================================================================================

================================================================================
     As filed with the Securities and Exchange Commission on March 27, 2003

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-K

[X]  Annual report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the fiscal year ended   DECEMBER 31, 2002
                                             -----------------
                                       OR
[ ]  Transition  report  pursuant  to  Section 13 or 15(d) of the Securities
     Exchange  Act  of  1934

                          Commission File No. 0-17139
                                              -------

                                   GENUS, INC.
             (Exact name of registrant as specified in its charter)

           CALIFORNIA                                   94-2790804
(State or other jurisdiction of          (I.R.S. Employer Identification Number)
incorporation or organization)

   1139 KARLSTAD DRIVE, SUNNYVALE, CA                     94089
(Address of principal executive offices)               (Zip Code)

Registrant's telephone number, including area code  (408) 747-7120
                                                    ---------------
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act: Common Stock, no par
value

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed 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 if disclosure of delinquent filers pursuant to Item 405
of  Regulation  S-K  is  not contained herein, and will not be contained, to the
best  of  Registrant's  knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form  10-K.
Yes  [ ]   No  [X]

Indicate  by  check  mark  whether  the  Registrant  is an accelerated filer (as
defined  in  Exchange  Act  Rule  12b-2).
Yes  [ ]   No  [X]

The  aggregate  market  value  of the voting stock held by non-affiliates of the
Registrant,  based  upon the average bid and asked price as of the last business
day  of the registrant's most recently completed second fiscal quarter (June 28,
2002)as  reported  by the Nasdaq National Market, was approximately $55 million.
Shares  of common stock held by each officer and director and by each person who
owns  5% or more of the outstanding voting stock have been excluded in that such
persons  may  be deemed to be affiliates. This determination of affiliate status
is  not  necessarily  a  conclusive  determination  for  other  purposes.

As  of  February  28,  2003,  Registrant  had  28,943,409 shares of common stock
outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
Parts  of  the  following  document are incorporated by reference in Part III of
this  Form  10-K Report: Proxy Statement for Registrant's 2003 Annual Meeting of
Shareholders  -  Items  10,  11,  12  and  13.


================================================================================

<PAGE>
<TABLE>
<CAPTION>
                                        TABLE OF CONTENTS


PART I.                                                                                  PAGE
<S>                                                                                      <C>
    Item 1.  Business                                                                      3
    Item 2.  Properties                                                                   14
    Item 3.  Legal Proceeding                                                             14
    Item 4.  Submission of Matters to a Vote of Security Holders                          15

PART II.
    Item 5.  Market for the Registrant's Common Equity and Related Shareholder Matters    17
    Item 6.  Selected Financial Data                                                      18
    Item 7.  Management's Discussion and Analysis of Financial Condition and Results of
             Operations                                                                   20
    Item 7A. Quantitative and Qualitative Disclosures About Market Risk                   38
    Item 8.  Consolidated Financial Statements and Supplementary Data                     39
    Item 9.  Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure                                                         39

PART III.
    Item 10. Directors and Executive Officers of the Registrant                           40
    Item 11. Executive Compensation                                                       41
    Item 12. Security Ownership of Certain Beneficial Owners and Management               41
    Item 13. Certain Relationships and Related Transactions                               41
    Item 14. Controls and Procedures                                                      41

PART IV.
    Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K              43

SIGNATURES                                                                                69
EXHIBITS                                                                                  73
CERTIFICATIONS                                                                            71
</TABLE>


                                        2
<PAGE>
PART I

ITEM 1.   BUSINESS

OVERVIEW

     Since  1982,  we  have been supplying advanced manufacturing systems to the
semiconductor  industry  worldwide.  Major  semiconductor  manufacturers use our
leading-edge  thin  film  deposition equipment and process technology to produce
integrated circuits, commonly called chips, that are incorporated into a variety
of products, including personal computers, communications equipment and consumer
electronics.  We  pioneered  the  development of chemical vapor deposition (CVD)
tungsten silicide, which is used in certain critical steps in the manufacture of
integrated  circuits. In addition, today we are leading the commercialization of
atomic  layer  deposition,  also  known  as  ALD  technology. This technology is
designed  to  enable  a wide spectrum of thin film applications such as aluminum
oxide,  hafnium oxide and other advanced insulating and conducting materials for
advanced  integrated  circuit  manufacturing.

     We have also implemented a strategy of targeting non-semiconductor markets,
as  we are confident that our developed films can serve multiple applications in
both semiconductors and non-semiconductor segments. In addition to expanding our
total  available  market,  this  strategy  of  diversifying our customer base is
intended  to  provide  some  protection  against  cyclical  downturns  in  the
semiconductor  industry.  We  believe  our  emerging  ALD  technology will prove
effective  in  expanding  and  diversifying  our  customer  base.

     We  continue  to  develop  enabling thin film technology that addresses the
scaling  challenges  facing  the  semiconductor  industry  relating  to gate and
capacitor  materials.  The  International  Technology Roadmap for Semiconductors
(ITRS)  has  labeled  these challenges as "red zones" because there are no known
solutions  that  allow  for  further  reduction  in  feature  sizes and improved
performance.  Our  innovative  thin  film  technology  solutions are designed to
enable  chip  manufacturers  to  simplify  and  advance their integrated circuit
production processes and lower their total cost of manufacturing per chip, known
as  cost  of  ownership.

     As it is in the semiconductor industry, non-semiconductor business segments
have scaling initiatives as well.  For example, the making of thin film magnetic
heads  in  the  data  storage industry has scaling requirements analogous to the
scaling  trends in semiconductors.  A key part of our business strategy includes
providing  enabling  thin  film  solutions  for  non-semiconductor applications.

     We  provide  a  production-proven  platform  that  is  used  for  both  the
development  and  volume  production  of  new  thin  films in integrated circuit
manufacturing.  This  platform  is  based  on  a  common architecture and a high
percentage  of common parts that are designed to provide manufacturers with high
reliability  and  low  cost  of  ownership  across  a  wide  range  of thin film
deposition  applications. The modular design of our system permits manufacturers
to  add  capacity and to service their manufacturing systems easily. In addition
to  the  modular  platform  architecture,  our  systems  operate on standardized
software  that  is  designed  to  support  a  wide range of thin film deposition
processes.

     Our  global  customer  base  consists of semiconductor manufacturers in the
United  States,  Europe  and  Asia.  Our current customers include semiconductor
manufacturers  such  as  Infineon  Technologies,  NEC  and  Samsung  Electronics
Company, Ltd. and non-semiconductor customers such as IBM Corporation, Read-Rite
Corporation,  and  Seagate Technologies.


INDUSTRY  BACKGROUND

     The manufacture of an integrated circuit requires a number of complex steps
and processes. Most integrated circuits are built on a base of silicon, called a
wafer,  and  consist  of  two main structures. The lower structure is made up of
components,  typically  transistors  or  capacitors,  and  the  upper  structure
consists  of  the circuitry that connects the components. Building an integrated
circuit  requires  the  deposition  of  a  series  of  film layers, which may be


                                        3
<PAGE>
conductors,  dielectrics  (insulators), or semiconductors. The overall growth of
the  semiconductor industry and the increasing complexity of integrated circuits
have led to increasing demand for advanced semiconductor equipment. Although the
semiconductor  industry  has  grown over 30 years with an average  annual growth
rate  (CAGR)  of  14.8%, it is prone to cyclic variations, including significant
downturns. Typically there are periods of high demand followed by periods of low
demand.  Each  cycle is one to three years of high growth and one to three years
of  low growth. Currently we are witnessing the biggest recession in the history
of the semiconductor and semiconductor equipment industries. VLSI Research, Inc.
an  independent  research  company specializing in the high technology industry,
estimates  that  industry  shipments  in  2002  were  down 69% compared to 2001.
Additionally,  VLSI  expects  2003 shipments to be flat to moderate growth of 7%
growth  compared  to  2002.

INDUSTRY DRIVERS: LOWERING THE COST PER FUNCTION AND INCREASING PERFORMANCE

     The  growth of computer markets and the emergence and growth of new markets
such  as  wireless  communications  and  digital  consumer  electronics  have
contributed to growth in the semiconductor industry. This increase also has been
fueled  by  the semiconductor industry's ability to supply increasingly complex,
higher  performance  integrated  circuits,  while continuing to reduce cost. The
increasing  complexity of integrated circuits and the accompanying reductions in
feature  size  require  more advanced and expensive wafer fabrication equipment,
which  can  increase  the average cost of advanced wafer fabrication facilities.
Technological  advances  in  semiconductor  manufacturing  equipment  have
historically enabled integrated circuit manufacturers to lower cost per function
and  improve  performance  dramatically  by:

     -    reducing  feature  size of integrated circuits and the introduction of
          new  materials  with  scaled  dimensions;
     -    increasing  the  wafer  size;
     -    increasing  manufacturing  yields;  and
     -    improving  the  utilization  of  wafer  fabrication  equipment.

REDUCING FEATURE SIZES AND ADDING NEW ENABLING THIN FILMS

     Smaller  feature  sizes  allow  more  circuits  to  fit on one wafer. These
reductions have contributed significantly to reducing the manufacturing cost per
chip.  The semiconductor industry is driven by performance (mainly the increased
speed  for  logic  and  memory  signals)  and increased chip density (mainly the
increased  density  of  memory and logic capacity). In addition to the continued
reduction  in  feature  sizes,  there  is  a  paradigm  shift for the use of new
materials  to  improve  performance  of  integrated  circuits. New materials are
required  for  gate,  capacitor and interconnect application segments within the
semiconductor  manufacturing  process.  The  adoption  of new types of thin film
conducting  and  insulating  materials  will  accelerate the trend toward higher
levels  of  semiconductor  performance  and  integration  while  maintaining the
historic  trend  of  reduction  of  cost  per  function.

LARGER  WAFER  SIZES

     By  increasing the wafer size, integrated circuit manufacturers can produce
more circuits per wafer, thus reducing the overall manufacturing costs per chip.
Leading-edge  wafer  fabrication  lines  are currently using 300-millimeter (mm)
wafers,  in  addition to the 200mm wafers that they have been using for the last
ten  to  fifteen years.  We believe that most major manufacturers will add 300mm
production  capabilities  within  the  next  one  to  four  years.


                                        4
<PAGE>
HIGHER  MANUFACTURING  YIELDS

     In  the last fifteen years, manufacturing yields, or the percentage of good
integrated  circuits  per wafer, have increased substantially, while the time to
reach  maximum  yield  levels  during  a  production  lifecycle  has  decreased
significantly.  As  the  complexity  of  chips  increases,  manufacturers  must
continually  reduce  defect  density  to  obtain  higher  yields.

IMPROVED  EQUIPMENT  UTILIZATION  AND  INTRODUCING  NEW  EQUIPMENT ARCHITECTURES

     The  utilization  of  semiconductor manufacturing lines has improved in the
last  ten  years. Manufacturing lines now operate continuously. In addition, new
architectures  of  production equipment are being explored that allow for higher
throughputs, better reliability, high quality, and low overall cost-of-ownership
as  measured  by  the  total  cost  to process each wafer through the equipment.

     While  these  production techniques are important for reducing the cost per
function  of  chips,  we believe that the most beneficial production solution is
likely to combine feature size reduction and the use of new thin film materials.

"RED  ZONE"  CHALLENGES  FACING  THE  SEMICONDUCTOR  INDUSTRY

     The semiconductor industry is driven by the need for higher performance and
greater  chip  density  as  measured by an increasing number of functions on the
chip. The semiconductor industry has historically been able to double the number
of  transistors  on  a  given space of silicon every 18 to 24 months by reducing
feature  sizes.  However,  as the industry approaches feature size dimensions of
0.13  micron  and  below,  the  industry  will  face  significant challenges and
roadblocks  pertaining  to  improving  device  performance  and  feature  size
reduction.  The  International  Technology  Roadmap has labeled these challenges
"red zones" for semiconductors because there are no known solutions to allow for
further  reduction  in  feature  sizes and improved performance. It is estimated
that  semiconductor  manufacturers  need  approximately  two  to  four  years to
research,  develop  and  commercially  produce a new type of integrated circuit.

     As part of its strategy to solve the challenges posed by the red zones, the
semiconductor  industry is moving towards the use of ultra-thin dielectrics with
high  insulating  capabilities  for  gate  dielectrics and capacitors as well as
ultra-thin metal barriers for copper-based interconnect processes. Emerging thin
films  with  high  dielectric  capabilities  for gate and capacitor applications
include  metal  oxides  such  as  aluminum  oxide.

THE  GENUS  SOLUTION

     We  are  an  innovative  supplier  of  thin  film  deposition  equipment to
semiconductor  and non-semiconductor manufacturers and are focused on developing
enabling  thin  film  technology to solve the challenges posed by the red zones.
Our  patented  multi-purpose process chamber serves as the foundation for all of
our  current products. Our products are designed to deliver high throughput, low
cost  of  ownership  and  quick  time  to  market,  enhancing  the  ability  of
manufacturers to achieve productivity gains. We support our innovative thin film
deposition  systems  with  a  focused  level  of  customer  service.


                                        5
<PAGE>
INNOVATIVE  THIN  FILM  SOLUTIONS

     Our  systems  and  processes  are  designed to provide innovative thin film
solutions  that  address technical and manufacturing problems experienced by the
semiconductor  industry.  We  provide  our  customers  with advanced systems and
processes  for  depositing  thin  films  such as CVD tungsten silicide, tungsten
nitride,  and  blanket tungsten, and ALD films such as aluminum oxide, zirconium
oxide  and  hafnium  oxide. These innovative thin films solve certain key device
and  interconnect  problems  faced  by semiconductor manufacturers as they scale
their  device  geometries  below  0.13  micron.

VERSATILE  PRODUCTION  PLATFORM

     Our  LYNX  series  and  StrataGem  family  of systems are based on a common
outsourced,  reliable  wafer-handling robotic platform. The systems are designed
to  be flexible and can be configured for multiple deposition processes, such as
CVD,  plasma  enhanced  CVD and ALD. Our systems offer the following advantages:

     -    a  production-proven  platform  that  allows  for  easier  and  faster
          migration  from  research  and  development  to  production;

     -    a platform based upon a large number of standardized parts used across
          our  systems  to  enhance  reliability;  and

     -    a modular design that allows for simplified service.

     In  addition,  all  of  our  systems  are  designed  with  a graphical user
interface  that  automates  tasks  and  allows  for comprehensive viewing of the
real-time  status  of  the systems. Our software supports our customers' process
development  needs with the ability to run a different set of processes for each
wafer.

LOW  COST  OF  OWNERSHIP

     Our  LYNX  series  and  StrataGem  family  of  equipment  offer low cost of
ownership  by  featuring  multiple  deposition  processes  capabilities,
production-proven  process  chamber  design,  advanced software architecture and
reliable  wafer handling. Based on feedback from our installed customer base, we
estimate  that  our  production  systems  consistently  achieve greater than 90%
availability,  and  that the mean time between failures of our system is greater
than  300  hours.  In addition, our customers have confirmed that we offer among
the  lowest  costs  of  operation.  We are committed to improving these results;
achieving  these  same  levels  of  performance or better with our new thin film
products.

CUSTOMER  SUPPORT

     We  believe we deliver superior customer support and service to enhance our
long-term  customer relationships. We maintain an international customer support
infrastructure  with  fully  staffed  customer  support  capabilities  in United
States, Korea, Japan and Europe.  We provide training for two customer engineers
with  all of our equipment installations as well as 24 hours a day, seven days a
week  product  support.  We  offer  warranties  consisting  of  a two-year parts
warranty  and  a  one-year  labor  warranty.

MARKETS  AND  APPLICATIONS

     In  2002,  we  continued  to expand our CVD product line with new films and
applications  that  allow  us  to  serve broader markets. In 1999, Genus had CVD
tungsten  silicide and tungsten nitride for gate and barrier applications and we


                                        6
<PAGE>
were  just  introducing  ALD technology. As we turn into 2003, we have developed
films  using  tungsten  silicide,  tungsten  nitride  and  blanket  tungsten  by
conventional  CVD,  and  aluminum oxide, tantalum oxide, titanium oxide, hafnium
oxide  and  zirconium oxide.  In addition, Genus has the demonstrated capability
to  integrate  these  ALD films as alloys and nanolaminates (layered structures)
for  the  engineering of specialized capabilities on its platforms.  These films
serve  the Company for applications in semiconductors for gate and capacitor, as
well  as non-semiconductor applications (e.g., in particular, aluminum oxide for
thin  film  magnetic  heads  of  hard  disk  drives).

     By  focusing on a broader set of film markets, we believe we can reduce our
dependence  on  the volatile dynamic-random-access memory (DRAM) market, as well
as  benefit from participation in the logic segment and non-semiconductor market
opportunities.  We  are  now participating in semiconductor memory with gate and
capacitor  films,  in  semiconductor  logic  with  advanced  gate  films, and in
non-semiconductor  gap  dielectrics for thin film magnetic heads.  We moved from
solely  memory  applications  to this level of diversification in the last three
years.

     We focus on the following thin film market segments:

CVD  SILICIDE  AND  METAL, AND ALD DIELECTRICS AND METAL BARRIERS FOR GATE STACK
FILMS

     CVD  tungsten  silicide  is used to reduce the electrical resistance of the
gate  material in a transistor device structure. Our tungsten silicide gate thin
films  are  used in DRAM integrated circuit production. In the future, we expect
the  tungsten  gate  material  to  migrate  from  tungsten  silicide  to the low
resistance  tungsten  gate  films,  such as Rapid integrated gate (RinG) that we
have developed and beyond that to use various metal barrier films in combination
with  high-k  dielectrics.

     Capacitor  films

     Genus  is  commercializing  its  ALD  technology  with  the  application to
advanced  capacitors,  including  cylinder ("stacked"), trench, embedded, rf and
decoupling  capacitor  applications. One semiconductor customer has selected ALD
technology  for volume production. The state of the art has been advanced due to
high  conformality  and  high  quality  Genus  ALD  films.

     Non-semiconductor  films

     Genus  has  developed  a market for its ALD films in the thin film magnetic
head  (reader)  market. This market developed because of a production ready-made
solution  that  the  Genus  ALD  dielectrics  provide for the scaling of the gap
dielectrics.  Two data storage customers have selected ALD technology for volume
production.  The  market  is scaling to thinner films, ideally suited to the ALD
approach.     Other  non-semiconductor  markets  are  targeted,  these  include:
Magnetic  Random  Access Memory (MRAM), Optical interconnects / filters, Organic
Light  Emiting  Diodes (OLEDs), Microelectromechanical Systems (MEMS), and photo
masks,  in  fact  anywhere  that  film uniformity and conformality are enabling.
However,  it  is  too early to predict our ability to penetrate in many of these
markets.

PRODUCTS  AND  TECHNOLOGY

     We  have  developed  our  product  strategy  around  the LYNX and StrataGem
platforms  concept.  The  LYNX  system refers specifically to the vacuum robotic


                                        7
<PAGE>
wafer  handler  and its wafer controlling software. The LYNX process modules are
generically  appropriate  for  CVD  and  plasma  enhanced  CVD,  and is used for
depositing  the  following  films:

     -    tungsten  silicide-monosilane

     -    tungsten  silicide-dichlorosilane

     -    tungsten  nitride

     -    tungsten

     In  the  summer  of  2002  Genus introduced a family of ALD products called
     StrataGem.  These  are  serving  the  semiconductor  and storage technology
     markets.

     StrataGem  200mm  and  300mm  and StrataGem TFH are used for depositing the
     following  films:

     -    aluminum  oxide

     -    advanced metal oxides (e.g., tantalum oxide, titanium oxide, zirconium
          oxide,  hafnium  oxide)

     -    nanolaminates  and  alloys

     -    metal films (e.g., titanium nitride and tungsten nitride)

LYNX  Series

     LYNX2(R).  Manufacturers  of  advanced  DRAM devices of 0.35 to 0.13 micron
currently  use  the LYNX2(R) system in production. LYNX2(R) systems support over
150  process  modules in high volume production. Production availability for the
LYNX2(R)system  runs  from 90-95%. LYNX2(R) platforms are also used for customer
development and pilot manufacturing for more advanced semiconductor applications
below  0.18  micron.  The  LYNX2(R)features  a  wafer-handling  platform that is
compatible  with the Modular Equipment Standards Committee (MESC). This platform
uses  a  centrally  located,  dual-end  effectors  robot  for  high  throughput
operation.  The system is controlled by a graphical user interface that provides
the operator with real-time information such as recipe, set points, and hardware
status  and  service  features.  The  modular  design  of the LYNX2(R)allows the
addition  of  up  to  four  process  modules,  which  can  be run serially or in
parallel.  The LYNX2(R) process module design also offers a multi-zone resistive
heater  for  more  uniform wafer heating, two-zone showerheads for improved film
composition uniformity and a state-of-the-art gas delivery system that minimizes
chamber-to-chamber  variance.

     LYNX3(TM).  We  introduced the LYNX3(TM) in January 1999 as our first 300mm
low  pressure  CVD  process module in a beta system. The LYNX3 process module is
based  on a newly developed and patented process chamber concept that results in
exceptional  uniformity.  The  LYNX3(TM)  is designed to run all films currently
supported  by  the  LYNX2(R), as well as all films currently in development. The
LYNX3  system  supports up to four process modules, which can be run serially or
in parallel. Also, we have developed an advanced version of the LYNX3(TM), which
is  designed  to  be  a  "bridge  tool",  capable of running either 200 or 300mm
wafers.

StrataGem Family (StrataGem 200mm, StrataGem 300mm and StrataGem TFH)

     The  ranges  of thin films that can be deposited using the StrataGem family
products  include:


                                        8
<PAGE>
     -    ALD  Dielectrics.  In  July 1999, we announced the availability of ALD
          aluminum  oxide.  ALD  has  many  possible  applications  in  the
          semiconductor market including as a high dielectric constant oxide for
          either  capacitors  or  for  gate  dielectrics,  as  an  etch stop for
          advanced  structures,  or  for  hard  mask applications. We made other
          advanced  ALD  dielectrics  available during 2000 and 2001. We believe
          that  our  ALD  aluminum  oxide-based  technology  will find near-term
          opportunities in the DRAM capacitor application. Other ALD dielectrics
          will  find  longer-term  applications  in  both  capacitor  and  gate
          dielectric  structures.

     -    ALD Metal Films. Metal films have been developed and offer application
          for  metal  gate (work function control as well as barrier), capacitor
          electrodes,  contact  and  interconnect barriers. The applications are
          current  in  the case of capacitor electrodes and contact barrier. For
          interconnects  they  will  likely  come  to  be  needed below the 90nm
          feature  size,  where  barrier  film  thickness  decrease  below  100
          angstroms.  Somewhat  beyond  2005, there will be an interest in these
          barriers  for  metal  gate  electrodes.

     -    Metal  Oxide  Alloys  and Nanolaminates. With the development of Genus
          ALD,  the  Company  has  been  able  to demonstrate a film flexibility
          otherwise  not  known.  For  example, Genus ALD system can provide the
          flexibility  to  deposit  up  to  3  compound  films in alloy and / or
          nanolaminate  form.  The  capability  has  become  enabling  for  the
          "engineering"  of  composite  films  for  optimal  performance in next
          generation  semiconductor  devices. Composites of both dielectrics and
          metals  can  be  achieved.

     Genus  8700  Series and 6000 Series. While we no longer actively sell these
thin  film products, we continue to sell spare parts and provide service for the
installed  base  worldwide.

FINANCIAL  INFORMATION  ABOUT  OPERATING  SEGMENTS

     Currently,  the  Company  operates  in one industry segment. The Company is
engaged  in  the design, manufacturing, marketing and servicing of advanced thin
film deposition systems used in the semiconductor manufacturing industry and the
Thin  Film  Head  segment  of the Data Storage Industry. Please refer to Item 6,
Selected  Financial  Data,  and  Item  8,  Consolidated Financial Statements and
Supplementary  Data  of  this  10-K report for geographic financial information.

CUSTOMER  SUPPORT

     We  believe  that  our  customer  support  organization  is  critical  to
establishing and maintaining the long-term customer relationships that often are
the  basis upon which semiconductor manufacturers select their equipment vendor.
Our customer support organization is headquartered in Sunnyvale, California with
additional  employees  located  in  Japan,  South Korea and Europe.  Our support
personnel  are  available  on  a  24-hour  a day, seven days a week basis with a
maximum  one-hour  response  time.  All  support  personnel  have  technical
backgrounds,  most  with  process,  mechanical and electronics training, and are
supported  by  our  engineering  and  applications  personnel. Support personnel
install  systems, perform warranty and out-of-warranty service and provide sales
support.

     We  offer  a  12-month labor warranty and a 24-month parts warranty. During
the third quarter of 2002, we made a strategic decision to explore opportunities
to  increase  revenues by selling the services of our customer support engineers
on an hourly basis.  We also offer training to our customers at our headquarters
and  on-site  support  as  an  enhancement  to  our  standard  warranty program.


                                       9
<PAGE>
SALES  AND  MARKETING

     We  maintain  direct sales and service offices in the United States, Japan,
South  Korea  and  Europe.  From  these  offices and other locations, we provide
customer  support  directly  and maintain, "spares depots" for our products.  We
also  have  sales  representatives  in  the  northwestern United States, Taiwan,
Singapore,  Malaysia  and  China.

CUSTOMERS

    We  rely  on  a limited number of customers for a substantial portion of our
net  sales.  Our  major  customers in 2002 included Samsung, IBM Corporation and
Seagate Technologies. As of December 31, 2002 we had nine customers serving four
market  segments  -  Memory,  Logic,  Data  Storage  and  MEMS.

BACKLOG

     We  schedule  production  of  our systems based on both backlog and regular
sales  forecasts.  We  include  in  backlog only those systems for which we have
accepted  purchase orders and assigned shipment dates within the next 12 months.
All  orders are subject to cancellation or delay by the customer with limited or
no  penalty. Our backlog was approximately $24.7 million as of December 31, 2002
compared  to a backlog of $3.2 million as of December 31, 2001. The year-to-year
fluctuation  is  due  primarily  to  the  cyclical  nature  of the semiconductor
industry. Because of possible changes in delivery schedules and cancellations of
orders,  our backlog at any particular date is not necessarily representative of
actual  sales  for  any  succeeding  period.  In  particular,  during periods of
industry  downturns  we  have  experienced significant delays relating to orders
that  were  previously  booked  and  included  in  backlog.

RESEARCH  AND  DEVELOPMENT

     We focus our research and development efforts on developing innovative thin
film  products.  During  recent periods, we have devoted a significant amount of
resources  to  the  StrataGem200  and  StrataGem300  systems and CVD systems. We
expect  to  focus  our  future efforts on our StrataGem system for 200 and 300mm
applications  and  StrataGem  TFH  for advanced film technologies. We maintain a
Class  1  applications  laboratory and a separate thin films development area in
California. By basing our products on the LYNX and StrataGem systems, we believe
that  we can focus our development activities on the process chamber and develop
new  products  quickly  and  at  relatively  low  cost.

     Our  research  and  development  expenses were $8.0 million for 2002, $12.1
million  for  2001, and $8.7 million for 2000, representing 20%, 25%, and 21% of
revenues,  respectively.

     The  worldwide  semiconductor industry is characterized by rapidly changing
technology,  evolving industry standards and continuous improvements in products
and services. Because of continual changes in these markets, we believe that our
future  success will depend upon our ability to continue to improve our existing
systems  and  process  technologies, and to develop systems and new technologies
that  compete  effectively.  We  must  adapt  our  systems  and  processes  to
technological  changes  and  to  support  emerging industry standards for target
markets.  We  cannot  be  sure  that  we  will  complete our existing and future
development  efforts within our anticipated schedule or that our new or enhanced
products  will  have  the  features  to  make  them  successful.

     We  may  experience difficulties that could delay or prevent the successful
development,  introduction  or  marketing  of new or improved systems or process
technologies.  These  new  and improved systems and process technologies may not
meet  the  requirements  of  the  marketplace  and  achieve  market  acceptance.
Furthermore,  despite  testing by us, difficulties could be encountered with our
products  after  shipment,  resulting  in  loss  of  revenue  or delay in market
acceptance  and  sales,  diversion  of  development  resources,  injury  to  our


                                       10
<PAGE>
reputation  or  increased  service and warranty costs. The success of new system
introductions  is  dependent on a number of factors, including timely completion
of  new  system  designs  and market acceptance. If we are unable to improve our
existing  systems  and  process  technologies  or to develop new technologies or
systems,  we  may  lose  sales  and  customers.

COMPETITION

     The  global  semiconductor  fabrication  equipment  industry  is  intensely
competitive  and  is  characterized  by rapid technological change and demanding
customer  service  requirements. Our ability to compete depends upon our ability
to  continually  improve our products, processes and services and our ability to
develop  new  products  that  meet  constantly  evolving  customer requirements.

     A substantial capital investment is required by semiconductor manufacturers
to  install  and  integrate  new  fabrication  equipment  into  a  semiconductor
production  line.  As a result, once a semiconductor manufacturer has selected a
particular  supplier's products, the manufacturer often relies for a significant
period  of time upon that equipment for the specific production line application
and  frequently  will  attempt  to  consolidate  its  other  capital  equipment
requirements  with  the  same  supplier.  It  is  difficult  for us to sell to a
particular  customer  for  a  significant period of time after that customer has
selected  a  competitor's  product,  and it may be difficult for us to unseat an
existing  relationship that a potential customer has with one of our competitors
in  order  to  increase  sales  of  our  products  to  that  customer.

     Each  of  our  product  lines competes in markets defined by the particular
wafer fabrication process it performs. In each of these markets we have multiple
competitors.  At  present, however, no single competitor competes with us in all
of  the  same  market  segments  in  which  we  compete.  Competitors in a given
technology  tend  to  have  different  degrees of market presence in the various
regional  geographic  markets.  Competition  is based on many factors, primarily
technological  innovation, productivity, total cost of ownership of the systems,
including  yield, price, product performance and throughput capability, quality,
contamination  control,  reliability  and  customer support. We believe that our
competitive  position  in  each  of  our  markets is based on the ability of our
products  and  services  to  address  customer  requirements  related  to  these
competitive  factors.

     Our  direct competitors in the CVD tungsten silicide market include Applied
Materials,  Inc.  and  Tokyo  Electron,  Ltd.  Our direct competitors in the ALD
market  include ASM International, ASML and Veeco Instruments.  Competition from
these  competitors  increased  in  2001  and  2002,  and  we  expect  that  this
competition  will continue to intensify. We believe that we compete favorably on
each  of  the  competitive  elements  in  this  market.

     We may not be able to maintain our competitive position against current and
potential  competition.  New  products,  pricing  pressures,  rapid  changes  in
technology  and other competitive actions from both new and existing competitors
could  materially  affect  our  market  position.  Some  of our competitors have
substantially greater installed customer bases and greater financial, marketing,
production,  technical and other resources than we do and may be able to respond
more  quickly  to  new  or  changing  opportunities,  technologies  and customer
requirements. Our competitors may introduce or acquire competitive products that
offer  enhanced  technologies  and  improvements.  In  addition,  some  of  our
competitors  or  potential  competitors  have  greater name recognition and more
extensive  customer  bases  that  could be leveraged to gain market share to our
detriment. We believe that the semiconductor equipment industry will continue to
be subject to increased consolidation, which will increase the number of larger,
more  powerful  companies  and  increase  competition.


                                       11
<PAGE>
MANUFACTURING  AND  SUPPLIERS

     Our  manufacturing  operations  are  based  in  our  Sunnyvale,  California
facility  and  consist  of  procurement,  subassembly,  final assembly, test and
reliability  engineering.  Our  manufacturing  facility maintains and operates a
Class-1  clean  room  to demonstrate integrated applications with its customers.
The  LYNX and StrataGem family systems are based on an outsourced wafer-handling
platform,  enabling  us  to  use  a  large  number  of  common subassemblies and
components.  Many  of  the major assemblies are procured completely from outside
sources.  We  focus  our  internal  manufacturing  efforts  on  those  precision
mechanical and electro-mechanical assemblies that differentiate our systems from
those  of  our  competitors.

     Most  of  the  components  for  our  thin  film  systems  are  produced  in
subassemblies  by  independent  domestic  suppliers  according to our design and
procurement  specifications.  We  anticipate  that the use of such subassemblies
will continue to increase to achieve additional manufacturing efficiencies. Many
of these components are obtained from a limited group of suppliers. In addition,
a  limited  number  of these components are available from only one supplier. We
generally  acquire  these  components  on  a  purchase order basis and not under
long-term  supply  contracts.  Our  reliance on outside vendors generally, and a
limited  group  of  suppliers in particular, involves several risks, including a
potential  inability  to  obtain  an  adequate supply of required components and
reduced  control  over  pricing  and  timely  delivery  of  components.

     Because the manufacture of certain of these components and subassemblies is
an  extremely  complex  process  and  can  require  long  lead  times,  we could
experience  delays  or shortages caused by suppliers. We are not currently aware
of  any  specific  problems  regarding the availability of components that might
significantly delay the manufacturing of our systems in the future. However, the
inability to develop alternate sources or to obtain sufficient source components
as  required  in  the  future,  could result in delays of product shipments that
would  have a material adverse effect on our business, results of operations and
financial  condition.

     We  are  subject  to  a variety of federal, state and local laws, rules and
regulations  relating  to  the use, storage, discharge and disposal of hazardous
chemicals  used  during  our  sales demonstrations and research and development.
Failure to comply with present or future regulations could result in substantial
liability  to us, suspension or cessation of our operations, restrictions on our
ability  to  expand at our present locations or requirements for the acquisition
of  significant  equipment  or  other  significant  expense.  To  date,  we have
adequately  complied  with  environmental rules and regulations. Such compliance
has  not  materially  affected  our  operations.

     In  December  2002 we received ISO 9001-2000 and ISO 14001 Certification by
NSAI,  a  qualified  examiner  for  ISO  Certification.

INTELLECTUAL  PROPERTY

     We  believe  that  because  of  the  rapid  technological  change  in  the
semiconductor  industry,  our  future  prospects  will depend primarily upon the
expertise  and  creative  skills  of  our  personnel  in process technology, new
product development, marketing, application engineering and product engineering,
rather  than  on  patent  protection. Nevertheless, we have a policy to actively
pursue  domestic  and foreign patent protection to cover technology developed by
us.  We hold 33 United States patents with 17 patent applications pending in the
United  States  as  well  as  several  foreign  patents  and patent applications
covering  various  aspects  of our products and processes. Where appropriate, we
intend  to  file  additional  patent applications to strengthen our intellectual
property  rights.


                                       12
<PAGE>
     Although  we  attempt  to  protect our intellectual property rights through
patents, copyrights, trade secrets and other measures, we cannot be sure that we
will  be  able  to  protect our technology adequately, and our competitors could
independently  develop  similar  technology,  duplicate  our  products or design
around our patents. To the extent we wish to assert our patent rights, we cannot
be sure that any claims of our patents will be sufficiently broad to protect our
technology  or  that  our  pending  patent  applications  will  be approved.  In
addition, litigation is uncertain, expensive and time consuming and there can be
no  assurance that we will prevail in any litigation.  Regardless of the results
of  any  such litigation, the related costs could have a material adverse effect
on  our  business and financial condition.  Moreover,  there can be no assurance
that  any  patents  issued  to  us  will  not  be  challenged,  invalidated  or
circumvented,  that any rights granted under these patents will provide adequate
protection  to  us,  or  that  we  will have sufficient resources to protect and
enforce  our  rights.  In  addition,  the laws of some foreign countries may not
protect  our  proprietary  rights  to  as  great an extent as do the laws of the
United  States.

     From  time  to  time,  we  may  receive notices from third parties alleging
infringement  of  patents  or intellectual property rights.  We are currently in
litigation  with ASM America, Inc ("ASMA") as discussed below.  It is our policy
to  respect  all  parties'  legitimate intellectual property rights, and we will
defend  against  such  claims  or  negotiate licenses on commercially reasonable
terms  where  appropriate.  However,  no  assurance can be given that, if we are
required  to  obtain  licenses  to third party intellectual property, we will be
able  to  negotiate  necessary  licenses on commercially reasonable terms, or at
all,  or  that any litigation resulting from third party claims would not have a
material  adverse  effect  on  our  business  and  financial  results.

     On  June  6,  2001,  ASMA filed a patent infringement action against Genus.
ASMA's  Complaint  alleges that Genus is directly and indirectly infringing U.S.
Patent  No.  5,916,365  ("the '365 Patent"), entitled "Sequential Chemical Vapor
Deposition,"  and U.S. Patent No. 6,015,590 ("the '590 Patent") entitled "Method
For  Growing  Thin  Films," which ASMA claims to own or exclusively license. The
Complaint  seeks  monetary  and  injunctive  relief. Genus' served its Answer to
ASMA's complaint on August 1, 2001. Also on August 1, 2001, Genus counterclaimed
against  ASMA  and ASM International, N.V. ("ASMI") for (1) infringement of U.S.
Patent  No.  5,294,568 ("the '568 Patent") entitled "Method of Selective Etching
Native  Oxide";  (2)  declaratory  judgment  that  the '365 and '590 Patents are
invalid,  unenforceable,  and  not  infringed  by  Genus;  and  (3)  antitrust
violations.  An initial Case Management Conference was held on October 16, 2001.
On  January  9, 2002, the Court issued an order granting ASMA leave to amend its
complaint  to  add  an  individual  as  a party and to add a claim that Genus is
directly and indirectly infringing U.S. Patent No. 4,798,165 ("the '165 Patent")
entitled "Apparatus for Chemical Vapor Deposition Using an Axially Symmetric Gas
Flow"),  which  ASMA  claims to own. The court also severed and stayed discovery
and  trial of Genus' antitrust claims until after trial of the patent claims. On
February  4,  2002,  Genus served its Amended Answer to ASMA's amended complaint
and counterclaimed against ASMA for declaratory judgment that the '165 Patent is
invalid,  unenforceable,  and  not  infringed  by Genus. On August 15, 2002, the
Court  issued  a  claim  construction  order  regarding the '590, '365, and '598
Patents.  A  claim  construction  hearing  regarding the '165 Patent was held on
September  26,  2002, and the Court issued a claim construction ruling regarding
this  patent on November 13, 2002. On September 23, 2002 Genus filed motions for
summary  judgment  on  noninfringement  regarding  the '590 and '365 Patents. On
November  20,  2002,  the  Court  granted  Genus' motion for summary judgment of
noninfringement  of  the  '365  Patent.  On  January 10, 2003, the Court granted
Genus'  motion  for  summary  judgment  of noninfringement of the '590 Patent. A
hearing  for  dispositive  motions on the remaining patent claims in the case is
currently  set for June 20, 2003, and trial on those claims is currently set for
January  12,  2004.


                                       13
<PAGE>
     We intend to defend our position vigorously. The outcome of this litigation
is  uncertain,  however,  and we may not prevail. Should we be found to infringe
any  of  the patents asserted, in addition to potential monetary damages and any
injunctive  relief granted, we would need either to obtain a license from ASM to
commercialize  our products or redesign our products so they do not infringe any
of  these  patents.  If  we  were  unable  to  obtain  a  licenses  or  adopt  a
non-infringing  product  design, we may not be able to proceed with development,
manufacture and sale of our atomic layer products. In this case our business may
not  develop  as  planned,  and  our  results  could  materially  suffer.

EMPLOYEES

     As  of December 31, 2002, we employed 134 full-time and temporary employees
worldwide,  29 of which were engaged in research and development. The success of
our future operations depends in large part on our ability to recruit and retain
qualified  employees, particularly those highly skilled design, process and test
engineers involved in the manufacture of existing systems and the development of
new  systems  and  processes.  The  competition  for  such personnel is intense,
particularly  in the San Francisco bay area, where our headquarters are located.
At  times we have experienced difficulty in attracting new personnel, and we may
not  be  successful  in  retaining or recruiting sufficient key personnel in the
future. None of our employees is represented by a labor union, and we have never
experienced  a  work stoppage, slowdown or strike. We consider our relationships
with  our  employees  to  be  good.

     Information  regarding  our  foreign  and  domestic  operations  and export
revenues  is  included  in  Note  12  of the Notes to the Consolidated Financial
Statements.

     Genus'  financial  statements  are  available  at  the Company's website at
www.Genus.com  and  the  SEC's  website  at  www.SEC.gov.
-------------

ITEM 2.   PROPERTIES

     We  maintain  our  headquarters, manufacturing and research and development
operations  in  Sunnyvale,  California.  We have a lease for a facility totaling
approximately 100,500 square feet.  Our lease for the Sunnyvale facility expires
in  October  2012.  Commencing  in  2003,  our  annual  rental  expense  will be
$1,828,000,  which  includes $200,000 per year to recognize the impact of future
rental  increases on a straight-line basis. Our monthly cash rent payments start
at a lower rate in the first few years and then increase periodically during the
term  of  the  lease.  We  also have leases for our sales and support offices in
Seoul, South Korea and Tokyo, Japan.  The rent expense increase between 2002 and
2003  was  primarily due to increased monthly rent amounts in the United States.
We  believe  that  our  existing  facilities  are  adequate  to meet our current
requirements  and that suitable additional or substitute space will be available
as  needed.

     In 2000, we subleased approximately 27,000 square feet to a third party. In
September  2001, this third party terminated their sublease and we reclaimed the
office  space.  Total  amount  of  sublease  income  in  2001  was approximately
$596,000.  In  2002,  we  had  no  sublease  income.

ITEM 3.   LEGAL PROCEEDINGS

     On  June  6,  2001,  ASM  America, Inc ("ASMA") filed a patent infringement
action  against  Genus.  ASMA's  Complaint  alleges  that  Genus is directly and
indirectly  infringing  U.S.  Patent No. 5,916,365 ("the '365 Patent"), entitled
"Sequential Chemical Vapor Deposition," and U.S. Patent No. 6,015,590 ("the '590
Patent")  entitled  "Method  For  Growing  Thin  Films,"  which


                                       14
<PAGE>
ASMA  claims  to  own  or exclusively license.  The Complaint seeks monetary and
injunctive  relief.  Genus'  served  its answer to ASMA's complaint on August 1,
2001.  Also  on  August  1,  2001,  Genus  counterclaimed  against  ASMA and ASM
International,  N.V.  ("ASMI") for (1) infringement of U.S. Patent No. 5,294,568
("the  '568  Patent")  entitled  "Method of Selective Etching Native Oxide"; (2)
declaratory  judgment that the '365 and '590 Patents are invalid, unenforceable,
and  not  infringed  by  Genus;  and  (3) antitrust violations.  An initial Case
Management  Conference  was  held  on October 16, 2001.  On January 9, 2002, the
Court  issued  an  order  granting  ASMA  leave to amend its complaint to add an
individual  as  a party and to add a claim that Genus is directly and indirectly
infringing U.S. Patent No. 4,798,165 ("the '165 Patent") entitled "Apparatus for
Chemical  Vapor  Deposition  Using  an  Axially Symmetric Gas Flow"), which ASMA
claims  to own.  The court also severed and stayed discovery and trial of Genus'
antitrust  claims  until after trial of the patent claims.  On February 4, 2002,
Genus  served  its Amended Answer to ASMA's amended complaint and counterclaimed
against  ASMA  for  declaratory  judgment  that  the  '165  Patent  is  invalid,
unenforceable, and not infringed by Genus.  On August 15, 2002, the Court issued
a  claim construction order regarding the '590, '365, and '598 Patents.  A claim
construction  hearing  regarding the '165 Patent was held on September 26, 2002,
and  the  Court  issued  a  claim  construction  ruling regarding this patent on
November  13,  2002.  On  September  23,  2002  Genus  filed motions for summary
judgment  on  noninfringement  regarding the '590 and '365 Patents.  On November
20,  2002,  the  Court  granted  Genus'  motion  for  summary  judgment  of
noninfringement  of  the  '365  Patent.  On  January 10, 2003, the Court granted
Genus'  motion  for  summary judgment of noninfringement of the '590 Patent.   A
hearing  for  dispositive  motions on the remaining patent claims in the case is
currently  set for June 20, 2003, and trial on those claims is currently set for
January  12,  2004.

     We  may  in  the future be party to litigation arising in the course of our
business, including claims that we allegedly infringe third party trademarks and
other  intellectual property rights. Such claims, even if not meritorious, could
result  in  the  expenditure  of significant financial and managerial resources.

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

None.


                                       15
<PAGE>
EXECUTIVE OFFICERS OF THE REGISTRANT

     As  of  December  31,  2002, the executive officers of the Company, who are
elected  by  and  serve  at  the  discretion  of  the Board of Directors, are as
follows:

<TABLE>
<CAPTION>
NAME                     AGE  POSITION
-----------------------  ---  ------------------------------------------------------
<S>                      <C>  <C>
William W.R. Elder. . .   64  Chairman and Chief Executive Officer
Thomas E. Seidel, Ph.D.   67  Executive Vice President, Chief Technical Officer
Shum Mukherjee. . . . .   52  Executive Vice President, Finance, Chief Financial Officer
Werner Rust . . . . . .   60  Vice President, Worldwide Sales & Marketing
Eddie Lee . . . . . . .   51  Executive Vice President, Advanced Engineering
</TABLE>

     Except  for  Mr.  Mukherjee, Mr. Rust and Mr. Lee, all of the officers have
been  associated  with us in their present or other capacities for more than the
past  five  years.  Officers  are elected annually by the Board of Directors and
serve  at  the  discretion of the Board. There are no family relationships among
our  executive  officers.

     WILLIAM W.R. ELDER was a founder of Genus and is our Chairman of the Board,
President  and our Chief Executive Officer. From October 1996 to April 1998, Dr.
Elder  served  only as Chairman of the Board. From April 1990 to September 1996,
Dr.  Elder  was  Chairman of the Board, President and Chief Executive Officer of
the  Company.  From  November  1981 to April 1990, Dr. Elder was President and a
director  of  the  Company.

     THOMAS  E.  SEIDEL  has  served  as  our Executive Vice President and Chief
Technical Officer since January 1996. From July 1988 to January 1996, Dr. Seidel
was  associated  with  SEMATECH, a semiconductor-industry consortium, in various
senior management positions, most recently as Chief Technologist and Director of
Strategic  Technology.

     SHUM  MUKHERJEE  has  served as our Executive Vice President of Finance and
Chief  Financial  Officer  since October 2001. Mr. Mukherjee has broad financial
management experience. From 1978 to 1984, Mr. Mukherjee was with Ford of Europe,
Raychem Corporation (now a division of Tyco International) from 1984 to 1998 and
with  E*TRADE  Group from 1998 to 2001. Mr. Mukherjee earned a Masters Degree in
Management  from  the  Sloan  School of Management at Massachusetts Institute of
Technology.

     WERNER  RUST  has  served  as  our  Vice  President  of Sales and Marketing
Worldwide  since  November  2001. Mr. Rust has more than 20 years' experience in
semiconductor  sales  and  marketing.  From  1994  to  1996,  Mr. Rust served as
Director of Marketing at GaSonics. From 1997 to 1998, Mr. Rust served as General
Manager  of  Low-K  Dielectric  at Fairchild Technologies. From 1998 to February
2001,  Mr.  Rust  served  as Director of Marketing at SVG. From February 2001 to
September  2001,  Mr.  Rust served as CMO/Etch of Strategic Marketing at Applied
Materials.

     EDDIE LEE has served as our Executive Vice President, Advanced Technology,
Engineering  and  Strategic  Marketing  since  February 2001. Mr. Lee joined the
Company  in  August  2000,  as  Vice  President  of  New  Technology  Business
Development.  Prior  to  joining  the  Company,  Mr.  Lee  was Vice President of
Technology  at  Silicon  Valley  Group.  Working in the thin film industry since
1974, Mr. Lee has held managerial positions at Honeywell, Advanced Micro Devices
and  Varian.  He  is  currently  on  the  technical  advisory board of two other
privately  held  companies  in  a  non-competing  field  with  Genus.


                                       16
<PAGE>
PART II

ITEM 5.   MARKET  FOR  THE  REGISTRANT'S  COMMON EQUITY AND RELATED SHAREHOLDER
          MATTERS

Common  Stock  Information

     Our  common stock is traded in the over-the-counter market under the NASDAQ
symbol  GGNS.  The only class of Genus securities that is traded is Genus common
stock.  The  high and low closing sales prices for 2002 and 2001 set forth below
are  as reported by the NASDAQ National Market System.  At February 28, 2003, we
had  432  registered  shareholders as reported by Mellon Investor Services.  The
closing sales price of Genus common stock on December 31, 2002, the last trading
day  in  2002,  was  $  2.29.

<TABLE>
<CAPTION>
                                               2002          2001
                                           ------------  ------------
                                           HIGH    LOW   HIGH    LOW
                                           -----  -----  -----  -----
<S>                                        <C>    <C>    <C>    <C>
First Quarter. . . . . . . . . . . . . .   $3.35  $2.26  $4.09  $1.66
Second Quarter . . . . . . . . . . . . .    4.40   1.93   7.28   2.88
Third Quarter. . . . . . . . . . . . . .    1.95   1.00   6.05   1.77
Fourth Quarter . . . . . . . . . . . . .   $2.81  $1.00  $3.25  $1.91
</TABLE>

     We  have  not  paid cash dividends on our common stock since inception, and
our  Board  of  Directors presently intends to reinvest our earnings, if any, in
our business. Accordingly, it is anticipated that no cash dividends will be paid
to  holders  of  common  stock  in  the  foreseeable  future.


                                       17
<PAGE>
<TABLE>
<CAPTION>
ITEM 6.   SELECTED  FINANCIAL  DATA

SELECTED CONSOLIDATED FINANCIAL DATA

                                                            YEAR ENDED DECEMBER 31,
                                               --------------------------------------------------
                                               2002 (3)     2001    2000(3)     1999     1998(1)
                                               ---------  --------  --------  --------  ---------
<S>                                            <C>        <C>       <C>       <C>       <C>
                                                        (IN THOUSANDS, EXCEPT SHARE DATA)

CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenues . . . . . . . . . . . . . . . . . .   $ 39,767   $48,739   $40,638   $28,360   $ 32,431
Costs and expenses:
  Costs of goods sold. . . . . . . . . . . .     29,143    32,500    24,385    16,628     29,600
  Research and development . . . . . . . . .      8,011    12,118     8,659     5,368      8,921
  Selling, general and administrative. . . .     12,621    10,381    10,093     7,930     14,115
  Restructuring and other(2) . . . . . . . .          0         0         0       543      7,308
                                               ---------  --------  --------  --------  ---------
Loss from operations . . . . . . . . . . . .    (10,008)   (6,260)   (2,499)   (2,109)   (27,513)
Other income (expense), net. . . . . . . . .     (1,074)     (336)      108       669        (86)
                                               ---------  --------  --------  --------  ---------
Loss before provision for income taxes and
   cumulative effect of change in accounting
   principle . . . . . . . . . . . . . . . .    (11,082)   (6,596)   (2,391)   (1,440)   (27,599)
Provision for income taxes . . . . . . . . .        538        70       490       177          1
                                               ---------  --------  --------  --------  ---------
Loss before cumulative effect of change in
   accounting principle. . . . . . . . . . .    (11,620)   (6,666)   (2,881)   (1,617)   (27,600)
Cumulative effect of change in accounting
   principle . . . . . . . . . . . . . . . .          0         0    (6,770)        0          0
                                               ---------  --------  --------  --------  ---------
Net loss . . . . . . . . . . . . . . . . . .    (11,620)   (6,666)   (9,651)   (1,617)   (27,600)
Deemed dividends on preferred stock. . . . .          0         0         0         0     (1,903)
                                               ---------  --------  --------  --------  ---------
Net loss attributable to common
   shareholders. . . . . . . . . . . . . . .   $(11,620)  $(6,666)  $(9,651)  $(1,617)  $(29,503)
                                               =========  ========  ========  ========  =========
Net loss per share before cumulative
  effect of change in accounting principle
   Basic . . . . . . . . . . . . . . . . . .      (0.43)    (0.31)    (0.15)    (0.09)     (1.71)
   Diluted . . . . . . . . . . . . . . . . .      (0.43)    (0.31)    (0.15)    (0.09)     (1.71)
Cumulative effect of change in accounting
principle (3)
  Basic. . . . . . . . . . . . . . . . . . .                          (0.36)
  Diluted. . . . . . . . . . . . . . . . . .                          (0.36)
Net loss per share:
  Basic. . . . . . . . . . . . . . . . . . .      (0.43)    (0.31)    (0.51)    (0.09)     (1.71)
  Diluted. . . . . . . . . . . . . . . . . .      (0.43)    (0.31)    (0.51)    (0.09)     (1.71)
Shares used in computing net loss
per share:
  Basic. . . . . . . . . . . . . . . . . . .     26,934    21,163    18,937    18,134     17,248
  Diluted. . . . . . . . . . . . . . . . . .     26,934    21,163    18,937    18,134     17,248
</TABLE>


                                       18
<PAGE>
The  following  are  pro  forma  amounts with the change in accounting principle
related  to  revenue  recognition  applied retroactively to years prior to 2000.

<TABLE>
<CAPTION>
                                 YEAR ENDED DECEMBER 31,
                     ---------------------------------------------
                         2000(3)            1999       1998(1)(2)
                     ----------------  --------------  -----------
                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                  <C>               <C>             <C>
Revenues. . . . . .  $        40,638   $      27,992   $   33,599
Net loss. . . . . .           (2,881)         (3,232)     (25,963)
Net loss per share:
   Basic. . . . . .  $         (0.15)  $       (0.18)  $    (1.51)
   Diluted. . . . .  $         (0.15)  $       (0.18)  $    (1.51)
<FN>
(1)  In  1998,  we  sold  our  ion  implant  equipment  product  line.
(2)  In  1998, we recorded a restructuring charge related to the sale of the ion
     implant  equipment  product  line  and  the  restructuring of the thin film
     operation.
(3)  In  2000, the Company changed its accounting method for recognizing revenue
     to  comply  with  Staff  Accounting  Bulletin  number  101.
</TABLE>

<TABLE>
<CAPTION>
                                                         YEAR ENDED DECEMBER 31,
                                             --------------------------------------------
                                               2002     2001     2000     1999    1998
                                             -------  --------  -------  -------  -------
<S>                                          <C>      <C>       <C>      <C>      <C>
                                                 (IN THOUSANDS, EXCEPT PER SHARE DATA)
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents . . . . . . . . .  $11,546  $ 3,043   $ 3,136  $ 6,739  $ 8,125
Working capital . . . . . . . . . . . . . .    9,650   (2,600)      896   14,151   15,799
Total assets. . . . . . . . . . . . . . . .   41,510   35,902    44,535   27,744   31,827
Convertible notes and long term liabilities    5,571        0         0        0       50
Redeemable Series B convertible
   preferred stock. . . . . . . . . . . . .        0        0         0        0      773
Total shareholders' equity. . . . . . . . .  $13,797  $12,128   $11,292  $19,378  $19,953
</TABLE>


                                       19
<PAGE>
ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS

     The  following  discussion  and  analysis  of  our  financial condition and
results  of operations should be read in conjunction with "Selected Consolidated
Financial  Data"  and  our  consolidated  financial statements and related notes
included elsewhere in this Annual Report on Form 10-K. In addition to historical
information,  the discussion in this Annual Report on Form 10-K contains certain
forward-looking  statements  that  involve  risks  and uncertainties. Our actual
results  could differ materially from those anticipated by these forward-looking
statements  due  to factors, including but not limited to, those set forth under
"Risk  Factors"  and  elsewhere  in  this  Annual  Report  on  Form  10-K.

OVERVIEW

     Since  1982,  we  have been supplying advanced manufacturing systems to the
semiconductor  industry  worldwide.  Major  semiconductor  manufacturers use our
leading-edge  thin  film  deposition equipment and process technology to produce
integrated circuits, commonly called chips, that are incorporated into a variety
of products including personal computers, communications, equipment and consumer
electronics.  We  pioneered  the  development of chemical vapor deposition (CVD)
tungsten silicide, which is used in certain critical steps in the manufacture of
integrated  circuits. In addition, today we are leading the commercialization of
atomic  layer  deposition,  also  known  as  ALD technology and of our StrataGem
family  of  products.  This  technology is designed to enable a wide spectrum of
thin  film applications such as aluminum oxide, hafnium oxide and other advanced
dielectric  insulating  and  conducting  metal  barrier  materials  for advanced
integrated  circuit  manufacturing.

     Genus'  consolidated  financial statements have been prepared in accordance
with  accounting  principles  generally accepted in the United States of America
(US  GAAP). The preparation of these financial statements requires management to
make  estimates  and  assumptions  that affect the reported amount of assets and
liabilities  at  the date of the financial statements and the reported amount of
revenues  and  expenses  during  the  reporting  period.  On  a quarterly basis,
management  reevaluates  its  estimates  and  judgments  based  on  historical
experience  and relevant current conditions and adjusts the financial statements
as  required.

     Our  global  customer  base  consists of semiconductor manufacturers in the
United  States,  Europe  and Asia.  Over the past few years we were dependent on
one customer, Samsung, for a majority of our thin film product revenue. In 2002,
Samsung  accounted for 58% of our revenue, 73% in 2001 and 92% in 2000. There is
no  long-term  agreement between us and Samsung.   Over the past three years, we
have  gradually  expanded  our customer base and at the end of 2002, we had nine
customers.

     During  the  third  quarter  of  2002,  Genus increased efforts to generate
revenue  from  service  activities by providing on-site services and support for
fees  based  on  the time spent by our engineers.  Currently, revenues from such
services  are  not material, but the Company hopes to expand service revenues in
the  future.

     International  revenue accounted for 72% of revenue in 2002, 93% of revenue
in 2001 and 98% of revenue in 2000. We anticipate that international sales, and,
in  particular,  sales  from  South  Korea,  will  continue  to  account  for  a
significant  portion  of  our  total  revenue.

     The local currency is the functional currency for our foreign operations in
South  Korea  and  Japan.  All  other foreign operations are dollar denominated.
Gains  or  losses  from  translation  of  foreign  operations  where  the  local
currencies  are  the  functional  currency  are  included  as  a  component  of
shareholders'  equity and comprehensive loss. Foreign currency transaction gains
and  losses are recognized in the statement of operations.  To date, these gains
and  losses  have  not  been  material.


                                       20
<PAGE>
     Business  activity  in  the  semiconductor  and semiconductor manufacturing
equipment  industries  has  been  cyclical;  for  this and other reasons, Genus'
results  of  operations  for  the twelve months ended December 31, 2002, may not
necessarily  be  indicative  of  future  operating  results.

     In order to support our business strategy and maintain our competitiveness,
we will be required to make significant investments in research and development.
In  addition,  we  will need to divert additional resources to administration to
comply  with  our  reporting  requirement  under the Sarbanes-Oxley Act of 2002.
Based  on  our  cost  structure,  we believe selling, general and administrative
expenses  will  increase  as  sales  volumes increase. We depend on increases in
sales  in  order  to  attain profitability. If our sales do not increase, we may
need  to  reduce our operating costs, which could impair our competitiveness and
our  future  viability.

Critical  Accounting  Policies

     The  financial  statements  are  prepared  in  conformity  with  accounting
principles  generally  accepted  in  the  United  States  of America and require
management  to  make  estimates  and  assumptions  in certain circumstances that
affect  amounts  reported  in the accompanying consolidated financial statements
and  related  footnotes.  As  such,  we  are required to make certain estimates,
judgments  and  assumptions  that  we  believe  are  reasonable  based  upon the
information  available.  These  estimates  and  assumptions  affect the reported
amounts  of  assets  and liabilities at the date of the financial statements and
the  reported amounts of revenues and expenses during the periods presented. The
significant accounting policies which we believe are the most critical to aid in
fully  understanding  and  evaluating our reported financial results include the
following:

Revenue  recognition

     The Company derives revenue from the sale and installation of semiconductor
manufacturing  systems and from engineering services and the sale of spare parts
to  support  such  systems.

     Equipment  selling  arrangements  generally  involve  contractual  customer
acceptance  provisions and installation of the product occurs after shipment and
transfer  of title. Effective January 1, 2000, at which time the Company did not
have  verifiable  objective evidence of the fair value of installation services,
the Company commenced deferring recognition of revenue from such equipment sales
until  installation was complete and the product was accepted by the customer to
comply  with  the  provisions  of  Securities  and  Exchange  Commission  Staff
Accounting  Bulletin  No.  101.  In  the  third  quarter  of  2002,  the Company
established  verifiable  objective  evidence  of  fair  value  of  installation
services,  one  of  the  requirements  for  Genus  to  recognize  revenue  for
multiple-element  arrangements  prior  to  completion  of installation services.
Accordingly,  under  SAB  101,  if  Genus  has  met  defined customer acceptance
experience  levels  with  both  the customer and the specific type of equipment,
then  the  Company  recognizes  equipment  revenue upon shipment and transfer of
title.  A  portion  of  revenue  associated  with  undelivered  elements such as
installation  and  on-site  support related tasks is recognized for installation
when  the installation is completed and the customer accepts the product and for
on-site  support  as the support service is provided. For products that have not
been  demonstrated  to  meet  product  specifications  for the customer prior to
shipment,  revenue  is recognized when installation is complete and the customer
accepts  the  product.  Revenues  can fluctuate significantly as a result of the
timing  of  customer acceptances. At December 31, 2002 and 2001, the Company had
deferred  revenue  of  $2.7  million  and  $7.4  million,  respectively.


                                       21
<PAGE>
Revenues  from  sale  of  spare  parts  are  generally recognized upon shipment.
Revenues  from engineering services are recognized as the services are completed
over  the  duration  of  the  contract.

Accrual for warranty expenses

     The  Company  provides one-year labor and two-year material warranty on its
products.  Warranty  expenses are accrued at the time that revenue is recognized
from  the  sale  of  products. At present, based upon historical experience, the
Company  accrues  material warranty equal to 2% and 5% of shipment value for its
200mm  and 300mm products, respectively, and labor warranty equal to $20,000 per
system  for  both its 200mm and 300mm products. At the end of every quarter, the
Company reviews its actual spending on warranty and reassesses if its accrual is
adequate  to cover warranty expenses on the systems in the field which are still
under  warranty.  Differences  between the required accrual and recorded accrual
are  charged  or  credited  to warranty expenses for the period. At December 31,
2002  and 2001, the Company had accrued $970,000 and $803,000, respectively, for
material  and  labor  warranty  obligations.  Actual  results  could differ from
estimates.  In the unlikely event that a problem is identified that would result
in  the  need  to  replace  components  on  a  large  scale, we would experience
significantly  higher  expenses  and  our  results  of  operations and financial
condition  could  be  materially  and  adversely  effected.

Valuation  of  Inventories

     Inventories  are recorded at the lower of standard cost, which approximates
actual  cost  on  a  first-in-first-out  basis,  or  market value. We write down
inventories  to  net  realizable  value  based  on  forecasted demand and market
conditions.  Raw  material and purchased parts include spare parts inventory for
systems  were  $4.5  million  and  $4.4  million  at December 31, 2002 and 2001,
respectively.  The  forecasted  demand  for  spare  parts takes into account the
Company's  obligations  to  support systems for periods that are as long as five
years.

     Actual  demand  and market conditions may be different from those projected
by  the  Company. This could have a material effect on operating results and the
financial  position.  For  example  in 2002, as a result of unfavorable economic
conditions diminished demand for semiconductor products, and a change in the mix
of  products  sold,  the  Company  experienced  a  decline in sales and recorded
inventory charges of $2.2 million related primarily to excess inventories. These
charges  have  been  included in cost of sales in our consolidated statements of
operations.  At  December  31,  2002  and  2001,  the  Company  had written down
inventories  on  hand  by  $4.3  million  and  $2.1  million,  respectively.

Valuation  of  research  and  demonstration  equipment

     Equipment  includes  research and demonstration equipment, which is located
in  our  Applications Laboratory and is used to demonstrate to our customers the
capabilities  of  our  equipment  to process wafers and deposit films. The gross
value  of  demonstration  equipment is based on the cost of materials and actual
factory  labor  and  overhead  expenses incurred in manufacturing the equipment.
Costs  related  to refurbishing or maintaining existing demonstration equipment,
which  do  not  add to the capabilities or useful life of the equipment, are not
capitalized  and  are expensed as incurred. Demonstration equipment is stated at
cost  and  depreciated  over  a  period  of five years. If the Company sells the
equipment,  it  may  experience  gross margins that are different from the gross
margins  achieved  on  equipment  manufactured  specifically  for  customers.


                                       22
<PAGE>
RESULTS OF OPERATIONS

Net Sales

     Revenues  were $39.8 million, $48.7 million and $40.6 million in 2002, 2001
and  2000,  respectively. Revenues were down 18% in 2002 from 2001 and up 20% in
2001  from  2000.  Revenue from the sale of systems, spares and from services in
2002  were  $32.9  million, $6.5 million and $376,000, respectively. Revenues in
2002  included  four  200mm  systems  using CVD technology, four StrataGem 200mm
systems, one StrataGem 200mm upgrade, two 300mm systems using CVD technology and
one  StrataGem 300mm system. Revenues in 2001 included seven 200mm systems using
CVD  technology,  one 300mm system using CVD technology and four StrataGem 200mm
systems.  Revenues  in  2000  were  recognized  on  twelve  systems.

     Export  sales  were  72%,  93%  and 98% of total revenues in 2002, 2001 and
2000,  respectively.

Gross  Profit  Margin

     Gross  profit  margin  in 2002 was 27% of revenues compared to 33% in 2001.
Average  selling  prices  were  slightly  higher in 2002 than 2001. Gross profit
margins  were  lower  in  2002  due  to  the  following  factors:

          -    Our  revenues  were  lower  in  2002  due  to  customer delays in
               purchases.  Our  manufacturing  overheads  did not decline at the
               rate  that  revenues  declined.

          -    We  incurred  manufacturing inefficiencies of $626,000 related to
               expediting  components  supplies  and  compressing  processing
               schedules to help our customers meet their production commitments
               in  the  fourth  quarter  of  2002.

          -    We  recorded  provisions  related to inventory reserves for spare
               parts  for our CVD equipment of $2.2 million and $317,000 in 2002
               and  2001,  respectively.

          -    Severance  costs  in  cost  of sales were $178,000 and $77,000 in
               2002  and  2001,  respectively.

     Gross  profit margin in 2001 was 33% of revenues compared to a gross profit
margin  of  40%  in  2000. Although average selling prices in 2001 were slightly
higher than in 2000, overall gross margin was lower in 2001 due to the following
two  factors:

          -    First,  capacity  variances  were  incurred  due  to  our  lower
               production  volume, particularly in the fourth quarter, and fixed
               costs  related  to  manufacturing  and  international  service
               operations. We partially addressed this capacity issue in October
               2001  by  laying  off 10 employees and implementing an across the
               board  reduced  work  week.

          -    Second,  we  incurred  incremental  manufacturing  variances  of
               approximately  $1.5  million,  primarily  attributable  to  the
               introduction  of  LYNX3,  and  excess-inventory  write-offs  of
               approximately  $317,000  during  the  third  quarter  of  2001.

          -    Severance  costs  in  cost of sales were $77,000 and none in 2001
               and  2000,  respectively.

     We have implemented additional purchasing controls and have worked with our
suppliers  and customers to better time the delivery of our products. We believe
that  these  actions  will assist us in improving our gross margins. However, we
may  need  to  hire  additional manufacturing personnel to address the increased
volumes  and  bookings,  which  may  cause us to incur start up costs with these
personnel  which  may  negatively  impact  margins  in  the  short  term.


                                       23
<PAGE>
Research  and  Development

     Research  and  Development  (R&D) expenses were $8.0 million, $12.1 million
and  $8.7 million in 2002, 2001 and 2000 respectively.  As a percentage of total
revenues, R&D expenses were 20%, 25% and 21% of total revenues in 2002, 2001 and
2000  respectively.  The  decrease  in  absolute  dollars and as a percentage of
sales  in  2002  was  due  to  cost saving measures implemented beginning in the
fourth  quarter  of  2001,  including  reduced  use of outside consultants.  The
increase  in  2001  was  due  to  the  addition  of  significant capacity in our
demonstration lab, which enabled us to compile customer demos of wafers in 15 to
30  days,  increased  usage  of  outside  consultants  and  higher  depreciation
expenses.

     Severance  costs  in R&D were $129,000, $43,000, and none in 2002, 2001 and
2000,  respectively.

     Going  forward,  we expect our R&D expenses to be higher in 2003 to support
customer  requested  new  application  development  and  higher  investments  in
information  and  control  systems.

Selling,  General  and  Administrative

     Selling,  general  and  administrative  (SG&A) expenses were $12.6 million,
$10.4  million  and  $10.1  million  in  2002, 2001 and 2000 respectively.  As a
percentage  of sales, SG&A expenses were 32%, 21% and 25% in 2002, 2001 and 2000
respectively.  The increase in absolute dollars and as a percentage of net sales
in  2002  was  primarily due to higher legal expenses of $2.2 million related to
the  ASM  lawsuit.  In  addition,  the  Company  received sub-leasing revenue of
$596,000  that  was  offset against 2001 SG&A expenses.  The Company had minimal
governmental  grants  and  no  sub-leasing income in 2002.  The decrease in SG&A
expenses  as  a  percentage  of  net  sales  in  2001  when compared to 2000 was
primarily  due  to  higher  net  sales  in  2001.

     Severance  costs  in SG&A were $152,000, $46,000 and none in 2002, 2001 and
2000,  respectively.

     Going  forward,  we  expect our SG&A expenses to be higher due primarily to
increased  commissions  as  well as increased administrative expenses associated
with  enhanced  reporting  requirements  under  the  Sarbanes-Oxley Act of 2002.

Interest  Expense

     Interest  expenses  were  $1.2  million  and  $496,000  in  2002  and 2001,
respectively.  The  increase  in  2002  was  due  to an increase in net interest
charges  on  bank loans of approximately $452,000, and interest cost of $727,000
relating  to  the convertible notes.   In connection with the convertible notes,
the  Company  expects  to  incur  interest expense of $1.4 million in 2003.  The
interest  expense  includes  the  accretion  of  the  value  of  the  beneficial
conversion feature and amortization of issuance costs related to the convertible
notes.

     Interest  expenses  were  $496,000  and  $118,000  in  2001  and  2000,
respectively.  The  increase  in  2001  was  due  to  increased  levels  of debt
outstanding  in  2001,  compared  to  2000.

Provision  for  Income  Taxes

     We  recorded  tax  expenses of $538,000, $70,000 and $490,000 in 2002, 2001
and  2000, respectively, for our South Korean subsidiary.  We did not record any
provision for income taxes in the United States and Japan, as we incurred losses
in  these  entities.  We  provide  for  a  full  valuation allowance against tax
benefit  associated  with  these  losses.


                                       24
<PAGE>
Cumulative  effect  of  change  in  accounting  principle

    In  2000,  we  recorded  a  non-recurring  charge  of  $6.8  million for the
cumulative effect of a change in accounting principle due to the adoption of SAB
101.  This  amount  represents  the  gross profit on systems that shipped during
1999,  but  did  not  receive final customer acceptance during 1999. Included in
this  number  were 5 systems and some upgrades, which had a total sales value of
$13.5  million.

     In December 2000, the Company changed its accounting method for recognizing
revenue  on  sales  with  an  effective  date  of January 1, 2000. The Company's
selling  arrangements  generally  involve  contractual  customer  acceptance
provisions and installation of the product occurs after shipment and transfer of
title.  As a result, effective January 1, 2000, to comply with the provisions of
Securities  and  Exchange  Commission  Staff  Accounting  Bulletin  No. 101, the
Company  deferred  recognition  of  revenue  from  such  equipment  sales  until
installation  was  complete  and  the  product  was  accepted  by  the customer.

     Prior  to  the  introduction  of  SAB  101,  the Company recognized revenue
related  to  systems upon shipment. A provision for the estimated future cost of
system  installation,  warranty  and  commissions  was recorded when revenue was
recognized.  The  cumulative  effect  in prior years of the change in accounting
method  was  a  charge  of  $6.8  million  or  $0.36  per  diluted  share.

     In  the third quarter of 2002, the Company established verifiable objective
evidence  of  fair  value  of installation services, one of the requirements for
Genus to recognize revenue for multi-element arrangements prior to completion of
installation  services.  Accordingly,  under  SAB  101, if Genus has met defined
customer  acceptance  experience  levels with both the customer and the specific
type  of  equipment, then the Company recognizes equipment revenue upon shipment
and  transfer  of  title.  As a result, the total revenue recognized in 2002 for
equipment sales where installation had not been completed and the system was not
accepted  was  $5.6  million.

     Service  revenue  is  recognized  when  service has been completed over the
duration  of  the  contract.

Liquidity  and  Capital  Resources

     At  December  31,  2002,  our cash and cash equivalents were $11.5 million,
compared to $3.0 million as of December 31, 2001.  Accounts receivable were $7.5
million,  an increase of $3.2 million from $4.3 million as of December 31, 2001,
as  the  majority  of  our  shipments  occurred  in  the  latter  part  of 2002.

     Cash used in operating activities were $12.1 million, $1.9 million and $2.3
million  in 2002, 2001 and 2000 respectively.  Cash used in operating activities
in  2002 consisted primarily of net loss of $11.6 million, decreases in deferred
revenues  of  $4.7 million and accounts payable of $1.9 million, and an increase
in accounts receivable of $3.2 million, partially offset by depreciation of $3.7
million,  provision  for  excess  and  obsolete inventory at $2.2 million and an
increase  in  customer  advances  of  $1.8  million.

     Cash  used by operating activities totaled $1.9 million 2001, and consisted
primarily  of  net  loss  of  $6.7 million and decreases in deferred revenues of
$11.2  million,  partially offset by depreciation of $3.0 million and reductions
in  receivables  of  $4.2 million and reductions in inventories of $9.2 million.
Inventory reductions were primarily related to improved supply chain management,
decreases  in inventory held at customer sites from $9.5 million to $5.1 million
and  to  reductions  in shipment backlog, which reduced from $8.4 million at the
end  of  December  2000  to  $3.2  million  on  December  31,  2001.


                                       25
<PAGE>
     Financing  activities provided cash of $21.0 million, $9.4 million and $4.0
million  in  2002,  2001  and  2000  respectively.  In January 2002, the Company
received  net  proceeds of $7.8 million in a private placement.  In August 2002,
the  Company  received  $7.0  million,  net  of issuance costs, from the sale of
subordinated  convertible notes and warrants.  In addition, the Company received
$1.8 million from warrant exercises and $654,000 from stock option exercises and
the  employee  stock  purchase  plan.

     Financing  activities provided cash of $9.4 million for 2001.  In May 2001,
we  received  approximately  $6.9  million  of net proceeds from the sale of 2.5
million  shares  of  our  common  stock  and warrants for 1.3 million additional
shares  of  our  common  stock.  Additionally,  we  increased our net short-term
borrowings  by  $1.8  million.

     We incurred capital expenditures of approximately $502,000 in 2002 and $7.4
million  in  2001. Expenditures in 2001 were primarily related to the continuing
program  of  upgrading  existing  equipment  in our development and applications
laboratories  to  meet our most advanced system capabilities and specifications,
especially  for  our  ALD  processes.  This  has  improved  our product and film
development capabilities, and increased our customer demonstration capabilities,
which  is  critical  in  the  sales  process.

     Our primary source of funds at December 31, 2002 consisted of $11.5 million
in  cash  and cash equivalents, and $7.5 million of accounts receivable, most of
which  we  have  collected  or  expect to collect during the three months ending
March  31,  2003.

     Significant  financing  transactions  completed  since  December  31,  2001
include  the  following:

     On  December  20, 2001 and as amended on March 27, 2002 and March 20, 2003,
we  maintained  line  of  credit  facilities  from Silicon Valley bank for $15.0
million,  secured  against eligible receivables and inventory. The interest rate
is  prime  plus  1.75% per annum and the facility expires on June 29, 2004.  The
loan  is  collateralized  by a first priority perfected security interest in our
assets  and has a covenant requiring us to maintain a minimum tangible net worth
(calculated  as  the  excess  of total assets over total liabilities adjusted to
exclude  intangible  assets  and balances receivable from officers or affiliates
and  to exclude debt subordinated to Silicon Valley Bank) of $15 million.  As of
December  31,  2002,  there  was  $7.8  million  outstanding  under  this credit
facility.

    On  January  4,  2002,  we  received  gross proceeds of $1.2 million under a
secured loan with CitiCapital, a division of Citigroup. The loan is payable over
36  months, accrues interest of 8.75% per annum and is secured by two systems in
our  demonstration  lab.  There  was  a  $515,000 outstanding balance under this
agreement  at  December  31,  2002.


                                       26
<PAGE>
<TABLE>
<CAPTION>
A  summary  of our contractual obligations as of December 31, 2002 is as follows
(amounts  in  thousands):

                                          Less than                           After 5
                      Total   Revolving     1 year    1-3 years   4-5 years    years
                     -------  ----------  ----------  ----------  ----------  --------
<S>                  <C>      <C>         <C>         <C>         <C>         <C>
Silicon Valley Bank  $ 7,813  $    7,813  $        0  $        0  $        0  $      0
Citicapital              515           0         245         270           0         0
Convertible Notes*     7,125           0           0       7,125           0         0
Operating Leases      18,087         N/A       1,628       3,256       3,452     9,751
                     -------  ----------  ----------  ----------  ----------  --------
                     $33,540  $    7,813  $    1,873  $   10,651  $    3,452  $  9,751
                     =======  ==========  ==========  ==========  ==========  ========
</TABLE>


*In  the  event of a change of control in the Company, the note holder may elect
to  receive  repayment  of  the  notes  at  a  premium  of  10%

     As of February 28, 2003, our cash balance was $9.2 million. We believe that
our  existing  working  capital,  credit  lines and cash from operations will be
sufficient  to satisfy our cash needs for the next 12 months. Accordingly, these
financial  statements  have  been  prepared  on  a  going  concern  basis.

     We  are  actively marketing our existing and new products, which we believe
will  ultimately  lead  to  profitable operations.  Management believes that the
cash  resources  and  borrowing  capacity  will  be sufficient to meet projected
working  capital,  capital expenditures and other cash requirements for the next
twelve months.  However, there can be no assurance the currently available funds
will  meet  the company's cash requirements in the future, or, that any required
additional  funding will be available on terms attractive to us or at all, which
could  have  a  material adverse affect on our business, financial condition and
results  of  operations.  Any  additional  equity  financing  may be dilutive to
shareholders,  and  any  additional  debt  financing,  if available, may involve
restrictive  covenants.

RELATED  PARTY  TRANSACTIONS

     A  board  member  of  the  Company  is  also  a partner of Wilson, Sonsini,
Goodrich  & Rosati, the general counsel of the Company.  In 2002, 2001 and 2000,
the  Company  incurred  $630,000,  $781,000  and  $224,000  in  legal  costs,
respectively,  and  paid  approximately  $1.1  million,  $57,000  and  $222,000,
respectively,  to  Wilson  Sonsini  Goodrich & Rosati. At December 31, 2002, the
Company  owed  approximately  $297,000 to Wilson Sonsini Goodrich & Rosati.  Our
business  activities with Wilson, Sonsini, Goodrich & Rosati are at arms length.

RECENT  ACCOUNTING  PRONOUNCEMENTS.

     In  August  2001,  the  FASB  issued  SFAS  No.  143, "Accounting for Asset
Retirement  Obligations."  SFAS  No.  143  addresses  financial  accounting  and
reporting  for obligations associated with the retirement of tangible long-lived
assets  and the associated asset retirement costs. This statement applies to all
entities.  It  applies  to  legal  obligations associated with the retirement of
long-lived  assets  that  result from the acquisition, construction, development
and  (or)  the  normal  operation  of  long-lived  assets,  except  for  certain
obligations  of  leases.  As  used  in  this Statement, a legal obligation is an
obligation  that  a  party  is  required to settle as a result of an existing or
enacted  law,  stature,  ordinance  or  written  or  oral  contract  or by legal
construction  of  a  contract  under  the  doctrine  of promissory estoppel. The
statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning after June 15, 2002. We are currently assessing the impact of SFAS No.
143  on  our  financial  position  and  results  of  operations.


                                       27
<PAGE>
     In  June  2002,  the  FASB  issued  SFAS  No.  146, "Accounting for Exit or
Disposal  Activities".  SFAS  No. 146 addresses significant issues regarding the
recognition,  measurement,  and reporting of costs that are associated with exit
and  disposal  activities, including restructuring activities that are currently
accounted  for  under EITF No. 94-3, "Liability Recognition for Certain Employee
Termination  Benefits  and  Other  Costs  to Exit an Activity (including Certain
Costs  Incurred  in  a  Restructuring)." The scope of SFAS No. 146 also includes
costs  related  to  terminating  a  contract  that  is  not  a capital lease and
termination  benefits  that  employees  who are involuntarily terminated receive
under the terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement  or  an individual deferred-compensation contract. SFAS No. 146 will
be  effective  for exit or disposal activities that are initiated after December
31, 2002 and early application is encouraged.  We will adopt SFAS No. 146 during
the  first quarter ended March 31, 2003.  The effect on adoption of SFAS No. 146
will  change on a prospective basis the timing of when restructuring charges are
recorded  from  a  commitment  date  approach to when the liability is incurred.

     In  November  2002,  the  FASB  issued FASB Interpretation, or FIN, No. 45,
"Guarantor's  Accounting  and  Disclosure Requirements for Guarantees, Including
Indirect  Guarantees  of  Indebtedness  of  Others."  FIN No. 45 requires that a
liability  be  recorded  in  the  guarantor's  balance  sheet upon issuance of a
guarantee.  In  addition,  FIN  No. 45 requires disclosures about the guarantees
that an entity has issued, including a reconciliation of changes in the entity's
product  warranty  liabilities.  The initial recognition and initial measurement
provisions  of  FIN  No.  45 are applicable on a prospective basis to guarantees
issued  or  modified  after  December  31, 2002, irrespective of the guarantor's
fiscal  year-end.  The  disclosure  requirements of FIN No. 45 are effective for
financial  statements  of  interim  or  annual periods ending after December 15,
2002.  We have adopted the disclosure provision of FIN No. 45 for the year ended
December  31,  2002  and  we have not assessed the impact of the recognition and
measurement  provisions  of FIN No. 45 on our consolidated financial statements.

     In  November  2002,  the  EITF  reached  a  consensus  on  Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables." EITF Issue No.
00-21  provides  guidance  on  how  to account for arrangements that involve the
delivery  or  performance  of  multiple  products, services and/or rights to use
assets.  The  provisions  of  EITF  Issue  No.  00-21  will  apply  to  revenue
arrangements  entered  into  in fiscal periods beginning after June 15, 2003. We
are  currently  assessing the impact of EITF Issue No. 00-21 on our consolidated
financial  statements.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  -  Transition  and Disclosure - an amendment of FASB Statement No.
123."  SFAS  No.  148 provides alternative methods of transition for a voluntary
change  to  the  fair  value based method of accounting for stock-based employee
compensation.  SFAS  No.  148  also  requires  that disclosures of the pro forma
effect  of  using  the  fair value method of accounting for stock-based employee
compensation  be  displayed  more  prominently  and  in  a  tabular  format.
Additionally,  SFAS  No.  148  requires  disclosure  of  the pro forma effect in
interim  financial statements. The transition and annual disclosure requirements
of  SFAS  No.  148 are effective for fiscal years ended after December 15, 2002.
The  interim disclosure requirements are effective for interim periods beginning
after  December 15, 2002.  We have chosen to continue to account for stock-based
compensation  using  the intrinsic value method prescribed in APB Opinion No. 25
and  related  interpretations.  Accordingly,  compensation  expense  for  stock
options  is  measured as the excess, if any, of the estimate of the market value
of  our  stock  at the date of the grant over the amount an employee must pay to
acquire our stock.  We have adopted the annual disclosure provisions of SFAS No.
148 in our financial reports for the year ended December 31, 2002 and will adopt


                                       28
<PAGE>
the interim disclosure provisions for our future quarterly financial reports. As
the  adoption  of  this  standard  involves disclosures only, we do not expect a
material  impact  on  our  consolidated  financial  statements.

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities,  an  Interpretation  of  ARB  No.  51."  FIN  No.  46 requires certain
variable  interest entities to be consolidated by the primary beneficiary of the
entity  if the equity investors in the entity 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.  FIN  No. 46 is effective immediately for all new
variable  interest  entities  created  or  acquired after January 31, 2003.  For
variable  interest  entities  created or acquired prior to February 1, 2003, the
provisions  of FIN No. 46 must be applied for the first interim or annual period
beginning after June 15, 2003.  We are currently assessing the impact of FIN No.
46  on  our  consolidated  financial  statements.

RISK  FACTORS

     The  risks  described below are not the only risks that we face. Additional
risks  and uncertainties not presently known to us, or that are currently deemed
immaterial  may  also  impair  our  business operations. Our business, operating
results  or  financial  condition could be materially adversely affected by, and
the  trading  price of our common stock could decline due to any of those risks.
You  should  also  refer  to  the other information and our financial statements
included  in  this  10K  report  and  the  related  information  incorporated by
reference  into  this  10K  report.

WE  HAVE  EXPERIENCED  LOSSES  OVER THE LAST FEW YEARS AND WE MAY NOT BE ABLE TO
ACHIEVE  OR  SUSTAIN  PROFITABILITY

     We  have experienced losses of $11.6 million, $6.7 million and $9.6 million
for  2002,  2001  and  2000,  respectively.

     While  we  believe  our  cash  position  is  sufficient for the next twelve
months, we cannot provide assurances that future cash flows from operations will
be  sufficient  to  meet operating requirements and allow us to service debt and
repay  any  underlying indebtedness at maturity.   If we do not achieve the cash
flows that we anticipate, we may not be able to meet our planned product release
schedules  and  our  forecast  sales  objectives.  In such event we will require
additional  financing  to  fund  on-going and planned operations and may need to
implement further expense reduction measures, including, but not limited to, the
sale  of  assets,  the consolidation of operations, workforce reductions, and/or
the  delay, cancellation or reduction of certain product development, marketing,
licensing,  or other operational programs.  Some of these measures would require
third-party  consents  or  approvals,  including that of our bank, and we cannot
provide assurances that these consents or approvals will be obtained.  There can
be  no  assurance that we will be able to make additional financing arrangements
on  satisfactory  terms,  if  at  all, and our operations and liquidity would be
materially  adversely  affected.

     We  cannot  assure  our  shareholders  and  investors  that we will achieve
profitability  in  fiscal 2003 and beyond, nor can we provide assurances that we
will  achieve  the  sales  necessary  to avoid further expense reductions in the
future.


                                       29
<PAGE>
SUBSTANTIALLY ALL OF OUR NET SALES COME FROM A SMALL NUMBER OF LARGE CUSTOMERS

     In  2002,  Samsung  Electronics  Company, Ltd., Seagate Technologies, Inc.,
IBM,  and  Asuka  Project  accounted  for  58%,  24%,  7%,  and  6% of revenues,
respectively.  In 2001, Samsung Electronics Company, Ltd, Read-Rite Corporation,
NEC,  Infineon  and  SCS  accounted  for  73%,  7%,  6%,  6% and 5% of revenues,
respectively.  In 2000, Samsung Electronics Company, Ltd. and Micron Technology,
Inc.  accounted  for  91%  and  5%  of  revenues,  respectively.

     The  semiconductor  manufacturing  industry generally consists of a limited
number  of  larger companies. Consequently, we expect that a significant portion
of  our  future  product sales will continue to be concentrated within a limited
number  of  customers,  even  though  we  are  making  progress  in reducing the
concentration of our reliance on these customers through our strategy of product
and  customer  diversification.

     None  of  our  customers  has  entered  into  a long-term agreement with us
requiring  them  to purchase our products. In addition, sales to these customers
may  decrease  in  the  future  when  they  complete their current semiconductor
equipment  purchasing  requirements.  If  any of our customers were to encounter
financial difficulties or become unable to continue to do business with us at or
near current levels, our business, results of operations and financial condition
could  be  materially  harmed.  Customers may delay or cancel orders or may stop
doing  business  with  us  for  a  number  of  reasons  including:

     -    customer  departures  from  historical  buying  patterns;

     -    general  market  conditions;

     -    economic  conditions;  or

     -    competitive  conditions  in  the  semiconductor  industry  or  in  the
          industries  that  manufacture  products utilizing integrated circuits.

WE  DEPEND  UPON  A  LIMITED  NUMBER  OF  SUPPLIERS  FOR  MANY  COMPONENTS  AND
SUBASSEMBLIES,  AND SUPPLY SHORTAGES OR THE LOSS OF THESE SUPPLIERS COULD RESULT
IN  INCREASED  COST  OR  DELAYS  IN  THE  MANUFACTURE  AND SALE OF OUR PRODUCTS.

     We  rely  on  third  parties  to  manufacture  the  components  used in our
products.  Some  of our suppliers are sole or limited source.  In addition, some
of these suppliers are relatively small-undercapitalized companies that may have
difficulties  in  raising  sufficient funding to continue operations.  There are
risks associated with the use of independent suppliers, including unavailability
of  or  delays  in  obtaining  adequate  supplies  of components and potentially
reduced  control  of  quality,  production costs and timing of delivery.  We may
experience  difficulty  identifying  alternative  sources  of supply for certain
components  used  in our products.  In addition, the use of alternate components
may  require  design  alterations,  which  may  delay  installation and increase
product  costs.  These  components  may  not  be  available  in  the  quantities
required, on reasonable terms, or at all.  Financial or other difficulties faced
by  our  suppliers  or  significant  changes  in  demand for these components or
materials  could  limit their availability.  Any failures by these third parties
to  adequately  perform  may  impair our ability to offer our existing products,
delay the submission of products for regulatory approval, and impair our ability
to  deliver  products  on  a  timely  basis  or otherwise impair our competitive
position.  Establishing  our  own  capabilities  to manufacture these components
would  be  expensive  and  could significantly decrease our profit margins.  Our
business,  results  of  operations  and  financial  condition would be adversely
affected  if we were unable to continue to obtain components in the quantity and
quality  desired  and  at  the  prices  we  have  budgeted.


                                       30
<PAGE>
WE ARE SUBJECT TO RISKS BEYOND OUR CONTROL OR INFLUENCE AND ARE HIGHLY DEPENDENT
ON  OUR  INTERNATIONAL  SALES,  PARTICULARLY  SALES  IN  ASIAN  COUNTRIES

     Export  sales accounted for approximately 72%, 93% and 98% of our total net
sales  in 2002, 2001 and 2000, respectively. Net sales to our South Korean-based
customers  accounted  for  approximately  56%, 73% and 92% of total net sales in
2002,  2001  and  2000,  respectively.  We  anticipate that international sales,
including  sales  to  South  Korea,  will  continue to account for a significant
portion  of  our  net sales. As a result, a significant portion of our net sales
will  be  subject  to  risks,  including:

     -    unexpected  changes  in  law  or  regulatory  requirements;
     -    exchange  rate  volatility;
     -    tariffs  and  other  barriers;
     -    political  and  economic  instability;
     -    military  confrontation;
     -    difficulties  in  accounts  receivable  collection;
     -    extended  payment  terms;
     -    difficulties  in  managing  distributors  or  representatives;
     -    difficulties  in  staffing  our  subsidiaries;
     -    difficulties  in  managing  foreign  subsidiary  operations;  and
     -    potentially  adverse  tax  consequences.

     Our  foreign  sales are primarily denominated in U.S. dollars and we do not
engage  in  hedging  transactions. As a result, our foreign sales are subject to
the  risks  associated  with  unexpected  changes in exchange rates, which could
increase  the  cost  of  our  products  to  our  customers  and could lead these
customers  to  delay  or  defer  their  purchasing  decisions.

     Wherever  currency  devaluations  occur  abroad,  our  goods  become  more
expensive  for  our  customers  in that country. In addition, difficult economic
conditions  may limit capital spending by our customers. These circumstances may
also  affect  the  ability  of  our customers to meet their payment obligations,
resulting  in  the  cancellations  or  deferrals  of  existing  orders  and  the
limitation  of  additional  orders.

OUR  SALES  REFLECT  THE  CYCLICALITY OF THE SEMICONDUCTOR INDUSTRY, WHICH COULD
CAUSE  OUR  OPERATING  RESULTS  TO FLUCTUATE SIGNIFICANTLY AND COULD CAUSE US TO
FAIL  TO  ACHIEVE  ANTICIPATED  SALES

     Our  business  depends  upon  the  capital  expenditures  of  semiconductor
manufacturers, which in turn depend on the current and anticipated market demand
for  integrated circuits and products utilizing integrated circuits. Although we
are  marketing  our  atomic  layer  deposition  technology  to non-semiconductor
markets  such  as  markets  in  magnetic  thin  film heads, flat panel displays,
micro-electromechanical  systems  and inkjet printers, we are still dependent on
sales  to  semiconductor  manufacturers.  The semiconductor industry is cyclical
which  impacts  the  semiconductor  industry's  demand  for  semiconductor
manufacturing  capital  equipment.

     Semiconductor industry downturns have significantly decreased our revenues,
operating  margins  and  results  of operations in the past. During the industry
downturn  in  1998, several of our customers delayed or cancelled investments in
new  manufacturing  facilities  and  equipment due to declining DRAM prices, the
Asian economic downturn, and general softening of the semiconductor market. This
caused  our  sales  in  1998  to  be significantly lower than in the prior three
years.


                                       31
<PAGE>
     After  the  dramatic  industry boom for semiconductor equipment that peaked
early  in  the  year 2000, another cyclical downturn is presently occurring. The
sharp  and  severe  industry  downturn in 2001 was the largest in the industry's
history. Almost all previous downturns have been solely due to pricing declines.
However,  the  2001  downturn  in the industry marked a corresponding decline in
unit  production,  as  well as price reduction. We expect that our revenues will
continue  to  be further impacted by the continued downturn in the semiconductor
industry  and  global economy, which may prevent us from increasing our revenues
and  achieving  profitability.

OUR  FUTURE  GROWTH  IS  DEPENDENT  ON  ACCEPTANCE  OF  NEW  PRODUCTS AND MARKET
ACCEPTANCE  OF  OUR  SYSTEMS  RELATING  TO  THOSE  PRODUCTS

     We  believe  that  our  future  growth  will  depend in large part upon the
acceptance  of  our  new  thin  films and processes, especially our atomic layer
deposition  technology. As a result, we expect to continue to invest in research
and  development  in  these new thin films and the systems that use these films.
There  can  be no assurance that the market will accept our new products or that
we  will  be  able  to develop and introduce new products or enhancements to our
existing  products and processes in a timely manner to satisfy customer needs or
achieve  market  acceptance.  The  failure  to  do  so,  or  even a delay in our
introduction of new products or enhancements, could harm our business, financial
condition  and  results  of  operations.

     We  must  manage  product transitions successfully, as introductions of new
products  could harm sales of existing products. We derive our revenue primarily
from  the  sale of equipment used to chemically deposit tungsten silicide in the
manufacture  of memory chips. We estimate that the life cycle for these tungsten
silicide  deposition  systems is three-to-ten years. There is a risk that future
technologies, processes or product developments may render our product offerings
obsolete  and  we  may  not  be  able  to  develop and introduce new products or
enhancements  to  our  existing  products  in  a  timely  manner  or  at  all.


WE MAY NOT BE ABLE TO CONTINUE TO SUCCESSFULLY COMPETE IN THE HIGHLY COMPETITIVE
SEMICONDUCTOR  INDUSTRY  AGAINST  COMPETITORS  WITH  GREATER  RESOURCES

     The  semiconductor  manufacturing  capital  equipment  industry  is  highly
competitive.  We  face  substantial competition throughout the world. We believe
that  to  remain competitive, we will require significant financial resources to
develop  new products, offer a broader range of products, establish and maintain
customer  service  centers  and  invest  in  research  and  development.

     Many  of  our existing and potential competitors have substantially greater
financial  resources,  more  extensive  engineering,  manufacturing,  marketing,
customer  service  capabilities  and  greater  name  recognition.  We expect our
competitors  to  continue to improve the design and performance of their current
products and processes and to introduce new products and processes with improved
price  and  performance  characteristics.

     If  our  competitors  enter  into  strategic  relationships  with  leading
semiconductor manufacturers covering thin film products similar to those sold by
us,  it  would  materially  adversely affect our ability to sell our products to
such  manufacturers.  In addition, to expand our sales we must often replace the
systems  of our competitors or sell new systems to customers of our competitors.
Our competitors may develop new or enhanced competitive products that will offer
price  or performance features that are superior to our systems. Our competitors
may  also  be  able  to respond more quickly to new or emerging technologies and
changes  in  customer  requirements,  or  to  devote  greater  resources  to the
development,  promotion  and  sale of their product lines. We may not be able to
maintain  or  expand  our  sales  if  our  resources  do not allow us to respond
effectively  to  such  competitive  forces.


                                       32
<PAGE>
WE  MAY  NOT ACHIEVE ANTICIPATED REVENUE GROWTH IF WE ARE NOT SELECTED AS VENDOR
OF  CHOICE  FOR  NEW  OR  EXPANDED FABRICATION FACILITIES AND IF OUR SYSTEMS AND
PRODUCTS  DO  NOT  ACHIEVE  BROADER  MARKET  ACCEPTANCE

     Because  semiconductor  manufacturers must make a substantial investment to
install  and  integrate  capital  equipment  into  a  semiconductor  fabrication
facility,  these  manufacturers  will  tend  to  choose  semiconductor equipment
manufacturers  based  on  established  relationships,  product compatibility and
proven  system  performance.

     Once  a  semiconductor  manufacturer  selects a particular vendor's capital
equipment,  the  manufacturer  generally relies for a significant period of time
upon  equipment  from  this  vendor  of  choice for the specific production line
application.  To  do  otherwise  creates  risk  for the manufacturer because the
manufacture  of  a  semiconductor  requires many process steps and a fabrication
facility will contain many different types of machines that must work cohesively
to  produce  products  that  meet the customers' specifications. If any piece of
equipment  fails  to  perform  as expected, the customer could incur significant
costs related to defective products, production line downtime, or low production
yields.

     Since  most  new  fabrication  facilities  are  similar  to  existing ones,
semiconductor  manufacturers  tend to continue using equipment that has a proven
track record. Based on our experience with major customers like Samsung, we have
observed  that  once  a particular piece of equipment is selected from a vendor,
the  customer is likely to continue purchasing that same piece of equipment from
the  vendor  for  similar  applications in the future. Our customer list, though
limited,  has expanded in recent months. Yet our broadening market share remains
at  risk  due  to  choices  made  by customers that continue to be influenced by
pre-existing installed bases by competing vendors. Consequently, our penetrating
these  markets  and  our  ability  to  get  additional  orders  may  be limited.

     A  semiconductor  manufacturer  frequently  will attempt to consolidate its
other  capital  equipment requirements with the same vendor. Accordingly, we may
face  narrow  windows of opportunity to be selected as the "vendor of choice" by
potential  new  customers.  It  may  be difficult for us to sell to a particular
customer  for  a  significant  period  of  time  once  that  customer  selects a
competitor's  product,  and  we  may  not  be  successful  in  obtaining broader
acceptance  of our systems and technology. If we are not able to achieve broader
market  acceptance  of  our systems and technology, we may be unable to grow our
business  and  our  operating  results  and  financial condition will be harmed.

OUR  LENGTHY  SALES  CYCLE INCREASES OUR COSTS AND REDUCES THE PREDICTABILITY OF
OUR  REVENUE

     Sales  of our systems depend upon the decision of a prospective customer to
increase  manufacturing capacity. That decision typically involves a significant
capital  commitment  by  our customers. Accordingly, the purchase of our systems
typically  involves  time-consuming  internal  procedures  associated  with  the
evaluation,  testing,  implementation  and introduction of new technologies into
our  customers'  manufacturing  facilities.  For  many  potential  customers, an
evaluation  as  to  whether  new semiconductor manufacturing equipment is needed
typically  occurs  infrequently.  Following  an evaluation by the customer as to
whether  our systems meet its qualification criteria, we have experienced in the
past  and  expect  to experience in the future delays in finalizing system sales
while  the  customer  evaluates  and  receives  approval for the purchase of our
systems  and  constructs  a  new  facility  or  expands  an  existing  facility.

     Due  to  these  factors,  our  systems typically have a lengthy sales cycle
during  which  we  may  expend substantial funds and management effort. The time
between  our  first  contact  with a customer and the customer placing its first
order  typically  lasts  from  nine  to  twelve months and is often longer. This


                                       33
<PAGE>
lengthy  sales  cycle makes it difficult to accurately forecast future sales and
may  cause  our  quarterly and annual revenue and operating results to fluctuate
significantly  from  period  to  period.  If anticipated sales from a particular
customer  are  not  realized  in  a  particular period due to this lengthy sales
cycle,  our  operating  results  may  be  adversely  affected  for  that period.

IF  WE  ARE  FOUND  TO  INFRINGE  THE  PATENTS OR INTELLECTUAL PROPERTY OF OTHER
PARTIES,  OUR  ABILITY  TO  GROW  OUR  BUSINESS  MAY  BE  SEVERELY  LIMITED.

     From  time  to  time,  we  may  receive notices from third parties alleging
infringement  of  patents  or  intellectual property rights. It is our policy to
respect all parties' legitimate intellectual property rights, and we will defend
against such claims or negotiate licenses on commercially reasonable terms where
appropriate.  However,  no  assurance  can  be  given  that  we  will be able to
negotiate  any  such  necessary licenses on commercially reasonable terms, or at
all, or that any litigation resulting from such claims would not have a material
adverse  effect  on  our  business  and  financial  results.

     Litigation  is  time consuming, expensive and its outcome is uncertain.  We
may  not prevail in any litigation in which we are involved.  Should we be found
to  infringe  any  of  the  patents  asserted or any other intellectual property
rights  of  others, in addition to potential monetary damages and any injunctive
relief  granted,  we  may  need  either to obtain a license to commercialize our
products  or  redesign  our  products  so they do not infringe any third party's
intellectual  property.  If  we  are  unable  to  obtain  a  license  or adopt a
non-infringing  product  design, we may not be able to proceed with development,
manufacture  and  sale  or our atomic layer products.  In this case our business
may  not  develop  as  planned,  and  our  results  could  materially  suffer.

     On  June  6,  2001,  ASM  America, Inc ("ASMA") filed a patent infringement
action  against  Genus.  ASMA's  Complaint  alleges  that  Genus is directly and
indirectly  infringing  U.S.  Patent No. 5,916,365 ("the '365 Patent"), entitled
"Sequential Chemical Vapor Deposition," and U.S. Patent No. 6,015,590 ("the '590
Patent")  entitled  "Method For Growing Thin Films," which ASMA claims to own or
exclusively  license. The Complaint seeks monetary and injunctive relief. Genus'
served its Answer to ASMA's complaint on August 1, 2001. Also on August 1, 2001,
Genus  counterclaimed  against ASMA and ASM International, N.V. ("ASMI") for (1)
infringement  of  U.S. Patent No. 5,294,568 ("the '568 Patent") entitled "Method
of  Selective  Etching Native Oxide"; (2) declaratory judgment that the '365 and
'590  Patents  are  invalid,  unenforceable, and not infringed by Genus; and (3)
antitrust  violations. An initial Case Management Conference was held on October
16,  2001.  On January 9, 2002, the Court issued an order granting ASMA leave to
amend  its  complaint  to  add  an individual as a party and to add a claim that
Genus is directly and indirectly infringing U.S. Patent No. 4,798,165 ("the '165
Patent")  entitled  "Apparatus  for  Chemical  Vapor Deposition Using an Axially
Symmetric  Gas  Flow"),  which  ASMA  claims  to own. The court also severed and
stayed  discovery  and trial of Genus' antitrust claims until after trial of the
patent  claims.  On  February 4, 2002, Genus served its Amended Answer to ASMA's
amended  complaint and counterclaimed against ASMA for declaratory judgment that
the '165 Patent is invalid, unenforceable, and not infringed by Genus. On August
15,  2002, the Court issued a claim construction order regarding the '590, '365,
and  '598  Patents.  A  claim construction hearing regarding the '165 Patent was
held  on  September  26,  2002, and the Court issued a claim construction ruling
regarding  this  patent  on November 13, 2002. On September 23, 2002 Genus filed
motions  for  summary  judgment  on  noninfringement regarding the '590 and '365
Patents.  On  November  20,  2002,  the  Court granted Genus' motion for summary
judgment  of  noninfringement of the '365 Patent. On January 10, 2003, the Court
granted  Genus'  motion  for  summary  judgment  of  noninfringement of the '590
Patent.  A hearing for dispositive motions on the remaining patent claims in the
case  is currently set for June 20, 2003, and trial on those claims is currently
set  for  January  12,  2004.  We  intend  to  defend  our  position vigorously.


                                       34
<PAGE>
WE  ARE  DEPENDENT  UPON  KEY  PERSONNEL  WHO ARE EMPLOYED AT WILL, WHO WOULD BE
DIFFICULT TO REPLACE AND WHOSE LOSS WOULD IMPEDE OUR DEVELOPMENT AND SALES

     We  are highly dependent on key personnel to manage our business, and their
knowledge  of  business,  management  skills  and  technical  expertise would be
difficult  to replace. Our success depends upon the efforts and abilities of Dr.
William  W.R.  Elder,  our  chairman  and chief executive officer, Dr. Thomas E.
Seidel,  our  chief  technology  officer, and other key managerial and technical
employees who would be difficult to replace. The loss of Dr. Elder or Dr. Seidel
or  other key employees could limit or delay our ability to develop new products
and  adapt  existing  products to our customers' evolving requirements and would
also  result  in  lost  sales and diversion of management resources. None of our
executive  officers  are  bound  by  a  written  employment  agreement,  and the
relationships  with  our  officers  are  at  will.

     Because  of  competition  for additional qualified personnel, we may not be
able to recruit or retain necessary personnel, which could impede development or
sales  of  our products. Our growth depends on our ability to attract and retain
qualified,  experienced  employees.  There  is  substantial  competition  for
experienced  engineering, technical, financial, sales and marketing personnel in
our  industry.  In  particular, we must attract and retain highly skilled design
and  process  engineers. Competition for such personnel is intense, particularly
in the San Francisco bay area where we are based. If we are unable to retain our
existing key personnel, or attract and retain additional qualified personnel, we
may  from  time  to time experience inadequate levels of staffing to develop and
market  our  products  and  perform services for our customers. As a result, our
growth  could  be  limited due to our lack of capacity to develop and market our
products  to  customers,  or  fail  to  meet  delivery commitments or experience
deterioration  in  service  levels  or  decreased  customer  satisfaction.

OUR FAILURE TO COMPLY WITH ENVIRONMENTAL REGULATIONS COULD RESULT IN SUBSTANTIAL
LIABILITY  TO  US

     We  are  subject  to  a variety of federal, state and local laws, rules and
regulations  relating  to  the  protection  of health and the environment. These
include  laws,  rules  and  regulations  governing  the use, storage, discharge,
release,  treatment  and  disposal  of  hazardous  chemicals  during  and  after
manufacturing,  research and development and sales demonstrations. If we fail to
comply  with  present  or future regulations, we could be subject to substantial
liability  for  clean  up efforts, property damage, personal injury and fines or
suspension  or  cessation  of  our  operations.

     We  use  the  following  regulated  gases  at our manufacturing facility in
Sunnyvale:  tungsten hexafluoride, dichlorosilane silicide, silane and nitrogen.
We  also  use regulated liquids such as hydrofluoric acid and sulfuric acid. The
city  of  Sunnyvale,  California,  imposes  high  environmental  standards  to
businesses  operating  within  the city. Genus has received an operating license
from  Sunnyvale. Presently, our compliance record indicates that our methods and
practices  successfully  meet  standards.  Moving  forward,  if  we  fail  to
continuously  maintain  high standards to prevent the leakage of any toxins from
our  facilities  into  the environment, restrictions on our ability to expand or
continue  to  operate our present locations could be imposed upon us or we could
be  required  to acquire costly remediation equipment or incur other significant
expenses.

WE  DEPEND  UPON  SIX  INDEPENDENT  SALES  REPRESENTATIVES  FOR  THE SALE OF OUR
PRODUCTS  AND  ANY  DISRUPTION  IN THESE RELATIONSHIPS WOULD ADVERSELY AFFECT US

     We  currently  sell and support our thin film products through direct sales
and customer support organizations in the United States, Europe, South Korea and
Japan  and through six independent sales representatives and distributors in the
United  States,  Europe, South Korea, Taiwan, China and Malaysia. We do not have


                                       35
<PAGE>
any  long-term  contracts  with  our sales representatives and distributors. Any
disruption  or  termination  of  our  existing  distributor  relationships could
negatively  impact  sales  and  revenue.

WE  ESTABLISHED  A  DIRECT SALES ORGANIZATION IN JAPAN AND WE MAY NOT SUCCEED IN
EFFECTIVELY  PENETRATING  THE  JAPANESE  MARKETPLACE

     We  terminated  our  relationship  with  our distributor, Innotech Corp. in
Japan  in  1998.  In  2000,  we  invested  significant  resources  in  Japan  by
establishing a direct sales organization, Genus-Japan, Inc. To date, we have had
limited  success  in penetrating in Japanese semiconductor industry. Although we
continue to invest significant resources in our Japan office, we may not be able
to  attract  new  customers  in  the  Japanese  semiconductor industry, and as a
result,  we  may  fail  to  yield a profit or return on our investment in Japan.

THE  PRICE  OF  OUR  COMMON STOCK HAS FLUCTUATED IN THE PAST AND MAY CONTINUE TO
FLUCTUATE  SIGNIFICANTLY IN THE FUTURE, WHICH MAY LEAD TO LOSSES BY INVESTORS OR
TO  SECURITIES  LITIGATION

     Our common stock has experienced substantial price volatility, particularly
as  a  result  of  quarter-to-quarter  variations in our, our competitors or our
customers'  actual  or  anticipated  financial  results,  our competitors or our
customers'  announcements  of  technological  innovations,  revenue  recognition
policies,  changes in earnings estimates by securities analysts and other events
or  factors.  Also,  the  stock  market has experienced extreme price and volume
fluctuations  which have affected the market price of many technology companies,
in  particular, and which have often been unrelated to the operating performance
of these companies. These broad market fluctuations, as well as general economic
and  political  conditions in the United States and the countries in which we do
business,  may  adversely  affect  the  market  price  of  our  common  stock.

BUSINESS  INTERRUPTIONS  COULD  ADVERSELY  AFFECT  OUR  BUSINESS

     Our  operations  are  vulnerable to interruption by fire, earthquake, power
loss, telecommunications failure and other events beyond our control. A disaster
could  severely damage our ability to deliver our products to our customers. Our
products  depend  on our ability to maintain and protect our operating equipment
and  computer  systems,  which  are  primarily  located in or near our principal
headquarters  in Sunnyvale, California. Sunnyvale exists near a known earthquake
fault  zone.  Although  our  facilities  are  designed to be fault tolerant, the
systems  are  susceptible  to damage from fire, floods, earthquakes, power loss,
telecommunications  failures,  and  similar events. Although we maintain general
business  insurance against interruptions such as fires and floods, there can be
no  assurance  that  the  amount  of coverage will be adequate in any particular
case.

WE  ARE  OBLIGATED  TO  ISSUE  SHARES OF OUR STOCK UNDER OUTSTANDING OPTIONS AND
WARRANTS  AND  SUCH  ISSUANCE  WILL  DILUTE  YOUR  PERCENTAGE OWNERSHIP IN GENUS

     As of January 31, 2003, we have approximately of 7,184,478 shares of common
stock  underlying  warrants and outstanding employee stock options. Of the stock
options,  2,228,349  shares  are  exercisable as of January 31, 2003. All of the
shares  underlying  the  warrants  are currently exercisable. Some warrants have
terms  providing  for  an  adjustment  of  the  number  of shares underlying the
warrants  in  the  event  that  we  issue  new  shares at a price lower than the
exercise  price of the warrants, where we make a distribution of common stock to
our  shareholders  or  effect  a  reclassification.

     If  all  of the shares underlying the exercisable options and warrants were
exercised  and  sold in the public market, the value of your current holdings in
Genus  may  decline  because  there may not be sufficient demand to purchase the
increased  number  of  shares  that  would  be  available  for  sale.


                                       36
<PAGE>
WE  HAVE  IMPLEMENTED  ANTI-TAKEOVER  MEASURES  THAT MAY RESULT IN DILUTING YOUR
PERCENTAGE  OWNERSHIP  OF  GENUS  STOCK

     On  September 7, 2000, the Company's Board of Directors declared a dividend
pursuant to a newly adopted Share Purchase Rights Plan, which replaced a similar
earlier  plan  that  had  expired  on  July 3, 2000. The intended purpose of the
Rights  Plan  is  to protect shareholders' rights and to maximize share value in
the  event  of  an unfriendly takeover attempt. As of the record date of October
13,  2000, each share of common stock of Genus, Inc. outstanding was granted one
right  under  the  new  plan.  Each  right  is  exercisable  only  under certain
circumstances  and  upon the occurrence of certain events and permits the holder
to  purchase  from the Company one one-thousandth (0.001) of a share of Series C
Participating  Preferred  Stock  at  an  initial exercise price of forty dollars
($40.00)  per  one one-thousandth share. The 50,000 shares of Series C preferred
stock  authorized  in  connection  with  the  Rights  Plan  will be used for the
exercise of any preferred shares purchase rights in the event that any person or
group (the Acquiring Person) acquires beneficial ownership of 15% or more of the
outstanding  common  stock.  In  such  event,  the  shareholders (other than the
Acquiring  Person)  would  receive  common  stock of the Company having a market
value  of twice the exercise price. Subject to certain restrictions, the Company
may  redeem the rights issued under the Rights Plan for $0.001 per right and may
amend  the  Rights  Plan  without the consent of rights holders. The rights will
expire  on  October  13,  2010,  unless  redeemed  by  the  Company.

     In  the  event  that  circumstances  trigger  the  transferability  and
exercisability  of  rights  granted in our Rights Plan, your current holdings in
Genus  may decline as a result of dilution to your percentage ownership in Genus
or as a result of a reduction in the per share value of our stock resulting from
the  increase  in the number of outstanding shares available and your failure to
exercise  your  rights  under  the  Rights  Plan.

FORWARD-LOOKING  STATEMENTS

     This 10-K report contains or incorporates forward-looking statements within
the  meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities  Exchange  Act  of  1934  regarding,  among other items, our business
strategy,  growth  strategy  and anticipated trends in our business. We may make
additional  written  or  oral  forward-looking  statements  from time to time in
filings  with  the  Securities and Exchange Commission or otherwise. When we use
the  words "believe," "expect," "anticipate," "project" and similar expressions,
this  should  alert  you  that  this  is  a  forward-looking  statement.

     We  base  these  forward-looking  statements  on our expectations. They are
subject  to  a  number  of  risks  and  uncertainties  that cannot be predicted,
quantified  or  controlled.  Future  events  and  actual  results  could  differ
materially  from  those  set  forth  in,  contemplated  by,  or  underlying  the
forward-looking  statements.

     Statements  in  this  10-K  report, and in documents incorporated into this
10-K  report,  including  those  set  forth  above  in  "Risk Factors," describe
factors,  among  others, that could contribute to or cause these differences. In
light  of  these  risks  and  uncertainties,  there can be no assurance that the
forward-looking information contained in this 10-K report will in fact transpire
or  prove  to  be  accurate.  All  subsequent  written  and oral forward-looking
statements  attributable  to  us  or  persons acting on our behalf are expressly
qualified  in  their  entirety  by  this  section.


                                       37
<PAGE>
ITEM 7A.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     Approximately  85.9%  of  our  revenues  are U.S. dollar denominated sales.
Consequently,  fluctuations  in  our  exchange  rate  could  make  our  products
relatively  more  expensive to our customers, which could lead to reduced demand
for  our  products.

     Similarly, 14.1% of our sales are denominated in non-U.S. based currencies.
As  exchange  rates  fluctuate,  our  revenues  from  sales  of foreign currency
denominated  products  will  fluctuate which could have an adverse impact on our
margins.  As  a  result,  fluctuations  in  currency exchange rates could have a
material  adverse  effect  on  our business, results of operations and financial
condition.

     We  have both fixed rate and floating rate interest obligations. Fixed rate
obligations  may  result  in  interest  expenses  in  excess  of market rates if
interest  rates  fall,  while floating rate obligations may result in additional
interest  costs  if  interest rates rise. An increase of one percentage point in
interest  rates  would  not  materially  impact  the  results of our operations.

     At  any time, fluctuations in interest rates could affect interest earnings
on  our cash, cash equivalents or increase any interest expense owed on the line
of  credit  facility. We believe that the effect, if any, of reasonably possible
near  term  changes  in  interest  rates  on  our financial position, results of
operations  and  cash  flows  would  not be material. Currently, we do not hedge
these  interest  rates  exposures.


                                       38
<PAGE>
ITEM 8.   CONSOLIDATED  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA

     The  consolidated financial statements, together with the report thereon of
PricewaterhouseCoopers  LLP,  independent  accountants,  dated February 7, 2003,
except  as  to the first paragraph of Note 7, which is as of March 20, 2003, are
included  in  a  separate  section  of  this  Annual  Report.

Supplementary  Data:  Selected  Consolidated  Quarterly  Data

     The following table presents our consolidated statements of operations data
for  each  of  the  eight  quarters in the period ended December 31, 2002 In our
opinion,  this  information  has been presented on the same basis as the audited
consolidated financial statements included in a separate section of this report,
and  all necessary adjustments, consisting only of normal recurring adjustments,
have  been  included  in  the  amounts  below  to  present  fairly the unaudited
quarterly  results  when  read  in  conjunction  with  the  audited consolidated
financial  statements  and related notes.  The operating results for any quarter
should  not  be  relied  upon as necessarily indicated of results for any future
period.  We  expect  our  quarterly  operating  results  to  fluctuate in future
periods  due  to  a  variety  of reasons, including those discussed in "Business
Risks."

<TABLE>
<CAPTION>
                                        FIRST QTR     SECOND QTR    THIRD QTR    FOURTH QTR
                                      ------------------------------------------------------
                                                  (IN THOUSANDS,  EXCEPT SHARE DATA)
<S>                                   <C>            <C>           <C>          <C>
2002
Revenues                              $      9,591   $     6,743   $   12,153   $    11,280
Gross profit                                 2,124         1,573        4,327         2,600
Net loss                                    (3,752)       (3,609)      (1,575)       (2,684)
Basic net loss per share              $      (0.15)  $     (0.13)  $    (0.06)  $     (0.09)
Diluted net loss per share            $      (0.15)  $     (0.13)  $    (0.06)  $     (0.09)

2001
Revenues                              $     14,309   $    13,659   $   15,094   $     5,677
Gross profit                                 5,706         5,039        4,794           700
Net income (loss)                              131          (853)        (744)       (5,200)
Basic net income (loss) per share     $       0.01   $     (0.04)  $    (0.03)  $     (0.23)
Diluted net income (loss) per share   $       0.01   $     (0.04)  $    (0.03)  $     (0.23)
</TABLE>

ITEM 9.   CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING AND
          FINANCIAL  DISCLOSURE

None.


                                       39
<PAGE>
PART III


ITEM 10.  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by  this Item relating to executive officers is
incorporated  by  reference  to  the section entitled "Executive officers of the
registrant"  in  Part  I  of  this  Form  10-K.

     There  are  no  family relationships among the Company's executive officers
and  directors.  As  of  December  31, 2002, the directors of the Company are as
follows:

<TABLE>
<CAPTION>
NAME                         AGE  POSITION
---------------------------- ---  ------------------------------------
<S>                          <C>  <C>
William W.R. Elder . . . . .  64  Chairman and Chief Executive Officer
Mario M. Rosati. . . . . . .  56  Secretary and Director
Todd S. Myhre. . . . . . . .  58  Director
G. Frederick Forsyth . . . .  58  Director
George D. Wells. . . . . . .  67  Director
Robert J. Richardson . . . .  56  Director
</TABLE>

     WILLIAM W.R. ELDER was a founder of Genus and is our Chairman of the Board,
President  and our Chief Executive Officer. From October 1996 to April 1998, Dr.
Elder  served  only as Chairman of the Board. From April 1990 to September 1996,
Dr.  Elder  was  Chairman of the Board, President and Chief Executive Officer of
the  Company.  From  November  1981 to April 1990, Dr. Elder was President and a
director  of  the  Company.

     MARIO  M.  ROSATI  has  served  as  our  Secretary  since May 1996 and as a
director  since  our inception in November 1981. He has been a member of the law
firm Wilson Sonsini Goodrich & Rosati, Professional Corporation, general counsel
to the Company, since 1971.  Mr. Rosati is also a director of Aehr Test Systems,
a manufacturer of computer hardware testing systems, Sanmina-SCI Corporation, an
electronics  contract  manufacturer,  Symyx  Technologies, Inc., a combinatorial
materials  science  company,  The  Management  Network Group, Inc., a management
consulting  firm  focused  on  the  telecommunications  industry,  interWAVE
Communications International Ltd., a provider of compact mobile wireless network
systems  solutions in the Global System for Mobile Communications (GSM) markets,
and  Vivus, a specialty pharmaceutical company, all publicly-held companies.  He
is  also  a  director  of  a  number  of  privately  held  companies.

     TODD  S. MYHRE has served as a director since January 1994. Since September
1999,  he  served  as  Interim  Chief  Executive  Officer and a Board member for
Ybrain.com,  an  e-commerce  company focused on the college student market. From
April  1998 to August 1999 and from September 1995 to January 1996, he served as
President,  Chief  Executive  Officer,  and  a  Board  member  of  GameTech
International, an electronic gaming manufacturer. From February 1996 to February
1998,  Mr.  Myhre was an international business consultant. From January 1993 to
August  1993,  from August 1993 to December 1993 and from January 1994 to August
1995,  Mr.  Myhre  served  as  Vice President and Chief Financial Officer of the
Company,  as  Executive  Vice  President  and  Chief  Operating  Officer  and as
President  and  a  Director  of  the  Company.

     G.  FREDERICK  FORSYTH  has served as a director since February 1996. Since
May  2000,  Mr.  Forsyth has served as President and CEO of NewRoads, Inc.  From
March 1999 to May 2000, Mr. Forsyth served as President, Systems Engineering and
Services  of Solectron Corp.  From August 1997 to March 1999, Mr. Forsyth served


                                       40
<PAGE>
as  President,  Professional Products Division of Iomega, Inc. From June 1989 to
February  1997, Mr. Forsyth was associated with Apple Computer, Inc., a personal
computer  manufacturer, in various senior management positions, most recently as
Senior  Vice  President  and  General  Manager,  Macintosh  Product  Group.

     GEORGE  D.  WELLS has served as a director since March 2000. From July 1992
to  October  1996,  Mr. Wells served as President and Chief Executive Officer of
Exar Corporation. From April 1985 to July 1992, he served as President and Chief
Operating  Officer  of  LSI  Logic Corporation and became Vice Chairman in March
1992.  From  May 1983 to April 1985, Mr. Wells was President and Chief Executive
Officer  of  Intersil,  Inc.,  a  subsidiary  of  General  Electric  Company.

     ROBERT  J.  RICHARDSON  has  served  as  a director since March 2000. Since
January  2000, Mr. Richardson has been a semiconductor industry consultant. From
November  1997  to  January  2000,  Mr.  Richardson  served  as  Chairman, Chief
Executive  Officer  and  President  of  Unitrode  Corporation. From June 1992 to
November  1997,  he  served  in  various positions at Silicon Valley Group, Inc.
including  President  Lithography Systems, President Track Systems Division, and
Corporate  Vice-President  New  Business Development and Marketing. From October
1988  to June 1992, Mr. Richardson was President and General Manager, Santa Cruz
Division  at  Plantronics, Inc.  In March 2003, Mr. Richardson became a Director
of  Applied  Signal  Technology.

ITEM 11.  EXECUTIVE  COMPENSATION

     The  information  required  by  this  Item  is incorporated by reference to
"Board  of  Directors  and  Committees,"  "Summary  Compensation  Table," "Stock
Options  and  Stock  Appreciation  Rights"  and  "Retirement  Benefits"  in  the
Company's  definitive  Proxy  Statement  for  the fiscal year ended December 31,
2002,  which we will file with the Securities and Exchange Commission within 120
days  after  the  end  of  the  fiscal  year  covered  by  this  report.

ITEM 12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS  AND MANAGEMENT

     The  information  required  by  this  Item  is incorporated by reference to
"Information  Relating  to  Directors,  Nominees  and Executive Officers" in the
Company's  definitive  Proxy  Statement  for  the fiscal year ended December 31,
2002,  which we will file with the Securities and Exchange Commission within 120
days  after  the  end  of  the  fiscal  year  covered  by  this  report.

ITEM 13.  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information  required  by  this  Item  is incorporated by reference to
"Certain  Transactions"  in  the  Company's  definitive  Proxy Statement for the
fiscal  year  ended December 31, 2002 which we will file with the Securities and
Exchange  Commission within 120 days after the end of the fiscal year covered by
this  report.

ITEM 14.  CONTROLS  AND  PROCEDURES

     Within  90  days  before  filing  this  report,  the Company evaluated the
effectiveness  of  the  design  and  operation  of  its  disclosure controls and
procedures.  The  Company's  disclosure  controls and procedures are designed to
ensure  that the information that the Company must disclose in its reports filed
under  the  Securities  Exchange  Act  is communicated and processed in a timely
manner.  William  W.R.  Elder,  Chairman  of  the  Board,  President  and  Chief
Executive  Officer  and  Shum  Mukherjee,  Executive  Vice  President  and Chief
Financial  Officer,  participated  in  this  evaluation.


                                       41
<PAGE>
     Based  on  this evaluation, Messrs. Elder and Mukherjee concluded that, as
of  the  date  of  their  evaluation,  the  Company's  disclosure  controls  and
procedures  were  effective,  except  as noted in the next paragraph.  Since the
date  of  the  evaluation  described  above, there have not been any significant
changes  in  the  Company's  internal  controls  or  in other factors that could
significantly  affect  those  controls.

     During  the  fiscal  2002  financial  reporting  process,  management,  in
consultation with the Company's independent accountants, identified deficiencies
involving  internal  controls  over  inventories,  warranties  and the Company's
Korean  operations  which  constituted  a "Reportable Condition" under standards
established  by  the  American  Institute  of  Certified  Public  Accountants.
Management  believes  that these matters have not had any material impact on our
financial  statements.  Management  has  established  a  project  plan  and  has
completed  the  initial  design  of  processes  and  controls  to  address these
deficiencies.  Development  is  ongoing  and  implementation/completion  of this
project  is  anticipated  in  2003.


                                       42
<PAGE>
PART IV

ITEM 15.  EXHIBITS,  FINANCIAL  STATEMENT  SCHEDULE  AND  REPORTS  ON FORM 8-K

(a)  The following documents are filed as a part of this Report:

1.   Consolidated Financial Statements.

     Report  of  Independent  Accountants

     Consolidated Balance Sheets - December 31, 2002 and 2001

     Consolidated Statements of Operations - Years Ended December 31, 2002, 2001
     and  2000

     Consolidated  Statements  of  Shareholders' Equity and Comprehensive Income
     (loss)  -  Years  Ended  December  31,  2002,  2001  and  2000

     Consolidated Statements of Cash Flows - Years Ended December 31, 2002, 2001
     and  2000

     Notes  to  the  Consolidated  Financial  Statements

2.   Financial Statement Schedule.

     Schedule  II  "Valuation  and  Qualifying  Accounts"

3.   Exhibits  and  reports on form 8-K. The Exhibits listed on the accompanying
     Index  to  Exhibits  immediately following the financial statement schedule
     are  filed  as  part  of,  or  incorporated by reference into, this Report.


                                       43
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders of
Genus,  Inc.:

     In  our  opinion, the consolidated financial statements listed in the index
appearing  under  Item  15  (a)(1) present fairly, in all material respects, the
financial  position of Genus, Inc. and its subsidiaries at December 31, 2002 and
2001,  and  the results of their operations and their cash flows for each of the
three years in the period ended December 31, 2002, in conformity with accounting
principles  generally  accepted in the United States of America. These financial
statements  are  the  responsibility  of  the  Company's  management;  our
responsibility  is  to express an opinion on these financial statements based on
our  audits.  We  conducted  our  audits  of these statements in accordance with
auditing  standards  generally  accepted  in the United States of America, which
require  that we plan and perform the audit to obtain reasonable assurance about
whether  the  financial  statements  are free of material misstatement. An audit
includes  examining,  on  a  test  basis,  evidence  supporting  the amounts and
disclosures  in  the  financial  statements, assessing the accounting principles
used  and  significant  estimates made by management, and evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

As  discussed  in  Note  2  to  the consolidated financial statements, effective
January 1, 2000, the Company changed its method of recognizing revenue to comply
with  Securities  and  Exchange  Commission  Staff  Accounting Bulletin No. 101.

/s/  PRICEWATERHOUSECOOPERS  LLP
--------------------------------
PricewaterhouseCoopers  LLP

San Jose, California
February 7, 2003, except as to the first paragraph of Note 7,
which is as of March 20, 2003


                                       44
<PAGE>
<TABLE>
<CAPTION>
GENUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

                                                                     DECEMBER 31,
                                                                ---------------------
                                                                   2002       2001
                                                                ----------  ---------
<S>                                                             <C>         <C>
ASSETS
Current Assets:
  Cash and cash equivalents. . . . . . . . . . . . . . . . . .  $  11,546   $  3,043
  Accounts receivable (net of allowance for doubtful accounts
    of $69 in 2002 and 2001, respectively) . . . . . . . . . .      7,505      4,262
  Inventories. . . . . . . . . . . . . . . . . . . . . . . . .     11,405     12,648
  Other current assets . . . . . . . . . . . . . . . . . . . .      1,336      1,221
                                                                ----------  ---------
    Total current assets . . . . . . . . . . . . . . . . . . .     31,792     21,174
Equipment, furniture and fixtures, net . . . . . . . . . . . .      8,661     14,573
Other assets . . . . . . . . . . . . . . . . . . . . . . . . .      1,057        155
                                                                ----------  ---------
    Total assets . . . . . . . . . . . . . . . . . . . . . . .  $  41,510   $ 35,902
                                                                ==========  =========

LIABILITIES
Current Liabilities:
  Short-term bank borrowings . . . . . . . . . . . . . . . . .  $   7,813   $  4,481
  Accounts payable . . . . . . . . . . . . . . . . . . . . . .      6,498      8,352
  Accrued expenses . . . . . . . . . . . . . . . . . . . . . .      3,064      3,553
  Deferred revenue . . . . . . . . . . . . . . . . . . . . . .      2,713      7,388
  Customer advances. . . . . . . . . . . . . . . . . . . . . .      1,809          0
  Long term liabilities, current portion . . . . . . . . . . .        245          0
                                                                ----------  ---------
    Total current liabilities. . . . . . . . . . . . . . . . .     22,142     23,774
Convertible Notes. . . . . . . . . . . . . . . . . . . . . . .      5,301          0
Long term liabilities. . . . . . . . . . . . . . . . . . . . .        270          0
                                                                ----------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . . .     27,713     23,774
                                                                ----------  ---------

Commitments and contingencies (Note 8)

SHAREHOLDERS' EQUITY
Preferred stock, no par value:
  Authorized 2,000 shares; Issued and outstanding, none. . . .          0          0
Common stock, no par value:
  Authorized 50,000 shares;
    Issued and outstanding, 28,621 shares in 2002 and
    22,365 shares in 2001. . . . . . . . . . . . . . . . . . .    123,890    110,753
Accumulated deficit. . . . . . . . . . . . . . . . . . . . . .   (107,809)   (96,189)
Note receivable from shareholder . . . . . . . . . . . . . . .       (151)      (151)
Accumulated other comprehensive loss . . . . . . . . . . . . .     (2,133)    (2,285)
                                                                ----------  ---------
    Total shareholders' equity . . . . . . . . . . . . . . . .     13,797     12,128
                                                                ----------  ---------
    Total liabilities and shareholders' equity . . . . . . . .  $  41,510   $ 35,902
                                                                ==========  =========
</TABLE>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.


                                       45
<PAGE>
<TABLE>
<CAPTION>
GENUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                   YEARS ENDED DECEMBER 31,
                                                                 -----------------------------
                                                                   2002       2001      2000
                                                                 ---------  --------  --------
<S>                                                              <C>        <C>       <C>
Revenues                                                         $ 39,767   $48,739   $40,638
Costs and expenses:
  Cost of goods sold . . . . . . . . . . . . . . . . . . . . .     29,143    32,500    24,385
  Research and development . . . . . . . . . . . . . . . . . .      8,011    12,118     8,659
  Selling, general and administrative. . . . . . . . . . . . .     12,621    10,381    10,093
                                                                 ---------  --------  --------
Loss from operations . . . . . . . . . . . . . . . . . . . . .    (10,008)   (6,260)   (2,499)
Interest expense . . . . . . . . . . . . . . . . . . . . . . .     (1,237)     (496)     (118)
Interest income. . . . . . . . . . . . . . . . . . . . . . . .         83        75       252
Other income (expense), net. . . . . . . . . . . . . . . . . .         80        85       (26)
                                                                 ---------  --------  --------
Loss before provision for income taxes and cumulative effect
  of change in accounting principle. . . . . . . . . . . . . .    (11,082)   (6,596)   (2,391)
Provision for income taxes . . . . . . . . . . . . . . . . . .        538        70       490
                                                                 ---------  --------  --------
Loss before cumulative effect of change in accounting principle   (11,620)   (6,666)   (2,881)
Cumulative effect of change in accounting principle. . . . . .          0         0    (6,770)
                                                                 ---------  --------  --------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . .   $(11,620)  $(6,666)  $(9,651)
                                                                 =========  ========  ========
Per share data:
Basic and diluted loss per share  before cumulative effect . .   $  (0.43)  $ (0.31)  $ (0.15)
Cumulative effect of change in accounting principle. . . . . .          0         0     (0.36)
                                                                 ---------  --------  --------
Basic and diluted net loss per share . . . . . . . . . . . . .   $  (0.43)  $ (0.31)  $ (0.51)
                                                                 =========  ========  ========
Shares used to compute basic and diluted net loss per share. .     26,934    21,163    18,937
                                                                 =========  ========  ========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.


                                       46
<PAGE>
<TABLE>
<CAPTION>
GENUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
AND COMPREHENSIVE LOSS
(IN THOUSANDS)

                                                               NOTES           RETAINED        OTHER      TOTAL
                                         COMMON STOCK        RECEIVABLE        EARNINGS       COMPRE-    SHARE-
                                      -------------------       FROM         (ACCUMULATED     HENSIVE    HOLDERS
                                       SHARES    AMOUNT     SHAREHOLDERS       DEFICIT)        LOSS      EQUITY
                                      ------  -----------  --------------  ----------------  ---------  ---------
<S>                                   <C>     <C>          <C>             <C>               <C>        <C>
Balances, December 31, 1999. . . . .  18,469      101,042              0           (79,872)    (1,792)    19,378
  Issuance of shares of common stock
    under stock option plan. . . . .     490        1,023              0                 0          0      1,023
  Issuance of shares of common
    stock from warrants and options       72            0              0                 0          0          0
  Issuance of shares of common stock
    under employee stock purchase
    plan . . . . . . . . . . . . . .     288          282              0                 0          0        282
  Stock-based compensation . . . . .       0          490              0                 0          0        490
  Net loss . . . . . . . . . . . . .       0            0              0            (9,651)         0
  Translation adjustments. . . . . .       0            0              0                 0       (230)
  Comprehensive loss . . . . . . . .       0            0              0                 0          0     (9,881)
                                      ------  -----------  --------------  ----------------  ---------  ---------
Balances, December 31, 2000. . . . .  19,319      102,837              0           (89,523)    (2,022)    11,292
  Issuance of  shares of common
    stock and warrants to purchase
    common stock under private
    placement, net of issuance cost
    of $725. . . . . . . . . . . . .   2,542        6,900              0                 0          0      6,900
  Issuance of shares of common stock
    under stock option plan. . . . .     243          521           (151)                0          0        370
  Issuance of shares of common stock
    under employee stock purchase
    plan . . . . . . . . . . . . . .     261          417              0                 0          0        417
  Stock-based compensation . . . . .       0           78              0                 0          0         78
  Net loss . . . . . . . . . . . . .       0            0              0            (6,666)         0
  Translation adjustments. . . . . .       0            0              0                 0       (263)
Comprehensive loss . . . . . . . . .       0            0              0                 0          0     (6,929)
                                      ------  -----------  --------------  ----------------  ---------  ---------
Balances, December 31, 2001. . . . .  22,365  $   110,753  $        (151)  $       (96,189)  $ (2,285)  $ 12,128
                                      ------  -----------  --------------  ----------------  ---------  ---------


                                       47
<PAGE>
                                                               NOTES           RETAINED        OTHER      TOTAL
                                         COMMON STOCK        RECEIVABLE        EARNINGS       COMPRE-    SHARE-
                                      -------------------       FROM         (ACCUMULATED     HENSIVE    HOLDERS
                                       SHARES    AMOUNT     SHAREHOLDERS       DEFICIT)        LOSS      EQUITY
                                      ------  -----------  --------------  ----------------  ---------  ---------

Balances, December 31, 2001. . . . .  22,365      110,753           (151)          (96,189)    (2,285)    12,128
  Issuance of shares of common stock
   and warrants to purchase common
   stock under private placement,
   net of issuance costs of $447 . .   3,871        7,750              0                 0          0      7,750
  Value of warrants related to the
   issuance of 7% convertible notes
   and warrants. . . . . . . . . . .       0        1,312              0                 0          0      1,312
  Value of beneficial conversion
   feature related to the
   issuance of 7% convertible notes
   and warrants. . . . . . . . . . .       0          928              0                 0          0        928
  Issuance of warrants . . . . . . .       0           54              0                 0          0         54
  Exercise of warrants . . . . . . .   1,536        1,764              0                 0          0      1,764
  Conversion of notes payable to
   shares of common stock. . . . . .     490          675              0                 0          0        675
  Issuance of shares of common stock
  under stock option plan. . . . . .     159          324              0                 0          0        324
  Issuance of shares of common stock
   under employee stock purchase
   plan. . . . . . . . . . . . . . .     200          330              0                 0          0        330
  Net loss . . . . . . . . . . . . .       0            0              0           (11,620)         0
  Translation adjustments. . . . . .       0            0              0                 0        152
  Comprehensive loss . . . . . . . .       0            0              0                 0          0    (11,468)
                                      ------  -----------  --------------  ----------------  ---------  ---------
Balances, December 31, 2002. . . . .  28,621  $   123,890          ($151)        ($107,809)   ($2,133)  $ 13,797
                                      ======  ===========  ==============  ================  =========  =========
</TABLE>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.


                                       48
<PAGE>
<TABLE>
<CAPTION>
GENUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

                                                                    YEARS ENDED DECEMBER 31,
                                                                -------------------------------
                                                                  2002       2001       2000
                                                                ---------  ---------  ---------
<S>                                                             <C>        <C>        <C>

Cash flows from operating activities:
  Net loss . . . . . . . . . . . . . . . . . . . . . . . . . .  $(11,620)  $ (6,666)  $ (9,651)
  Adjustments to reconcile net loss to net cash from operating
  activities:
    Cumulative effect of change in accounting principle. . . .         0          0      6,770
    Depreciation . . . . . . . . . . . . . . . . . . . . . . .     3,748      3,034      1,740
    Provision for excess and obsolete inventories and
       lower of cost or market . . . . . . . . . . . . . . . .     2,190        317        400
    Provision for doubtful accounts. . . . . . . . . . . . . .         5          0       (188)
    Amortization of deferred finance costs . . . . . . . . . .       525          0          0
    Write off of fixed assets. . . . . . . . . . . . . . . . .        72          0          0
    Stock-based compensation . . . . . . . . . . . . . . . . .         0         78        490
    Changes in assets and liabilities:
      Accounts receivable. . . . . . . . . . . . . . . . . . .    (3,248)     4,217       (662)
      Inventories. . . . . . . . . . . . . . . . . . . . . . .     1,647      8,884    (10,814)
      Other assets . . . . . . . . . . . . . . . . . . . . . .      (258)      (512)       352
      Accounts payable . . . . . . . . . . . . . . . . . . . .    (1,854)      (295)     4,501
      Accrued expenses . . . . . . . . . . . . . . . . . . . .      (489)       238        111
      Deferred revenue . . . . . . . . . . . . . . . . . . . .    (4,675)   (11,174)     4,659
      Customer advances. . . . . . . . . . . . . . . . . . . .     1,809          0          0
                                                                ---------  ---------  ---------
      Net cash used in operating activities. . . . . . . . . .   (12,148)    (1,879)    (2,292)
                                                                ---------  ---------  ---------
Cash flows from investing activities:
  Acquisition of equipment, furniture and fixtures . . . . . .      (502)    (7,400)    (5,053)
                                                                ---------  ---------  ---------
      Net cash used in investing activities. . . . . . . . . .      (502)    (7,400)    (5,053)
                                                                ---------  ---------  ---------
Cash flows from financing activities:
  Issuance of convertible notes and warrants net of cash
  issuance costs of $814 . . . . . . . . . . . . . . . . . . .     6,986          0          0
  Net proceeds from issuance of common stock and warrants. . .    10,168      7,687      1,305
  Proceeds from short-term bank borrowings . . . . . . . . . .    28,122     14,236      6,719
  Payments of short-term bank borrowings . . . . . . . . . . .   (24,790)   (12,474)    (4,000)
      Proceeds from debt . . . . . . . . . . . . . . . . . . .     1,200          0          0
  Payments for debt. . . . . . . . . . . . . . . . . . . . . .      (685)         0        (52)
                                                                ---------  ---------  ---------
      Net cash provided by financing activities. . . . . . . .    21,001      9,449      3,972
                                                                ---------  ---------  ---------
Effect of exchange rate changes on cash. . . . . . . . . . . .       152       (263)      (230)
                                                                ---------  ---------  ---------
Net increase (decrease) in cash and cash equivalents . . . . .     8,503        (93)    (3,603)

Cash and cash equivalents, beginning of year . . . . . . . . .     3,043      3,136      6,739
                                                                ---------  ---------  ---------
Cash and cash equivalents, end of year . . . . . . . . . . . .  $ 11,546   $  3,043   $  3,136
                                                                =========  =========  =========
Supplemental Cash Flow Information
Cash paid for interest . . . . . . . . . . . . . . . . . . . .  $    227   $    470   $     76
Cash paid for income taxes . . . . . . . . . . . . . . . . . .       157          1        177
Non-cash investing and financing activities:
  Transfer of fixed assets to inventory. . . . . . . . . . . .     2,594          0          0
     Conversion of notes payable to common stock . . . . . . .       675          0          0
     Issuance of warrants in connection with convertible
       notes financing . . . . . . . . . . . . . . . . . . . .  $     54   $      0   $      0
</TABLE>

The  accompanying  notes  are  an  integral  part  of the consolidated financial
statements.


                                       49
<PAGE>
GENUS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Nature  of  Operations.  Genus,  Inc.  (the  "Company") was incorporated in
California  in  1981.  The  Company  designs,  manufactures  and markets capital
equipment and deposition processes for advanced semiconductor manufacturing. The
Company's  products  are  marketed  worldwide  either  directly  to end-users or
through sales representative arrangements. In January 1996, the Company opened a
subsidiary  in  South  Korea  to  provide  sales  and  service support to Korean
customers.  The  Company's customers include semiconductor manufacturers located
throughout  the  United  States,  Europe and in the Pacific Rim including Japan,
South  Korea and Taiwan. The following is a summary of the Company's significant
accounting  policies.

     Basis  of  Presentation.  The consolidated financial statements include the
accounts  of  Genus, Inc. and its wholly owned subsidiaries after elimination of
significant intercompany accounts and transactions. The preparation of financial
statements  in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets  and  liabilities  and disclosure 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.

     Liquidity.  The  Company  has incurred losses from continuing operations of
approximately  $11.6  million, $6.7 million and $9.7 million for the years ended
December  31,  2002,  2001  and  2000,  respectively.  Management  believes that
existing  cash  and  available  financing  will  be sufficient to meet projected
working  capital,  capital  expenditure and other cash requirements for the next
twelve  months  but  cannot  provide  assurances  that  future  cash  flows from
operations  will  be  sufficient  to  meet  operating requirements and allow the
Company  to  service debt and repay any underlying indebtedness at maturity. The
Company  is  actively marketing its existing and new products, which it believes
will  ultimately lead to profitable operations. However, if the Company does not
achieve  the  anticipated cash flows, we may not be able to meet planned product
release  schedules and forecast sales objectives. In such event the Company will
require  additional  financing  to  fund on-going and planned operations and may
need  to  implement further expense reduction measures. In the event the Company
needs  additional financing, there is no assurance that funds would be available
to  the  Company  or,  if available, under terms that would be acceptable to the
Company.

     Risks and Uncertainties. The Company operates in the highly competitive and
rapidly  changing  semiconductor  and  semiconductor  manufacturing  equipment
industries  and  is  dependant on limited financial resources, a small number of
suppliers  and customers with a concentration in Asian countries.  The Company's
future  growth  is dependant on acceptance of new products and market acceptance
of  systems relating to those products. Significant technological changes in the
industry  could  affect  operating  results  adversely.

     Cash  and  Cash  Equivalents.  The  Company  considers  all  highly  liquid
investments  with  maturity  of  three  months or less when purchased to be cash
equivalents.  Cash  equivalents  consist  primarily  of  money  market  funds.

     Fair  Value of Financial Instruments. The carrying amounts of cash and cash
equivalents,  accounts  receivable,  short  term  bank  borrowings  and accounts
payable  approximate estimated fair value because of the short maturity of those
financial  instruments.  The fair value of the convertible notes maturing August
15,  2005 with a carrying value of $5.3 million was $5.5 million at December 31,
2002.

     Concentration  of  Credit  Risk.  Financial  instruments, which potentially
subject  the  Company  to  concentrations of credit risk, consist principally of
cash  and  cash  equivalents  and trade receivables. The Company places cash not


                                       50
<PAGE>
required  for  current  disbursement in money market funds in the United States.
The  Company  does  not  require  collateral from its customers and maintains an
allowance  for  credit  losses.

     Two  customers  accounted for an aggregate of 95% of accounts receivable at
December  31,  2002.  One customer accounted for an aggregate of 99% of accounts
receivable  at  December  31,  2001.  The  Company  has written off bad debts of
$5,000,  $294,000  and  $188,000  in  2002,  2001,  and  2000,  respectively.

     Inventories.  Inventories  are stated at the lower of cost or market, using
standard  costs  that  approximate  actual  costs  under the first-in, first-out
method.

     Included  in  the inventory are customer evaluation units. If not purchased
by  the  customer  within  6 months after shipment date, the units are amortized
over  3  years.

     Long-Lived Assets. Equipment, furniture and fixtures are stated at cost and
depreciated  using  the  straight-line method over their estimated useful lives,
which  range from three to ten years. Leasehold improvements are amortized using
the  straight-line  method  over  their  estimated useful lives or the remaining
lease  term,  whichever  is  less.

     Equipment  includes  demonstration  equipment,  which  is  located  in  our
Applications  Laboratory  and  is  used  to  demonstrate  to  our  customers the
capabilities  of  our  equipment  to process wafers and deposit films. The gross
value  of  demonstration  equipment is based on the cost of materials and actual
factory  labor  and  overhead  expenses incurred in manufacturing the equipment.
These  costs  related  to  refurbishing  or  maintaining  existing demonstration
equipment, which do not add to the capabilities or useful life of the equipment,
are  expensed  as  incurred.  Demonstration  equipment  is  stated  at  cost and
depreciated  over  a  period  of  five  years.

Revenue recognition.  The Company derives revenue from the sale and installation
of  semiconductor  manufacturing  systems  and from engineering services and the
sale  of  spare  parts  to  support  such  systems.

     Equipment  selling  arrangements  generally  involve  contractual  customer
acceptance  provisions and installation of the product occurs after shipment and
transfer  of title. Effective January 1, 2000, at which time the Company did not
have  verifiable  objective evidence of the fair value of installation services,
the Company commenced deferring recognition of revenue from such equipment sales
until  installation was complete and the product was accepted by the customer to
comply  with  the  provisions  of  Securities  and  Exchange  Commission  Staff
Accounting  Bulletin  No.  101.  In  the  third  quarter  of  2002,  the Company
established  verifiable  objective  evidence  of  fair  value  of  installation
services,  one  of  the  requirements  for  Genus  to  recognize  revenue  for
multiple-element  arrangements  prior  to  completion  of installation services.
Accordingly,  under  SAB  101,  if  Genus  has  met  defined customer acceptance
experience  levels  with  both  the customer and the specific type of equipment,
then  the  Company  recognizes  equipment  revenue upon shipment and transfer of
title.  A  portion  of  revenue  associated  with  undelivered  elements such as
installation  and  on-site  support related tasks is recognized for installation
when  the installation is completed and the customer accepts the product and for
on-site  support as the support service is provided.  For products that have not
been  demonstrated  to  meet  product  specifications  for the customer prior to
shipment,  revenue  is recognized when installation is complete and the customer
accepts  the  product.  Revenues  can fluctuate significantly as a result of the
timing  of  customer acceptances. At December 31, 2002 and 2001, the Company had
deferred  revenue  of  $2.7  million  and  $7.4  million,  respectively.

Revenues  from  sale  of  spare  parts  are  generally recognized upon shipment.
Revenues  from engineering services are recognized as the services are completed
over  the  duration  of  the  contract.


     Product Warranty. The Company provides one-year labor and two-year material
warranty  on  its  products.  Warranty  expenses  are  accrued  upon  revenue


                                       51
<PAGE>
recognition.  At  present, based upon historical experience, the Company accrues
material  warranty  equal  to  2%  and 5% of shipment value for its LYNX2(R) and
LYNX3 products, respectively, and labor warranty equal to $20,000 per system for
both  its  LYNX2(R) and LYNX3 products. At the end of every quarter, the Company
reviews  its actual spending on warranty and reassess if its accrual is adequate
to  cover  warranty  expenses  on the systems in the field which are still under
warranty.  Differences  between  the  required  accrual and recorded accrual are
charged  or  credited  to  warranty  expenses  for  the  period.

     Income  Taxes.  The  Company  accounts for income taxes using a method that
requires  deferred  tax assets to be computed annually on an asset and liability
method and adjusted when new tax laws or rates are enacted. Valuation allowances
are established when necessary to reduce deferred tax assets to the amounts more
likely  than not to be realized. Income tax expense (benefit) is the tax payable
(refundable)  for the period plus or minus the change in deferred tax assets and
liabilities  during  the  period.

     Foreign  Currency.  The  Company  has foreign sales and service operations.
With  respect  to  all foreign subsidiaries excluding South Korea and Japan, the
functional  currency  is  the U.S. dollar, and transaction and translation gains
and losses are included in results of operations. The functional currency of the
Company's South Korean subsidiary is the won, and the functional currency of the
Company's  Japanese  subsidiary  is the yen. The translation from the applicable
foreign  currency  to U.S. dollars is performed for balance sheet accounts using
current  exchange  rates in effect at the balance sheet date and for revenue and
expense  accounts  using  the  weighted average exchange rate during the period.
Adjustments  resulting  from  such  translation  are  reflected  as  cumulative
translation  adjustments.

     Net  Loss  Per Share. Basic net loss per share is computed by dividing loss
available to common shareholders by the weighted average number of common shares
outstanding  for  the period. Diluted net loss per share is computed by dividing
loss  available  to  common  shareholders,  adjusted  for  convertible preferred
dividends and after-tax interest expense on convertible debt, if any, by the sum
of the weighted average number of common shares outstanding and potential common
shares  (when  dilutive).

     Stock Compensation. The Company accounts for stock-based compensation using
the  intrinsic  value  method  prescribed in Accounting Principles Board Opinion
(APB)  No.  25,  "Accounting  for  Stock  Issued  to  Employees"  and  Financial
Accounting  Standards  Board  Interpretation  No.  44  "Accounting  for  Certain
Transactions  Involving Stock Compensation."  Generally, the Company's policy is
to  grant options with an exercise price equal to the quoted market price of the
Company's  stock on the date of the grant. Accordingly, no compensation cost has
been recognized in the Company's statements of operations. Pro forma information
regarding  net  loss  and  net  loss  per  share  as  if  the  Company  recorded
compensation  expense  based  on  the fair value of stock-based awards have been
presented in accordance with Statement of Financial Accounting Standards No.148,
"Accounting  for Stock-Based Compensation - Transition and Disclosure" and is as
follows  for  the  years  ended  December 31, 2002, 2001 and 2000 (in thousands,
except  per  share  data):

<TABLE>
<CAPTION>
                                                       YEARS ENDED DECEMBER 31,
                                                    ------------------------------
                                                      2002       2001      2000
                                                    ---------  --------  ---------
<S>                                                 <C>        <C>       <C>
  Net loss, as reported . . . . . . . . . . . . .   $(11,620)  $(6,666)  $ (9,651)
  Deduct: Total stock-based employee compensation
  expense determined under fair value based method
  for all awards, net of related tax effects. . .     (2,797)   (3,240)    (2,927)
                                                    ---------  --------  ---------
  Pro forma net loss attributable to common
  Shareholders. . . . . . . . . . . . . . . . . .   $(14,417)  $(9,906)  $(12,578)
                                                    =========  ========  =========
Earnings per share
  Basic - as reported . . . . . . . . . . . . . .   $  (0.43)  $ (0.31)  $  (0.51)
  Basic - pro forma . . . . . . . . . . . . . . .   $  (0.54)  $ (0.47)  $  (0.66)

  Diluted - as reported . . . . . . . . . . . . .   $  (0.43)  $ (0.31)  $  (0.51)
  Diluted - as pro forma. . . . . . . . . . . . .   $  (0.54)  $ (0.47)  $  (0.66)
</TABLE>


                                       52
<PAGE>
     The  above  pro  forma effects on net loss may not be representative of the
effects  on  future results as options granted typically vest over several years
and  additional  option  grants  are  expected  to  be  made  in  future  years.

     The  fair  value  of  options  was estimated at the date of grant using the
Black-Scholes  option-pricing  model  with  the  following  weighted  average
assumptions  for  2002,  2001  and  2000;

<TABLE>
<CAPTION>
                                          2002        2001        2000
<S>                                       <C>         <C>         <C>
  Risk free interest rates . . . . . . .  2.03%       4.19%       5.17%
  Expected life . . . . . . .  . . . . .  3.0 years   3.0 years   3.3 years
  Expected volatility . . . .  . . . . .  112%        112%        222%
  Expected dividend yield . .  . . . . .  0%          0%          0%
</TABLE>

     The  weighted  average fair value of options granted in 2002, 2001 and 2000
was  $1.42,  $1.93  and  $8.09,  respectively.

     The  fair  value  of the employees' purchase rights under the 1989 Employee
Stock  Purchase  Plan was estimated using the Black-Scholes option-pricing model
with  the following assumptions for those rights granted in 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                  2002        2001        2000
<S>                                           <C>         <C>         <C>
  Risk free interest rates . . . . . . . . .   1.21%       3.42%       5.17%
  Expected life. . . . . . . . . . . . . . .   0.5 years   0.5 years   0.5 years
  Expected volatility . . . . . . . . .. . .   123%        78%         222%
  Expected dividend yield. . . . . . . . . .   0%          0%          0%
</TABLE>

     The  weighted  average fair value of those purchase rights granted in 2002,
2001  and  2000  was  $1.06,  $1.30  and  $4.66,  respectively.

     Comprehensive  loss.  Comprehensive  loss  includes  all  changes in equity
during  a  period  from  non-owner  sources.  The  Company's  comprehensive loss
includes  net loss and foreign currency translation adjustments and is displayed
in  the  statement  of  shareholders'  equity.

RECENT  ACCOUNTING  PRONOUNCEMENTS.

     In  August  2001,  the  FASB  issued  SFAS  No.  143, "Accounting for Asset
Retirement  Obligations."  SFAS  No.  143  addresses  financial  accounting  and
reporting  for obligations associated with the retirement of tangible long-lived
assets  and the associated asset retirement costs. This statement applies to all
entities.  It  applies  to  legal  obligations associated with the retirement of
long-lived  assets  that  result from the acquisition, construction, development
and  (or)  the  normal  operation  of  long-lived  assets,  except  for  certain
obligations  of  leases.  As  used  in  this Statement, a legal obligation is an
obligation  that  a  party  is  required to settle as a result of an existing or
enacted  law,  stature,  ordinance  or  written  or  oral  contract  or by legal
construction  of  a  contract  under  the  doctrine  of promissory estoppel. The
statement  is  effective  for  financial  statements  issued  for  fiscal  years
beginning  after June 15, 2002. The Company is currently assessing the impact of
SFAS No. 143  on  our  financial  position  and  results  of  operations.

     In  June  2002,  the  FASB  issued  SFAS  No.  146, "Accounting for Exit or
Disposal  Activities".  SFAS  No. 146 addresses significant issues regarding the
recognition,  measurement,  and reporting of costs that are associated with exit
and  disposal  activities, including restructuring activities that are currently
accounted  for  under EITF No. 94-3, "Liability Recognition for Certain Employee
Termination  Benefits  and  Other  Costs  to Exit an Activity (including Certain


                                       53
<PAGE>
Costs  Incurred  in  a  Restructuring)." The scope of SFAS No. 146 also includes
costs  related  to  terminating  a  contract  that  is  not  a capital lease and
termination  benefits  that  employees  who are involuntarily terminated receive
under the terms of a one-time benefit arrangement that is not an ongoing benefit
arrangement  or  an individual deferred-compensation contract. SFAS No. 146 will
be  effective  for exit or disposal activities that are initiated after December
31,  2002  and early application is encouraged.  The Company will adopt SFAS No.
146  during  the  first quarter ended March 31, 2003.  The effect on adoption of
SFAS No. 146 will change on a prospective basis the timing of when restructuring
charges  are  recorded  from a commitment date approach to when the liability is
incurred.

     In  November  2002,  the  FASB  issued FASB Interpretation, or FIN, No. 45,
"Guarantor's  Accounting  and  Disclosure Requirements for Guarantees, Including
Indirect  Guarantees  of  Indebtedness  of  Others."  FIN No. 45 requires that a
liability  be  recorded  in  the  guarantor's  balance  sheet upon issuance of a
guarantee.  In  addition,  FIN  No. 45 requires disclosures about the guarantees
that an entity has issued, including a reconciliation of changes in the entity's
product  warranty  liabilities.  The initial recognition and initial measurement
provisions  of  FIN  No.  45 are applicable on a prospective basis to guarantees
issued  or  modified  after  December  31, 2002, irrespective of the guarantor's
fiscal  year-end.  The  disclosure  requirements of FIN No. 45 are effective for
financial  statements  of  interim  or  annual periods ending after December 15,
2002.  The  Company  have adopted the disclosure provision of FIN No. 45 for the
year  ended  December  31,  2002  and  we  have  not  assessed the impact of the
recognition  and  measurement  provisions  of  FIN  No.  45  on our consolidated
financial  statements.

     In  November  2002,  the  EITF  reached  a  consensus  on  Issue No. 00-21,
"Accounting for Revenue Arrangements with Multiple Deliverables." EITF Issue No.
00-21  provides  guidance  on  how  to account for arrangements that involve the
delivery  or  performance  of  multiple  products, services and/or rights to use
assets.  The  provisions  of  EITF  Issue  No.  00-21  will  apply  to  revenue
arrangements  entered  into in fiscal periods beginning after June 15, 2003. The
Company  is  currently  assessing  the  impact  of  EITF  Issue No. 00-21 on our
consolidated  financial  statements.

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  -  Transition  and Disclosure - an amendment of FASB Statement No.
123."  SFAS  No.  148 provides alternative methods of transition for a voluntary
change  to  the  fair  value based method of accounting for stock-based employee
compensation.  The transition and annual disclosure requirements of SFAS No. 148
are  effective  for  fiscal  years  ended  after December 15, 2002.  The interim
disclosure  requirements  are  effective  for  interim  periods  beginning after
December  15,  2002.  We  have  chosen  to  continue  to account for stock-based
compensation  using  the intrinsic value method prescribed in APB Opinion No. 25
and  related  interpretations.  Accordingly,  compensation  expense  for  stock
options  is  measured as the excess, if any, of the estimate of the market value
of  our  stock  at the date of the grant over the amount an employee must pay to
acquire our stock.  We have adopted the annual disclosure provisions of SFAS No.
148 in our financial reports for the year ended December 31, 2002 and will adopt
the interim disclosure provisions for our future quarterly financial reports. As
the  adoption  of  this standard involves disclosures only, the Company does not
expect  a  material  impact  on  our  consolidated  financial  statements.

     In  January  2003,  the  FASB issued FIN No. 46, "Consolidation of Variable
Interest  Entities,  an  Interpretation  of  ARB  No.  51."  FIN No. 46 requires
certain variable interest entities to be consolidated by the primary beneficiary
of  the  entity  if  the  equity  investors  in  the  entity  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.  FIN No. 46 is effective
immediately  for  all  new  variable interest entities created or acquired after
January  31,  2003.  For variable interest entities created or acquired prior to
February  1,  2003,  the  provisions of FIN No. 46 must be applied for the first
interim  or  annual  period  beginning  after  June  15,  2003.  The  Company is
currently  assessing  the  impact  of  FIN  No. 46 on our consolidated financial
statements.


                                       54
<PAGE>
NOTE 2.   ACCOUNTING  CHANGE  -  REVENUE  RECOGNITION

     In December 2000, the Company changed its accounting method for recognizing
revenue  on  sales  with  an  effective  date  of January 1, 2000. The Company's
selling  arrangements  generally  involve  contractual  customer  acceptance
provisions and installation of the product occurs after shipment and transfer of
title.  As a result, effective January 1, 2000, to comply with the provisions of
Securities  and  Exchange  Commission  Staff  Accounting  Bulletin  No. 101, the
Company  deferred  recognition  of  revenue  from  such  equipment  sales  until
installation  was  complete and the product was accepted by the customer. In the
third  quarter of 2002, the Company established verifiable objective evidence of
fair  value  of  installation  services,  one  of  the requirements for Genus to
recognize  revenue  for  multi-element  arrangements  prior  to  completion  of
installation  services.  Accordingly,  under  SAB  101, if Genus has met defined
customer  acceptance  experience  levels with both the customer and the specific
type  of  equipment, then the Company recognizes equipment revenue upon shipment
and  transfer  of  title.  As a result, the total revenue recognized in 2002 for
equipment sales where installation had not been completed and the system was not
accepted  was  $5.6  million.

Prior  to the introduction of SAB 101, the Company recognized revenue related to
systems  upon  shipment.  A  provision  for  the estimated future cost of system
installation, warranty and commissions was recorded when revenue was recognized.

The  cumulative  effect  on prior years of the change in accounting method was a
charge  of  $6.8  million  or  $0.36  per  basic  and  diluted  share.

Unaudited  Pro  forma  amounts  of  the retroactive application of the change in
accounting  principle  under  SAB 101 are as follows (amounts are in thousands):

<TABLE>
<CAPTION>
                                            YEAR ENDED
                                           ------------
                                            DECEMBER 31
                                           ------------
                                               2000
                                           ------------
<S>                                        <C>

Revenues. . . . . . . . . . . . . . . . .  $    40,638
Net loss. . . . . . . . . . . . . . . . .       (2,881)
Net loss per share:
  Basic . . . . . . . . . . . . . . . . .  $     (0.15)
  Diluted . . . . . . . . . . . . . . . .  $     (0.15)
</TABLE>

NOTE 3.   INVENTORIES

     Inventories comprise the following (in thousands):

<TABLE>
<CAPTION>
                                                       DECEMBER 31,
                                                     -----------------
                                                      2002      2001
                                                     -------  --------
<S>                                                  <C>      <C>

Raw materials and purchased parts . . . . . . . . .  $ 4,493  $  4,446
Work in process . . . . . . . . . . . . . . . . . .    3,417     2,499
Finished goods. . . . . . . . . . . . . . . . . . .      175       630
Inventory at customers' locations . . . . . . . . .    3,320     5,073
                                                     -------  --------
                                                     $11,405  $ 12,648
                                                     =======  ========
</TABLE>


     Finished  goods  include customer evaluation units with a net book value of
$175,000  and $619,000 at December 31, 2002 and 2001, respectively. Inventory at
customers'  locations  represent  the  cost  of systems shipped to customers for
which  the  Company  is  awaiting  customer  acceptance.

NOTE 4.   EQUIPMENT,  FURNITURE  AND  FIXTURES

     Equipment,  furniture  and  fixtures  are  stated  at cost and comprise the
following  (in  thousands):


                                       55
<PAGE>
<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              ------------------------
                                                                  2002         2001
                                                              -----------  -----------
<S>                                                           <C>          <C>
Equipment (useful life of 3 years) . . . . . . . . . . . . .  $    9,481   $    9,165
Demonstration equipment (useful life ranges from 3-5 years)       21,258       24,161
Furniture and fixtures (useful life of 3 years). . . . . . .       1,045        1,083
Leasehold improvements (useful life ranges from 4-10 years)        4,332        4,385
                                                              -----------  -----------
                                                                  36,116       38,794
Less accumulated depreciation and amortization . . . . . . .     (27,688)     (27,611)
                                                              -----------  -----------
                                                                   8,428       11,183
Construction in progress . . . . . . . . . . . . . . . . . .         233        3,390
                                                              -----------  -----------
                                                              $    8,661   $   14,573
                                                              ===========  ===========
</TABLE>

Depreciation  expense  was $3.7 million, $3.0 million and $1.7 million for 2002,
2001  and  2000,  respectively.

NOTE 5.   ACCRUED EXPENSES

     Accrued expenses comprise the following (in thousands):

<TABLE>
<CAPTION>
     Accrued expenses comprise the following (in thousands):

                                               DECEMBER 31,
                                              --------------
                                               2002    2001
                                              ------  ------
<S>                                           <C>     <C>
     System warranty . . . . . . . . . . . .  $  970  $  803
     Accrued commissions and incentives. . .      18     330
     Accrued compensation and related items.     491     723
     Federal, state and foreign income taxes     751     444
     Other . . . . . . . . . . . . . . . . .     834   1,253
                                              ------  ------
                                              $3,064  $3,553
                                              ======  ======
</TABLE>

NOTE 6.   WARRANTIES

     The  Company  warrants  that  each of the products we sell shall be free of
defects  in material and workmanship and meets performance specifications during
our  warranty  period.  The warranty period means the period commencing upon the
earlier  of  successful  completion of acceptance tests agreed in writing by the
Company's  customers;  the  customer's  use  of  products  for  the  customer's
pre-production,  production or product development activities; ninety days after
the  product  shipment  date.

     The  Company's  warranty  period  terminates  for  material  coverage  in
twenty-four  months  and  for labor coverage in twelve months after the warranty
period  begins,  but  in  any  event  no later than twenty seven months from the
product  shipment  date  for  material  coverage  and  fifteen  months for labor
coverage,  unless otherwise stated in the quotation.  The Company provides labor
for  all product repairs and replacement parts, excluding consumable items, free
of  charge  during  the  warranty  period.

     Changes  in  our  warranty  liability,  which is included as a component of
"accrued  expenses"  on  the  Consolidated  Balance  Sheets,  during  the period
follows:

<TABLE>
<CAPTION>
<S>                                                                   <C>
Balance at January 1, 2002                                            $803
Accrual for warranty liability for revenues recognized in the period   576
Settlements made                                                      (409)
                                                                      -----
Balance at December 31, 2002                                          $970
                                                                      =====
</TABLE>


                                       56
<PAGE>
NOTE 7.   SHORT-TERM  BANK  BORROWING

     On  December  20, 2001 and as amended on March 27, 2002 and March 20, 2003,
the  Company  maintained  line of credit facilities from Silicon Valley bank for
$15.0  million, secured against eligible receivables and inventory. The interest
rate  is  prime  plus 1.75% per annum and the facility expires on June 29, 2004.
The  loan  is  collateralized by a first priority perfected security interest in
the  Company's  assets  and  has  a covenant requiring the Company to maintain a
minimum  tangible net worth (calculated as the excess of total assets over total
liabilities  adjusted  to exclude intangible assets and balances receivable from
officers  or affiliates and to exclude debt subordinated to Silicon Valley Bank)
of  $15  million.  As  of  December 31, 2002, there was $7.8 million outstanding
under  this  credit  facility.

    On  January  4,  2002,  the  Company received gross proceeds of $1.2 million
under  a  secured  loan  with  CitiCapital, a division of Citigroup. The loan is
payable  over  36  months, accrues interest of 8.75% per annum and is secured by
two systems in the Company's demonstration lab. There was a $515,000 outstanding
balance  under  this  agreement  at  December  31,  2002.

NOTE 8.   COMMITMENTS  AND  CONTINGENCIES

     We  maintain  our  headquarters, manufacturing and research and development
operations  in Sunnyvale, California. Our lease for approximately 100,000 square
feet  for  our  Sunnyvale facility expires in October 2012.  Commencing in 2003,
our  annual  rental expense will be $1,828,000, which includes $200,000 per year
to  recognize the impact of future rental increases on a straight-line basis. We
also  have  leases  for  our sales and support offices in Seoul, South Korea and
Tokyo,  Japan.  We believe that our existing facilities are adequate to meet our
current  requirements  and  that suitable additional or substitute space will be
available  as  needed.

     At December 31, 2002, minimum lease payments required under these operating
leases  are  as  follows  (in  thousands):

     2003 . . . . . .    $   1,628
     2004 . . . . . .        1,628
     2005 . . . . . .        1,628
     2006 . . . . . .        1,653
     2007 . . . . . .        1,799
     Thereafter . . .        9,751
                         ---------
                         $  18,087
                         =========

     Rent  expense  was  $1.0 million, $682,000 and $806,000 for the years ended
December  31,  2002, 2001 and 2000, respectively. Sublease rental income was $0,
$596,000  and $1.1 million for the years ended December 31, 2002, 2001 and 2000,
respectively.     In  September  2001,  the  sublease  tenant  terminated  their
sublease  and  we  reclaimed  the  office  space.


Legal  Proceedings


     On  June  6,  2001,  ASM  America, Inc ("ASMA") filed a patent infringement
action  against  Genus,  Inc  ("Genus").  ASMA's Complaint alleges that Genus is
directly  and  indirectly  infringing  U.S.  Patent  No.  5,916,365  ("the  '365
Patent"),  entitled  "Sequential Chemical Vapor Deposition," and U.S. Patent No.
6,015,590  ("the  '590  Patent") entitled "Method For Growing Thin Films," which
ASMA  claims  to  own  or exclusively license.  The Complaint seeks monetary and
injunctive  relief.  Genus  served  its  answer to ASMA's complaint on August 1,
2001.  Also  on  August  1,  2001,  Genus  counterclaimed  against  ASMA and ASM


                                       57
<PAGE>
International,  N.V.  ("ASMI") for (1) infringement of U.S. Patent No. 5,294,568
("the  '568  Patent")  entitled  "Method of Selective Etching Native Oxide"; (2)
declaratory  judgment that the '365 and '590 Patents are invalid, unenforceable,
and  not  infringed  by  Genus;  and  (3) antitrust violations.  An initial Case
Management  Conference  was  held  on October 16, 2001.  On January 9, 2002, the
Court  issued  an  order  granting  ASMA leave to amend its complaint to add Dr.
Sherman  as  a  party  and  to add a claim that Genus is directly and indirectly
infringing U.S. Patent No. 4,798,165 ("the '165 Patent") entitled "Apparatus for
Chemical  Vapor  Deposition  Using  an  Axially Symmetric Gas Flow"), which ASMA
claims  to own.  The court also severed and stayed discovery and trial of Genus'
antitrust  claims  until after trial of the patent claims.  On February 4, 2002,
Genus  served  its Amended Answer to ASMA's amended complaint and counterclaimed
against  ASMA  for  declaratory  judgment  that  the  '165  Patent  is  invalid,
unenforceable, and not infringed by Genus.  On August 15, 2002, the Court issued
a  claim construction order regarding the '590, '365, and '598 Patents.  A claim
construction  hearing  regarding the '165 Patent was held on September 26, 2002,
and  the  Court  issued  a  claim  construction  ruling regarding this patent on
November  13,  2002.  On  September  23,  2002  Genus  filed motions for summary
judgment  on  noninfringement  regarding the '590 and '365 Patents.  On November
20,  2002,  the  Court  granted  Genus'  motion  for  summary  judgment  of
noninfringement  of  the  '365  Patent.  On  January 10, 2003, the Court granted
Genus'  motion  for  summary  judgment of noninfringement of the '590 Patent.  A
hearing  for  dispositive  motions on the remaining patent claims in the case is
currently  set for June 20, 2003, and trial on those claims is currently set for
January  12,  2004.  Management  believes that the outcome of these matters will
not  have a material adverse effect on the Company's financial position, results
of  operations  or  cash  flows.

     We  may in the future be party to litigation arising in the ordinary course
of  our  business,  including  claims  that  we  allegedly  infringe third party
trademarks  and  other  intellectual  property  rights. Such claims, even if not
meritorious,  could  result  in  the  expenditure  of  significant financial and
managerial  resources.

NOTE  9.  CONVERTIBLE  NOTES  AND  WARRANTS

     On August 15, 2002, the Company raised $7.0 million, net of issuance costs,
by  issuing  unsecured  7%  convertible notes and warrants to purchase 2,761,000
shares  of  common  stock.

     -    $7.5  million  of  the  convertible  notes are convertible into common
          stock at a price of $1.42 per share and a $300,000 convertible note is
          convertible  into  common  stock  at  a  price of $1.25 per share. All
          convertible  notes  accrue  interest  at  7%  per  annum,  payable
          semi-annually  each  February  15  and  August  15, in cash or, at the
          election  of  the  Company, in registered stock. The convertible notes
          are  redeemable  three  years  after issuance or may be converted into
          5,521,000  shares  of common stock prior to the redemption date at the
          election  of  the  investors.

     -    Warrants  exercisable  for  2,641,000  shares  of common stock have an
          exercise price of $1.42 per share and warrants exercisable for 120,000
          shares  of common stock have an exercise price of $1.25 per share. All
          warrants  are currently exercisable, expire on August 15, 2006 and are
          callable  by  the  Company  after  one  year if the common stock price
          exceeds 200% of the respective exercise prices. The Company determined
          the fair value of the warrants, using the Black Scholes option pricing
          model with a risk free intrest rate of 4.4 percent, volatility of 75%,
          a  term  of  three  years  and  no  dividend  yield.

     The  Company  classified  the warrants as equity and allocated a portion of
the proceeds from the convertible notes to the warrants, using the relative fair
value  method  in  accordance with APB No. 14. The allocation of proceeds to the
warrants  reduced  the carrying value of the convertible notes. As a result, the
fair value of the common stock issuable upon conversion of the notes exceeds the
carrying  value  of  the convertible notes, resulting in a beneficial conversion
feature.  The  beneficial conversion feature is accreted over the stated term of
the  convertible  notes  in  accordance  with  EITF  No.  00-27.

     The  net  cash  proceeds  from  the  issuance  of the convertible notes and
warrants  were  recorded  as  follows  (in  thousands):


                                       58
<PAGE>
          Convertible note                                   $ 5,560
          Detachable warrants                                  1,312
          Beneficial conversion feature                          928
                                                             --------
                                                               7,800
          Other  asset, issuance costs                          (814)
                                                             --------
                                                             $ 6,986
                                                             ========

     The  $2.2 million difference between the $5.6 million carrying value of the
notes  and  the  $7.8 million face value of the notes, representing the value of
the  warrants and the beneficial conversion feature, has been recorded as equity
and  the  corresponding  debt  discount is accreted as interest expense over the
three  year  term  of  the  convertible notes, using the effective interest rate
method.

     The Company incurred issuance costs of approximately $868,000, representing
cash obligations of $814,000 and the Black Scholes value of $54,000 of a warrant
to  purchase  79,000  shares  of  common  stock  at  $1.42 per share issued to a
placement agent in connection with the transaction. These warrants are currently
exercisable  and  expire  on  August  15, 2006.  Issuance costs are deferred and
amortized  as  interest  expense  over the stated term of the convertible notes.

     In  the  event  of a change of control of the Company, the note holders may
elect  to receive repayment of the notes at a premium of 10% over the face value
of  the  notes.

     During  the  fourth quarter of 2002, convertible notes with a face value of
$675,000  were  converted  into  489,544  shares  of  common  stock.


NOTE 10.  SHAREHOLDERS'  EQUITY

Sale  of  Common  Stock

      On May 17, 2001, the Company sold 2,541,785 shares of our common stock and
warrants  to  purchase  up to 1,461,525 of additional shares of common stock for
net  proceeds  of  approximately  $6.9  million.

     On  January 25, 2002, the Company sold 3,871,330 shares of our common stock
and  warrants to purchase up to 580,696 of additional shares of common stock for
net  proceeds  of  approximately  $7.9  million.

Warrants

     Shares  subject  to warrants to purchase common stock (in thousands, except
per  share  amounts):

<TABLE>
<CAPTION>
                          No. of Shares of                                          No. of Shares of
                           Common Stock                                               Common Stock
               Exercise   Underlying Warrants                                     Underlying Warrants on
Date issued      Price    Upon Date of Issuance             Reason                  December 31, 2002
-------------  ---------  -----------------  -----------------------------------  ----------------------
<S>            <C>        <C>                <C>                                  <C>
November 1999  $    2.39                25   Credit Facility Costs                                    25
May 2001       $    3.50           1,271(1)  - Warrants Issued to Investors                            -
May 2001       $    3.00                69   - Placement Agent (Financing Costs)                      69
May 2001       $    5.24               121   - Placement Agent (Financing Costs)                     121


                                       59
<PAGE>
January 2002   $    2.19             760(1)  - Warrants Issued to Investors                            -
January 2002   $    3.23               581   - Warrants Issued to Investors                          581
August 2002    $    1.42             2,641     Warrants Issued to Notes Holder                     2,341
August 2002    $    1.25               120     Warrants Issued to Notes Holder                       120
August 2002    $    1.42                79     Placement Agent (Financing Costs)                      79
                          -----------------                                       ----------------------
Totals                               5,667                                                         3,336
                          =================                                       ======================
</TABLE>

     (1)  Exercised in full prior to December 31, 2002.

     In  connection  with  the  November  1999  $10.0  million revolving line of
credit, the Company issued to Venture Bank warrants to purchase 25,000 shares of
the  Company's  common  stock  at  a  price  of  $2.39  per  share. Based on the
Black-Scholes option-pricing model, the fair market value of the warrants at the
date  of the grant was $53,000, which was amortized to interest expense over the
two-year  life  of  the  line.

     In connection with the sale of common stock in May 2001, the Company issued
warrants  to  purchase  1,461,525  shares  of  common stock with exercise prices
ranging from $3.00 to $5.24. The warrants have terms providing for an adjustment
of  the  number of shares underlying the warrants in the event that we issue new
shares  at  a  price  lower  than  the exercise price of the warrants, where the
Company  makes  distributions  of  common stock to its shareholders or effects a
reclassification.  In January 2002, warrants exercisable for 1,270,891 shares of
common  stock  were adjusted and thereafter exercisable for an aggregate 760,203
additional  shares  of  common  stock.  With  the  exception of certain warrants
exercisable  for 190,634 shares of common stock, the warrants issued in May 2001
have  been  exercised  in  full.

     In  connection  with  the sale of common stock in January 2002, the Company
issued  warrants to purchase 580,696 shares of common stock at an exercise price
of  $3.23.  The warrants have terms providing for an adjustment of the number of
shares  underlying  the warrants in the event that the Company issues new shares
at  a  price  lower  than  the exercise price of the warrants, where the Company
makes  a  distribution  of  common  stock  to  its  shareholders  or  effects  a
reclassification.

     In connection with the issuance of convertible notes and warrants in August
2002,  the  Company issued warrants to purchase 2,760,669 shares of common stock
with  exercise  prices  ranging  from  $1.25  to $1.42 to the note holders.  The
Company  determined  the  fair value of these warrants to be $1.3 million, using
the  Black  Scholes option-pricing model.  Warrants to purchase 79,225 shares of
common  stock  were  issued  to  the placement agent. Based on the Black-Scholes
option-pricing model, the fair market value of these warrants at the date of the
grant  was  $54,000,  which was capitalized as part of the issuance costs and is
amortized to interest expense over the three-year life of the convertible notes.

Convertible  notes

     During 2002, the Company issued convertible notes with a face value of $7.8
million. These notes are convertible into common stock at the option of the note
holder. The conversion price for $7.5 million is $1.42 per share of common stock
and  $1.25  per share of common stock for the remaining $300,000. During 2002, a
note holder converted notes with a face value of $675,000. At December 31, 2002,
the  remaining  notes  with  a  face value of $7.1 million were convertible into
5,031,797  shares  of  common  stock.


                                       60
<PAGE>
Shares  reserved  for  future  issuance

A  summary  of shares reserved for future issuance by the Company as of December
31,  2002  is  as  follows:

Exercise of warrants                                              3,336,224
Conversion of convertible notes                                   5,031,797
Stock options                                                     4,142,254
Employee Stock Purchase Plan                                         31,811
                                                                 ----------
                                                                 12,842,086
                                                                 ==========

Net Loss Per Share

     A reconciliation of the numerator and denominator of basic and diluted loss
per  share  is  as  follows  (in  thousands,  except  per  share  data):

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                                   -----------------------------
                                                                     2002       2001      2000
                                                                   ---------  --------  --------
<S>                                                                <C>        <C>       <C>

Loss attributable to common shareholders before cumulative effect
of change in accounting principle:
  Numerator-Basic and diluted:
     Net loss attributable to common shareholders . . . . . . . .  $(11,620)  $(6,666)  $(2,881)
                                                                   =========  ========  ========
  Denominator-Basic and diluted:
    Weighted average common stock outstanding . . . . . . . . . .    26,934    21,163    18,937
                                                                   =========  ========  ========
  Basic and diluted net loss per share. . . . . . . . . . . . . .  $  (0.43)  $ (0.31)  $ (0.15)
                                                                   =========  ========  ========

Net loss attributable to common shareholders:
  Numerator-Basic and diluted:
     Net loss attributable to common shareholders . . . . . . . .  $(11,620)  $(6,666)  $(9,651)
                                                                   =========  ========  ========
  Denominator-Basic and diluted:
    Weighted average common stock outstanding . . . . . . . . . .    26,934    21,163    18,937
                                                                   =========  ========  ========
  Basic and diluted net loss per share. . . . . . . . . . . . . .  $  (0.43)  $ (0.31)  $ (0.51)
                                                                   =========  ========  ========
</TABLE>

     Stock  options to purchase 4,142,254 shares of common stock with a weighted
average  exercise price of $3.05 were outstanding on December 31, 2002, but were
not  included  in  the computation of diluted loss per share because the Company
has a net loss for 2002. Warrants for the purchase of 3,336,224 shares of common
stock  with  a  weighted  average  exercise  price  of $1.89 were outstanding at
December  31,  2002 but were not included in the computation of diluted loss per
share  because  the  Company  has  a  net  loss  for  2002.

     Stock  options to purchase 3,378,321 shares of common stock with a weighted
average  exercise price of $3.72 were outstanding on December 31, 2001, but were
not  included  in  the computation of diluted loss per share because the Company
has  a  net  loss  for  2001.  Warrants  for the purchase of 1,486,525 shares of
common stock with a weighted average exercise price of $3.60 were outstanding at
December  31, 2001, but were not included in the computation of diluted loss per
share  because  the  Company  has  a  net  loss  for  2001.

     Stock  options to purchase 2,972,386 shares of common stock with a weighted
average  exercise price of $4.28 were outstanding on December 31, 2000, but were
not  included  in  the computation of diluted loss per share because the Company
has  a  net loss for 2000. Warrants for the purchase of 325,000 shares of common
stock  with  a  weighted  average  exercise  price  of $3.57 were outstanding at
December  31, 2000, but were not included in the computation of diluted loss per
share  because  the  Company  has  a  net  loss  for  2000.


                                       61
<PAGE>
Stock  Option  Plan

     In  March of 2000, the Company adopted the 2000 Incentive Stock Option Plan
to replace the 1991 Incentive Stock Option Plan. The 1991 Incentive Stock Option
Plan  was  scheduled  to  expire ten years after its adoption in 1991. Under the
2000 Incentive Stock Option Plan, the Board of Directors can grant incentive and
nonstatutory  stock  options.  The  Board  of  Directors  has  the  authority to
determine  to  whom options will be granted, the number of options, the term and
exercise price. The options are exercisable at times and increments as specified
by  the  Board  of  Directors,  and  generally vest over a three-year period and
expire  five years from the date of grant. At December 31, 2002, the Company had
reserved  6,503,006 shares of common stock for issuance under the 2000 Incentive
Stock Option Plan, which included 700,000 and 1,000,000 shares added to the plan
in 2001 and 2002, respectively.  At December 31, 2002, a total of 210,360 shares
remained  available  for  future  grants.

     Activity  under the 1991 and 2000 Incentive Stock Option Plans is set forth
in  the  table  below:
(in  thousands,  except  per  share  data):

<TABLE>
<CAPTION>
                                                                                                  Weighted
                            Available               Options Outstanding                           Average
                               For                  -------------------                           Exercise
                              Grant      Options      Price Per Share            Amount            Price
                            ----------  ---------  ---------------------  ---------------------  ---------
<S>                         <C>         <C>        <C>                    <C>                    <C>
Balance, January 1, 2000          441      2,639   $   0.88  to    $8.00  $              5,563   $   2.11

   Granted                     (1,052)     1,052      2.25   to    15.75                 8,795       8.36
   Exercised                        -       (490)     0.88   to     3.22                (1,023)      2.09
   Terminated                     229       (229)     0.88   to    15.75                  (602)      2.63
   Authorized                     800          -        -            -                      -           -
                            ----------  ---------  ---------------------  ---------------------  ---------

Balance, December 31, 2000        418      2,972      0.88   to    15.75                12,733       4.28
   Granted                     (1,005)     1,005      1.59   to     6.83                 2,859       2.85
   Exercised                        -       (243)     2.02   to     7.32                  (521)      2.15
   Terminated                     356       (356)     2.02   to    15.75                (2,489)      6.99
   Authorized                     700          -        -            -                      -           -
                            ----------  ---------  ---------------------  ---------------------  ---------
Balance, December 31, 2001        469      3,378      0.88   to    15.75                12,582       3.72
   Granted                     (1,629)     1,629      1.07   to     2.89                 3,421       2.02
   Exercised                        -       (159)     0.88   to     3.03                  (324)      2.05
   Expired                       (336)         -        -            -                      -           -
   Terminated                     760       (706)     0.88   to     4.00                (3,044)      1.57
   Authorized                   1,000          -        -            -                      -           -
                            ----------  ---------  ---------------------  ---------------------  ---------

Balance, December 31, 2002        210      4,142   $  0.88  to    $15.75  $             12,635   $   2.11
                            ==========  =========  =====================  =====================  =========
</TABLE>

     Options  outstanding  and currently exercisable by exercise price under the
option  plan  at  December  31,  2002  are  as  follows:


                                       62
<PAGE>
<TABLE>
<CAPTION>
                                 Options Outstanding                    Options Exercisable
                  ---------------------------------------------  ------------------------------------
                               Weighted Avg.
Range of           Number        Remaining       Weighted Avg.     Number     Weighted Avg. Exercise
Prices           Outstanding  Contractual Life  Exercise Price   Exercisable      Exercise Price
---------------  -----------  ----------------  ---------------  -----------  -----------------------
<S>              <C>          <C>               <C>              <C>          <C>
$0.88 - $ 0.88       500,440              0.72  $          0.88      500,440  $                  0.88
 1.07 -   1.29       626,300              4.62             1.29       61,997                     1.27
 1.31 -   2.30       543,625              2.71             2.01      333,618                     1.88
 2.38 -   2.50       250,833              2.91             2.44      112,455                     2.44
 2.56 -   2.56       552,333              4.47             2.56       92,746                     2.56
 2.59 -   3.03       676,500              2.34             2.82      431,613                     2.91
 3.04 -   5.34       604,723              2.57             4.14      430,318                     4.05
 5.93 -  10.06       283,000              2.32             7.84      192,132                     7.85
11.69 -  11.69         1,000              2.31            11.69          667                    11.69
15.75 -  15.75       103,500              2.19            15.75       72,335                    15.75
---------------  -----------  ----------------  ---------------  -----------  -----------------------
$0.88 - $15.75     4,142,254              2.88  $          3.05    2,228,321  $                  3.28
===============  ===========  ================  ===============  ===========  =======================
</TABLE>

     On  January  24,  2001, the Company's Chief Executive Officer issued a full
recourse  promissory note for $151,000  in connection with the exercise of stock
options. The note bears interest of 8% per annum and is repayable on January 24,
2004.

Employee  Stock  Purchase  Plan

     The  Company  has  reserved a total of 3,250,000 shares of common stock for
issuance under a qualified stock purchase plan, which provides substantially all
Company employees with the right to acquire shares of the Company's common stock
through payroll deductions. This total includes 300,000 shares added to the plan
in  each  2002  and  2001.  Under  the plan, the Company's employees, subject to
certain  restrictions,  may purchase shares of common stock at the lesser of 85%
of  fair  market  value  at  either  the  beginning of period or the end of each
six-month  purchase  period.  At  December  31, 2002, 2,918,189 shares have been
issued  under  the  plan.  The  Company  has issued 200,247, 261,177 and 287,971
shares  in  2002,  2001  and  2000,  respectively.  At December 31, 2002, shares
available  for  purchase  under  this  plan  were  331,811.

Share  Purchase  Rights  Plan

     On  September 7, 2000, the Company's Board of Directors declared a dividend
pursuant to a newly adopted Share Purchase Rights Plan, which replaced a similar
earlier  plan  that  had  expired  on July 3, 2000.  The intended purpose of the
Rights  Plan  is  to protect shareholders' rights and to maximize share value in
the  event  of an unfriendly takeover attempt.  As of the record date of October
13,  2000, each share of common stock of Genus, Inc. outstanding was granted one
right  under  the  new  plan.  Each  right  is  exercisable  only  under certain
circumstances  and  upon the occurrence of certain events and permits the holder
to  purchase  from the Company one one-thousandth (0.001) of a share of Series C
Participating  Preferred  Stock  at  an  initial exercise price of forty dollars
($40.00)  per one one-thousandth share.  The 50,000 shares of Series C preferred
stock  authorized  in  connection  with  the  Rights  Plan  will be used for the
exercise  of any preferred share purchase rights in the event that any person or
group (the Acquiring Person) acquires beneficial ownership of 15% or more of the
outstanding  common  stock.  In  such  event,  the  shareholders (other than the
Acquiring  Person)  would  receive  common  stock of the Company having a market
value of twice the exercise price.  Subject to certain restrictions, the Company
may  redeem the rights issued under the Rights Plan for $0.001 per right and may
amend  the  Rights  Plan  without the consent of rights holders. The rights will
expire  on  October  13,  2010,  unless  redeemed  by  the  Company.

Stock  Compensation

     In  1998  and  1999,  the Company granted options to outside consultants to
purchase  23,000  and 5,000 shares of common stock, respectively.  These options
have  exercise  prices  between  $0.875 and $3.03 per share.  The options vested


                                       63
<PAGE>
over  three years and expired between February 2001 and March 2002. The work was
to be conducted over a 3-year period coinciding with the vesting of the options.
Unvested  options  are to be forfeited if the consultants cease performing their
work.  The  Company  accounts  for  consultants  options in accordance with EITF
96-18,  "Accounting  for  Equity  Instruments  That  Are  Issued  to  Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."  In
accordance  with  this  standard,  changes  in the estimated fair value of these
options  are  recognized  as  compensation  expense in the period of the change.
The Company recorded none, $16,000 and $218,000 as compensation expense relating
to  these  options  in  2002,  2001  and  2000,  respectively.

  In  addition,  the Company recorded $28,000 and $209,000 of stock compensation
in  2001  and  2000, respectively, resulting from a shortfall in shares approved
for  the  ESPP.  The calculation and recording of expense was made in accordance
with  EITF  97-12,  "Accounting  for  Increased  Share  Authorizations in an IRS
Section  423  Employee  Stock  Purchase  Plan  under  APB  Opinion  No.  25." In
accordance  with  this  consensus,  a  compensation charge is calculated for the
amount by which the quoted stock price on the date of shareholder approval, less
a  15% discount, exceeds the price at which options were granted under the ESPP.
The  compensation charge so determined is amortized over the term of the options
issued  under  the  ESPP  that  remains after shareholder approval of additional
shares.

     During  2001,  the  Company  recorded  $34,000  of  stock  compensation  in
connection  with  the  accelerated  vesting  of  options granted to a terminated
employee.

NOTE 11.  EMPLOYEE  BENEFIT  PLAN

     During  1988, the Company adopted the Genus, Inc. 401(k) Plan (the "Benefit
Plan") to provide retirement and incidental benefits for eligible employees. The
Benefit  Plan  provides  for Company contributions as determined by the Board of
Directors  that  may  not  exceed  6%  of the annual aggregate salaries of those
employees  eligible  for  participation.  In  2002,  2001  and 2000, the Company
contributed $174,000, $101,000, and $142,000, respectively, to the Benefit Plan.

NOTE 12.  OTHER  INCOME  (EXPENSE),  NET

     Other income (expense), net, comprises the following (in thousands):

<TABLE>
<CAPTION>
                                             YEAR ENDED DECEMBER 31,
                                             ---------------------
                                              2002    2001    2000
                                             ------  ------  ------
<S>                                          <C>     <C>     <C>
     Foreign exchange, net . . . . . . . .      98     (27)    (58)
     Other, net. . . . . . . . . . . . . .     (18)    112      32
                                             ------  ------  ------
                                             $  80   $  85   $ (26)
                                             ======  ======  ======
</TABLE>

NOTE 13.  INCOME TAXES

     Income tax expense for the years ended December 31, 2002, 2001 and 2000 was
$538,000,  $70,000  and  $490,000,  respectively.

     The  components  of  income  (loss) before income taxes were as follows (in
thousands):

<TABLE>
<CAPTION>
                                                           YEAR ENDED DECEMBER 31,
                                                        -----------------------------
                                                          2002       2001      2000
                                                        ---------  --------  --------
<S>                                                     <C>        <C>       <C>
     Domestic loss before taxes . . . . . . . . . . . . $(11,407)  $(6,905)  $(3,829)
     Foreign income (loss) before taxes . . . . . . . .      325       309     1,438
                                                        ---------  --------  --------
     Loss before taxes and cumulative effect of change
     in accounting principle. . . . . . . . . . . . . . $(11,082)  $(6,596)  $(2.391)
                                                        =========  ========  ========
</TABLE>


                                       64
<PAGE>
     The  income  tax  expense for 2002, 2001 and 2000, respectively, was due to
current  foreign  taxes.

     The  Company's  effective  tax  rate for the years ended December 31, 2002,
2001  and  2000  differs  from  the  U.S.  federal  statutory income tax rate as
follows:

<TABLE>
<CAPTION>
                                                     YEAR ENDED DECEMBER 31,
                                                    -------------------------
                                                      2002     2001     2000
                                                    -------  -------  -------
<S>                                                 <C>      <C>      <C>
Federal  income tax at statutory rate . . . . . .     35.0%    35.0%    35.0%
Foreign income taxes. . . . . . . . . . . . . . .     (4.9)   ( 1.1)   (20.5)
Net operating loss not benefited. . . . . . . . .    (35.0)   (35.0)   (35.0)
                                                    -------  -------  -------
                                                    ( 4.9%)  ( 1.1%)  (20.5%)
                                                    =======  =======  =======
</TABLE>

     Deferred  tax assets (liabilities) consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                          DECEMBER 31,
                                                     ----------------------
                                                       2002         2001
                                                     -----------  ---------
<S>                                                  <C>          <C>
Deferred tax assets
  Depreciation and amortization . . . . . . . . . .  $    2,511   $  1,118
  Inventory, accounts receivable and other reserves       2,092      1,187
  Tax credits . . . . . . . . . . . . . . . . . . .       2,921      1,517
  Accrued expenses. . . . . . . . . . . . . . . . .       1,236        718
  Deferred revenue. . . . . . . . . . . . . . . . .       1,563      1,063
  Net operating loss carry forwards . . . . . . . .      33,900     32,446
                                                     -----------  ---------
                                                         44,223      8,049
  Deferred tax asset valuation allowance  . . . . .   (  44,223)   (38,049)
                                                     -----------  ---------
  Net deferred tax assets . . . . . . . . . . . . .  $      -     $      -
                                                     ===========  =========
</TABLE>

     The  deferred  tax assets valuation allowance at December 31, 2002 and 2001
is  attributable  to  federal and state deferred tax assets. Management believes
that sufficient uncertainty exists with regard to the realizability of these tax
assets  such that a full valuation allowance is necessary. These factors include
the  lack  of  a  significant  history  of  consistent  profits  and the lack of
carry-back  capacity to realize these assets. Based on these factors, management
is  unable  to  assert  that  it  is  more likely than not that the Company will
generate  sufficient  taxable  income  to realize the Company's net deferred tax
assets.

<TABLE>
<CAPTION>
                                        TAX REPORTING   EXPIRATION DATES
                                        --------------  ----------------
<S>                                     <C>             <C>
     U.S. regular tax operating losses  $       97,234         2005-2021
     U.S. business tax credits                   2,921         2003-2021
     State net operating losses         $        9,102         2004-2005
</TABLE>

Utilization  of the net operating losses and credits may be subject to an annual
limitation  due  to  the  ownership  change limitations provided by the Internal
Revenue  Code  and similar state provisions. The annual limitation may result in
the  expiration  of  net  operating  loss  carry-forwards  and  credits  before
utilization.


                                       65
<PAGE>
NOTE 14.  SEGMENT INFORMATION

     Currently,  the  Company  operates  in one industry segment. The Company is
engaged  in  the  design,  manufacture, marketing and servicing of advanced thin
film  deposition  systems  used  in  the  semiconductor  manufacturing industry.

Export Revenues

     For  reporting  purposes, export revenues are determined by the location of
the  parent  company of the Company's customer, regardless of where the delivery
was  made  by  the  Company.

     Revenues  by  geographical  region  for  the years ended December 31, 2002,
2001,  and  2000  were  as  follows  (in  thousands):

<TABLE>
<CAPTION>
                                      YEAR ENDED DECEMBER 31,
                                     -------------------------
                                       2002     2001     2000
                                     -------  -------  -------
<S>                                  <C>      <C>      <C>
United States . . . . . . . . . . .  $11,199  $ 3,200  $ 3,095
South Korea . . . . . . . . . . . .   22,430   35,767   37,123
Japan . . . . . . . . . . . . . . .    2,758    3,089      149
Taiwan. . . . . . . . . . . . . . .       85    2,300        0
Europe. . . . . . . . . . . . . . .    3,295    2,706        0
Rest of world . . . . . . . . . . .        0    1,677      271
                                     -------  -------  -------
                                     $39,767  $48,739  $40,638
                                     =======  =======  =======
</TABLE>

     The  Company did not hold any material long-lived assets in countries other
than  the  United  States  at  December  31,  2002  and  December  21,  2001.

Major  Customers

     In 2002, Samsung Electronics Company, Ltd, Seagate Technologies, Inc., IBM,
and  Asuka Project accounted for 58%, 24%, 7%, and 6% of revenues, respectively.
In  2001, Samsung Electronics Company, Ltd, Read-Rite Corporation, NEC, Infineon
and  SCS  accounted  for  73%,  7%, 6%, 6% and 5% of revenues, respectively.  In
2000,  Samsung  Electronics  Company, Ltd. and Micron Technology, Inc. accounted
for  91%  and  5%  of  revenues,  respectively.

NOTE 15.  RELATED  PARTY  TRANSACTIONS

     Mario  Rosati,  a board member of the Company, is also a partner of Wilson,
Sonsini,  Goodrich  & Rosati, the general counsel of the Company.  In 2002, 2001
and  2000,  the Company incurred $630,000, $781,000 and $224,000 in legal costs,
respectively,  and  paid  approximately  $1.1  million,  $57,000  and  $222,000,
respectively,  to  Wilson  Sonsini  Goodrich & Rosati. At December 31, 2002, the
Company  owed  approximately  $297,000  to  Wilson  Sonsini  Goodrich  & Rosati.


                                       66
<PAGE>
ITEM 15  (a) 2.  FINANCIAL STATEMENT SCHEDULE


REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE

To the Board of Directors
of Genus, Inc.:

Our  audits  of  the consolidated financial statements referred to in our report
dated  February 7, 2003, except as to the first paragraph of Note 7, which is as
of March 20, 2003, appearing in this Annual Report on Form 10-K also included an
audit  of  the financial statement schedule listed in Item 15(a)(2) of this Form
10-K.  In our opinion, this financial statement schedule presents fairly, in all
material  respects,  the  information set forth therein when read in conjunction
with  the  related  consolidated  financial  statements.



/s/  PRICEWATERHOUSECOOPERS  LLP
--------------------------------
PricewaterhouseCoopers  LLP

San Jose, California
February 7, 2003


                                       67
<PAGE>
Genus, Inc.

Schedule II "Valuation and Qualifying Accounts"


<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
Description                        Balance at     Additions     Deductions   Balance at
                                  Beginning of    Charged to     Charged       to end
                                     Period       costs/exp       Other       of period
----------------------------------------------------------------------------------------
<S>                               <C>            <C>           <C>           <C>
2002
Allowance for doubtful accounts   $          69  $         5   $         5   $        69
Allowance for excess and
obsolete inventory                        2,115        2,190             0         4,305
Deferred tax valuation allowance         38,049        6,174             0        44,223

2001
Allowance for doubtful accounts   $         363  $         0   $       294   $        69
Allowance for excess and
obsolete inventory                        2,830          317        (1,032)        2,115
Deferred tax valuation allowance         30,826        7,223             0        38,049

2000
Allowance for doubtful accounts   $         551  $         0   $       188   $       363
Allowance for excess and
obsolete inventory                        2,445          400            15         2,830
Deferred tax valuation allowance         32,923       (2,097)            0        30,826
----------------------------------------------------------------------------------------
</TABLE>


                                       68
<PAGE>
SIGNATURES

     Pursuant  to  the  requirements  of  Section  13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its  behalf  by  the  undersigned,  thereunto  duly  authorized,  in the City of
Sunnyvale,  State  of  California,  on  the  27th  day  of  March  2003

                                         GENUS, INC.


                                          By:  /s/ Shum Mukherjee
                                               ---------------------------------
                                                       Shum  Mukherjee
                                               Executive Vice President, Finance
                                                   Chief Financial Officer


     POWER  OF  ATTORNEY

     KNOW  ALL  PERSONS  BY  THESE  PRESENTS,  that  each person whose signature
appears  below  constitutes  and  appoints Shum Mukherjee and William W R Elder,
jointly  and  severally,  his  attorneys-in-fact,  each  with  the  power  of
substitution,  for him in any and all capacities, to sign any amendments to this
Form  10-K,  and  to file the same, with exhibits thereto and other documents in
connection  therewith,  with  the  Securities  and  Exchange  Commission, hereby
ratifying  and  confirming  all  that  each  of  said  attorneys-in-fact, or his
substitute  or  substitutes,  may  do  or  cause  to  be  done by virtue hereof.

     Pursuant  to  the requirements of the Securities Exchange Act of 1934, this
Report  has  been  signed  below  by  the  following  persons  on  behalf of the
Registrant  and  in  the  capacities  and  on  the  dates  indicated.

<TABLE>
<CAPTION>
NAME                                   TITLE                      DATE
-----------------------  ----------------------------------  --------------
<S>                      <C>                                 <C>
/s/ William W.R. Elder   Chairman of the Board, President    March 27, 2003
-----------------------  and Chief Executive Officer
William W.R. Elder       (principal executive officer)

/s/ Shum Mukherjee       Executive Vice President, Finance   March 27, 2003
-----------------------  Chief Financial Officer
Shum Mukherjee           (principal financial officer and
                         principal accounting officer)

/s/G. Frederick Forsyth  Director                            March 27, 2003
-----------------------
G. Frederick Forsyth

/s/ Todd S. Myhre        Director                            March 27, 2003
-----------------------
Todd S. Myhre

/s/ Mario M. Rosati      Director                            March 27, 2003
-----------------------
Mario M. Rosati

/s/ George D. Wells      Director                            March 27, 2003
-----------------------
George D. Wells


                                       69
<PAGE>
/s/Robert J. Richardson  Director                            March 27,2003
-----------------------
Robert J. Richardson
</TABLE>


                                       70
<PAGE>
Sarbanes-Oxley  Section  302(a)  Certifications

I, William W.R. Elder, certify that:

1.   I  have  reviewed  this  annual  report  on  Form  10-K  of  Genus,  Inc.;

2.   Based  on  my  knowledge,  this  annual  report does not contain any untrue
     statement  of a material fact or omit to state a material fact necessary to
     make  the  statements  made, in light of the circumstances under which such
     statements  were made, not misleading with respect to the period covered by
     this  annual  report;

3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included in this annual report, fairly present in all material
     respects  the  financial condition, results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

4.   The  registrant's  other  certifying  officers  and  I  are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in  Exchange  Act  Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed  such  disclosure  controls  and  procedures  to  ensure that
          material  information  relating  to  the  registrant,  including  its
          consolidated  subsidiaries, is made known to us by others within those
          entities,  particularly  during the period in which this annual report
          is  being  prepared;

     b)   evaluated  the  effectiveness  of the registrant's disclosure controls
          and procedures as of a date within 90 days prior to the filing date of
          this  annual  report  (the  "Evaluation  Date");  and

     c)   presented  in  this  annual  report  our  conclusions  about  the
          effectiveness  of  the disclosure controls and procedures based on our
          evaluation  as  of  the  Evaluation  Date;

5.   The  registrant's  other certifying officers and I have disclosed, based on
     our  most  recent  evaluation,  to  the registrant's auditors and the audit
     committee  of  registrant's  board  of directors (or persons performing the
     equivalent  functions):

     a)   all  significant  deficiencies  in the design or operation of internal
          controls  which  could  adversely  affect  the registrant's ability to
          record,  process,  summarize  and  report  financial  data  and  have
          identified  for  the  registrant's auditors any material weaknesses in
          internal  controls;  and

     b)   any  fraud, whether or not material, that involves management or other
          employees  who  have  a  significant role in the registrant's internal
          controls;  and

6.   The  registrant's  other  certifying  officer  and I have indicated in this
     annual  report  whether  or  not there were significant changes in internal
     controls  or  in  other  factors  that  could significantly affect internal
     controls  subsequent  to  the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

Date:  March 27, 2003
                                        /s/ William W. R. Elder
                                        ---------------------------
                                        William W.R. Elder
                                        Chief Executive Officer


                                       71
<PAGE>
I,  Shum  Mukherjee,  certify  that:

     1.   I  have  reviewed  this  annual  report  on  Form 10-K of Genus, Inc.;

     2.   Based  on my knowledge, this annual report does not contain any untrue
          statement  of  a  material  fact  or  omit  to  state  a material fact
          necessary  to  make the statements made, in light of the circumstances
          under  which such statements were made, not misleading with respect to
          the  period  covered  by  this  annual  report;

     3.   Based  on  my knowledge, the financial statements, and other financial
          information  included  in  this  annual  report, fairly present in all
          material  respects  the financial condition, results of operations and
          cash  flows of the registrant as of, and for, the periods presented in
          this  annual  report;

     4.   The  registrant's  other certifying officers and I are responsible for
          establishing  and  maintaining  disclosure controls and procedures (as
          defined  in  Exchange  Act Rules 13a-14 and 15d-14) for the registrant
          and  we  have:

          a)   designed  such  disclosure controls and procedures to ensure that
               material  information  relating  to the registrant, including its
               consolidated  subsidiaries,  is made known to us by others within
               those  entities,  particularly  during  the  period in which this
               annual  report  is  being  prepared;

          b)   evaluated  the  effectiveness  of  the  registrant's  disclosure
               controls  and procedures as of a date within 90 days prior to the
               filing  date  of  this annual report (the "Evaluation Date"); and

          c)   presented  in  this  annual  report  our  conclusions  about  the
               effectiveness  of the disclosure controls and procedures based on
               our  evaluation  as  of  the  Evaluation  Date;

     5.   The registrant's other certifying officers and I have disclosed, based
          on  our  most  recent evaluation, to the registrant's auditors and the
          audit  committee  of  registrant's  board  of  directors  (or  persons
          performing  the  equivalent  functions):

          a)   all  significant  deficiencies  in  the  design  or  operation of
               internal  controls  which could adversely affect the registrant's
               ability  to  record, process, summarize and report financial data
               and  have  identified  for the registrant's auditors any material
               weaknesses  in  internal  controls;  and

          b)   any  fraud,  whether or not material, that involves management or
               other  employees  who have a significant role in the registrant's
               internal  controls;  and

6. The registrant's other certifying officer and I have indicated in this annual
report  whether or not there were significant changes in internal controls or in
other  factors  that  could significantly affect internal controls subsequent to
the  date  of  our most recent evaluation, including any corrective actions with
regard  to  significant  deficiencies  and  material  weaknesses.

Date:  March 27, 2003
                                        /s/ Shum Mukherjee
                                        --------------------
                                        Shum Mukherjee
                                        Chief Financial Officer


                                       72
<PAGE>
                                  GENUS, INC.

ANNUAL REPORT ON FORM 10-K
YEAR ENDED DECEMBER 31, 2002

INDEX TO EXHIBITS

EXHIBIT
NO.                            DESCRIPTION
-------                        -----------
2.1       Asset  Purchase Agreement, dated April 15, 1998, by and between Varian
          Associates,  Inc.  and  Registrant  and  exhibits  thereto  (15)

3.1       Amended  and Restated Articles of Incorporation of Registrant as filed
          June  6,  1997  (11)

3.2       By-laws  of  Registrant,  as  amended  (13)

4.1       Common  Shares  Rights  Agreement, dated as of April 27, 1990, between
          Registrant  and  Bank  of  America, N.T. and S.A., as Rights Agent (4)

4.2       Convertible  Preferred  Stock  Purchase  Agreement,  dated February 2,
          1998,  among  the  Registrant  and  the  Investors  (14)

4.3       Registration  Rights  Agreement,  dated  February  2,  1998, among the
          Registrant  and  the  Investors  (14)

4.4       Certificate  of Determination of Rights, Preferences and Privileges of
          Series  A  Convertible  Preferred  Stock  (14)

4.5       Certificate  of Determination of Rights, Preferences and Privileges of
          Series  B  Convertible  Preferred  Stock  (17)

4.6       Redemption  and  Exchange  Agreement,  dated  July 16, 1998, among the
          Registrant  and  the  Investors  (17)

4.7       Registration  Rights  Agreement,  dated  January 17, 2002, as amended,
          amongst  the  Registrant  and  the  Investors  (20)

4.8       Securities  Purchase  Agreement  dated July 31, 2002 among the Company
          and  the  Purchasers  signatory  thereto.  (21)

4.9       Resale  Registration  Rights Agreement dated August 14, 2002 among the
          Company  and  the  Purchasers  signatory  thereto.  (21)

4.10      7%  Convertible Subordinated Note Due 2005 dated August 14, 2002. (21)

10.1      Lease,  dated  December  6,  1985,  for  Registrant's  facilities at 4
          Mulliken  Way, Newburyport, Massachusetts, and amendment and extension
          of  lease,  dated  March  17,  1987  (1)

10.2      Assignment  of Lease, dated April 1986, for Registrant's facilities at
          Unit  11A,  Melbourn  Science  Park,  Melbourn,  Hertz,  England  (1)

10.3      Registrant's  1989  Employee  Stock  Purchase  Plan,  as  amended  (5)

10.4      Registrant's  1991  Incentive  Stock  Option  Plan,  as  amended  (10)

10.5      Registrant's  2000  Stock  Plan  (19)

10.6      Distributor/Representative  Agreement,  dated  August 1, 1984, between
          Registrant and Aju Exim (formerly Spirox Holding Co./You One Co. Ltd.)
          (1)

10.7      Exclusive Sales and Service Representative Agreement, dated October 1,
          1989,  between  Registrant  and  AVBA  Engineering  Ltd.  (3)


                                       73
<PAGE>
10.8      Exclusive  Sales  and  Service  Representative  Agreement, dated as of
          April  1,  1990,  between  Registrant  and  Indosale  PVT  Ltd.  (3)

10.9      License  Agreement,  dated  November  23, 1987, between Registrant and
          Eaton  Corporation  (1)

10.10     Exclusive  Sales  and  Service  Representative Agreement, dated May 1,
          1989,  between  Registrant  and  Spirox  Taiwan,  Ltd.  (2)

10.11     Lease,  dated  April  7,  1992, between Registrant and The John A. and
          Susan  R.  Sobrato  1979 Revocable Trust for property at 1139 Karlstad
          Drive,  Sunnyvale,  California  (6)

10.12     Asset  Purchase  Agreement,  dated  May  28,  1992, by and between the
          Registrant  and  Advantage  Production  Technology,  Inc.  (7)

10.13     License  and  Distribution Agreement, dated September 8, 1992, between
          the  Registrant  and  Sumitomo  Mutual  Industries,  Ltd.  (8)

10.14     Lease  Agreement,  dated  October 1995, for Registrant's facilities at
          Lot  62,  Four  Stanley  Tucker  Drive, Newburyport, Massachusetts (9)

10.15     International  Distributor  Agreement,  dated  July  18, 1997, between
          Registrant  and  Macrotron  Systems  GmbH  (12)

10.16     Credit  Agreement,  dated  August  18,  1997,  between  Registrant and
          Sumitomo  Bank  of  California  (12)

10.18     Settlement Agreement and Mutual Release, dated April 20, 1998, between
          Registrant  and  James  T.  Healy  (16)

10.19     Form  of  Change  of  Control  Severance  Agreement  (16)

10.20     Settlement  Agreement  and Mutual Release, dated January 1998, between
          the  Registrant  and  John  Aldeborgh  (18)

10.21     Settlement  Agreement  and Mutual Release, dated May 1998, between the
          Registrant  and  Mary  Bobel  (18)

21.1     Subsidiaries  of  Registrant

23.1     Consent  of  Independent  Accountants

99.1     Certification  of  Chief Executive Officer and Chief Financial Officer
          pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
          of  the  Sarbanes-Oxley  Act  of  2002.

-----------------------------
(1)  Incorporated  by  reference  to  the  exhibit  filed  with  Registrant's
     Registration  Statement  on  Form S-1 (No. 33-23861) filed August 18, 1988,
     and  amended  on  September  21,  1988,  October 5, 1988, November 3, 1988,
     November  10,  1988,  and  December  15, 1988, which Registration Statement
     became  effective  November  10,  1988.

(2)  Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Registration  Statement  on  Form S-1 (No. 33-28755) filed on May 17, 1989,
     and amended May 24, 1989, which Registration Statement became effective May
     24,  1989.

(3)  Incorporated by reference to the exhibit filed with the Registrant's Annual
     Report  on  Form  10-K  for  the  year  ended  December  31,  1989.

(4)  Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q for the quarter ended September 30, 1990.

(5)  Incorporated by reference to the exhibit filed with the Registrant's Annual
     Report  on  Form  10-K  for  the  year  ended  December  31,  1990.

(6)  Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  June 30, 1992.

(7)  Incorporated by reference to the exhibit filed with the Registrant's Report
     on  Form  8-K  dated  June  12,  1992.

(8)  Incorporated by reference to the exhibit filed with the Registrant's Annual
     Report  on  Form  10-K  for  the  year  ended  December  21,  1992.


                                       74
<PAGE>
(9)  Incorporated by reference to the exhibit filed with the Registrant's Annual
     Report  on  Form  10-K  for  the  year  ended  December  31,  1995.

(10) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q  for  the  quarter  ended March 31, 1997.

(11) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q  for  the  quarter  ended  June 30, 1997.

(12) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q for the quarter ended September 30, 1997.

(13) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q for the quarter ended September 30, 1998.

(14) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Current  Report  on  Form  8-K  dated  February  12,  1998.

(15) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Current  Report  on  Form  8-K  dated  April  15,  1998.

(16) Incorporated by reference to the exhibit filed with the Registrant's Annual
     Report  on  Form  10-K/A  for  the  year  ended  December  31,  1997.

(17) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Current  Report  on  Form  8-K  dated  July  29,  1998.

(18) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Quarterly  Report  on  Form  10-Q/A  for  the  quarter ended June 30, 1998.

(19) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Annual  Report  on  Form  10-K  for the year ended December 21,  2000.

(20) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Current  Report  on  Form  8-K  dated  January  25,  2002.

(21) Incorporated  by  reference  to  the  exhibit  filed  with the Registrant's
     Current  Report  on  Form  8-K  dated  August  20,  2002.


                                       75
<PAGE>