INTERCLOUD SYSTEMS, INC. - FORM 10-K

Attached files

file	filename
EX-31.1 - CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - INTERCLOUD SYSTEMS, INC.	f10k2010ex31i_genesis.htm
EX-31.2 - CERTIFICATION PURSUANT TO SECTION 302 OF SARBANES OXLEY ACT OF 2002 - INTERCLOUD SYSTEMS, INC.	f10k2010ex31ii_genesis.htm
EX-10.11 - LOAN EXTENSION AND MODIFICATION AGREEMENT - INTERCLOUD SYSTEMS, INC.	f10k2010ex10xi_genesis.htm
EX-32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF SARBANES OXLEY ACT OF 2002 - INTERCLOUD SYSTEMS, INC.	f10k2010ex32i_genesis.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

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

For the fiscal year ended December 31, 2010

o	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________________ to __________________________

Commission file number: 000-32037

GENESIS GROUP HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware	65-0908171
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2500 N. Military Trail, Suite 275, Boca Raton, FL	33431
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code:

(561) 988-1988

Securities registered under Section 12(b) of the Act:

Title of each class	Name of each exchange on which registered
None	Not applicable

Securities registered under Section 12(g) of the Act:

Common Stock, par value $0.0001 per share

(Title of class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 (or for such shorter period that the registrant was required to submit and post such files). o Yes o No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company:

Large accelerated filer	o	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	x

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was sold, or the average bid and asked prices of such common equity, as of the last business day of the registrant's most recently completed second fiscal quarter. Approximately $885,000 on April 8, 2011.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. 109,256,071 shares of common stock are issued and outstanding as of March 31, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980). None.

GENESIS GROUP HOLDINGS, INC.

FORM 10-K

TABLE OF CONTENTS

		Page No.
Part I
Item 1.	Business.		4
Item 1A.	Risk Factors.		7
Item 1B.	Unresolved Staff Comments.		14
Item 2.	Properties.		14
Item 3.	Legal Proceedings.		14
Item 4.	(Removed and Reserved).
Part II
Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.		14
Item 6.	Selected Financial Data.		15
Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations.		15
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk.		19
Item 8.	Financial Statements and Supplementary Data.		19
Item 9.	Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.		19
Item 9A	Controls and Procedures.		20
Item 9B.	Other Information.		21
Part III
Item 10.	Directors, Executive Officers and Corporate Governance.		21
Item 11.	Executive Compensation.		23
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.		26
Item 13.	Certain Relationships and Related Transactions, and Director Independence.		27
Item 14.	Principal Accounting Fees and Services.		27
Part IV
Item 15.	Exhibits, Financial Statement Schedules.		28

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are typically identified by use of terms such as “may”, “could”, “should”, “expect”, “plan”, “project”, “intend”, “anticipate”, “believe”, “estimate”, “predict”, “potential”, “pursue”, “target” or “continue”, the negative of such terms or other comparable terminology, although some forward-looking statements may be expressed differently. The forward-looking statements contained in this report are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this report are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to a number of factors, including:

•

delays or difficulties related to the commencement or completion of contracts, including additional costs, reductions in revenues or the payment of completion penalties or liquidated damages;

•

actions of suppliers, subcontractors, customers, competitors, banks, surety providers and others which are beyond our control including suppliers' and subcontractor's failure to perform;

•

the effects of estimates inherent in our percentage-of-completion accounting policies including onsite conditions that differ materially from those assumed in our original bid, contract modifications, mechanical problems with our machinery or equipment and effects of other risks discussed in this document;

•

cost escalations associated with our fixed-unit price contracts, including changes in availability, proximity and cost of materials such as steel, concrete, aggregate, oil, fuel and other construction materials and cost escalations associated with subcontractors and labor;

•

our dependence on a few significant customers;

•

adverse weather conditions - although we prepare our budgets and bid contracts based on historical rain and snowfall patterns, the incident of rain, snow, hurricanes, etc., may differ significantly from these expectations;

•

the presence of competitors with greater financial resources than we have and the impact of competitive services and pricing;

•

changes in general economic conditions and resulting reductions or delays, or uncertainties regarding governmental funding for infrastructure services;

•

adverse economic conditions in our markets;

•

our ability to successfully identify, complete and integrate acquisitions;

•

citations and fines issued by any government authority;

•

risks associated with the terms of the Note and Warrant Purchase Agreement with UTA Capital LLC, and

•

the other factors discussed in more detail in Item 1A. —Risk Factors

You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. You should also consider carefully the statements under “Risk Factors” and other sections of this report, which address additional factors that could cause our actual results to differ from those set forth in the forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Item 1A. - Risk Factors. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Genesis", "we"", "our", the "Company" and similar terms refer to Genesis Group Holdings, Inc., a Delaware corporation, and wholly owned subsidiary Digital Comm Inc., a Florida corporation (“Digital Comm”). In addition, when used herein and unless specifically set forth to the contrary, “2009” refers to the year ended December 31, 2009 and “2010” refers to the year ending December 31, 2010.

The information which appears on our web site at www.digitalcomminc.com is not part of this report.

All share and per share information contained herein gives effect to the 1:20 reverse stock split effective September 15, 2008.

PART I

ITEM 1. DESCRIPTION OF BUSINESS.

We are a provider of specialty services for the construction and maintenance of facilities-based communications systems in the United States. These services include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities including telecommunications providers, and other construction and maintenance services to electric and gas utilities and others. We also provide turn-key telecommunications infrastructure solutions. Our "one-stop" capabilities include project development, procurement, design, engineering, construction management, and on- going maintenance and operations services for telecommunications networks. The projects include the construction of fiber networks that provide advanced digital voice, data and video communications and wireless infrastructure deployment.

Specialty Contracting Services. Our turnkey operations in outside plant construction, voice-data network technologies, utilities infrastructure – water, sewer, electric, gas, fiber/copper buried and aerial cable. We offer a full package of infrastructure services as well as network operations and maintenance solutions.

We provide management solutions to firms including but not limited to:

·	Central Office – (RBOC, CLEC, ILEC)

·	Wireless and Cellular

·	Voice and Data Enterprise

·	Cable Television (CATV)

·	Outside Plant (OSP)

·	Government

·	Healthcare

·	Airport Authorities

Security

We have established relationships with many leading telephone companies, cable television multiple system operators, utilities and others, including AT&T Inc., Comcast Corporation, Verizon Communications Inc. and Florida Power & Light Company. We are currently performing work with both AT&T and Verizon and expect to continue to provide these services for the foreseeable future.

We will provide comprehensive network solutions to customers in the telecommunications and cable television industries. Services performed generally include the design, installation, repair and maintenance of fiber optic, copper and coaxial cable networks used for video, data and voice transmission, as well as the design and installation of wireless communications towers and switching systems. Services include cable locating, splicing and testing of fiber optic networks and residential installation of fiber optic cabling.

There are times we work as a subcontractor to other general contractors and infrastructure service providers including; Danella Construction and Southern Technologies Services, Inc. We are currently performing work for these entities on a project and need basis.

Engineering. We provide outside plant engineers to telecommunication providers, together with services that include project development, procurement, design, engineering, construction management, and on-going maintenance.

Construction, Maintenance, and Installation. The inside plant services, also known as premise wiring; that we provide include design, engineering, installation and integration of telecommunications networks for voice, video and data inside customers' facilities. Additionally, we provide maintenance and installation of electric utility grids and water and sewer utilities. We provide outside plant telecommunications services primarily under hourly and per unit basis contracts to local telephone companies. We also provide these services to long distance telephone companies, electric utility companies, local municipalities and cable television multiple system operators.

Business Sector

We believe that several of the large telecommunications companies remain committed to their fiber to the premises (FTTP) and fiber to the node (FTTN) initiatives over the long-term. We believe the rate of growth in fiber network build-outs will continue to increase over the long-term as more Americans look to next-generation networks for faster internet and more robust video services. While not all of the spending in the FTTP and FTTN initiatives will be for services that we provide, we believe that we are well-positioned to furnish infrastructure solutions for these initiatives throughout the United States. We also anticipate increased long-term opportunities arising from plans by several wireless companies to transition to 4G technology, as well as the installation of fiber optic "backhaul" to provide links from wireless cell sites to broader voice, data and video networks. We believe that advances in Internet and wireless technologies will continue unabated. These trends, combined with other fast moving telecom innovations and technological enhancements, will continue to provide growth opportunities for our Company.

Our Position in the Marketplace.

While we are a small company, we are poised for rapid growth within the marketplace. We intend to maintain a decentralized operating structure. We believe that this structure and numerous points of contact within customer organizations position us favorably to win new opportunities with existing customers. Our access to capital could limited our growth and the projects we take on. We will continue to be selective in the work we pursue. We will pursue work that is not only profitable and within the areas of our expertise, but work that will not unnecessarily strain our cash flow requirements.

Growth Through Selective Acquisitions

We intend to pursue growth and market share through selective acquisitions. In particular, we will pursue those acquisitions that we believe will provide us with incremental revenue and diversification while complementing our existing operations. We intend to target companies for acquisition that are profitable, with proven operating histories and sound management. We expect to complete at least two acquisitions during the calendar year 2011. The Company may be required to raise capital in order to complete these acquisitions.

Master Contracts and Other Service Agreements

A portion of our services are performed under master service agreements and other arrangements with customers that extend for periods of one or more years. We are approved vendors for many telecommunication companies and utilities, including AT&T, Verizon and Florida Power & Light. Master Service agreements generally contain customer specified service requirements, such as discrete pricing for individual tasks. We also work with local government agencies. Whether in the public or private sectors, a customer’s decision to engage us with respect to a specific construction or maintenance project is often made by local customer management. Historically, most of our agreements have been awarded through a competitive bidding process; however, we may be able to extend some of these agreements on a negotiated basis.

Competition

The specialty contracting services industry in which we operate is highly fragmented and it is characterized by a large number of participants, including several large companies as well as a significant number of small, privately held, local competitors. A significant portion of our revenue is currently derived from master service agreements and price is often an important factor in awarding such agreements. Accordingly, we may be underbid by our competitors if they elect to price their services aggressively to procure such business. Our competitors may also develop the expertise, experience and resources to provide services that are equal or superior in both price and quality to our services, and we may not be able to maintain or enhance our competitive position. The principal competitive factors for our services include geographic presence, breadth of service offerings, worker and general public safety, price, quality of service, and industry reputation. We believe that we compete favorably with our competitors on the basis of these factors.

Materials and Subcontractors

For a majority of the contract services we perform, our customers provide all necessary materials and we provide the personnel, tools, and equipment necessary to perform installation and maintenance services. The customer determines the specifications of the materials and we are only responsible for the performance of the required services. Materials supplied by our customers, for whom the customer retains the financial and performance risk, are not included in our revenue or costs of sales. Under contracts where we are required to supply part or all of the materials, we are not dependent upon any one source for the materials that we customarily use to complete the job. We do not manufacture any significant amounts of material for resale. We are not presently experiencing, nor do we anticipate experiencing, any difficulties in procuring an adequate supply of materials.

We use independent contractors to perform portions of the services that we provide; however, we are not dependent on any single independent contractor. These independent contractors typically are small locally owned companies. Independent contractors provide their own employees, vehicles, tools, and insurance coverage. We use independent contractors to help manage our work flow and reduce the amount that we may otherwise be required to spend on fixed assets.

Seasonality

Some of our revenues are affected by seasonality as a portion of the work we perform is outdoors. Consequently, our outside operations are impacted by extended periods of inclement weather. Generally, inclement weather is more likely to occur during the winter season which falls during our second and third fiscal quarters. Holidays and access customer premises will have additional impact on our revenues.

Environmental Matters

A portion of our work is performed underground. As a result, we are potentially subject to material liabilities related to encountering underground objects which may cause the release of hazardous materials or substances. Additionally, the environmental laws and regulations which relate to our business include those regarding the removal and remediation of hazardous substances and waste. These laws and regulations can impose significant fines and criminal sanctions for violations. Costs associated with the discharge of hazardous materials or substances may include clean-up costs and related damages or liabilities. These costs could be significant and could adversely affect our results of operations and cash flows.

Government Regulations

We have no specific governmental regulations that we need to comply with, fines and risks are associated with the transport of equipment over highways to job sites. We also have certain local permitting requirements at those sites.

Consulting Agreement with Harpos Funding II, LLC.

In October, 2010 we entered into a Consulting Agreement with Harpos Funding II, LLC under which it was supposed to provide us with financial advisory services, investment banking and other strategic advice under the terms of an agreement. In December a principal of that company met with his untimely death and as a result the Consulting Agreement was cancelled upon notice to Harpos Funding II, LLC dated February 25, 2011.

Employees

As of February 15, 2011 we had 24 full time employees and one part-time employee.

Our History

We were incorporated under the name i-realtyauction.com, Inc. in the State of Delaware on November 22, 1999 as a subsidiary of i-Incubator.com, Inc. (OTCBB:INQU). We were initially incorporated to develop and operate an online auction web site that was dedicated to bringing together buyers and sellers of real estate. In January 2001, i-Incubator spun off our shares to its shareholders of record. On August 16, 2001, we changed our name to Genesis Realty Group, Inc. and began to focus our attention on the acquisition, development and management of real property. In August 2008 we changed our name to Genesis Group Holdings, Inc.

ITEM 1.A RISK FACTORS.

Before you invest in our securities, you should be aware that there are various risks. You should consider carefully these risk factors, together with all of the other information included in this annual report before you decide to purchase our securities. If any of the following risks and uncertainties develop into actual events, our business, financial condition or results of operations could be materially adversely affected.

Risks Relating to Our Business.

OUR PRIMARY ASSETS SERVE AS COLLATERAL UNDER THE NOTE AND WARRANT PURCHASE AGREEMENT WITH UTA CAPITAL. IF WE WERE TO DEFAULT ON THIS AGREEMENT, THE LENDER COULD FORECLOSE ON OUR ASSETS.

In August 2010, Digital Comm entered into a Note and Warrant Purchase Agreement with UTA Capital. The agreement calls for two senior bridge notes in the amount of $1 million each, for an aggregate principal amount of $2 million. The notes are each one year amortized term notes bearing interest at 10% per annum. To date one $1 million principal amount note has been funded.

In or about February 14, 2011, Digital Comm entered into a Loan Extension and Modification Agreement with UTA Capital, extending the maturity date to September 30, 2011. The revolving note continues to be collateralized by a blanket security interest in Digital Comm’s assets and the agreement contains certain covenants we must comply with. If we should default under the terms of this agreement, the lender could seek to foreclose on our primary assets. If the lender was successful, we would be unable to conduct our business as it is presently conducted and our ability to generate revenues and fund our ongoing operations would be materially adversely affected.

IF WE ARE UNABLE TO ACCURATELY ESTIMATE THE OVERALL RISKS OR COSTS WHEN WE BID ON A CONTRACT THAT IS ULTIMATELY AWARDED TO US, WE MAY ACHIEVE A LOWER THAN ANTICIPATED PROFIT OR INCUR A LOSS ON THE CONTRACT.

Substantially all of our revenues are typically derived from fixed unit price contracts. Fixed unit price contracts require us to perform the contract for a fixed unit price irrespective of our actual costs. As a result, we realize a profit on these contracts only if we successfully estimate our costs and then successfully control actual costs and avoid cost overruns. If our cost estimates for a contract are inaccurate, or if we do not execute the contract within our cost estimates, then cost overruns may cause us to incur losses or cause the contract not to be as profitable as we expected. This, in turn, could negatively affect our cash flow, earnings and financial position.

The costs incurred and gross profit realized on such contracts can vary, sometimes substantially, from the original projections due to a variety of factors, including, but not limited to:

•

onsite conditions that differ from those assumed in the original bid;

•

delays caused by weather conditions or project owners notice to proceed;

•

contract modifications creating unanticipated costs not covered by change orders;

•

changes in availability, proximity and costs of construction materials, as well as fuel and lubricants for our equipment;

•

availability and skill level of workers in the geographic location of a project;

•

our suppliers’ or subcontractors’ failure to perform due to various reasons including bankruptcy;

•

fraud or theft committed by our employees;

•

mechanical problems with our machinery or equipment;

•

citations or fines issued by any governmental authority;

•

difficulties in obtaining required governmental permits or approvals or performance bonds;

•

changes in applicable laws and regulations; and

•

claims or demands from third parties alleging damages arising from our work or from the project of which our work is part.

ECONOMIC DOWNTURNS OR REDUCTIONS IN GOVERNMENT FUNDING OF INFRASTRUCTURE PROJECTS COULD REDUCE OUR REVENUES AND PROFITS AND HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

Our business is highly dependent on the amount and timing of infrastructure work funded by various governmental entities, and which, in turn, depends on the overall condition of the economy, the need for new or replacement infrastructure, the priorities placed on various projects funded by governmental entities and federal, state or local government spending levels.

THE CANCELLATION OF SIGNIFICANT CONTRACTS OR OUR DISQUALIFICATION FROM BIDDING FOR NEW CONTRACTS COULD REDUCE OUR REVENUES AND PROFITS AND HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS.

Contracts that we enter into can usually be canceled at any time by the customer with payment only for the work already completed. In addition, we could be prohibited from bidding on certain governmental contracts if we fail to maintain qualifications required by those entities. A cancellation of an unfinished contract or our debarment from the bidding process could cause our equipment and work crews to be idled for a significant period of time until other comparable work became available, which could have a material adverse effect on our business and results of operations.

We operate in several states, including Ohio, Florida, Texas, Louisiana, and North Carolina any adverse change to the economy or business environment in any State that we perform work could significantly and adversely affect our operations, which would lead to lower revenues and reduced profitability.

OUR ACQUISITION STRATEGY INVOLVES A NUMBER OF RISKS.

In addition to organic growth of our business, we intend to continue pursuing growth through the acquisition of companies or assets that may enable us to expand our project skill-sets and capabilities, enlarge our geographic markets, add experienced management and increase critical mass to enable us to bid on larger contracts. However, we may be unable to implement this growth strategy if we cannot reach agreements for potential acquisitions on acceptable terms or for other reasons. Moreover, our acquisition strategy involves certain risks, including:

• difficulties in the integration of operations and systems;

• difficulties applying our expertise in one market into another market;

•

the key personnel and customers of the acquired company may terminate their relationships with the acquired company;

•

we may experience additional financial and accounting challenges and complexities in areas such as tax planning and financial reporting;

•

we may assume or be held liable for risks and liabilities (including for environmental-related costs and liabilities) as a result of our acquisitions, some of which we may not discover during our due diligence;

• our ongoing business may be disrupted or receive insufficient management attention; and

• we may not be able to realize cost savings or other financial benefits we anticipated.

Future acquisitions may require us to obtain additional equity or debt financing, as well as additional surety bonding capacity, which may not be available on terms acceptable to us or at all. Moreover, to the extent that any acquisition results in additional goodwill, it will reduce our tangible net worth, which might have an adverse effect on our credit and bonding capacity.

OUR INDUSTRY IS HIGHLY COMPETITIVE, WITH A VARIETY OF LARGER COMPANIES WITH GREATER RESOURCES COMPETING WITH US, AND OUR FAILURE TO COMPETE EFFECTIVELY COULD REDUCE THE NUMBER OF NEW CONTRACTS AWARDED TO US OR ADVERSELY AFFECT OUR MARGINS ON CONTRACTS AWARDED.

Essentially all of the contracts on which we bid are awarded through a competitive bid process, with awards generally being made to the lowest bidder, but sometimes recognizing other factors, such as shorter contract schedules or prior experience with the customer. Within our markets, we compete with many national, regional and local construction firms. Some of these competitors have achieved greater market penetration than we have in the markets in which we compete, and some have greater financial and other resources than we do. In addition, there are a number of national companies in our industry that are larger than we are and that, if they so desire, could establish a presence in our markets and compete with us for contracts. As a result, we may need to accept lower contract margins in order to compete against competitors that have the ability to accept awards at lower prices or have a pre-existing relationship with a customer. If we are unable to compete successfully in our markets, our relative market share and profits could be reduced.

OUR DEPENDENCE ON SUBCONTRACTORS AND SUPPLIERS OF MATERIALS COULD INCREASE OUR COSTS AND IMPAIR OUR ABILITY TO COMPLETE CONTRACTS ON A TIMELY BASIS OR AT ALL, WHICH WOULD ADVERSELY AFFECT OUR PROFITS AND CASH FLOW.

We rely on third-party subcontractors to perform some of the work on many of our contracts. We generally do not bid on contracts unless we have the necessary subcontractors committed for the anticipated scope of the contract and at prices that we have included in our bid. Therefore, to the extent that we cannot engage subcontractors, our ability to bid for contracts may be impaired. In addition, if a subcontractor is unable to deliver its services according to the negotiated terms for any reason, including the deterioration of its financial condition, we may suffer delays and be required to purchase the services from another source at a higher price. This may reduce the profit to be realized, or result in a loss, on a contract.

We also rely on third-party suppliers to provide most of the materials for our contracts. We normally do not bid on contracts unless we have commitments from suppliers for the materials required to complete the contract and at prices that we have included in our bid. Thus, to the extent that we cannot obtain commitments from our suppliers for materials, our ability to bid for contracts may be impaired. In addition, if a supplier is unable to deliver materials according to the negotiated terms of a supply agreement for any reason, including the deterioration of its financial condition, we may suffer delays and be required to purchase the materials from another source at a higher price. This may reduce the profit to be realized, or result in a loss, on a contract.

IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND SKILLED LABOR, OR IF WE ENCOUNTER LABOR DIFFICULTIES, OUR ABILITY TO BID FOR AND SUCCESSFULLY COMPLETE CONTRACTS MAY BE NEGATIVELY IMPACTED.

Our ability to attract and retain reliable, qualified personnel is a significant factor that enables us to successfully bid for and profitably complete our work. This includes members of our management, project managers, estimators, supervisors, foremen, equipment operators and laborers. The loss of the services of any of our management could have a material adverse effect on us. Our future success will also depend on our ability to hire and retain, or to attract when needed, highly-skilled personnel. Competition for these employees is intense, and we could experience difficulty hiring and retaining the personnel necessary to support our business. If we do not succeed in retaining our current employees and attracting, developing and retaining new highly-skilled employees, our reputation may be harmed and our future earnings may be negatively impacted.

OUR CONTRACTS MAY REQUIRE US TO PERFORM EXTRA OR CHANGE ORDER WORK, WHICH CAN RESULT IN DISPUTES AND ADVERSELY AFFECT OUR WORKING CAPITAL, PROFITS AND CASH FLOWS.

Our contracts generally require us to perform extra or change order work as directed by the customer even if the customer has not agreed in advance on the scope or price of the extra work to be performed. This process may result in disputes over whether the work performed is beyond the scope of the work included in the original project plans and specifications or, if the customer agrees that the work performed qualifies as extra work, the price that the customer is willing to pay for the extra work. These disputes may not be settled to our satisfaction. Even when the customer agrees to pay for the extra work, we may be required to fund the cost of such work for a lengthy period of time until the change order is approved by the customer and we are paid by the customer.

To the extent that actual recoveries with respect to change orders or amounts subject to contract disputes or claims are less than the estimates used in our financial statements, the amount of any shortfall will reduce our future revenues and profits, and this could have a material adverse effect on our reported working capital and results of operations. In addition, any delay caused by the extra work may adversely impact the timely scheduling of other project work and our ability to meet specified contract milestone dates.

OUR FAILURE TO MEET SCHEDULE OR PERFORMANCE REQUIREMENTS OF OUR CONTRACTS COULD ADVERSELY AFFECT US.

In most cases, our contracts require completion by a scheduled acceptance date. Failure to meet any such schedule could result in additional costs, penalties or liquidated damages being assessed against us, and these could exceed projected profit margins on the contract. Performance problems on existing and future contracts could cause actual results of operations to differ materially from those anticipated by us and could cause us to suffer damage to our reputation within the industry and among our customers.

UNANTICIPATED ADVERSE WEATHER CONDITIONS MAY CAUSE DELAYS, WHICH COULD SLOW COMPLETION OF OUR CONTRACTS AND NEGATIVELY AFFECT OUR REVENUES AND CASH FLOW.

Because much of our work is performed outdoors, work on our contracts is subject to unpredictable weather conditions, which could become more frequent or severe if general climatic changes occur.. While revenues can be recovered following a period of bad weather, it is generally impossible to recover the inefficiencies, and significant periods of bad weather typically reduce profitability of affected contracts both in the current period and during the future life of affected contracts. Such reductions in contract profitability negatively affect our results of operations in current and future periods until the affected contracts are completed.

TIMING OF THE AWARD AND PERFORMANCE OF NEW CONTRACTS COULD HAVE AN ADVERSE EFFECT ON OUR OPERATING RESULTS AND CASH FLOW.

It is generally very difficult to predict whether and when new contracts will be offered for tender, as these contracts frequently involve a lengthy and complex design and bidding process, which is affected by a number of factors, such as market conditions, financing arrangements and governmental approvals. Because of these factors, our results of operations and cash flows may fluctuate from quarter to quarter and year to year, and the fluctuation may be substantial.

In addition, the timing of the revenues, earnings and cash flows from our contracts can be delayed by a number of factors, including adverse weather conditions such as prolonged or intense periods of rain, snow, storms or flooding, delays in receiving material and equipment from suppliers and changes in the scope of work to be performed. Such delays, if they occur, could have adverse effects on our operating results for current and future periods until the affected contracts are completed.

OUR DEPENDENCE ON A LIMITED NUMBER OF CUSTOMERS COULD ADVERSELY AFFECT OUR BUSINESS AND RESULTS OF OPERATIONS.

Due to the size and nature of our construction contracts, one or a few customers have in the past and may in the future represent a substantial portion of our consolidated revenues and gross profits in any one year or over a period of several consecutive years. One customer may comprise a significant percentage of revenues at a certain point in time. The loss of business from any one of such customers could have a material adverse effect on our business or results of operations. Because we do not maintain any reserves for payment defaults, a default or delay in payment on a significant scale could materially adversely affect our business, results of operations and financial condition.

WE MAY INCUR HIGHER COSTS TO LEASE, ACQUIRE AND MAINTAIN EQUIPMENT NECESSARY FOR OUR OPERATIONS, AND THE MARKET VALUE OF OUR OWNED EQUIPMENT MAY DECLINE.

We own most of the construction equipment used on our projects. However, to the extent that we are unable to buy construction equipment necessary for our needs, either due to a lack of available funding or equipment shortages in the marketplace, we may be forced to rent equipment on a short-term basis, which could increase the costs of performing our contracts.

The equipment that we own or lease requires continuous maintenance, for which we maintain our own repair facilities. If we are unable to continue to maintain the equipment in our fleet, we may be forced to obtain third-party repair services, which could increase our costs. In addition, the market value of our equipment may unexpectedly decline at a faster rate than anticipated.

AN INABILITY TO OBTAIN PERFORMANCE BONDING COULD LIMIT THE AGGREGATE DOLLAR AMOUNT OF CONTRACTS THAT WE ARE ABLE TO PURSUE.

As is customary in the construction business, we are required to provide surety bonds to secure our performance under certain construction contracts. Our ability to obtain surety bonds primarily depends upon our capitalization, working capital, past performance, management expertise and reputation and certain external factors, including the overall capacity of the surety market. Surety companies consider such factors in relationship to the amount of our backlog and their underwriting standards, which may change from time to time. Events that affect the insurance and bonding markets generally may result in bonding becoming more difficult to obtain in the future, or being available only at a significantly greater cost. Our inability to obtain adequate bonding, and, as a result, to bid on new contracts, could have a material adverse effect on our future revenues and business prospects.

OUR OPERATIONS ARE SUBJECT TO HAZARDS THAT MAY CAUSE PERSONAL INJURY OR PROPERTY DAMAGE, THEREBY SUBJECTING US TO LIABILITIES AND POSSIBLE LOSSES, WHICH MAY NOT BE COVERED BY INSURANCE.

Our workers are subject to the usual hazards associated with providing construction and related services on construction sites. Operating hazards can cause personal injury and loss of life, damage to or destruction of property, plant and equipment and environmental damage. We maintain insurance coverage in amounts and against the risks that we believe are consistent with industry practice, but this insurance may not be adequate to cover all losses or liabilities that we may incur in our operations.

Insurance liabilities are difficult to assess and quantify due to unknown factors, including the severity of an injury, the determination of our liability in proportion to other parties, the number of incidents not reported and the effectiveness of our safety program. If we were to experience insurance claims or costs above our estimates, we might also be required to use working capital to satisfy these claims rather than to maintain or expand our operations. To the extent that we experience a material increase in the frequency or severity of accidents or workers’ compensation claims, or unfavorable developments on existing claims, our operating results and financial condition could be materially and adversely affected.

ENVIRONMENTAL AND OTHER REGULATORY MATTERS COULD ADVERSELY AFFECT OUR ABILITY TO CONDUCT OUR BUSINESS AND COULD REQUIRE EXPENDITURES THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

Our operations are subject to laws and regulations relating to workplace safety and worker health, which, among other things, regulate employee exposure to hazardous substances. Immigration laws require us to take certain steps intended to confirm the legal status of our immigrant labor force, but we may nonetheless unknowingly employ illegal immigrants. Violations of such laws and regulations could subject us to substantial fines and penalties, cleanup costs, third-party property damage or personal injury claims. In addition, these laws and regulations have become, and enforcement practices and compliance standards are becoming, increasingly stringent. Moreover, we cannot predict the nature, scope or effect of legislation or regulatory requirements that could be imposed, or how existing or future laws or regulations will be administered or interpreted, with respect to products or activities to which they have not been previously applied. Compliance with more stringent laws or regulations, as well as more vigorous enforcement policies of the regulatory agencies, could require us to make substantial expenditures for, among other things, pollution control systems and other equipment that we do not currently possess, or the acquisition or modification of permits applicable to our activities.

Risks Related to Our Financial Results and Financing Plans

WE MAY NOT RECEIVE ADDITIONAL FUNDING UNDER THE UTA CAPITAL AGREEMENT.

Under the terms of the August 2010 Note and Warrant Purchase Agreement with UTA Capital, we have borrowed $1 million. The Note was amended and restated in February, 2011 and shall now mature on September 30, 2011. The principle balance owed under the Note as of February 14, 2011 was $775,000. The ability of the Company to borrow additional funds from UTA Capital is currently at the discretion of UTA Capital.

ACTUAL RESULTS COULD DIFFER FROM THE ESTIMATES AND ASSUMPTIONS THAT WE USE TO PREPARE OUR FINANCIAL STATEMENTS.

To prepare financial statements in conformity with generally accepted accounting principles (“GAAP”), management is required to make estimates and assumptions, as of the date of the financial statements, which affect the reported values of assets and liabilities, revenues and expenses, and disclosures of contingent assets and liabilities. Areas requiring significant estimates by our management include: contract costs and profits and application of percentage-of-completion accounting and revenue recognition of contract change order claims; provisions for uncollectible receivables and customer claims and recoveries of costs from subcontractors, suppliers and others; valuation of assets acquired and liabilities assumed in connection with business combinations; and accruals for estimated liabilities, including litigation and insurance reserves. Our actual results could differ from, and could require adjustments to, those estimates.

In particular we recognize contract revenue using the percentage-of-completion method. Under this method, estimated contract revenue is recognized by applying the percentage of completion of the contract for the period to the total estimated revenue for the contract. Estimated contract losses are recognized in full when determined. Contract revenue and total cost estimates are reviewed and revised on a continuous basis as the work progresses and as change orders are initiated or approved, and adjustments based upon the percentage of completion are reflected in contract revenue in the accounting period when these estimates are revised. To the extent that these adjustments result in an increase, a reduction or an elimination of previously reported contract profit, we recognize a credit or a charge against current earnings, which could be material.

WE MAY NEED TO RAISE ADDITIONAL CAPITAL IN THE FUTURE FOR WORKING CAPITAL, CAPITAL EXPENDITURES AND/OR ACQUISITIONS, AND WE MAY NOT BE ABLE TO DO SO ON FAVORABLE TERMS OR AT ALL, WHICH WOULD IMPAIR OUR ABILITY TO OPERATE OUR BUSINESS OR ACHIEVE OUR GROWTH OBJECTIVES.

Our ability to obtain additional financing in the future will depend in part upon prevailing credit and equity market conditions, as well as conditions in our business and our operating results; such factors may adversely affect our efforts to arrange additional financing on terms satisfactory to us. We have pledged substantially all of our other assets as collateral in connection with our credit. As a result, we may have difficulty in obtaining additional financing in the future if such financing requires us to pledge assets as collateral. In addition, under our credit facility, we must obtain the consent of our lenders to incur any amount of additional debt from other sources (subject to certain exceptions). If future financing is obtained by the issuance of additional shares of common stock, our stockholders may suffer dilution. If adequate funds are not available, or are not available on acceptable terms, we may not be able to make future investments, take advantage of acquisitions or other opportunities, or respond to competitive challenges.

Risks Related to our Common Stock

THE TERMS OF THE UTA CAPITAL WARRANTS WILL RESULT IN CONTINUED DILUTION TO OUR COMMON STOCKHOLDERS.

Under the terms of the five warrants we issued UTA Capital as part of the Note and Warrant Purchase Agreement, we agreed that if we should issue any shares of common stock, other than certain excepted issuances, without consideration or for a consideration per share less than the exercise price of $0.15 per share, then the exercise price is reduced in accordance with the formula set forth in the warrant and the number of shares underlying the warrant are concurrently increased so that the aggregate equity percentage represented by the warrant remains at 16%. In addition, so long as a note is outstanding and during the term of the warrants we agreed that we will not issue any shares of our common stock or securities convertible into or exercisable for shares of our common stock, or grant any option or warrant to acquire shares of our common stock, to any individual who prior to such issuance or grant is the beneficial owner of 5% or more of our common stock without UTA Capital’s prior consent. If we do not obtain such consent, we are required to issue UTA Capital an additional number of warrants so as to maintain their ownership interest (on an as converted basis) of 16% of our common stock on a fully diluted basis giving effect to such additional issuance or grant. These provisions could result in significant dilution to our existing stockholders without our receipt of any additional consideration and could inhibit our ability to raise additional capital as needed.

THE UTA CAPITAL WARRANTS CONTAIN A CASHLESS EXERCISE PROVISION WHICH MEANS WE MAY NOT RECEIVE ANY CASH PROCEEDS UPON THEIR EXERCISE.

In August 2010 under the terms of the Note and Warrant Purchase Agreement with UTA Capital we issued common stock purchase warrants to purchase an aggregate of 20,952,381 shares of our common stock with an exercise price of $0.15 per share. These five-year warrants are exercisable on a cashless basis which means that the holder, rather than paying the exercise price in cash, may surrender a number of warrants equal to the exercise price of the warrants being exercised. The utilization of this cashless exercise feature will deprive us of additional capital which might otherwise be obtained if the warrants did not contain a cashless feature.

OUR COMMON STOCK IS QUOTED IN THE OVER THE COUNTER MARKET ON THE BULLETIN BOARD.

Our common stock is now quoted on the OTC Bulletin Board (OTCBB). The OTCBB is an electronic quotation system that displays real-time quotes, last-sale prices, and volume information for many OTC securities that are not listed on the Nasdaq Stock Market or a national securities exchange. Because our common stock is quoted on the OTCBB, it is possible that fewer brokers or dealers would be interested in making a market in our common stock which may adversely impact its liquidity.

THE TRADABILITY OF OUR COMMON STOCK IS LIMITED UNDER THE PENNY STOCK REGULATIONS WHICH MAY CAUSE THE HOLDERS OF OUR COMMON STOCK DIFFICULTY SHOULD THEY WISH TO SELL THE SHARES.

Because the quoted price of our common stock is less than $5.00 per share, our common stock is considered a “penny stock,” and trading in our common stock is subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction.

SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. These requirements severely limit the liquidity of securities in the secondary market because few broker or dealers are likely to undertake these compliance activities and this limited liquidity will make it more difficult for an investor to sell his shares of our common stock in the secondary market should the investor wish to liquidate the investment. In addition to the applicability of the penny stock rules, other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable to a smaller reporting company.

ITEM 2. DESCRIPTION OF PROPERTY.

Our principal executive offices are located at Digital Comm. The Company through Digital Comm has a lease on its office premises occupying approximately 1,000 square feet at 2500 N. Military Trail, Suite 275, Boca Raton, Florida 33431 with Crystal Investors Florida, LLC pursuant to the terms of a five year lease commencing in August 2010. Under the terms of the lease we pay an annual base rent of $21,155 for the first year escalating to $23,810 in the fifth year, together with additional annual rent of approximately $13,000.

ITEM 3. LEGAL PROCEEDINGS.

We are not a party to any pending or threatened litigation.

ITEM 4. (REMOVED AND RESERVED).

PART II

ITEM 5. MARKET FOR COMMON STOCK AND RELATED STOCKHOLDER MATTERS.

Market Price of and Dividends on Common Equity and Related Stockholder Matters

Our common stock is quoted in the over-the-counter market on the Pink Sheets under the symbol GGHO. The reported high and low last sale prices for the common stock are shown below for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not represent actual transactions.

	Low	High

2009
First quarter ended March 31, 2009	$0.25	$0.26
Second quarter ended June 30, 2009	$0.08	$0.20
Third quarter ended September 30, 2009	$0.08	$0.25
Fourth quarter ended December 31, 2009	$0.04	$0.11

2010
First quarter ended March 31, 2010	$0.28	$0.65
Second quarter ended June 30, 2010	$0.15	$0.31
Third quarter ended September 30, 2010	$0.06	$0.15
Fourth quarter ended December 31, 2010	$0.08	$0.04

2011
First quarter ended March 31, 2011	$0.13	$0.13

The last sale price of our common stock as reported on the OTC Markets was $0.14 per share on April 8, 2011. As of March 31, 2011, there were approximately 108 record owners of our common stock.

Dividend Policy

We have never paid cash dividends on our common stock. Under Delaware law, we may declare and pay dividends on our capital stock either out of our surplus, as defined in the relevant Delaware statutes, or if there is no such surplus, out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. If, however, the capital of our company, computed in accordance with the relevant Delaware statutes, has been diminished by depreciation in the value of our property, or by losses, or otherwise, to an amount less than the aggregate amount of the capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets, we are prohibited from declaring and paying out of such net profits any dividends upon any shares of our capital stock until the deficiency in the amount of capital represented by the issued and outstanding stock of all classes having a preference upon the distribution of assets shall have been repaired.

Recent Sales of Unregistered Securities

NONE

ITEM 6. SELECTED FINANCIAL DATA.

Not applicable to a smaller reporting company.

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our financial condition and results of operation for 2010 and 2009 should be read in conjunction with the financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Item 1A. Risk Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this Form 10-K. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

On January 14, 2010 the Company acquired all the outstanding shares of Digital Comm in exchange for 50,000,000 shares of our common stock. Digital was originally formed on September 13, 2006 and, on January 14, 2010 was merged into Genesis as a wholly owned subsidiary. Digital is a provider of specialty contracting services, primarily in the installation of fiber optic telephone cable. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities including telecommunications providers, and other construction and maintenance services to electric and gas utilities and others. As this transaction will be treated as a reverse merger for accounting purposes, our results of operations and financial condition will materially change in the first quarter of 2010.

Outlook

The telecommunications industry has undergone and continues to undergo significant changes due to governmental deregulation, advances in technology, increased competition as the telephone and cable companies converge, and growing consumer demand for enhanced and bundled services. As a result of these factors, the networks of our customers increasingly face demands for more capacity and greater reliability. Telecommunications providers continue to outsource a significant portion of their engineering, construction and maintenance requirements in order to reduce their investment in capital equipment, provide flexibility in workforce sizing, expand product offerings without large increases in incremental hiring and focus on those competencies they consider core to their business success. These factors drive customer demand for our services.

Telecommunications network operators are increasingly relying on the deployment of fiber optic cable technology deeper into their networks and closer to consumers in order to respond to demands for capacity, reliability, and product bundles of voice, video, and high speed data services. Fiber deployments have enabled an increasing number of cable companies to offer voice services in addition to their traditional video and data services. These voice services require the installation of customer premise equipment and at times the upgrade of in-home wiring. Additionally, fiber deployments are also facilitating the provisioning of video services by local telephone companies in addition to their traditional voice and high speed data services. Several large telephone companies have pursued fiber-to-the-premise and fiber-to-the-node initiatives to compete actively with cable operators. These long-term initiatives and the likelihood that other telephone companies pursue similar strategies present opportunities for us.

Telecommunication companies have undertaken additional projects relating to the deployment of fiber optic cable to cell sites. As wireless carriers have successfully marketed smart phones and other wireless data devices, the amount of cellular traffic that must be "backhauled" from cell sites to wired telecommunications networks has increased dramatically. Traditional copper based networks are incapable of cost effectively addressing the data traffic expected as wireless carriers begin to roll out advanced fourth generation wireless data services. The increase in fiber backhaul services is expected to continue during 2011, resulting in demand for the type of services we provide.

In November 2010, we entered into a General Services Agreement with Verizon Wireless. This Master Contract, together with existing Master Contracts that the company already has presents revenue growth opportunities for our Company in 2011.

Results of Operations

Revenues decreased in 2010 by $292,485 or 23.5% compared to 2009 revenues primarily from the company expending its efforts during the 2010 year to secure new local government contract jobs that were unsuccessful because of the company’s inability to secure performance bonding for such jobs versus a built-up of its existing on-going jobs. Additionally the winter storms that impacted the Northeastern United States resulted in a slow down or delays in completing contract jobs.

Cost of revenues earned in 2010 was 105% of revenues as compared to 73% in 2009. Cost of revenues earned in 2010 increased $87,779 or 9.6% as compared to 2009. This change was the result of overruns in cost to complete certain jobs in 2010 that could not be recaptured, as well as reduced margins available from larger jobs secured in 2010.

Cost of earned revenues includes all direct costs of providing services under our contracts, including costs for direct labor provided by employees, services by subcontractors, operation of capital equipment (excluding depreciation and amortization), direct material and other related costs. For a majority of the contract services we perform, our customers provide all necessary materials and we provide the personnel, tools, and equipment necessary to perform installation and maintenance services.

Salaries and wages for 2010 increased by $1,493,621 or 1,850% from 2009 primarily from the issuance of stock valued at $872,000 to one of the company’s new officers pursuant to his employment contract plus the build–up of additional corporate office management and administrative personnel.

General and administrative costs include all of our corporate costs, as well as costs of our subsidiaries' administrative overhead. These costs primarily consist of legal, consulting and professional fees, travel and other costs that are not directly related to performance of our services under customer contracts. General and administrative expenses increased $414,179 or approximately 222% in 2010 from 2009. Included in the increased expenses in 2010 were increases in consulting and professional $139,868 (254%) due to requirements of new job contracts and travel and related expenses $67,723 (113%) from broadening the scope of new jobs being secured.

Interest expense increased by $222,888 or 501% in 2010 as compared to 2009 primarily from the third party loan from UTA used to finance the operations of the Company’s acquisition of Digital and the amortization of the debt discount associated with the warrants issued to UTA, and borrowings from bank lines of credit.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. At December 31, 2010 the Company had a working capital deficit of $1,183,508 as compared to a working capital deficit of $81,319 at December 31, 2009. The increase in working capital deficit of $1,102,189 was comprised of mainly from the additional borrowings undertaken by the company combined with the recognition of the derivative liability from the warrants issuance with the third party loan from UTA.

The approximate 80% increase in accounts receivable and approximate 89% increase in accounts payable at December 31, 2010 compared to December 31, 2009 are both the result of the change in customer base for Digital Comm’s revenues in 2009. Accrued expenses, which include travel expenses, increased 1,414% at December 31, 2010 from December 31, 2009.

Net cash used by operating activities was -$1,142,544 in 2010, which reflects the increase in accounts payable and accrued expenses offset by the increase in accounts receivable plus the decrease in current value of the derivative liability, as compared to net cash provided by operating activities of $40,765 in 2009.

Net cash used in investing activities in 2010 was $181,312, which primarily represents capital expenditures for equipment and machinery, as compared to $47,009 in 2009.

Net cash provided by financing activities in 2010 was $1,343,918 resulted primarily from third party and bank borrowings coupled with loans from shareholders. Net cash provided by financing activities in 2009 represented capital contributions from the shareholders of $7,200.

We anticipate that our cash and cash equivalents on hand, our foregoing borrowing availability under the 2010 UTA Capital Note and Warrant Purchase Agreement, assuming we are able to access the remaining $1 million under this agreement, assuming we are able to access the remaining $1 million under this agreement, and our future cash flow from operations will provide sufficient cash to enable us to meet our future operating needs, debt service requirements, and planned capital expenditures. We expect that our capital spending in 2011 will be reasonably consistent with our 2010 capital spending. Although we believe that we have adequate cash and availability under our credit facility to meet these needs, our involvement in any large-scale projects may require additional working capital, depending upon the size and duration of the project and the financial terms of the underlying agreement, and the Company’s’ ability to secure necessary bonding.

Note and Warrant Purchase Agreement with UTA Capital LLC

On August 6, 2010, we secured a working capital loan from UTA Capital LLC, with Digital Comm as the borrower. The loan is evidenced by a Note and Warrant Purchase Agreement between the Company, Digital Comm and UTA Capital, LLC dated August 6, 2010. Additionally, the Company issued to UTA Capital, LLC warrants initially to purchase 20,952,381 shares of our common stock with an exercise price of $0.15 per share.

In or about February 14, 2011 we entered into a Loan Extension and Modification Agreement with UTA Capital, extending the maturity date to September 30, 2011. There is currently $775,000, plus interest due under the Note.

In addition, both the Company and Digital Comm agreed:

• that so long as a note is outstanding and during the term of the warrants we will not issue any shares of our common stock or securities convertible into or exercisable for shares of our common stock, or grant any option or warrant to acquire shares of our common stock, to any individual who prior to such issuance or grant is the beneficial owner of 5% or more of our common stock without UTA Capital’s prior consent. If we do not obtain such consent, we are required to issue UTA Capital an additional number of warrants so as to maintain their ownership interest (on an as converted basis) of 16% of our common stock on a fully diluted basis giving effect to such additional issuance or grant,

• within 12 months from the closing we will satisfy the corporate governance requirements under Nasdaq Marketplace Rule 5605 (relating to Board and Board committee composition, process and decision-making), Rule 5610 (related to codes of conduct) and Rule 5630 (relating to approval of related party transactions),

• without the affirmative vote of at least two independent directors, and thereafter the approval or ratification of a majority of our Board of Directors, we would not enter into any related party transactions, and

• we would obtain key man insurance on the life of Mr. Caudill, our President, with the proceeds payable to UTA Capital.

The term of the warrant is for five years from the later of the date we are current in our reporting obligations with the SEC or five years from the date the warrant is first exercisable. The warrant is exercisable on a cashless basis. Upon 10 trading days notice to the holder that we intend to redeem the warrant, and providing that there is an effective registration statement covering the shares underlying the warrant, the average trading volume and price meets certain thresholds, then the warrant shall be deemed to have been issued on a cashless basis. The number of shares of common stock underlying the warrant and the exercise price of the warrant are subject to proportional adjustment in the event of stock splits, dividends and similar corporate transactions. In addition, if we should issue any shares of common stock, other than certain excepted issuances, without consideration or for a consideration per share less than the exercise price, then the exercise price is reduced in accordance with the formula set forth in the warrant and the number of shares underlying the warrant are concurrently increased so that the aggregate equity percentage represented by the warrant remains at 16%.

The exercise price of the warrant and the number of shares underlying the warrant are also subject to further adjustment at any time we issue convertible securities at a per share value less than the exercise price. In such event the exercise price and number of shares underlying the warrant shall be adjusted in accordance with the same formula as set forth above.

We agreed to file a registration statement with the SEC within nine months of closing to register the resale of the shares of common stock issuable upon the exercise of the warrant and we agreed to use our best efforts to cause it to be declared effective within 12 months from the closing date. We are subject to liquidated damages of 2% per month of the then current value of the shares underlying the warrant if we fail to timely file the registration statement, if it is not declared effective by the effectiveness deadline or if we file to keep it current, up to a maximum of 20% of the Investment Amount. For the purposes of the warrant, “Investment Amount” means 250% of the aggregate amount payable upon the exercise of the warrant. We are obligated to pay all fee and expenses of the registration statement and up to $10,000 of fees and expenses of counsel for the warrant holder. We also granted UTA Capital piggy back registration rights covering the shares underlying the warrant.

We believe that we are in compliance of all material financial terms of the UTA Agreement. We are working to finish some of our post-closing covenants, including the preparation of a registration statement. We have not received any notices of default to date, and have been working with and are in frequent communication with UTA Capital.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements, financings, or other relationships with unconsolidated entities or other persons, also known as “special purpose entities” (SPEs).

Recent Accounting Pronouncements

ASC Topic 855, Subsequent Events (“ASC Topic 855”), establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before the date the financial statements are issued or available to be issued. ASC Topic 855 requires companies to reflect in their financial statements the effects of subsequent events that provide additional evidence about conditions at the balance sheet date. In February 2010, the FASB issued Accounting Standards Update No. 2010-09 – Subsequent Events (Topic 855) — Amendments to Certain Recognition and Disclosure Requirements (“ASU 2010-09”). ASU 2010-09 provides amendments which clarify that SEC filers are not required to disclose the date through which subsequent events have been evaluated. The adoption of this guidance had no impact on the Company’s consolidated financial statements.

In April 2010, the FASB issued Accounting Standards Update No. 2010-12, Income Taxes (Topic 740) – Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts (“ASU 2010-12”). ASU 2010-12 addresses changes in accounting for income taxes resulting from the recently issued Health Care and Education Reconciliation Act of 2010 and the Patient Protection and Affordable Care Act. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update No. 2010-29, Business Combinations (Topic 805) (“ASU 2010-29”). ASU 2010-29 is intended to address diversity in practice regarding pro-forma revenue and earnings disclosure requirements for business combinations. ASU 2010-29 specifies that if a public entity presents comparative financial statements, the entity should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. The amendments also expand the supplemental pro-forma disclosures to include a description of the nature and amount of material, non-recurring pro-forma adjustments directly attributable to the business combination included in the reported pro-forma revenue and earnings. The amendments affect any public entity as defined by ASU 2010-29 that enters into business combinations that are material on an individual or aggregate basis. ASU 2010-29 is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period after December 15, 2010. The adoption of this guidance is not expected to have a material effect on the Company’s condensed consolidated financial statements.

In December 2010, the FASB issued Accounting Standards Update No. 2010-28, Intangibles - Goodwill and Other (Topic 350): When to Perform Step 2 of the Goodwill Impairment Test for Reporting Units with Zero or Negative Carrying Amounts (“ASU 2010-28”). ASU 2010-28 modifies Step 1 of the goodwill impairment test for reporting units with zero or negative carrying amounts. For those reporting units, an entity is required to perform Step 2 of the goodwill impairment test if it is more likely than not that a goodwill impairment exists. In determining whether it is more likely than not that a goodwill impairment exists, an entity should consider whether there are any adverse qualitative factors indicating that an impairment may exist. The amendments in ASU 2010-28 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2010. The adoption of this guidance is not expected to have a material effect on the Company’s condensed consolidated financial statements.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable for a smaller reporting company.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Please see our Financial Statements beginning on page F-1 of this annual report.

ITEM 9.

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

On August 24, 2010, Li & Company, PC advised Genesis Group Holdings, Inc. that is terminating its engagement as our independent registered public accounting firm. Li & Company, PC served as our independent registered public accounting firm since October 8, 2009; however, during the course of its engagement by us, it never rendered a report on our financial statements and we have yet to file our Annual Report on Form 10-K for the year ended December 31, 2009.

During our two most recent fiscal years and the subsequent interim period preceding Li & Company, PC’s resignation we had no disagreements with the firm on any matter of accounting principles or practices, financial statement disclosure, or auditing scope of procedure which such disagreement if not resolved to the satisfaction of Li & Company, PC would have caused it to make reference to the subject matter of the disagreement in connection with its report.

On August 25, 2010 we engaged Sherb & Co. LLP as our independent registered public accounting firm. During our two most recent fiscal years and the subsequent interim period prior to retaining Sherb & Co. LLP (1) neither we nor anyone on our behalf consulted Sherb & Co. LLP regarding (a) either the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements or (b) any matter that was the subject of a disagreement or a reportable event as set forth in Item 304(a)(1)(iv) and (v), respectively, of Regulation S-K, and (2) Sherb & Co. LLP did not provide us with a written report or oral advice that they concluded was an important factor considered by us in reaching a decision as to accounting, auditing or financial reporting issue.

The decision to engage Sherb & Co. LLP as our independent registered public accounting firm was approved by our Board of Directors.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this Annual Report on Form 10-K, our Chief Executive Officer who also serves as our Chief Financial Officer has concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management to allow timely decisions regarding required disclosure as a result of material weaknesses in our disclosure controls and procedures. The material weaknesses relate to our inability to timely file our reports and other information with the SEC as required under Section 13 of the Securities Exchange Act of 1934, together with the material weaknesses in our internal control over financial reporting as described later in this section. To remediate the material weaknesses in disclosure controls and procedures related to our inability to timely file reports and other information with the SEC, we have hired experienced accounting personnel to assist with filings and financial record keeping.

Management’s Report on Internal Control over Financial Reporting. Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that:

• pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

• provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of the inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2010. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing of the operational effectiveness of these controls. Based on this assessment, our management has concluded that as of December 31, 2010, our internal control over financial reporting was not effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles as a result of the material weaknesses indentified in our disclosure controls and procedures as described earlier in this section as well as weaknesses in our internal control over financial reporting related to proper recording keeping of invoices for services and posting of equity issuances in accordance with generally accepted accounting principles. Subsequent to the 2009 year end, we hired an outside accountant and instituted policies which dictate the collection and retention of invoices for services as well as procedures to ensure that all equity issuances are properly and timely recorded. We believe that these remedial actions will be sufficient to correct the material weaknesses in internal control over financial reporting which existed at December 31, 2010.

Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. Other Information.

N/A

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Executive officers and directors

Name	Age	Positions
Gideon Taylor	68	Director, Chief Executive Officer, Chief Financial Officer
Billy B. Caudill	66	President , Chief Operating Officer
Lawrence Sands	50	Senior Vice President, Corporate Secretary

Gideon Taylor. Mr. Taylor has been a member of our Board of Directors and an executive officer since July 2009. In 1987 Mr. Gideon founded what became Able Telcom Holding Corp., a Florida based telecommunications infrastructure provider, and in 1988 the company went public which grew to more than $400,000,000 in annual revenues in 11 years. Mr. Gideon served as President and Chief Executive Officer Able Telcom Holding Corp. from 1988 until August 1992, and Chairman of the Board of Directors from 1988 until 1995. Mr. Taylor came out of retirement in 2004 and became an independent consultant performing research and development, and miscellaneous assistance within the telecommunications industry. Mr. Taylor also served a total of 24 years in the United States Army; during much of that tenure he provided telecommunications engineering services for the US Government.

Billy B. Caudill. Mr. Caudill has served as our President and Chief Operating Officer since January 2010 and has been President of Digital Comm since 2005. Beginning his career in the Central Office division of GTE, Mr. Caudill has successfully started and managed several public and private telecommunication companies. Having over 30 years of significant Telecom Operational and Management experience has made Mr. Caudill knowledgeable in Central Office Engineering and Installation, the construction of Broadband Networks, Network Integration, Structured Cabling and Switching Equipment Installations, LAN/WAN applications and technician staffing and training.

Lawrence Sands. Mr. Sands has served as our Senior Vice President since January 2010 and in August 2010 became corporate secretary. Prior to joining our company, from January 2010 to September 2010 he was a finance manager at Vista BMW in Coconut Creek, Florida and from March 2010 until September 2010 he was Vice President, Secretary and a director of Omni Ventures, Inc. (OTCBB: OMVE), a development stage company that planned to provide equity funding for commercial and recreational projects in the Mid-west and Western areas of the United States. In 2009 he provided consulting services to Digital Comm. From January 2008 until December 2008 he was Chief Executive Officer of Paivis Corp., a public company engaged in long distance telecommunications. Prior thereto, from September 2003 until April 2008, Mr. Sands was a finance manager at JM Lexus in Margate, Florida. Mr. Sands received a B.S. in Technology and Industrial Arts from New York University and a J.D. from Whittier College, School of Law.

There are no family relationships between our officers and directors. Each director is elected at our annual meeting of stockholders and holds office until the next annual meeting of stockholders, or until his successor is elected and qualified.

Director Qualifications, Committees of our Board of Directors and the Role of our Board in Risk Oversight

Mr. Taylor, our sole director, has in excess of 10 years experience in our industry segment. We do not have any independent directors and the business and operations of our company is managed by Mr. Taylor, including oversight of various risks, such as operational and liquidity risks that our company faces.

We have not established any committees, including an Audit Committee, a Compensation Committee or a Nominating Committee, any committee performing a similar function. The functions of those committees are being undertaken by Board of Directors as a whole. Because we have only one director, we believe that the establishment of these committees would be more form over substance.

We do not have a policy regarding the consideration of any director candidates which may be recommended by our stockholders, including the minimum qualifications for director candidates, nor has our Board of Directors established a process for identifying and evaluating director nominees. We have not adopted a policy regarding the handling of any potential recommendation of director candidates by our stockholders, including the procedures to be followed. Our Board has not considered or adopted any of these policies as we have never received a recommendation from any stockholder for any candidate to serve on our Board of Directors. Given our relative size and lack of directors and officers insurance coverage, we do not anticipate that any of our stockholders will make such a recommendation in the near future. While there have been no nominations of additional directors proposed, in the event such a proposal is made, all members of our Board will participate in the consideration of director nominees. In considering a director nominee, it is likely that our Board will consider the professional and/or educational background of any nominee with a view towards how this person might bring a different viewpoint or experience to our Board.

Mr. Taylor has determined that he is an “audit committee financial expert” within the meaning of Item 401(e) of Regulation S-K. In general, an “audit committee financial expert” is an individual member of the audit committee or Board of Directors who:

•	understands generally accepted accounting principles and financial statements,

•	is able to assess the general application of such principles in connection with accounting for estimates, accruals and reserves,

•	has experience preparing, auditing, analyzing or evaluating financial statements comparable to the breadth and complexity to our financial statements,

•	understands internal controls over financial reporting, and

•	understands audit committee functions.

Our securities are not quoted on an exchange, however, that has requirements that a majority of our Board members be independent and we are not currently otherwise subject to any law, rule or regulation requiring that all or any portion of our Board of Directors include “independent” directors, nor are we required to establish or maintain an Audit Committee or other committee of our Board of Directors.

Financial Code of Ethics

We have adopted a Financial Code of Ethics applicable to our chief executive officer, who is our principal executive officer, and our chief financial officer, who is our principal financial and accounting officer. We will provide a copy, without charge, to any person desiring a copy of the Financial Code of Ethics, by written request to, 2500 N. Military Trail, Suite 275, Boca Raton, FL 33431.

Compliance with Section 16(a) of the Exchange Act

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% stockholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, and to the best of our knowledge, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2010.

ITEM 11. EXECUTIVE COMPENSATION.

The following table summarizes all compensation recorded by us in 2010 for our executive officers, whose annual compensation exceeded $100,000, and up to two additional individuals for whom disclosure would have been made in this table but for the fact that the individual was not serving as an executive officer of our company at December 31, 2010. The value attributable to any option awards is computed in accordance with FASB ASC Topic 718.

SUMMARY COMPENSATION TABLE
Name and principal position (a)	Year (b)	Salary ($) (c)		Bonus ($) (d)		Stock Awards ($) (e)		Option Awards ($) (f)		Non-Equity Incentive Plan Compen-sation ($) (g)		Non-qualified Deferred Compen-sation Earnings ($) (h)		All Other Compen-sation ($) (i)		Total ($) (j)
Gideon Taylor 1	2010		200,000		0		0		0		0		0		0		200,000
Billy Caudill2	2010		200,000		0		0		0		00		0		0		200,000
Lawrence Sands3	2010		120,000		0		800,000		0		0		0		0		920,000

1 Mr. Taylor has served as our Chief Executive Officer since July 2009. We have accrued the amount of compensation due Mr. Taylor which is included in our operating expenses for the year ended December 31, 2010. Mr. Taylor was not paid his annual salary totaling $200,000 and instead chose to waive receiving it. The company recorded this forgiveness as contributed capital and is reflected in the accompanying financial statements as additional paid-in capital.

2 Mr. Caudill served as our President since January 2010. We have accrued the amount of compensation due Mr. Caudill which is included in our operating expenses for the year ended December 31, 2010. Mr. Caudill was not paid his annual salary totaling $200,000 and instead chose to waive receiving it. The company recorded this forgiveness as contributed capital and is reflected in the accompanying financial statements as additional paid-in capital

3 Mr. Sands served as our Senior Vice President and Corporate Secretary since January 2010. He began receiving salary in August 2010.

How Mr. Taylor’s Compensation is Determined

In September 2009 we entered into a five year employment agreement with Gideon Taylor to serve as our Chief Executive Officer and a member of our Board of Directors. Unless earlier terminated, at the end of the initial term the agreement automatically renews for additional one year terms. Under the terms of the agreement, he is entitled to annual compensation of $200,000 payable in cash; if we do not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. He is also entitled to receive a bonus at the discretion of the Board of Directors of which he is the sole member. He is entitled to participate in any equity incentive plan we may adopt, participate in employee benefits and reimbursement of expenses

The agreement may be terminated by us for “cause” at any time after the first year of the agreement upon two months notice to Mr. Taylor. Under the agreement “cause” includes:

• if he is convicted or pleads guilty to a felony or act of fraud, misappropriation or embezzlement, or

• if he had been negligent or dishonest to the detriment of the Company, or

• if he had engaged in actions amounting to misconduct or failed to perform his duties, or

• if he had died or is disabled.

In the event he is terminated for cause, he is not entitled to any severance or other benefits. The employment agreement may also be terminated by Mr. Taylor upon two months notice if there is a material and substantial reduction in his duties and the resignation is approved by the Board. In the event he should terminate the agreement during the second year of the term, he is entitled one year’s salary as severance; in the event he should terminate the agreement after the second anniversary of the agreement, he is entitled to two years salary as severance and he may exercise any vested options which may have been granted. The employment agreement contains customary confidentiality and non-compete provisions

At the time we entered into the agreement with Mr. Taylor, he was the sole member of our Board of Directors and we did not consult with any compensation consultant or other third parties in determining the terms of Mr. Taylor’s agreement.

Employment Agreement with Mr. Caudill

In January 2010 we entered into a five year employment agreement with Billy D. Caudill to serve as our Chief Operating Officer and Secretary. Unless earlier terminated, at the end of the initial term the agreement automatically renews for additional one year terms. Under the terms of the agreement, he is entitled to annual compensation of $200,000 payable in cash; if we do not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. We have not yet issued these shares. He is also entitled to receive a bonus an annual bonus equal to 5% of our EBITDA for the 12 month period ending December 31, payable in cash or stock at the discretion of our Board of Directors. He is entitled to a $1,000 per month car allowance, participate in any equity incentive plan we may adopt, participate in employee benefits and reimbursement of expenses. He is also entitled to receive an additional 25,000,000 shares of our common stock if we record $20 million of contracts and new company acquisitions during the first year of the term of the agreement.

The agreement may be terminated by us for “cause” at any time after the first year of the agreement upon two months notice to Mr. Caudill. Under the agreement “cause” includes:

• if he is convicted or pleads guilty to a felony or act of fraud, misappropriation or embezzlement, or

• if he had been negligent or dishonest to the detriment of the Company, or

• if he had engaged in actions amounting to misconduct or failed to perform his duties, or

• if he had died or is disabled.

In the event he is terminated for cause, he is not entitled to any severance or other benefits. The employment agreement may also be terminated by Mr. Caudill upon two months notice if there is a material and substantial reduction in his duties and the resignation is approved by the Board. In the event he should terminate the agreement during the second year of the term, he is entitled one year’s salary as severance; in the event he should terminate the agreement after the second anniversary of the agreement, he is entitled to two years salary as severance and he may exercise any vested options which may have been granted. The employment agreement contains customary confidentiality and non-compete provisions

We did not consult with any compensation consultant or other third parties in determining the terms of Mr. Caudill’s agreement. Mr. Caudill did not receive any compensation for his services to us to date and has agreed to accrue his compensation or accept stock in lieu of cash compensation.

Employment Agreement with Mr. Sands

In January 2010 we entered into a three year employment agreement with Mr. Lawrence Sands to serve as our Vice President of Mergers and Acquisitions. Unless earlier terminated, at the end of the initial term the agreement automatically renews for additional one year terms. Under the terms of the agreement, he is entitled to annual compensation of $120,000 payable in cash; if we do not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. He is also entitled to receive a bonus at the discretion of the Board of Directors, a $1,000 per month car allowance and to participate in any equity incentive plan we may adopt and to participate in employee benefits. As an incentive, we issued him 4,000,000 shares of our common stock valued at $2,400,000 of the agreement, and an additional 1,200,000 shares of common stock in satisfaction of accrued but unpaid salary totaling $72,000 for the period January 2010 to August 2010.

The agreement may be terminated by us for “cause” at any time after the first year of the agreement upon two months notice to Mr. Sands. Under the agreement “cause” includes:

• if he is convicted or pleads guilty to a felony or act of fraud, misappropriation or embezzlement, or

• if he had been negligent or dishonest to the detriment of the Company, or

• if he had engaged in actions amounting to misconduct or failed to perform his duties, or

• if he had died or is disabled.

In the event he is terminated for cause, he is not entitled to any severance or other benefits. The employment agreement may also be terminated by Mr. Sands upon notice if there is a material and substantial reduction in his duties and the resignation is approved by the Board. In the event he should terminate the agreement, he is entitled to severance benefits ranging from three month’s salary to one year’s salary based upon the date of termination and he is entitled to exercise any vested options. The employment agreement contains customary confidentiality and non-compete provisions

We did not consult with any compensation consultant or other third parties in determining the terms of Mr. Sands’ agreement. Mr. Sands began receiving salary in August, 2010

Outstanding Equity Awards at Fiscal Year-End

The following table provides information concerning unexercised options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2010:

OPTION AWARDS											STOCK AWARDS
Name (a)	Number of Securities Underlying Unexercised Options (#) Exercisable (b)		Number of Securities Underlying Unexercised Options (#) Unexercisable (c)		Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) (d)		Option Exercise Price ($) (e)		Option Expiration Date (f)		Number of Shares or Units of Stock That Have Not Vested (#) (g)		Market Value of Shares or Units of Stock That Have Not Vested ($) (h)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) (i)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) (j)
Billy Caudill		0		0		0		0		0		0		0		0		0
Gideon Taylor		0		0		0		0		0		0		0		0		0
Lawrence Sands		0		0		0		0		0		0		0		0		0

Compensation of Directors

We have not established standard compensation arrangements for our directors and the compensation payable to each individual for their service on our Board is determined from time to time by our Board of Directors based upon the amount of time expended by each of the directors on our behalf. Neither Mr. Taylor nor Mr. Glick, each of whom was an executive officer of our company during 2009, received any compensation specifically for his services as a director. Mr. Glick resigned as director in January 2010. The following table provides information concerning the compensation of Mr. Taylor for his services as a member of our Board of Directors for 2010. The value attributable to any option awards is computed in accordance with FASB ASC 718.

Director Compensation
Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)		Non-Qualified Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)

Gideon Taylor		0		0		0		0		0		0		0

ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

At March 31, 2011, 2010 we had 149,881,070 shares of common stock issued and outstanding. The following table sets forth information known to us as of March 31, 2011 relating to the beneficial ownership of shares of our voting securities by:

▪ each person who is known by us to be the beneficial owner of more than 5% of our outstanding voting stock;

▪ each director;

▪ each named executive officer; and

▪ all named executive officers and directors as a group.

Unless otherwise indicated, the business address of each person listed is in care of 2500 N. Military Trail, Suite 275, Boca Raton, FL 33431. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse.

Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	% of Class
Gideon Taylor	25,500,000	23.3%
Lawrence Sands	5,200,000	4.8%
Billy B. Caudill	50,000,000	45.8%
All named executive officers and directors as a group (three persons)	80,700,000	73.9%
UTA Capital LLC 1	22,234,475	20.4%

1 The number of shares owned by UTA Capital LLC includes shares of our common stock issuable upon the exercise of outstanding warrants expiring in August 2015 with an exercise price of $0.15 per share. UTA Capital LLC’s address is 100 Executive Drive, Suite 330, West Orange, NJ 07052.

Securities Authorized for Issuance under Equity Compensation Plans

The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our shareholders as of December 31, 2010.

Number of securities to be issued upon exercise of outstanding options, warrants and rights (a)

Weighted average exercise price of outstanding options, warrants and rights (b)

Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c)

Plan category

Plans approved by our shareholders:

n/a

Plans not approved by shareholders:

n/a

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

During 2010, the principal shareholders of the Company Mr. Gideon Taylor and Mr. Billy Caudill provided loans totaling $348,471 and $4,000 at December 31, 2010. These loans are unsecured, non-interest bearing with maturities less than one year.

Director Independence

Mr. Taylor is not considered “independent” within the meaning of meaning of Rule 5605 of the NASDAQ Marketplace Rules.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

The following table shows the fees that were billed for the audit and other services provided by Sherb & Co., LLP.

	2010		2009

Audit Fees	$	30,000	$	39,000
Audit-Related Fees		0		0
Tax Fees		0		0
All Other Fees		0		0
Total	$	30,000	$	39,000

Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

Audit-Related Fees — This category consists of assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.

Tax Fees — This category consists of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice.

All Other Fees — This category consists of fees for other miscellaneous items.

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by the our independent registered public accounting firm. Under the procedure, the Board approves the engagement letter with respect to audit, tax and review services. Other fees are subject to pre-approval by the Board, or, in the period between meetings, by a designated member of Board. Any such approval by the designated member is disclosed to the entire Board at the next meeting. The audit and tax fees paid to the auditors with respect to 2010 were pre-approved by the entire Board of Directors.

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Exhibit No.	Description
2.1	Stock Purchase Agreement dated January 14, 2010 between Genesis Group Holdings, Inc. and Digital Comm, Inc.
3.1	Certificate of Incorporation, as amended (1)
3.2	Certificate of Amendment to Certificate of Incorporation (5)
3.3.	Bylaws (1)
4.1	Form of Digital Comm, Inc. Senior Secured Bridge Note
4.2	Form of Common Stock Purchase Warrant issued to UTA Capital LLC
10.1	Share Purchase Agreement dated October 5, 2001 by and between Genesis Realty Group, Inc. and Glick Global Development, LLC (2)
10.2	Stock Purchase Agreement dated July 2, 2009 by and between Gideon Taylor and Genesis Group Holdings, Inc.
10.3	Consulting Agreement between Genesis Group Holdings, Inc. and Harpos Funding II, LLC
10.4	Note and Warrant Purchase Agreement dated August 6, 2010 with UTA Capital LLC
10.5	Employment Agreement with Billy Caudill
10.6	Employment Agreement with Lawrence Sands
10.7	Lease for Principal Executive Offices
10.8	Employment Agreement with Gideon Taylor
10.9	Form of Amendment to Executive Employment Agreement with Billy Caudill
10.10	Form of Amendment to Executive Employment Agreement with Gideon Taylor
10.11	Loan Extension and Modification Agreement dated February 14, 2011 with UTA Capital LLC*
14.1	Code of Ethics (3)
16.1	Letter from Li & Company (4)
31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer *
31.2	Rule 13a-14(a)/15d-14(a) Certification Chief Financial Officer *
32.1	Section 1350 Certification of Chief Executive Officer and Chief Financial Officer *

* filed herewith.

(1)	Incorporated by reference to the Registration Statement on Form 10, SEC File No. 000-32037.
(2)	Incorporated by reference to the Current Report on Form 8-K filed on October 24, 2001.
(3)	Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2007.
(4)	Incorporated by reference to the Current Report on Form 8-K filed on September 3, 2010.
(5)	Incorporated by reference to the definitive information statement on Schedule 14C filed on August 18, 2008

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Genesis Group Holdings, Inc.

April 19 ,2011	By:	/s/ Gideon Taylor
		Gideon Taylor, Chief Executive Officer

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

Name	Positions	Date
/s/ Gideon Taylor Gideon Taylor	Chief Executive Officer, Chief Financial Officer, President, sole director, principal executive officer and principal financial and accounting officer	April 19, 2011

	7900 Glades Road, Suite 540 Boca Raton, FL 33434 Tel: 561.886.4200 Fax: 561.886.3330 e-mail: info@sherbcpa.com
SHERB & CO., LLP	Offices in New York and Florida

Certified Public Accountants

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors

Genesis Group Holdings, Inc.

We have audited the accompanying consolidated balance sheets of Genesis Group Holdings, Inc. and Subsidiary as of December 31, 2010 and 2009, respectively, and the related consolidated statements of operations, changes in stockholders' deficit and cash flows for the years ended December 31, 2010 and 2009, respectively. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company and its subsidiaries as of December 31, 2010 and 2009, respectively, and the results of their operations and cash flows for the years ended December 31, 2010, and 2009, respectively, in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the consolidated financial statements, the Company has suffered losses from operations, and has an accumulated deficit and net cash used in operations of $1,142,543 for the year ended December 31, 2010. This raises substantial doubt about its ability to continue as a going concern. Management's plans in regards to these matters are described in Note 12 to the consolidated financial statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

	/s/ Sherb & Co., LLP
	Certified Public Accountants

Boca Raton, Florida

April 11, 2011

GENESIS GROUP HOLDINGS, INC.

Consolidated Balance Sheets

December 31,

	2010			2009
Assets

Current Assets
Cash and cash equivalents	$	22,476		$	2,413
Accounts receivable, net		148,811			82,608
Inventory and other current		13,235			-

Total Current Assets		184,522			85,021

Property and equipment, net		237,935			30,432

Deposits		7,926			-

Total Assets	$	430,383		$	115,453

Liabilities and Stockholders' Deficit

Current liabilities
Bank overdraft	$	-		$	-
Accounts payable		294,689			156,333
Accrued expenses		151,497			10,007
Due to related parties		348,471			-
Bank debt, current portion		64,105			-
Note payable, UTA, (net of debt discount of $265,732)		509,268			-

Total Current Liabilities		1,368,030			166,340

Other Liabilities:
Bank debt, net of current portion		229,542			-
Derivative liability		459,897			-

Total Other Liabilities		689,439			-


Stockholders' Deficit:
Common stock, $.0001 par value, 500,000,000 shares
authorized; 105,973,976 and 161,090,500 shares issued and outstanding		10,597			15,959
Preferred stock, $.0001 par value, 50,000,000 authorized;
none issued or outstanding		-			-
Additional paid-in-capital		581,800			4,811,041
Less: Subscription Stock Receivable		-			(4,800,000	)
Accumulated deficit		(2,219,483	)		(77,887	)

Total Stockholders' Deficit		(1,627,086	)		(50,887	)

Total Liabilities and Stockholders' Deficit	$	430,383		$	115,453

F-1

GENESIS GROUP HOLDINGS, INC.

Consolidated Statements of Operations

	FOR THE YEARS ENDED
	DECEMBER 31,
	2010			2009

REVENUES:
Contract revenues	$	952,839		$	1,245,324


EXPENSES
Cost of revenues earned		1,002,781			914,982
Depreciation and amortization		26,191			16,578
Salaries and wages, including stock compensation		1,574,374			80,753
General and administrative		600,509			186,330

TOTAL EXPENSES		3,203,855			1,198,643

LOSS FROM OPERATIONS		(2,251,016	)		46,681

Unrealized gain on increase in value of derivative		376,788			-
Interest expense		(267,368	)		(44,480	)

NET LOSS (INCOME)	$	(2,141,596	)	$	2,201

LOSS PER COMMON SHARE
Basic and fully diluted	$	(0.02	)	$	0.00

Weighted average number of common shares
outstanding		136,148,976			66,397,843

F-2

GENESIS GROUP HOLDINGS, INC.

Consolidated Statements of Cash Flow


	FOR THE YEARS ENDED DECEMBER 31,
	2010			2009

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)	$	(2,141,596	)	$	2,201
Adjustments to reconcile net loss to net cash
used in operations:
Depreciation		26,191			16,578
Amortization of debt discount		189,808			—
Stock compensation for services		872,000			—
Decrease in current value of derivative liability		(376,788	)		—
Changes in assets and liabilities:
Increase in accounts receivable		(66,203	)		(61,027	)
Increase in inventory		(13,235	)		—
Increase in deposits		(7,926	)		—
Increase in accounts payable and accrued expenses		375,206			83,013

		999,052			38,564

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		(1,142,543	)		40,765

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment		(181,312	)		(47,009	)

NET CASH USED IN INVESTING ACTIVIES		(181,312	)		(47,009	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Bank overdraft		—			—
Borrowings from related party		528,471			—
Repayments to related party		(253,200	)		—
Capital contribution from shareholder					7,200
Borrowings from banks		421,754			—
Repayments to banks		(128,107	)		—
Borrowings from third party lender-UTA		1,000,000			—
Repayments to third party lender-UTA		(225,000	)		—
NET CASH PROVIDED BY FINANCING ACTIVITIES		1,343,918			7,200

NET INCREASE (DECREASE) IN CASH		20,063			956

CASH - beginning of year		2,413			1,457

CASH - end of year	$	22,476		$	2,413

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for interest	$	97,293		$	42,570

Taxes paid	$	—		$	—

Non-cash investing and financing activities:

Recognition of derivative liability from warrant issuance		836,685			—

Contribution of capital from waiver of officer salaries	$	400,000		$	—

Shares Issued (cancelled/consummated)for pending acquisitions	$	(4,800,000	)	$	8,800,000

Shares issued/(cancelled) for services relating to pending acquisition not transpire	$	(350	)	$	696,000

F-3

GENESIS GROUP HOLDINGS, INC.

Consolidated Statement of Changes in Stockholders' Equity

For the Years Ended December 31, 2009 and 2010

											Additional						Stock
	Common Stock						Preferred Stock				Paid-in			Accumulated			Subscription
	Shares			Amount			Shares		Amount		Capital			Deficit			Receivable			Total

Balance December 31, 2008		84,200,000		$	8,420			-	$	-	$	(223,228	)	$	(80,088	)				$	(294,896	)

Issuances of shares for services relating to pending acquisition that did not transpire		60,000,000			6,000			-		-		4,794,000			-			(4,800,000	)		-
Conversion of notes payable and accrued
interest		15,391,438			1,539			-		-		240,269			-						241,808
Loss during development stage for the year
ended December 31, 2009															2,201						2,201

Balance December31, 2009		159,591,438			15,959			-		-		4,811,041			(77,887	)		(4,800,000	)		(50,887	)

Recapitalization from acquisition of Digital
Comm, Inc.		1,499,062			150							(325,608	)								(325,458	)

Issuance of shares to former management and
debt holders		3,183,476			318			-		-		(318	)		-						-

Issuance of shares to officer pursuant to
employment contract		4,000,000			400							799,600									800,000

Issuance of shares to officer in settlement of
unpaid salary		1,200,000			120							71,880									72,000

Cancellation of shares relating to proposed acquisition of STS		(60,000,000	)		(6,000	)						(4,794,000	)					4,800,000			-

Cancellation of shares		(3,500,000	)		(350	)						350									-

Computed debt discount on warrant issuance to
UTA												455,540									455,540

Derivative liability from warrant issuance												(836,685	)								(836,685	)

Contributed capital by officers from
waiver of salaries												400,000									400,000

Net loss															(2,141,596	)					(2,141,596	)

Balance December 31, 2010		105,973,976		$	10,597			-	$	-	$	581,800		$	(2,219,483	)				$	(1,627,086	)

F-4

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.	DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

Genesis Group Holdings, Inc. (formerly known as Genesis Realty Group, Inc.) (“Genesis” or “the Company”) was incorporated on November 22, 1999 under the laws of the State of Delaware. Prior to December 31, 2009 the Company was a development stage company and had limited activity. The Company’s initial activities were been devoted to developing a business plan, structuring and positioning itself to take advantage of available opportunities and raising capital for future operations and administrative functions.

On August 1, 2008 the Company authorized and approved a 1-for-20 reverse share split of the common stock of the Corporation. The Company also authorized an increase in the number of shares of stock to 500,000,000 shares of common stock and created a new class of stock entitled blank check preferred stock at par value of $.0001 for 50,000,000 authorized shares.

The 1-for-20 reverse stock split has been applied to the financial statements retroactively.

On January 14, 2010 Genesis Group Holdings, Inc. (“Genesis” and “the Company”) acquired all the outstanding shares of Digital Comm, Inc. (“Digital”), a Florida Corporation, in exchange for 50,000,000 shares of Genesis. Digital was originally formed on September 13, 2006 and, on January 14, 2010 was reorganized as a wholly owned subsidiary of Genesis. Digital is a provider of specialty contracting services, primarily in the installation of fiber optic telephone cable. These services are provided throughout the United States and include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities including telecommunications providers, and other construction and maintenance services to electric and gas utilities and others.

For financial accounting purposes, the merger was treated as a recapitalization of Genesis Group Holdings, Inc with the former stockholders of Genesis Group Holdings, Inc retaining approximately 20% of the outstanding stock. This transaction has been accounted for as a reverse acquisition and accordingly the transaction has been treated as a recapitalization of Digital Comm, Inc., with Digital Comm, Inc. as the accounting acquirer. The historical financial statements are a continuation of the financial statements of the accounting acquirer, and any difference of the capital structure of the merged entity as compared to the accounting acquirer’s historical capital structure is due to the recapitalization of the acquired entity.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary in order to prepare the financial statements have been included.

The consolidated balance sheet as of December 31, 2009 and the consolidated statement of operations and cash flows for the year ended December 31, 2009, are derived from the historical financial statements of the Company and Digital and have been prepared to give effect to the reverse acquisition of the Company and Digital as at December 31, 2009.

F-5

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- (continued)

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of Genesis and its wholly owned subsidiary Digital. All significant inter-company accounts and transactions have been eliminated in consolidation.

USE OF ESTIMATES

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 disclosures of contingent assets and liabilities as of the date of the financial statements and reporting period. Accordingly, actual results could differ from those estimates.

CASH AND CASH EQUIVALENTS

For purposes of reporting cash flows, the company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

REVENUE RECOGNITION

The Company recognizes revenues under the percentage of completion method of accounting using the cost-to-cost measures. Revenues from contracts using the cost-to-cost measures of completion are recognized based on the ratio of contract costs incurred to date to total estimated contract costs.

Application of the percentage of completion method of accounting requires the use of estimates of costs to be incurred for the performance of the contract. This estimation process is based upon the knowledge and experience of the Company’s project managers and financial personnel. Factors that the Company considers in estimating the work to be completed and ultimate contract recovery include the availability and productivity of labor, the nature and complexity of the work to be performed, the effect of change orders, the availability of materials, the effect of any delays in performance and the recoverability of any claims. Changes in job performance, job conditions, estimated profitability and final contract settlements may result in revisions to costs and income and their effects are recognized in the period in which the revisions are determined. At the time a loss on a contract becomes known, the amount of the estimated loss expected to be incurred is accrued.

ALLOWANCE FOR DOUBTFUL ACCOUNTS

The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Estimates of uncollectible amounts are reviewed each period, and changes are recorded in the period they become known. Management analyzes the collectability of accounts receivable balances each period. This review considers the aging of account balances, historical bad debt experience, and changes in customer creditworthiness, current economic trends, customer payment activity and other relevant factors. Should any of these factors change, the estimate made by management may also change, which could affect the level of the Company’s provision for doubtful accounts.

F-6

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- (continued)

ADVERTISING

The Company’s policy for reporting advertising expenditures is to expense them as they are incurred. Advertising expense has not been material to date.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated on a straight-line basis over their estimated useful lives. Useful lives range from: vehicles — 3- 7 years; equipment and machinery — 5-7 years; small tools – 5 years: and furniture, fixtures, computer equipment — 5 years. Maintenance and repairs are expensed as incurred and major improvements are capitalized. When assets are sold or retired, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is included in other income.

COMMON STOCK PURCHASE WARRANTS

The Company accounts for the issuance of common stock purchase warrants issued in connection with capital financing transactions in accordance with professional standards for "Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company's Own Stock".

The Company assessed the classification of its derivative financial instruments as of December 31, 2010, which consist of common stock purchase warrants, and determined that such derivatives are accounted for in accordance with professional standards.

INCOME TAXES

The Company accounts for income taxes under the asset and liability method. This approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. In June 2006, the FASB issued ASC Topic 740, Income Taxes (“ASC Topic 740”) (formerly FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109 ), which prescribes a two-step process for the financial statement recognition and measurement of income tax positions taken or expected to be taken in an income tax return. The first step evaluates an income tax position in order to determine whether it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position. The second step measures the benefit to be recognized in the financial statements for those income tax positions that meet the more likely than not recognition threshold. ASC Topic 740 also provides guidance on de-recognition, classification, recognition and classification of interest and penalties, accounting in interim periods, disclosure and transition. In May 2007, the FASB issued an amendment of ASC Topic 740 to provide guidance that a Company may recognize a previously unrecognized tax benefit if the tax position is effectively (as opposed to “ultimately”) settled through examination, negotiation, or litigation.

STOCK-BASED COMPENSATION

The Company grants stock options, time-based and performance-based restricted share units to certain employees and officers. The fair value of stock option grants is estimated on the date of grant using the Black-Scholes option pricing model based on certain assumptions. The fair value of restricted share units is estimated on the date of grant and is generally equal to the closing stock price on the date of grant. In accordance with ASC Topic 718,

F-7

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- (continued)

Compensation – Stock Compensation , compensation costs for performance-based awards are recognized by the Company over the requisite service period if it is probable that the performance goal will be satisfied. The Company uses its best judgment to determine probability of achieving the performance goals at each reporting period and recognizes compensation costs based on the estimate of the shares that are expected to vest.

NET LOSS PER SHARE

Basic loss per common share is computed based on the weighted average number of shares outstanding during the period. Diluted loss per share is computed in a manner similar to the basic loss per share, except that the weighted-average number of shares outstanding is increased to include all common shares, including those with the potential to be issued by virtue of warrants, options, convertible debt and other such convertible instruments. A diluted earnings per share contemplates a complete conversion to common shares of all convertible instruments only if they are dilutive in nature with regards to earnings per share. Since the Company has incurred net losses for all periods, and since there are no convertible instruments, basic loss per share and diluted loss per share are the same. ASC Topic 260, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities (“ASC Topic 260”), addresses whether unvested share-based payment awards with rights to receive dividends or dividend equivalents should be considered as participating securities for the purposes of applying the two-class method of calculating earnings (loss) per share. Unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents are participating securities, and thus, should be included in the two-class method of computing earnings (loss) per share. The Company adopted this standard in the first quarter of fiscal 2010 and the adoption did not change the Company’s earnings (loss) per share calculation for any prior period presented.

FAIR VALUE OF FINANCIAL INSTRUMENTS

ASC Topic 820, Fair Value Measurements and Disclosures (“ASC Topic 820”), defines fair value, establishes a measurement framework and expands disclosure requirements. The Company adopted ASC Topic 820 for financial assets and liabilities on the first day of fiscal 2009 and adopted non-recurring measurements for non-financial assets and liabilities on the first day of fiscal 2010. The adoption of ASC Topic 820 did not have an impact on the Company’s financial statements. ASC Topic 820 requires that assets and liabilities carried at fair value will be

classified and disclosed in one of the following three categories: (1) Level 1 - Quoted market prices in active markets for identical assets or liabilities; (2) Level 2 - Observable market based inputs or unobservable inputs that are corroborated by market data; and (3) Level 3 - Unobservable inputs not corroborated by market data which require the reporting entity’s own assumptions. The Company’s financial instruments consist primarily of cash and equivalents, restricted cash, accounts receivable, income taxes receivable and payable, accounts payable and accrued expenses, and long-term debt. The carrying amounts of these instruments approximate their fair value due to the short maturity of these items.

The fair value of our financial instruments at December 31, 2010 and 2009 are as follows:

F-8

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES- (continued)


	Fair Value Measurements at Reporting Date Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
December 31, 2009:
Warrant Derivatives		$	—		$	—		$	----

December 31, 2010:
Warrant Derivatives		$	—		$	—		$	459,897

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

F-9

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3. PROPERTY AND EQUIPMENT, NET

Property and equipment consist of the following:

	December 31, 2010			December 31, 2009
Vehicles	$	95,568		$	4,000
Computers and Office Equipment		24,367			7,771
Equipment		146,253			31,007
Small Tools		14,183			4,232
Total		280,371			47,010
Less accumulated depreciation		(42,436	)		(16,578
Property and equipment, net	$	237,935		$	30,432

Depreciation expense for the years ended December 31, 2010 and 2009 was $ 26,191 and $ 16,578, respectively.

4. BANK DEBT

Bank debt consists of the following:


	December 30, 2010			December 31, 2009

Installment note payable, payable monthly principle
and interest of $621.24, interest at 9.05%
secured by vehicle, maturing June 2015	$	27,396		$	-0-
Two Lines of credit, payable monthly principle
and interest , interest at 8.05%, guaranteed
personally by principal shareholders, maturing
June 2015 and February 2020		266,251			-0 -
		293,647			- 0-
Less: Current portion of debt		(64,105	)		- 0 -
Long term portion of bank debt	$	229,542		$	- 0-

5. DUE TO RELATED PARTY

On February 20, 2007, the Company entered into an agreement with Michael Farkas and two of his companies in which he is a beneficial owner (Atlas Equity Group, Inc. and The Atlas Group of Companies, LLC) to grant him the right to convert any or all debt into fully paid and non-assessable shares of Common Stock. Through December 31, 2010 and 2009 the Company executed notes aggregating a total of $ -0- and $241,808, respectively with Atlas Equity. These unsecured notes are short-term borrowings with maturities of less then one year with an interest rate of 10%. During 2009 the Company converted the total notes and accrued interest through the issuance of 15,391,438 common shares of the Company at a conversion price of $.01 per share pursuant to the agreement with Atlas Equity.

During 2010, the principal shareholders of the Company provided loans totaling $348,471 at December 31, 2010. These loans are unsecured, non-interest bearing with maturities less than one year.

F-10

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6. NOTES PAYABLE – UTA

On August 6, 2010, UTA Capital LLC provided a working capital loan to Genesis Group Holdings, Inc., the parent company of Digital, with Digital also as an additional borrower. The loan is evidenced by a Note and Warrant Purchase Agreement between Digital and Genesis and UTA Capital, LLC dated August 6, 2010. The Agreement calls for two senior bridge notes in the amount of $1 million each, for an aggregate principal amount of $2 million. The notes are each one year amortized term notes bearing interest at 10% per annum. The Company received an initial draw from the first $1 million note $960,000 net of fees which was recorded as a capital contribution by Genesis in Digital.

Additionally, the parent company issued to UTA Capital, LLC warrants purchasing 20,952,381 shares of common stock in Genesis exercisable at $0.15 per share which provide for a cashless exercise. Using professional standards, the relative fair value of the warrant was calculated using the Black-Scholes Option Valuation Model. This amount,

totaling approximately $455,540, has been recorded as a debt discount that will be charged to interest expense over the life of the promissory note.

The loan was subsequently modified and extended as further explained in Note 14.

7. DERIVATIVE LIABILITY

The Company analyzed the Note and Purchase Warrant Agreement referred to in Note 6 based on the provisions of ASC 815-15 and determined that the conversion option of the loan agreement qualifies as an embedded derivative.

The fair value upon inception of the embedded derivative was determined to be $836,685 and was recorded as an embedded derivative liability. The embedded derivative is revalued at the end of each reporting period and any resulting gain or loss is recognized as a current period charge to the statement of operations. Upon issuance the fair value was calculated using the Black-Scholes option pricing model with the following factors, assumptions, and methodologies:

· The fair value of the Company’s common stock was calculated to be $0.10 per share.

· A volatility of 60.2% was calculated by using the closing stock prices of three comparable public companies.

· The exercise price was $0.15. This amount is as stated in the loan agreement.

· The estimated life was determined to be 5 years, which is equal to the contractual life of the embedded derivative.

· The risk free interest rate was determined to be .15% based on the 1-year treasury rate.

The Company accounts for the embedded conversion features included in its common stock as well as the related warrants as derivative liabilities. The aggregate fair value of derivative liabilities as of August 6, 2010 and December 31, 2010 amounted to $836,685 and $459,897, respectively. The decrease of $376,788 in the fair value of the derivative liability between their respective date of issuance and December 31, 2010 is included in other income.

8. INCOME TAXES

No provisions for income taxes have been made because the Company has a current year loss and has sustained cumulative losses since the commencement of operations. As of December 31, 2010 and December 31, 2009 the Company had net operating loss carryforwards (“NOL’s”) of $1,219,000 and $84,190, respectively, which will be

F-11

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8. INCOME TAXES –(continued)

available to reduce future taxable income and expense through 2030, subject to limitations pursuant to IRC Section 382 in the event of a more than fifty percent change of ownership.

In accordance with ASC Topic 740 the Company has computed the components or deferred income taxes as follows.


	December 31, 2010			December 31, 2009
Deferred tax assets	$	466,000		$	33,255
Valuation allowance		(466,000	)		(33,255	)

Deferred tax asset, net	$	-0-		$	-0-

At December 31, 2010 and December 31, 2009, a full valuation allowance has been provided as realization of the deferred tax benefit is not likely. The valuation allowance increased approximately $433,000 in 2010.

The effective tax rate varies from the U.S. Federal statutory tax rate are as follows:


		Year Ended December 31,
	2010				2009

U.S. statutory tax rate			34.0	%		34.0	%
State and local taxes, net of federal benefit			3.6			5.5
Permanent differences			(18.2	)		(35.6	)
Valuation allowance5			(19.4	)		(3.9	)

Effective rate			0.0	%		0.0	%

9. CONCENTRATIONS OF CREDIT RISK

The Company is subject to concentrations of credit risk relating primarily to its cash and equivalents due to deposits in financial institutions which exceed the amount insured by the Federal Deposit Insurance Corporation, and trade accounts receivable. The Company grants credit under normal payment terms, generally without collateral, to its customers. These customers primarily consist of telephone companies, cable television multiple system operators and electric and gas utilities. With respect to a portion of the services provided to these customers, the Company has certain statutory lien rights which may in certain circumstances enhance the Company’s collection efforts. Adverse changes in overall business and economic factors may impact the Company’s customers and increase credit risks. These risks may be heightened as a result of the current economic developments and market volatility. In the past, some of the Company’s customers have experienced significant financial difficulties and likewise, some may experience financial difficulties in the future. These difficulties expose the Company to increased risks related to the collectability of amounts due for services performed. The Company believes that none of its significant customers were experiencing financial difficulties that would impact the collectability of the Company’s trade accounts receivable as of December 31, 2010 and 2009.

F-12

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9. CONCENTRATIONS OF CREDIT RISK (continued)

For the years ended December 31, 2010 and 2009, concentrations of significant customers were as follows:


	Accounts Receivable			Revenues

2010
Danella Construction Corp. of FL, Inc.		24	%		19	%
AT&T		33	%		10	%
Advanced Communications USA, LLC		15	%		2	%
Michels Corporation		13	%		2	%
Southern Technologies, Inc.		10	%		47	%
2009
Danella Construction Corp. of FL, Inc.		37	%		8	%
Southern Technologies, Inc.		54	%		89	%

10. COMMITMENTS AND CONTINGENCIES

Rental

In July 2010 the Company entered into a rental operating lease covering its primary office facility, including corporate, in Boca Raton, Florida that has an original non-cancelable term of 5 years with a provision for early termination after 3 years. The lease contains renewal provisions and generally requires the Company to pay insurance, maintenance, and other operating expenses. The future minimum obligation during each year through fiscal 2014 and thereafter under the leases with non-cancelable terms in excess of one year is as follows:


	Future Minimum Lease Payments
2011	$	21,400
2012		22,100
2013		22,700
2014		23,400
Total	$	89,600

Employment Agreement

In September 2009 the Company entered into a five year employment agreement with Mr. Gideon Taylor to serve as the Company’s Chief Executive Officer and a member of its Board of Directors. The terms of the agreement provides for automatic one year renewals after the initial term, annual compensation of $200,000 payable in cash; if the Company does not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. He is also entitled to receive a bonus at the discretion of the Board of Directors of which he is the sole member and entitled to participate in any equity incentive plan that may be adopted, as well as participate in employee benefits and reimbursement of expenses. For the year ended December 31, 2010 Mr. Taylor was not paid his annual salary totaling $200,000 and instead chose to waive receiving it. The company recorded this forgiveness as contributed capital and is reflected in the accompanying financial statements as additional paid-in capital

F-13

GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

10. COMMITMENTS AND CONTINGENCIES-(continued)

In January 2010 the Company entered into a five year employment agreement with Mr. Billy D. Caudill to serve as the Company’s Chief Operating Officer and Secretary. The terms of the agreement provides for automatic one year renewals after the initial term, annual compensation of $200,000 payable in cash; if the Company does not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. He is also entitled to receive a bonus an annual bonus equal to 5% of our EBITDA for the 12 month period ending December 31, payable in cash or stock at the discretion of our Board of Directors. He is entitled to a $1,000 per month car allowance, participate in any equity incentive plan we may adopt, participate in employee benefits and reimbursement of expenses. He is also entitled to receive an additional 25,000,000 shares of our common stock if we record $20 million of contracts and new company acquisitions during the first year of the term of the agreement.

For the year ended December 31, 2010 Mr. Taylor was not paid his annual salary totaling $200,000 and instead chose to waive receiving it. The company recorded this forgiveness as contributed capital and is reflected in the accompanying financial statements as additional paid-in capital

In January 2010 the Company entered into a three year employment agreement with Mr. Lawrence Sands to serve as its Vice President of Mergers and Acquisitions. The terms of the agreement provides for automatic one year renewals after the initial term, annual compensation of $120,000 payable in cash; if the Company does not have sufficient cash flow to pay the compensation he is entitled to receive equity in lieu of the cash. Mr. Sands is also entitled to receive a bonus at the discretion of the Board of Directors, a $1,000 per month car allowance and to participate in any equity incentive plan the Company may adopt and to participate in employee benefits.

On August 30, 2010 Mr. Sands was issued 5,200,000 shares of its common stock that had been due to Mr. Sands, as compensation, both pursuant to the terms of his employment agreement and accrued salary. This issuance included 4,000,000 shares of the Company’s common stock valued at fair market value of the per share price totaling $2,400,000 as an incentive bonus at the time he entered into the agreement and an additional 1,200,000 shares of common stock issued in satisfaction of accrued but unpaid compensation totaling $72,000 due Mr. Sands under the terms of the agreement from the date of the agreement through August 2010. In connection with the incentive bonus shares $1,600,000 was deferred and will be charged as stock compensation expense over the remaining term of the employment contract.

11. STOCKHOLDERS’ EQUITY

In August 2009 the Company converted total notes payable and accrued interest of $241,808 into 15,391,438 shares of common of the Company at a carrying value of $.01 per share pursuant to the agreement.

On July 2, 2009, the Company issued 25,500,000 shares of common stock to Mr. Gideon Taylor in exchange for $100 in the private sale.

On August 7, 2009, the Company issued 50,000,000 shares of common stock to Mr. Billy Caudill in exchange for all of the issued and outstanding stock of Digital Comm Inc. in a reverse merger that closed on January 14, 2010 as described in further in Note 8. The stock was valued at its fair market value of $.08 per share and recorded as a stock subscription pending closure of the merger.

On August 7, 2009, an aggregate of 60,000,000 shares of our common stock were issued by the Company to three individuals in anticipation of the closing of a transaction which never occurred. The stock was valued at its fair market value of $.08 per share and recorded as a stock subscription. These shares were cancelled and returned to the status of authorized but unissued shares of our common stock in July 2010.

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GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11. STOCKHOLDERS’ EQUITY (continued)

On September 3, 2009, the Company issued an aggregate of 8,700,000 shares of common stock valued to two entities as a fee under the terms of the stock purchase agreement with Mr. Taylor. The Company is presently in the process of cancelling 3,500,000 of these shares which were issued to one entity. The remaining shares were valued at $400,000. The stock was valued at its fair market value of $.08 per share.

On August 30, 2010 Mr. Sands was issued 5,200,000 shares of its common stock that had been due to Mr. Sands, as compensation, both pursuant to the terms of his employment agreement and accrued salary. This issuance included 4,000,000 shares of the Company’s common stock valued at fair market value of the per share price totaling $2,400,000 as an incentive bonus at the time he entered into the agreement and an additional 1,200,000 shares of common stock issued in satisfaction of $60,000 of accrued but unpaid compensation due Mr. Sands under the terms of the agreement from the date of the agreement through August 2010.

12. GOING CONCERN

The Company has suffered losses from operations that may raise doubt about the Company's ability to continue as a going concern. As of December 31, 2010, the Company has both negative working capital and continued net losses. The Company may raise capital through the sale of its equity securities, through debt securities, or through borrowings from principals and/or financial institutions. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. There can be no assurance that additional financing which is necessary for the Company to continue its business will be available to the Company on acceptable terms, or at all. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

13. RISKS AND UNCERTAINTIES

The Company is subject to risk and uncertainty common to start-up companies including, but not limited to, successful development, promotion, and sale of services, and expansion of market coverage.

As reflected in the accompanying financial statements, the Company has incurred significant losses from operations and negative operating cash flows, which have been financed primarily by proceeds from stock and debt issuance.

As a result the Company had accumulated deficits of $2,219,482 and $77,887 at December 31, 2010 and December 31, 2009 respectively.

Management plans to raise additional working capital and funds for the continued development of its contracts for services through public sale of the Company's common stock, debt securities or borrowing from financial institutions. Management is also attempting to expand the number of job contracts which could increase cash flow during early stages of sales growth. No assurance can be given that the Company will successfully expand its number of third party jobs or that sufficient capital can be raised to support those contracts.

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GENESIS GROUP HOLDINGS, INC.

[FORMERLY GENESIS REALTY GROUP, INC.]

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

14. SUBSEQUENT EVENTS

The Company has evaluated subsequent events through April 11, 2011, which is the date the financial statements were issued, and has concluded that no such events or transactions took place which would require disclosure herein, except for the following disclosures:

Debt

On February 3, 2011 the Company entered into a Securities Purchase Agreement with Asher Enterprises, Inc. for the issuance of 40,625,000 of the Company’s common stock to be reserved pursuant to an 8% Convertible Promissory Note of $32,500.

On February 14, 2011 the Company and lender UTA Capital LLC, entered into a Loan Extension and Modification Agreement (“Modification Agreement”) in connection with their existing note payable with a balance of $775,000 at December 31, 2010. The Modification Agreement provided for:

a)	An extension of the original maturity date of the note from August 6, 2011 to September 30, 2011,

b)	A continuation in interest rate of 10% for the remainder of the loan,

c)	For the period commencing on January 1, 2011 through March 31, 2011, the loan shall bear interest only, and

d)	For the period commencing on April 1, 2011 through September 30, 201, the loan shall bear interest at the stated rate and the borrower shall repay the $775,000 balance in five (5) equal monthly principal payments of $75,000 each due on the first of each month

The Modification Agreement also provided for certain repayments of the loan in the event the Company secures additional equity and/or financing. Additionally in exchange for consenting to the Modification Agreement the lender was issued 1,282,094 shares of the Company’s common stock; and a continuing provision of additional shares to be issued to the lender to maintain ownership of 1% of the company’s total outstanding shares until the loan is repaid.

Equity

On February 22, 2011, the Company issued 2,000,000 shares to consultant Birbragher in exchange for consulting services relating to corporate matters.

Proposed Acquisition

On February 25, 2011, Genesis Group Holdings, Inc. (the “Company”) entered into a Memorandum of Understanding with Premier Cable Designs, Inc.(“PCD”) of Valrico, Florida for the purchase by the Company of the business of PCD. Under the terms of the parties understanding, and subject to more formal documentation and due diligence , the Company would acquire PCD for 1,000,000 shares of the Company’s common stock, plus a note payable to the principal shareholder of PCD in the amount of $150,000. The terms of the Note are yet to be agreed upon.

In addition to the foregoing, the selling shareholders will receive additional shares of stock based upon 50% of the net income realized by the Company from PCD over a thirty month period following closing, as well as certain cashless warrants. The warrants will be to purchase an additional 1,000,000 shares priced at .20 a share for each $300,000 in EBITDA, computed and vested on an annual

F-16

Attached files

INTERCLOUD SYSTEMS, INC. Reports

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