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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  June  30,  2001  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  August  10,  2001:  22,269,117
                                                     ----------

--------------------------------------------------------------------------------
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                                        1
<PAGE>

                         PART I.  FINANCIAL INFORMATION


ITEM  1.  FINANCIAL  STATEMENTS

                          GENUS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>

                                                 THREE  MONTHS  ENDED     SIX  MONTHS  ENDED
                                                       JUNE 30,                 JUNE 30,
                                                    2001      2000         2001        2000
                                                ----------  --------    --------   ---------
<S>                                                <C>         <C>         <C>         <C>
Net sales. . . . . . . . . . . . . . . . . . .  $  13,659     $ 6,586     $27,968   $ 10,412
Costs and expenses:
  Cost of goods sold . . . . . . . . . . . . .      8,620       4,175      17,223      7,019
  Research and development . . . . . . . . . .      3,242       1,968       6,246      3,728
  Selling, general and administrative. . . . .      2,714       2,398       5,232      5,223
                                                ----------  ----------    --------   --------
Loss from operations . . . . . . . . . . . . .       (917)     (1,955)       (733)    (5,558)

Other income (expenses), net . . . . . . . . .         78          (4)         80        282
                                               ----------   ----------    --------   --------
Loss before income taxes and cumulative
  effect of change in accounting principle . .       (839)     (1,959)       (653)    (5,276)

Provision for income taxes . . . . . . . . . .         14         100          69        350
                                               ----------   ----------    --------   --------
Loss before cumulative effect of
  change in accounting principle . . . . . . .       (853)     (2,059)        (722)   (5,626)

Cumulative effect of change in
  accounting principle . . . . . . . . . . . .         --          --           --     (6,770)
                                               ----------   ----------    --------    --------
Net loss . . . . . . . . . . . . . . . . . . .  $    (853)    $(2,059)     $  (722)  $(12,396)
                                                ==========   ==========    ========   ========

Loss per share before
  cumulative effect of change in
  accounting principle:
  Basic. . . . . . . . . . . . . . . . . . . .  $   (0.04)  $   (0.11)       $ (0.04)  $ (0.30)
  Diluted. . . . . . . . . . . . . . . . . . .      (0.04)      (0.11)         (0.04)    (0.30)
Net loss per share:
  Basic. . . . . . . . . . . . . . . . . . . .      (0.04)      (0.11)         (0.04)    (0.66)
  Diluted. . . . . . . . . . . . . . . . . . .  $   (0.04)  $   (0.11)       $ (0.04)  $ (0.66)

Shares used in per share calculation - basic .     20,731      18,839         20,055     18,704
                                                ==========   ==========     ========   ========
Shares used in per share calculation - diluted     20,731      18,839         20,055     18,704
                                                ==========   ==========     ========   ========
</TABLE>

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

                                        2
<PAGE>

                          GENUS, INC. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>


                                                        JUNE 30,      DECEMBER 31,
                                                          2001            2000
                                                       ----------  --------------
<S>                                                    <C>         <C>

ASSETS
Current Assets:
  Cash and cash equivalents . . . . . . . . . . . . .  $   3,513   $       3,136
  Accounts receivable (net of allowance for doubtful
    accounts of $346 in 2001 and $363 in 2000). . . .      7,232           8,479
  Inventories . . . . . . . . . . . . . . . . . . . .     20,052          21,849
  Other current assets. . . . . . . . . . . . . . . .        572             675
                                                       ----------  --------------
    Total current assets. . . . . . . . . . . . . . .     31,369          34,139
  Equipment, furniture and fixtures, net. . . . . . .     13,374          10,207
  Other assets, net . . . . . . . . . . . . . . . . .        181             189
                                                       ----------  --------------
    Total assets. . . . . . . . . . . . . . . . . . .  $  44,924   $      44,535
                                                       ==========  ==============

LIABILITIES
Current Liabilities:
  Short-term bank borrowings. . . . . . . . . . . . .  $   3,997   $       2,719
  Accounts payable. . . . . . . . . . . . . . . . . .     10,462           8,647
  Accrued expenses. . . . . . . . . . . . . . . . . .      2,923           3,315
  Deferred revenue and customer deposits. . . . . . .      9,371          18,562
                                                       ----------  --------------
    Total current liabilities . . . . . . . . . . . .     26,753          33,243
                                                       ----------  --------------

Contingencies (see notes)

SHAREHOLDERS' EQUITY
Common stock, no par value:
  Authorized 50,000,000 shares;
    Issued and outstanding 22,263,000 shares at
    June 30, 2001 and 19,319,000 shares at
    December 31, 2000 . . . . . . . . . . . . . . . .    110,442         102,837
  Accumulated deficit . . . . . . . . . . . . . . . .    (90,245)        (89,523)
  Accumulated other comprehensive loss. . . . . . . .     (2,026)         (2,022)
                                                       ----------  --------------
    Total shareholders' equity. . . . . . . . . . . .     18,171          11,292
                                                       ----------  --------------
    Total liabilities and shareholders' equity. . . .  $  44,924   $      44,535
                                                       ==========  ==============
</TABLE>

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

                                        3
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                              SIX MONTHS ENDED
                                                                  JUNE 30,
                                                              2001       2000
                                                           ----------  ---------
<S>                                                        <C>         <C>
Cash flows from operating activities:
  Net loss. . . . . . . . . . . . . . . . . . . . . . . .  $    (722)  $(12,396)
  Adjustments to reconcile net loss to net cash
    from operating activities:
    Cumulative effect of change in accounting principle .         --      6,770
    Depreciation. . . . . . . . . . . . . . . . . . . . .      1,199        756
    Stock-based compensation. . . . . . . . . . . . . . .         56        275
    Changes in assets and liabilities:
      Accounts receivable . . . . . . . . . . . . . . . .      1,247      3,615
      Inventories . . . . . . . . . . . . . . . . . . . .      1,797     (8,311)
      Other assets. . . . . . . . . . . . . . . . . . . .        111       (321)
      Accounts payable. . . . . . . . . . . . . . . . . .      1,815      3,329
      Accrued expenses. . . . . . . . . . . . . . . . . .       (392)      (232)
      Deferred revenue and customer deposits. . . . . . .     (9,191)    11,858
                                                           ----------  ---------
      Net cash provided by (used in) operating activities     (4,080)     5,343
                                                           ----------  ---------
Cash flows from investing activities:
  Acquisition of equipment, furniture and fixtures. . . .     (4,366)    (2,800)
                                                           ----------  ---------
      Net cash used in investing activities . . . . . . .     (4,366)    (2,800)
                                                           ----------  ---------
Cash flows from financing activities:
  Proceeds from issuance of common stock. . . . . . . . .      7,549        993
  Proceeds from short-term bank borrowings. . . . . . . .      3,997      4,000
  Payments of short-term bank borrowings. . . . . . . . .     (2,719)    (4,000)
  Other . . . . . . . . . . . . . . . . . . . . . . . . .          0         64
                                                           ----------  ---------

      Net cash provided by financing activities . . . . .      8,827      1,057
                                                           ----------  ---------

Effect of exchange rate changes on cash                           (4)        20
                                                           ----------  ---------

Net increase in cash and cash equivalents                        377      3,620
Cash and cash equivalents, beginning of period                 3,136      6,739
                                                           ----------  ---------
Cash and cash equivalents, end of period                   $   3,513   $ 10,359
                                                           ==========  =========
</TABLE>

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

                                        4
<PAGE>
                          GENUS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                            JUNE 30, 2001 (UNAUDITED)


     Basis  of  Presentation. The accompanying 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
consolidated  financial  statements  and notes thereto included in the Company's
2000  Annual  Report  on  Form  10-K/A2.

     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.

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

Net  Income  (Loss)  Per  Share

     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     SIX  MONTHS  ENDED

                                           JUNE 30,              JUNE 30,
                                      2001       2000       2001       2000
                                  ----------  ----------    --------  ---------
<S>                               <C>         <C>           <C>       <C>
Basic:
Net loss . . . . . . . . . . . .  $    (853)  $  (2,059)    $  (722)  $(12,396)
                                  ==========  ==========    ========  =========
  Weighted average common shares
  outstanding. . . . . . . . . .     20,731      18,839      20,055     18,704
                                  ==========  ==========    ========  =========
  Basic net loss per share . . .  $   (0.04)  $   (0.11)    $ (0.04)  $  (0.66)
                                  ==========  ==========    ========  =========

Diluted:
  Net loss . . . . . . . . . . .  $    (853)  $  (2,059)    $  (722)  $(12,396)
                                  ==========  ==========    ========  =========
  Weighted average common shares
  outstanding. . . . . . . . . .     20,731      18,839      20,055     18,704
                                  ==========  ==========    ========  =========

Diluted net loss per share . . .  $   (0.04)  $   (0.11)     $ (0.04)  $  (0.66)
                                  ==========  ==========    ========  =========
</TABLE>



                                        5
<PAGE>

     Stock  options  and  warrants  to purchase approximately 3,553,000 weighted
shares  of  common  stock  were outstanding during the six months ended June 30,
2001,  but  were  not  included in the computation of diluted net loss per share
because  the  Company  had  a  net  loss for the six months ended June 30, 2001.

     Stock  options  and  warrants  to purchase approximately 3,012,000 weighted
shares  of  common  stock  were outstanding during the six months ended June 30,
2000  but  were  not  included  in the computation of diluted net loss per share
because  the  Company  had  a  net  loss for the six months ended June 30, 2000.

     Stock  options and warrants to purchase 3,938,000 weighted shares of common
stock  were outstanding during the three months ended June 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  months  ended  June  30,  2001.

     Stock  options and warrants to purchase 3,109,000 weighted shares of common
stock  were outstanding during the three months ended June 30, 2000 but were not
included  in  the  computation of diluted net loss per share because the Company
had  a  net  loss  for  the  three  months  ended  June  30,  2000.

     Statement  of  Cash  Flow  Information  (amounts  in  thousands):


<TABLE>
<CAPTION>

                                     SIX  MONTHS  ENDED
                                          JUNE 30,
                                       2001      2000
                                     ---------  -------
<S>                                  <C>        <C>
Supplemental cash flow information:
  Cash paid during the period for:
    Interest. . . . . . . . . . . .  $     142    $  64
    Income taxes. . . . . . . . . .  $     473    $ 152
</TABLE>

     Line  of  Credit.  On March 28, 2001, we converted our existing $10 million
Venture Bank line of credit to an asset-based line of credit.  Amounts available
under  the line are based on 80% of eligible accounts receivable, and borrowings
under the line are secured by all corporate assets and bear interest at 9.6% per
annum  and  an  administrative  fee of a quarter of one percent on all advances.
This  line does not have accounts receivable customer concentration limitations,
does  allow  borrowing  against  foreign  receivables,  and  has  no  financial
covenants.  It  will  expire  in  March,  2002.  At  June  30, 2001, there is an
outstanding  balance  of  $3,997,000  on  this  line  of  credit.

Inventories  comprise  the  following  (in  thousands):

<TABLE>
<CAPTION>

                                    JUNE 30,    DECEMBER 31,
                                     2001         2000
                                   ---------  -------------
<S>                                <C>        <C>
Raw materials and purchased parts  $   5,416  $       6,081
Work in process . . . . . . . . .      7,955          5,624
Finished goods. . . . . . . . . .      1,986            647
Inventory at customers' locations      4,695          9,497
                                   ---------  -------------
                                   $  20,052  $      21,849
                                   =========  =============
</TABLE>


Inventory  at  customers'  locations  represent  the  cost of systems shipped to
customers  for  which  we  are  awaiting  customer  acceptance.

                                        6
<PAGE>

Accrued  expenses  comprise  the  following  (in  thousands):


<TABLE>
<CAPTION>
                                           JUNE 30,   DECEMBER 31,
                                            2001         2000
                                         ---------    ----------
<S>                                      <C>        <C>
System warranty*. . . . . . . . . . . .  $     920    $     757
Accrued commissions and incentives. . .        116          242
Accrued compensation and related items.        691          615
Federal, state and foreign income taxes        400          828
Other . . . . . . . . . . . . . . . . .        796          873
                                         ---------    ----------
                                         $   2,923    $   3,315
                                         =========    ==========
</TABLE>

Common Stock

On May 17, 2001, we sold in a private transaction 2,541,785 shares of our common
stock,  and  warrants to purchase up to 1,270,891 of additional shares of common
stock,  for  aggregate  proceeds  of approximately $7.6 million.


Stock  Compensation.

     In  1998  and  1999,  the Company granted options to outside consultants to
purchase  23,000  and 5,000 shares of common stock, respectively.  These options
have  exercise prices between $0.875 and $3.03 per share.  The options vest over
three  years and expire between February 2001 and March 2002.  The work is to be
conducted  over  a three-year period coinciding with the vesting of the options.
Unvested  options  are to be forfeited if the consultants cease performing their
work.  The  Company  accounts  for  consultants' options in accordance with EITF
96-18,  "Accounting  for  Equity  Instruments  That  Are  Issued  to  Other Than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services."  In
accordance  with  this  standard,  changes  in the estimated fair value of these
options  will be recognized as compensation expense in the period of the change.
The  Company recorded $32,000 and $94,000 for the six months ended June 30, 2001
and  2000,  respectively.

     In  addition,  the Company recorded $24,000 and $181,000 for the six months
ending June 30, 2001 and 2000 respectively, resulting from a shortfall in shares
approved  for  the ESPP.  Aggregate compensation resulting from the shortfall of
approximately  $400,000  is  being  amortized  through  December  2001.  The
calculation  and  recording  of  expense was made in accordance with EITF 97-12,
"Accounting  for  Increased  Share Authorizations in an IRS Section 423 Employee
Stock  Purchase  Plan  under  APB  Opinion  No.  25."  In  accordance  with this
consensus,  a  compensation  charge  is  calculated  for the amount by which the
quoted  stock  price  on  the date of shareholder approval, less a 15% discount,
exceeds  the  price  at  which  options  were  granted  under  the  ESPP.  The
compensation  charge  so  determined  is  amortized over the term of the options
issued  under  the  ESPP  that  remains after shareholder approval of additional
shares.



Legal  Proceedings.     In July 1999, we were named as a co-defendant in a claim
filed  at  the Superior Court of the state of California for the county of Santa
Clara,  involving  an  automobile  accident by one of our former employees which
resulted  in  the  death  of  an  individual.  Significant general, punitive and

                                        7
<PAGE>

exemplary  damages  are  being  sought  by  the  plaintiffs.  In June, 2001, the
plaintiffs settled with our insurance carrier for an amount within our insurance
policy  limits.

On  June  6,  2001, ASM America, Inc. filed suit against us in the U.S. District
Court  for  the  Northern District of California asserting that our atomic layer
products  infringe  claims  of  U.S.  Patent  Nos. 6,015,590 and 5,916,365.  The
complaint  sought  unspecified  monetary  damages  and  equitable  relief.

On  August  1,  2001,  we  filed  our  response  in the patent infringement case
initiated  by ASM denying ASM's allegation that Genus infringes patents that ASM
claims  to  have  acquired.  In  our  response,  we  deny  ASM's allegations and
maintain  that  ASM's claims based on these patents are improper.  Additionally,
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
atomic  layer  deposition  market.

Comprehensive  Loss.     Statement  of  Financial  Accounting  Standards No. 130
(SFAS 130), "Reporting Comprehensive Income" establishes rules for the reporting
and  display  of  comprehensive  income  and  its  components.

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

<TABLE>
<CAPTION>

                                           THREE  MONTHS ENDED     SIX MONTHS ENDED
                                                 JUNE 30,           JUNE 30,
                                             2001        2000      2001     2000*
                                          ----------  ----------  ------  ---------
<S>                                       <C>         <C>         <C>     <C>
Net income (loss). . . . . . . . . . . .  $    (853)  $  (2,059)  $(722)  $(12,396)
Foreign currency translation adjustment.         30          (1)     (4)        20
                                          ----------  ----------  ------  ---------
  Comprehensive loss . . . . . . . . . .  $    (823)  $  (2,060)  $(726)  $(12,376)
                                          ==========  ==========  ======  =========
</TABLE>

*  Restated  to  reflect  change  in  accounting  principle



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


<TABLE>
<CAPTION>

                                    JUNE 30,     DECEMBER 31,
                                     2001           2000
                                    --------      --------
<S>                                 <C>            <C>
Cumulative translation adjustments  $(2,026)      $(2,022)
                                    ========      ========
</TABLE>

Recent  Accounting  Pronouncements

In June 1998, the Financial Accounting Standards Boards ("FASB") issued SFAS No.
133,  "Accounting  for  Derivative Instruments and Hedging Activities." SFAS 133
establishes  accounting  and  reporting  standards  for  derivative instruments,
including  certain  derivative  instruments embedded in other contracts, and for
hedging activities.  In July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative  Instruments and Hedging Activities-Deferral of the Effective Date of
FASB Statement No. 133" which deferred the effective date until the first fiscal
year  beginning  after  June  15,  2000.  In

                                        8
<PAGE>

June  2000,  the  FASB  issued  SFAS  Statement No. 138, "Accounting for Certain
Derivative  Instruments  and  Certain  Hedging Activities - an Amendment of SFAS
133."  SFAS  No.  138  amends certain terms and conditions of SFAS 133. SFAS 133
requires  that  all derivative instruments be recognized at fair value as either
assets or liabilities in the statement of the financial position. The accounting
for changes in the fair value (i.e., gains or losses) of a derivative instrument
depends  on  whether  it  has been designated and qualifies as part of a hedging
relationship  and  further, on the type of hedging relationship. We adopted SFAS
No.  133,  as  amended, on January 1, 2001. The adoption of SFAS No. 133 did not
have  a  material  impact  on  the  Company's consolidated financial statements.

In  July  2001, the FASB issued SFAS No. 141, "Business Combinations."  SFAS No.
141  requires  the  purchase  method  of  accounting  for  business combinations
initiated  after  June  30, 2001 and eliminates the pooling-of-interests method.
We  believe  the  adoption of SFAS No. 141 will not have a significant impact on
our  financial  statements.

In  July  2001,  the  FASB  issued  SFAS No. 142, "Goodwill and Other Intangible
Assets,"  which is effective for fiscal years beginning after December 15, 2001.
SFAS  No.  142  requires,  among  other  things,  the discontinuance of goodwill
amortization.  In  addition,  the standard includes provisions upon adoption for
the  reclassification  of  certain  existing recognized intangibles as goodwill,
reassessment  of  the  useful  lives  of  existing  recognized  intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the  testing  for  impairment  of  existing  goodwill and other intangibles.  We
believe  the  adoption of SFAS No. 142 will not have a significant impact on our
financial  statements.


                                        9
<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.

RESULTS  OF  OPERATIONS

     NET  SALES.  Net  sales  for  three and six months ended June 30, 2001 were
$13.7  and  $28.0 million, which represented increases of 107% and 169% compared
to the net sales of $6.6 million and $10.4 million for the corresponding periods
in  2000.  Four systems were accepted by our customers during the second quarter
of  2001,  compared  to  two systems during the second quarter of 2000. Three of
these  systems  were  our current generation chemical vapor deposition products,
and  one  system  was  an atomic level deposition product. During the six months
ended June 30, 2001, six systems and several upgrades were accepted, compared to
three  systems  in  the  first  six  months  of  2000.

     COST  OF GOODS SOLD. Cost of goods sold for three and six months ended June
30,  2001  was $8.6 million and $17.2 million, compared to $4.2 million and $7.0
million  for  the same period in 2000. Gross profit as a percentage of net sales
for the quarter ended June 30, 2001 was 37%, flat with the same period last year
despite  higher sales volumes.  Three of the systems that we recorded as revenue
in  the  quarter  ended  June  30,  2001 were standard chemical vapor deposition
products,  and  these  systems have lower gross margins than our next generation
atomic  level deposition products. Additionally, operations and customer service
expenses increased $400,000 over the second quarter of 2000 due to the expansion
of  Genus  Japan and increases in headcount to support our growth. Year to date,
gross profit as a percentage of sales was $38%, compared to 33% during the first
half  of 2000.  This increase was primarily due to the higher sales volumes that
allowed  us  to  better absorb our fixed operations expenses.  Our gross profits
have  historically  been  affected  by  variations  in  average  selling prices,
configuration  differences,  changes  in the mix of product sales, unit shipment
levels,  the  level  of  foreign  sales  and  competitive  pricing  pressures.

     RESEARCH AND DEVELOPMENT. Research and development expenses for the quarter
ended  June  30, 2001 were $3.2 million, or 24% of net sales, compared with $2.0
million  or  30%  of  net  sales for the same period in 2000. For the six months
ended  June  30,  2001, expenses were $6.2 million, or 22% of sales, compared to
$3.7  million,  or  36%  of sales for the first half of 2000.   The increases in
both  quarter  and  year  to  date  expenses  were primarily associated with the
development  costs  of our 300 millimeter product, the Lynx3, which is scheduled
to  ship  in  the third quarter of 2001. These Lynx 3 costs have continued since
the  fourth  quarter  of  2000,  and  we expect them to decline once the product
finally  ships.  We  continue  to  make  investments  in  our  ALD  technology,
particularly  in  new films and productivity improvements, and new CVD products,
including  tungsten films.  We continue to pursue non-semiconductor applications
for  ALD,  including  magnetic  disk  drives,  telecommunications,  and  inkjet
printers.  We expect our research and development spending levels to continue to
increase  throughout  2001.

     SELLING,  GENERAL  AND  ADMINISTRATIVE. Selling, general and administrative
expenses  were  $2.7  million,  or  20% of sales, for the quarter ended June 30,
2001, compared with $2.4 million or 36% of sales for the second quarter of 2000.
This  was  primarily  due to increased applications lab expenses and legal costs
and  the  reduction  in  relation  to sales is the result of increased revenues.
Going forward, we expect legal costs

                                       10
<PAGE>

to  be  higher  due  to  the patent infringement lawsuit with ASM International.
Other  general  and  administrative  headcount  and spending remain frozen until
there  is  better visibility in the business outlook. Year to date expenses were
$5.2 million, which was flat with last year's figures. As a percentage of sales,
year to date 2001 was 19% of sales, much lower than last year's 50% of sales due
to  the  increased  sales  volumes.

     OTHER  INCOME  (EXPENSE),  NET. Other income, net for the second quarter of
2001  was  $78,000  compared  to other expenses of $4,000 for the same period in
2000.  During the six months ended June 30, 2001, other income, net was $80,000,
compared to $282,000 in the first six months of 2000,  primarily due to interest
received  from Samsung and foreign currency exchange gains during the first half
of  2000.

     PROVISION  FOR  INCOME  TAXES.  Income taxes for three and six months ended
June 30, 2001 were $14,000 and $69,000, compared to $100,000 and $350,000 in the
same  2000  period.  Income  taxes  are related to the profit generated from our
South  Korean  subsidiary,  which  was  higher  during  the  first half of 2000.

LIQUIDITY  AND  CAPITAL  RESOURCES

     At  June  30,  2001,  our  cash  and cash equivalents were $3.5 million, an
increase  of  $377,000 over cash and cash equivalents of $3.1 million held as of
December  31,  2000.  Accounts  receivable  was $7.2 million, a decrease of $1.2
million  from  December  31,  2000.  Two  300  millimeter  Lynx3 systems that we
expected  to ship in June were pushed out into August due to development delays.
Additionally,  a system that shipped to our Japanese subsidiary in the last week
of  June  did  not  clear  customs  until  the  first  week  of  July.

     Cash  used  by operating activities totaled $4.1 million for the six months
ended  June  30,  2001,  and  consisted  primarily  of  net loss of $722,000 and
decreases in deferred revenues of $9.2 million and accrued expenses of $392,000.
This  was  offset by increases in accounts payable of $1.8 million, decreases in
inventories  of $1.8 million, and depreciation of $1.2 million.  The decrease in
accounts  receivable  was  due  to  the  delays  in system shipments.  Inventory
reductions  were  primarily  related to lower inventory at customer sites due to
system  acceptances  by  customers,  which  was  partially  offset  by inventory
associated  with  the  shipment  delays.  For  the same reason, deferred revenue
decreased  as  the net value of systems accepted by customers exceeded the value
of  shipments that were deferred during the quarter.  Accounts payable increased
as  we  continue  to  manage  cash  very  tightly.

     Financing activities provided cash of $8.8 million for the six months ended
June  30,  2001.  In  May, we received approximately $6.9 million from a private
placement  of  2.5  million  shares  of  our  common stock.  During the year, we
received  $600,000  from  the  issuance  of  common stock for our employee stock
purchase  and  incentive stock option plans.  Additionally, we increased our net
short  term  borrowings  by  $1.3  million.

     We  made capital expenditures of $4.4 million for the six months ended June
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  will  improve  our  product  and  film  development
capabilities,  and  increase  our  customer demonstration capabilities, which is
critical  in  the  sales  process.  We  anticipate  making  additional  capital
investments  during  the  remainder  of  2001, but will be looking to vendors or
third  parties  to  finance  some  of these purchases, with the remainder funded
through  working  capital.

     Our  primary  source of funds at June 30, 2001 consisted of $3.5 million in
cash  and  cash  equivalents,  and  $7.2 million of accounts receivable, most of
which  we  expect  to  collect  or  to  have  been  collected  during  2001.

                                       11
<PAGE>


     On  March 28, 2001, we converted our existing $10 million Venture Bank line
of  credit  to  an asset-based line of credit.  Amounts available under the line
are  based on 80% of eligible accounts receivable, and borrowings under the line
are  secured  by all corporate assets and bear interest at 9.6% per annum and an
administrative  fee  of a quarter of one percent on all advances. This line does
not  have  accounts  receivable  customer  concentration limitations, does allow
borrowing  against  foreign receivables, and has no financial covenants. It will
expire  in  March,  2002.

     We  believe  that  our existing working capital and our $10 million line of
credit  will  be  sufficient  to  satisfy our cash needs for the next 12 months,
provided we meet our revenue and shipment forecasts.  Additionally, we expect to
raise  up  to  $5.0  million through the conversion of the 1.5 million of common
stock  warrants associated with the May 17, 2001 private stock placement.  There
can  be  no  assurance  that any required additional funding, if needed, will be
available  on terms attractive to us, 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.



RECENT  ACCOUNTING  PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No.  133,  "Accounting  for  Derivatives  and Hedging Activities."  SFAS No. 133
establishes  accounting  and  reporting  standards  for  derivative instruments,
including  certain  derivative  instruments embedded in other contracts, and for
hedging activities.  In July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative  Instruments and Hedging Activities-Deferral of the Effective Date of
FASB  Statement  No.  133,"  which  deferred  the effective date until the first
fiscal  year  beginning after June 15, 2000.  In June 2000, the FASB issued SFAS
Statement  No.  138,  "Accounting for Certain Derivative Instruments and Certain
Hedging Activities-an Amendment of SFAS 133."  SFAS No. 138 amends certain terms
and  conditions  of SFAS 133.  SFAS 133 requires that all derivative instruments
be  recognized at fair value as either assets or liabilities in the statement of
financial  position.  The  accounting for changes in the fair value (i.e., gains
or  losses) of a derivative instrument depends on whether is has been designated
and  qualifies  as  part  of  a hedging relationship and further, on the type of
hedging  relationship.  We adopted SFAS No. 133, as amended, on January 1, 2001.
The  adoption  of  SFAS  No. 133 did not have a material impact on our financial
statements.

     In  July  2001, the FASB issued SFAS No. 141, "Business Combinations." SFAS
No.  141  requires  the  purchase method of accounting for business combinations
initiated after June 30, 2001 and eliminates the pooling-of-interests method. We
believe  the  adoption of SFAS No. 141 will not have a significant impact on our
financial  statements.

     In  July 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets,"  which is effective for fiscal years beginning after December 15, 2001.
SFAS  No.  142  requires,  among  other  things,  the discontinuance of goodwill
amortization.  In  addition,  the standard includes provisions upon adoption for
the  reclassification  of  certain  existing recognized intangibles as goodwill,
reassessment  of  the  useful  lives  of  existing  recognized  intangibles,
reclassification  of certain intangibles out of previously reported goodwill and
the  testing  for  impairment  of  existing  goodwill  and other intangibles. We
believe  the  adopting  of  SFAS  142  will not have a significant impact on our
financial  statements

                                       12
<PAGE>

RISK  FACTORS

     Certain  sections  of  Management's  Discussion  and  Analysis  contain
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as  amended.  Actual results could differ materially from those projected in the
forward-looking  statements  as  a  result  of  the  factors  set forth above in
Management's  Discussion  and  Analysis  and  this  Risk  Factors  section.  The
discussion  of  these  factors  is  incorporated  by  this  reference as if said
discussion  was  fully  set  forth  in  Management's  Discussion  and  Analysis.

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

We  have  experienced losses of $9.6 million, $1.6 million and $29.5 million for
2000,  1999  and  1998,  respectively.

We  may  not  be able to attain or sustain consistent future revenue growth on a
quarterly or annual basis, or achieve and maintain consistent profitability on a
quarterly  or  annual  basis.

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 sales.  For example, Samsung Electronics Company, Ltd. and
Micron  Technology,  Inc.  accounted  for  91%  and 5% of our net sales in 2000.
Samsung  Electronics  Company,  Ltd. and Infineon Technologies accounted for 90%
and  6%  of  total  shipments  made  in  2000, which would have been recorded as
revenue  under the historical accounting method.  Samsung and Infineon accounted
for  88%  and  9%  of  our sales for the first six months of 2001.  In addition,
Samsung  Electronics Company, Ltd., and Infineon Technologies represented 92% of
accounts  receivable  at  December 31, 2000. Read-Rite, SCS Hightech and Samsung
Electronics  represented  88%  of  gross  receivables  at  June  30,  2001.  The
semiconductor  manufacturing  industry generally consists of a limited number of
larger  companies.  We  consequently  expect  that  a significant portion of our
future  product sales will 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 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;
-    economic  conditions;  or
-    competitive  conditions  in the semiconductor industry or in the industries
     that  manufacture  products  utilizing  integrated  circuits.

OUR  QUARTERLY  FINANCIAL  RESULTS FLUCTUATE SIGNIFICANTLY AND MAY FALL SHORT OF
ANTICIPATED  LEVELS,  WHICH  COULD  CAUSE  OUR  STOCK  PRICE  TO  DECLINE


                                       13
<PAGE>


Our  net sales and operating results may fluctuate significantly from quarter to
quarter.  For example, in the year 2000, our quarterly revenues ranged from $3.8
million  to  $15.7  million  with  the  bottom line ranging from a loss of $10.3
million  to  a  profit  of  $1.6  million.

We  derive  our  revenue primarily from the sale of a relatively small number of
high-priced  systems,  many  of which may be ordered and shipped during the same
quarter.  Our results of operations for a particular quarter could be materially
adversely  affected  if  anticipated orders, for even a small number of systems,
were  not  received  in  time to enable shipment during the quarter, anticipated
shipments  were  delayed  or canceled by one or more customers or shipments were
delayed  due  to manufacturing difficulties.  At our current revenue level, each
sale,  or  failure  to  make  a  sale,  could  have  a  material  effect  on us.

Our  lengthy  sales  cycle, coupled with our customers' competing capital budget
considerations,  make  the  timing  of  customer  orders uneven and difficult to
predict.  Our  backlog  at the beginning of a quarter typically does not include
all  orders  required  to  achieve  our sales objectives for that quarter.  As a
result,  our net sales and operating results for a quarter depend on us shipping
orders  as  scheduled  during  that  quarter as well as obtaining new orders for
systems to be shipped in that same quarter.  Any delay in scheduled shipments or
in  shipments  from  new  orders would materially harm our operating results for
that  quarter,  which  could  cause  our  stock  price  to  decline.

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 98%, 86% and 56% of our total net sales
in  2000,  1999  and  1998,  respectively and accounted for 99% of our total net
sales  during the first six months of 2001.  Net sales to our South Korean-based
customers  accounted  for  approximately  92%,  84%  and 30% of total net sales,
respectively  and  accounted  for  88%  of  our total net sales in the first six
months  of  2001.  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;
-    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.


                                       14
<PAGE>


Our foreign sales are primarily denominated in U.S. dollars and we do not engage
in  hedging  transactions.  As  a  result,  our foreign sales are subject to the
risks  associated  with unexpected changes in exchange rates, which could affect
the  price  of  our  products.

In  the  past,  turmoil  in  the  Asian  financial  markets resulted in dramatic
currency  devaluations,  stock  market declines, restriction of available credit
and  general  financial weakness.  For example, prices fell dramatically in 1998
because  integrated  circuit  manufacturers  sold  dynamic  random access memory
chips,  called  DRAMs,  at  less  than cost in order to generate cash.  The cash
shortfall  caused  Asian semiconductor companies  to defer or cancel investments
in  new  production  facilities,  thereby  reducing our anticipated sales of our
semiconductor  manufacturing  equipment  in  Asia  in  1998.

Also  during  this  time,  the  value  of  the won, the currency of South Korea,
declined  significantly against the U.S. dollar.  As a result, purchases of U.S.
manufactured  products became very costly.  Since most of our sales were made to
South  Korean  customers,  these circumstances adversely impacted our customers'
ability  to  invest  in  new facilities and equipment that reduced our shipments
and  profitability  in  1998.

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.  Industry
reports  anticipate  a  fall  of  35%  in 2001 compared to 2000.  This sharp and
severe  industry  downturn  is  the  largest in the industry's history and it is
occurring  with  a  slowdown  of  the  U.S. economy overall. Almost all previous
downturns have been solely due to pricing declines.  The current downturn in the
industry  marks  a  corresponding  decline  in  unit  production. Genus recently
reported  a loss for our second quarter 2001 financial results.  There is a risk
that  our revenues and operating results will continue to be further impacted by
the  continued  downturn  in  the  semiconductor  industry  and  global economy.

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

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

                                       15
<PAGE>

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 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-five 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.

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 in
order  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  financial  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

                                       16
<PAGE>

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  to  choices  made  by  customers  that  continue to be
influenced  by  pre-existing  installed  bases  by  competing  vendors.

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  IT.

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  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 thereunder will provide
us  with  competitive  advantages.

                                       17
<PAGE>


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.

On  June  6,  2001, ASM America, Inc. filed suit against us in the U.S. District
Court  for  the  Northern District of California asserting that our atomic layer
products  infringe  claims  of  U.S.  Patent  Nos. 6,015,590 and 5,916,365.  The
complaint  sought  unspecified  monetary  damages  and  equitable  relief.

On  August  1,  2001,  we  filed  our  response  in the patent infringement case
initiated  by ASM denying ASM's allegation that Genus infringes patents that ASM
claims to have acquired.  In our response, we deny ASM's and maintain that ASM's
claims  based  on  these  patents  are  improper.

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  were  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
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

                                       18
<PAGE>

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

Components  and  sub-assemblies  included  in  our  products are obtained from a
single  supplier  or a limited group of suppliers.  Disruption or termination of
these  sources  could have an adverse effect on our operations.  We believe that
alternative sources could be obtained and qualified to supply these products, if
necessary.  Nevertheless,  a prolonged inability to obtain components could have
a  material  adverse  effect  on  our  operating  results.

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

We  currently  sell  and support our thin film products through direct sales and
customer  support  organizations  in the U.S., Europe, South Korea and Japan and
through  six  independent  sales  representatives  and distributors in the U.S.,
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 and have received orders from two new
Japanese  customers  in 2001, 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

                                       19
<PAGE>

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 effect
the  market  price  of  our  common  stock.

In  the  past,  securities  class  action  litigation  has often been instituted
against  a company following periods of volatility in the company's stock price.
This  type of litigation, if filed against us, could result in substantial costs
and  divert  our  management's  attention  and  resources.

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.  Further, our facilities in the
State  of  California  are  currently  subject  to  electrical  blackouts  as  a
consequence  of  a  shortage  of available electrical power.  In the event these
blackouts continue or increase in severity, they could disrupt the operations of
our  affected  facilities.  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  July  31,  2001,  we  have  a  total of 4,494,555 shares of common stock
underlying  warrants  and  outstanding  employee  stock  options.  Of  the stock
options,  1,558,729  shares  are  currently  exercisable.  All  of  the  shares
underlying  the  warrants  are  currently  exercisable.

There are 1,461,525 shares of our common stock underlying the warrants issued to
the  shareholders  listed in the table below under the section entitled "Selling
Securities  Holders."  Of  these  shares,  1,270,891  have  an exercise price of
$3.50;  69,375  have  an  exercise  price of $3.00; and 121,259 have an exercise
price  of  $5.24.   In  addition, Venture Banking Group, a division of Cupertino
National  Bank,  holds  a  warrant,  issued October 14, 1999, to purchase 25,000
shares  of  our  common  stock at an exercise price of $2.39.  The warrants have
terms  providing  for  an  adjustment  of  the  number  of shares underlying the
warrants  in  the  event  that  we  issue  new  shares at a price lower than the
exercise  price of the warrants, where we make a distribution of common stock to
our  shareholders  or  effect  a  reclassification.

If  all  of  the  shares  underlying  the  exercisable options and warrants were
exercised  and  sold in the public market, the value of your current holdings in
Genus  may decline 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

Please  read the section below entitled "Description of Equity Securities" where
we  more completely summarize our preferred stock rights agreement, which is our
primary anti-takeover device.  Pursuant to the agreement, our board of directors
has declared a dividend of one right for each share of our common

                                       20
<PAGE>

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  acquiror  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

     Some  of  the  information in this Quarterly Report on Form 10-Q and in any
documents  that  are  incorporated  by  reference,  including  the risk factors,
contains  forward-looking statements that involve risks and uncertainties. These
statements  relate to future events or our future financial performance. In many
cases, you can identify forward-looking statements by terminology such as "may,"
"will,"  "should,"  "expects,"  "plans," "anticipates," "believes," "estimates,"
"predicts," "potential," or "continue," or the negative of these terms and other
comparable  terminology.  These  statements  are  only  predictions.  Our actual
results  could differ materially from those anticipated in these forward-looking
statements  as  a result of a number of factors, including the risks faced by us
described  above  and  elsewhere  in  this  Quarterly  Report  on  Form  10-Q.

     We  believe  it  is  important  to  communicate  our  expectations  to  our
shareholders. However, there may be events in the future that we are not able to
predict  accurately  or  over  which we have no control. The risk factors listed
above, as well as any cautionary language in this Quarterly Report on Form 10-Q,
provide  examples  of  risks, uncertainties and events that may cause our actual
results  to  differ  materially  from  the  expectations  we  describe  in  our
forward-looking  statements.



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  could  make  our  products more
expensive and, therefore, 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.

                                       21
<PAGE>



                           PART II.  OTHER INFORMATION



ITEM  1.  LEGAL  PROCEEDINGS

In  July  1999, we were named as a co-defendant in a claim filed at the Superior
Court  of  the  state  of California for the county of Santa Clara, involving an
automobile  accident  by one of our former employees which resulted in the death
of  an individual. Significant general, punitive and exemplary damages are being
sought  by  the  plaintiffs.  In  June,  2001,  the plaintiffs  settled with our
insurance  carrier  for  an  amount  within  our  insurance  policy  limits.

On  June  6,  2001, ASM America, Inc. filed suit against us in the U.S. District
Court  for  the  Northern District of California asserting that our atomic layer
products  infringe  claims  of  U.S.  Patent  Nos. 6,015,590 and 5,916,365.  The
complaint  sought  unspecified  monetary  damages  and  equitable  relief.

On  August  1,  2001,  we  filed  our  response  in the patent infringement case
initiated  by ASM denying ASM's allegation that Genus infringes patents that ASM
claims  to  have  acquired.  In  our  response,  we  deny  ASM's allegations and
maintain  that  ASM's claims based on these patents are improper.  Additionally,
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
atomic  layer  deposition  market.



ITEM  2.  CHANGES  IN  SECURITIES  AND  USE  OF  PROCEEDS

On May 17, 2001, we sold in a private transaction 2,541,785 shares of our common
stock,  and  warrants to purchase up to 1,270,891 of additional shares of common
stock,  for aggregate proceeds of approximately $7.6 million.  We also issued an
aggregate  of  190,634  warrants to Burnham Securities, Inc. and Wells Fargo Van
Kasper  as  partial  compensation  for their services as placement agents in the
transaction.  The  purchasers  paid  us  $3.00  per  share of common stock.  The
price  was  determined  by considering the average of our historical closing bid
prices,  and  the respective trailing trading average bid prices for a period of
20  days  ending on May 4, 2001.  The shares were sold at a 6 % discount to this
20-day  average.

For  each  $6.00  paid to us in the private transaction, the purchasers received
two shares of our common stock and one warrant.  The number of shares underlying
each  warrant  is  determined  by  the number of shares purchased.  The warrants
issued  to the purchasers in the private placement are exercisable for $3.50 per
share.  The placement agents have an aggregate of 69,375 shares underlying their
warrants  that  are  exercisable for $3.00 per share and an aggregate of 121,259
shares underlying their warrants that are exercisable for $5.24 per share.  Each
warrant  is  exercisable  to  purchase one share of our common stock at any time
beginning  May  14  2001,  the  day  of  issuance, and ending May 13, 2006.  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  price  of  the  warrants.

We  may  request  the  holders  of  the warrants issued to the purchasers in the
private  placement to exercise them if the closing price per share of our common
stock  is  greater  than  $5.25  for  each  of  the ten trading days immediately
preceding  the  date we give notice to the holders of our decision to effect the
exercise.  Under  the  terms  of this mandatory exercise provision, a holder can
choose  not  to  exercise  his  or her warrants, although such holder would then
forfeit  rights,  title and interest under the warrants to the extent that he or
she  fails  to  exercise  within  thirty  calendar days of receiving our notice.

The  warrants  issued  to  the  purchasers  in  the  private  placement  include
antidilution  provisions  under  section  5,  including provisions that call for
adjustments  in  the  number  of  shares  of  stock  issued upon exercise of the
warrants  to  prevent  dilution  to  the  holders of the warrants because of (i)
dividends or distributions in common stock; (ii) reclassifications of the common
stock; or (iii) the issuance of new stock at less than the exercise price of the
warrants.

The  warrants  issued to the placement agents differ from the warrants issued to
the  investors  in  the  private  placement  in  that the warrants issued to the
placement  agents  (i)  have no mandatory exercise provision; and (ii) require a
more  relaxed  adjustment, called a broad-based adjustment, which requires fewer
additional  shares to be issued to the shareholders to prevent dilution if Genus
issues  new  stock  at  less  than  the  exercise  price  of  the  warrant.

If  all  the  warrants are exercised for cash and converted to common stock, the
additional  net  proceeds  would  total $5.0 million.  The net proceeds from the
private  placement  will  be  used to fund inventory, sales and sales support to
address  new  customers,  working  capital  and  general  corporate  matters.

We  entered  into  a  registration  rights  agreement  with  the  purchasers  in
connection  with the private transaction that required us to file a registration
statement  a  Form  S-3,  the  most  recent amendment of which was filed on Form
S-3/A2  on  August  7, 2001.  The securities sold in this private placement have
not  been  registered under the Securities Act of 1933 and may not be offered or
sold  in the United States in the absence of an effective registration statement
or an applicable exemption from registration requirements of the Securities Act.


                                       22
<PAGE>

which  was  filed  on Form S-3/A2 on August 7, 2001. The securities sold in this
private  placement have not been registered under the Securities Act of 1933 and
may  not  be offered or sold in the United States in the absence of an effective
registration statement or an applicable exemption from registration requirements
of  the  Securities  Act.



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

THE  COMPANY'S  ANNUAL MEETING OF SHAREHOLDERS WAS HELD ON MAY 24, 2001 IN SANTA
CLARA, CALIFORNIA. PROXIES FOR THE MEETING WERE SOLICITED PURSUANT TO REGULATION
14A.  AT  THE  COMPANY'S ANNUAL MEETING, THE SHAREHOLDERS APPROVED THE FOLLOWING
RESOLUTIONS:

(1) Election of the following persons as directors.

     Director                  In  Favor     Withheld
     --------                  ---------     --------
     William  W.  R.  Elder    15,132,750     697,106
     Todd  S.  Myhre           15,357,638     472,218
     G.  Frederick  Forsyth    15,362,708     467,148
     Mario  M.  Rosati         15,360,783     469,073
     Robert  J.  Richardson    15,352,033     477,223
     George  D.  Wells         15,352,033     477,823


(2) Amendment to the 2000 stock option plan increasing the number of shares
reserved for issuance thereunder by 700,000 additional shares.

     For:                     3,916,976
     Against:                   979,887
     Abstain:                    63,668
     Broker  Non-Vote:       14,469,459

(3) Amendment to the 1989 Employee Stock Purchase Plan increasing the number of
shares reserved for issuance thereunder by 300,000 additional shares.

     For:                     3,943,670
     Against:                   948,567
     Abstain:                    68,294
     Broker  Non-Vote:       14,469,459

(4) Ratification and appointment of PricewaterhouseCoopers LLP as independent
accountants.

     For:                    15,744,416
     Against:                    56,664
     Abstain:                    28,776
     Broker  Non-Vote:        3,600,134



ITEM  6.  EXHIBITS  AND  REPORTS  ON  FORM  8-K

(a) Exhibits

     None.

                                       23
<PAGE>



(b) Report on Form 8-K

     The  company  filed two Current Reports on Forms 8-K, on April 11, 2001 and
     May  23,  2001.



                                   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:  August 14,  2001       GENUS,  INC.



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



                              /s/  Kenneth  Schwanda
                              -----------------------------
                              Kenneth  Schwanda
                              Chief  Financial  Officer
                             (Principal  Financial  and  Principal
                              Accounting  Officer)

                                       24
<PAGE>