Edgar Filing: GENESIS TECHNOLOGY GROUP INC

United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-QSB

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

For the fiscal quarter ended: June 30, 2003
Commission file number: 333-86347

GENESIS TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)

Florida 65-1130026
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

777 Yamato Road, Suite 130
Boca Raton, Florida 33431
(Address of principal executive offices)(Zip code)

(561) 988-9880
(Registrant's telephone number, including area code)

Indicate by check mark whether registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes X No

Indicate the number of shares outstanding of each of the registrant's classes of
common stock, as of June 30, 2003 35,255,353 outstanding shares of common stock,
$.001 par value per share.

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
FORM 10-QSB
QUARTERLY PERIOD ENDED June 30, 2003
INDEX

Page

PART I - FINANCIAL INFORMATION

Item 1 - Consolidated Financial Statements

Consolidated Balance Sheet
June 30, 2003 (Unaudited)................................ 3
Consolidated Statements of Operations (Unaudited)
For the Three and Nine Months Ended June 30, 2003 and 2002... 4
Consolidated Statements of Cash Flows (Unaudited)
For the Nine Months Ended June 30, 2003 and 2002........... 5

Notes to Consolidated Financial Statements.......................... 6-12

Item 2 - Management's Discussion and Analysis or Plan of Operation.... 13-23

Item 3 - Controls and Procedures....................................... 23

PART II - OTHER INFORMATION

Item 1 - Legal Proceedings......................................... 24

Item 2 - Changes in Securities and Use of Proceeds................ 24

Item 3 - Default upon Senior Securities.......................... 24-25

Item 4 - Submission of Matters to a Vote of Security Holders..... 25-26

Item 5 - Other Information...................................... 27-30

Item 6 - Exhibits and Reports on Form 8-K.......................... 31

Signatures........................................................ 31

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET

June 30,
2003
----------------
(Unaudited)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents $ 244,342
Marketable equity securities 281,719
Accounts receivable 90,807
Inventories 376,827
Prepaid expenses and other 483,107
----------
Total Current Assets 1,476,802
----------

PROPERTY AND EQUIPMENT - Net 115,197
----------

OTHER ASSETS:
Goodwill 10,540
Other assets 34,919
----------

Total Other Assets 45,459
----------

Total Assets $ 1,637,458
=============

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Loans payable $ 100,000
Accounts payable and accrued expenses 352,458
Deferred revenue 107,500
Due to related party 407,384
----------

Total Current Liabilities 967,342
----------

MINORITY INTEREST 33,079
----------

STOCKHOLDERS' EQUITY:
Preferred stock ($.001 Par Value; 20,000,000 Shares Authorized;
no shares issued and outstanding) -
Common stock ($.001 Par Value; 200,000,000 Shares Authorized;
35,255,353 shares issued and outstanding) 35,256
Additional paid-in capital 13,687,106
Accumulated deficit (11,461,760)
Less: Deferred compensation (105,382)
Less: Subscriptions receivable (214,450)
Accumulated other comprehensive loss (1,303,733)
----------

Total Stockholders' Equity 637,037
----------

Total Liabilities and Stockholders' Equity $ 1,637,458
----------

See notes to consolidated financial statements
-3-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended For the Nine Months Ended
June 30, June 30,
----------------------------- ------------------------------
2003 2002 2003 2002
------------- ------------- ------------- -------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)

NET REVENUES $ 6,862,613 $ 4,230,102 $ 18,020,770 $ 9,633,718

COST OF SALES 6,523,730 3,739,082 17,349,184 8,548,450
---------- ---------- ----------- -----------

GROSS PROFIT 338,883 491,020 671,586 1,085,268
---------- ---------- ----------- -----------

OPERATING EXPENSES:
Consulting 89,042 143,096 462,744 225,781
Salaries and non-cash compensation 185,875 23,774 406,712 95,094
Selling, general and administrative 297,102 177,328 741,850 397,835
---------- ---------- ----------- -----------
Total Operating Expenses 572,019 344,198 1,611,306 718,710
---------- ---------- ----------- -----------

(LOSS) INCOME FROM OPERATIONS (233,136) 146,822 (939,720) 366,558

OTHER INCOME (EXPENSE):
Loss from sale of marketable securities (195) (16) (12,099) (43,750)
Interest (expense) income, net (22,627) (4) (27,503) 222
---------- ---------- ----------- -----------

Total Other Income (Expense) (22,822) (20) (39,602) (43,528)
---------- ---------- ----------- -----------

(LOSS) INCOME BEFORE DISCONTINUED OPERATIONS AND
MINORITY NTEREST (255,958) 146,802 (979,322) 323,030
---------- ---------- ----------- -----------
DISCONTINUED OPERATIONS:
Gain from sale of subsidiary - 421,654 - 421,654
Income (loss) from discontinued operations 502 (89,442) 182 19,766
---------- ---------- ----------- -----------

Total Income from Discontinued Operations 502 332,212 182 441,420
---------- ---------- ----------- -----------

(LOSS) INCOME BEFORE MINORITY INTEREST, (255,456) 479,014 (979,140) 764,450

MINORITY INTEREST IN INCOME OF SUBSIDIARY - - - (7,541)

NET (LOSS) INCOME $ (255,456) $ 479,014 $ (979,140) $ 756,909
============ ========== =========== ===========

BASIC (LOSS) INCOME PER COMMON SHARE:
Income (loss) from continuing operations $ (0.01) $ 0.01 $ (0.03) $ 0.01
Income (loss) from discontinued operations 0.00 0.01 0.00 0.02
---------- ---------- ----------- -----------

Net (loss) income per common share $ (0.01) $ 0.02 $ (0.03) $ 0.03
============ ========== =========== ===========

DILUTED (LOSS) INCOME PER COMMON SHARE:
Income (loss) from continuing operations $ (0.01) $ 0.01 $ (0.03) $ 0.01
Income (loss) from discontinued operations 0.00 - 0.00 0.02
---------- ---------- ----------- -----------

Net (loss) income per common share $ (0.01) $ 0.01 $ (0.03) $ 0.03
============ ========== =========== ===========

Weighted Common Shares Outstanding - Basic 33,485,672 25,426,858 31,395,968 24,363,005
============ ========== =========== ===========
Weighted Common Shares Outstanding - Diluted 33,485,672 25,576,858 31,395,968 24,513,005
============ ========== =========== ===========

See notes to consolidated financial statements
-4-

GENESIS TECHNOLOGY GROUP, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Nine Months Ended
June 30,
-------------------------

2003 2002
--------------- ---------------
(Unaudited) (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ (979,322) $ 300,035
Adjustments to reconcile income (loss) from continuing
operations to net cash used in operating activities:
Depreciation and amortization 11,014 9,803
Loss on sale of marketable securities - 43,750
Grant and exercise of stock options to consultants and employees 450,078 84,502
Common stock issued for services 56,000 23,750
Beneficial conversion feature on note payable 20,000 -
Minority interest - (77,379)
Amortization of deferred compensation 52,118 117,478
Gain from sale of subsidiary - (475,304)
Changes in assets and liabilities:
Marketable equity securities (111,276) (692,371)
Accounts receivable (7,486) (7,586)
Inventories (189,781) 146,700
Prepaid and other current assets (142,400) (296,336)
Due from related party - 18,023
Other assets (29,307) -
Accrued payable and accrued expenses 374,290 (215,151)
Due to related party - 14,360
Deferred revenues (15,000) (76,500)
--------------- ---------------

NET USED IN CONTINUING OPERATING ACTIVITIES (511,072) (1,082,226)
--------------- ---------------

Income from discontinued operations 182 456,874
Adjustments to reconcile income from discontinued
operations to net cash provided by discontinued operating activities:
Net increase in net liabilities from discontinued operations 4,772 -
--------------- ---------------

NET CASH PROVIDED BY DISCONTINUED OPERATING ACTIVITIES 4,954 456,874
--------------- ---------------

NET CASH USED IN OPERATING ACTIVITIES (506,118) (625,352)
--------------- ---------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired in acquisition - 106,790
Proceeds from sale of marketable securities 12,826 21,040
Increase in marketable securities - (226,697)
Capital expenditures (1,785) (68,091)
--------------- ---------------

NET CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES 11,041 (166,958)
--------------- ---------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loans payable - 669,426
Payment on loans payable (120,919) -
Due to related party 373,625 -
Proceeds from exercise of stock options 429,139 124,500
--------------- ---------------

NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 681,845 793,926
--------------- ---------------

NET INCREASE IN CASH AND CASH EQUILALENTS 186,768 1,616

CASH AND CASH EQUIVALENTS - beginning of period 57,574 545,452
--------------- ---------------

CASH AND CASH EQUIVALENTS - end of period $ 244,342 $ 547,068
=============== ===============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Noncash investing and financing activities:
Common stock issued for debt $ - $ 24,985
=============== ===============

Common stock retired in connection with sale of subsidiary $ 68,000
=============== ===============

Acquisition details:
Fair value of assets acquired $ - $ 813,452
=============== ===============

Liabilities assumed $ - $ (544,692)
=============== ===============

Common stock issued for acquisitions $ - $ (268,760)
=============== ===============

Goodwill $ - $ 10,540
=============== ===============

See notes to consolidated financial statements.

-5-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2003
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

The Company

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission ("SEC"). The accompanying consolidated
financial statements for the interim periods are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the periods presented. The consolidated
financial statements include the accounts of the Company and its wholly and
partially owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated. These consolidated financial statements
should be read in conjunction with the financial statements for the year ended
September 30, 2002 and notes thereto contained in the Transition Report on Form
10-KSB of Genesis Technology Group, Inc. (the "Company") as filed with the
Securities and Exchange Commission. The results of operations for the nine
months ended June 30, 2003 are not necessarily indicative of the results for the
full fiscal year ending September 30, 2003.

Net income (loss) per share

Basic earnings per share is computed by dividing net loss by weighted average
number of shares of common stock outstanding during each period. Diluted loss
per share is computed by dividing net loss by the weighted average number of
shares of common stock, common stock equivalents and potentially dilutive
securities outstanding during each period.

Marketable equity securities

Marketable equity securities consist of investments in equity of publicly traded
and non-public domestic and foreign companies and are stated at market value
based on the most recently traded price of these securities at June 30, 2003.
All marketable securities are classified as available for sale at June 30, 2003.
Unrealized gains and losses, determined by the difference between historical
purchase price and the market value at each balance sheet date, are recorded as
a component of Accumulated Other Comprehensive Income in Stockholders' Equity.
Realized gains and losses are determined by the difference between historical
purchase price and gross proceeds received when the marketable securities are
sold. Restricted marketable equity securities are show as long-term assets.

-6-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)

Foreign currency translation

Transactions and balances originally denominated in U.S. dollars are presented
at their original amounts. Transactions and balances in other currencies are
converted into U.S. dollars in accordance with Statement of Financial
Accounting Standards (SFAS) No. 52, "Foreign Currency Translation," and are
included in determining net income or loss.

For foreign operations with the local currency as the functional currency,
assets and liabilities are translated from the local currencies into U.S.
dollars at the exchange rate prevailing at the balance sheet date. Revenues,
expenses and cash flows are translated at weighted average exchange rates for
the period to approximate translation at the exchange rates prevailing at the
dates those elements are recognized in the financial statements. Translation
adjustments resulting from the process of translating the local currency
financial statements into U.S. dollars are included in determining comprehensive
loss. As of June 30, 2003, the exchange rate for the Chinese Renminbi (RMB) was
$1 US for 8.27 RMB.

The functional currency of the Company's Chinese subsidiaries is the local
currency. The financial statements of the subsidiary are translated to United
States dollars using period-end rates of exchange for assets and liabilities,
and average rates of exchange for the period for revenues, costs, and expenses.
Net gains and losses resulting from foreign exchange transactions are included
in the consolidated statements of operations and were not material during the
periods presented. The cumulative translation adjustment and effect of exchange
rate changes on cash at June 30, 2003 was not material.

Reclassifications

Certain prior periods' balances have been reclassified to conform to the current
period's financial statement presentation. These reclassifications had no impact
on previously reported results of operations or stockholders' equity (deficit).

-7-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

NOTE 2 - ACQUISITIONS AND SALE OF SUBSIDIARY

Acquisitions

On November 15, 2001, the Company entered into a Stock Purchase Agreement with
Shanghai Zhaoli Technology Development Company, Limited ("Zhaoli") and Zhaoli's
shareholder. For the nine months ended June 30, 2002, the results of operations
of Zhaoli are included in the accompanying financial statements from November
15, 2001 (effective date of acquisition) to June 30, 2002.

On December 1, 2001, the Company entered into a Stock Purchase Agreement with
Yastock Investment Consulting Company, Limited ("Yastock") and the shareholders
of Yastock. For the nine months ended June 30, 2002, the results of operations
of Yastock are included in the accompanying financial statements from December
1, 2001 (effective date of acquisition) to June 30, 2002.

The following unaudited pro forma consolidated results of operations have been
prepared as if the acquisitions of Zhaoli and Yastock had occurred as of the
beginning of the following periods:

Nine Months Ended
June 30, 2002
----------------------

Net Revenues $ 15,408,000
Net Income from continuing operations $ 557,000
Net Income per Share from continuing operations $ 0.02

Pro forma data does not purport to be indicative of the results that would have
been obtained had these events actually occurred at the beginning of the periods
presented and is not intended to be a projection of future results.

Sale of Subsidiary

Effective June 30, 2002, the Company sold its 80% interest in its subsidiary
Shanghai G-Choice Science and Technology Development Company Ltd. ("G-Choice")
for 1,549,791 common shares of the NETdigest.com, Inc. ("NET"). The Company
concluded the sale of G-Choice as of June 30, 2002. For the nine months ended
June 30, 2002, G-Choice is reported separately as a discontinued operation.

-8-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

NOTE 3 - SEGMENT INFORMATION

The following information is presented in accordance with SFAS No. 131,
Disclosure about Segments of an Enterprise and Related Information. In the
periods ended June 30, 2003 and 2002, the Company operated in two reportable
business segments - (1) sale of computer equipment and accessories and (2)
business development services for small public and private companies regarding
public relations, corporate financing, mergers and acquisitions, e-commerce,
business operations support and marketing. The Company's reportable segments are
strategic business units that offer different products. They are managed
separately based on the fundamental differences in their operations.

Information with respect to these reportable business segments for the nine
months ended June 30, 2003 is as follows:

------------------- ----------------- --------------
Business
Computer and Development Consolidated
Equipment Sales Services Totals
------------------- ----------------- --------------

Net Revenues $ 17,660,055 $ 360,715 $ 18,020,770
Gross Profit $ 310,871 $ 360,715 $ 671,586
Segment profit income (Loss)
from operations $ 11,480 $ (943,700) $ (932,220)

Information with respect to these reportable business segments for the nine
months ended June 30, 2002 is as follows:

------------------- ----------------- --------------
Business
Computer and Development Consolidated
Equipment Sales Services Totals
------------------- ----------------- --------------

Net Revenues $ 8,699,279 $ 934,439 $ 9,633,718
Gross Profit $ 150,829 $ 934,439 $ 1,085,268
Segment profit income (Loss)
from operations $ 3,686 $ 362,872 $ 366,558

For the nine months ended June 30, 2003, the Company derived approximately 99%
of its revenue from its subsidiaries located in the People's Republic of China.
Sales and identifiable assets by geographic areas as of June 30, 2003 and 2002
and for the nine months ended June 30, 2003 and 2002 were as follows:

-9-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

June 30, 2003
Sales Identifiable Assets
United States $ 356,099 $ 495,350
China 17,664,671 1,142,108
----------------- -----------------

Total $ 18,020,770 $ 1,637,458
================= =================

June 30, 2002
Sales Identifiable Assets
United States $ 603,803 $ 1,904,605
China 9,019,915 927,057
----------------- -----------------

Total $ 9,633,718 $ 2,831,662
================= =================

Currently, the Company's revenues are primarily derived from sale of
computer equipment and accessories to customers in the Peoples Republic of China
(PRC). The Company hopes to expand its operations to countries outside the PRC,
however, such expansion has not been commenced and there are no assurances that
the Company will be able to achieve such an expansion successfully. Therefore, a
downturn or stagnation in the economic environment of the PRC could have a
material adverse effect on the Company's financial condition.

NOTE 4 - RELATED PARTY TRANSACTIONS

Due from/to related party

Occasionally, the Company borrows funds from an officer of the Company. The
advances are non-interest bearing and are payable on demand. At June 30, 2003,
the Company owed an officer of the Company $44,627. During the three months
ended June 30, 2003, the Company's subsidiary, Zhaoli, borrowed funds amounting
$362,757 from certain key employees for operations.

NOTE 5 - LOANS PAYABLE

On April 1, 2002, the Company borrowed $80,000 from an individual related to an
officer of the Company. The loan bears interest at 10% per annum and is
unsecured. All unpaid principal and accrued interest is payable on April 1,
2003. In the event of default of the loan agreement, the lender is to receive
free trading shares of the Company's common stock at a 25% discount to the
average closing price of the previous 20 trading days of the Company's common
stock equal to the total amount due to the lender. As of June 30, 2003, this
loan is in default and remains unpaid. Relating to this default the Company has
recorded a beneficial conversion feature of $20,000, which was recorded as
interest expense.

-10-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

NOTE 5 - LOANS PAYABLE (continued)

On July 31, 2002, the Company borrowed $20,000 from an individual related to an
officer of the Company. The loan bears interest at 10% per annum and is
unsecured. All unpaid principal and accrued interest was payable on January 1,
2003. At the option of the lender, the entire obligation may be repaid with
common stock calculated by dividing the amount due by the average closing common
stock price for ten days prior to the repayment discounted by 40%, with a
maximum price of $0.13 per share. The beneficial conversion feature present in
the issuance of this note payable as determined on the date funds were received
under the loan agreement totaled $12,500 and was recorded as interest expense
and additional paid-in capital. As of June 30, 2003, no conversion had occurred.
As of June 30, 2003, the loan remains unpaid.

NOTE 6 - STOCKHOLDERS' EQUITY

Preferred stock

The Company is authorized to issue 20,000,000 shares of Preferred Stock, par
value $.001, with such designations, rights and preferences as may be determined
from time to time by the Board of Directors.

Common stock

On June 8, 2003, the Company issued 1,123,000 and 915,000 shares of its common
stock relating to the exercise of options held by certain executives and
consultants, respectively. The Company received proceeds of $45,200 and has a
subscription receivable of $127,450 related to these share issuances.

On May 8, 2003, in connection with a repricing of stock options, the Company
issued 700,000 shares of common stock. The Company received proceeds of $50,000
related to this stock issuance.

Stock options

On May 7, 2003, the Company exchanged option with an officer of the Company and
a former officer under which these individuals exchanged 1,950,000 of their
existing options to purchase the Company's common stock for new options, with a
new exercise price of $.10. In accordance with FASB Interpretation (FIN) No. 44,
"Accounting for Certain Transactions Involving Stock Compensation (an
Interpretation of APB Opinion No. 25)", this option exchange was deemed an
option repricing and therefore, variable plan accounting is being applied. For
each interim period, the Company will determine the change in fair value of the
options that have not been exercised, cancelled or expired, and will record a
charge based on the vesting schedule of the options. If there is a reduction in
the market value of the options, the Company will record a reduction in the
stock compensation charge, but not in excess of what had been recognized to
date. For the nine months ended June 30, 2003, the Company recognized a stock
compensation charge of $32,000 relating to the option exchange.

-11-

GENESIS TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
June 30, 2003
(UNAUDITED)

NOTE 6 - STOCKHOLDERS' EQUITY (continued)

In June 2003, the Company granted 243,000 options to employees for services
rendered. Of these options, 123,000 were immediately exercised. The Company
recorded $15,990 in compensation expense relating to this issuance of these
options.

In June 2003, in connection with employment agreements, the Company granted
1,500,000 options to employees for services rendered. Of these options,
1,000,000 were immediately exercised. The Company recorded $117,000 in
compensation expense relating to this issuance of these options.

On June 16, 2003, the Company entered into a one-year agreement with a
consultant. The consultant received 750,000 options to purchase shares of the
Company's common stock at an exercise price of $0.13 per share. The Company
valued these shares at approximately $0.03 per share and recorded compensation
expense relating to this issuance of options of $875 and deferred consulting
expenses of $20,125. This consultant exercised 750,000 of these options on
February 19, 2003 (see Common stock).

A summary of outstanding options and warrants at June 30, 2003 are as follows:

Shares Range of Remaining Average
Underlying Exercise Contractual Exercise
Warrants/Options Price Life Price
----------------- ----------- ----------- ----------
Outstanding at 5,645,000 $ 0.25-0.50 1 to 5 yrs 0.33
September 30, 2002

Granted 9,913,000 0.07-0.35 .5 to 5 yrs 0.11
Expired (1,620,000) 0.00 -
Exercised (7,828,000) 0.07-0.15 0.11
----------------- ---------- ---------
Outstanding at
June 30, 2003 6,110,000 $ 0.10-2.25 0.27
================= ========== =========

-12-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS

The following analysis of the results of operations and financial
condition of the Company should be read in conjunction with the financial
statements of Genesis Technology Group, Inc. for the year ended September 30,
2002 and notes thereto contained in the Report on Form 10-KSB of Genesis
Technology Group, Inc. as filed with the Securities and Exchange Commission.

This report on Form 10-QSB contains forward-looking statements that are
subject to risks and uncertainties that could cause actual results to differ
materially from those discussed in the forward-looking statements and from
historical results of operations. Among the risks and uncertainties which could
cause such a difference are those relating to our dependence upon certain key
personnel, our ability to manage our growth, our success in implementing the
business strategy, our success in arranging financing where required, and the
risk of economic and market factors affecting us or our customers. Many of such
risk factors are beyond the control of the Company and its management.

OVERVIEW

Genesis Technology Group Inc. ("Genesis" or the "Company") is an
international business development firm that specializes in leading and
assisting companies in penetrating the Chinese market for business development
and commerce, as well as assisting Chinese companies in penetrating the US
market or listing in the US public market. Companies utilize Genesis because of
the Company's expertise in marketing, distribution, manufacturing, forming joint
ventures, or establishing a base in China. As a part of that strategy, the
company is a member of the Shanghai Technology Stock (Property Rights) Exchange,
an organization that promotes the influx of technology into China.

Our key area of competency and focus is the Life and Health Science
arena in China. Life and Health Science is compromised of different but related
industries such as pharmaceuticals, environmental science, biotechnology, and
healthcare development. These industries range from water, soil, and air testing
and remediation to hospital facility development and management. These are new
and robust areas in China that desperately need attention and expertise.
Genesis' goal is to assist companies that are active in these areas in entering
the Chinese market.

In addition to our business development services, we have also acquired
companies in the U.S. and China for the purposes of further developing these
companies, with managerial, operational, and financial support. Our model
envisions and promotes opportunities for synergistic business relationships
among all of the companies that Genesis works with, both clients and
subsidiaries.

As the Company continues to grow, acquisitions and mergers is a
significant piece of our growth model. We are concentrating on mergers and
acquisitions activity with firms in both the U.S. and China that mirror our
strategy. These relationships will be built around consolidating key resources,
financial and physical assets, brand names, and human resources. We pay
attention to integration strategies and also pay attention to core competencies,
including best practices, skills, knowledge bases, and routines.

Company management and partners have been responsible for successfully
negotiating contracts in China for 11 years. The Company is able to bring talent
in the areas of marketing, finance and business development to its clients and
subsidiaries, to help guide those companies to success.

-13-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)
Our merger and acquisitions strategy can achieve long-term success in
the China industry. Factors contributing to companies success include:

o Emergence of economies of scale related to purchasing, training, risk
management, financing, advertising, equipment acquisitions, etc.,

o Increased outsourcing of maintenance services by many commercial and
governmental enterprises,

o Future acquisitions of similarly aligned China based and focused
businesses which will lead to improved economies, operating
efficiencies and overall profitability, and

o Cross-marketing opportunities for ancillary services by and
between their operating divisions in both horizontally and vertically
grown entities.

Companies that we seek for Mergers and Acquisition, will meet the following
criteria:

o Strong cash flow,
o Growing revenue,
o Position as market sector leader o Customers in a growth market,
o Weak competition,
o Strong management, and
o Strong niche position.

We currently have three active subsidiary companies. We own 80% of one
computer hardware and software manufacturer/distributor located in Shanghai
China. We own 100% of two consulting companies, one in the U.S. and one in
China. We own 85% of an inactive biotechnology-marketing firm that is located in
the Unites States.

By building on the success of already successful businesses, Genesis
intends to become an important player in the expanding Cross-Pacific marketplace
-increasing its revenues, profitability and market value by accelerating the
success of its subsidiaries and partner companies.

Severe Acute Respiratory Syndrome (SARS) had a profound impact on
conducting business in China during the past quarter. While this disease appears
to be contained, it still must be considered a future threat to foreign
companies' willingness to travel to China and could thusly affect the Company
negatively, as well.

-14-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

ACQUISITIONS AND DISPOSITIONS

On November 15, 2001, we acquired 80% of Shanghai Zhaoli Technology
Development Company, Limited (Zhaoli"), an Information Technology enterprise
that integrates sales and technology with services. Currently, its sales cover
printer, copier, scanner and network products, as well as network integration.
In addition to hardware sales and service, the company focuses much of its
resources on the development of proprietary software systems, such as its
e-learning software for K-12 education in China. Zhaoli has approximately 65
employees at seven branches and exclusive stores in Shanghai and a strong and
growing presence throughout eastern areas of China. The increase in sales mainly
resulted from increasing demand from the market, as the Chinese government will
require all companies to issue all transaction receipts and invoices by using a
printer and a computer in order to smooth its tax collections by July 1, 2003.
Zhaoli expects its sales will be increased significantly in the near future due
to this new regulation. Zhaoli is planning to increase its sales, as well as
increase its profit margin. Hardware has been low profit margin business
historically. Zhaoli is working with its parent company, Genesis, to bring more
software development and sales in order to increase its profit margin.

On December 1, 2001, we acquired 80% of Yastock Investment Consulting
Company, Limited ("Yastock"), an investment consulting firm located in Shanghai,
China that specializes in consulting for Chinese and American companies in a
number of areas, including financial, public relations, corporate management,
corporate strategic evaluations and human resources. In addition to its ongoing
business, Yastock's management oversees all of Genesis' operations in China and
is important source of financial and operational support for our Chinese
subsidiaries. On January 1, 2002, we acquired the remaining 20% of Yastock,
making it a wholly owned subsidiary. Yastock has 15 part and full-time
employees.

Yastock is also managing the seat that Genesis Technology Group, Inc.
has with the Shanghai Technology Stock Exchange. Shanghai Technology Stock
(Property Rights) Exchange (STSE) was founded in December 1999 and is sponsored
by the Shanghai Municipal Government with independent corporate qualifications.
STSE was established to promote the commercialization of technological
innovations, to solve bottleneck problems in combining technological,
industrial, and financial capitals, and to actively construct operational and
exit mechanisms for venture investments. STSE has both a physical exchange
located in Shanghai and data mining techniques that target licensees' interests
using its two-way delivery system. In 2000 and 2001, over 2,500 transactions
were completed with over $12 billion in transaction volume through its 363
members that control over $24 billion in capital. The STSE is a specialized
equity capital market to serve all of China. It provides services in property
rights and equity financing for companies looking to enter China markets.

-15-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

The STSE provides flexible and convenient financing and investment
services for various enterprises by means of technology rights and ownership.
STSE supports the advancement of technological innovation, and brings optimal
allocation of hi-tech and social resources, as well as the combination of
talented people and tremendous networks. Genesis is the first member of the
exchange in the U.S. As a trust member on the exchange, Genesis can directly
introduce technology companies and owners to the exchange and generate earnings
via success fees on completed transactions with those companies. Genesis will
focus its initial efforts on working with companies in the U.S that want to
expand their business via China. In addition, Genesis will enjoy preferential
policies issued by the Shanghai and Chinese national governments for introducing
new and high technologies into China. Under the landmark agreement, Genesis and
STSE are planning to form a joint venture to launch a similar physical property
rights exchange in the U.S. This joint venture will be the exclusive authorized
representative for STSE in the US. For more information in English about the
Shanghai Technology Stock (Property Rights) Exchange, please visit
www.saviaq.com/english/index.asp

In addition, Yastock serves Chinese companies that wish to enter both
the general market and the public market in the United States. In addition,
Yastock has developed its own joint ventures and projects in the areas of
Internet wireless messaging for lottery information (http://www.zc8888.com),
gasoline replacement fuel, software development and so on. It is expected that
such projects or joint ventures will generate significant cash flow in the near
future.

BUSINESS DEVELOPMENT

In addition to overseeing the operation of its subsidiaries, we have
been growing our cross-pacific business development/consulting business.
Management believes that China's entrance into the WTO offers a unique
opportunity for Genesis to secure itself a position as a leader in the growing
market for cross-pacific products, technology, capital, and property exchange.
To that end, we market our self to other U.S. firms interested in Chinese
partnerships for manufacturing and distribution of a variety of products in
China, with a strong focus on the Life and Health Science arena

We currently have 24 clients under contract. In the last 12 months, we
have grown our client base from 2 to 24 clients. Company management has met with
over 400 firms that have shown significant interest in introducing their product
or service to China or the U.S. We are assisting these clients in penetrating
the Chinese market for the purposes of product and solutions sales,
distribution, manufacturing, and/or research and development.

To aid in achieving these goals, in 2002 we were granted a seat as a
U.S. representative of the Shanghai Technology Stock (Property Rights) Exchange
(STSE). STSE is a technology transfer exchange sponsored by the Shanghai
Municipal Government with independent corporate qualifications. STSE is
essentially a vehicle for the transfer of technology and property rights into
China. As a representative of the STSE, we can directly introduce American
companies and individuals who would like to sell or license intellectual
property to a Chinese partner, or use technology to form a joint venture in
China, to the STSE for purposes of listing their technologies or intellectual
properties. Our clients pay a monthly retainer and a success fee based on any
completed transactions, a portion of which goes to the STSE. In addition, the
standard Genesis contract calls for the company to receive ongoing compensation
by clients via a percentage of any licensing fees or an equity position in any
joint ventures/partnerships formed with Chinese entities.

-16-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

Management has utilized a successful means of developing Western
clients for purposes of technology transfer and investment in China. We abide by
an "RCD" development formula and an "RSE" fee formula. The former enables the
Company to recruit prospective clients (R), close on those that are deemed good
candidates for business in China (C), and deliver enforceable, profitable
contracts (D). The secondary function, as it rewards Genesis, manifests in
client contracts, which require a retainer (R), success fee (S), and often an
equity position (E) in any resultant Sino-Western entity.

Among those Genesis contract clients who have benefited from this
time-tested business model are: Agronix, Inc., Alternate Energy Corporation
(AEC), Dynegy Energy, Edulink, Inc., Enviro Voraxial Technology, Inc., Equifax
Inc, Mark Capital Management, Inc., Flowers Chemical Laboratories, Sarlo Power
Mowers, Custom Biologicals Inc., Frank Medical Systems, Powerbetter (UK),
Agronix, Inc., Kane, Laduzinsky, & Mendoza, LTD., Ayiko (Europe), eProtea
(Malaysia), Sarlo Power Mowers, Inc., aShanghai Dongda Insurance Brokerage
Company, Ltd., Raltron Electronics, CorporationTelecom Communications, Inc,
Viragen International, and others.

Historically, such contracts should generate an average benefit of
$250,000 to the Company, not including accumulated equity positions in private
and public entities in China. The latter holdings are designed to gain a
ground-floor position in dozens of companies, some of which could reach
substantial value in the Asian and Western stock markets.

RESULTS OF OPERATIONS

NINE MONTHS ENDED JUNE 30, 2003 COMPARED TO NINE MONTHS ENDED JUNE 30, 2002

REVENUES AND COSTS BY SEGMENT:

For the nine months ended June 30, 2003, we had consolidated revenues
of $ 18,020,770 as compared to $ 9,533,718 for the nine months ended June 30,
2002. This increase resulted from the acquisition of our subsidiaries and is
outlined below.

Genesis Technology Group, Inc.

Revenue for the nine months ended June 30, 2003 was $ 337,099 as
compared to $ 16,250 for the nine months ended June 30, 2002. This revenue was
generated from business development services.

For the nine months ended June 30, 2003, we incurred consulting fees of
$ 460,244 as compared to $ 215,781 for the nine months ended June 30, 2002. For
the nine months ended June 30, 2003, consulting fee expense was attributable to
the granting of stock options and issuance of common shares to consultants for
marketing and business development activities. For the nine months ended June
30, 2003, we incurred salary expense of $ 399,212 as compared to $ 39,094 for
the nine months ended June 30, 2002. The increase in salary expense was
attributable to the hiring of key personnel to support our current business
plan. For the nine months ended June 30, 2003, other selling, general and
administrative expenses consisted of rent of $ 63,734 and other expenses such as
professional fees and office expenses of $292,328. For the nine months ended
June 30, 2002, other selling, general and administrative expenses consisted of
rent of $ 7,063 and other expenses such as professional fees and office expenses
of $148,743.

-17-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

Genesis Systems, Inc.

Revenue for the nine months ended June 30, 2003 from Genesis Systems,
Inc. was $19,000 as compared to $ 597,553 of revenue for the nine months ended
June 30, 2002. This revenue was generated from business development services in
which we received stock or cash for services. The decrease was attributable the
fact that we shifted our focus to our parent company, Genesis Technology Group,
Inc

For the nine months ended June 30, 2003, operating expenses of our
Genesis Systems subsidiary consisted of rent of $ 3,594, consulting fees of
$2,500 and other general and administrative expenses amounting to $23,800.
Additionally, we recorded a realized loss from the sale of marketable securities
received for business development services of $16,417 for the nine months ended
June 30, 2003. For the nine months ended June 30, 2002, other selling, general
and administrative expenses of our Genesis Systems subsidiary consisted of
salaries of $56,000, rent of $15,373, consulting fees of $10,000 and other
general and administrative expenses amounting to $56,001.

Yastock

Revenue for the nine months ended June 30, 2003 from Yastock was $
8,316 as compared to $330,636 for the nine months ended June 30, 2002. This
revenue was generated from business development services and software licensing
fees.

Other selling, general and administrative expenses consisting of
salaries, commissions, accounting fees and office rent amounted to $ 61,898 for
the nine months ended June 30, 2003 as compared to $33,512. We have incurred
additional marketing costs associated with increased business development
efforts.

Zhaoli

Revenue for the nine months ended June 30, 2003 were $ 17,660,055 as
compared to $8,699,279 to June 30, 2002 from our subsidiary Zhaoli, a Chinese
company. This revenue was generated from sales of printers, copiers, network
equipment and software licensing fees. The increase in sales mainly resulted
from increasing demand from the market, as the Chinese government will require
all companies to issue all transaction receipts and invoices by using a printer
and a computer in order to smooth its tax collections by July 1, 2003. Cost of
sales for Zhaoli for the nine months ended June 30, 2003 amounted to $
17,349,184 or 98.2% of net sales as compared to $ 8,548,450 or 98.3% of net
sales for the nine months ended June 30, 2002.

For the nine months ended June 30, 2003, other selling, general and
administrative expenses amounted to $ 299,391 as compared to $ 147,143 for the
period from acquisition (November 15, 2001) to June 30, 2002. Other selling,
general and administrative expenses consisted of salaries, rent and other
expenses.

-18-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

Discontinued Operations

For the nine months ended June 30, 2003, we had a gain from
discontinued operations of $182 related to the discontinuation of our Propamedia
and eSpectus subsidiaries as compared to loss from discontinued operations of $
19,766 for the nine months ended June 30, 2002.

Overall

We reported a loss from operations for the nine months ended June 30,
2003 of $ (932,220) compared to income from operations for the nine months ended
June 30, 2002 of $ 366,558. Additionally, we reported a gain from discontinued
operations for the nine months ended June 30, 2003 of $182 as compared to an
income from discontinued operations of $19,766 for the nine months ended June
30, 2002.

This translates to an overall per-share loss of ($.03) for the nine
months ended June 30, 2003 compared to per share income of $.03 for the nine
months ended June 30, 2002.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2003, we had cash and equivalents balance of $ 244,342. As
of June 30, 2003, our cash position by geographic area is as follows:

Cash
United States $ 100,454
China 143,888
-------------

Total $ 244,342
===============

Management has invested substantial time evaluating and considering
numerous proposals for possible acquisition or combination developed by
management or presented by investment professionals, the Company's advisors and
others. We continue to consider acquisitions, business combinations, or start up
proposals, which could be advantageous to shareholders. No assurance can be
given that any such project; acquisition or combination will be concluded.

We intend to continue our trading activities and as a consequence the
future financial results of the Company may be subject to substantial
fluctuations. As part of our investment activities, we may sell a variety of
equity or debt securities obtained as revenue for consulting services. Such
investments often involve a high degree of risk and must be considered extremely
speculative.

At June 30, 2003, our Company had stockholders' equity of $637,037. Our
Company's future operations and growth will likely be dependent on our ability
to raise capital for expansion and to implement our strategic plan.

-19-

ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OR RESULTS OF OPERATIONS (continued)

Net cash used in continuing operations was $ (511,072) for the nine
months ended June 30, 2003 as compared to net cash provided by operations of $
(1,082,226) for the nine months ended June 30, 2002. The difference is due to
the implementation of our new business model and the acquisition of our
subsidiaries.

Net cash provided by investing activities for the nine months ended
June 30, 2003 was $11,041 as compared to net cash used in investing activities
for the nine months ended June 30, 2002 of $ (166,958). For the nine months
ended June 30, 2003, we received $ 12,826 from the sale of marketable securities
offset by cash used for capital expenditures of $ (1,785).

Net cash provided by financing activities were $ 681,845 for the nine
months ended June 30, 2003 as compared to $ 793,926 for the nine months ended
June 30, 2002. For the nine months ended June 30, 2003, net cash provided by
financing activities related primarily to proceeds from the exercise of stock
options and related party loans of $ 429,139 and $ 373,625, respectively, offset
by payments on long tern debt of $120,919. For the nine months ended June 30,
2002, net cash provided by financing activities related primarily to proceeds
from loans payable and proceeds from the exercise of stock options of $669,426
and $ 124,500, respectively.

We currently have no material commitments for capital expenditures. Our
future growth is dependent on our ability to raise capital for expansion, and to
seek additional revenue sources. If we decide to pursue any acquisition
opportunities or other expansion opportunities, we may need to raise additional
capital, although there can be no assurance such capital- raising activities
would be successful.

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board has recently issued several new
accounting pronouncements:

Statement No. 146, "Accounting for Exit or Disposal Activities"
("SFAS 146") addresses the recognition, measurement, and reporting of cost that
are associated with exit and disposal activities that are currently accounted
for pursuant to the guidelines set forth in EITF 94-3, "Liability Recognition
for Certain Employee Termination Benefits and Other Costs to exit an Activity
(including Certain Cost Incurred in a Restructuring)," cost related to
terminating a contract that is not a capital lease and one-time benefit
arrangements received by employees who are involuntarily terminated - nullifying
the guidance under EITF 94-3. Under SFAS 146, the cost associated with an exit
or disposal activity is recognized in the periods in which it is incurred rather
than at the date the Company committed to the exit plan. This statement is
effective for exit or disposal activities initiated after December 31, 2002 with
earlier application encouraged. The adoption of SFAS 146 did not have a material
impact on the Company's financial position, results of operations or liquidity.

-20-

In December 2002, the FASB issued Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation - Transition and
Disclosure. Statement 148 provides alternative methods of transition to
Statement 123's fair value method of accounting for stock-based employee
compensation. It also amends the disclosure provisions of Statement 123 and APB
Opinion No. 28, Interim Financial Reporting, to require disclosure in the
summary of significant accounting policies of the effects of an entity's
accounting with respect to stock-based employee compensation on reported net
income and earnings per share in annual and interim financial statements.
Statement 148's amendment of the transition and annual disclosure requirements
of Statement's 123 are effective for fiscal years ending after December 15,
2002. Statement 148's amendment of the disclosure requirements of Opinion 28 is
effective for interim periods beginning after December 15, 2002. The adoption of
the disclosure provisions of Statement 148 as of December 31, 2002 did not have
a material impact on the Company's financial condition or results of operations.

In November 2002, the FASB issued FASB Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
Indirect Guarantees of Indebtedness of Others" (FIN 45). FIN 45 requires that
upon issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 also requires
additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The
recognition provisions of FIN 45 are effective for any guarantees issued or
modified after December 31, 2002. The disclosure requirements are effective for
financial statements of interim or annual periods ending after December 15,
2002. The adoption of this pronouncement does not have a material effect on the
earnings or financial position of the Company.

In January 2003, the FASB issued Interpretation No. 46 ("FIN 46"),
"Consolidation of Variable Interest Entities." FIN 46 requires that if an entity
has a controlling financial interest in a variable interest entity, the assets,
liabilities and results of activities of the variable interest entity should be
included in the consolidated financial statements of the entity. FIN 46 requires
that its provisions are effective immediately for all arrangements entered into
after January 31, 2003. The Company does not have any variable interest entities
created after January 31, 2003. For those arrangements entered into prior to
January 31, 2003, the FIN 46 provisions are required to be adopted at the
beginning of the first interim or annual period beginning after June 15, 2003.
The Company has not identified any variable interest entities to date and will
continue to evaluate whether it has variable interest entities that will have a
significant impact on its consolidated balance sheet and results of operations.

CRITICAL ACCOUNTING POLICIES

A summary of significant accounting policies is included in Note 1 to
the audited consolidated financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended September 30, 2002. Management believes
that the application of these policies on a consistent basis enables the Company
to provide useful and reliable financial information about the company's
operating results and financial condition.

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

-21-

OPERATING RISK

(a) Country risk

(b) Products risk

In addition to competing with other computer and electronics equipment
companies, the Company could have to compete with larger US companies who have
greater funds available for expansion, marketing, research and development and
the ability to attract more qualified personnel if access is allowed into the
PRC market. If US companies do gain access to the PRC markets, it may be able to
offer products at a lower price. There can be no assurance that the Company will
remain competitive should this occur.

The Company generates revenue and incurs expenses and liabilities in
Chinese renminbi and U.S. dollars. As a result, the Company is subject to the
effects of exchange rate fluctuations with respect to any of these currencies.
For example, the value of the renminbi depends to a large extent on PRC's
domestic and international economic and political developments, as well as
supply and demand in the local market. Since 1994, the official exchange rate
for the conversion of renminbi to U.S. dollars has generally been stable and the
renminbi has appreciated slightly against the U.S. dollar. However, given recent
economic instability and currency fluctuations, the Company can offer no
assurance that the renminbi will continue to remain stable against the U.S.
dollar or any other foreign currency. The Company's results of operations and
financial condition may be affected by changes in the value of renminbi and
other currencies in which its earnings and obligations are denominated. The
Company has not entered into agreements or purchased instruments to hedge its
exchange rate risks, although the Company may do so in the future.

Although Chinese governmental policies were introduced in 1996 to allow
the convertibility of renminbi into foreign currency for current account items,
conversion of renminbi into foreign exchange for capital items, such as foreign
direct investment, loans or security, requires the approval of the State
Administration of Foreign Exchange, or SAFE, which is under the authority of the
People's Bank of China. These approvals, however, do not guarantee the
availability of foreign currency. The Company cannot be sure that the Company
will be able to obtain all required conversion approvals for its operations; or
that Chinese regulatory authorities will not impose greater restrictions on the
convertibility of the renminbi in the future. Because a significant amount of
its revenues are in the form of renminbi, its inability to obtain the requisite
approvals or any future restrictions on currency exchanges will limit its
ability to utilize revenue generated in renminbi to fund its business activities
outside PRC.

-22-

(d) Political risk

Currently, PRC is in a period of growth and is openly promoting
business development in order to bring more business into PRC. Additionally PRC
allows a Chinese corporation to be owned by the United States corporation. If
the laws or regulations are changed by the PRC government, the Company's ability
to operate the PRC subsidiaries could be affected.

(e) Our future performance is dependent on its ability to retain key personnel

Our performance is substantially dependent on the performance of our
senior management. In particular, the Company's success depends on the continued
effort of our Senior Management to maintain all contact with our Chinese
subsidiaries. The Company's inability to retain Senior Management could have a
material adverse effect on our prospects, businesses, Chinese operations,
financial conditions and share price.

ITEM 3. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer (collectively, the
"Certifying Officers") are responsible for establishing and maintaining
disclosure controls and procedures for us. Based upon such officers' evaluation
of these controls and procedures as of a date within 45 days of the filing of
this Quarterly Report, and subject to the limitations noted hereinafter, the
Certifying Officers have concluded that our disclosure controls and procedures
are effective to ensure that information required to be disclosed by us in this
Quarterly Report is accumulated and communicated to management, including our
principal executive officers as appropriate, to allow timely decisions regarding
required disclosure.

The Certifying Officers have also indicated that there were no significant
changes in our internal controls or other factors that could significantly
affect such controls subsequent to the date of their evaluation, and there were
no corrective actions with regard to significant deficiencies and material
weaknesses.

Our management, including each of the Certifying Officers, does not expect that
our disclosure controls or our internal controls will prevent all error and
fraud. A control system, no matter how well conceived and operated, can provide
only reasonable, not absolute, assurance that the objectives of the control
system are met. In addition, the design of a control system must reflect the
fact that there are resource constraints, and the benefits of controls must be
considered relative to their costs. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that
all control issues and instances of fraud, if any, within a company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people or by management
override of the control. The design of any systems of controls also is based in
part upon certain assumptions about the likelihood of future events, and their
can be no assurance that any design will succeed in achieving its stated goals
under all potential future conditions. Over time, control may become inadequate
because of changes in conditions, or the degree of compliance with the policies
or procedures may deteriorate. Because of these inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected.

-23-

Part II - OTHER INFORMATION

Item 1.Legal Proceedings

Genesis Technology Group, Inc. won a judgment in the County
Court of Palm Beach County in a lawsuit against Hy-Tech Technology Group,
Inc. (OTCBB: HYTT). The Court issued a default and final judgment decree on
June 9, 2003. HYTT has since paid the judgment and accompanying fees.

The company also filed a lawsuit June 6, 2003 in the Circuit Court of the
Fifteenth Judicial Circuit seeking the contractual compensation due from the
transactions among Altos Bancorp, HYTT and other responsible parties, including
the SunTrust Bank. Genesis contends that it is entitled to a ten percent (10%)
ownership of HYTT, one seat on its board of directors, and other benefits.

The company has retained the law firm of Becker & Poliakoff, P.A., and is
vigorously pursuing recovery of damages and other relief from Altos Bancorp, and
HYTT's CEO (and former Altos Bancorp CEO), Martin Nielson. The pending Circuit
Court Case No. CA-006067-AA.

Item 2. Changes in Securities and Use of Proceeds

The issuance of the securities was to consultants and employees that
were sophisticated investors with sufficient resource. Such transaction were in
compliance with Section 4 of the Securities Act of 1934

Common stock

On June 8, 2003, the Company issued 1,123,000 and 915,000 shares of
its common stock relating to the exercise of options held by certain employees
and consultants, respectively. The Company received proceeds of $45,200 and has
a subscription receivable of $127,450 related to these share issuances.

On May 8, 2003, in connection with a repricing of stock options, the
Company issued 700,000 shares of common stock. The Company received proceeds of
$50,000 related to this stock issuance.

Stock options

On May 7, 2003, the Company exchanged option with an officer of the
Company and a former officer under which these individuals exchanged 1,950,000
of their existing options to purchase the Company's common stock for new
options, with a new exercise price of $.10. In accordance with FASB
Interpretation (FIN) No. 44, "Accounting for Certain Transactions Involving
Stock Compensation (an Interpretation of APB Opinion No. 25)", this option
exchange was deemed an option repricing and therefore, variable plan accounting
is being applied. For each interim period, the Company will determine the change
in fair value of the options that have not been exercised, cancelled or expired,
and will record a charge based on the vesting schedule of the options. If there
is a reduction in the market value of the options, the Company will record a
reduction in the stock compensation charge, but not in excess of what had been
recognized to date. For the nine months ended June 30, 2003, the Company
recognized a stock compensation charge of $32,000 relating to the option
exchange.

-24-

In June 2003, the Company granted 243,000 options to employees for
services rendered. Of these options, 123,000 were immediately exercised. The
Company recorded $15,990 in compensation expense relating to this issuance of
these options.

In June 2003, in connection with employment agreements, the Company
granted 1,500,000 options to employees for services rendered. Of these options,
1,000,000 were immediately exercised. The Company recorded $117,000 in
compensation expense relating to this issuance of these options.

In June 16, 2003, the Company entered into a one-year agreement with a
consultant. The consultant received 750,000 options to purchase shares of the
Company's common stock at an exercise price of $0.13 per share. The Company
valued these shares at approximately $0.03 per share and recorded compensation
expense relating to this issuance of options of $875 and deferred consulting
expenses of $20,125. This consultant exercised 750,000 of these options on
February 19, 2003 (see Common stock).

Item 3. Defaults Upon Senior Securities

None

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

On May 30, 2003 Genesis held its 2003 Annual Meeting at the company
headquarters in Boca Raton, Florida. The meeting began with a presentation of
the approved Financial Statements, and the Management Report for Genesis
Technology Group from Adam Wasserman, CFO Gary Management, CEO respectfully.
Also, a date was set for the 2004 Annual Shareholder and management and Board
members answered questions from the floor.

The shareholders adopted resolutions concerning proxy issues. The
results of shareholder voting: shareholders approved the election of five
Genesis directors for two-year terms. Each director received 81 percent or more
of the vote. These directors bring tremendous talent and experience to help
guide the Company," said Wolfson. The Board of Directors will continue to grow
as the Company prospers and also to meet the standards of more elite trading
exchanges. The strength of this board is representative of the way we are
shaping this firm for growth and success in the future The Approved Board of
Directors for 2003-2005;

Maria Hsueh

Mrs. Hsueh accepted the honor as a "Minority Businesswoman of the Year"
from Mayor Rudy Giuliani of New York in 1996. Mrs. Hsueh has built a storied
career in bridging the interests of U.S. and Chinese businesses, often focusing
on her hometown of Qingdao in Shangdong Province. She established one of the
most respected and successful private, foreign school systems in China. Her
business achievements include establishing "Snow White Liquid Paper" in China,
with an 80% market share. Mrs. Hsueh had the key role in establishing a U.S.
manufacturing plant for Haier Electronics, comparable to a "Fortune 50" company
in China. She has served on several boards for both public and private firms.

-25-

Kenneth Clinton

Mr. Clinton has more than a decade of journalism, public relations, and
marketing expertise. Mr. Clinton has extensive experience in investor relations
with a background in finance, risk management, economic forecasting and SEC
reporting. He has coordinated investor relation's campaigns for companies
ranging from NASDAQ, AMEX, and the OTC. Mr. Clinton was previously Vice
President Sales and Marketing for an emerging technology company concentrating
on the Pacific Rim. While working with top-level executives he developed
effective, comprehensive management and communications strategies for firms such
as Disney, Southland Corporation, and Texas Instruments.

Dr. Li Shaoqing.

Dr. Li brings competent and qualified Asian/Pacific leadership to
Genesis. Dr. Li is General Manager for Shenda Kobond New Materials Co. in
Shanghai, China and Chairman of Shanghai Capitalmill Business Development Co.
Dr. Li formerly served as Executive Vice President and Director of the world
conglomerate the Top Group, China; Dr. Li was also President for Topsoft Limited
and President for Top International (USA). Dr. Li has also been a noteworthy
visiting scholar/Assistant Lecturer as the University of New South Wales,
Australia where he completed his PhD.

Dr. James Wang

Dr. Wang has several years experience in corporate finance, equity
research, portfolio management, and business management. Prior to creating
Genesis, he served as a business consultant to many small public companies. Dr.
Wang's success rate with exciting business ventures remains unchallenged. His
unique combination of creativity and business savvy makes him adept at turning
visions into profitable realities. Previously, Dr. Wang was a Professor at the
University of Minnesota.

Gary L. Wolfson

Mr. Wolfson has been totally reliant on China as a source of income and
inspiration for 10 years. Mr. Wolfson has served as Chief Executive Officer of
many firms both public and private. He has served as an advisor to almost 30
western companies and was elected to the board of directors of one of China's
largest public companies, represented the China Academy of Sciences in the U.S.,
and served as president of a Chinese manufacturing joint venture with over 3,000
employees. He attended the Northwestern University School of Business in
Evanston, Illinois.

Robert Zhuang

Mr. Zhuang is a consultant located in Shanghai, China who specializes
in raising capital and consulting in a number of areas, including trading
information, public relations, corporate management, corporate strategic
evaluations and human resources. One of two brothers of Dr. Wang, he too is an
expert on Sino-American business strategies and he is dedicated to supporting
the development of the Chinese capital market and providing medium and small
enterprises with consulting services for marketing management, human resource
management, stock investment, fundraising, financing, and public offerings in
the United States. In other voting, Genesis reported that 59 percent voted in
favor of a resolution, requesting shareholder approval of management
compensation to concur with the current formula set in the current employment
agreements.

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Item 5. Other Information

The following principles have been approved by the board of directors
and, along with the charters and key practices of the board committees, provide
the framework for the governance of Genesis. The board recognizes that there is
an on-going and energetic debate about corporate governance, and it will review
these principles and other aspects of Genesis governance annually or more often
if deemed necessary.

1. Role of Board and Management.

Genesis's business is conducted by its employees, managers and officers, under
the direction of the chief executive officer (CEO) and the oversight of the
board, to enhance the long-term value of the company for its shareowners. The
board of directors is elected by the shareowners to oversee management and to
assure that the long-term interests of the shareowners are being served. Both
the board of directors and management recognize that the long-term interests of
shareowners are advanced by responsibly addressing the concerns of other
stakeholders and interested parties including employees, recruits, customers,
suppliers, Genesis communities, government officials and the public at large.

2. Functions of Board.

The board of directors has 4 scheduled meetings a year at which it reviews and
discusses reports by management on the performance of the company, its plans and
prospects, as well as immediate issues facing the company. Directors are
expected to attend all scheduled board and committee meetings. Because of the
international makeup of the board, directors may attend telephonically,
although, at least once annually, it is intended that the entire board conduct a
centrally-located meeting, with all directors being present. In addition to its
general oversight of management, the board also performs a number of specific
functions, including: selecting, evaluating and compensating the CEO and
overseeing CEO succession planning; providing counsel and oversight on the
selection, evaluation, development and compensation of senior management;
reviewing, approving and monitoring fundamental financial and business
strategies and major corporate actions; assessing major risks facing the
company---and reviewing options for their mitigation; and ensuring processes are
in place for maintaining the integrity of the company---the integrity of the
financial statements, the integrity of compliance with law and ethics, the
integrity of relationships with customers and suppliers, and the integrity of
relationships with other stakeholders.

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3. Qualifications.

Directors should possess the highest personal and professional ethics, integrity
and values, and be committed to representing the long-term interests of the
shareowners. They must also have an inquisitive and objective perspective,
practical wisdom and mature judgment. We endeavor to have a board representing
diverse experience at policy-making levels in business, government, education
and technology, and in areas that are relevant to the company's global
activities.
Directors must be willing to devote sufficient time to carrying out their duties
and responsibilities effectively, and should be committed to serve on the board
for an extended period of time. Directors should offer their resignation in the
event of any significant change in their personal circumstances.
The board does not believe that arbitrary term limits on directors' service are
appropriate, nor does it believe that directors should expect to be renominated
biennially until they reach the mandatory retirement age. The board
self-evaluation process described below will be an important determinant for
board tenure. Directors will not be nominated for election to the board after
their 73rd birthday, although the full board may nominate candidates over age 73
for special circumstances.

4. Composition of the Board and Related Matters

The board shall be comprised of no fewer than five (5) and no more than nine (9)
directors. The directors serve for a period of two (2) years, with the
termination date 24 months following his/her election. Directors may run for
additional 2-year terms in succession. In the event that any director fails to
attend two successive board meetings, then the board may ask for the resignation
of that director and immediately conduct a search and selection of a
replacement. Genesis does not provide directors and officers insurance, at
present.

5. Setting Board Agenda.

The CEO shall be responsible for its agenda. Before the purposed board meeting,
the CEO will propose for the board's approval key issues of strategy, risk and
integrity to be scheduled and discussed during the course the next meeting.
Before that meeting, the board will be invited to offer its suggestions. As a
result of this process, a schedule of major discussion items for the meeting
will be established. Prior to each board meeting, the CEO will discuss the other
specific agenda items for the meeting with the presiding director. The CEO and
the presiding director, or committee chair as appropriate, shall determine the
nature and extent of information that shall be provided regularly to the
directors before each scheduled board or committee meeting. Directors are urged
to make suggestions for agenda items, or additional pre-meeting materials, to
the CEO, the presiding director, or appropriate committee chair at any time.

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6. Ethics and Conflicts of Interest.

The board expects Genesis directors, as well as officers and employees, to act
ethically at all times and to acknowledge their adherence to the policies
comprising Genesis's code of conduct set forth in the company's handbook. The
board will not permit any waiver of any ethics policy for any director or
executive officer. If an actual or potential conflict of interest arises for a
director, the director shall promptly inform the CEO and the presiding director.
If a significant conflict exists and cannot be resolved, the director should
resign. All directors will recluse themselves from any discussion or decision
affecting their personal, business or professional interests. The board shall
resolve any conflict of interest question involving the CEO, a vice chairman or
a senior vice president, and the CEO shall resolve any conflict of interest
issue involving any other officer of the company. The current membership of the
board includes residents of both the United States of America and the People's
Republic of China. Genesis is firmly dedicated to upholding a high standard of
ethical conduct and pronounces that it "operates in the sunshine" in every area
of its business endeavors. Genesis adheres to all equal opportunity and
non-discriminatory practices.

In an effort to operate with an abundance of caution, board members listed the
following current business relationships that are designed to add value to the
Company, yet may involve individuals having a direct relationship with these
directors: (a) The Board of Directors is aware that two of the current board
members, Dr. James Wang of the U.S. and Mr. Robert Zhuang of China are, in fact,
brothers; (b) Director Maria Hsueh has been assigned to work on behalf of one or
more Genesis contract clients, and she may derive personal financial benefit
from these contracts; (c) Director Dr. Li Shaoqing has been assigned to work on
behalf of one or more Genesis contract clients, and he may derive personal
financial benefit from these contracts; (d) Director Gary Wolfson informed the
board that his brother-in-law had been accepted as a contract consultant to the
Company primarily in the field of show business and entertainment, in which he
has many years of experience and expertise. Significantly, a major project,
currently in the developmental stages, is Entertainment-on-Demand in China. Mr.
Wolfson has had no previous business relationship with his brother-in-law and
refrains from discussing the Company with him, at any time.

7. Reporting of Concerns to Non-Employee Directors or the Audit Committee.

Anyone who has a concern about Genesis's conduct, or about the company's
accounting, internal accounting controls or auditing matters, may communicate
that concern directly to the presiding director, to the non-employee directors,
or to the audit committee. Such communications may be confidential or anonymous,
and may be e-mailed, submitted in writing, or reported by phone to special
addresses and a toll-free phone number that are published on the company's
website. Concerns relating to accounting, internal controls, auditing or officer
conduct shall be sent immediately to the presiding director and to the chair of
the audit committee and will be simultaneously reviewed and addressed.

8. Ethics and Steering Committee

All contracts, agreements, prospects of mergers and acquisitions, granting of
options, and publication of information pertaining to the Company shall have the
approval of the Ethics and Steering Committee. The Committee includes the Chief
Financial Officer, Legal Counsel, an Independent Director, the Chief Executive
Officer, and the Chairman of the Board. In each case, the final document must
have the majority approval to be acted upon. Because of existing agreements and
those already in negotiation, the effective date of this provision shall be
August 1, 2003. As the Company grows and has the wherewithal, this Committee
also shall have the responsibility of establishing a formal Audit Committee,
complying with guidelines furnished by the Securities & Exchange Committee.

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9. Compensation of Board.

The nominating and corporate governance committee shall have the responsibility
for recommending to the board compensation and benefits for non-employee
directors. In discharging this duty, the committee shall be guided by three
goals: compensation should fairly pay directors for work required in a company
of Genesis's size and scope; compensation should align directors' interests with
the long-term interests of shareowners; and the structure of the compensation
should be simple, transparent and easy for shareowners to understand. As
discussed more fully in the key practices of the nominating and corporate
governance committee, the committee believes these goals will be served by
providing 50% of director compensation in options and 50% in restricted stock
units starting in 2003-2004. At the end of each year, the nominating and
corporate governance committee shall review non-employee director compensation
and benefits.

For each term of one year, board member shall be entitled to 75,000 options. The
compensation committee will determine the strike price. The board member shall
also be entitled to 75,000 shares in Restricted (144) stock. Also, for each
meeting that Board Member participates, that person will receive 10,000 options
at the price of day of meeting.
The Company will be responsible for any expenses incurred for the purpose of
meeting on behalf of the Genesis shareholders.

10. Succession Plan.

The board shall approve and maintain a succession plan for the CEO and senior
executives, based upon recommendations from the management development and
compensation committee. The Chairman of the Board of Directors shall be elected
by the directors and serve for a period of two (2) years. This election shall be
conducted in odd numbered years, commencing in 2005, with the selection of a new
chairman. In the event that the presiding chairman should resign or become
unable to serve, a special election among current directors shall be conducted.

11. Annual Compensation Review of Senior Management.

The management development and compensation committee shall annually approve the
goals and objectives for compensating the CEO. That committee shall evaluate the
CEO's performance in light of these goals before setting the CEO's salary, bonus
and other incentive and equity compensation. The committee shall also annually
approve the compensation structure for the company's officers, and shall
evaluate the performance of the company's senior executive officers before
approving their salary, bonus and other incentive and equity compensation.

12. Access to Senior Management. Non-employee directors are encouraged to
contact senior managers of the company without senior corporate management
present.

13. Access to Independent Advisors. The board and its committees shall have the
right at any time to retain independent outside financial, legal or other
advisors.

14. Director Orientation. The general counsel and the Executive Vice President
shall be responsible for providing an orientation for new directors, and for
periodically providing materials or briefing sessions for all directors on
subjects that would assist them in discharging their duties. Each new director
shall, be receive personal briefing by senior management on the company's
strategic plans, its financial statements, and its key policies and practices.

Governance Principles for the Board of Directors of Genesis Technology Group,
Inc., were hereby approved and placed in the permanent Company records as of the
date of the 2003 Annual Shareholders' Meeting: May 30, 2003.

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Item 6. Exhibits and Reports on Form 8-K

(1) Exhibits

Exhibit
Number Description
------ ----------------
31.1 Certification by Chief Executive Officer Pursuant to Section 302
31.2 Certification by Chief Financial Officer Pursuant to Section 302
32.1 Certification by Chief Executive Officer Pursuant to Section 906
32.2 Certification by Chief Financial Officer Pursuant to Section 906

(2) Reports on Form 8-K

None

SIGNATURES

In accordance with Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized, in West
Palm Beach, Florida on August 18, 2003.

GENESIS TECHNOLOGY GROUP, INC.

By: /s/ Gary Wolfson
------------------
Gary Wolfson
Chief Executive Officer

In accordance with the Securities Exchange Act, the registrant has
caused this report to be singed on behalf by the undersigned that is duly
authorized of 1934, this report has been signed by the following persons on
behalf of the registrant in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
---------------- ---------- --------

/s/ Gary Wolfson Chief Executive Officer August 18, 2003
----------------
Gary Wolfson

/s/ Adam Wasserman CFO and Principal Financial August 18, 2003
------------------- and Accounting Officer
Adam Wasserman

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