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

                                    FORM 10-Q


[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2002 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For  the  transition  period  from  ___  to  ___

Commission  file  number  0-17139


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

            CALIFORNIA                                           94-279080
  (State or other jurisdiction of                            (I.R.S. Employer
   incorporation or organization)                           Identification No.)

 1139 KARLSTAD DRIVE, SUNNYVALE, CALIFORNIA                         94089
(Address  of  principal  executive  offices)                     (Zip code)

                                 (408) 747-7120
              (Registrant's telephone number, including area code)

                                 NOT APPLICABLE
   (Former name, former address and former fiscal year, if changed since last
                                    report)

Indicate by check mark whether the registrant (1) has filed all reports required
to  be  filed  by  Sections  13  or 15(d) of the Securities Exchange Act of 1934
during  the  preceding  12  months  (or  for such 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  the  number  of  shares outstanding of each of the issuer's classes of
common  stock,  as  of  the  latest  practicable  date:

Common  shares  outstanding at October 31, 2002:    27,740,162


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<PAGE>
<TABLE>
<CAPTION>
                                     GENUS,INC.
                                     FORM 10-Q
                                       INDEX

PART  I.  FINANCIAL  INFORMATION


Item 1.  Financial Statements
<S>      <C>                                                                                         <C>
         Condensed Consolidated Statements of Operations for the three months and nine months
         ended September 30, 2002 and September 30, 2001 . . . . . . . . . . . . . . . . . . . . .   3

         Condensed Consolidated Balance Sheets as of September 30, 2002
         and December 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4

         Condensed Consolidated Statements of Cash Flows
         for the nine months ended September 30, 2002 and September 30, 2001 . . . . . . . . . . .   5

         Notes to Condensed Consolidated Financial Statements  . . . . . . . . . . . . . . . . . .   6

Item 2.  Management's Discussion and Analysis
         of Financial Condition and Results of Operations. . . . . . . . . . . . . . . . . . . . .   13

Item 3.  Quantitative and Qualitative Disclosures About Market Risk. . . . . . . . . . . . . . . .   26

Item 4:  Controls & Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26



PART II. OTHER INFORMATION

Item 1:  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27

Item 2:. Changes in Securities and Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . .   27

Item 4:. Submissions of Matters to Vote of Security Holders. . . . . . . . . . . . . . . . . . . .   28

Item 5:. Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   28

Item 6:. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . .   29

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   32
</TABLE>


                                        2
<PAGE>
This  Quarterly  Report  on  Form  10-Q,  including "Management's Discussion and
Analysis  of  Financial Condition and Results of Operations" in Item 2, contains
forward-looking  statements  that  involve  risks  and uncertainties, as well as
assumptions  that, if they never materialize or prove incorrect, could cause the
results  of  Genus, Inc. to differ materially from those expressed or implied by
such  forward-looking  statements.  All  statements  other  than  statements  of
historical  fact are statements that could be deemed forward-looking statements,
including any projections of earnings, revenue, synergies, accretion, margins or
other financial items; any statements of the plans, strategies and objectives of
management  for  future  operations,  including the execution of integration and
restructuring  plans;  any statement concerning proposed new products, services,
developments  or  industry  rankings;  any  statements regarding future economic
conditions  or  performance;  any  statements  of  belief; and any statements of
assumptions  underlying  any  of  the  foregoing.  The  risks, uncertainties and
assumptions  referred to above include the performance of contracts by customers
and  partners;  employee  management  issues;  the  challenge  of managing asset
levels,  including  inventory;  the  difficulty  of aligning expense levels with
revenue  changes;  and  other  risks  that  are  described  herein  and that are
otherwise  described  from  time  to  time  in  Genus'  Securities  and Exchange
Commission  reports.  Genus  assumes no obligation and does not intend to update
these  forward-looking  statements.

                          PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

                                                  THREE MONTHS ENDED        NINE MONTHS ENDED
                                                     SEPTEMBER 30,             SEPTEMBER 30,
                                                   2002         2001         2002        2001
                                                -----------  -----------  ----------  -----------
<S>                                             <C>          <C>          <C>         <C>
Net sales  . . . . . . . . . . . . . . . . . .  $   12,153   $   15,094   $  28,487   $   43,062
Costs and expenses:
  Cost of goods sold . . . . . . . . . . . . .       7,826       10,300      20,463       27,523
  Research and development . . . . . . . . . .       2,127        2,592       6,079        8,838
  Selling, general and administrative. . . . .       3,498        2,739      10,229        7,971
                                                -----------  -----------  ----------  -----------
Loss from operations . . . . . . . . . . . . .      (1,298)        (537)     (8,284)      (1,270)

Other income (expenses), net . . . . . . . . .        (206)        (207)       (493)        (127)
                                                -----------  -----------  ----------  -----------
Loss before income taxes . . . . . . . . . . .      (1,504)        (744)     (8,777)      (1,397)
Provision for income taxes . . . . . . . . . .          71            0         159           69
                                                -----------  -----------  ----------  -----------

Net loss   . . . . . . . . . . . . . . . . . .  $   (1,575)  $     (744)  $  (8,936)  $   (1,466)
                                                ===========  ===========  ==========  ===========
Net loss per share:
  Basic. . . . . . . . . . . . . . . . . . . .  $    (0.06)  $    (0.03)  $   (0.34)  $    (0.07)
  Diluted. . . . . . . . . . . . . . . . . . .  $    (0.06)  $    (0.03)  $   (0.34)  $    (0.07)

Shares used in per share calculation-basic . .      27,693       22,268      26,572       20,793
                                                ===========  ===========  ==========  ===========
Shares used in per share calculation-diluted .      27,693       22,268      26,572       20,793
                                                ===========  ===========  ==========  ===========
</TABLE>


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


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                 GENUS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                        (IN THOUSANDS)


                                                                SEPTEMBER 30,    DECEMBER 1,
                                                                    2002            2001
                                                               ---------------  -------------
<S>                                                            <C>              <C>
ASSETS
Current Assets:
  Cash and cash equivalents . . . . . . . . . . . . . . . . .  $        9,136   $      3,043
    Accounts receivable (net of allowance for doubtful
      accounts of $69 in 2002 and $69 in 2001). . . . . . . .           5,937          4,262
  Inventories . . . . . . . . . . . . . . . . . . . . . . . .           8,137         12,648
  Other current assets. . . . . . . . . . . . . . . . . . . .             980          1,221
                                                               ---------------  -------------
    Total current assets. . . . . . . . . . . . . . . . . . .          24,190         21,174
  Equipment, furniture and fixtures, net. . . . . . . . . . .          12,159         14,573
  Other assets, net . . . . . . . . . . . . . . . . . . . . .           1,161            155
                                                               ---------------  -------------
    Total assets. . . . . . . . . . . . . . . . . . . . . . .  $       37,510   $     35,902
                                                               ===============  =============

LIABILITIES
Current Liabilities:
  Short-term bank borrowings. . . . . . . . . . . . . . . . .  $        4,239   $      4,481
  Accounts payable. . . . . . . . . . . . . . . . . . . . . .           5,220          8,352
  Accrued expenses. . . . . . . . . . . . . . . . . . . . . .           3,640          3,553
  Deferred revenue. . . . . . . . . . . . . . . . . . . . . .           2,938          7,388
  Long term liabilities, current portion. . . . . . . . . . .             313              0
                                                               ---------------  -------------
    Total current liabilities . . . . . . . . . . . . . . . .          16,350         23,774

  Convertible notes . . . . . . . . . . . . . . . . . . . . .           5,639              0
  Long term liabilities . . . . . . . . . . . . . . . . . . .             320              0
                                                               ---------------  -------------
    Total liabilities . . . . . . . . . . . . . . . . . . . .          22,309         23,774
                                                               ---------------  -------------

Contingencies (see note)


SHAREHOLDERS' EQUITY
Common stock, no par value:
  Authorized 50,000 shares;
    Issued and outstanding 27,740 shares at September 30, 2002
    and 22,365 shares at December 31, 2001. . . . . . . . . .         122,638        110,753
  Accumulated deficit . . . . . . . . . . . . . . . . . . . .        (105,125)       (96,189)
  Note receivable from shareholder. . . . . . . . . . . . . .            (151)          (151)
  Accumulated other comprehensive loss. . . . . . . . . . . .          (2,161)        (2,285)
                                                               ---------------  -------------
    Total shareholders' equity. . . . . . . . . . . . . . . .          15,201         12,128
                                                               ---------------  -------------
    Total liabilities and shareholders' equity. . . . . . . .  $       37,510   $     35,902
                                                               ===============  =============
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                              financial statements


                                        4
<PAGE>
<TABLE>
<CAPTION>
                            GENUS, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                   (IN THOUSANDS)

                                                                 NINE MONTHS ENDED
                                                                   SEPTEMBER 30,
                                                                2002         2001
                                                             -----------  ----------
<S>                                                          <C>          <C>
Cash flows from operating activities: . . . . . . . . . . .
  Net loss  . . . . . . . . . . . . . . . . . . . . . . . .  $   (8,936)  $  (1,466)
  Adjustments to reconcile net loss to net cash
    used in operating activities:
    Depreciation  . . . . . . . . . . . . . . . . . . . . .       2,816       2,004
    Amortization and accretion of non-cash interest on
      convertible notes . . . . . . . . . . . . . . . . . .         115           0
    Stock-based compensation. . . . . . . . . . . . . . . .           0          44
    Changes in assets and liabilities:
      Accounts receivable . . . . . . . . . . . . . . . . .      (1,675)      3,438
      Inventories . . . . . . . . . . . . . . . . . . . . .       4,511       9,893
      Other assets. . . . . . . . . . . . . . . . . . . . .          67        (149)
      Accounts payable. . . . . . . . . . . . . . . . . . .      (3,132)        457
      Accrued expenses. . . . . . . . . . . . . . . . . . .          87        (249)
      Deferred revenue. . . . . . . . . . . . . . . . . . .      (4,450)    (14,172)
                                                             -----------  ----------
      Net cash used in operating activities . . . . . . . .     (10,597)       (200)
                                                             -----------  ----------

Cash flows from investing activities:
  Acquisition of equipment, furniture and fixtures. . . . .        (402)     (7,737)
                                                             -----------  ----------
      Net cash used in investing activities . . . . . . . .        (402)     (7,737)
                                                             -----------  ----------
Cash flows from financing activities:
  Proceeds from issuance of common stock. . . . . . . . . .       9,591       7,530
  Proceeds from short-term bank borrowings. . . . . . . . .           0       5,567
  Payments for short-term bank borrowings . . . . . . . . .        (242)     (2,719)
  Proceeds from issuance of convertible notes and warrants,
    net of cash issuance costs of $ 814 . . . . . . . . . .       6,986           0
  Proceeds from debt. . . . . . . . . . . . . . . . . . . .       1,200           0
  Payments for debt . . . . . . . . . . . . . . . . . . . .        (567)          0
                                                             -----------  ----------
      Net cash provided by financing activities . . . . . .      16,968      10,378
                                                             -----------  ----------
Effect of exchange rate changes on cash . . . . . . . . . .         124         (63)
                                                             -----------  ----------

Net increase in cash and cash equivalents . . . . . . . . .       6,093       2,378
Cash and cash equivalents, beginning of period. . . . . . .       3,043       3,136
                                                             -----------  ----------
Cash and cash equivalents, end of period. . . . . . . . . .  $    9,136   $   5,514
                                                             ===========  ==========
Supplemental cash flow information
  Cash paid during the period for:. . . . . . . . . . . . .
  Interest. . . . . . . . . . . . . . . . . . . . . . . . .  $      198   $     287
  Income taxes. . . . . . . . . . . . . . . . . . . . . . .  $        7   $     473
Non cash transactions for the period
Warrants issued in connection with convertible note . . . .  $       54           0
</TABLE>


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


                                        5
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)


BASIS  OF  PRESENTATION

     The  accompanying  condensed  consolidated  financial  statements have been
prepared  in  accordance with SEC requirements for interim financial statements.
These  financial  statements  should  be  read in conjunction with the condensed
consolidated  financial  statements  and notes thereto included in the Company's
2001  Annual  Report  on  Form  10-K.

     The  information  furnished  reflects  all  adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for  the  fair  statement  of financial position, results of operations and cash
flows for the interim periods. The results of operations for the interim periods
presented  are not necessarily indicative of results to be expected for the full
year.

LIQUIDITY

     The  Company  is  in the process of executing its business strategy and has
plans  to  eventually  achieve  profitable  operations.  During August 2002, the
Company raised an additional $7 million, net of issuance costs, through the sale
of  subordinated  convertible  notes  and warrants. Management believes that the
cash generated from this transaction, together with 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 the Company or at all, which could have a
material  adverse  effect  on  its  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.

NET  LOSS  PER  SHARE

     Basic  net  loss  per  share  is  computed  by  dividing net loss to common
shareholders by the weighted average number of common shares outstanding for the
period.  Diluted  net  loss per share is computed by dividing net loss to common
shareholders  by  the  sum  of  the  weighted  average  number  of common shares
outstanding  and  potential  common  shares  (when  dilutive).

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

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED        NINE MONTHS ENDED
                                                   SEPTEMBER 30,             SEPTEMBER 30,
                                                 2002         2001         2002         2001
                                              ----------  ------------  -----------  ----------
<S>                                           <C>         <C>           <C>          <C>
Basic:
Net loss . . . . . . . . . . . . . . . . . .  $  (1,575)  $      (744)  $   (8,936)  $  (1,466)
                                              ==========  ============  ===========  ==========
  Weighted average common shares outstanding     27,693        22,268       26,572      20,793
                                              ==========  ============  ===========  ==========
  Basic net loss per share . . . . . . . . .  $   (0.06)  $     (0.03)  $    (0.34)  $   (0.07)
                                              ==========  ============  ===========  ==========

Diluted:
  Net loss . . . . . . . . . . . . . . . . .  $  (1,575)  $      (744)  $   (8,936)  $  (1,466)
                                              ==========  ============  ===========  ==========
  Weighted average common shares outstanding     27,693        22,268       26,572      20,793
                                              ==========  ============  ===========  ==========
  Diluted net loss per share . . . . . . . .  $   (0.06)  $     (0.03)  $    (0.34)  $   (0.07)
                                              ==========  ============  ===========  ==========
</TABLE>


                                        6
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)

     Stock  options,  warrants  and  convertible  debt  shares  to  purchase
approximately  12,675,000  shares  of common stock were outstanding at September
30, 2002, but were not included in the computation of diluted net loss per share
because the Company had a net loss for the three and nine months ended September
30,  2002.

     Stock  options  and  warrants to purchase approximately 4,607,000 shares of
common stock were outstanding at September 30, 2001 but were not included in the
computation of diluted net loss per share because the Company had a net loss for
the  three  and  nine  months  ended  September  30,  2001.

REVENUE  RECOGNITION.

     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 defers recognition of revenue from such equipment sales until
installation  is  complete  and  the  product  is  accepted  by  the  customer.

     Genus  subsequently established verifiable objective evidence of fair value
of  installation  services,  a  requirement  to  recognize  revenue  for
multiple-element  arrangements  prior  to  completion  of installation services.
Accordingly, if Genus has met defined customer acceptance experience levels with
both  the  customer  and  the  specific type of equipment, then Genus recognizes
equipment  revenue  upon  shipment  and  transfer of title. A portion of revenue
associated  with  installation-related tasks is recognized when the installation
is  completed  and  the customer accepts the product. 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 product is
accepted  by  the  customer.

     Revenue  from  sale  of spare parts and system upgrades are recognized upon
shipment.  Revenues  related to maintenance and service contracts are recognized
ratably  over  the  duration  of  the  contracts.

BORROWINGS

     In  December  2001,  the  Company replaced the $10.0 million line of credit
with  Venture Bank with a $10.0 million line of credit from Silicon Valley Bank.
The  Silicon  Valley Bank agreement includes a domestic revolving line of credit
of  $7.5  million,  based on domestic eligible receivables and a foreign line of
credit  of  $7.5  million,  financed  by  EXIM  bank,  based on foreign eligible
receivables  and  inventory.  The  initial term of the loan was 12 months ending
December  20,  2002.  Total  availability under both lines at any given point in
time  is  limited to $10.0 million.  The interest rate for borrowings under both
the  domestic  and foreign lines is prime plus 1.75% per annum calculated on the
basis  of  a  360-day  year.  The  loan  agreement  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 of $12.0 million
plus  50% of consideration for subsequent equity issuances and 50% of net income
of  future  quarters.  The  minimum tangible net worth requirement is reduced by
any  losses  in a subsequent quarter, but will not be reduced to less than $12.0
million.

     On  March  27, 2002, we amended our line of credit with Silicon Valley Bank
to  increase the funds available under both lines of credit to $15.0 million, to
extend  the  initial  term of the loan to 15 months ending March 19, 2003 and to
reset  the  covenant  to  $12.0 million plus 50% of consideration for equity and
subordinated debt issuances subsequent to March 8, 2002.  In July 2002, the term
of  the  credit  was extended to June 30, 2003.  As of September 30, 2002, there
was  $4.2  million  outstanding  under  this  credit  facility.


                                        7
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)


     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 our demonstration lab.   As of September 30, 2002, the short-term
portion  of  this  loan  was  $313,000  and  the long-term portion was $320,000.

CONVERTIBLE  NOTES  AND  WARRANTS

     On  August  15, 2002, the Company raised $7 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 convertible notes are convertible at a price of $1.42 per
          share  of common stock and $300,000 convertible note is convertible at
          a  price  of  $1.25  per  share of common stock. 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 to purchase 2,641,000 shares of common stock have an exercise
          price  of  $1.42  per  share  of common stock and warrants to purchase
          120,000  shares  of  common  stock have an exercise price of $1.25 per
          share  of common stock. 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  to  be
          $1,312,000,  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  gross proceeds from the issuance of the convertible notes and warrants were
recorded  as  follows  (in  thousands):

          Convertible  note                                  $5,560
          Detachable  warrants                                1,312
          Beneficial  conversion  feature                       928
                                                             ------
                                                             $7,800
                                                             ======

     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 will be accreted as interest expense over
the  three year term of the convertible notes, using the effective interest rate
method.


                                        8
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)


     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 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 connection with the transaction, the Company entered into a registration
rights  agreement  requiring  the  Company  to file a registration statement and
committing  the Company to pay monthly interest of 1.5% of the face value of the
notes  if  the  Company  does  not  maintain  the  effectiveness  of  the  shelf
registration  for the common stock underlying the convertible notes and warrants
throughout  the stated term of the convertible notes. The registration statement
on  Form  S-3  filed  with the SEC was declared effective on September 26, 2002.

     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.

INVENTORIES

     Inventories comprise the following (in thousands):

<TABLE>
<CAPTION>
                                   SEPTEMBER 30,   DECEMBER 31,
                                        2002           2001
                                   --------------  -------------
<S>                                <C>             <C>
Raw materials and purchased parts  $        4,793  $       4,446
Work in process                             1,049          2,499
Finished goods                                339            630
Inventory at customers' locations           1,956          5,073
                                   --------------  -------------
                                   $        8,137  $      12,648
                                   ==============  =============
</TABLE>

     Inventory at customers' locations represent the cost of a system shipped to
our customer, and related installation costs, for which we are awaiting customer
acceptance.

ACCRUED  EXPENSES

     Accrued expenses comprise the following (in thousands):

<TABLE>
<CAPTION>
                                         SEPTEMBER 30,   DECEMBER 31,
                                              2002           2001
                                         --------------  -------------
<S>                                      <C>             <C>
System warranty . . . . . . . . . . . .  $          878  $         803
Accrued commissions and incentives. . .              19            330
Accrued compensation and related items.             416            723
Federal, state and foreign income taxes             374            444
Other . . . . . . . . . . . . . . . . .           1,953          1,253
                                         --------------  -------------
                                         $        3,640  $       3,553
                                         ==============  =============
</TABLE>

COMMON  STOCK  AND  WARRANTS

     On January 25, 2002, the Company sold 3,871,330 shares of common stock, and
warrants  to purchase 580,696 shares of common stock, for net aggregate proceeds
of  approximately  $7.8  million.  The  warrants issued to the purchasers in the
private  placement  are  exercisable for $3.23 per share and the warrants have a
five-year  term.


                                        9
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)


     The January 25, 2002 transaction diluted the interests of certain investors
in  the  May  2001  private  placement  transaction who had received warrants to
purchase  1,270,891 shares of Company Common Stock (the "May 2001 Warrants"), at
an exercise price of $3.50 per share. As a result of this dilution, and pursuant
to  the  terms  of the May 2001 Warrants, the Company reduced the exercise price
for  the May 2001 Warrants from $3.50 per share to $2.19 per share and increased
the  underlying  shares  to  an  aggregate  of  2,031,094  shares.  The May 2001
Warrants have now been exercised.  May 2001 Warrants representing 610,872 shares
were exercised for cash in an aggregate amount of approximately $1.3 million and
the  remaining  1,420,224 May 2001 Warrants were exercised on a cash-less basis.
The  Company  issued  a  total  of  642,295  shares as a result of the cash-less
exercise  of  May  2001  Warrants  pursuant  to  the  terms  therein.

     In August 2002, the Company completed a $7.8 million financing in a private
placement  of  subordinated  notes  convertible  into  common stock and warrants
convertible  into  or  exercisable  for  common stock.  Refer to the Convertible
Notes  and  Warrants  footnote.

RELATED  PARTY  TRANSACTIONS

     Mario  Rosati,  a  board member of the Company, is also a partner of Wilson
Sonsini  Goodrich  and  Rosati,  the general counsel of the Company.  During the
three  months  ended  September  30,  2002  and  2001,  the  Company  incurred
approximately  $363,000  and  $296,000  in  legal  costs, and paid approximately
$655,000 and $0, respectively, to Wilson Sonsini Goodrich and Rosati. During the
nine  months  ended  September  30,  2002  and  2001,  the  Company  incurred
approximately  $547,000  and  $609,000  in  legal  costs, and paid approximately
$913,000  and  $57,000,  respectively, to Wilson Sonsini Goodrich and Rosati. At
September  30,  2002,  the Company owed approximately $387,000 to Wilson Sonsini
Goodrich  and  Rosati.

COMPREHENSIVE  LOSS

     The following are the components of comprehensive loss (in thousands):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED        NINE MONTHS ENDED
                                                         SEPTEMBER 30,            SEPTEMBER 30,
                                                      2002         2001        2002         2001
                                                   ----------  ------------  ---------  ------------
<S>                                                <C>         <C>           <C>        <C>
Net loss . . . . . . . . . . . . . . . . . . . . . $  (1,575)  $      (744)  $ (8,936)  $    (1,466)
Change in foreign currency translation adjustment        (57)          (59)       124           (63)
                                                   ----------  ------------  ---------  ------------
    Comprehensive loss . . . . . . . . . . . . . . $  (1,632)  $      (803)  $ (8,812)  $    (1,529)
                                                   ==========  ============  =========  ============
</TABLE>

     The  components  of  accumulated other comprehensive loss is as follows (in
thousands):


                                             SEPTEMBER 30,     DECEMBER 31,
                                               2002                2001
                                             -------------     ------------
Cumulative translation adjustment . . . . .  $     (2,161)     $    (2,285)
                                             =============     ============


                                       10
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)

CONTINGENCIES

     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 ASM 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 ASM
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 ASM claims to own. The court also severed and stayed
discovery  and  trial  of  Genus'  antitrust claims until after the trial of the
patent  claims.  On  February  4, 2002, Genus served its Amended Answer to ASM's
amended  complaint  and counterclaimed against ASM 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 '568 patents.  A claim construction hearing regarding the '165 Patent
was  held on September 26, 2002.  On September 23, 2002, Genus filed motions for
summary  judgment  of noninfringement regarding the '590 and '365 patents, and a
hearing  on  these  motions  is  scheduled  for  December  17,  2002.

     We  intend to defend our position vigorously. The outcome of any 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 are unable to obtain 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.

RECENT  ACCOUNTING  PRONOUNCEMENTS

     In  August  2001,  the Financial Accounting Standard Board, or FASB, issued
Statement  of  Financial Accounting Standards, or 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 do not expect the adoption of SFAS No. 143 to
have  a  material  effect  on  our  results  of  operations.

     In  June  2002,  the  FASB  issued  SFAS  No.  146, "Accounting for Exit or
Disposal  Activities'"  ("SFAS  No.  146").  SFAS  No. 146 addresses significant
issues  regarding  the recognition, measurement, and reporting of costs that are


                                       11
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                         SEPTEMBER 30, 2002 (UNAUDITED)

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 provisions of EITF No.
94-3  shall  continue to apply for an exit activity initiated under an exit plan
that  met  the  criteria of EITF No. 94-3 prior to the adoption of SFAS No. 146.
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.


                                       12
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     Statements  in  this  report  which  express  "belief",  anticipation"  or
"expectation"  as  well  as  other  statements which are not historical fact are
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. These
forward-looking  statements  are subject to certain risks and uncertainties that
could  cause  actual  results  to  differ  materially from historical results or
anticipated  results,  including  those  set  forth under "Risk Factors" in this
"Management's  Discussion  and  Analysis  of  Financial Condition and Results of
Operations"  and elsewhere in or incorporated by reference into this report. The
following  discussion should be read in conjunction with the Company's Financial
Statements  and  Notes  thereto  included  in  this  report.

CRITICAL ACCOUNTING POLICIES

     For  information  related  to  our  revenue  recognition and other critical
accounting  policies, please refer to the "Critical Accounting Policies" section
of  our  Management's Discussion and Analysis of Financial Condition and Results
of  Operations  contained  in  our Annual Report on Form 10-K for the year ended
December  31,  2001,  as  filed  with  the  Securities  and Exchange Commission.

     Revenue Recognition

     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 defers recognition of revenue from such equipment sales until
installation  is  complete  and  the  product  is  accepted  by  the  customer.

     Genus  subsequently established verifiable objective evidence of fair value
of  installation  services,  a  requirement  to  recognize  revenue  for
multiple-element  arrangements  prior  to  completion  of installation services.
Accordingly, if Genus has met defined customer acceptance experience levels with
both  the  customer  and  the  specific type of equipment, then Genus recognizes
equipment  revenue  upon  shipment  and  transfer of title. A portion of revenue
associated  with  installation-related tasks is recognized when the installation
is  completed  and  the customer accepts the product. 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 product is
accepted  by  the  customer.

     Revenues  from  sale of spare parts and system upgrades are recognized upon
shipment.  Revenues  related to maintenance and service contracts are recognized
ratably  over  the  duration  of  the  contracts.

     Revenues  can  fluctuate  significantly  as  a  result  of  the  timing  of
customers' acceptances. At September 30, 2002 and December 31, 2001, the Company
had  deferred  revenue  of  $  2.9  million  and  $7.4  million,  respectively.

RESULTS  OF  OPERATIONS

     NET SALES. Net sales for the three and nine months ended September 30, 2002
were  $  12.2  million and $28.5 million, which represented decreases of 19% and
34%  when  compared  to  net  sales  of  $15.1 million and $43.1 million for the
corresponding  periods in 2001. The decreases were attributable to the slow-down
in the technology industry and orders being postponed by our customers.  One 200
mm  CVD  system, two 200 mm ALD systems and one 200 mm ALD upgrade were accepted
in  the third quarter of 2002, compared to three ALD systems and two CVD systems
accepted  during  the  third  quarter  of  2001.  During  the  nine months ended
September  30,  2002, eight systems and an upgrade were accepted compared to ten
systems  and  several  upgrades  accepted  in  the  first  nine  months of 2001.


                                       13
<PAGE>
     We recorded a low level of bookings in the three months ended September 30,
2002  of approximately $3.0 million.  In October 2002, we have received purchase
orders  of  approximately  $10.0  million  and  letters  of  intent  (subject to
cancellation)  for an additional $16.0 million.  The purchase orders and letters
of  intent  received  in  October  include  both 200mm and 300mm for CVD and ALD
systems  and  additional  system  purchases  for  Thin  Film Head manufacturing.

     COST  OF GOODS SOLD. Cost of goods sold for the three and nine months ended
September  30,  2002  were  $7.8  million  and  $20.5 million, compared to $10.3
million  and  $27.5  million  for  the  same  periods in 2001. Gross profit as a
percentage of revenues was 35.6% for the third quarter of 2002 compared to 31.8%
in the third quarter of 2001. Gross profit as a percentage of revenues was 28.2%
for  the  nine  months  ended  September  30,  2002  compared  to  36.1% for the
corresponding  period  in 2001. The higher gross profit percentages in the third
quarter of 2002 were due to higher proportion of ALD systems which have a higher
margin  than  CVD  systems when compared to 2001.  The lower gross profit in the
year  to  date 2002 results was due to lower production volumes that resulted in
lower  manufacturing  absorption  in  Q2 2002.  The Company expects gross profit
percentage  to  increase  with  anticipated  increases  in  production  volumes.
Severance  costs in cost of sales was approximately $155,000 in the three months
ended  September  30,  2002.

     RESEARCH  AND  DEVELOPMENT. Research and development (R&D) expenses for the
quarter  ended  September  30,  2002  were  $2.1 million, or 17.5% of net sales,
compared  with  $2.6  million or 17.2% of net sales for the same period in 2001.
For  the  nine  months  ended  September 30, 2002, expenses were $6.1 million or
21.3%  of  sales,  compared  to $8.8 million or 20.5% of net sales for the first
nine months of 2001. The dollar decrease of research and development expenses in
2002 was due to cost saving measures implemented beginning in the fourth quarter
of  2001,  including  reduced  use  of outside consultants.  In 2001, the higher
level  of  research  and  development  expenses  was  due  to  the  addition  of
significant  capacity  in  our  demonstration  lab, which enables us to complete
customer  requests for demos of wafers in 15 to 30 days.  Severance costs in R&D
was  approximately  $129,000  in  the  three  months  ended  September 30, 2002.

     SELLING,  GENERAL  AND  ADMINISTRATIVE. Selling, general and administrative
(SG&A)  expenses  were  $3.5  million  and  $10.2 million for the three and nine
months ended September 30, 2002 compared to $2.7 million and $8.0 million in the
corresponding  periods in 2001.  As a percent of net sales, selling, general and
administrative expenses were 28.8% and 35.9% for the three and nine months ended
September  30, 2002 compared to 18.1% and 18.5% for the corresponding periods in
2001.  The  increase in selling, general and administrative expenses in 2002 was
mainly  due  to higher legal expenses of approximately $638,000 and $2.2 million
for  the  three  months  and nine months ended September 30, 2002, respectively,
related  to  the lawsuit.  In addition, during 2001, the Company received income
from a government SBIR grant that amounted to $400,000 and subleasing revenue of
$312,000  that  was  offset  against  2001  selling,  general and administrative
expenses.  The Company had minimal government grants and no subleasing income in
2002.  Severance  costs  in  SG&A was approximately $156,000 in the three months
ended  September  30,  2002.

     OTHER  INCOME  (EXPENSE), NET. Other expenses for the three and nine months
ended  September  30,  2002  were $206,000 and $493,000 respectively compared to
other  expense  of  $207,000 and $127,000 for the corresponding periods in 2001.
Other expense in the nine months ended September 30, 2002 includes approximately
$183,000  related  to  the  convertible  notes, partially offset by net exchange
gains  of  $150,000.  Cash  interest cost on convertible notes was approximately
$68,000  and  non-cash interest expense on convertible notes was $115,000 in the
three  months ended September 30, 2002. In connection with the convertible note,
the  Company  expects to incur cash interest expense of approximately $136,000 a
quarter  and  additional


                                       14
<PAGE>
non-cash  expense  on  convertible  notes of $159,000 a quarter.  These non-cash
expenses  relate primarily to the accretion of beneficial conversion feature and
amortization  of  issuance  costs  related  to  the  convertible  notes.

     PROVISION FOR INCOME TAXES.  We recorded income tax expenses of $70,000 and
$159,000  for  our  South  Korean subsidiary for the three and nine months ended
September  30, 2002, compared to none and $69,000 recorded for the corresponding
periods  in 2001. We did not record any provision for income taxes in the United
States  and  Japan  for the three and nine months ended September 30, 2002 as we
recorded  losses  in  these  entities. We provide for a full valuation allowance
against  the  tax  benefit  associated  with  these  losses.

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  September 30, 2002, our cash and cash equivalents were $9.1 million, an
increase  of $6.1 million over cash and cash equivalents of $3.0 million held as
of December 31, 2001.  At September 30, 2001, our cash and cash equivalents were
$5.5 million, an increase of $2.4 million over cash and cash equivalents of $3.1
million held as of December 31, 2000.  Accounts receivable at September 30, 2002
was  $5.9  million, an increase of $1.7 million from $4.3 million as of December
31,  2001.  The increase relates to shipment of systems during the third quarter
of  2002. Accounts receivable at September 30, 2001 was $5.0 million, a decrease
of  $3.4  million  from $8.4 million as of December 31, 2000, as we were able to
collect  on  most of our overdue receivables.  Cash used by operating activities
totaled  $10.6  million  for  the  nine  months  ended  September  30, 2002, and
consisted primarily of net loss of $8.9 million, increase in accounts receivable
of $1.7 million, decreases in accounts payable of $3.1 million and a decrease in
deferred  revenue  of  $4.5  million,  partially  offset by depreciation of $2.8
million and a decrease in inventories of $4.5 million. Inventory reductions were
primarily  related  to  decreases  in inventory held at customer sites from $5.1
million to $2.0 million.  Cash used by operating activities totaled $200,000 for
the nine months ended September 30, 2001, and consisted primarily of net loss of
$1.5  million  and  decreases  in  deferred revenues of $14.2 million, partially
offset  by  depreciation  of  $2.0  million  and  reductions in working capital,
primarily  receivables  of  $3.4  million  and  inventories  of  $9.9  million.
Inventory reductions were primarily related to improved supply chain management,
decreases in inventory held at customer sites from $9.5 million to $4.2 million.

     We  made  capital  expenditures  of  $402,000  for  the  nine  months ended
September  30, 2002 compared to $7.7 million for the nine months ended September
30, 2001. These expenditures 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.

     Financing  activities  provided  cash  of $17.0 million for the nine months
ended  September  30,  2002.  In  the  first  nine  months  of 2002, we received
approximately  $9.6 million of proceeds from a sale of common stock and warrants
to  purchase common stock. In the third quarter of 2002, we received $7 million,
net  of  issuance  costs,  from  the  sale of subordinated convertible notes and
warrants.  Financing  activities  provided  cash  of  $10.4 million for the nine
months  ended  September  30,  2001. In May 2001, we received approximately $7.5
million  of  proceeds from a private placement and from issuance of common stock
under  the  stock plans of 2.5 million shares of our common stock. Additionally,
we  increased  our  net  short-term  borrowings  by  $2.8  million.

     Our primary source of funds at September 30, 2002 consisted of $9.1 million
in  cash  and  cash  equivalents,  $6.0  million of accounts receivable, and our


                                       15
<PAGE>
credit  facilities  with  Silicon  Valley  Bank.  Our primary source of funds at
September  30,  2001  consisted of $5.5 million in cash and cash equivalents and
$5.0  million  of  accounts  receivable.

     A  summary  of  our  contractual obligations as of September 30, 2002 is as
follows  (in  thousands):

<TABLE>
<CAPTION>
                                         Less than                          After
                      Total   Revolving   1 year   2-3 years   4-5 years   5 years
                     -------  ----------  -------  ----------  ----------  --------
<S>                  <C>      <C>         <C>      <C>         <C>         <C>

Silicon Valley Bank  $ 4,239  $    4,239  $     0  $        0  $        0  $      0
Citicapital              633         N/A      313         320           0         0
Operating Leases      18,475         N/A    1,610       3,257       3,389    10,219
Convertible Notes*     7,800         N/A        0       7,800           0         0
                     -------  ----------  -------  ----------  ----------  --------
                     $31,147  $    4,239  $ 1,923  $   11,377  $    3,389  $ 10,219
                     =======  ==========  =======  ==========  ==========  ========
</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%.

     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

     Mario  Rosati,  a  board member of the Company, is also a partner of Wilson
Sonsini  Goodrich  and  Rosati,  the  general counsel of the Company. During the
three  months  ended  September  30,  2002  and  2001,  the  Company  incurred
approximately  $363,000  and  $296,000  in  legal  costs, and paid approximately
$655,000 and $0, respectively, to Wilson Sonsini Goodrich and Rosati. During the
nine  months  ended  September  30,  2002  and  2001,  the  Company  incurred
approximately  $547,000  and  $609,000  in  legal  costs, and paid approximately
$913,000  and  $57,000,  respectively, to Wilson Sonsini Goodrich and Rosati. At
September  30,  2002,  the Company owed approximately $387,000 to Wilson Sonsini
Goodrich  and  Rosati.


RECENT  ACCOUNTING  PRONOUNCEMENTS

     In  August  2001,  the Financial Accounting Standard Board, or FASB, issued
Statement  of  Financial  Accounting Standards, or SFAS, No 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 do not expect the adoption of SFAS No. 143 to
have  a  material  effect  on  our  results  of  operations.


                                       16
<PAGE>
     In  June  2002,  the  FASB  issued  SFAS  No.  146, "Accounting for Exit or
Disposal  Activities'"  ("SFAS  No.  146").  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 provisions of EITF No.
94-3  shall  continue to apply for an exit activity initiated under an exit plan
that  met  the  criteria of EITF No. 94-3 prior to the adoption of SFAS No. 146.
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.


RISK  FACTORS

     You  should  consider  the  risks  described  below  before  making  an
investment  decision.  We  believe  that  the  risks and uncertainties described
below are the principal material risks facing our company as of the date of this
Form 10-Q. In the future, we may become subject to additional risks that are not
currently  known  to  us.  Our  business,  financial  condition  or  results  of
operations could be materially adversely affected by any of the following risks.
The  trading price of our common stock could decline due to any of the following
risks.

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

     We  experienced  losses  of $6.7 million for fiscal year 2001 and losses of
$9.6 million for the fiscal year ended 2000. At September 30, 2002, our net loss
was  $8.9  million.

     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.


                                       17
<PAGE>
SUBSTANTIALLY ALL OF OUR NET SALES COME FROM A SMALL NUMBER OF LARGE CUSTOMERS

     Historically,  we  have  relied  on  a  small  number  of  customers  for a
substantial  portion  of  our  net  revenues.  For  example,  in  2001  Samsung
Electronics  Company,  Ltd.,  Read-Rite  Corporation,  NEC,  Infineon  and  SCS
Hightech,  Inc.  accounted for 73%, 7%, 6%, 6% and 5% of revenues, respectively.
In  the  first nine months of 2002, Samsung Electronics accounted for 51% of our
net  revenues  and  Seagate  accounted  for  23%  of  our  net  revenues.

     The  semiconductor  manufacturing  industry  generally  is  comprised  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.

     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 current 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  would  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;
     -    technological  breakthroughs;
     -    economic  conditions;  or
     -    competitive  conditions  in  the  semiconductor  industry  or  in  the
          industries  that  manufacture  products utilizing integrated circuits.

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 93%, 98% and 86% of our total net
sales  in 2001, 2000 and 1999, respectively.  For the first nine months of 2002,
export  sales accounted for approximately 71% of total net sales.  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  in  Asia;
     -    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


                                       18
<PAGE>
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 region. 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
the semiconductor market. The semiconductor industry is cyclical and experiences
periodic  downturns both of which reduce 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.

     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 make it more difficult to increase our
revenues  and  to  achieve  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.


                                       19
<PAGE>
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.

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.


                                       20
<PAGE>
     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
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.

OUR  INTELLECTUAL  PROPERTY  IS  IMPORTANT  TO US AND WE RISK LOSS OF A VALUABLE
ASSET,  REDUCED  MARKET  SHARE  AND  LITIGATION EXPENSES IF WE CANNOT ADEQUATELY
PROTECT  OUR  INTELLECTUAL  PROPERTY.

     Our  success depends in part on our proprietary technology. There can be no
assurance  that  we  will  be able to protect our technology or that competitors
will  not be able to develop similar technology independently. We currently have
a number of United States and foreign patents and patent applications. On August
1,  2001,  we  filed a counterclaim against ASM International N.V., charging ASM
with  infringing  Genus'  U.S.  Patent  5,294,568, entitled "Method of Selective
Etching Native Oxide," and with committing antitrust violations designed to harm
the  developing  atomic  layer  deposition  market.

     There  can  be  no  assurance  that  any  patents  issued to us will not be
challenged,  invalidated  or circumvented or that the rights granted there under
will  provide  us  with  competitive  advantages.

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  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.


                                       21
<PAGE>
     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 ASM 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 ASM
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 ASM claims to own. The court also severed and stayed
discovery  and  trial  of  Genus'  antitrust claims until after the trial of the
patent  claims.  On  February  4, 2002, Genus served its Amended Answer to ASM's
amended  complaint  and counterclaimed against ASM 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 '568 patents.  A claim construction hearing regarding the '165 Patent
was  held on September 26, 2002.  On September 23, 2002, Genus filed motions for
summary  judgment  of noninfringement regarding the '590 and '365 patents, and a
hearing  on  these  motions  is  scheduled  for  December  17,  2002.

     We  intend to defend our position vigorously. 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,  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  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 of our
atomic layer products. In this case our business may not develop as planned, and
our  results  could  materially  suffer.

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


                                       22
<PAGE>
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  met  the city's stringent
requirements  and  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  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.  We  have  some long term or volume purchase agreements with our
suppliers  and  currently  purchase components on a purchase order basis.  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.

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


                                       23
<PAGE>
     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
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. 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  is  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  MAY  DILUTE YOUR PERCENTAGE OWNERSHIP IN GENUS OR
CAUSE  OUR  STOCK  PRICE  TO  DROP

     As  of September 30, 2002, we had a total of approximately 7,059,000 shares
of  common  stock underlying warrants and outstanding employee stock options. Of
the  stock  options,  approximately  2,069,000shares  were  exercisable  as  of
September  30,  2002.  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.


                                       24
<PAGE>
     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 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 Genus shares available on the market, if such
availability  were  to  exceed  the  demand  for  our  stock.

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

     Pursuant  to a preferred stock rights agreement, our board of directors has
declared  a  dividend  of  one right for each share of our common stock that was
outstanding  as  of October 13, 2000. The rights trade with the certificates for
the common stock until a person or group acquires beneficial ownership of 15% or
more  of our common stock. After such an event, we will mail rights certificates
to  our  shareholders  and  the  rights  will become transferable apart from the
common  stock.  At that time, each right, other than rights owned by an acquirer
or its affiliates, will entitle the holder to acquire, for the exercise price, a
number of shares of common stock having a then-current market value of twice the
exercise  price.

     In  the  event  that  circumstances  trigger  the  transferability  and
exercisability  of  rights granted in our preferred stock rights agreement, 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.

FORWARD-LOOKING  STATEMENTS

     We  make  forward-looking statements in this 10-Q report that may not prove
to  be  accurate.

     This 10-Q 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-Q  report, and in documents incorporated into this
10-Q  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-Q 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.

     Statements  in this report, and in documents incorporated into this 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  report  will  in fact transpire or prove to be
accurate.  All  subsequent  written  and  oral  forward-looking  statements


                                       25
<PAGE>
attributable  to  us  or persons acting on our behalf are expressly qualified in
their  entirety  by  this  section.

ITEM  3.  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

     We  face  exposure to adverse movements in foreign currency exchange rates.
These  exposures may change over time as our business practices evolve and could
seriously  harm  our  financial  results. All of our international sales, except
spare  parts  and  service  sales  made  by  our  subsidiary in South Korea, are
currently denominated in U.S. dollars. All spare parts and service sales made by
the South Korean subsidiary are WON denominated. An increase in the value of the
U.S.  dollar  relative  to  foreign  currencies  would  make  our  products more
expensive  and,  therefore,  could  reduce  the demand for our products. Reduced
demand  for our products could materially adversely affect our business, results
of  operations  and  financial  condition.

     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.

ITEM  4.  CONTROLS  AND  PROCEDURES

     (a)  Under  the  supervision  and with the participation of our management,
including  our  principal  executive officer and principal financial officer, we
conducted  an evaluation of our "disclosure controls and procedures" (as defined
in  Rule  13a-14(c) under the Securities Exchange Act of 1934) within 90 days of
the  filing  date  of  this  report.  Based  on  their evaluation, our principal
executive officer and principal accounting officer concluded that our disclosure
controls  and  procedures  need  improvement.  (See  Item  4(b)  below)

     (b)  Management  and  the Audit Committee are aware of conditions that were
considered  to  be  a  "material  weakness" for the year ended December 31, 2001
under  standards  established  by  the  American  Institute  of Certified Public
Accountants.  In  particular, the Company needed to (i) perform regular detailed
reconciliations  of  general  ledger  accounts  to supporting documentation (ii)
regularly  reconcile  cash  accounts  to  bank  statements  and  investigate any
differences,  and  (iii)  improve  policies  and  procedures  for  tracking
work-in-progress,  construction-in-progress  and  demonstration  equipment.
Management  and  the  Audit  Committee  have  taken  actions with respect to the
material  weakness,  including the hiring of new, more experienced and qualified
finance  staff  and  has  made  certain  operational  changes  in  policies  and
procedures  and  additional procedures are being implemented to expand the scope
of  detailed  reconciliations, including reconciliations of subsidiary accounts.
Management  believes  that  the  Company  will successfully implement procedures
addressing  all  material  weakness  by  December  31,  2002.


                                       26
<PAGE>
PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     With  respect  to  the  ongoing  intellectual  property litigation with ASM
America,  Inc.,  as  previously disclosed in the company's Annual Report on Form
10-K  filed  April  1,  2002,  the  following  events  transpired  in  Q3:

          -    On  August  15, 2002, the Court issued a claim construction order
               regarding  U.S  Patents Nos. 6,015,590, 5,916,365, and 5,294,568.
          -    A  claim  construction  hearing  regarding  the  U.S.  Patent No.
               4,798,165  was  held  on  September  26,  2002.
          -    On  September  23, 2002, Genus filed motions for summary judgment
               of  noninfringement  regarding  U.S.  Patent  Nos.  6,015,590 and
               5,916,365,  and  a  hearing  on  these  motions  is scheduled for
               December  17,  2002.
          -
ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

     Recent Sales of Unregistered Securities

     On  July  31, 2002 and August 14, 2002, we entered into Securities Purchase
Agreements  with certain investors (together, the "Purchasers"). Pursuant to the
Securities  Purchase  Agreements, we agreed to issue and sell to the Purchasers,
in  a  private  placement,  an  aggregate of $7.8 million principal amount of 7%
convertible  subordinated  notes  due  2005  (the "Notes") together with related
four-year  warrants  (the  "Warrants")  to  purchase shares of our common stock.

     Summary  of  the  Transaction

     On  August 14, 2002, we issued to the Purchasers the Notes convertible into
an aggregate of 5,521,341 shares of common stock and the Warrants to purchase an
aggregate  of  2,760,669  shares  of  common  stock in a private placement.  The
conversion price of the Notes and the exercise price of the Warrants is based on
a  premium of 105.19% to the average closing bid price for the five trading days
preceding  the  execution  of  the  Securities  Purchase  Agreements  for  this
transaction.  For those investors who committed to the private placement on July
31,  2002,  the  conversion  price  for the Notes and the exercise price for the
Warrants  is  $1.42  per  share.  For  the investor who committed to the private
placement  on  August  14,  2002,  the  conversion  price  for the Notes and the
exercise  price  for  the  Warrants  is  $1.2518  per  share. In addition to the
issuances specified above, a warrant for 79,225 shares was issued to SG Cowen as
placement  agent  to  Genus  for  the transaction closing August 14, 2002.  This
warrant has an exercise price of $1.42 and contains the identical terms as those
warrants  issued  to  the  Purchasers.

     Each Note is convertible into, and each Warrant is exercisable to purchase,
shares  of  our  common  stock  at any time beginning August 14, 2002 and ending
after  a term of three years and four years, respectively.  The Warrants include
a  net  exercise  provision  permitting the holders to pay the exercise price by
cancellation  of  a  number  of  shares  with  a  fair market value equal to the
exercise  price  of  the  Warrants.

     After August 14, 2003, we may require the holders of the Warrants issued in
the private placement to exercise them if the closing bid price per share of our
common stock is greater than 200% of the exercise price for twenty of the thirty
trading days immediately preceding the date we give notice to the holders of our
decision  to effect the exercise and upon satisfaction of the other requirements
specified in the Warrants. Under the terms of this mandatory exercise provision,


                                       27
<PAGE>
a holder can choose not to exercise such holder's Warrants, although such holder
would  then forfeit all rights under the Warrants to the extent that such holder
fails  to  exercise  within  thirty  business  days  of  receiving  our  notice.

     The  Notes  and  Warrants  issued  to  the  Purchasers include antidilution
provisions,  including  provisions  that  call  for adjustments in the number of
shares  of  stock  issued  upon  exercise of the Warrants and adjustments to the
conversion  price  of the Notes to prevent dilution to the Purchasers because of
dividends  or  distributions  in  common  stock, reclassifications of the common
stock, the issuance of new stock at less than the exercise price of the Warrants
or  conversion  price  of  the  Notes,  and  similar  types  of  issuances.

     Restrictions  on  Conversion  and  Exercise

     Under  the  terms  of  the  Notes  and the Warrants, the Purchasers may not
convert  the  Notes,  or exercise the Warrants, to the extent such conversion or
exercise  would  cause  the  Purchaser,  together  with  its affiliates, to have
acquired a number of shares of common stock which would exceed 4.99% of our then
outstanding common stock, excluding for purposes of such determination shares of
common stock issuable upon conversion of the Notes which have not been converted
and  upon  exercise  of  the  Warrants  which  have  not  been  exercised.

     Use  of  Proceeds

     A  placement  fee  of  7% of the consideration received for the transaction
plus  expenses  was  paid  to the Company's placement agent, SG Cowen Securities
Corporation.  We  intend  to  use  the  proceeds  from the private placement for
general  corporate  purposes, including growth initiatives, capital expenditures
and  potential  acquisitions.  As of November 1, 2002, we have used the proceeds
for  working  capital.

     Exemption

     In  executing and delivering the Notes and the Warrants, we relied upon the
exemption  from  securities registration afforded by Rule 506 of Regulation D as
promulgated  by  the  Securities  and  Exchange Commission (the "SEC") under the
Securities  Act of 1933, as amended. Our reliance on this exemption was based on
representations  made  by  each  Purchaser that such Purchaser is an "accredited
investor"  as  that  term  is  defined  in  Rule  501(a)  of  Regulation  D.

     Resale  Registration

     On  September 11, 2002, Genus filed a resale registration statement on Form
S-3  (the  "Registration  Statement")  with the SEC pursuant to the terms of the
Registration  Rights Agreements dated August 14, 2002 by and among Genus and the
Purchasers.  The  Registration  Statement covers the shares underlying the Notes
and  the  Warrants.  On  September  26,  2002  the SEC rendered the Registration
Statement  effective.

ITEM  4.  SUBMISSIONS  OF  MATTERS  TO  VOTE  OF  SECURITY  HOLDERS

     None.

ITEM  5.  OTHER  INFORMATION

     None


                                       28
<PAGE>
ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a)     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       Securities  Purchase  Agreement  dated July 31, 2002 among the Company
          and  the  Purchasers  signatory  thereto.  (19)
4.8       Resale  Registration  Rights Agreement dated August 14, 2002 among the
          Company  and  the  Purchasers  signatory  thereto.  (19)
4.9       7%  Convertible Subordinated Note Due 2005 dated August 14, 2002. (19)
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
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)
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)


                                       29
<PAGE>
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)
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.
(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.


                                       30
<PAGE>
(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
          Current  Report  on  Form  8-K  dated  August  20,  2002.

(b)  Report  on  Form  8-K

     On  August  20,  2002,  the  company  filed  a  current  report on Form 8-K
announcing the close of a private placement of 7% subordinated convertible notes
due  2005  and  warrants  to  purchase  company common stock on August 14, 2002.

     On  September  25,  2002,  the  company  filed a current report on Form 8-K
regarding  its  filing  of motions for summary judgment with the court regarding
the  pending ASM America, Inc. litigation.  The motions apply to U.S. Patent No.
6,015,590  and  U.S. Patent  No.  5,916,365  and move  that  the  court  make  a
decision  on  non-infringement  without  going  to  trial  on  the  basis of the
court's  claim  construction  ruling  and  evidence  produced  in  the
litigation.


                                       31
<PAGE>
GENUS,  INC.
SIGNATURES


Pursuant  to  the  requirements  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.




Date:  November 12, 2002     GENUS, INC.



     /s/  William W.R. Elder
     -----------------------

William W.R. Elder, President,
     Chief Executive Officer and Chairman



     /s/  Shum Mukherjee
     -----------------------
Shum  Mukherjee
     Chief  Financial  Officer
     (Principal Financial and Principal
     Accounting Officer)


                                       32
<PAGE>
Sarbanes-Oxley  Section  302(a)  Certifications

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

1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q  of Genus, Inc.;
2.   Based  on  my  knowledge, this quarterly 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  quarterly  report;
3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  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
     quarterly  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 quarterly
          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  quarterly  report  (the  "Evaluation  Date");  and
     c)   presented  in  this  quarterly  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  officers and I have indicated in this
     quarterly  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:  November 12, 2002
                                        /s/  William W. R. Elder
                                        ------------------------
                                        William W.R. Elder
                                        Chief Executive Officer


                                       33
<PAGE>
I, Shum Mukherjee, certify that:

1.   I  have  reviewed  this  quarterly  report  on  Form  10-Q  of Genus, Inc.;
2.   Based  on  my  knowledge, this quarterly 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  quarterly  report;
3.   Based  on  my  knowledge,  the  financial  statements,  and other financial
     information  included  in  this  quarterly  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
     quarterly  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 quarterly
          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  quarterly  report  (the  "Evaluation  Date");  and
     c)   presented  in  this  quarterly  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  officers and I have indicated in this
     quarterly  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:  November 12, 2002
                                        /s/  Shum  Mukherjee
                                        --------------------
                                        Shum  Mukherjee
                                        Chief  Financial  Officer


                                       34
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