GENERATION ZERO GROUP, INC. - 10-Q/A - Management's Discussion and Analysis of Financial Condition and Results of Operations

(Edgar Glimpses Via Acquire Media NewsEdge) CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION Statements made in this Form 10-Q that are not historical or current facts are "forward-looking statements". These statements often can be identified by the use of terms such as "may," "will," "expect," "believe," "anticipate," "estimate," "approximate" or "continue," or the negative thereof. We intend that such forward-looking statements be subject to the safe harbors for such statements. We wish to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Any forward-looking statements represent management's best judgment as to what may occur in the future. However, forward-looking statements are subject to risks, uncertainties and important factors beyond our control that could cause actual results and events to differ materially from historical results of operations and events and those presently anticipated or projected. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statement or to reflect the occurrence of anticipated or unanticipated events. References in this Form 10-Q, unless another date is stated, are to September 30, 2011.

You should read the matters described in "Risk Factors" below and disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Commission on January 25, 2013, and the other cautionary statements made in this Report as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

Corporate History Generation Zero Group, Inc. ("we," the "Company," and "us") was formed as a Nevada corporation on May 16, 2006 under the name Velocity Oil & Gas, Inc. The Company originally operated as a start-up entity with the intention of being involved in oil and gas exploration and development with a geographic focus in Texas and Louisiana. We have since changed our business focus to Internet, technology and entertainment related businesses, and have closed on an acquisition of certain technologies and other proprietary information described below.

On or around November 10, 2009, Travel Engine Solutions, LLC ("Travel Engine") subscribed for 1,000 shares of our Series A Preferred Stock (the "Series A Shares", which include "Super Majority Voting Rights" (i.e., the right to vote 51% of the Company's outstanding voting shares on any shareholder votes) for aggregate consideration of $175,000.

On or around January 21, 2010, Matthew Krieg, the sole Director of the Company and Mr. Krieg as the Manager and beneficial owner of Travel Engine, our majority shareholder as a result of the Series A Shares, which it held, which provided it the Super Majority Voting Rights, approved via a consent to action without meeting, the filing of a Certificate of Amendment to the Company's Articles of Incorporation (the "Certificate") to (a) authorize and approve a 1 for 100 reverse stock split (the "Stock Split") of the Company's authorized and outstanding common stock, effective as of the close of business on February 12, 2010, which Stock Split did not affect the authorized or outstanding shares of the Company's preferred stock; (b) to change the Company's name to "Generation Zero Group, Inc." (the "Name Change"); (c) to reauthorize 100,000,000 shares of $0.001 par value per share common stock following the Stock Split; (d) to re-authorize 10,000,000 shares of "blank check" preferred stock, $0.001 par value per share following the Stock Split (collectively with (c) the "Authorized Share Transactions"); and (e) to provide that the Company elects, pursuant to Section 78.434 of the Nevada Revised Statutes (the "NRS"), to not be governed by Sections 78.411 to 78.444 of the NRS, inclusive and Sections 78.378 to 78.3793, inclusive, of the NRS (the "Elections").

13 The Certificate, the Stock Split, the Name Change, the Authorized Share Transactions and the Elections were effective with the Secretary of State of Nevada on February 12, 2010, and were effective with the Financial Industry Regulatory Authority ("FINRA") on March 8, 2010.

Unless otherwise noted, the effect of the Stock Split and Name Change has been retroactively reflected throughout this report.

Find.com Technology Acquisition On or around April 28, 2010, the Company entered into an Asset Purchase Agreement (the "Purchase Agreement") with Find.com Acquisition, Inc., a Delaware corporation ("Find.com Acquisition"). Pursuant to the Purchase Agreement, we purchased all of Find.com Acquisition's interest in and ownership of the assets associated with the technology and operations of the www.Find.com website and all intellectual property rights associated therewith, including technical documentation, source code, and files (collectively the "Technology Assets"). As described below, we also subsequently purchased 100% of the ownership interests in URL Holdings, which owns the URL, Find.com. The Technology Assets also include all service contracts related to the operations of the technology and certain unrelated domain names. The purchase did not include any liabilities of Find.com Acquisition or the Find.com URL. The purchase price paid to Find.com Acquisition in consideration for the Technology Assets was 10,000,000 shares of our restricted common stock, representing 98.8% of our then outstanding common stock, however, because Matthew Krieg, our sole officer and Director beneficially owns all of the outstanding shares of our Series A Preferred Stock, he retained super majority voting control over the Company.

Find.com URL Exchange Agreement On or around June 30, 2010, we entered into a Share Exchange Agreement (the "Exchange Agreement") with Find.com URL Holdings, LLC., a Georgia limited liability company ("URL Holdings") and an Asset Purchase Agreement (the "Asset Purchase Agreement") with Scientigo, Inc. ("Scientigo").

Pursuant to the Exchange Agreement, we purchased approximately 51 membership interests in URL Holdings totaling over 99% of the outstanding membership interests of URL Holdings (the "URL Holdings Members"); however that percentage has increased to 100% as of the date of this report. URL Holdings owns the domain name Find.com. URL Holdings acquired the domain name through a consensual foreclosure process prior to the acquisition of the majority ownership of URL Holdings by the Company. Scientigo was a party to the consensual foreclosure process and had an option to acquire 40% of the domain name in exchange for Scientigo's consent to the foreclosure. The Company acquired and extinguished Scientigo's option rights in connection with the Asset Purchase Agreement in order to secure the maximum ownership the Company could acquire from URL Holdings, which as of this date stands at 100%.

The Exchange Agreement provided for (a) the issuance of an aggregate of 14,000,000 shares of the Company's restricted common stock, and (b) the issuance of secured promissory notes ("Notes") in an aggregate principal amount of approximately $3,620,410 (representing the aggregate amount of money owed to such URL Holdings Members pursuant to previously outstanding promissory notes) to the URL Holdings Members (the "Note Holders"). The Notes are in favor of the selling members of URL Holdings and are secured by the assets of the Company including the URL Holdings membership units purchased by the Company. The Exchange Agreement also required that the Company make a closing payment in an aggregate amount of $50,000 to the URL Holdings Members. Scientigo has since been merged with and into Phoenix Restructuring, Inc. ("Phoenix"), with Phoenix being the surviving entity in the merger.

14 URL Holdings Members Notes The Notes, bear interest at the rate of 12% per annum, and are payable as follows: (a) $50,000 which was due on the closing of the Exchange Agreement (June 30, 2010, the "Closing Date"), and which was paid to the Note Holders on such date; (b) $250,000 which was due to the Note Holders within 30 days of the closing date of the Exchange Agreement (which has not been paid to date); (c) approximately $49,918.47 which is due at the end of each quarter for six quarters, due three months, six months, nine months, twelve months, sixteen months and twenty months after the Closing Date, each representing 1/6th of the Note Holder's portion of an aggregate of $299,511 (which has not been paid to date); (d) by way of interest payments representing the accrued interest on the Notes which are due quarterly, beginning three months after the Closing Date and continuing until 18 months from the Closing Date (which has not been paid to date); and (e) by way of twelve monthly payments of principal and interest (which monthly principal payments will total approximately $2,450,000 or $204,000 per month) representing the then outstanding balance of the Notes, the last of which payment was due December 31, 2012 (the "Maturity Date"). The Notes may be prepaid at any time without penalty.

Upon the occurrence of any event of default under the Notes (as defined and described therein) the Notes accrue interest at 14% per annum which rate the Notes are currently accruing interest as a result of our default in the payment of certain amounts due under the Notes. If any event of default occurs and is not cured within sixty days of the date of occurrence of such event of default, the Note Holders may enforce their rights under the Notes, declare the entire amount of the Notes immediately due and payable and seek to enforce their security interests (as described below). Additionally, pursuant to the Notes, the Company is required to provide the Note Holders prompt notice of their knowledge of the occurrence of any event of default. The right to receive further Extensions was terminated by the parties' entry into the Forbearance Agreement (described below).

The Company's repayment of the Notes is secured by a security agreement providing the Note Holders a security interest in substantially all of the Company's assets, personal property, and URL Holdings' ownership of Find.com (the "Security Agreements"). Scientigo previously served as collateral agent for the benefit of the Note Holders under the Security Agreements, provided that Phoenix Restructuring Inc. currently serves as collateral agent (the "Collateral Agent"). Until the Notes are repaid in full, the Collateral Agent has the right to appoint two Managers of URL Holdings, solely for the purpose of protecting the collateral securing the Notes. Matthew Krieg, the Company's Chief Executive Officer and President, serves as President and Chief Executive Officer of URL Holdings.

The Company obtained the $50,000 which was due upon closing in the form of a loan, which does not bear interest or have a stated due date, from its Chief Executive Officer, Matthew Krieg.

Asset Purchase Agreement with Scientigo Pursuant to the Asset Purchase Agreement, the Company purchased and extinguished Scientigo's pre-existing option to purchase a 40% interest in URL Holdings (the "Option"). In consideration for the Option, we issued Scientigo 14,000,000 shares of restricted common stock (representing approximately 39.7% of our then outstanding shares and agreed to pay Scientigo $120,000 in cash (the "Cash Payment"). A total of $15,000 of the Cash Payment was paid at the closing of the Asset Purchase Agreement on June 30, 2010, and a total of $55,000 was due within 30 days of closing (i.e., prior to July 30, 2010); which payment has not been made as of the date of this filing and which the Company is in default in connection with as described below. Scientigo has since been merged with and into Phoenix, with Phoenix being the surviving entity in the merger.

Scientigo also has the right pursuant to the Asset Purchase Agreement to name two members to the Company's advisory board in order to oversee activities that may affect the collateral pledged to the Note Holders (as described above).

15 The Company obtained the $15,000 which was due upon closing in the form of a loan, which does not bear interest or have a stated due date, from its Chief Executive Officer, Matthew Krieg.

As described above, the Company did not make the required payment of $250,000 under the Notes to the Note Holders when due on July 30, 2010 (the "Default") and did not made the required payments of $55,000 to Scientigo as provided in connection with the Cash Payment as of July 30, 2010, and has not made such required payments to date. As such, Scientigo, as Collateral Agent for the Notes has declared the Notes and the Cash Payment in default. As a result of the Default, the balance of the Notes began accruing interest at the default rate of 14% per annum.

Forbearance Agreement Effective November 30, 2010, the Company, the Note Holders, Scientigo and URL Holdings formally executed and entered into a Forbearance Agreement (the "Forbearance Agreement"). Pursuant to the Forbearance Agreement, the Collateral Agent agreed to forbear from taking any action in connection with the Default until March 15, 2011 (subject to any default occurring other than in connection with the Default)(the "Forbearance Period") and that the Notes would continue to bear interest at the rate of 14% per annum during the Forbearance Period. Additionally, the Company agreed to pay the Note Holders $100,000 of principal reduction from a total of $150,000 then held in escrow and issue such Note Holders an aggregate of 200,000 shares of common stock; reimburse the Collateral Agent for attorney's fees in connection with the preparation of the Forbearance Agreement; and pay the Note Holders, before the end of the Forbearance Period, $332,903 of accrued but unpaid interest and $249,837 of principal on the Notes (collectively, the "Cure Payment"), which if paid prior to the end of the Forbearance Period, would result in the waiver of the Default, which Cure Payment was not made, but which requirement to make such Cure Payment was waived by the parties' entry into the First Addendum, described below.

The Forbearance Agreement also required the Company to pay one-half of the first $300,000 of any equity or debt capital raised by the Company moving forward (i.e., up to $150,000 of any funds raised) as follows (i) first to the Collateral Agent, for transaction related expenses (until $20,000 is paid) and thereafter (ii) two-thirds of each dollar to the holders of the Notes and one-third of each dollar to the Collateral Agent with respect to the unpaid balance of the required Cash Payment. The Forbearance Agreement also amended the Notes to remove the right of the Company to obtain an Extension as discussed above, to reduce the percentage of Note Holders' interests required to amend the Notes to holders of at least a majority of the outstanding principal amount of the Notes (instead of 85%); and provided for the Company to pay $50,000 of the amount owed to Scientigo from the funds then held in escrow.

The Company was not able to meet the terms of the Forbearance Agreement and in March 2012, the Note Holders, with majority approval and the Company entered into a First Addendum to Forbearance Agreement (the "First Addendum"). Pursuant to the First Addendum, the Note Holders authorized the Collateral Agent to forbear in the exercise of its rights and remedies under the Notes, security agreement securing the Notes, Forbearance Agreement and applicable law during a forbearance period commencing on June 30, 2010 and ending on the earlier to occur of (a) January 2, 2014 or (b) the date that any default (other than relating to the payment of funds under the Notes) occurs (the "Extended Forbearance Period"). The Notes were also renegotiated to represent a face value of $2,920,250. Accrued interest was forgiven and no interest accrues on the Notes during the Extended Forbearance Period. The First Addendum also provided that all shares issued to the Note Holders from time to time have piggy-back registration rights; the Company could borrow up to $1 million in the form of a bridge loan (in addition to up to $50,000 which could be borrowed from the Note Holders, of which a total of $40,000 was subsequently borrowed as discussed below), and that Mr. Krieg would cancel his Series A Shares in connection with the conversion of such shares into 3 million shares of common stock. New Series A Shares would then be issued to Cynthia S. White and Ronald L. Attkisson or their assigns, as collateral agent for the Find.com notes, currently in default, within 10 days of notice of such requested issuance. This would effect a change of control of the Company, which has not occurred or been requested to date, but it is expected to occur during the first quarter of 2013.

We also agreed to pay the Note Holders up to 25% of our cash flow (in the discretion of the Board of Directors), in any fiscal year that revenues associated with Find.com exceed $1 million, in connection with the Notes, and the Note Holders agreed to further forbear from taking 16 any action under the Notes and to extend the forbearance period so long as such requirements are met. As a forbearance fee, the Company issued 1,460,125 shares of restricted common stock pro-rata with the outstanding principal amount of the Notes held by each holder.

Four of the Note Holders provided the Company non-interest bearing bridge loans in the aggregate amount of $40,000 in March 2012, with a maturity date of the earlier of (a) the date the Company receives aggregate funding from any source in excess of $50,000 and (b) January 2, 2014, provided that the Company is currently in the process of obtaining waivers from the Note holders in order to allow the Company to raise additional funding for working capital purposes. In consideration for providing the loan, the Company issued the participating Note Holders an aggregate of 400,000 shares of restricted common stock. The loans are secured by a security interest in all of the Company's properties and assets.

The Company raised the $150,000 paid in connection with and pursuant to the terms of the November 2010 Forbearance Agreement and funds used for working capital through the sale of promissory notes described in greater detail below under "Liquidity and Capital Resources." StaffMD, Inc. Acquisition On February 4, 2011, we entered into an Agreement and Plan of Merger (the "Merger Agreement") with StaffMD, Inc., a Georgia corporation ("StaffMD"), and the sole owner of StaffMD, Jeffrey Sisk, an individual. Pursuant to the Merger Agreement, StaffMD was merged with and into MedicalWork, LLC, a newly formed Georgia limited liability company, and the Company's then wholly-owned subsidiary ("MedicalWork" and the "Merger"), pursuant to which MedicalWork was the surviving entity in the Merger. As a result of the closing of the Merger, the Company acquired StaffMD's business known as PhysicianWork.com, which is a leading online job board for physicians.

In consideration for Mr. Sisk's ownership of StaffMD and in connection with the Merger, we agreed to (a) issue Mr. Sisk 6,000,000 shares of the Company's restricted common stock (the "Sisk Shares"); (b) pay Mr. Sisk $100,000 in cash at the closing of the Merger (the "Closing"); and (c) provide Mr. Sisk a secured, subordinated promissory note in the amount of $3,950,000 (the "Seller Note"). A required closing condition of the Merger was that the Company contributed $100,000 to MedicalWork, which contribution was made in connection with the Closing. The Merger Agreement also provided that Mr. Sisk would serve as the Manager and President and Chief Executive Officer of MedicalWork. Mr.

Sisk entered into an Employment Agreement with MedicalWork in connection with the Closing, described in greater detail below (the "Employment Agreement"). The Sisk Shares were also granted piggy-back registration rights.

Geronimo Note The funds paid in connection with the Merger were financed through the entry by MedicalWork into a Senior Secured Promissory Note in the amount of $250,000 with Geronimo Property Trust ("Geronimo") on February 1, 2011 (the "Geronimo Note"). The Geronimo Note bears interest at the rate of 12% per annum, and has a default interest rate of 18% per annum. Monthly interest-only payments are due on the Geronimo Note, which was originally due February 1, 2012, but has since been extended until February 1, 2013. The Geronimo Note was secured by a security interest in all of MedicalWork's assets, pursuant to a Security Agreement. The Company was also an obligor on the Geronimo Note and remained as an obligor following the parties' entry into the Rescission Agreement, described below. The Company also agreed to issue Geronimo an aggregate of 250,000 shares of the Company's restricted common stock in consideration for agreeing to enter into the Geronimo Note.

Of the $250,000 of proceeds the Company received from the Geronimo Note, $90,000 was allocated to Physicianwork.com marketing, $10,000 was reserved for interest on the Geronimo Note, and the balance was paid to Mr. Sisk in connection with the consideration due pursuant to the terms of the Merger Agreement and in reimbursement for Mr. Sisk's attorney's fees in connection with such Merger.

17 Seller Note The Seller Note accrued interest at the rate of 8% per annum, and had a default rate of interest of 14% per annum. The Seller Note was previously due and payable on February 4, 2012, but has since been forgiven as described below.

Rescission of StaffMD Acquisition Effective as of December 31, 2011, we entered into an Assignment of Membership Interests Agreement (the "Rescission Agreement") with Mr. Sisk. Pursuant to the Rescission Agreement, we agreed to transfer and assign all right, title and interest which we held in MedicalWork (including any and all interests in PhysicianJobs.com and the URL Portfolio owned by MedicalWork) to Mr. Sisk; Mr.

Sisk agreed to cancel and terminate the Seller Note and an Employment Agreement we had entered into with Mr. Sisk; Mr. Sisk agreed to indemnity and hold us harmless from any claims, costs, expenses or causes of action relating to the Geronimo Note (the "Indemnification Obligations"), provided that we remain as a secondary obligor under the Geronimo Note; and Mr. Sisk agreed to return 3,000,000 shares of our common stock (which shares were issued in connection with the Merger Agreement) to us for cancellation, which shares have been cancelled to date and to further pledge to us 500,000 of the shares originally issued in connection with the Merger Agreement as collateral for the Indemnification Obligations pursuant to the parties entry into a Pledge Agreement. Finally, as part of the Rescission Agreement, Mr. Sisk agreed to release us and our agents from and against any liability associated with the operations of MedicalWork; provided that the 3,000,000 shares of common stock retained by Mr. Sisk (including the 500,000 shares) still have piggy-back registration rights. As a result of the Rescission Agreement, we no longer hold any rights to MedicalWork or its assets, including PhysicanJobs.com.

Description of Business ActivitiesOur current primary business focus is to monetize the find.com URL.

Find.com, which we acquired ownership of pursuant to our purchase of 100% of the outstanding membership interests of URL Holdings, pursuant to the transactions above, is a domain name and website. The website had been powered by certain technology assets that the Company acquired on or about April 28, 2010, as described in greater detail above. The Find.com strategy is in the development stage. Find.com is a URL that the Company believes has tremendous attributes as a domain name for purposes of branding and marketing for ecommerce. The Find.com website, which is currently not operational, is in the process of being upgraded and redesigned by the Company, with the goal of redeploying the website in the first quarter of 2013.

The Company believes that it will be able to manage and operate the domain name in a manner that will create value for the Company. This management and operation may involve strategic partnerships and revenue sharing relationships as is common in the operation of domain names. The Company believes that Find.com has a broad reach and can be used for a variety of purposes. To date Find.com has not generated revenue, but the Company believes that the domain name can be grown into a significant Internet based business. However, the success of the Find.com asset is subject to the availability of necessary financing for operations and to service the Notes. The Company is currently in negotiations with a private company in Internet marketing and search engine optimization services to potentially form a joint venture and undertake a business plan to execute a commercialization of www.find.com. The joint venture, which has not been finalized or agreed to, would create an Internet market place environment for the sale and purchase of products and services.

The Company hopes to finalize a comprehensive business plan and plan of operations for Find.com during the first quarter of 2013.

18 Description of the Technology Assets: The Technology Assets described above are comprised primarily of the technology that powered the www.Find.com website. Four letter URL's that spell an easy to understand word are all privately owned or reserved. Short URL's are preferable for marketing purposes as they are easier to remember and in the case of Find.com, the URL sends a clear message as to what the website is about so it should be easier to brand.

We believe that the Find.com URL name lends itself to being used as a search engine or for a variety of other uses as the e-commerce world continues to develop and become more focused and refined. The Company understands that Google and other large players such as Bing and Ask.com are dominant in the search space. The Company has no intention or belief that it will overtake or even compete with these large players.

The Company intends to partner through a revenue sharing agreement with other search engines and through lead generation agreements with various businesses, and selling direct products and services. The Company expects to develop certain verticals within Find.com and other websites and create revenue sharing opportunities, of which there can be no assurance.

The Company also intends to use and improve the technology assets acquired in the acquisition to develop other websites through marketing and providing information, products and services that create revenue sharing opportunities for the Company. Previously, www.Find.com and the Technology Assets have not generated significant revenues, nor any revenues while under the control of the Company, but we believe that the technology that has been developed has proven to work effectively. Through continued use, the Company hopes to build a revenue base from revenue sharing, licensing, and by using the Technology Assets in connection with other websites it hopes to acquire and market in the future, funding and opportunities permitting.

We believe that the Technology Assets have many proprietary qualities that make them effective for online marketing and that the Technology Assets are versatile so they can be used for other websites and related applications. Our Chief Executive Officer, Matthew Krieg, has significant experience in online travel and other Internet based businesses and his experience and training should be beneficial to the Company as it moves forward with its strategy, even if a change of control occurs and his role is diminished.

Plan of Operation Our goal is to expand or build our business through a variety of efforts. We are considering ongoing offerings of securities under private placements, acquisitions, and joint ventures with other public and private companies and other activities to either build sales or generate much needed capital to grow and undertake our business plan (for example, obtain, if possible, loans). We currently have no lines of credit or other bank financing arrangements.

Generally, we have financed operations to date through the proceeds of the private placement of equity and debt securities and loans from our shareholders.

We have not generated any significant revenues to date and do not anticipate being able to generate significant revenues until such time as we can raise substantial additional capital and our websites are further developed and marketed.

In connection with our business plan, management will try and delay additional increases in operating expenses. We have undertaken certain actions and continue to implement changes designed to improve our financial results and operating cash flows. The actions involve certain cost-saving initiatives and growing strategies. For example, we do not have a seasoned staff of public company officers beyond the extent of experience and abilities of our Chief Executive Officer.

19 Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.

RESULTS FROM OPERATIONSFOR THE THREE MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 2010 We had total revenues of $87,312 for the three months ended September 30, 2011, which revenues were due to revenues generated by the Company's then subsidiary, MedicalWork, which has since been transferred back to its original owner, as described above, compared to no revenues for the three months ended September 30, 2010.

We had total cost of sales of $1,125 for the three months ended September 30, 2011, compared to no cost of sales for the three months ended September 30, 2010.

We had general and administrative expenses of $47,240 for the three months ended September 30, 2011, compared to general and administrative expenses of $35,413 for the three months ended September 30, 2010, an increase of $11,827 from the prior period. The increase in general and administrative expenses was mainly due to increased expenses due to the operations of the Company's then subsidiary, MedicalWork, which has since been transferred back to its original owner, as described above.

We had $70,000 in amortization and depreciation expense for the three months ended September 30, 2011 compared with amortization and depreciation expense of $0 for the three months ended September 30, 2010. Amortization and depreciation expenses increased in connection with the acquisition of the Find.com assets in fiscal 2010, which increased our depreciable asset base.

We recognized an impairment of technology acquired with the Find.com acquisition (described above) of $1,100,000 during the three months ended September 31, 2010. We intend to pursue opportunities to monetize the technology assets on future initiatives unrelated to Find.com, and accordingly we have recorded an impairment charge of $1,100,000 based on the current status of Find.com and the fact that the timing of the future initiatives is unknown and uncertain.

We had a total operating loss of $31,053 for the three months ended September 30, 2011, compared to a total operating loss of $1,135,413 for the three months ended September 30, 2010, a decrease in total operating loss of $1,104,360 from the prior period due to the reasons stated above.

We had interest expense of $362,690 for the three months ended September 30, 2011, compared to interest expense of $296,690 for the three months ended September 30, 2010, an increase in interest expense of $66,000 from the prior period, which increase was in connection with interest on the secured loans associated with the Notes issued in connection with the Exchange Agreement, described above.

We had a total net loss of $393,743 for the three months ended September 30, 2011, compared to a total net loss of $1,432,103 for the three months ended September 30, 2010, a decrease in net loss of $1,038,360 from the prior period, which was mainly due to the $1,100,000 of impairment of technology during the nine months ended September 30, 2010.

20 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2011 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 2010 We had total revenues of $300,597 for the nine months ended September 30, 2011, which revenues were due to revenues generated by the Company's then subsidiary, MedicalWork, which has since been transferred back to its original owner, as described above, compared to no revenues for the nine months ended September 30, 2010.

We had total cost of sales of $7,790 for the nine months ended September 30, 2011, compared to no cost of sales for the nine months ended September 30, 2010.

We had general and administrative expenses of $209,719 for the nine months ended September 30, 2011, compared to general and administrative expenses of $95,218 for the nine months ended September 30, 2010, an increase of $114,501 from the prior period. The increase in general and administrative expenses was mainly due to increased expenses due to the operations of the Company's then subsidiary, MedicalWork, which has since been transferred back to its original owner, as described above.

We recognized an impairment of technology acquired with the Find.com acquisition (described above) of $1,100,000 during the nine months ended September 31, 2010.

We intend to pursue opportunities to monetize the technology assets on future initiatives unrelated to Find.com, and accordingly we have recorded an impairment charge of $1,100,000 based on the current status of Find.com and the fact that the timing of the future initiatives is unknown and uncertain.

We had $210,000 in amortization and depreciation expense for the nine months ended September 30, 2011 compared with amortization and depreciation expense of $316 for the nine months ended September 30, 2010. Amortization and depreciation expenses increased in connection with the acquisition of the Find.com assets in fiscal 2010, which increased our depreciable asset base.

We had a total operating loss of $126,912 for the nine months ended September 30, 2011, compared to a total operating loss of $1,195,534 for the nine months ended September 30, 2010, a decrease in total operating loss of $1,068,622 from the prior period due to the reasons stated above.

We also had $3,028 of loss on abandonment of assets for the nine months ended September 30, 2010 in connection with the closure of the Atlanta office.

We had interest expense of $1,088,070 for the nine months ended September 30, 2011, compared to interest expense of $303,147 for the nine months ended September 30, 2010, an increase in interest expense of $784,923 from the prior period, which increase was in connection with interest on the secured loans associated with the Notes issued in connection with the Exchange Agreement, described above.

We had a total net loss of $1,214,982 for the nine months ended September 30, 2011, compared to a total net loss of $1,501,709 for the nine months ended September 30, 2010, a decrease in net loss of $286,727 from the prior period, which was mainly due to the fact that we had $1,100,000 of impairment of intangible asset for the nine months ended September 30, 2010, offset by the $784,923 increase in interest expense for the nine months ended September 30, 2011, compared to the nine months ended September 30, 2010.

LIQUIDITY AND CAPITAL RESOURCES We had total assets of $3,873,436 as of September 30, 2011, consisting of intangible assets, net of accumulated amortization of $3,850,000 and total current assets of $24,436, consisting of cash of $780 and other assets of $22,656.

21 We had total liabilities as of September 30, 2011 of $2,807,725, consisting of total current liabilities of $759,431; which included $19,918 of accounts payable, $709,345 of accrued liabilities and $30,168 of accounts payable related party, which amount was owed to Matthew Krieg, the Company's sole officer and Director in connection with certain loans made to the Company by Mr. Krieg, as described below; and non-current liabilities consisting of $2,048,294 of long-term notes payable as described below, net of unamortized discount (which does not include debt relating to MedicalWork, which has since been transferred back to Mr. Sisk, its original owner as described above).

We had a working capital deficit of $735,995 and a total deficit accumulated during the development stage of $3,829,622 as of September 30, 2011.

We incurred net losses of $393,743 and $1,214,982 for the three and nine months ended September 30, 2011, and had an accumulated deficit of $3,829,622 as of September 30, 2011. These conditions raise substantial doubt as to our ability to continue as a going concern. Management is trying to raise additional capital through sales of common and preferred stock. The financial statements do not include any adjustments that might be necessary if Generation Zero is unable to continue as a going concern.

We had $15,137 of net cash used in operating activities for the nine months ended September 30, 2011, which was mainly due to a net loss of $1,214,982 offset by $375,856 of increase in amortization of debt discount, $350,000 of amortization of intangible assets and $494,885 of accrued liabilities.

We had $13,798 of net cash provided by financing activities for the three months ended September 30, 2011, which included $13,798 of proceeds from related party debt.

On June 1, 2007, we issued Capersia Pte. Ltd. ("Capersia") an $8,000 Promissory Note to evidence an $8,000 loan we received from Capersia, which had an interest rate of 6% per annum, and was payable on demand; provided that we were required to receive one (1) year and one (1) day notice prior to the due date of such note, and any amounts not paid when due accrued interest at the rate of 15% per annum. The note had the right to convert into common stock at the option of the holder (subject to the holder not holding more than 4.99% of our outstanding common stock upon conversion) at a conversion rate of $0.001 per share. On or around November 7, 2008, the Capersia Note was amended to reflect an increased amount owed to the Company of $12,764. On or around August 20, 2009, Capersia converted $1,000 of the amount owed under the note into 10,000 1:100 post-reverse split shares of our common stock. On or around November 10, 2009, Capersia sold its entire interest in the note to Cascata Equity Management, Inc.

(50%) ("Cascata") and Seven Palm Investments, LLC. (50%) ("Seven Palm"), who each subsequently converted $550 of the note into 550,000 shares of common stock each in May 2010. Additionally, in January 2011, Cascata converted an aggregate of $1,200 owed under the Capersia Note into 1,200,000 shares of common stock.

On October 23, 2010, Seven Palm agreed to cancel and forgive its portion of the Capersia Note then owned by the Company (representing a principal amount of $5,332 in its entirety prior to the accrual of any interest thereon, which accrued interest was also forgiven in connection with the Termination Agreement).

On October 23, 2012, the Company exercised its right to pay-off the note in full and remitted payment to Cascata of $5,861 in order to cancel the Capersia Note.

This amount is comprised of $4,132 in unpaid principal plus interest in the amount of $1,729 computed at 6% per annum.

In December 2009, the Company borrowed $5,000 from its sole officer and Director, Matthew Krieg. Between February and March 2010, the Company borrowed a total of $6,720 from Mr. Krieg. The amount loaned bears zero interest and is due on demand with 90 days' notice. As of December 31, 2010, 2011 and 2012, a total of $16,370, $30,168 and $30,168, respectively was owed to Mr. Krieg. As of September 30, 2011, a total of $30,168 was owed to Mr. Kreig.

The Company raised the $150,000 provided to the escrow agent in connection with and pursuant to the terms of the Forbearance Agreement (described above) through the sale of promissory notes.

22 A total of $150,000 was loaned to the Company in November 2010 by Gerald Modesitt, an individual, which was evidenced by a promissory note, which bears interest at the rate of 12% per annum (with interest payable monthly until maturity) and a maturity date, as extended of June 2, 2014. Additionally, Matthew Krieg, the Company's sole officer and Director agreed to assign Mr.

Modesitt an aggregate of $100,000 which the Company owed to Mr. Krieg as of the date of the Modesitt Note, which Modesitt Note evidenced a principal amount of $250,000 (representing the $150,000 loaned by Mr. Modesitt and the rights to the $100,000 assigned to Mr. Modesitt by Mr. Krieg). The Company agreed to issue Mr.

Modesitt 750,000 shares of restricted common stock in connection with the Modesitt Note. As of December 31, 2010, 2011 and 2012, a total of $254,833, $287,153 and $323,571 respectively, including accrued and unpaid interest thereon, was owed under the Modesitt Note. As of September 30, 2011, a total of $278,707 was owed under the Modesitt Note.

Additionally in November 2010, a third party loaned the Company $50,000, which was evidenced by a promissory note, which bears interest at the rate of 12% per annum (with interest payable monthly until maturity) and a maturity date, as extended of June 2, 2014. The Company agreed to issue the third party an aggregate of 300,000 shares of common stock in connection with the Third Party Note. As of December 31, 2010, 2011 2012, a total of $50,967, $57,431 and $64,714, respectively, including accrued and unpaid interest thereon, was owed under the Third Party Note. As of September 30, 2011, a total of $55,741 was owed under the Third Party Note.

As described above, on February 4, 2011, we entered into a Merger Agreement with StaffMD and Jeffrey Sisk, an individual, and acquired ownership of MedicalWork, which held ownership of over 60 URLs including PhysicianWork.com. Part of the consideration paid for the acquisition was the issuance of the Geronimo Note in the amount of $250,000, which bears interest at the rate of 12% per annum, and has a default interest rate of 18% per annum. Monthly interest-only payments are due on the Geronimo Note, which was originally due February 1, 2012, but has since been extended until February 1, 2013 The Company also agreed to issue Geronimo an aggregate of 250,000 shares of the Company's restricted common stock in consideration for agreeing to enter into the Geronimo Note. The Geronimo Note was secured by a security interest in all of MedicalWork's assets, pursuant to a Security Agreement. The Company was also an obligor on the Geronimo Note and remained as a secondary obligor following the parties' entry into the Rescission Agreement, described below. The Company also agreed to issue Geronimo an aggregate of 250,000 shares of the Company's restricted common stock in consideration for agreeing to enter into the Geronimo Note, which shares have been issued to date.

We also provided Mr. Sisk the Seller Note, a secured, subordinated promissory note in the amount of $3,950,000, which accrued interest at the rate of 8% per annum, had a default rate of interest of 14% per annum and was due and payable on February 4, 2012. The Seller Note was subsequently forgiven by Mr. Sisk effective December 31, 2011, pursuant to the Revision Agreement described in greater detail above. As of September 30, 2011, the balance on the Seller Note was $3,497,996, which included accrued interest thereon, provided that such note has since been forgiven in connection with the Rescission Agreement.

Additionally, as part of the Rescission Agreement with Mr. Sisk, and effective December 31, 2011, pursuant to which we released ownership of MedicalWork and its assets to Mr. Sisk, and Mr. Sisk, among other things, agreed to cancel and terminate the Seller Note and his Employment Agreement and to indemnify and hold us harmless from any claims, costs, expenses or causes of action relating to the Geronimo Note (which is secured by 500,000 shares of our common stock). As of December 31, 2010, 2011 and 2012, there was $0, $252,500 and $284,523 outstanding under the Geronimo Note, respectively, including accrued and unpaid interest thereon. As of September 30, 2011, there was a total of $276,156 outstanding under the Geronimo Note.

23 Four of the Note Holders provided the Company non-interest bearing convertible bridge loans in the aggregate amount of $40,000 in March 2012, with a maturity date of the earlier of (a) the date the Company receives aggregate funding from any source in excess of $50,000 and (b) January 2, 2014, provided that the Company is currently in the process of obtaining waivers from the Note holders in order to allow the Company to raise additional funding for working capital purposes. In consideration for providing the loan, the Company issued the participating Note Holders an aggregate of 400,000 shares of restricted common stock. The loans are secured by a security interest in all of the Company's properties and assets.

On August 15, 2012, the Company issued a subordinated Convertible Promissory Note to John Strickland and Kimberly Ann Griffith, joint tenants, in the amount of $200,000 for working capital which included funding for the specific purpose of bringing the Company current in its SEC filings so that the Company would be in a better position to raise additional capital as needed to launch the Company's strategic plan. The Convertible Promissory Note accrues interest at the rate of 10% per annum (payable monthly in arrears) and is due and payable on August 15, 2014. The Convertible Promissory Note is convertible into shares of the Company's common stock at the option of the holder at a conversion price of $0.08 per share.

As of the date of this filing, the Company owes $2,920,250 to the Note Holders in connection with the acquisition of Find.com, the payment of which is secured by a security interest in substantially all of our assets. The Company is in default in connection with the payment of the Notes, provided that pursuant to the terms of a Forbearance Agreement and a First Addendum thereto, described in greater detail above, the Note Holders have agreed to forbear from taking any action in connection with the default during a forbearance period ending on the earlier to occur of (a) January 2, 2014 or (b) the date that any default (other than relating to the payment of funds under the Notes) occurs (the "Extended Forbearance Period"). No interest accrues on the Notes during the Extended Forbearance Period. The First Addendum also provided that all shares issued to the Note Holders from time to time have piggy-back registration rights; and that the Company could borrow up to $1 million in the form of a bridge loan (in addition to up to $50,000 which could be borrowed from the Note Holders, of which a total of $40,000 was subsequently borrowed). The agreement also requires that Mr. Krieg transfer ownership of the Series A Shares (or cancel such shares and have them reissued) to Cynthia S. White and Ronald L. Attkisson, as collateral agents for the notes (currently in default) associated with the Find.com acquisition, or their assigns within 10 days of notice of such requested transfer (or reissuance), which has not occurred or been requested to date but is expected to occur in the first quarter of 2013. We also agreed to issue Mr. Krieg 3 million shares of common stock in connection with such cancellation or transfer. We also agreed to pay the Note Holders up to 25% of our cash flow (in the discretion of the Board of Directors), in any fiscal year that revenues associated with Find.com exceed $1 million, in connection with the Notes, and the Note Holders agreed to further forebear from taking any action under the Notes and to extend the forbearance period so long as such requirements are met.

We do not currently have any formal commitments or identified sources of additional capital from third parties or from our officer, Director or majority shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan and/or suspend our exploration activities.

In the future, we may be required to seek additional capital by selling additional debt or equity securities, selling assets, if any, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.

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