, 2006 and 2005 (Unaudited)                                          9

 Notes to Condensed Consolidated Financial Statements (Unaudited)            10





























                                        4
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
                      CONDENSED CONSOLIDATED BALANCE SHEET
                           MARCH 31, 2006 (UNAUDITED)

                                     ASSETS

                                                                     2006
                                                              -----------------

CURRENT ASSETS
  Cash and cash equivalents                                              2,059
  Accounts receivable                                                  412,500

TOTAL ASSETS                                                           414,559
                                                              =================


    LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
  Accounts payable and accrued expenses                                149,089
  Debentures payable                                                   453,720
  Loans payable - Officers                                              25,540
                                                              -----------------

      TOTAL CURRENT LIABILITIES                                        628,349
                                                              -----------------

TEMPORARY EQUITY                                                       266,377
                                                              -----------------


STOCKHOLDERS' (DEFICIT)
  Preferred Stock,  $.001 Par Value;  10,000,000 shares
     authorized and 5,000,000 shares issued
     and outstanding,                                                    5,000
  Common Stock, $.001 Par Value; 500,000,000
    shares authorized and 84,355,220 shares issued
    and outstanding.                                                    84,355
  Additional Paid-in Capital                                           244,745
  Deficit                                                             (814,267)
                                                              -----------------

      TOTAL STOCKHOLDERS' (DEFICIT)                                   (480,167)
                                                              -----------------

TOTAL LIABILITIES, TEMPORARY EQUITY AND
   STOCKHOLDERS' (DEFICIT)                                           $ 414,559
                                                              =================










                                        5
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE SIX AND THREE MONTHS ENDED MARCH 31, 2006 AND 2005
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                            SIX MONTHS ENDED                         THREE MONTHS ENDED
                                                     MARCH 31,             MARCH 31,            MARCH 31,            MARCH 31,
                                                       2006                  2005                 2006                 2005
                                                 -----------------     -----------------    -----------------    -----------------

<S>                                              <C>                   <C>                  <C>                  <C>
CONSULTING REVENUE                                $             -       $             -      $             -      $             -
                                                 -----------------     -----------------    -----------------    -----------------

OPERATING EXPENSES
   Professional Fees and Compensation Expenses                976                 1,520                   41                1,370
   Office and Administrative Expenses                      39,174                 8,172                3,259                7,760
    Bad debt                                              135,654                                    135,654
   Interest Expense                                        23,574                18,148               11,765                9,074
                                                 -----------------     -----------------    -----------------    -----------------

          TOTAL OPERATING EXPENSES                        199,378                27,840              150,719               18,204
                                                 -----------------     -----------------    -----------------    -----------------

(LOSS) BEFORE OTHER (EXPENSES)                           (199,378)              (27,840)            (150,719)             (18,204)

NET (LOSS) BEFORE PROVISION
  FOR INCOME TAXES                                       (199,378)              (27,840)            (150,719)             (18,204)
   Provision for Income Taxes                                   -                     -                    -                    -
                                                 -----------------     -----------------    -----------------    -----------------

NET (LOSS) APPLICABLE TO COMMON SHARES                  $(199,378)            $ (27,840)           $(150,719)           $ (18,204)
                                                 =================     =================    =================    =================

NET (LOSS) PER BASIC AND DILUTED SHARES                 $(0.00076)            $(0.00033)           $(0.00018)           $(0.00022)
                                                 =================     =================    =================    =================

WEIGHTED AVERAGE NUMBER OF
  COMMON SHARES OUTSTANDING                            84,355,220            84,355,220           84,355,220           84,355,220
                                                 =================     =================    =================    =================
</TABLE>















                                        6
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
     CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
                FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                    PREFERRED              COMMON               ADDITIONAL
                                                     STOCK                 STOCK                PAID-IN
                                                     SHARES     AMOUNT     SHARES     AMOUNT    CAPITAL      (DEFICIT)    TOTAL
                                                   ----------- -------- ------------ --------- ------------ ----------- -----------
<S>                                                <C>         <C>      <C>          <C>       <C>          <C>         <C>
Balance, September 30, 2004                         5,000,000   $5,000   84,355,220   $84,355   $  244,745   $(812,039)  $(481,384)
                                                   ----------- -------- ------------ --------- ------------ ----------- -----------

Net (loss) for the six months ended March 31, 2005          -        -            -         -            -     (27,840)    (27,840)
                                                   ----------- -------- ------------ --------- ------------ ----------- -----------

Balance, March 31, 2005                             5,000,000   $5,000   84,355,220   $84,355   $  244,745   $(839,879)  $(509,224)
                                                   =========== ======== ============ ========= ============ =========== ===========

Balance, September 30, 2005                         5,000,000   $5,000   84,355,220   $84,355   $  244,745   $(614,889)  $(280,789)
                                                   ----------- -------- ------------ --------- ------------ ----------- -----------

Net (loss) for the six months ended March 31, 2006          -        -            -         -            -   $(199,378)  $(199,378)
                                                   ----------- -------- ------------ --------- ------------ ----------- -----------

Balance, March 31, 2006                             5,000,000   $5,000   84,355,220   $84,355   $  244,745   $(814,267)  $(480,167)
                                                   =========== ======== ============ ========= ============ =========== ===========
</TABLE>




























                                        7
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN TEMPORARY EQUITY
                FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005
                                   (UNAUDITED)




<TABLE>
<CAPTION>
                                                                                  ADDITIONAL
                                                    COMMON STOCK                   PAID-IN
                                                       SHARES         AMOUNT       CAPITAL      (DEFICIT)      TOTAL
                                                   --------------  ------------  ------------  -----------  -----------
<S>                                                <C>             <C>           <C>           <C>          <C>
Balance, September 30, 2004                          383,594,468    $  383,594    $ (244,745)   $ 127,528    $ 266,377

Activity for the six months ended March 31, 2005               -             -             -            -            -
                                                   --------------  ------------  ------------  -----------  -----------

Balance, March 31, 2005                              383,594,468    $  383,594    $ (244,745)   $ 127,528    $ 266,377
                                                   ==============  ============  ============  ===========  ===========

Balance, September 30, 2005                          383,594,468    $  383,594    $ (244,745)   $ 127,528    $ 266,377

Activity for the six months ended March 31, 2006               -             -             -            -            -
                                                   --------------  ------------  ------------  -----------  -----------

Balance, March 31, 2006                              383,594,468    $  383,594    $ (244,745)   $ 127,528    $ 266,377
                                                   ==============  ============  ============  ===========  ===========
</TABLE>




























                                        8
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                FOR THE SIX MONTHS ENDED MARCH 31, 2006 AND 2005
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                    2006           2005
                                                                ------------   ------------
<S>                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
   Net loss                                                      $ (150,719)    $  (20,111)
                                                                ------------   ------------
   Adjustments  to  reconcile  net  (loss)  to net cash  provided  by (used  in)
   operating activities:

   Bad debt                                                         135,654

   CHANGES IN ASSETS AND LIABILITIES:
   Net proceeds from loans payable                                    4,000         2,000
   Increase in Accounts Payable and Accrued Expenses                 11,750        18,149
                                                                ------------   ------------
          TOTAL ADJUSTMENTS                                          15,750        20,149
                                                                ------------   ------------
          NET CASH PROVIDED BY(USED IN) OPERATING ACTIVITIES       (134,969)           38
                                                                ------------   ------------


NET INCREASE IN CASH AND
   CASH EQUIVALENTS                                              $      685     $       38

CASH AND CASH EQUIVALENTS
   BEGINNING OF PERIOD                                                1,374            739
                                                                ------------   ------------

CASH AND CASH EQUIVALENTS
   END OF PERIOD                                                 $    2,059     $      777
                                                                ============   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:

CASH PAID DURING THE YEAR FOR:
   Interest Expense                                              $        -     $        -
                                                                ============   ============
</TABLE>












                                        9
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                       MARCH 31, 2006 AND 2005 (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
         --------------------------------------

         The  condensed  consolidated  unaudited  interim  financial  statements
         included  herein have been  prepared,  without  audit,  pursuant to the
         rules and  regulations of the Securities and Exchange  Commission.  The
         condensed  consolidated financial statements and notes are presented as
         permitted on Form 10-QSB and do not contain information included in the
         Company's annual condensed consolidated unaudited statements and notes.
         Certain  information  and  footnote  disclosures  normally  included in
         condensed  consolidated  unaudited  financial  statements  prepared  in
         accordance with accounting  principles generally accepted in the United
         States of America have been condensed or omitted pursuant to such rules
         and regulations, although the Company believes that the disclosures are
         adequate  to make  the  information  presented  not  misleading.  It is
         suggested  that  these  condensed   consolidated   unaudited  financial
         statements be read in  conjunction  with the September 30, 2005 audited
         consolidated  financial  statements and the accompanying notes thereto.
         While  management  believes the procedures  followed in preparing these
         condensed  consolidated  unaudited financial statements are reasonable,
         the  accuracy of the amounts are in some  respects  dependent  upon the
         facts that will exist,  and procedures that will be accomplished by the
         Company later in the year.

         These condensed consolidated unaudited financial statements reflect all
         adjustments,  including  normal  recurring  adjustments  which,  in the
         opinion of  management,  are necessary to present  fairly the condensed
         consolidated  operations,  changes  in  permanent  stockholders  equity
         (deficit),  changes in temporary  equity and cash flows for the periods
         presented.

         Genesis Capital  Corporation of Nevada (the "Company") was incorporated
         in  the  State  of  Colorado  in  1983.  The  Company  has a  total  of
         500,000,000  authorized  common  shares  at March  31,  2006 and  2005,
         respectively,  (par value  $.001) with  467,949,688  shares  issued and
         outstanding  at March 31, 2006 and 2005,  respectively,  and 10,000,000
         shares  authorized  preferred stock (par value of $.001) with 5,000,000
         shares issued and outstanding as of March 31, 2006 and 2005.

         The Company may be in violation of Section 5 under the  Securities  and
         Exchange  Commission  Act as  amended.  The  Company  has  reclassified
         certain  common  shares issued to a temporary  equity  account from its
         permanent deficit (See Note 6).

         In December,  1997, the Company  merged with Lincoln Health Fund,  Inc.
         which is the  company  that  owned land in Tarrant  County,  Texas.  In
         March,  1999,  the Company  filed an Articles of Merger in the State of
         Nevada and to change the par value of its common stock.







                                       10
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)
         --------------------------------------------------

         The Company entered into a Stock Acquisition Agreement with Christopher
         Astrom,  Hudson Consulting  Group,  Inc. and Global Universal,  Inc. of
         Delaware dated August 30, 2001,  which closed on October 30, 2001. This
         Stock Acquisition Agreement enabled Senior Lifestyle Communities,  Inc.
         to  acquire  95% of the  issued  and  outstanding  shares of common and
         preferred stock of the Company for $315,000.  For accounting  purposes,
         the transaction has been accounted for as a reverse acquisition,  under
         the purchase method of accounting.

         In addition to the Stock Acquisition Agreement,  the Company and Senior
         Lifestyle Communities, Inc. entered into a Share Exchange Agreement and
         Plan of Reorganization.

         Upon these  agreements  with Senior  Lifestyle  Communities,  Inc., the
         Company on November 1, 2001 assumed by  assignment,  the  obligation of
         certain 8% Series SPA Senior Subordinated Convertible Debentures in the
         face amount of $1,000,000  received by assignment from Senior Lifestyle
         Communities, Inc. and Sea Lion Investors, LLC, Equity Planners LLC, and
         Myrtle  Holdings,  LLC  (collectively  "Purchasers"),  each a  Colorado
         limited  liability  company,  issue the Company's  debentures of Senior
         Lifestyle Communities, Inc.

         Senior Lifestyle  Communities,  Inc. is a Nevada Corporation engaged in
         the  development of senior adult  residences,  incorporated  in August,
         2001. In addition to Senior  Lifestyle  Communities,  Inc., the Company
         has Senior Adult Lifestyles,  Inc. a wholly-owned  subsidiary effective
         October 30, 2001.

         As  additional  consideration  for  the  conveyance  to  Senior  of the
         Connecticut  Properties,  the  Company  agreed  to  issue  to  National
         Residential Properties,  Inc., a related company with common ownership,
         20,000,000  shares of the Company`s  common stock ("Shares") based on a
         value of $0.10 per share  (determined  on the basis of the  average bid
         price of the Company`s common stock during the week  immediately  prior
         to  the  effective   date  of  October  31,  2001)  towards  an  agreed
         consideration  of  $2,000,000  for a land  deposit.  In  addition,  the
         Company  agreed that on the earlier of (a) the  expiration of three (3)
         years  from the date of the  conveyance  if the  value on that date was
         below  $2,000,000,  or  (b)  at  the  time  that  National  Residential
         Properties,  Inc.  has  sold  all of the  shares,  if the  gross  sales
         proceeds  realized by National  Residential  Properties,  Inc. from the
         sale of the shares is less than $2,000,000, the Company was required to
         issue to National Residential  Properties,  Inc. such additional shares
         of common  stock in an amount  based on the closing bid price as quoted
         on the OTC Bulletin Board on the day before the date of such additional
         share issuance as to make up the difference between said value or gross
         sales proceeds and $2,000,000. The Company issued the 20,000,000 shares
         on February 1, 2002 and an  additional  5,230,000 on February 12, 2002.
         The value of the common stock  February 1, 2002 was  $180,000  ($.009).
         The agreement for additional  consideration  subsequently defaulted and
         was rescinded.

                                       11
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

         PRINCIPLES OF CONSOLIDATION

         The condensed consolidated financial statements include the accounts of
         the Company and all of its wholly-owned  subsidiaries.  All significant
         intercompany   accounts  and  transactions   have  been  eliminated  in
         consolidation.

         USE OF ESTIMATES

         The  preparation  of condensed  consolidated  financial  statements  in
         conformity with accounting  principles generally accepted in the United
         States of America requires management to make estimates and assumptions
         that  affect  the  reported  amounts  of  assets  and  liabilities  and
         disclosures  of contingent  assets and  liabilities  at the date of the
         financial  statements and the reported amounts of revenues and expenses
         during the  reporting  period.  Actual  results could differ from those
         estimates.

         REVENUE AND COST RECOGNITION

         The Company's condensed  consolidated financial statements are prepared
         using the accrual method of accounting.  Under this method,  revenue is
         recognized when earned and expenses are recognized  when incurred.  The
         Company performed  consulting services and earned $0 for the six months
         ended March 31, 2006.

         CASH AND CASH EQUIVALENTS

         The Company  considers  all highly  liquid debt  instruments  and other
         short-term investments with an initial maturity of three months or less
         to be cash equivalents.

         INCOME TAXES

         The  Company  has  adopted  the  provisions  of  Financial   Accounting
         Standards  Board  Statement No. 109,  Accounting for Income Taxes.  The
         Company  accounts for income taxes  pursuant to the  provisions  of the
         Financial  Accounting Standards Board Statement No. 109, Accounting for
         Income  Taxes,  which  requires  an asset  and  liability  approach  to
         calculating  deferred  income taxes.  The asset and liability  approach
         requires the recognition of deferred tax liabilities and assets for the
         expected future tax consequences of temporary  differences  between the
         carrying amounts and the tax basis of assets and liabilities.








                                       12
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         FAIR VALUE OF FINANCIAL INSTRUMENTS

         The carrying  amount  reported in the  condensed  consolidated  balance
         sheet  for cash and cash  equivalents,  accounts  payable  and  accrued
         expenses  approximate fair value because of the immediate or short-term
         maturity of these condensed consolidated financial instruments.

         EARNINGS (LOSS) PER SHARE OF COMMON STOCK

         Historical  net income per common share is computed  using the weighted
         average number of common shares outstanding. Diluted earnings per share
         (EPS) includes additional dilution from common stock equivalents,  such
         as  stock  issuable  pursuant  to the  exercise  of stock  options  and
         warrants. Common stock equivalents were not included in the computation
         of diluted  earnings per share when the Company reported a loss because
         to do so would be antidilutive for periods  presented.  The Company has
         used the issued and weighted  average shares  reported in the permanent
         stockholders' schedule (See Note 6).


         EARNINGS (LOSS) PER SHARE OF COMMON STOCK (CONTINUED)

         The  following is a  reconciliation  of the  computation  for basic and
         diluted EPS:

                                                   2006              2005
                                              --------------    --------------

Net (Loss)                                     $   (199,388)     $    (27,840)
                                              --------------    --------------

Weighted-average common shares outstanding       84,355,220        84,355,220
(Basic)

Weighted-average common stock equivalents:
  Stock Options
  Warrants                                                -                 -
                                              --------------    --------------

Weighted-average common shares outstanding
(Diluted)                                        84,355,220        84,355,220
                                              ==============    ==============









                                       13
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         RECENT ACCOUNTING PRONOUNCEMENTS

         In January 2003, the FASB issued  Interpretation No. 46, "Consolidation
         of Variable Interest Entities, an interpretation of Accounting Research
         Bulletin No. 51", ("FIN 46"). FIN 46 requires certain variable interest
         entities to be consolidated by the primary beneficiary of the entity if
         the   other   equity   investors   in  the   equity  do  not  have  the
         characteristics  of a  controlling  financial  interest  or do not have
         sufficient  equity at risk for the  entity to  finance  its  activities
         without additional  subordinated  financial support from other parties.
         The disclosure and  consolidation  requirements  of FIN 46 for variable
         interest  entities  created or acquired  subsequent to January 31, 2003
         became  effective  for  financial  statements  issued  by  the  Company
         beginning in the second quarter of fiscal 2003.  For variable  interest
         entities   created  or  acquired   prior  to  February  1,  2003,   the
         consolidation  requirements of FIN 46 became  effective for the Company
         in the first  quarter of fiscal 2004. In December  2003,  FASB issued a
         revised  interpretation of FIN 46 ("FIN 46-R"), which supersedes FIN 46
         and  clarifies  and expands  current  accounting  guidance for variable
         interest entities. The Company adopted the new requirements of FIN 46-R
         as of March 31, 2004.  The adoption of FIN 46 and FIN 46-R did not have
         a material effect on the Company's  condensed  consolidated  results of
         operations, financial position or cash flows.

         In May 2003,  the FASB  issued SFAS No.  150,  "Accounting  for certain
         Financial  Instruments  with  Characteristics  of both  Liabilities and
         Equity" ("SFAS No. 150").

         SFAS No. 150 requires that certain financial  instruments issued in the
         form of shares that are mandatorily redeemable as well as certain other
         financial  instruments  be classified as  liabilities  in the financial
         statements. SFAS No. 150 is effective for financial instruments entered
         into or modified  after May 31, 2003.  The adoption of SFAS No. 150 did
         not have a material effect on the Company's reported financial results.

















                                       14
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
         ------------------------------------------------------

         RECLASSIFICATIONS

         Certain  amounts  for the six  months  ended  March 31,  2005 have been
         reclassified  to conform  with the  presentation  of the March 31, 2006
         amounts. The reclassifications have no effect on the net income for the
         six months ended March 31, 2006 and 2005.

NOTE 3 - ACCOUNTS RECEIVABLE
         -------------------

         The Company entered into an agreement with Wahoo Funding LLC, a Florida
         limited  liability  company  that is owned by common  owners on July 1,
         2004.

         During  the  term of this  Agreement,  Genesis  shall  render  to Wahoo
         Funding,  LLC through  such of Genesis'  officers,  employees,  agents,
         representatives  and  affiliates  as Genesis,  in its sole  discretion,
         shall  designate  from  time to time,  advisory,  consulting  and other
         services (the  "Oversight  Services") in relation to the  operations of
         the Company,  strategic planning,  domestic and international marketing
         and financial oversight and including, without limitation, advisory and
         consulting  services  in  relation  to  the  selection,  retention  and
         supervision  of  independent  auditors,  the  selection,  retention and
         supervision  of outside legal  counsel,  the  selection,  retention and
         supervision  of  investment  bankers  or other  financial  advisors  or
         consultants   and  the  structuring   and   implementation   of  equity
         participation  plans,   employee  benefit  plans  and  other  incentive
         arrangements for certain key executives of the Company.

         The  Company  earned $ -0- for the six months  ended March 31, 2006 and
         collected $287,500 through the date of this report. The agreement shall
         be in effect  until  August 31, 2006 unless  mutually  terminated.  The
         Company's  management has determined  that there should be no allowance
         for doubtful collections.

         Interest  expense on loans  receivable to related parties is $5,411 for
         the six months ended March 31, 2006.

NOTE 4 - LOANS PAYABLE - OFFICERS
         ------------------------

         This represents  amounts advanced to the company by the officers of the
         Company.  These  amounts have no specific  payment terms and are due on
         demand.  No interest  has been  recorded on these  amounts,  due to the
         relative short-term repayments on them.







                                       15
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)


NOTE 5 - DEBENTURES PAYABLE
         ------------------

         The Company has  outstanding  convertible  debentures at March 31, 2006
         and 2005 in the amount of $453,720.  The debentures are  convertible at
         the  investors'   discretion  pursuant  to  the  convertible  debenture
         agreement.  These  debentures  were to mature  along  with the  related
         interest on November 1, 2003, and are in default (See Note 6).

         Interest  expense  and  accrued on these  debentures  were  $18,149 and
         $18,148 for the six months ended March 31, 2006 and 2005, respectively.

         The interest rate is approximately 8% per annum.


NOTE 6 - TEMPORARY EQUITY
         ----------------

         The Company has  recorded  on its balance  sheet as a temporary  equity
         account for those securities  issued that may not be in compliance with
         the registration provisions of Section 5 of the Securities Act of 1933,
         as amended  and for shares  issued in  conversion  with the  debentures
         payable  that the  Company  relied  upon Rule 504 of  Regulation  D and
         Section 3 (a)(a) which may not be available to the Company.

         Temporary equity at March 31, 2006 and 2005 was $266,377. Substantially
         all the shares issued in connection  with the  conversion of debentures
         have  been  reclassified  as  temporary  equity.  The  Company  has not
         recorded  any  additional  liabilities  associated  with  the  possible
         violations.

NOTE 7 - STOCKHOLDERS' (DEFICIT)
         -----------------------

         COMMON AND PREFERRED STOCK

         In October 2001, the Company  completed the  recapitalization  whereby,
         the Company had authorized two classes of stock; preferred stock with a
         par value of $.001 and 10,000,000 shares  authorized,  and common stock
         with a par value of $.001, and 500,000,000 shares authorized.


         As of March 31, 2006, the Company had issued 5,000,000 of its preferred
         stock.

         The Company had also issued as of March 31, 2006 and 2005,  467,949,688
         of  its  common  shares,   of  which   383,594,468   shares  have  been
         reclassified to temporary equity (See Note 6).

         There have been no  issuances  of preferred or common stock for the six
         months ended March 31, 2006.



                                       16
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)

NOTE 7 - STOCKHOLDERS' (DEFICIT) (CONTINUED)
         -----------------------------------

         OPTIONS AND WARRANTS

         The Company had no options or warrants outstanding at March 31, 2006.

NOTE 8 - GOING CONCERN
         -------------

         The Company has incurred a deficit at March 31, 2006 of $814,267.

         There is no  guarantee  whether  the  Company  will be able to generate
         enough revenue and/or raise capital to support those  operations.  This
         raises  substantial  doubt about the Company's ability to continue as a
         going concern.

         Management  states that they are  confident  that they can initiate new
         operations and raise the  appropriate  funds to continue in its pursuit
         of a reverse merger or similar transaction.

         The Company may have  violated  certain  provisions of Section 5 of the
         Securities  Act of 1933 (See Notes 6 and 10). The Company  reclassified
         $266,377 into temporary equity from permanent equity. The Company plans
         to resolve this issue.

         The  condensed  consolidated  financial  statements  do not include any
         adjustments that might result from the outcome of these uncertainties.

NOTE 9 - INCOME TAXES
         ------------

         The net deferred tax assets in the accompanying  condensed consolidated
         balance sheet includes the following components at March 31, 2006:

                                                                      2006
                                                                ---------------

         Deferred tax assets                                     $     244,280
         Deferred tax valuation allowance                             (244,280)
                                                                ---------------

         Net deferred tax assets                                 $           -
                                                                ===============


         Due to the  uncertainty  of utilizing the  approximate  $814,267 in net
         operating  losses at March 31, 2006, and  recognizing  the deferred tax
         assets, an offsetting valuation allowance has been established.






                                       17
<PAGE>
                      GENESIS CAPITAL CORPORATION OF NEVADA
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                       MARCH 31, 2006 AND 2005 (UNAUDITED)

NOTE 10 - CONTINGENCY/UNCERTAINTY
          -----------------------

         The Company during the year ended  September 30, 2002 became aware that
         some  or  all  of  the  stock  issuances   relating  to  the  debenture
         conversions may have not been in compliance without compliance with the
         registration  provisions of Section 5 of the  Securities Act of 1933 as
         amended.  The full impact of this is unknown at this time. As a result,
         the Company has  reclassified  $266,377 to temporary equity as of March
         31, 2006 and 2005.  This account acts as a reserve for capital that the
         Company may be required to pay.

         Additionally,  the Company has not renewed the  corporate  charters for
         Senior Lifestyle  Communities,  Inc. and Senior Adult Lifestyles,  Inc.
         The Company has transferred all assets and liabilities  associated with
         these companies into the parent Genesis Capital Corporation of Nevada.

         The company recorded an allowance for doubtful  accounts of $135,654 in
         March 31, 2006 for related receivables that may not be collectible.

NOTE 11 - PRIOR PERIOD ADJUSTMENT AND RESTATEMENT

         There were no adjustments effecting the six months ended March 31, 2006
         and 2005.  The  Company  restated  its  September  30,  2002  financial
         statements  to  correct  the  amortization  expense of loan fees and to
         reclassify the activity  associated  with the debenture  conversions to
         temporary  equity.  The effect of this change was to  increase  the net
         (loss) and (deficit) in 2002 by $127,528.

         Accordingly,  the  deficit is  restated  as it was  carried  through to
         reflect the restated beginning balance at October 1, 2002.

NOTE 12 - RELATED PARTY RECEIVABLES

         The Company has advanced  certain related  companies funds that are due
         on demand with 8% interest accruing beginning on October 1, 2005.



















                                       18
<PAGE>
Item 2.  Management's Discussion and Analysis or Plan of Operation.

THE  FOLLOWING  DISCUSSION  SHOULD  BE READ IN  CONJUNCTION  WITH THE  COMPANY'S
FINANCIAL  STATEMENTS  AND THE NOTES TO THOSE  STATEMENTS  AND  OTHER  FINANCIAL
INFORMATION APPEARING ELSEWHERE IN THIS REPORT.

                                     History

The Company was formed as a Colorado  corporation  on September 19, 1983,  under
the name Bugs,  Inc.,  for the  purpose  of using  microbial  and other  agents,
including  metallurgy,  to  enhance  oil  and  natural  gas  production  and  to
facilitate the recovery of certain metals.  Its initial  capitalization  was 100
million  shares of $.001 par value  common  stock.  In July  1989,  the  Company
approved Articles of Amendment  changing its name to Genesis  Services,  Inc. In
September 1990, the Company approved  additional  Articles of Amendment changing
its name to Genesis Capital Corporation  (sometimes referred to as the "Colorado
Corporation").  In July 1993, the Company decreased its authorized  capital from
100 million  shares of $.001 par value common stock to 10 million shares of $.01
par value common  stock.  At that same time,  the Company  created a class of 10
million shares of no par value preferred stock.

Since 1994, the activities of the Company have been limited, because it sold its
wholly owned subsidiary,  U.S. Staffing, Inc., during the 199495 fiscal year. In
January  1996 after its sale,  U.S.  Staffing,  Inc.  filed for  bankruptcy  and
restrained the Colorado  Corporation  from  collecting  its note  receivable and
claimed to own stock in the Colorado Corporation through its U.S. Benefit Trust.
The Company itself has never declared bankruptcy. In December 1997, the Colorado
Corporation's  shareholders  voted  unanimously  to settle this claim by issuing
4,500,000  shares  of  its  common  stock,  restricted  under  Rule  144  of the
Securities Act of 1933, to be held in trust for U.S. Benefit Trust (these shares
were eventually  reduced to 113 shares due to a 1:20 reverse stock split in 1997
and a 1:2000  reverse stock split in 1999 and were  disposed of by U.S.  Benefit
Trust sometime  after 1999).  Also at this time, the Company merged with Lincoln
Health Fund, Inc. (which owned land in Tarrant County,  Texas,  which it planned
to use in building a retirement  center),  increased its  authorized  capital to
50,000,000 shares of common stock, and authorized a postmerger  reverse split of
its common  stock on a 1:20  basis.  Since  1999,  the  Company  has had minimal
activity. The Company is a shell corporation seeking a business to acquire.

On December 22, 1998, Genesis Capital  Corporation of Nevada (sometimes referred
to as the "Nevada  Corporation")  was  incorporated in Nevada for the purpose of
merging with the Colorado Corporation so as to effect a redomicile to Nevada and
a reverse  split of the  Company's  common  stock.  The Nevada  Corporation  was
authorized  to issue  50,000,000  shares  of $.001 par  value  common  stock and
10,000,000  shares of $.001 par value preferred  stock. As part of the Company's
plan to seek an acquisition  candidate,  on January 11, 1999, the Company paid a
total of 600,000 shares of preferred stock to 5 persons,  Ronald Welborn,  Henry
Simon, David Newren, Richard Surber, and AZ Professional Consultants,  Inc., for
consulting services related to the redomicile and reverse split of the Company's
stock.  All 600,000 shares were returned to the Company and cancelled in October
2001.

On March 9, 1999,  both the  Colorado  Corporation  and the  Nevada  Corporation
signed  Articles  of  Merger by which the  Colorado  Corporation's  shareholders
received  one share of new  (Nevada)  common stock for every 2,000 shares of old
(Colorado)  common stock they owned. The  shareholders of both  corporations had
previously approved this proposal on due notice, and all


                                       19
<PAGE>
outstanding shares of the Colorado  Corporation's common stock were purchased by
the new Nevada Corporation,  effectively  merging the Colorado  Corporation into
the Nevada  Corporation,  reverse  splitting the Company's stock, and making the
Nevada  Corporation the surviving entity.  Holders of preferred stock in the old
Colorado Corporation received preferred stock in the new Nevada Corporation on a
1:1 basis. In March 1999, the Company  entered into  Consulting  Agreements with
Hudson Consulting  Group,  Inc. and Global Universal,  Inc. to obtain additional
assistance in finding and completing an acquisition.

Later in March 1999, the Company began  discussions about acquiring Motor Sports
on Dirt, Inc. ("Motor  Sports"),  which claimed to own NASCAR  racetracks in the
South. The parties reached a preliminary  agreement on the terms of acquisition,
in anticipation  of which,  on March 25, the Company  authorized an offering for
10,000,000  shares of common  stock under Rule 504 of  Regulation  D. The shares
were  offered  at Ten  Cents  ($.10)  per  share to rise up to but not more than
$1,000,000,  and a Form D to that  effect  was  filed  with the SEC on March 26,
1999.  Proceeds were to be used to pay expenses  related to the  acquisition  of
Motor Sports and to pay off the Company's  debts.  By April 6, 1999, the Company
had sold  4,100,000  shares to five  investors.  215,000  shares were sold for a
$100,000 check  delivered  before April 6, 1999 (this check was to buy 1,000,000
shares;  it was later  dishonored,  but not before the purchaser  absconded with
215,000 shares the Company canceled the remaining  785,000 shares and considered
legal action which it did not pursue as it could not afford to do so). 3,885,000
shares were paid toward debts owed to  consultants,  Arce  International,  Inc.,
Hudson  Consulting  Group,  Inc.,  Chartwell   Investments,   Inc.,  and  Global
Universal,  Inc.,  incurred  for  services  rendered  before  April  6,  1999 by
introducing  Motor  Sports  to the  Company  and  handling  various  accounting,
corporate cleanup, and compliance issues.

On April 6, 1999, the Company signed an Acquisition  Agreement with Motor Sports
which would have effected the Company's  acquisition of Motor Sports.  According
to the  Acquisition  Agreement,  a total of  11,790,000  shares of the Company's
common  stock were to be issued to Motor  Sports  shareholders.  However,  Motor
Sports and/or its financial  backers did not perform  certain  conditions of the
Acquisition Agreement,  which led to extensive negotiations between the parties.
These negotiations yielded an Addendum #1 to the Acquisition Agreement dated May
10, 1999 a Debt  Settlement  Agreement  dated June 11, 1999 (relating to matters
raised in the Acquisition Agreement),  and a Settlement Agreement dated July 19,
1999 (which the parties intended to resolve all outstanding issues). As a result
of these negotiations and agreements,  the contemplated merger with Motor Sports
was finally canceled on or about September 28, 1999. As a result of the canceled
merger, all 11,790,000 shares of common stock, as well as all but 502,360 shares
of the stock issued under Rule 504, were canceled on September 28, 1999.

Also on September  28, 1999,  the Company  issued  250,000  shares of its common
stock, restricted under Rule 144, to Donald Walker as a settlement of all claims
under the  Settlement  Agreement  dated July 19, 1999;  550,000 shares of common
stock,  restricted under Rule 144 to Global Universal for new services  relating
to new acquisition opportunities; and 532,640 shares of common stock, restricted
under Rule 144, to Hudson Consulting Group, Inc. for new assistance in preparing
the  documents  necessary  to become a reporting  company  under the  Securities
Exchange  Act of  1934  as  well  as  assistance  relating  to  new  acquisition
opportunities.

On August 30,  2001,  the Company  entered  into a Stock  Acquisition  Agreement
("Acquisition  Agreement") with Christopher  Astrom;  Hudson  Consulting  Group,
Inc.; and Global Universal, Inc, of Delaware pursuant to which Mr. Astrom was


                                       20
<PAGE>
granted the right to purchase 54,110,309 shares of common stock and 1,477,345
shares of preferred stock. Under the Acquisition Agreement, Mr. Astrom was to
pay $ 315,000.00 to the Company for the common and preferred stock and tender to
the Company all of the issued and outstanding common stock of Senior Lifestyle
Communities, Inc. ("Communities"). The Acquisition Agreement closed October 30,
2001. At the time of Closing, the purchased shares represented 95% of the issued
and outstanding common and preferred stock of the Company.

On October 30, 2001,  the Company  entered into a Share  Exchange  Agreement and
Plan of Reorganization  ("Exchange  Agreement") with Mr. Astrom and Communities,
the  purpose of which was to  accommodate  the  financing  by Mr.  Astrom of his
obligations under the Acquisition Agreement.  To provide the financing on behalf
of  Mr.  Astrom,  Communities  issued  its 8%  Series  SPA  Senior  Subordinated
Convertible  Debentures  in the initial  amount of $ 360,000 to a  nonaffiliated
private source of financing.  At the close of the Acquisition  Agreement and the
Exchange Agreement, Communities became a wholly owned subsidiary of the Company.
Communities owns all of the issued and outstanding  common stock of Senior Adult
Lifestyle, Inc. ("Senior").

Pursuant to an Agreement  executed on December 26,  2001,  made  effective as of
October 31, 2001 and a  Statutory  Warranty  Deed dated  October 30,  2001,  the
Registrant,  through  Senior,  acquired  from National  Residential  Properties,
Inc.("National")  all of the right,  title and  interest  of  National  in (i) a
certain parcel of real property in Hebron, Connecticut;  and (ii) four contracts
to purchase certain parcels of real property in Watertown,  New Milford,  Granby
and East Windsor,  Connecticut. The Hebron property was subject to two mortgages
having an aggregate  principal  balance of $ 315,000.00,  which mortgages Senior
assumed  and  agreed  to pay as part of the  consideration  for the  conveyance.
National and the Company have the same officers and directors and,  accordingly,
they may be deemed "affiliates".

In May 2001,  prior to the conveyance of the Connecticut  Properties,  National,
through its then wholly owned subsidiary,  Connecticut  Acquisitions  Corp. No.1
("Acquisition  Corp.") entered into a joint venture with Nathan Kahn and various
companies controlled by Mr. Kahn ("Kahn Entities") to develop the portion of the
Connecticut  Properties  ("Land  Development   Agreement')  located  in  Hebron,
Connecticut  ("Hebron  Parcel").  The  Land  Development  Agreement  called  for
Acquisition  Corp. to fund the initial costs of acquisition and development and,
after the  deduction of expenses from gross  revenues,  profits would be divided
50% to Acquisition Corp. and 50% to the Kahn Entities. On May 8, 2001, following
the  acquisition  of the  Hebron  Parcel,  Acquisition  Corp.  was  merged  into
National. As a consequence of the conveyance of the Hebron Parcel by National to
Senior as part of the Connecticut Properties,  Senior assumed the obligations of
National under the Land Development Agreement.

As additional  consideration  for the  conveyance  to Senior of the  Connecticut
Properties,  the  Company  agreed to issue to National  Residential  Properties,
Inc.,  a  related  company  with  common  ownership,  20,000,000  shares  of the
Company's  common  stock  ("Shares")  based  on  a  value  of  $0.10  per  share
(determined on the basis of the average bid price of the Company's  common stock
during the week  immediately  prior to the  effective  date of October 31, 2001)
towards an agreed  consideration of $2,000,000 for a land deposit.  In addition,
the Company  agreed that on the earlier of (a) the expiration of three (3) years
from the date of the conveyance if the value on that date was below  $2,000,000,
or (b) at the time that National  Residential  Properties,  Inc. has sold all of
the  Shares,  if the gross  sales  proceeds  realized  by  National  Residential
Properties,  Inc.  from the sale of the  Shares  is less  than  $2,000,000,  the
Company was required to issue to National Residential Properties, Inc. such

                                       21
<PAGE>
additional shares of common stock in an amount based on the closing bid price as
quoted on the OTC Bulletin  Board on the day before the date of such  additional
share  issuance as to make up the  difference  between said value or gross sales
proceeds and $2,000,000. The Company issued the 20,000,000 shares on February 1,
2002 and an additional  5,230,000 on February 12, 2002.  The value of the common
stock  February 1, 2002 was  $180,000  ($.009).  The  agreement  for  additional
consideration subsequently defaulted and was rescinded.

In March,  2002, the Company sold its interest in the Connecticut  Properties to
Nathan Kahn and CT Adult Condominiums, LLC for $630,216.

In June  2002,  the  Company  issued  3,522,655  shares of Series A  Convertible
Preferred Stock to Christopher Astrom and designated the entire 5,000,000 shares
of Preferred  Stock then owned by Mr. Astrom as Series A  Convertible  Preferred
Stock.

On July 1, 2004,  the Company  entered into a two (2) year  agreement with Wahoo
Funding  LLC, an  affiliated  Florida  limited  liability  company,  whereby the
Company shall render to Wahoo certain financial and business consulting services
in exchange for a total of $750,000.

Except for the foregoing contract with Wahoo, the Company has not engaged in any
operations and has been virtually dormant for several years.

Additionally,  the Company has not renewed  the  corporate  charters  for Senior
Lifestyle  Communities,  Inc. and Senior Adult Lifestyles,  Inc. The Company has
transferred all assets and liabilities  associated with these companies into the
parent Genesis Capital Corporation of Nevada.

On  January  19,  2006,  the  Company  filed an  amendment  to the  registration
statement filed on Form 10SB. Upon effectiveness of this registration statement,
the Company  will resume the filing of reporting  documentation  in an effort to
maximize  shareholder  value. The best use and primary attraction of the Company
as a merger  partner or  acquisition  vehicle  will be its status as a reporting
public company.  Any business  combination or transaction may potentially result
in a  significant  issuance  of  shares  and  substantial  dilution  to  present
stockholders of the Company.

General Business Plan


The  Company  is a shell  company in that it has no or  nominal  operations  and
either no or nominal  assets.  At this time,  the Company's  purpose is to seek,
investigate and, if such investigation warrants, acquire an interest in business
opportunities  presented  to it by persons or firms who or which  desire to seek
the perceived advantages of an Exchange Act registered corporation.  The Company
will not restrict its search to any specific business, industry, or geographical
location and the Company may participate in a business  venture of virtually any
kind or nature. This discussion of the proposed business is purposefully general
and  is  not  meant  to be  restrictive  of the  Company's  virtually  unlimited
discretion  to  search  for and enter  into  potential  business  opportunities.
Management  anticipates that it may be able to participate in only one potential
business  venture  because the Company has nominal assets and limited  financial
resources.  This lack of diversification should be considered a substantial risk
to  shareholders of the Company because it will not permit the Company to offset
potential losses from one venture against gains from another.


The Company may seek a business  opportunity  with entities  which have recently
commenced  operations,  or which wish to utilize the public marketplace in order
to raise additional capital in order to expand into new products or markets, to

                                       22
<PAGE>
develop a new product or service, or for other corporate  purposes.  The Company
may acquire assets and establish wholly owned subsidiaries in various businesses
or acquire existing businesses as subsidiaries.

The Company intends to advertise and promote the Company privately.  The Company
has not yet prepared any notices or advertisement.  The Company anticipates that
the selection of a business  opportunity in which to participate will be complex
and extremely  risky. Due to general economic  conditions,  rapid  technological
advances  being made in some  industries  and  shortages of  available  capital,
management believes that there are numerous firms seeking the perceived benefits
of a publicly  registered  corporation.  Such  perceived  benefits  may  include
facilitating or improving the terms on which additional  equity financing may be
sought,  providing  liquidity for incentive stock options or similar benefits to
key  employees,  providing  liquidity  (subject to  restrictions  of  applicable
statutes),  for all  shareholders  and  other  factors.  Potentially,  available
business  opportunities  may occur in many  different  industries and at various
stages  of  development,  all  of  which  will  make  the  task  of  comparative
investigation and analysis of such business  opportunities  extremely  difficult
and complex.

The Company has, and will  continue to have,  little or no capital with which to
provide the owners of business  opportunities with any significant cash or other
assets. However, management believes the Company will be able to offer owners of
acquisition  candidates  the  opportunity  to  acquire a  controlling  ownership
interest in a publicly  registered  company without  incurring the cost and time
required  to conduct  an initial  public  offering.  The owners of the  business
opportunities  will,  however,  incur  significant legal and accounting costs in
connection with  acquisition of a business  opportunity,  including the costs of
preparing  Form 8K's,  10K's or  10KSB's,  agreements  and  related  reports and
documents.  The  Securities  Exchange  Act of 1934 (the "34 Act"),  specifically
requires that any merger or  acquisition  candidate  comply with all  applicable
reporting requirements,  which include providing audited financial statements to
be included within the numerous  filings  relevant to complying with the 34 Act.
Nevertheless,  the  officers and  directors  of the Company  have not  conducted
market  research and are not aware of  statistical  data which would support the
perceived  benefits of a merger or acquisition  transaction  for the owners of a
business opportunity.

The analysis of new business  opportunities  will be undertaken by, or under the
supervision of, the officers and directors of the Company. Management intends to
concentrate on identifying preliminary prospective business opportunities, which
may be brought to its attention  through  present  associations of the Company's
officers  and  directors.   In  analyzing  prospective  business  opportunities,
management will consider such matters as the available technical,  financial and
managerial resources; working capital and other financial requirements;  history
of operations,  if any; prospects for the future; nature of present and expected
competition;  the quality and  experience  of management  services  which may be
available and the depth of that management;  the potential for further research,
development, or exploration; specific risk factors not now foreseeable but which
then may be  anticipated to impact the proposed  activities of the Company;  the
potential  for growth or  expansion;  the  potential  for profit;  the perceived
public  recognition  of  acceptance  of  products,  services,  or  trades;  name
identification;  and other  relevant  factors.  Officers  and  directors  of the
Company do expect to meet  personally  with  management and key personnel of the
business opportunity as part of their investigation. To the extent possible, the
Company  intends to utilize written  reports and  investigation  to evaluate the
above factors.  The Company will not acquire or merge with any company for which
audited financial statements cannot be obtained within a reasonable period of

                                       23
<PAGE>
time after closing of the proposed transaction.

The  Officers of the  Company  have  limited  experience  in managing  companies
similar to the Company and shall rely upon their own efforts,  in  accomplishing
the business purposes of the Company.  The Company may from time to time utilize
outside  consultants or advisors to effectuate its business  purposes  described
herein.  No policies  have been adopted  regarding  use of such  consultants  or
advisors, the criteria to be used in selecting such consultants or advisors, the
services to be provided,  the term of service,  or regarding the total amount of
fees that may be paid. However, because of the limited resources of the Company,
it is likely that any such fee the Company  agrees to pay would be paid in stock
and not in cash.

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

It  is  anticipated  that  the  Company  will  incur  nominal  expenses  in  the
implementation  of its business plan described  herein.  The Company has limited
capital with which to pay these anticipated expenses.

Acquisition of Opportunities

In implementing a structure for a particular business  acquisition,  the Company
may become a party to a merger, consolidation, reorganization, joint venture, or
licensing  agreement  with another  corporation  or entity.  It may also acquire
stock or assets of an existing  business.  On the consummation of a transaction,
it is probable that the present  management and shareholders of the Company will
no longer be in control of the Company.  In addition,  the  Company's  directors
may, as part of the terms of the acquisition transaction, resign and be replaced
by new directors without a vote of the Company's  shareholders or may sell their
stock in the  Company.  Any and all such sales  will only be made in  compliance
with the securities laws of the United States and any applicable state.

It is anticipated that any securities issued in any such reorganization would be
issued in reliance upon exemption from registration under applicable federal and
state securities laws. In some  circumstances,  however, as a negotiated element
of its  transaction,  the Company  may agree to  register  all or a part of such
securities  immediately  after the  transaction  is  consummated or at specified
times  thereafter.  If  such  registration  occurs,  of  which  there  can be no
assurance,  it will be undertaken by the surviving  entity after the Company has
successfully consummated a merger or acquisition.

As part of the  Company's  investigation,  officers and directors of the Company
may personally  meet with  management  and key personnel,  may visit and inspect
material  facilities,  obtain analysis and  verification of certain  information
provided,  check  references of  management  and key  personnel,  and take other
reasonable  investigative  measures,  to the  extent  of the  Company's  limited
financial  resources and management  expertise.  The manner in which the Company
participates in an opportunity will depend on the nature of the opportunity, the
respective needs and desires of the Company and other parties, the management of

                                       24
<PAGE>
the opportunity and the relative negotiation strength of the Company and such
other management.

With  respect to any merger or  acquisition,  negotiations  with target  company
management  are  expected to focus on the  percentage  of the Company  which the
target  company  shareholders  would  acquire  in  exchange  for  all  of  their
shareholdings  in the target company.  Depending upon,  among other things,  the
target company's assets and liabilities,  the Company's shareholders will in all
likelihood  hold a substantially  lesser  percentage  ownership  interest in the
Company  following any merger or  acquisition.  The percentage  ownership may be
subject to  significant  reduction  in the event the  Company  acquires a target
company  with  substantial  assets.  Any merger or  acquisition  effected by the
Company can be expected to have a significant  dilutive effect on the percentage
of shares held by the Company's then shareholders.

The  Company  will  participate  in  a  business   opportunity  only  after  the
negotiation and execution of appropriate written agreements.  Although the terms
of such agreements  cannot be predicted,  generally such agreements will require
some specific representations and warranties by all of the parties thereto, will
specify  certain  events of  default,  will  detail the terms of closing and the
conditions  which must be  satisfied  by each of the parties  prior to and after
such  closing,  will  outline  the  manner of  bearing  costs,  including  costs
associated with the Company's attorneys and accountants, will set forth remedies
on default and will include miscellaneous other terms.

The Company does not intend to provide the Company's  security  holders with any
complete   disclosure   documents,   including  audited  financial   statements,
concerning an  acquisition  or merger  candidate  and its business  prior to the
consummation of any acquisition or merger transaction.

COMPETITION

The  Company  will  remain an  insignificant  participant  among the firms which
engage in the acquisition of business opportunities.  There are many established
venture  capital  and  financial  concerns  which  have  significantly   greater
financial and personnel  resources and technical  expertise than the Company. In
view of the Company's combined extremely limited financial resources and limited
management  availability,  the  Company  will  continue  to be at a  significant
competitive disadvantage compared to the Company's competitors

EMPLOYEES

The Company  currently  has no  employees.  The  business of the Company will be
managed by its officer and directors,  who may become  employees of the Company.
The Company does not anticipate a need to engage any fulltime  employees at this
time.  The need for  employees  and  their  availability  will be  addressed  in
connection with the proposed development of the Company's real property.

REPORTING

From 1999  through  February  2002,  the  Company was an SEC  reporting  company
obligated to file reports under Section 13 and 15(d) of the Securities  Exchange
Act of 1934, as amended. In February 2002, the Company filed with the SEC a Form
15 terminating the above reporting obligations.

POTENTIAL VIOLATIONS OF THE SECURITIES' LAWS

In a comment letter from the Securities and Exchange Commission dated May 31,

                                       25
<PAGE>
2002, the SEC commented on the Company's Form 10KSB for the year ended September
30, 2001 and Form 10QSB for the quarter ended December 31, 2001.

The Company  during the year ended  September 30, 2002 became aware that some or
all of the stock  issuances  relating to the debenture  conversions may have not
been  in  compliance  with  the  registration  provisions  of  section  5 of the
Securities  Act of 1933 as  amended.  The full impact of this is unknown at this
time. As a result, the Company has reclassified  $266,377 to temporary equity as
of September 30, 2004 and 2003.  This account acts as a reserve for capital that
the Company may be required to pay.

The specific circumstances surrounding said potential violations are as follows:

         On or about  October  30,  2001,  Senior  Lifestyle  Communities,  Inc.
("Communities") issued 8% Senior Subordinated  Convertible Redeemable Debentures
("Debentures")  in the  aggregate  principal  amount of $ 1,000,000  to Sea Lion
Investors LLC; Equity Planners LLC; and Myrtle Holdings LLC. The Debentures were
issued  pursuant to Regulation D Rule 504(b) (iii).  The  Debentures  permit the
holders  thereof to convert all or any amount over  $5,000.00  of the  principal
face amount of the Debentures into shares of common stock at a conversion  price
of 70% of the per share price  valued in  accordance  with the book value of the
common  stock  or 70% of the  lowest  closing  bid  price as  quoted  on the OTC
Bulletin, if the shares of Communities, or its successors or assigns, are quoted
in the  OTC  Bulletin  Board.  Subsequent  to the  issuance  of the  Debentures,
Communities  became the wholly owned subsidiary of the Company.  The Company has
assumed all of the obligations of Communities under the Debentures.

         On December 13, 2001, the Company entered into an Escrow Agreement with
Sroya  Holdings  LLC, as escrow agent  ("Sroya"),  and Sea Lion  Investors  LLC;
Equity  Planners LLC; and Myrtle Holdings LLC, the purpose of which was to amend
in addition, supplement the October 30, 2001 agreement among Communities and the
Debenture  holders.  Pursuant to the Escrow  Agreement,  the  Company  deposited
100,000,000  shares of its common stock  ("Escrow  Shares") with Sroya to ensure
the timely  delivery  of the  Company's  common  stock upon the  exercise of the
conversion  privileges by the Debenture  holders under the Debentures  issued on
October 31, 2001. Under the Escrow  Agreement,  Sroya, as escrow agent, does not
have an interest in either the  Debentures  or the Escrow  Shares and neither is
Stroya  considered a shareholder  of the Company by virtue of holding the Escrow
Shares.  The Escrow Shares were  deposited  with Sroya  pursuant to Regulation D
Rule 540 (b) (iii)  and  Section  3 (a)(9)  of the  Securities  Act of 1933 as a
result of the  assumption  by the  Company  of all of the  obligations  under of
Communities  under  the  Debentures,  including  the  obligation  to  repay  the
principal and interest and the conversion privileges. The issuance of the Escrow
Shares to the Debenture  holders upon the exercise of the conversion  privileges
under the Debentures  and any subsequent  sale of the Escrow Shares could have a
material adverse affect on the Company's common stock and cause its market price
to decline substantially.

         Section 5 of the Securities Act prohibits the public sale of securities
absent an effective  registration  statement being filed with the SEC, unless an
exemption from registration  applies. The above transactions were performed in a
manner thought to be exempt from the  registration  requirements of Section 5 of
the Securities Act. However, the requirements of the exemptions relied on do not
appear to have been  satisfied.  The  Company  is thereby  exposed  to  possible
litigation  under  Section  12(a)(1) of the  Securities  Act.  Section 13 of the
Securities  Act  provides  that no action  shall be  maintained  for offering or
selling  securities  in  violation  of Section 5 unless  that  action is brought
within one year of the date of the violation. If actions by the holders of

                                       26
<PAGE>
Company  Common Stock  received upon  conversion of the Debentures are barred by
this statute of limitations,  the Company expects to reclassify  certain amounts
from temporary equity to permanent stockholder equity.

While more than one year has passed from the initial placement of the Debentures
and the partial conversion of said Debentures,  there have been no actions filed
against the Company  based upon a violation of Section 5. Because the statute of
limitations  has run, it is unlikely  that a large  portion of these  holders of
Company Common Stock will file an action against the Company.  However,  some of
the Debentures remain  unconverted and, as such, any potential action maintained
against the Company could have a  substantial  impact on the Company and capital
resources.  The ramifications of this may entail a possible  rescission offer to
the  stockholders  affected within the past year.  Other possible  ramifications
include an enforcement action by the SEC.

The  following  presentation  of  management's  discussion  and  analysis of the
Company's  financial  condition  and  results  of  operations  should be read in
conjunction  with  the  Company's   consolidated   financial   statements,   the
accompanying notes thereto and other financial  information  appearing elsewhere
in  this  report.   This  section  and  other  parts  of  this  report   contain
forward-looking  statements that involve risks and uncertainties.  The Company's
actual  results  may differ  significantly  from the  results  discussed  in the
forward-looking statements.

OVERVIEW

Since its  incorporation  in 1983,  the  Company  has  changed the nature of its
business  operations several times.  Currently,  the Company's renders financial
and  consulting  services to Wahoo  Funding LLC, an affiliated  Florida  limited
liability  company.  On July 1, 2004,  the Company  entered  into a two (2) year
agreement  with Wahoo  Funding  LLC, an  affiliated  Florida  limited  liability
company,  whereby  the  Company  shall  render to Wahoo  certain  financial  and
business consulting services in exchange for a total of $750,000.

Except for the foregoing contract with Wahoo, the Company has not engaged in any
operations and has been virtually dormant for several years.

Plan of Operations

The Company intends to offer consulting  services pursuant to its agreement with
Wahoo Funding LLC.

In addition,  the Company  intends to search for suitable  merger or acquisition
candidates in order to expand its operations.

The Company does not expect to hire any employees during the next 12 months.













                                       27
<PAGE>
                              RESULTS OF OPERATIONS

                  THREE MONTHS ENDED MARCH 31, 2006 COMPARED TO
                        THREE MONTHS ENDED MARCH 31, 2005

Revenues

Revenues  were $0.00 for the three months  ended March 31, 2006,  as compared to
$0.00 for the three months ended March 31, 2005.

Cost Of Revenues

Cost of  revenues  was $0.00 for the  three  months  ended  March 31,  2006,  as
compared to $0.00 for the three months ended March 31, 2005.

Operating Expenses

Operating  expenses  for the three  months  ended March 31,  2006 were  $150,719
compared to $18,204 for the three months ended March 31, 2005.  This increase in
operating  expenses  was the result of the write off of a bad debt in the amount
of $135,654 representing a note from an affiliated Company,  National Realty and
Mortgage, Inc.

Loss From Operations

Loss from  operations  for the three  months  ended March 31, 2006 was  $150,719
compared to $18,204 for the three months ended March 31, 2005.

Interest Expense

Interest  expense was $11,765  and $9,074 for the three  months  ended March 31,
2006 and 2005,  respectively.  The increase in interest expense is the result of
increased loans from related parties to fund operating expenses.

Net Loss Applicable To Common Stock

Net loss per share  applicable to Common Stock was $0.00018 for the three months
ended March 31, 2006,  compared to $0.00022 for the three months ended March 31,
2005.

                   SIX MONTHS ENDED MARCH 31, 2006 COMPARED TO
                         SIX MONTHS ENDED MARCH 31, 2005
Revenues

Revenues  were $0.00 for the six months  ended  March 31,  2006,  as compared to
$0.00 for the six months ended March 31, 2005.

Cost Of Revenues

Cost of revenues was $0.00 for the six months ended March 31, 2006,  as compared
to $0.00 for the six months ended March 31, 2005.








                                       28
<PAGE>
Operating Expenses

Operating  expenses  for the six  months  ended  March 31,  2006  were  $199,378
compared to $27,840 for the six months  ended March 31, 2005.  This  increase in
operating  expenses  was the result of the write off of a bad debt in the amount
of $135,654 representing a note from an affiliated Company,  National Realty and
Mortgage, Inc.

Loss From Operations

Loss from  operations  for the six  months  ended  March 31,  2006 was  $199,378
compared to $27,840 for the six months ended March 31, 2005.

Interest Expense

Interest expense was $23,574 and $18,148 for the six months ended March 31, 2006
and 2005,  respectively.  The  increase  in  interest  expense  is the result of
increased loans from related parties to fund operating expenses.

Net Loss Applicable To Common Stock

Net loss per share  applicable  to Common  Stock was $0.00076 for the six months
ended March 31,  2006,  compared to $0.00033  for the six months ended March 31,
2005.

                         LIQUIDITY AND CAPITAL RESOURCES

         The Company  currently plans to satisfy its cash  requirements  for the
next 12 months by borrowing from affiliated  company's with common  ownership or
control and believes it can satisfy its cash  requirements so long as it is able
to obtain  financing  from these  affiliated  companies.  The Company  currently
expects  that money  borrowed  will be used during the next 12 months to satisfy
the  Company's  operating  costs,  professional  fees and for general  corporate
purposes. The Company has also been exploring alternative financing sources. The
Company  currently  has no plans to conduct any  research  and  development,  to
purchase or sell any significant equipment or to make any significant changes in
its number of employees.

         The Company will use its limited  personnel and financial  resources in
connection  with  seeking  new  business  opportunities,  including  seeking  an
acquisition  or  merger  with an  operating  company.  It may be  expected  that
entering into a new business  opportunity or business  combination  will involve
the issuance of a substantial  number of restricted  shares of common stock.  If
such additional  restricted shares of common stock are issued,  the shareholders
will  experience a dilution in their  ownership  interest in the  Company.  If a
substantial number of restricted shares are issued in connection with a business
combination, a change in control may be expected to occur.

         As of March 31 2006,  the  Company  had current  assets  consisting  of
$414,559 of which  $2,059  consisted of cash and cash  equivalents  and $412,500
consists of accounts receivables.

         In connection with the plan to seek new business  opportunities  and/or
effecting a business  combination,  the Company may  determine  to seek to raise
funds from the sale of restricted stock or debt  securities.  The Company has no
agreements to issue any debt or equity  securities  and cannot  predict  whether
equity or debt financing will become available at acceptable terms, if at all.


                                       29
<PAGE>
         There are no limitations in the  certificate  of  incorporation  on the
Company's  ability  to borrow  funds or raise  funds  through  the  issuance  of
restricted common stock to effect a business combination.  The Company's limited
resources and lack of recent  operating  history may make it difficult to borrow
funds or raise  capital.  Such  inability to borrow funds or raise funds through
the  issuance of  restricted  common  stock  required to effect or  facilitate a
business  combination  may  have a  material  adverse  effect  on the  Company's
financial  condition and future  prospects,  including the ability to complete a
business combination.  To the extent that debt financing ultimately proves to be
available, any borrowing will subject the Company to various risks traditionally
associated with indebtedness,  including the risks of interest rate fluctuations
and insufficiency of cash flow to pay principal and interest,  including debt of
an acquired business.

                               PLAN OF OPERATIONS

The Company does not have any ongoing  business  operations or revenue  sources.
The  Board  of  Directors  of  the  Company  has  determined  that,  subject  to
stockholder approval, the best course of action for the Company is to complete a
business  combination  with an existing  business.  Accordingly,  the  Company's
remaining  operations will be limited to business  combination  with an existing
business.

                               RECENT DEVELOPMENTS

         On January 19, 2006, the Company filed an amendment to the registration
statement  filed on Form 10SB.  The SEC has  indicated  no further  comments and
accordingly the registration  statement became effective on or near February 19,
2006. The Company has resumed the filing of reporting documentation in an effort
to  maximize  shareholder  value.  The best use and  primary  attraction  of the
Company  as a merger  partner  or  acquisition  vehicle  will be its status as a
reporting   public  company.   Any  business   combination  or  transaction  may
potentially result in a significant  issuance of shares and substantial dilution
to present stockholders of the Company.


RECENT ACCOUNTING PRONOUNCEMENTS

         The  Company  continues  to  assess  the  effects  of  recently  issued
accounting  standards.  The impact of all recently adopted and issued accounting
standards has been disclosed in the Notes to the audited Consolidated  Financial
Statements.

CRITICAL ACCOUNTING ESTIMATES

         The  Company is a shell  company  and, as such,  the  Company  does not
employ critical  accounting  estimates.  Should the Company resume operations it
will employ critical accounting  estimates and will make any and all disclosures
that are necessary and appropriate.

OFF BALANCE SHEET TRANSACTIONS

         The Company has no off balance sheet  arrangements  and has not entered
into any transactions involving unconsolidated, limited purpose entities.





                                       30
<PAGE>
                                  RISK FACTORS

IN  ADDITION  TO OTHER  INFORMATION  IN THIS  REPORT,  YOU SHOULD  CONSIDER  THE
FOLLOWING RISK FACTORS CAREFULLY. THESE RISKS MAY IMPAIR THE COMPANY'S OPERATING
RESULTS AND  BUSINESS  PROSPECTS  AS WELL AS THE MARKET  PRICE OF THE  COMPANY'S
COMMON STOCK.

                    RISKS RELATED TO THE COMPANY'S FINANCIAL
                          CONDITION AND BUSINESS MODEL

THE COMPANY'S LIQUIDITY IS LIMITED AND IT MAY NOT BE ABLE TO OBTAIN SUFFICIENT
FUNDS TO FUND ITS BUSINESS

The Company's  cash is currently  very limited and may not be sufficient to fund
future  operations.  These  factors  may  make the  timing,  amount,  terms  and
conditions of additional financing  unattractive for the Company. If the Company
is unable to raise additional  capital,  any future operations could be impeded.
If the Company obtains  additional  funding,  the issuance of additional capital
stock may be dilutive to the  Company's  stockholders.  The Company  will likely
have substantial difficulty raising additional capital unless and until it comes
into compliance with Nevada state law and Section 5 of the Securities Act.

THE COMPANY HAS RECEIVED A GOING CONCERN OPINION FROM ITS AUDITORS

The  Company's  consolidated  financial  statements  have been  prepared  on the
assumption  that the Company will  continue as a going  concern.  The  Company's
independent auditors have issued a report that includes an explanatory paragraph
stating the Company's  lack of revenue  generating  activities  and  substantial
operating  deficits,  among  other  things,  raise  substantial  doubt about the
Company's ability to continue as a going concern.

THE COMPANY CURRENTLY HAS NO OPERATIONS

The Company has had no or limited operations since March 2002.

IT MAY BE DIFFICULT TO CONSUMMATE A MERGER OR ACQUISITION WITH A PRIVATE ENTITY

The Company expects its purpose will include  locating and consummating a merger
or acquisition with a private entity. The Company anticipates that the selection
of a business  opportunity in which to participate will be complex and extremely
risky.  The Company  has, and will  continue to have,  little or no capital with
which to provide the owners of business  opportunities  any significant  cash or
other  assets.  However,  management  believes the Company will be able to offer
owners of  acquisition  candidates  the  opportunity  to  acquire a  controlling
ownership  interest in a publicly  registered company without incurring the cost
and time required to conduct an initial  public  offering.  Such an  acquisition
candidate  will,  however,  incur  significant  legal  and  accounting  costs in
connection with an acquisition of the Company,  including the costs of preparing
current and periodic reports, various agreements and other documents.

                      RISKS RELATED TO LEGAL UNCERTAINTIES

THE COMPANY MAY FACE LITIGATION FOR ISSUING SECURITIES IN VIOLATION OF SECTION 5
OF THE SECURITIES ACT

         In a comment letter from the Securities and Exchange  Commission  dated
May 31, 2002,  the SEC commented on the Company's  Form 10KSB for the year ended
September 30, 2001 and Form 10QSB for the quarter ended December 31, 2001.

                                       31
<PAGE>
         The Company during the year ended  September 30, 2002 became aware that
some or all of the stock  issuances  relating to the debenture  conversions  may
have not been in compliance with the registration provisions of section 5 of the
Securities  Act of 1933 as  amended.  The full impact of this is unknown at this
time. As a result, the Company has reclassified  $266,377 to temporary equity as
of December  31,  2005.  This  account  acts as a reserve  for capital  that the
Company may be required to pay.

         Section 5 of the Securities Act prohibits the public sale of securities
absent an effective  registration  statement being filed with the SEC, unless an
exemption from registration  applies. The above transactions were performed in a
manner thought to be exempt from the  registration  requirements of Section 5 of
the Securities Act. However, the requirements of the exemptions relied on do not
appear to have been  satisfied.  The  Company  is thereby  exposed  to  possible
litigation  under  Section  12(a)(1) of the  Securities  Act.  Section 13 of the
Securities  Act  provides  that no action  shall be  maintained  for offering or
selling  securities  in  violation  of Section 5 unless  that  action is brought
within  one year of the date of the  violation.  If  actions  by the  holders of
Company  Common Stock  received upon  conversion of the Debentures are barred by
this statute of limitations,  the Company expects to reclassify  certain amounts
from temporary equity to permanent stockholder equity.

         While one year has passed from the initial  placement of the Debentures
and the partial conversion of said Debentures,  there have been no actions filed
against the Company  based upon a violation of Section 5. Because the statute of
limitations  has run, it is unlikely  that a large  portion of these  holders of
Company Common Stock will file an action against the Company.  However,  some of
the Debentures remain  unconverted and, as such, any potential action maintained
against the Company could have a  substantial  impact on the Company and capital
resources.  The ramifications of this may entail a possible  rescission offer to
the  stockholders  affected within the past year.  Other possible  ramifications
include an enforcement action by the SEC.

THE COMPANY MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL

         There  can be no  assurance  that  the  Company  will be able to  raise
additional capital on a debt or equity basis.

                                   OTHER RISKS

THE COMPANY'S STOCK PRICE HAS DECLINED SIGNIFICANTLY AND MAY NOT RECOVER

         The  trading  price  of  the   Company's   common  stock  has  declined
significantly  since  approximately  October 2001.  The market for the Company's
common  stock is  essentially  nonexistent  and there can be no  assurance  of a
change in the immediate future.

THE COMPANY MAY BE SUBJECT TO PENNY STOCK REGULATIONS AND REQUIREMENTS FOR LOW
PRICED STOCK

         The SEC adopted  regulations  which generally define a "penny stock" to
be any nonNasdaq  equity security that has a market price of less than $5.00 per
share,  subject to  certain  exceptions.  Based upon the price of the  Company's
common stock as currently traded on the OTC Bulletin Board, the Company's common
stock is subject to Rule 15g9 under the  Exchange Act which  imposes  additional
sales practice  requirements on broker-dealers  which sell securities to persons
other than  established  customers and "accredited  investors." For transactions
covered  by  this  rule,  a  broker  dealer  must  make  a  special  suitability
determination for the purchaser and have received a purchaser's written consent

                                       32
<PAGE>
to the transaction  prior to sale.  Consequently,  this rule may have a negative
effect on the ability of  stockholders  to sell common  shares of the Company in
the secondary market.

ADDITIONAL DEBT, CONVERTIBLE DEBT, OR EQUITY FINANCING MAY EFFECT ABILITY OF
INVESTORS TO SELL COMMON STOCK

         The Company's  common stock currently trades on the OTC Bulletin Board.
Stocks trading on the OTC Bulletin Board  generally  attract a smaller number of
market makers and a less active public market and may be subject to  significant
volatility.  If the  Company  raises  additional  capital  from  the sale of the
Company's common stock, the market price could drop and the ability of investors
to sell the Company's common stock could be diminished.

Item 3. Controls and Procedures

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

         The  Company's  Chief  Executive  Officer,  Richard  Astrom  and  Chief
Financial  Officer,   Christopher   Astrom,  have  reviewed  and  evaluated  the
effectiveness of the Company's disclosure controls and procedures (as defined in
Exchange Act Rules 13a15(e) and 15d15(e)) as of the end of the period covered by
this  quarterly  report on Form  10QSB.  Based on that  evaluation,  Christopher
Astrom  determined that he and Richard Astrom,  the Company's only two directors
and officers, are the only individuals involved in the Company's disclosure

process. The Company's system is designed so that information is retained by the
Company  and relayed to counsel as it becomes  available.  The  Company's  Chief
Executive  Officer and Chief Financial  Officer  believes that, as of the end of
the  period  covered by this  report,  the  Company's  disclosure  controls  and
procedures are effective to ensure that information  required to be disclosed by
the Company in the reports  that it filed or submits  under the  Exchange Act is
recorded, processed,  summarized and reported, within the required time periods.
Further,  the Company's officers have concluded that the disclosure controls and
procedures  are  also  effective  to  ensure  that  information  required  to be
disclosed  in the  reports  that the Company  files and submits  pursuant to the
Exchange Act of 1934 is accumulated and  communicated  to management,  including
our  chief  executive  officer  and chief  financial  officer,  to allow  timely
decisions regarding required disclosure.



CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

         No changes in the Company's  internal control over financial  reporting
have come to  management's  attention  during the Company's  last fiscal quarter
that have materially affected, or are likely to materially affect, the Company's
internal control over financial reporting.











                                       33
<PAGE>
                                     PART II
                                OTHER INFORMATION

Item 1. Legal Proceedings

         The Company is not a party to any pending legal  proceedings nor is any
of the Company's property the subject of any pending legal proceedings.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

         None

Item 3. Defaults Upon Senior Securities

         See the discussion in "RISK FACTORS RISKS RELATED TO LEGAL
UNCERTAINTIES"


Item 4. Submission of Matters to a Vote of Securities Holders

         None

Item 5. Other Information

         None

Item 6. Exhibits and Reports On Form 8K

(a) Exhibits:

EXHIBIT
NUMBER            DESCRIPTION
-------           -----------

31.1        Certification of Chief Executive Officer pursuant to Section 302 of
            the Sarbanes Oxley Act of 2002.

31.2        Certification of Chief Financial Officer pursuant to Sec ton 302 of
            the Sarbanes Oxley Act of 2002.

32.1        Certification of Chief Executive Officer pursuant to Sec ton 906 of
            the Sarbanes Oxley Act of 2002.

32.2        Certification of Chief Financial Officer pursuant to Sec ton 906 of
            the Sarbanes Oxley Act of 2002.

(b) Reports on Form 8K:

         None









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<PAGE>
SIGNATURES

In accordance with the  requirements of the Exchange Act, the Company has caused
this report to be signed by the undersigned, thereunto duly authorized.



GENESIS CAPITAL CORPORATION OF NEVADA.


Date: September 21, 2006


By: /s/ CHRISTOPHER ASTROM
   -------------------------------
   Christopher Astrom
   Chief Executive Officer
   Chief Financial Officer
































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