GENOIL INC (Form: 20-F, Received: 06/28/2007 12:25:49)

Large accelerated filer

Accelerated filer X

Non-accelerated filer

Indicate by check mark which financial statement item the registrant has elected to follow

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FORM 20-F

(Mark One)

o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2006

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

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

Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . .

For the transition period from _______________ to ______________

Commission file number:

GENOIL INC.
(Exact name of Registrant as specified in its charter)

Canada

(Jurisdiction of incorporation or organization)
633 – 6 Avenue S.W., Suite 2020
Calgary, Alberta, Canada T2P 2Y5
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

None.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

Common Stock, Fully Paid and Non-Assessable Common Shares Without Par Value listed on the TSX Venture Exchange and OTC Bulletin Board

SEC 1852 (05-06)		Persons who respond to the collection of information contained in
		this form are not required to respond unless the form displays a
currently valid OMB control number.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

Common Shares: 223,054, 604 as of December 31, 2006 and 225,172,808 as of June 15, 2007

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes X No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes X No

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

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 No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.

(Check one):

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes X No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes

Item 1.	Identity of Directors, Senior Management and Advisers		1
Item 2.	Offer Statistics and Expected Timetable		1
Item 3.	Key Information		1
Item 4.	Genoil's Information		6
Item 4A. Unresolved Staff Comments			13
Item 5.	Operating and Financial Review and Prospects		13
Item 6.	Directors, Senior Management and Employees		17
Item 7.	Major Shareholders and Related Party Transactions		23
Item 8.	Financial Information		25
Item 9.	The Offer and Listing		25
Item 10.	Additional Information		26
Item 11. Quantitative and Qualitative Disclosures About Market Risk			35
Item 12.	Description of Securities Other than Equity Securities		35
Item 13.	Defaults, Dividends Arrearages and Delinquencies		35
Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds		35
Item 15.	Controls and Procedures		35
Item 16.	[Reserved]		37
	Item A	Audit Committee Financial Report	37
	Item B	Code of Ethics	37
	Item C	Audit Fees	38
	Item D	Exemptions from the Listing Standards for Audit Committees	38
	Item E	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	38
Item 17. Financial Statements			38
Item 18. Financial Statements			39
Item 19. Exhibits			39

Page 1 of 50

		PART I
Item 1.		*Identity of Directors, Senior Management and Advisers*
A.		Directors and senior management.

Not required as this is an annual report under the Exchange Act .

B. Advisers.

Not required as this is an annual report under the Exchange Act .

C. Auditors.

Not required as this is an annual report under the Exchange Act .

Item 2. Offer Statistics and Expected Timetable

Not required as this is an annual report under the Exchange Act .

Item 3. Key Information

A. Selected financial data.

Genoil Inc.'s (hereinafter "Genoil" or the "Corporation") financial statements are prepared in accordance with Canadian generally accepted accounting principles (GAAP). These principles conform in all material respects with US GAAP except as disclosed in Note 22 to the Consolidated Financial Statements. The following summary financial data should be read together with the Consolidated Financial Statements and the respective notes thereto, and the other information contained in this document.

The following selected consolidated financial data as of December 31, 2006, 2005, 2004, 2003 and 2002 and for the years ended December 31, 2006, 2005, 2004, 2003 and 2002 have been derived from Genoil's audited Consolidated Financial Statements, which are included elsewhere herein, and were prepared in accordance with Canadian GAAP. These principles differ in certain respects from those applicable under U.S. GAAP as is discussed in detail in Note 22 to the Consolidated Financial Statements.

Genoil's Consolidated Financial Statements are stated in Canadian Dollars ("CDN$" or "$"). All dollar amounts provided in this annual report are in Canadian Dollars unless otherwise stated.

Page 1 of 50

Selected Consolidated Financial Information

(All amounts in Canadian dollars)


			Years ended December 31

	2006		2005	2004	2003	2002
Revenue		23,393	19,484	-	-	30,100
Loss from continuing operations
Canadian GAAP	(13,906,047)		(10,923,321)	(9,097,560)	(5,711,256)	(3,055,577)
US GAAP	(13,922,447)		(10,901,392)	(9,135,654)	(6,321,628)	(3,196,807)
Loss for the period
Canadian GAAP	(13,906,047)		(10,923,321)	(9,097,560)	(5,711,256)	(3,055,577)
US GAAP	(13,922,447)		(10,901,392)	(9,135,654)	(6,321,628)	(3,196,807)
Loss per share from continuing operations:
Basic and diluted
Canadian GAAP		(0.07)	(0.06)	(0.05)	(0.04)	(0.03)
US GAAP		(0.07)	(0.06)	(0.05)	(0.04)	(0.03)
Income (loss) per share: Basic and diluted

Canadian GAAP		(0.07)	(0.06)	(0.05)	(0.04)	(0.03)
US GAAP		(0.07)	(0.06)	(0.05)	(0.04)	(0.03)
Total assets
Canadian GAAP	6,481,575		6,155,904	12,702,995	8,613,384	10,239,807
US GAAP	6,481,575		6,155,904	12,702,995	8,613,384	10,239,807
Net assets
Canadian GAAP	2,699,148		867,375	5,024,210	5,038,954	6,758,878
US GAAP	2,032,796		(197,740)	3,988,534	5,038,954	6,758,878
Share Capital
Number of Shares Outstanding	223,054,604		196,051,227	178,880,056	159,035,409	141,948,050
Canadian GAAP	34,809,229		21,665,406	15,576,995	13,167,509	10,791,613
US GAAP	67,460,296		54,316,473	48,228,062	45,818,576	43,442,680
Retained earnings (deficit)
Canadian GAAP	(43,779,493)		(29,873,446)	(18,950,125)	(9,852,565)	(4,141,309)
US GAAP	(98,715,962)		(84,793,515)	(73,892,123)	(64,756,469)	(58,330,813)


To date, the Corporation has not issued any dividends to shareholders.

Number of Shares Issued

Years ended December 31

	2006		2005	2004	2003	2002

Shares outstanding	223,054,604	196,051,227 178,880,056			159,035,409	141,948,050
Shares issued	27,003,377	17,171,171		19,844,647	17,087,359	38,493,465

Currency and Exchange Rates (Cdn$ per 1 US$)

Average exchange rate	2006	1.1304
	2005	1.2114
	2004	1.2191
	2003	1.3916
	2002	1.5705

Exchange rate on June 18, 2007	1.0679


	Low	High

May 2007	1.1163	1.0666
April 2007	1.1600	1.1048
March 2007	1.1817	1.1500
February 2007	1.1878	1.1565
January 2007	1.1848	1.1630
December 2006	1.1670	1.1380

B. Capitalization and indebtedness.

Not required as this is an annual report under the Exchange Act .

C. Reasons for the offer and use of proceeds.

Not required as this is an annual report under the Exchange Act .

D. Risk factors.

Going Concern

To date Genoil has not attained commercially viable operations from its various patents and technology rights. Genoil's future is dependent upon its ability to obtain adequate additional financing to fund the development of commercial operations from its various patents and technology rights. The consolidated financial statements are prepared on the basis that Genoil will continue to operate throughout the next fiscal period to December 31, 2007 as a going concern. A failure to continue as a going concern would require that stated amounts of assets and liabilities be reflected on a liquidation basis, which would differ from the going concern basis.

General Risk Factors

An investment in the Corporation's common shares ("Common Shares") should be considered highly speculative. In addition to other information in this Form 20-F, you should carefully consider the following factors when evaluating Genoil and its business.

Much of the information included in this annual report includes or is based upon estimates, projections or other "forward-looking statements". Such forward-looking statements include any projections or estimates made by the Corporation and its management in connection with its business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect Genoil's current judgment regarding the direction of its business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.

The section that follows addresses several of the risk factors related to the Corporation's operations in more detail.

Genoil has a history of substantial losses and negative cash flows. It expects these losses and negative cash flows to continue and increase in the future. If it is unable to make a profit, the Corporation may not be able to continue to operate its business.

Genoil has not earned profits to date and it may not earn profits in the future. Profitability, if achieved, may not be sustained. The commercialization of its technologies requires financial resources and capital infusions and future revenues may not be sufficient to generate the funds required to continue its business development and marketing activities. If the Corporation does not obtain sufficient capital to fund its operations, it may be required to forego certain business opportunities or discontinue operations entirely.

Genoil has incurred significant losses and expects to continue to incur significantly greater costs than revenue received. Consequently, the Corporation expects to incur losses in the near term. If Genoil achieves profitability, it may not be able to sustain it. The business of initiating, developing and implementing inventive or innovative processes is inherently risky. Manpower and capital employed may not result in the development of a commercial or economic process. Once successfully developed, there is no certainty that the intended market will be receptive to the Corporation's technology. In all areas of its business, Genoil may compete against entities that may have greater technical and financial resources. The Corporation is completely dependent upon external sources of financing which may not be available on acceptable or economic terms.

The intellectual property and technology developed by Genoil may not work in the manner anticipated or the market may not be receptive to its technology or other new technologies might be more feasible to implement.

Genoil develops technology for use in various industries. Part of the risk in this type of undertaking is that the technology may not perform as expected or its use may not be economical. The development of intellectual property is expensive and time consuming and if the developed product is not marketable, then no revenues will be realized from its development.

The marketability of Genoil's technologies depends on the ability of those technologies to meet and adapt to the needs of industry customers. The markets for Genoil's technologies may not develop further and the current level of market acceptance of its products may decrease or may not be sustainable. In order to continue marketing its technology, the Corporation must adapt to rapid changes in technology and customer requirements. The Corporation's success will depend, in part, on its ability to enhance its existing technology, gain market acceptance, and continue to develop its products to meet increasingly demanding customer requirements.

Genoil's technology is still experimental so the demand for it is unknown. The Corporation's potential market may not develop as it anticipates and, accordingly, it may not be able to expand its business or operate it profitably.

The Corporation's technology has not been proven in any commercial venture and, as such, any market for its technology will depend significantly on its own efforts. As a result, future demand for its technology is unknown. Genoil believes that many of its potential customers are not fully aware of the benefits of its technology. The Corporation must educate potential customers regarding these benefits and convince them of its ability to provide complete and reliable services. The market for its technology may never become viable or grow further. If the market for its technology does not grow or grows more slowly than it currently anticipates, its business, financial condition and operating results would be materially adversely affected.

Key employees may terminate their employment.

Skilled and educated professionals are a fundamental component of the development of intellectual property. If these key employees terminate their employment with Genoil, the development of its intellectual property may be hindered or delayed, increasing the expenses associated with technology development. The Corporation's success is dependent on the services of members of its senior management team. The experience and talents of this team will be a significant factor in its continued success and growth. The loss of any senior management member could have

a material adverse effect on its operations and business prospects. Given its financial situation, Genoil may not be able to retain or replace its key personnel. The Corporation has no key man insurance.

Genoil has issued common share purchase warrants, options and convertible debt, the conversion and/or exercise of which would have a dilutive effect on its earnings per share.

As of December 31, 2006, Genoil has reserved 27,213,502 Common Shares for issuance upon the exercise of stock options, 4,978,588 Common Shares for issuance upon the exercise of warrants, and 13,432,459 for issuance upon conversion of outstanding debt. These Common Shares represent a potential equity dilution of approximately 20%. There were 223,054,604 Common Shares outstanding at December 31, 2006 and 225,172,808 as of June 15, 2007. Furthermore, the Corporation may enter into commitments in the future which would require the issuance of additional Common Shares, and it may grant additional stock options. The Corporation is authorized to issue an unlimited number of Common Shares. Issuance of additional shares would be subject to TSX Venture Exchange regulatory approval and compliance with applicable securities legislation. Genoil currently has no plans to issue Common Shares other than upon the exercise of warrants and options, for the purpose of raising funds for general working capital requirements, to acquire additional technology, to accommodate strategic partnerships, or for the satisfaction of debts, in certain, limited circumstances, which issuance would be subject to approval of the TSX Venture Exchange.

Third parties may claim that Genoil infringes their proprietary rights.

Genoil potentially may be subjected to claims that it has infringed the intellectual property rights of others. As the number of products in the oil and gas industry increases, the Corporation may become increasingly subject to infringement claims, including patent and copyright infringement claims. In addition, previous employers of its former, current or future employees may assert claims that such employees have improperly disclosed to Genoil the confidential or proprietary information belonging to those employers. Any such claim, with or without merit, could be time consuming to defend, result in costly litigation, divert management's attention from its core business, require it to stop selling or delay shipping, or cause the redesign of its product. In addition, Genoil may be required to pay monetary amounts as damages, for royalty or licensing arrangements, or to satisfy indemnification obligations that it has with some of its customers.

Genoil may not be able to protect its proprietary information.

Genoil relies on a combination of copyright, patents and trade secret laws, confidentiality procedures, contractual provisions and other measures to protect its proprietary information. All of these measures afford only limited protection. These measures may be invalidated, circumvented or challenged, and others may develop technologies or processes that are similar or superior to the Corporation's technology. Despite its efforts to protect its proprietary rights, unauthorized parties may attempt to copy Genoil's products or to obtain or use information that it regards as proprietary. Given its size and financial situation, Genoil may not be ultimately effective in preventing misappropriation of its proprietary rights.

Genoil's intellectual property may become outdated or surpassed by industry improvements.

Genoil is a technology-based company and is involved in developing, improving, and marketing its technology to customers. There is a risk that new developments in Genoil's field of specialty will arise, making its technology products less marketable. To enhance its position in the technology industry, the Corporation must continue to develop and improve its current products and develop product extensions. There may not be a demand for the products or capital available to finance their development in the future.

Genoil operates in a competitive market.

The business of providing technology-based solutions to industry is highly competitive. Some of Genoil's competitors may have greater financial and marketing resources, greater market share and name recognition than it has, which would allow them to quickly develop market presence in the markets Genoil serves or allow them to expand into new markets that Genoil intends to serve. Given its size and financial position, the Corporation may not be able to effectively compete with these competitors.

Potential expansion and opportunities may arise.

Genoil may continue to expand its operations or product lines through the acquisition of additional businesses, products or technologies. It may not be able to identify, acquire or profitably manage additional businesses or successfully integrate any acquired businesses, products or technologies without substantial expenses, delays or other operational or financial challenges. Furthermore, acquisitions may involve a number of additional risks, including the diversion of management's attention, failure to retain key personnel, unanticipated events or circumstances and legal liabilities, some or all of which could have a material adverse effect on Genoil's business, results of operations and financial condition. In addition, acquired businesses, products or technologies, if any, may not achieve anticipated revenues and profitability. Acquisitions could also result in potentially dilutive issuances of equity securities. The Corporation's failure to manage its acquisition strategy could have a material adverse effect on its business, results of operations and financial condition.

U.S. investors may have difficulty enforcing judgments against Genoil or its management.

Genoil is incorporated in Canada. Substantially all of its assets are located outside the United States. As a result, U.S. investors may not be able to:

effect service of process upon the Corporation or these persons within the United States; or
enforce against the Corporation or these persons in United States courts, judgments obtained in United States courts, including judgments predicated on the civil liability provisions of the federal securities laws of the United States; or
initiate a derivative suit on the Corporation's behalf.

Genoil is subject to exchange rate risk.

Genoil is a Canadian company and its operating expenses and capital expenditures are denominated in Canadian dollars. It will be subject to exchange rate risk where it enters into contracts not denominated in Canadian dollars and, accordingly, fluctuations in exchange rates could have a material effect on its results of operations.

Item 4. Genoil's Information

A. Genoil's history and development.

The Company

Genoil was created from an amalgamation on September 5, 1996 under the Canada Business Corporations Act of Genoil Inc. and Continental Fashion Group Inc., a public company whose shares traded on the Alberta Stock Exchange. At the time of the merger, Continental Fashion Group Inc. had no assets, no liabilities and did not carry on any business.

The address of its head office is 2020, 633 – 6 Avenue S.W., Calgary, Alberta, T2P 2Y5 and its phone number is (403) 750-3450.

History

1996	-	Genoil was created from an amalgamation between Genoil Inc. and Continental Fashion Group Inc.
		Continental Fashion Group Inc. shareholders received shares in the amalgamated company on a 10-for-1
		basis while Genoil Inc. shareholders received shares in the amalgamated company on a 1-for-1 basis.
1997	-	Genoil acquired interests in oil and gas properties located in the Province of Quebec;
	-	St. Genevieve Resources Ltd., Genoil's then parent company, re-directed funds from its accounts, leaving
		Genoil insolvent;
	-	Debt owed by Explogas Ltd. ("Explogas") was converted for farm-in rights in Cuba offshore and onshore
		in a related party transaction by which Genoil acquired shares of Explogas and a general release in
		respect of their dealings. Subsequent to the conversion of debt, Genoil sold all of its shares in Explogas.

1998	-	Genoil was re-capitalized by Beau Canada Exploration ("Beau") and it became a subsidiary of Beau;
	-	Genoil's board of directors and management were replaced and it changed its year end to December 31st;
	-	Royalty interests and producing properties in the Western Sedimentary Basin were purchased for
		$2,600,000. As this was a non-arm's length transaction and the purchase price was determined with
		reference to an independent engineering assessment.
	-	Genoil listed on the Canadian Venture Exchange (CDNX) predecessor to the TSX Venture Exchange.
1999	-	Genoil acquired all outstanding common shares of CE3 Technologies Inc. This was an arm's length
		transaction;
	-	Genoil's subsidiaries at the end of 1999 were CE3 Technologies Inc. ("CE3"), Enviremedial Services Inc.
		("Enviremedial") (CE3 was sole shareholder of Enviremedial), and Genoil Merchant Banking Intragroup
		Restricted Limited ("GMBI");
	-	Genoil sold its Cuban interests.
2000	-	All of Genoil's Canadian royalty interest and producing properties were sold to Beau Canada for
		$1,700,000. As this was a non-arm's length transaction the purchase price was determined with reference
		to an independent engineering assessment. The disposition was recorded at the exchange value based on
		a valuation reviewed by independent petroleum engineers;
	-	Genoil also sold GMBI to Beau for $1,400,000 cash consideration. As Genoil shifted its focus to
		technology development from oil and gas operations, GMBI, which held some residual international oil
		and gas exploration prospects and some accumulated tax losses, was no longer a core asset. This
		transaction, which was non-arms length, approximated fair value given a reasonable estimate of the value
		of the accumulated tax losses and the exploration prospects;
	-	Beau distributed its holdings in Genoil, a total of 61,600,000 Common Shares, to its shareholders and
		ceased to be Genoil's parent company;
	-	CE3 was placed into receivership as it had substantial cost overruns on its oil sands cleaning facility.
		CE3's creditors took over the project, and Genoil made a bid to the receiver for CE3's technology.
		Genoil was successful in its bid and the remaining operations of CE3 were wound up by the receiver;
	-	Genoil changed its registered office from Toronto, Ontario to Calgary, Alberta.
2001	-	Genoil acquired all of the intellectual property of CE3, as well as certain capital assets, including a pilot
		heavy oil upgrader facility, for $2,000,000 cash consideration and the subordination of CE3's
		approximate $20,000,000 of secured debt owing to Genoil;
	-	David Lifschultz acquired 10,121,462 Common Shares of Genoil. Mr. Lifschultz acquired 1,613,450 of
		these shares through a private placement, with the remaining amount acquired through market purchases
		at prices between $0.09 and $0.11 per share.
	-	Exclusive rights to the oil-water separation technology which Genoil held were indefinitely extended.
2002	-	Genoil purchased Hydrogen Solutions Inc. and was assigned an existing license for EHG Technology
		LLC ("EHG") technology, which it paid for by issuing 10.5 million Common Shares and agreeing to pay
		a 32.5% royalty based on net operating income relating to hydrogen production. This was an arm's
		length purchase. The Corporation acquired the exclusive rights to a process for generating hydrogen
		from water;
	-	Genoil acquired patent rights for a three-phase oil water separator as well as an existing commercial oil
		water separation unit in exchange for 700,000 of its Common Shares at a deemed price of $0.22 per
		share;
	-	Genoil completed two non-brokered private placements through which it issued 6,566,614 Common
		Shares at a price of $0.18 per Common Share and 20,226,853 Common Shares at a price of $0.10 per
		share. As part of the latter placement, Mr. Lifschultz purchased an additional 19,770,329 shares,
		bringing his shareholdings to 20.5% of Genoil's outstanding Common Shares. Mr. Lifschultz paid cash
		for these shares;
2003	-	Genoil continued operations under the agreement with EHG for the purpose of conducting tests of the
		hydrogen generating technology at a site in Romania;
	-	Outstanding warrants, representing a total of 11,262,500 Common Shares, were extended for one
		additional year to February 12, 2004. These warrants have now expired;
	-	A number of shares-for-debt agreements were reached with several of Genoil's creditors. As of
		December 31, 2003, Genoil had issued 5,186,060 Common Shares representing $732,325 of creditor
		liabilities for the year 2003. It received approval from the TSX Venture Exchange to list all of the shares
		issued pursuant to such arrangements and all such shares were issued subject to a TSX Venture Exchange
		imposed four-month hold period;

	-	Genoil completed two non-brokered private placements through which it issued 6,008,499 Common
		Shares at a price of $0.10 per share and 6,917,193 units at a price of $0.15 per unit (each unit being
		comprised of one Common Share and three-tenths of a share purchase warrant, with each full warrant
		allowing its holder to purchase one Common Share at a price of $0.20 for a period of two years).
2004	-	Genoil completed a non-brokered private placement through which it issued 10,642,820 units at a price
		of $0.14 per unit (each unit being comprised of one Common Share and three-tenths of a share purchase
		warrant with each full warrant allowing its holder to purchase one Common Share at a price of $0.15 for
		a period of two years).
	-	The Corporation issued 1,674,999 shares in satisfaction of obligations to four creditors including two
		officers and one related party.
	-	Genoil entered into a contract with Silver Eagle Refining – Woods Cross Inc. ("Silver Eagle") to install
		the first commercial Genoil Hydroconversion Upgrader ("GHU").
	-	Genoil raised $900,000 through two short-term loans from a director. As compensation for the loan, the
		Corporation issued to the lender 300,000 Common Shares at a deemed price of $0.25 per share.
	-	Genoil signed an agreement with OAO Lukoil (“Lukoil”) for the testing of its heavy oil from the Yarega
		oil field in Russia's Komi Republic.
	-	Genoil signed a licensing agreement with Velox Corporation regarding the "Maxis" oil and water
		separation system. Genoil has proprietary rights to the "Maxis" hydrocyclone technology that provides
		upstream, high-speed separation of oil from water in the field. Genoil’s Maxis uses the hydrocyclone
		system to provide pre-treatment and de-watering of crude emulsions.
	-	Genoil signed a licensing agreement for its Claris technology with MNGK, a Russian oil services firm.
	-	Genoil acquired a controlling interest in Velox Corporation.
	-	In December, Genoil completed a non-brokered private placement through which it received $5,638,220
		and issued non-interest bearing convertible debentures with a conversion price of $0.44 per share. The
		participants in the private placement also received 3,203,534 warrants entitling them to purchase
		3,203,534 Common Shares at a price of $0.85 per share any time prior to December 23, 2009. The
		debentures mature in December, 2014.
2005	-	On February 3, 2005, a lender agreed to exercise its right to acquire 10,000,000 Common Shares for
		$2,300,000. As part of the note payable settlement agreement, the Company agreed to arrange for
		investors to purchase the 10,000,000 Common Shares exercised by the holder for approximately $3.0
		million. The total proceeds on the sale of shares were paid to the holder to settle the entire principal and
		accrued interest outstanding to the lender.
	-	The Corporation settled payables with insiders equal to $471,414 through the issuance of 1,266,873
		Common Shares pursuant to certain shares for debt agreements.
	-	Late in 2005 the Corporation received a letter of termination from Silver Eagle.
	-	Genoil completed a non-brokered private placement, through which it received $750,000 and issued a six
		month convertible debenture, accruing interest at a rate of 12% per annum with a conversion price of
		$0.44 per share.
	-	Genoil signed a letter of intent with Surge Global Energy, Inc. to evaluate the construction of a 10,000
		barrel per day commercial upgrader based on its technology.
	-	In December 2005, Genoil arranged a non-brokered private placement. Pursuant to this private
		placement, Genoil received $750,000 and issued a six month convertible debenture, accruing interest at a
		rate of 12% per annum and having a conversion price of $0.44 per share. The private placement also
		included 426,000 warrants to purchase Common Shares at an exercise price of $0.85 per share and
		exercisable within 6 months of the date of issuance.
2006	-	Genoil entered into a non-binding memorandum of understanding with Hebei Zhongjie PetroChemical
		Group Company Ltd. (“Hebei Zhogjie”) to jointly develop and build the first major commercial heavy
		oil upgrader in China based on the GHU ^TM technology.
	-	Genoil's GHU ^TM technology was approved by the United States Patent and Trademark Office.
	-	Lifschultz Terminal and Leasing Co. Inc. and Lifschultz Enterprises Co, LLC converted their outstanding
		$750,000 convertible notes, originally acquired in 2005 and 2006 respectively, into Common Shares thus
		eliminating a $1,500,000 outstanding debt payable by Genoil.
	-	SDS Capital Group SPC, Ltd. converted $296,316 of its outstanding $428,995 non-interest bearing
		convertible debenture originally acquired in December 2004.
	-	In June 2006, Genoil and Steaua Romana Refinery signed a memorandum of understanding for a
		Hydroconversion Upgrader in Romania.

		- In August 2006, Genoil entered into a purchase and sale agreement with Murphy Canada Exploration
		Company for the purchase of rights to royalties previously held by Beau Canada Exploration Ltd. Genoil
		acquired those rights in exchange for 4,500,000 common shares.
		- In September 2006, Genoil completed a private placement, receiving US$3,550,150 and issued 4,863,218
		Common Shares, and 1,215,802 warrants to purchase Common Shares at an exercise price of US$1.10
		per share and exercisable within two years from issue date.
		- In October 2006, Genoil and Hebei Zhongjie signed a Letter of Intent to proceed with the design and
		installation of a 20,000 bpd GHU at their refinery in Nampaihe Town, Huanghua City, Hebei, China.
		Hebei Zhongjie shipped oil for testing at the Corporation's pilot facility in Two Hills, Alberta. Genoil
		will immediately begin work on the first stage of the project's engineering design.
		- Genoil completed a non-brokered private placement, through which it received $968,825.19 and issued a
		convertible debenture carrying a 12% annual interest rate and having a conversion price of $0.75 per
		share. In connection with the issuance of the convertible debentures, Genoil granted 322,941 warrants
		exercisable for a term of 6 months at $0.98 per share.
		- In April 2007, Genoil and two holders of convertible notes, originally issued in October 2006, agreed to
		extend the maturity date by six months to October 6, 2007, with such notes to continue on the same term
		in all other respects. The warrants issued in connection with these notes were likewise extended.
		- In April 2007, Genoil entered into a testing agreement with Hebei Zhogjie for testing of their heavy oil at
		the Company’s pilot plant todetermine final parameters to move the project into the next phase.
		- In May 2007, Genoil entered into shares-for-debt agreements with several of Genoil’s outside directors,
		they agree to forgive an total of $223,000 in unpaid director’s fees in exchange for 660,740 common
		shares of the Corporation.

B. Business overview.

General Development of the Business

Genoil's principal business is the development of technologies relating to the oil and gas industry. Its present goal is to commercialize its technologies internationally.

The Corporation owns rights to several patented and proprietary technologies. A number of products that have been created from these technologies are under development. None of its technologies have been commercialized. A discussion of these products follows.

No consideration has been given to consumer boycotts as a result of operations in Countries of Particular Concern as defined by the International Religious Freedom Act of 1998 . Genoil is a Canadian company and as such the International Religious Freedom Act of 1998 does not apply to its operations. The Corporation does not produce consumer products.

Pilot Heavy Oil Upgrader

Genoil owns heavy oil upgrader technology. Genoil's pilot heavy oil upgrader (the "Upgrader") uses a hydrogen addition process, as opposed to conventional carbon rejection. The considerable price differential between light and heavy oil creates a potential opportunity for the Upgrader to be developed for both heavy oil and bitumen. The hydrogen addition process is a process whereby hydrogen is mixed with bitumen under specific pressures and temperatures to upgrade the bitumen from a low API to whatever desired value the client requires. Genoil's Upgrader has progressed through the development stage.

In 2005, Genoil entered into a letter of intent with Surge Global Energy, Inc. to evaluate the construction of a 10,000 barrel per day commercial upgrader in North America based upon its GHU technology. The first step in this evaluation is to conduct a feasibility study regarding the installation of a GHU at Surge's Sawn Lake Heavy Oil development. The feasibility study will start with the analysis of the raw Sawn Lake crude that will be upgraded in its pilot unit. These test results will establish the parameters for the construction of the upgrading unit and establish the optimal upgraded crude quality and the API to be derived from the GHU process. Presently, Surge Global is conducting tests results to determine whether or not lifting the oil is economically feasible.

During the first quarter of 2006, Genoil entered into a non-binding memorandum of understanding (“MOU”) with Hebei Zhongjie to jointly develop and build the first major commercial heavy oil upgrader in China based on the Genoil GHU technology. The MOU was followed by a Letter of Intent (“LOI”) after a high level delegation of Hebei Zhongjie visited the Genoil office in Edmonton in September 2006. Genoil is currently proceeding with a feasibility study for funding which will, assuming a positive report, be followed by the Front End Engineering & Design ("FEED") study to be integrated into a final contract approval of the project. In April 2007, Genoil entered into an agreement with Hebei Zhodgjie for testing of their oil at Genoil’s pilot plant.

Testing of the M180 crude is required to establish the parameters for the construction of the GHU ^TM upgrading unit at the most optimal upgraded crude quality and API. Meanwhile, Hebei Zhongjie shipped a sample of oil for testing at the Corporation's pilot facility in Two Hills, Alberta. This project has a planned start up date early 2010. The LOI sets out the framework upon which Genoil and Hebei Zhongjie plan to proceed with the design and installation of a 20,000 bpd GHU at Hebei Zhongjie's 150,000 bpd petrochemical facility in Nampaihe Town, Huanghua City, Hebei, China. The LOI also provides that the Corporation will fund 80% of the total capital costs for the implementation of the project and Hebei Zhongjie agrees to fund the remaining 20%. Further, the LOI provides that net profits of the project shall be allocated and paid as to 60% to the account of the Corporation until such time as the Corporation has received net profits in an amount equal to double the Corporation's costs. Following such time, 10% of all net profits realized from the project are to be received by the Corporation for so long as the refinery remains in operation.

A high level Lukoil delegation visited Alberta in mid-June 2006 and held discussions with the Genoil engineering team at its Sherwood Park offices outside Edmonton. During a detailed review of Lukoil’s requirements in the area of heavy oil upgrading, Lukoil requested a further elaboration of a project study submitted with respect to a proposed GHU project in the Komi region of Russia. Genoil presented a commercial proposal for a 60,000 bpd upgrader in October 2006.

In August 2006 Genoil signed a Memorandum of Understanding with Steaua Romana refinery in Romania. It is Genoil's plan to conduct a GHU retrofit of 1,500 bpd on this refinery that processes 11,000 bpd, and to utilize this project as a showcase for European, Eastern European, Russian and CIS oil companies, and despite its relatively small size, to demonstrate the versatility of the GHU technology. The anticipated Steaua Romana refinery retrofit will be conducted for the purpose of upgrading the vacuum distillation towers residues and obtaining hydrocarbons of higher value than might otherwise be achievable and which can be further processed in the refinery.

Oil/Water Separation

Genoil owns certain oil/water separator technology rights through a wholly owned subsidiary. Its Maxis oil/water separator separates oil from water at the wellhead. An oil/water separator test unit is located at the Corporation's Upgrader facility for testing at Two Hills, Alberta, Canada. Other companies also have oil-water separators that operate near the wellhead, but often require additional sources of heat to function efficiently. Oil/water separators generally use gravity, heat or a combination of the two as well as filters. Some separators also use gravity and the movement of the fluid ("cyclonics") to separate oil and water. Genoil's separators are designed to use cyclonic action to separate oil and water more efficiently than strictly gravitational or heat based separators. Other cyclonic separators exist but management believes that, as a result of the design of Genoil's separators, they should perform better than existing separators currently in use.

Genoil’s Crystal water separator is a compact unit that is able to handle smaller volumes using a compartmental process. Genoil built a prototype that has been successfully tested by U. S. Coast Guard and has presented this technology to a major tanker line. The Crystal Sea Separator has the potential of tapping a 50,000 ship market, as all ships over 200 tons which sail internationally must be outfitted with a device of this nature, as per international shipping regulations. This new generation of our existing Crystal technology meets or exceeds the IMO MEPC 107(49) resolution that requires the separators to process and treat bilge water containing surfactant elements such as oil and what is called fluid “C” or emulsionated hydrocarbon water and detergent, and after processing to have an effluent discharge of less than 15 ppm for territorial water and less than 5 ppm for discharge into inland waterways.

Revenues from Product Sales

The majority of Genoil's products continue to be at the commercialization stage and have not yet produced revenues at this time.

In 2004, Genoil received $139,930 pursuant to an agreement with OAO Lukoil. The upgrading of heavy oil from Lukoil was completed in early 2005. The amounts are included as a recovery in pilot upgrader expenses.

Interest was earned on short-term investment of the Company’s cash reserves.

Expenditures Relating to the Sale of Products

Genoil is primarily involved in the development of its technologies for commercial application. The Corporation engaged two full-time employees (one engineer and one administrative) and three consultants (one engineer and two financial professionals) to help in selling and marketing its products, and to seek funding during 2006.

The following table presents expenditures relating to the sale and marketing of Genoil's products for the past four fiscal years, by source:

	2006	2005	2004	2003

Business development	1,172,098	1,739,788	3,263,955	2,661,106

Business development expenses consist largely of traveling expenses as officers traveled, mainly to China, Russia and Middle Eastern countries, to negotiate contracts and present at conferences. No major tests were done at the pilot plant during 2006.

Genoil does not intend to commit to any expenditures of any other nature, beyond expenditures necessary for the development and maintenance of its technologies, in the near future.

While Genoil’s primary commercial focus has been on the GHU, it has also recently made advances with respect to potential near term revenue opportunities from its Maxis and Crystal products. Genoil anticipates sales of both Maxis and Crystal units based on changes being made through the world discharge of process water and discharge of bilge and ballast water by IMOA. Therefore, the Company is anticipating the generation of income in the short term from sale of oil/water separation equipment. The Corporation continues to believe that the largest potential for medium and long-term revenue is based on sales of the GHU technology.

Geographic Markets

The Company markets its technology mainly to potential customers in the Middle East, Russia and China. The markets for Genoil’s products are global.

Intellectual Property Rights

Genoil has 10 patent applications under review in Canada, the United States, Venezuela, Brazil, Europe and the Middle East, and has been granted 6 US patents (Patent nos. 6,074,549; 6,527,960; 6,125,865; 7,001,502; 7,014,756; 5,603,825), 1 Canadian patent (2,243,143), and Velox has one patent (5,965,021). Genoil either owns or licenses the rights to all intellectual properties used in its products.

Genoil has copyright, patent rights and trademarks, which are necessary and contribute significantly to the preservation of its competitive position in the markets which it addresses. It is possible that the Corporation's patents and other intellectual property will be challenged, invalidated or circumvented by third parties in the future. In the future, it may not be able to obtain necessary licenses on commercially reasonable terms. Genoil enters into nondisclosure agreements with its suppliers, contractors and employees, as appropriate, so as to limit access to and disclosure of its proprietary information. These measures may not suffice to deter misappropriation or independent third party development of similar technologies, which may adversely affect the Corporation.

Sales, Marketing and Distribution

Genoil is presently involved in pursuing sales of its Oil/Water Separator Units. Genoil is pursuing sales of Oil/Water Separators through its international network of agents and various engineering firms that deal with oil and gas companies throughout the world.

Genoil intends to market its products and license its GHU technology throughout the world's oil refining and production industry. Genoil is presently engaged in discussions with refining operations in North America, Europe, Latin America, Asia and the Middle East. It has entered into 15 contracts with agents that cover 36 countries to further pursue these sales.

Competition

Genoil is aware that several other companies may be presently pursuing the development of technologies in the oil and gas industry. It acknowledges that it is possible that some of these technologies may be similar in nature to its products and technologies. Such companies, should they be involved in selling or developing the same technology as Genoil, may be potential competitors to the Corporation. The Company believes that its patented fixed bed catalyst hydroprocessing technology in the GHU is competitively advantaged in the market by virtue of the expected comparatively low capital and operating costs and high product yields for operators relative to other coking or hydroprocessing products.

Government Regulations

There are several government regulations with which Genoil must comply. Failure to comply with these regulations could adversely affect its business. Certain government regulations require the imposition of standards that are normally a part of industry knowledge, and as such, would be understood and acted upon by the Corporation in the normal course of doing business.

Genoil, as a producer of technology and intellectual property, is not generally subject to environmental regulations. Genoil specializes in mechanical processes and as such its regular operations do not fall within the scope of environmental protection legislation.

The Corporation is subject to securities regulation in the Canadian jurisdictions in which it is a reporting issuer. As an issuer with securities traded on the TSX Venture Exchange, the Company is subject to its rules. The Corporation's shares are also traded on the OTCBB and as such, the Corporation is subject to the OTCBB listing requirements. Genoil must maintain a legislated level of public disclosure and must maintain minimum listing requirements based on its financial performance, resources and stage of development.

Plan of Operation

Genoil intends to continue to focus on marketing and developing its products in the immediate future. The Company may also consider opportunities in projects that incorporate its GHU Technology.

To fund its near term working capital requirements, the Corporation completed a private placement of shares during 2006, through which it raised about $3.9 million. During the year, the Company also received about $1.8 million on the exercise of options and warrants. These funds have permitted Genoil to fulfill its operating and capital requirements for the last several months; however subsequent financing activities will be required.

There are no confirmed purchases or sales of plant and equipment.

C. Organizational structure.

Genoil has a total of 17 full time employees, and also hires outside consultants as required in the cities of

Calgary and Edmonton, Alberta, New York, New York, Houston, Texas, and in Europe. The Corporation has also

engaged a number of sales agents that cover 36 countries in North and South America, Europe and the Middle East. Some consultants and the agents generally act as representatives on Genoil’s behalf with respect to commercial opportunities in their respective cities and countries. The Corporation intends to rely upon the services of these representatives and to remunerate them by means of sales commissions and incentive stock options.

Genoil has five subsidiaries: Genoil (USA) Inc., Velox Corporation, Hydrogen Solutions Inc., Genoil Technology International C.A. and Crystal Clear Solutions Inc. (the "Subsidiaries"). Genoil (USA), Inc., a wholly-owned subsidiary, was incorporated on December 29, 2004, in the State of Delaware, to facilitate payment of charges incurred by David K. Lifschultz, CEO of the Corporation, relating to market development in the U.S.A. Genoil owns 100% of each of Hydrogen Solutions Inc. and Crystal Clear Solutions Inc., both corporations incorporated in Canada pursuant to the Business Corporations Act (Alberta) . It also owns 100% of Genoil Technology International C.A., incorporated in Venezuela. None of these subsidiaries have any material assets or operations. Hydrogen Solution Inc. has had its legal entity status struck due to inactivity.

Genoil holds a 52.1% interest in the voting shares of Velox Corporation, which is a corporation incorporated in Canada pursuant to the Business Corporations Act (Alberta). Velox Corporation's primary asset is a cyclone oil and water separation technology. Velox Corporation currently has no material operations.

D. Property, plant and equipment.

Human Resources and Facilities

Genoil presently operates out of four main locations: an office in Edmonton, Alberta, an office in Calgary, Alberta, an office in New York, New York, and a research and development site located at Two Hills, Alberta.

Genoil currently has seven employees and two consultants based at its office in Edmonton, Alberta. During 2006, the Corporation leased 8,300 square feet and paid $ 9,436.37 per month for rental of this space. Genoil uses its Edmonton office for engineering, research and development.

The Corporation has two employees and one consultant based at its office in Calgary, Alberta. During 2006, Genoil leased 1,596 square feet and paid $2,959 per month in rent. In August 2006, it moved to a new office in Calgary where it pays $2,000 per month in rent. Genoil uses its Calgary office for corporate administration and marketing.

Genoil had five employees based at its facilities located in Two Hills, Alberta, at December 31, 2006. It uses its Two Hills facilities for research and development and for client demonstrations.

There are no present plans to construct, expand, or improve its facilities.

The facilities operated by the Corporation are not subject to environmental protection legislation and to its knowledge no environmental issues exist that would potentially affect its utilization of its assets.

Item 4A. Unresolved Staff Comments

Not applicable as Genoil is not an accelerated filer or a large accelerated filer.

Item 5. Operating and Financial Review and Prospects

Forward-Looking Statements

Statements in this report, or any document filed by Genoil with the different governing authorities, by or on behalf of it, to the extent not directly and exclusively based on historical events, constitute "forward-looking statements". These statements represent the Corporation's intentions, plans, expectations, and beliefs, and no assurance can be given that the results described in such statements will be achieved.

Forward-looking statements include, without limitation, statements evaluating market and general economic conditions in the following sections, and statements regarding future-oriented revenues, costs and expenditures. Investors are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date thereof. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties with respect to the Corporation include the effects of general economic conditions, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgements in the course of preparing forward-looking statements.

Genoil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

A. Operating results

Overview

Genoil's financial statements are prepared in accordance with Canadian GAAP, which conform in all material respects with US generally accepted accounting principles, except as disclosed in Note 22 to the Consolidated Financial Statements, and are presented in Canadian dollars unless otherwise indicated.

The following discussion and analysis provides a review of activities, results of operations, cash flows and the Corporation's financial condition for the fiscal year ended December 31, 2006 in comparison with those for the fiscal year ended December 31, 2005. This discussion should be read in conjunction with the Consolidated Financial Statements of the Company, incorporated hereto by reference (see Item 19 A).

Genoil is actively involved in the marketing, development and commercial applications of its proprietary technologies. Its pilot plant is located at Two Hills, Alberta.

To December 31, 2006, the Corporation has incurred significant operating losses. The Corporation expects to continue to have operating losses during the next year and expects to fund its operations in the near term from capital stock offerings and project loans.

As Genoil’s business has not yet generated revenue from operations, the Company requires cash infusions on a regular basis as it seeks to grow, develop and market its technologies.

The Corporation will continue to review the prospects of raising additional debt and equity financing to support its operations until such time that its operations become self-sustaining, fund any further research and development activities, and ensure the commercial realization of its assets and discharge of its liabilities. While the Corporation is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.

Results of Operations – Year Ended December 31, 2006

Significant items

	2006	2005	2004

Interest received	$ 23,393	$ 19,484	$ -

General & Administration costs
Human resources	$ 2,072,491	$ 1,819,355	$ 1,205,509
Business development	1,172,098	855,584	425,013
Professional fees	687,687	871,402	399,067
Rent	187,341	179,536	146,391
Shareholder services	133,223	140,813	143,805

Research & Development costs
Development costs	$ 335,322	$ 1,408,054	$ 741,049

Other items
Impairment of long term assets	$ 121,753	$ 2,191,428	$ 2,116,912
Repurchase of royalty agreement	4,230,000	-	-
Stock-based compensation	3,554,776	1,960,141	1,858,163

Net loss	$ (13,906,047)	$ (10,923,321)	$ (9,097,560)
Per share - basic & diluted	(0.07)	(0.06)	(0.05)

Interest received on temporary investment of the Company’s cash remains the only revenue received.

Total administration expenses increased by 6% in 2006. The significant subcategories thereof are shown above. New senior officers were enticed to join the company primarily using stock options rather than cash remuneration. The significant increase in business development expenses are due to increased travel costs of officers as they expanded their efforts in the Middle East and their presence at conferences and tradeshows.

The reduction in development costs reflects the fact that no major testing was done at our pilot plant during the year. The plant has reached a stage of maturity that requires less investment in maintenance or improvements.

The increase in stock-based compensation is a result of a) an increase of directors’ compensation on the recommendation of an independent consultant. b) the appointment of five new senior officers who received options as an incentive.

Please refer to the financial statements for details on other unusual items.

Acquisitions

Genoil did not make any significant acquisitions in 2006.

B. Liquidity and Capital Resources

Genoil’s business is capital intensive, requiring cash infusions on a regular basis as it seeks to grow its business. The Corporation expects to be able to fund its capital expenditure program to the end of 2007 using working capital and, to the extent required or desirable, through funds raised in the capital markets and short term loans.

On April 5, 2004, Genoil completed a private placement of 10,642,820 share units at a price of $0.14 per unit. Officers and directors participated in the private placement. Each unit consisted of one Common Share and three-tenths of one non-transferable warrant. Each full warrant entitled the holder to purchase one additional Common Share at the exercise price of $0.15 for a period of two years. Any such warrants, which were not exercised, have since expired.

On December 31, 2004, the Corporation received $5,638,220 pursuant to a private placement financing and issued non-interest bearing convertible debentures with a conversion price of $0.44 per share and 3,230,534 warrants at an exercise price of $0.85 per share, exercisable any time prior to December 13, 2009.

On February 3, 2005, a lender agreed to exercise its right to acquire 10,000,000 Common Shares for $2,300,000. As part of the note payable settlement agreement, the Company agreed to arrange for investors to purchase the 10,000,000 Common Shares exercised by the holder for approximately $3.0 million. The total proceeds on the sale of shares were paid to the holder to settle the entire principal and accrued interest outstanding to the lender.

On October 12, 2005, Genoil completed a non-brokered private placement, through which it received $750,000 and issued a convertible debenture, accruing interest at a rate of 12% per annum and having a conversion price of $0.44 per share.

In December 2005, the Corporation arranged a non-brokered private placement and on substantially similar terms to the October 2005 private placement. Pursuant to this private placement, the Corporation received $750,000 and issued a convertible debenture, accruing interest at a rate of 12% per annum and having a conversion price of $0.44 per share. The private placement also included the issuance of 426,000 warrants to purchase Common Shares at an exercise price of $0.85 per share and exercisable within 6 months of the date of issuance.

In September 2006, Genoil raised C$3,916,263 in a non-brokered private placement of 4,863,218 units at US$0.73 per unit. Each unit consisted of one Common Share and one-quarter non-transferable share purchase warrant. C$522,497 was allocated to the fair value of warrants.

The Company also received $1,862,483 from the exercise of options and warrants during the year.

During the year ended December 31, 2006, Genoil's operations used $5,599,095 of cash. It is expected that its operations will continue to use cash in the near term. The Corporation proposes to fund its future capital expenditures and future debt repayment through capital stock offerings and by generating revenue through the sale of technologies or royalties. Genoil has not yet been successful in commercializing its products and there are no current definitive agreements in place regarding obtaining financing.

There are no restrictions on the ability of the Subsidiaries to transfer funds to Genoil in the form of cash dividends, loans or advances. However, the Subsidiaries are not yet generating income and the Corporation does not consider them as a source of revenue.

C. Research and development, patents and licenses, etc.

Genoil does not presently plan to conduct any major new research and development, but will continue to refine and fine-tune its present complement of technologies. During 2006 the Company spent $355,322 on the maintenance of its pilot plant.

		Year ended December 31
	2006	2005	2004
Category – Capital Expenditures


Pilot Heavy Oil Upgrader – Patent	-	(15,412)	199,044
Catalyst Development license	-	1,371,951	819,477

	-	1,356,539	1,018,521

D. Trend information.

Currently Genoil has no sales inventory or production.

E. Off-Balance Sheet Arrangements.

Genoil has no off-balance sheet arrangements.

F. Tabular Disclosure of Contractual Obligations.

			Payments due by period
	Total		< 1 year	1 - 3 years	4-5 years	> 5 years

Operating lease obligations		125,301	104,031	21,270
Convertible notes		6,338,502	996,598			5,341,904

		6,463,803	1,100,629	21,270	-	5,341,904

G. Safe Harbour.

Not applicable.

Item 6. Directors, Senior Management and Employees

A. Directors and senior management.

At year end, the following were directors and officers of Genoil, their residence, their principal occupations within the past five years, and the periods during which each has served in such capacity.

				Number of
				Securities Owned or
				Controlled by
				Directors and
				Corresponding
				Percentage of Total
Name and Office Held	Principal Occupation For Past Five Years	Date of Birth	Director Since	Securities



Adam Hedayat	President of Hampco Enterprises Ltd.	February 26,	March 25,	382,001
Calgary, Alberta		1950	2005	<1%
Director	Chairman of the Board of Guyana
	Power & Light from October 1999 to
	April 2003.


	Chairman and CEO of Northstone

				Number of
				Securities Owned or
				Controlled by
				Directors and
				Corresponding
				Percentage of Total
Name and Office Held	Principal Occupation For Past Five Years	Date of Birth	Director Since	Securities


	Power Corp from March 2001 to
	January 2002.

	Chairman of the Board of Drayton
	Valley Power Income Fund from June
	1998 to July 2001.

	Vice-President of SaskPower
	Commercial, the international arm of
	SaskPower Corporation of
	Saskatchewan from September 1995 to
	April 1999.



Brian Korney	Chief Financial Officer of Genoil Inc.	December 2,	June 3, 2005	16,000
Calgary, Alberta	from September 1, 2004 to July 12,	1950		<1%
Director	2005.

	Vice-President, Finance, Chief Financial
	Officer and Secretary of Caspian Energy
	Inc. from December 2004 to present.

	Vice-President, Finance, and Chief
	Financial Officer of Innova Exploration
	Corporation from November 2000 to
	August 2004.

	Director of British Controlled Oilfields
	Limited from July 2006 to present.


David K. Lifschultz*	Chief Executive Officer of Genoil Inc.	November 23,	February 25,	42,708,871
Larchmont, New York	from 2003 to present.	1945	2002	19%*
Chief Executive
Officer,	Chairman of the board of directors of
Chairman and Director	Genoil Inc. from 2002 to present.

	President and Chief Executive Officer
	of Lifschultz Terminal and Leasing, Inc.
	(Joint Venture Investment Company)
	from 1987 to present.

	Chairman and Chief Executive Officer
	of Lifschultz Industries, Inc.
	(Manufacturer of scientific and
	industrial temperature measurement
	systems) from 1991 to 2000.


Lawrence Lifschultz*	Fellow of Yale Center of International	August 10,	January 13,	4,137,680

				Number of
				Securities Owned or
				Controlled by
				Directors and
				Corresponding
				Percentage of Total
Name and Office Held	Principal Occupation For Past Five Years	Date of Birth	Director Since	Securities


Stoney Creek,	& Area Studies, Yale University from	1949	2003	<1%
Connecticut	April 2005 to present.
Director
	South Asia Correspondent for the Far
	Eastern Economic Review (Hong Kong)
	from 1975 to present.



David Kippen	Chief Financial Officer of Genoil Inc.	January 25,	N/A	N/A
New York, NY	from August 14, 2006 to present.	1969
Chief Financial Officer	Financial consultant to the Corporation
	since June 2006.




James Runyan	Chief Operating Officer and Executive	January 17,	N/A	N/A
Edmonton, Alberta	Vice President of Genoil since July	1958
Chief Operating	2006. He was a consultant to Genoil
Officer, Executive Vice since September 2005, and was
President	appointed Chief Operations Officer in
	March 2006.

	Sales Manager for Process Systems
	International from 1998 to 2003.

Hendrik Lombard	Controller of Genoil since August 2006	November 2,	N/A	N/A
Calgary, Alberta		1963
Controller

Peter Chung	Vice President Engineering since	March 20,	N/A	N/A
Edmonton, Alberta	September 2006	1951
VP Engineering

*Includes 8,467,971 Common Shares, which Mr. Lifschultz exercises control over as a trustee and through entities which he controls.

**David K. Lifschultz and Lawrence Lifschultz are brothers.

B. Compensation.

Salary

During 2006, David K. Lifschultz, the Chief Executive Officer of Genoil, had an annual salary of $ 187,500 pursuant to the terms of an executive employment agreement between himself and the Corporation. David K. Lifschultz agreed to accept the issuance of 2,500,000 stock options pursuant to the Corporation's stock option plan in lieu of such cash salary and as such, no cash compensation was paid. An additional 300,000 stock options were granted to Mr. Lifschultz on June 7, 2006 as additional compensation in 2006, as disclosed in the chart below. These options were granted to Mr. Lifschultz at the market price of Genoil's Common Shares at the time of issuance.

As part of the terms of the termination of his employment, the former president of Genoil, Thomas F. Bugg,
remained a consultant of Genoil for fiscal year 2005 and under the terms of such termination he remained a
consultant of the Corporation until June 30, 2006. During this time, Mr. Bugg was compensated for his consulting
services based on an annual salary of $187,500 which compensation was discharged through the issuance of
Common Shares. Thomas F. Bugg resigned in November 2004.

Kirk Morgan, Genoil's part-time Chief Financial Officer until July 31, 2006, earned a total of $56,250 for his
employment in 2006.

David Kippen, Genoil’s current full-time Chief Financial Officer from August 14, 2006 onwards, earned a total
of US$45,434 for his employment in 2006.

James Runyan, Chief Operating Officer from March 2006 earned US$ 155,000 during the year.

Hendrik Lombard, Controller earned $46,875 during 2006.

Peter Chung, VP Engineering earned $50,000 during 2006.

The following chart outlines information on share options granted to directors and senior officers in 2006.

Share Options Granted to Directors and Officers
for the Fiscal Year
January 1, 2006 to December 31, 2006

	Options Granted in	Exercise or Base
	respect of duties as	Price
Name	director or officer	($/Security)	Expiration date

David Lifschultz – Chief Executive	2,500,000 ¹	$0.47	February 21st 2010
Officer, Chairman and Director	1,000,000 ²	$1.20	June 7 ^th 2010


Lawrence Lifschultz – Director	750,000 ³	$0.47	February 21 ^st 2010
	25,000 ⁴	$1.12	May 31 ^st	2010


	250,000 ⁵	$0.47	February 21 ^st 2010
Brian Korney – Director	137,500 ⁶	$1.12	May 31 ^st 2010

Adam Hedayat – Director	250,000 ⁷	$0.47	February 21 ^st 2010
	175,000 ⁸	$1.12	May 31 ^st	2010

David Kippen – Chief Financial Officer	150,000 ⁹	$1.20	June 1 ^st 2010
	1,000,000 ¹⁰	$0.72	August 11 ^th	2010


Kirk Morgan – Former Chief Financial Officer
	50,000 ¹¹	$1.65	May 4 ^th	2011

James Runyan – Chief Operating Officer	500,000 ¹²	$0.47	February 21 ^st 2010
	500,000 ¹²	$1.20	June 7 ^th	2010

Hendrik Lombard - Controller	250,000 ¹³	$0.73	August 18 ^th 2011


Peter Chung – VP Engineering	1,000,000 ¹⁴	$1.20	May 19 ^th 2010

Notes:

(1)	Granted to David Lifschultz for his services as Chairman and Chief Executive Officer

(2)	300,000 options granted as compensation for services as Chief Executive Officer for 2006 and 700,000 options granted as a bonus for under compensation in past years.

(3)	500,000 options were granted as compensation for services as a director and 250,000 options were granted for services as a consultant.

(4)	Compensation for services as a member of Compensation and Corporate Governance Committee (“CCG”) for ½ year

(5)	Granted as compensation for services as a director for 2006.

(6)	37,500 options granted for services as Chair of Audit Committee for ½ year; 75,000 options granted for services as a member of the audit committee for one year; 25,000 options granted for services as a member of the CCG committee for ½ year.

(7)	Granted as compensation for services as a director for 2006.

(8)	50,000 options granted for services as Chair of the CCG Committee for one year; 50,000 options granted for services as a member the CCG for one year; 75,000 options granted for services as a member of the audit committee for one year.

(9)	Granted for services as a consultant to the corporation for a six month term in 2006.

(10)	Granted for services as the interim Chief Financial Officer for 2006.

(11)	Granted for services as the Chief Financial Officer, these options have expired due to Mr. Morgan’s resignation.

(12)	Granted for services as an officer of the corporation for 2006.

(13)	Granted for services as the Financial Controller for 2006.

(14)	Granted for services as the Vice-President Engineering for 2006.

Directors are elected annually to the Board of Directors (the “Board”) at the Corporation's Annual General Meeting. Directors may also, between Annual General Meetings, appoint one or more additional Directors, provided such number of additional directors does not exceed 1/3 of the existing number, to serve until the next Annual General Meeting. No Director has a service contract with Genoil providing for benefits upon termination of employment.

Duties and Obligations of the Board of Directors

The general duty of Genoil's Board of Directors is to oversee the management of Genoil's business and affairs. In particular, the Board of Directors is responsible for the following matters:

(a) adopting a strategic planning process which establishes the Corporation's long-term goals and strategies, and monitoring the success of its management in achieving those goals and implementing the strategy;

(b) identifying the principal risks with respect to all aspects of the Corporation's business, ensuring that there are systems in place to effectively monitor and manage such risks with a view to its long-term viability, and achieving a proper balance between the risks incurred and the potential return to its members;

(c) engaging in succession planning, including appointing, training and monitoring senior management (which includes ensuring that objectives are in place against which management's performance can be measured), establishing and maintaining programs to train and develop management, providing for the orderly succession of management, and assessing the performance and contribution of Genoil's Chief Executive Officer against mutually established objectives;

(d) ensuring that there are effective controls and information systems in place for the Board of Directors to discharge its responsibilities, such as an audit system which can inform the Board of Directors about the integrity of the data and the compliance of the financial information with appropriate accounting principles, and the timely reporting of developments material to the Corporation

C. Board practices.

Composition of the Board of Directors

As of December 31, 2006, Genoil's Board of Directors consisted of Messrs. David Lifschultz, Lawrence Lifschultz, Brian Korney, and Adam Hedayat, Of the Board, Mr. Hedayat is "independent". Mr. David Lifschultz is not independent as he is the Chairman and Chief Executive Officer of the Corporation. Mr. Lawrence Lifschultz is not considered to be independent as he is related to David Lifschultz, the Corporation's Chairman and Chief Executive Officer. Lawrence Lifschultz is David Lifschultz' brother. Brian Korney is not considered to be independent as he has served as Genoil's Chief Financial Officer within the last three years.

At the annual general meeting, held on May 14, 2007, two new, independent directors were elected. The board is now composed of David K. Lifschultz, Chairman, Brian Korney, Harry Bloomfield and Joseph Fatony.

The definition of "independence" that Genoil uses when determining a director's independence is derived from National Instrument 58-101, published by the Canadian Securities Administrators and adopted in all Canadian jurisdictions.

The Board facilitates its exercise of independent supervision over management by attempting to meet independently from management when warranted, determining what additional information it needs from management and seeking outside advice and support as it considers appropriate. Generally the Board attempts to ensure that all board committees are composed in the majority by non-management directors with consideration being had to the Corporation's current size and board composition.

Committees of the Board of Directors

There are currently two committees of the Board of Directors. The Audit Committee is comprised of three directors, one of whom is a related party. The Compensation Committee is comprised of two directors. The mandate and activities of each committee are as follows:

Audit Committee . The Audit Committee consisted of Adam Hedayat, Brian Korney and David Lifschultz. The responsibilities of the Audit Committee include:

(a)	assisting the directors with meeting their responsibilities with respect to financial reporting;

(b)	reviewing and reporting to the Board of Directors on all audited financial statements the Corporation

prepares and enhancing the credibility and objectivity of all financial reports;

(c) reviewing with management and with the external auditor any proposed changes in major accounting policies, in the presentation and impact of significant risks and uncertainties, and in key estimates and judgments of management that may be material to financial reporting;

(d) questioning management and the external auditor regarding significant financial reporting issues discussed during the fiscal period and the method of resolution;

(e) reviewing any problems experienced by the external auditor in performing the audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management; and

(f) reviewing the post-audit or management letters containing the recommendations of the external auditor and management's response, and following up any identified weaknesses.

Compensation Committee . The Compensation Committee consisted of Adam Hedayat, Brian Korney and Lawrence Lifschultz. The responsibilities of the Compensation Committee are to review the adequacy and form of compensation of directors and senior management, and to supervise the administration of Genoil's stock option plan.

Decisions Requiring the Prior Approval of the Board of Directors

Each committee of the Board of Directors makes recommendations to the Board on an ongoing basis. Generally, recommendations from a committee of the Board of Directors require the approval of the full Board before they are implemented.

D. Employees.

At December 31, 2006, there were a total of 21 employees and consultants working for Genoil. Of these, 3 are senior management, 5 are employed in an administrative capacity, 4 are engineers, 9 are technologists and operators. The Corporation currently has 3 employees in the Calgary, Alberta, office, 7 employees in the Edmonton office, 7 at its Two Hills, Alberta, facility, 1 in Romania and 3 employees in its New York, New York, office. Genoil has no labour unions and no temporary staff.

As at December 31, 2005, there were a total of 20 employees working for Genoil and as at December 31, 2004, Genoil employed a total of 12 employees.

E. Share ownership.

There were 196,051,227 Common Shares issued and outstanding as of December 31, 2005 and 223,054,604 Common Shares issued and outstanding as of December 31, 2006. Information as to share and option information for directors, officers and key employees is discussed above in "Item 6.(A) Directors and Senior Management" and in "Item 6.(B) Compensation."

Genoil has established a stock option plan with the objective of advancing its interests by encouraging and enabling the acquisition of a share interests by its directors, officers, employees and consultants, in accordance with the policies and rules of the applicable regulatory authorities. The full text of Genoil's stock option plan is attached as an Exhibit to the Form 20-F for 2005.

Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders.

The following table sets forth information as of June 15, 2007, with respect to each person known to the Corporation to own more than 5% of its Common Shares. As used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from December 31, 2006, through the exercise of any option or warrant. Shares subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 225,172,808 Common Shares issued and outstanding.

* Includes 8,467,971 Common Shares, which Mr. Lifschultz exercises control over as a trustee and through corporations that he controls. David Lifschultz is a resident in New York, New York.

** This figure includes the 12,500,000 stock options that Mr. Lifschultz currently holds.

David Lifschultz has acquired his shareholdings incrementally during the past four years through companies under his control and personally by way of a series of purchases on the open market and private placement

subscriptions made for the purpose of providing financial assistance to the Corporation so as to ensure it continues to meet its financial obligations.

Additionally, as at June 15, 2007, CDS & Co. was the registered owner of 125,915,076 Common Shares, which represents approximately 56.0% of the issued and outstanding Common Shares and CEDE & Co. was the registered owner of 56,686,902 Common Shares, representing 25.2% of the Common Shares. The directors and officers of the Corporation understand that CDS & Co. and CEDE & Co. are nominees and not beneficial owners of Common Shares.

To the best of its knowledge, Genoil is not directly owned or controlled by another corporation, by any foreign government or by any natural or legal person.

To the best of its knowledge, Genoil is not aware of any arrangements which may result in a change of control of Genoil at a subsequent date.

B. Related party transactions.

The following is a description of the related party transactions that have occurred during the preceding fiscal year.

In 2006, two convertible notes for $ 750,000 each were converted into 1,800,020 and 1,764,204 Common Shares, respectively. Lifschultz Terminal and Leasing Co. Inc. and Lifschultz Enterprises Co., LLC, both entities controlled by David Lifschultz, completed each private placement during 2005 and both convertible debentures had an accruing interest at a rate of 12% per annum with a conversion price of $ 0.44 per share.

In October 2006 Genoil also completed a non-brokered private placement consisting of convertible debentures and warrants funded by entities affiliated with David K. Lifschultz, receiving $ 968,825.19. The convertible debentures carry a 12% annual interest at a conversion price of $ 0.75 per share. The Corporation has additionally granted 322,941 common share purchase warrants exercisable for a term of 6 months at $0.98 per share.

In April 2007, Genoil and two holders of convertible debentures issued in October 2006, agreed by way of a Note Extension Agreement to extend the maturity date of the original convertible promissory notes to October 6, 2007, with such notes to continue on the same terms in all other respects, and to extend the term of the warrants issued in connection with the issuance of the convertible promissory notes to a October 6, 2007.

Upon Tom Bugg's resignation as President and Chief Operating Officer in November 2004, the Board of Directors approved the following terms of severance: Tom Bugg and an affiliated corporation, Geopetrol Resources Ltd., became "consultants" of Genoil for 18 months from January 1, 2005. In return, Geopetrol Resources Ltd. was paid on a monthly prorated basis (in Common Shares at the current market price, less permitted discount) based on an annual amount of $187,500. These payments continued until June 30, 2006.

Transactions with Affiliates, Directors or Officers

Genoil's approach for transactions with affiliates is that they must be on terms no less favourable to the Corporation than could be obtained from unaffiliated third parties.

In the case of transactions involving a director, any of the Corporation's directors who, in any way, whether directly or indirectly, have an interest in a proposed contract or transaction with it, must disclose the nature and extent of his interest to the Corporation's Board and abstain from voting on the approval of the proposed contract or transaction. If he or she fails to do so, he or she must account to the Corporation for any profit made as a consequence of entering into the contract or transaction, unless the contract was fair and reasonable to the Corporation at the time it was entered into, and after full disclosure of the nature and extent of his or her interest, it is approved by the Corporation's shareholders by way of a resolution passed by a majority of not less than two-thirds of the votes cast at a duly convened shareholders' meeting. In addition, any of the Corporation's directors and officers who holds any office or possesses any property whereby, whether directly or indirectly, duties or interests might be created in conflict with his or her duties or interests as a director or officer, must disclose that fact and the nature and extent of the conflict. In the case of a director, the disclosure must be made at a Board meeting.

In the case of transactions involving an officer, the disclosure must be made in writing to the Corporation's Chairman at a Board meeting.

C. Interests of experts and counsel.

Not required as this is an annual report under the Exchange Act .

Item 8. Financial Information

A. Consolidated statements and other financial information.

Please see "Item 17 Financial Statements" and Exhibit 19(a) for a list of the financial statements filed as part of this annual report statement.

Genoil has neither declared nor paid dividends on any of its outstanding Common Shares, and does not intend to do so in the foreseeable future. It intends to retain any future earnings to finance the expansion of its business. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon its earnings, capital requirements and financial position, as well as any other factors deemed relevant by the Board of Directors.

B. Significant changes.

Please see "Item 17 Financial Statements".

Item 9. The Offer and Listing

A. Offer and listing details.

The following is a summary of the trading history (in Canadian dollars) of the Common Shares on the TSX Venture Exchange and OTC Bulletin Board (in US dollars) for:

the annual high and low market prices for the five most recent full financial years;
the quarterly high and low market prices for the two most recent full financial years and any subsequent period; and
the high and low monthly market prices for the most recent six months.

	Price per share on TSX		Price per share on OTC
	Venture Exchange		Bulletin Board
	(Cdn $)		(US $)


Year	High	Low	High	Low


Fiscal year ended December 31, 2002	$0.28	$0.06	$0.07	$0.07
Fiscal year ended December 31, 2003	$0.25	$0.09	$0.14	$0.14
Fiscal year ended December 31, 2004	$0.50	$0.10	$0.35	$0.31
Fiscal year ended December 31, 2005	$0.44	$0.24	$0.25	$0.24
Fiscal year ended December 31, 2006	$1.87	$0.24	$1.62	$0.20


Quarter	High	Low	High	Low


Year Ending December 31, 2005
First Quarter	$0.43	$0.30	$0.36	$0.23
Second Quarter	$0.44	$0.32	$0.36	$0.26
Third Quarter	$0.39	$0.24	$0.33	$0.20

Fourth Quarter	$0.36	$0.27	$0.32	$0.23

Fiscal year ended December 31, 2006
First Quarter	$1.39	$0.24	$1.20	$0.20
Second Quarter	$1.87	$0.93	$1.66	$0.81
Third Quarter	$0.96	$0.69	$0.87	$0.59
Fourth Quarter	$1.00	$0.55	$0.90	$0.47



Most Recent Six Months	High	Low	High	Low


December 2006	$0.71	$0.55	$0.64	$0.47
January 2007	$0.58	$0.44	$0.51	$0.39
February 2007	$0.62	$0.40	$0.53	$0.37
March 2007	$0.69	$0.55	$0.58	$0.46
April 2007	$0.72	$0.56	$0.64	$0.50
May 2007	$0.70	$0.54	$0.64	$0.49

B. Plan of distribution.

Not required as this is an annual report under the Exchange Act .

C. Markets.

The issued and outstanding Common Shares (223,054,604 shares as of December 31, 2006) are listed and posted for trading on the TSX Venture Exchange under the trading symbol "GNO" and on the OTC Bulletin Board under the symbol "GNOLF". The Corporation's Common Shares are registered shares.

D. Selling shareholders.

Not required as this is an annual report under the Exchange Act .

E. Dilution.

Not required as this is an annual report under the Exchange Act .

F. Expenses of the issue.

Not required as this is an annual report under the Exchange Act .

Item 10. Additional Information

A. Share capital.

Not required as this is an annual report under the Exchange Act .

B. Memorandum and articles of association.

Genoil was formed by the amalgamation under the Canada Business Corporations Act (the "CBCA") of Genoil Inc. and Continental Fashions Group Inc. ("CFG"), a public company whose shares traded on the Alberta Stock Exchange. At the time of the merger CFG had no assets, no liabilities and did not carry on any business. Genoil was incorporated in April of 1996 under Certificate of Incorporation no. 324649-3. In June of 1996, it amended and altered its Memorandum and Articles of Association. This amendment was made to facilitate a reorganization of its share capital in accordance with the amalgamation referenced above. The Articles of Amalgamation, adopted in September of 1996, replaced the Articles of Incorporation, as amended.

At the Annual and Special Meeting of Shareholders of the Corporation, held on May 31, 2006, shareholders of the Corporation passed a special resolution authorizing the Corporation to amend its Articles to create an additional class of share to be designed as "Class A Preferred Shares" and to allow for the appointment of additional directors of the Corporation between shareholder meetings.

The Articles of Amalgamation are subject to all the provisions of the CBCA. The CBCA provides that a company incorporated under that Act has all the powers and capacities of a natural person. The CBCA further stipulates that a company must not carry on a business that its articles prohibit. The Corporation's articles contain no prohibitions on the nature of businesses that it may carry out. Thus, it has the power and capacity of a natural person.

The following brief description of provisions of the CBCA, the Corporation's amended and restated articles of incorporation and by-laws do not purport to be complete and are subject in all respects to the provisions of the CBCA, the Corporation's restated articles of incorporation and by-laws.

Regulation SK Item 702 requires the Corporation to state the general effect of any statute, charter provisions, by-laws, contract or other arrangements under which any controlling persons, director or officer of the registrant is insured or indemnified in any manner against liability which he may incur in his capacity as such.

In 2005, the Corporation entered into indemnification agreements with David Lifschultz, Brian Korney, Robert Field, Adam Hedayat, and Lawrence Lifschultz, which indemnifies them from losses, costs or damages incurred or sustained by them acting in their capacities of director or officer.

Furthermore, the by-laws of the Corporation provide that except in respect of an action by or on behalf of the Corporation or other entity to procure a judgment in its favour, the Corporation will indemnify a director or officer of the Corporation against all costs, charges, and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity.

Directors' Conflicts of Interest

Section 120 of the CBCA requires every director who is, in any way, directly or indirectly, interested in one of Genoil's proposed material contracts or transactions, to disclose the nature and extent of the director's interest in writing or by requesting to have it entered in the minutes of the meeting of directors or of meetings of committees of directors.

The CBCA further provides that a director or officer who is required to disclose an interest may not vote on any resolution to approve the contract or transaction unless the contract or transaction, (i) relates primarily to the director's or officer's remuneration as one of the Corporation's directors, officers, employees or agents or that of an affiliate, (ii) is for indemnity or insurance for the director against liability incurred by the director or officer acting in his or her capacity as a director or officer, or (iii) is with an affiliate.

Borrowing Powers

The Corporation's By-Law No. 3 states that the Board of Directors may exercise borrowing powers provided for in this by-law. These powers include borrowing money on credit, issuing bonds, debentures, notes and other indebtedness, giving guarantees on behalf of the Corporation and granting mortgages by the Corporation, among others.

Directors

The number of directors shall be not less than one and not more than nine. The number of directors may be determined from time to time by an ordinary resolution of the shareholders passed at a duly convened general meeting. A director is not required to own any of the Corporation's shares to be qualified to serve as a director. A director is not required to retire under any age-limit requirement.

Upon the termination of each annual general meeting, all the directors are deemed to cease serving as directors. The number of directors to be elected at any such meeting will be the number of directors then in office unless the directors or shareholders otherwise determine.

If the shareholders remove any director before the expiration of his or her period of office and appoint another person in his or her place, that person so appointed shall hold office only during the remainder of the time that the director in whose place he or she is appointed would have held the office if he or she had not been removed. If the shareholders do not appoint another director to replace the removed director the vacancy may be filled by the directors.

The directors of the Corporation, between annual meetings, may appoint one or more additional directors of the Corporation to serve until the next annual meeting, provided that the number of additional directors of the Corporation shall not at any time exceed one-third of the number of directors who held office at the expiration of the last annual meeting of the Corporation.

The directors, or any committee of directors, may take any action required or permitted to be taken by them and may exercise any of the authorities, powers and discretions for the time being vested in or exercisable by them by way of a resolution either passed at a meeting at which a quorum is present or consented to in writing under the applicable section of the CBCA.

The directors may appoint a president, one or more vice-presidents, a secretary, a treasurer and other officers as determined by the Board, including assistants to the Board. The directors may specify the duties of and delegate powers to manage the business and affairs of the directors to these officers. The Corporation may also appoint a chairman of the Board, who must also be a director, and assign the powers and duties assigned to the managing director or president, under the by-laws, or other powers and duties.

Rights Attached to Shares

The following is a description of the rights, preferences, and restrictions attached to each class of the Corporation's shares:

(a) Unlimited Common Shares – Each Common Share carries the right to one vote at any meeting of the Corporation's shareholders. Dividends are payable on the Common Shares in the discretion of the Board of Directors. After a period of six years, dividends that have been paid but remain unclaimed by shareholders shall be forfeited to the Corporation. In the event of the liquidation, dissolution or winding-up of the Corporation or any distribution of Genoil's assets for the purpose of winding up its affairs, the Common Shares shall be entitled to receive Genoil's remaining property. The Common Shares are not redeemable at the Corporation's option or at the option of the holders. There are no sinking fund provisions respecting the Common Shares. The holders of the Common Shares are not liable for any further capital calls on such shares.

(b) Up to 10,000,000 Class A Preferred Shares – The Class A Preferred Shares may at any time and from time to time be issued in one or more series, each series consisting of such number of shares as may, before their issuance, be determined by resolution of the directors of the Corporation. Subject to the provisions of the CBCA, the directors of the Corporation may by resolution fix before the issue of Class A Preferred Shares the designation, rights, privileges, restrictions and conditions attaching to each series of the Class A Preferred Shares.

Alteration of the Rights of Shareholders

No rights, privileges or restrictions attached to the Common Shares may be altered except with the approval by resolution passed by the vote of the holders of not less than two-thirds of the votes cast in respect of a resolution to alter such rights.

There are no limitations in Genoil's charter on the rights of non-resident or foreign owners to hold Common Shares of Genoil.

Shareholders' Meetings

The CBCA requires the directors to call an annual general meeting of shareholders not later than fifteen months after the last annual general meeting and no later than six months after the end of the Corporation's preceding financial year. The directors may, whenever they think fit, convene a special meeting.

Notice of a meeting must specify the time and place of a meeting, and, in case of special business, the general nature of that business and the text of any resolution. The accidental omission to give notice of any meeting to, or the non-receipt of any notice by any of the shareholders entitled to receive notice does not invalidate any proceedings at that meeting.

All business that is transacted at meetings of shareholders, with the exception of consideration of the financial statements and auditor's report, election of directors, appointment of Genoil's auditor is deemed to be special business.

Genoil's Articles stipulate that business shall be conducted at any general meeting if there is quorum present at the opening of the meeting notwithstanding that there ceases to be a quorum present throughout the meeting. A quorum is shareholders entitled to vote or proxyholders thereof representing more than 10% of Genoil's outstanding shares entitled to vote at the meeting.

Genoil's Articles stipulate that the Chairman of the Board, or in his absence, the Corporation's Managing Director, or in his absence the Corporation's President shall preside as chairman of every general meeting.

Unless the directors otherwise determine, the instrument appointing a proxyholder shall be deposited at a place specified for that purpose in the notice convening the meeting, not less than forty-eight hours before the time for holding the meeting at which the proxyholder proposes to vote.

Notice of every general meeting should be sent to:

(a)	each director;

(b)	the Corporation's auditor;

(c)	every shareholder entered in the securities registrar as the holder of a share or shares carrying the right to

vote at such meetings on the record date or, if no record date was established by the directors, on the date of mailing such notice; and

(d) every person upon whom the ownership of a share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a shareholder where the shareholder, but for his death or bankruptcy, would be entitled to vote.

No other person is entitled to receive notice of general meetings.

There are no limitations to the rights of non-resident or foreign shareholders to hold or exercise voting rights associated with Genoil's securities.

These provisions do not deviate significantly from U.S. law, insofar as the following matters are concerned:

According to Rule 405 of the Securities Act , the term "foreign private issuer" means any foreign issuer other than a foreign government except an issuer meeting the following conditions:

(a) More than 50 percent of the outstanding voting securities of such issuer are directly or indirectly owned of record by residents of the United States; and

(b) Any of the following:

(i)	The majority of the executive officers or directors are United States citizens or residents;

(ii)	More than 50 percent of the assets of the issuer are located in the United States; or

(iii)	The business of the issuer is administered principally in the United States.

Further, the predominant rule in most U.S. jurisdictions is that an annual meeting must be held every 13 months.

C. Material contracts.

Genoil has entered into the following material contracts in the ordinary course of business for the two years preceding this registration statement:

1. On June 15, 2005, Genoil announced that a letter of intent was signed with Surge Global Energy, Inc. to jointly examine the feasibility of constructing a commercial upgrader based on the Corporation's technology. Pursuant to the terms of this letter of intent, Genoil will receive 30% of the net revenue stream associated with converting the oil. Presently, Surge Global is awaiting testing results to determine whether or not lifting the oil is economically feasible. Given economic test results, Genoil will undertake a cost estimate for the appropriate upgrading facility. Upon approval by Surge Global and pending the completion of the economic test results, the construction process will be initiated. This letter has not been turned into a binding agreement.

2. On October 12, 2005, Genoil completed a non-brokered private placement with Lifschultz Terminal and Leasing Co. Inc., an entity controlled by David Lifschultz, through which it received $750,000 and issued a convertible debenture, accruing interest at a rate of 12% per annum with a conversion price of $0.44 per share. This debenture was converted in April 2006.

3. In December 2005, Genoil arranged a non-brokered private placement with Lifschultz Enterprises Co., LLC, an entity controlled by David Lifschultz, through which Genoil received $750,000 and issued a convertible debenture, accruing interest at a rate of 12% per annum with a conversion price of $0.44 per share. This private placement also included the issuance of 426,000 warrants to purchase Common Shares, at an exercise price of $0.85 per share and exercisable within 6 months of the date of issuance. This private placement was completed in January 2006. The debenture was converted in May.

4. In February 2006, Genoil entered into a non-binding Memorandum of Understanding with Hebei Zhongjie Petro-Chemical Group to jointly develop and build the first major commercial heavy oil upgrader in China based on the GHU technology should such a project prove feasible and desirable. This memorandum of understanding requires the completion of an engineering and feasibility study to test the GHU technology's ability to process M380 feed which is available at Nanpaihe Town, Huanghua City, Hebei, China, where the proposed upgrader is to be located.

5. In August 2006, Genoil and Steaua Romana Refinery signed a memorandum of understanding for a Hydroconversion Upgrader in Romania.

6. On August 30, 2006, Genoil entered into a purchase and sale agreement with Murphy Canada Exploration Company for the re-purchase of rights to royalties previously held by Murphy and payable by Genoil. Genoil acquired those rights with the issuance of 4,500,000 Common Shares.

7. On September 29, 2006, Genoil completed a private placement, receiving US$3,550,150 and issued 4,863,218 Common Shares, including also 1,215,802 warrants to purchase Common Shares at an exercise price of US$1.10 per share and exercisable within two years from issue date.

8. In September 2006, Genoil and Hebei Zhongjie Petrochemical Group Company Ltd. signed a Letter of Intent to proceed with the design and installation of a 20,000 barrels per day GHU at their refinery in Nampaihe Town, Huanghua City, Hebei, China. As a next step Genoil is focused on the first stage of the project's engineering design and Hebei Zhongjie is to make arrangements for the shipment of the oil for testing at the Corporation's pilot facility in Two Hills, Alberta.

9. On October 10, 2006, Genoil completed another non-brokered private placement, through which it received $ 968,825.19 and issued convertible debentures carrying a 12% annual interest at a conversion price of $0.75 per share. The term of such debentures has been extended by two of the three holders to October 6, 2007. The term of the third debenture has expired and is repayable 30 days following demand from the holder. No such demand has yet been made.

10. In April 2007, Genoil entered into a definitive testing agreement with Hebei Zhongjie for testing of their heavy crude oil at Genoil's pilot plant and to determine the final catalyst selection, operating conditions and optimization of the GHU process required to move the project into the Front End Engineering and Design phase.

D. Exchange controls.

There is no law or governmental decree or regulation in Canada that restricts the export or import of capital or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. See "Taxation."

E. Taxation.

Genoil has provided the following summary of the material Canadian federal and U.S. federal income tax considerations generally applicable in respect of the holding or disposing of Common Shares. This summary does not address all possible tax consequences relating to an investment in its Common Shares. There may be provincial, territorial, state and local taxes applicable to a potential shareholder, depending on the shareholder's particular circumstances, which are not addressed in this summary. The tax consequences to any particular holder, including a U.S. Holder of common shares (defined below) will vary according to the status of that holder as an individual, trust, corporation, or member of a partnership, the jurisdiction in which the holder is subject to taxation, the place where the holder is resident and generally, according to the holder's particular circumstances.

U.S. Holder of Common Shares

References to a "U.S. Holder of common shares" in this section include individuals, corporations, trusts or estates who are holders of Common Shares and who:

for purposes of the Income Tax Act (Canada) (the "ITA") and the Canada-United States Income Tax Convention (1980), as amended by the protocol signed on July 29, 1997, (the "Treaty") are residents of the U.S. and have never been residents of Canada;
for purposes of the U.S. Internal Revenue Code of 1986 (the "Code") are U.S. persons;
deal at arm's length with Genoil for purposes of the ITA;
will hold the Common Shares as capital property for purposes of the ITA;
will hold the Common Shares as capital assets for purposes of the Code;
do not and will not hold the Common Shares in carrying on a business in Canada;
will not perform independent personal services from a fixed base situated in Canada; and
are not or will not be subject to special provisions of Canadian or U.S. federal income tax law, including, without limiting the generality of the foregoing, financial institutions, real estate investment trusts, shareholders that have a functional currency other than the U.S. dollar, shareholders that own shares through a partnership or other pass-through entity, shareholders that hold shares as part of a straddle, hedge or conversion transaction, tax-exempt organizations, qualified retirement plans, insurance companies, shareholders who acquired their shares through the exercise of employee stock options or otherwise as

compensation and mutual fund companies.

The following summary of Canadian federal and U.S. federal income tax considerations generally applicable to a U.S. Holder of Genoil's Common Shares is based on the following, as at the time of this statement:

the ITA and the Income Tax Regulations (Canada) (the "Regulations");
published proposals to amend the ITA and the Regulations;
published administrative positions and practices of the Canada Customs and Revenue Agency;
the Code;
Treasury Regulations;
published Internal Revenue Service ("IRS") rulings;
published administrative positions of the IRS;
published jurisprudence that is considered applicable; and
the Treaty.

All of the foregoing is subject to material or adverse change, on a prospective or retroactive basis, at any time. The tax laws of the various provinces or territories of Canada and the tax laws of the various state and local jurisdictions of the U.S. are not considered in this summary.

This summary is not exhaustive of all possible income tax consequences. The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of Genoil's Common Shares and no opinion or representation with respect to any such holder or prospective holder with respect to the income tax consequences to any such holder or prospective holder is made. Accordingly, it is recommended that holders and prospective holders of the Corporation's Common Shares consult their own tax advisors about the Canadian federal and provincial and U.S. federal, state, local, and foreign tax consequences of purchasing, owning and disposing of the Corporation's Common Shares.

Canadian Federal Income Tax Consequences

Disposition of Common Shares

Provided that the Common Shares are listed on a "prescribed stock exchange", which currently includes the TSX Venture Exchange but does not include the OTC Bulletin Board, a U.S. Holder of Common Shares will not be subject to tax in Canada under the ITA on capital gains realized on the disposition of such Common Shares unless the shares are "taxable Canadian property." Such Common Shares will be taxable Canadian property if, in general, at any time during the sixty month period immediately preceding the disposition, 25% or more of Genoil's issued shares of any class (or an option to acquire 25% or more of the issued shares of any class) were owned by such holder, or by such holder and persons with whom such holder did not deal at arm's length. If the Corporation's shares are taxable Canadian property to a U.S. Holder of Common Shares, 50% of any resulting capital gain realized on the disposition of such shares may be subject to tax in Canada. However, the Treaty provides that gains realized by a U.S. Holder of Common Shares on the disposition of shares of a Canadian corporation will be exempt from federal tax in Canada unless the value of the Canadian corporation is derived principally from real property situated in Canada. It is the current position of the Canada Revenue Agency that a U.S. limited liability company is not entitled to the benefits of the Treaty.

Dividend Distributions on Genoil's Shares

Dividends paid on Genoil's Common Shares held by a U.S. Holder of Common Shares will be subject to

Canadian non-resident withholding tax. The Corporation is required to withhold taxes at source. Under the Treaty,

a withholding rate of 5% is applicable to corporations resident in the United States and who are beneficial owners of at least 10% of the voting shares of the Corporation. Under the Treaty, a withholding rate of 15% is applicable in all other cases.

United States Federal Income Tax Consequences

The U.S. federal income tax consequences related to the disposition and ownership of Common Shares, subject to the Foreign Personal Holding Company Rules, Passive Foreign Investment Company and Controlled Foreign Corporation Rules contained in the Code, are generally as follows:

Disposition of Common Shares

On a disposition of Common Shares, a U.S. Holder of Common Shares generally will recognize a gain or loss. The gain or loss will be equal to the difference between the amount realized on the sale and the U.S. Holder of Common Share's adjusted tax basis in those shares. Any such gain or loss will be a long-term capital gain or loss if the shareholder has held the shares for more than one year. Otherwise the gain or loss will be a short-term capital gain or loss. However, a gain realized on the disposition of Common Shares may be treated as ordinary income if the company was a "collapsible corporation" within the meaning of the Code. The gain or loss will generally be a U.S. source gain or loss.

A collapsible corporation is usually formed to give a short-term venture the appearance of a long-term investment in order to portray income as capital gain rather than profit. Such a corporation is typically formed for the sole purpose of purchasing property and usually dissolved before the property has generated substantial income. The Internal Revenue Service treats the income earned through a collapsible corporation as ordinary income rather than as capital gain.

Dividend Distributions on Shares

Dividend distributions (including constructive dividends) paid by Genoil will be required to be included in the income of a U.S. Holder of Common Shares to the extent of the Corporation's current or accumulated earnings and profits ("E&P") attributable to the distribution without reduction for any Canadian withholding tax withheld from such distributions. Even if such payment is in fact not converted to U.S. dollars, the amount of any cash distribution paid in Canadian dollars will be equal to the U.S. dollar value of the Canadian dollars on the date of distribution based on the exchange rate on such date. To the extent distributions the Corporation pays on the Common Shares exceed the Corporation's current or accumulated E&P, they will be treated first as a return of capital up to a shareholder's adjusted tax basis in the shares and then as capital gain from the sale or exchange of the shares.

Dividends paid on the Common Shares generally will not be eligible for the "dividends received" deduction provided to corporations receiving dividends from certain U.S. corporations. These dividends generally may be subject to backup withholding tax, unless a U.S. Holder of Common Shares furnishes the Corporation with a duly completed and signed Form W-9. The U.S. Holder of Common Shares will be allowed a refund or a credit equal to any amount withheld under the U.S. backup withholding tax rules against the U.S. Holder of Common Share's U.S. federal income tax liability, provided the shareholder furnishes the required information to the IRS.

Foreign Tax Credit

A U.S. Holder of Common Shares will generally be entitled to a foreign tax credit or deduction in an amount equal to the Canadian tax withheld. Dividends paid by Genoil generally will constitute foreign source dividend income and "passive income" for purposes of the foreign tax credit, which could reduce the amount of foreign tax credits available to shareholders. There are significant and complex limitations that apply to the credit.

Foreign Personal Holding Company Rules

Special U.S. tax rules apply to a shareholder of a foreign personal holding company ("FPHC"). Genoil would be classified as a FPHC in any taxable year if both of the following tests are satisfied:

• at least 60% of Genoil's gross income consists of "foreign personal holding company income", which

generally includes passive income such as dividends, interest, royalties, gains from shares and commodity

transactions and rents; and

more than 50% of the total voting power of all classes of voting shares or the total value of outstanding shares is owned directly or indirectly by five or fewer individuals who are U.S. citizens or residents.

Passive Foreign Investment Company Rules

Special U.S. tax rules apply to a shareholder of a Passive Foreign Investment Company ("PFIC"). Genoil could be classified as a PFIC if, after the application of certain "look through" rules, for any taxable year, either:

75% or more of the Corporation's gross income for the taxable year is "passive income," which includes interest, dividends and certain rents and royalties; or
the average quarterly percentage, by fair market value of the Corporation's assets that produce or are held for the production of "passive income" is 50% or more of the fair market value of all of its assets.

To the extent Genoil owns at least 25% by value of the shares of another corporation, it is treated for purposes of the PFIC tests as owning its proportionate share of the assets of such corporation, and as receiving directly its proportionate share of the income of such corporation.

Distributions which constitute "excess distributions" from a PFIC and dispositions of Common Shares of a PFIC are subject to the following special rules:

the excess distributions (generally any distributions received by a U.S. Holder of Common Shares on the shares in any taxable year that are greater than 125% of the average annual distributions received by such U.S. Holder of Common Shares in the three preceding taxable years, or the U.S. Holder of Common Share's holding period for the shares, if shorter) or gain would be allocated on a pro rata basis over a U.S. Holder of Common Share's holding period for the shares;
the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which the Corporation is a PFIC would be treated as ordinary income in the current taxable year; and
the amount allocated to each of the other taxable years would be subject to the highest rate of tax on ordinary income in effect for that year and to an interest charge based on the value of the tax deferred during the period during which the shares are owned.

U.S. Holders of Common Shares who actually or constructively own shares in a PFIC may be eligible to make certain elections which require them to include income for the PFIC on an annual basis.

Controlled Foreign Corporation Rules

Generally, if more than 50% of the voting power or total value of all classes of Genoil's shares are owned, directly or indirectly, by U.S. shareholders, who individually own 10% or more of the total combined voting power of all classes of the Corporation's shares, the Corporation could be treated as a controlled foreign corporation ("CFC") under Subpart F of the Code. This classification would require such 10% or greater shareholders to include in income their pro rata shares of its "Subpart F Income," as defined in the Code. In addition, a gain from the sale or exchange of shares by a U.S. Holder of Common Shares who is or was a 10% or greater shareholder at any time during the five year period ending with the sale or exchange will be deemed ordinary dividend income to the extent that the Corporation's E&P is attributable to the shares sold or exchanged.

F. Dividends and paying agents.

Not required as this is an annual report under the Securities Act .

G. Statement by experts.

Not required as this is an annual report under the Securities Act .

H. Documents on display.

No longer required

I. Subsidiary information.

Genoil has five subsidiaries; Genoil (USA) Inc., Velox Corporation, Hydrogen Solutions Inc., Crystal Clear Solutions Ltd., and Genoil Technology International C.A. Genoil owns 100% of Genoil (USA) Inc., Hydrogen Solutions Inc, Crystal Clear Solutions Ltd., and Genoil Technology International C.A. None of these aforementioned subsidiaries has any material assets. Genoil owns 52.1% of Velox Corporation. Genoil (USA) Inc., incorporated in the United States, is owned 100% by Genoil.

Item 11. Quantitative and Qualitative Disclosures About Market Risk

Genoil is not exposed to cash flow and translation risk due to changes in the Canadian/United States dollar exchange rate and interest rate fluctuations at this time due to the fact it does not currently conduct any material business in the United States.

Item 12. Description of Securities Other than Equity Securities

Not required as this is an annual report under the Securities Act .

PART II

Item 13. Defaults, Dividends Arrearages and Delinquencies

There have been no material defaults in the payment of interest or principal or any dividend or arrearages or material delinquencies.

Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds

There has been no material modification to the rights of Genoil's security holders.

Item 15. Controls and Procedures

(a) Evaluation of disclosure controls and procedures .

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), on a timely basis so that appropriate decisions can be made regarding public disclosure.

For the year ended December 31, 2006 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in Multilateral Instrument 52-109 of the Canadian Securities Administrators and as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) and have concluded that such controls and procedures are not effective as a result of material weaknesses in internal controls as discussed below.

(b) Management's annual report on internal control over financial reporting .

Management is responsible for establishing and maintaining adequate internal control over financial reporting of the Company. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian generally accepted accounting principles (GAAP).

The Company's internal control over financial reporting includes those policies and procedures that

I.	pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

II.	provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and

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

A material weakness in internal controls is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements would not be prevented or detected on a timely basis by the Company.

We note, however, that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues including instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls 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. Over time, our control systems may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected and could be material and require a restatement of our financial statements.

Management conducted an evaluation of the effectiveness of internal control over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this evaluation, management concluded that the Company's internal control over financial reporting was not effective as of December 31, 2006.

Due to the company’s size, and its inability to segregate incompatible functions among its employees, there are inherent weaknesses in the company’s internal controls to provide reasonable assurance regarding the reliability of financial reporting. The lack of sufficient personnel has resulted in ineffective segregation of duties that if left unremediated, may not prevent or detect material misstatements to annual or interim financial statements. Accordingly, management has determined that this deficiency constitutes a material weakness.

Management and the Board of Directors are currently working on developing compensating controls to mitigate the risk of ineffective segregation of duties. Genoil Inc. will continue to monitor its internal controls and implement appropriate improvements as required.

During 2006 the Company, with the assistance of external consultants, has implemented a number of small improvements to its internal control system and plans to continue this process during 2007.

The attestation report of registered public accounting firm is not required, as the registrant is a Foreign Private Issuer;

(d) Changes in internal controls over financial reporting .

During 2006 the Company, with the assistance of external consultants, has implemented a number of small improvements to its internal control system and plans to continue this process during 2007.

Item 16. [Reserved ]

Not applicable.

Item A Audit Committee Financial Expert

The board of directors has determined that Brian Korney, who is a chartered accountant, qualifies as a financial expert. He is not an independent director for this purpose, as the New York Stock Exchange Rules state that a director who is an employee of the company is not independent until three years after the end of such employment relationship.

Item B Code of Ethics

Genoil has adopted a Code of Conduct that meets the requirements of the definition of a "Code of Ethics" as that term is defined in Item 16B(b) of Form 20-F. Genoil's Code of Conduct is applicable to all of its employees, including its principal executive officer and principal financial officer. The Corporation does not currently employ a principal accounting officer. Its Code of Conduct has been attached as Exhibit 11 to the 2005 Form 20-F.

Item C Audit Fees

Since the third quarter of 2005, Genoil retained BDO Dunwoody LLP as the Corporation's auditors. The following table summarizes the aggregate fees for professional audit services and other services rendered by BDO Dunwoody LLP in the past two years.

In Canadian dollars

	2006	2005


Audit Fees	$174,000	$160,000
Audit-Related Fees	-	-
Tax	12,000	-
All Other Fees	-	-


Total	$186,000	$160,000

Audit Fees

Audit fees include fees for professional services rendered in connection with the audit of Genoil's annual financial statements set forth in its Annual Report on Form 20-F and services provided by the independent auditors in connection with statutory and regulatory filings or engagements.

Audit Related Fees

Audit-related fees are generally fees billed for services that are closely related to the performance of the audit or review of financial statements.

Tax Fees

Tax fees are fees for professional services rendered related to tax compliance, tax advice and tax planning.

All Other Fees

The Company's audit committee is required to pre-approve all audit and non-audit services rendered by and approve the engagement fees and other compensation to be paid to the independent accountant and its affiliates. When deciding whether to approve these items, Genoil's audit committee takes into account whether the provision of any non-audit service is compatible with the independence standards under the guidelines of the SEC and of the Independent Standards Board. To assist in this undertaking, the audit committee requires the independent accountant to submit a report describing all relationships the independent accountant has with the Company and relevant third parties to determine the independent accountant's independence.

Item D Exemptions from the Listing Standards for Audit Committees

Not applicable.

Item E Purchases of Equity Securities by the Issuer and Affiliated Purchasers

Not applicable.

PART III

Item 17. Financial Statements

The Consolidated Financial Statements for years ended December 31, 2006 and 2005 are filed by reference as Exhibit 19(a).

Item 18. Financial Statements

The registrant has elected to provide financial statements pursuant to Item 17 that include, as Note 22, the differences between Canadian and US GAAP.

Item 19. Exhibits

(a) The Consolidated Financial Statements for the year ended December 31, 2006 have been filed with the SEC on April 25, 2007, form 6-K, file number 000-50766 and can be found at www.sec.gov and are hereby incorporated by reference. The December 31, 2004 Consolidated Financial Statements were audited by KPMG LLP. Their report on that years statements can be found in exhibit 2.7 below.

(b)	Exhibits
Exhibit Number		Description
1.1*		Articles of Incorporation of Genoil Inc. dated April 1, 1996
1.2*		Articles of Amendment of Genoil Inc. dated June 27, 1996
1.3***		Certificate and Articles of Amalgamation of Genoil Inc. dated September 5, 1996
1.4***		Certificate and Articles of Amendment of Genoil Inc. dated May 31, 2006
1.5***		By-laws of Genoil Inc. as adopted on May 2, 2006
2.1***		Stock Option Plan of Genoil Inc., as amended October 25, 2001 and January 13, 2003,
		March 30, 2004, June 3, 2005, March 1, 2006 and May 31, 2006.
2.2**		Note and Warrant Purchase Agreement and form of Convertible Note dated December
		23, 2004
2.3***		$750,000 Convertible Promissory Note Dated October 24, 2005 with Lifschultz
		Enterprises Co., LLC.
2.4***		$750,000 Convertible Promissory Note Dated December 23, 2005 with Lifschultz
		Terminal and Leasing Ltd.
2.5		$968,825.19 Convertible Promissory Notes Dated October 6, 2006 with Lifschultz
		Enterprises Co., LLC, Lifschultz Family Partnership LP and Sidney B. Lifschultz 1992
		Family Trust (one example included - all exactly the same)
2.6		Stock Option Plan of Genoil Inc., as amended October 25, 2001 and January 13, 2003,
		March 30, 2004, June 3, 2005, March 1, 2006, May 31, 2006, and May 14, 2007.

2.7		Report of the Independent Public Accounting Firm re December 31, 2004 audit
4*		Sample Marketing Agreement
11***		Code of Conduct as adopted on May 31, 2006.
12.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
		Act of 2002

12.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

13.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

13.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

*	These exhibits were filed with Genoil's 2003 Form 20-F.

**	This exhibit was filed with Genoil's 2004 Form 20-F.

***	These exhibits were filed with Genoil's 2005 Form 20-F.

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Dated: June 22, 2007

GENOIL INC .

By: /s/ David K. Lifschultz

David K. Lifschultz
Chief Executive Officer

Exhibit 2.5

UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THIS SECURITY BEFORE FEBRUARY 7, 2007.

THIS PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED.

GENOIL INC.

CONVERTIBLE PROMISSORY NOTE

October 6, 2006 Cdn. $658,785.19

GENOIL INC. , a corporation incorporated under the Canada Business Corporations Act (together with its successors and assigns, the " Issuer "), for value received, hereby promises to pay on the Maturity Date (as defined below) to LIFSCHULTZ ENTERPRISES CO., LLC (the " Noteholder ") and its successors, transferees and assigns, by wire transfer of immediately available funds to an account designated by Noteholder by written notice to Issuer the principal sum of Six Hundred Fifty Eight Thousand Seven Hundred Eighty Five Dollars and Nineteen Cents (Cdn $658,785.19) or, if less, the aggregate unpaid principal amount outstanding on the Maturity Date, together with interest outstanding and unpaid as provided below in lawful currency of Canada as at the time of payment shall be legal tender for the payment of public and private debts.

This Note (the " Note ") is one of a duly authorized issue of Convertible Promissory Notes of the Issuer in similar form (the " Promissory Notes "). The Promissory Notes rank equally and ratably without priority over one another. Payment, including any prepayment, may be made hereunder without payment, including any prepayments being made with respect to the other Promissory Notes.

This Note is transferable or assignable by the Noteholder or any transferee of the Noteholder; provided that such transfer or assignment is made in compliance with applicable Canadian securities laws and in compliance with the United States Securities Act of 1933, as amended, and any applicable provincial, state and foreign securities laws. Issuer agrees to issue to the Noteholder or any transferee of the Noteholder from time to time a replacement note or notes in the form hereof and in such denominations as such Person may request to facilitate such transfers and assignments. In addition, after delivery of an indemnification agreement in form

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and substance satisfactory to the Issuer, the Issuer also agrees to issue a replacement note if this Note has been lost, stolen, or destroyed.

The Issuer shall keep at its principal office a register (the " Register ") in which shall be entered the name and address of the registered holder of this Note and of all transfers of this Note. References to the " Holder " shall mean the Person listed in the Register as the payee of the Note. The ownership of this Note shall be proven by the Register. For the purpose of paying principal and any interest on this Note, Issuer shall be entitled to rely on the name and address in the Register and notwithstanding anything to the contrary contained in this Note, no Event of Default shall occur under Section 3(a) or 3(b) if payment of principal and any interest is made in accordance with the name and address contained in the Register.

1. Certain Definitions . The following terms (except as otherwise expressly provided) for all purposes of this Note shall have the respective meanings specified below. The terms defined in this Section 1 include the plural as well as the singular.

" Additional Common Shares " means any Common Shares issued by the Company after the date of this Note other than : (i) shares issued or issuable upon the exercise of any warrants or options outstanding as of the date of this Note; (ii) Common Shares or Common Share Equivalents issued in connection with a bona-fide strategic transaction with an unrelated third party; (iii) Common Shares or Common Share Equivalents issued in connection with any stock-based compensation plans of the Company approved by a majority of the independent directors on the Board of Directors of the Company or (iv) shares issuable upon the exercise or conversion of any Notes.

" Affiliate " means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with, such Person. For the purposes of this definition, "control" when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing.

" Bankruptcy Law " means the Bankruptcy and Insolvency Act (Canada) or any similar federal or foreign law for the relief of debtors that may be applicable.

"Beneficial ownership" has the meaning given to such term in the Securities Act (Ontario) as extended by Section 90(1) thereof.

" Business Day " means any day except a Saturday, Sunday or other day on which commercial banks in the Province of Alberta are authorized by law to close.

" Change of Control " means the (i) acquisition by an individual or legal entity or group of more than one-half of the voting rights or equity interests in the Company; or (ii) sale, conveyance, or other disposition of all or substantially all of the assets, property or business of the Company or the merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or effectuation of any transaction or series of related transactions

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where holders of the Company’s voting securities prior to such transaction or series of transactions fail to continue to hold at least 50% of the voting power of the Company.

" Common Share Equivalents " has the meaning set forth in Section 1.4 of

Schedule "A".

" Conversion Price " has the meaning given to such term in Section 6.

" Custodian " means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

"Date of Original Issue" means October 6, 2006,

" Debt " means at any date, without duplication, an amount equal to or greater than Two Million dollars (Cdn.$2,000,000) of: (i) all obligations of the Issuer for borrowed money, (ii) all obligations of the Issuer evidenced by bonds, debentures, notes, or other similar instruments, (iii) all obligations of the Issuer in respect of letters of credit or other similar instruments (or reimbursement obligations with respect thereto), except letters of credit or other similar instruments issued to secure payment of Trade Payables, (iv) all obligations of the Issuer to pay the deferred purchase price of property or services, except Trade Payables, (v) all obligations of the Issuer as lessee under capitalized leases, (vi) all Debt of others secured by a Lien on any asset of the Issuer, whether or not such Debt is assumed by such Person; and (vii) all Debt of others Guaranteed by the Issuer.

" Default " means any condition or event which constitutes an Event of Default or which with the giving of notice or lapse of time or both would, unless cured or waived, become an Event of Default.

" equity security " has the meaning given to such term in the Securities Act

(Ontario).

" Financing " means the equity financing by the Issuer consummated on the date hereof and represented by this Note.

" Guarantee " by any Person means any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Debt or other obligation of any other Person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other obligation of such other Person (whether arising by virtue of partnership arrangements, by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or (ii) entered into for the purpose of assuring in any other manner the obligee of such Debt or other obligation for the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term Guarantee shall not include endorsements for collection or deposit in the ordinary course of business. The term " Guarantee " used as a verb has a corresponding meaning.

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" Lien " means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset. For the purposes of this Note, Issuer shall be deemed to own subject to a Lien any asset which it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capitalized lease or other title retention agreement relating to such asset.

" Maturity Date " means April 6, 2007, subject to acceleration or extension as provided in Section 3 and 3.1 hereof or the conversion of this Note as set forth in Section 6 hereof.

" Purchase Agreement " means that certain Note and Warrant Purchase Agreement, previously entered into between the Issuer and various holders of Promissory Notes and dated December 23, 2004.

" Purchaser " means a Noteholder who has converted all or part of the indebtedness owing to it pursuant to a Note into Common Shares (or, if applicable, a successor security) of the Issuer.

" Person " means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization or a governmental entity (or any department, agency or political subdivision thereof).

" Restricted Payment " means (a) the declaration or payment of any dividend or other distribution (whether in cash, stock or other property) with respect to the equity securities of the Issuer or any subsidiary or (b) any payment on account of the redemption, purchase or other acquisition, directly or indirectly, of any equity securities of the Issuer or any of its subsidiaries or any option, warrant or other right to purchase or acquire any such equity securities, or any other security, other than (i) the repayment or prepayment of (A) any indebtedness outstanding as of the date hereof, (B) any Trade Payables, in each case, in the ordinary course of business or (C) the Promissory Notes pursuant to the terms thereof, or (ii) upon the "cashless" or "net issue" exercise by a holder of any option, warrant or other right to purchase or acquire any such equity securities, in each case, outstanding as of the Date of Original Issue.

" Sale Transaction " means the consummation of (i) the acquisition, directly or indirectly, (including through beneficial ownership) of a controlling interest (more than 50% of the voting power) in the Issuer (through merger, sale of equity securities or other transaction or series of related transactions) by any Person or Persons who do not control (or form part of a "group", as defined in Section 6(a.1) hereof, which controls) the Issuer as of the date hereof, or (ii) the sale or transfer of all or substantially all of the Issuer’s assets or business to any Person or Persons who do not control (or form part of a "group", as defined in Section 6(a.1) hereof, which controls) the Issuer as of the date hereof.

" Trade Payables " means accounts payable or any other indebtedness or monetary obligations to trade creditors created or assumed by Issuer in the ordinary course of business in connection with the obtaining of materials or services. "Trade Payables" shall not include any indebtedness outstanding to any director, officer, shareholder holding more than 1% of the

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outstanding Common Shares or other person (including individuals and entities of any type)
which are either "affiliates" or "associates" or which "act jointly and in concert" (in each case
within the meaning given to such terms in the Securities Act (Ontario)) with any of the
foregoing.

2. Principal and Interest .

(a) Interest . The aggregate outstanding principal balance of this Note shall
bear interest accruing from and after the date hereof to the date this Note shall have been
converted or repaid in full at the rate of twelve percent (12%) per annum, calculated and payable
semi-annually, with the first such semi-annual interest payment accruing, immediately, and
thereafter, if the Maturity Date is extended in accordance with Section 3.1 hereof, at the end of
such semi-annual period, with unpaid interest compounding at the same rate (effective annual
interest rate of approximately 12.4%) subject to adjustment as set forth in Section 3 hereof. All
computations of interest payable hereunder shall be on the basis of a 360-day year and actual
days elapsed in the period for which such interest is payable. Interest shall be due and payable
on the semi-annual dates of calculation or such earlier date that this Note is converted or repaid
in full.

(b) Payment Obligation . No provision of this Note shall alter or impair the
obligations of Issuer, which are absolute and unconditional, to pay the principal of and interest
on this Note at the place, times and rate, and in the currency herein prescribed, subject to the
conversion provisions of this Note as provided herein.

(c) Prepayment . The principal hereunder and all interest accrued thereon may
be prepaid at any time by the Issuer in whole or in part (a " Prepayment "), provided that (i) the
Issuer gives not less than fifteen (15) Business Days prior written notice to the Noteholder that it
intends to make such a Prepayment specifying the amount of such Noteholder’s Note that the
Issuer will Prepay and the date on which such Prepayment will be made. For avoidance of
doubt, at any time following receipt of the notice of Prepayment until the Prepayment, the
Noteholder shall have the right to convert the Note as provided in Section 6.

(d) Gross-Up for Withholding Tax.

(I) Payment of Taxes. Any and all payments by the Issuer to the
Noteholder or its successors, transferees and assigns (collectively, a " Holder ")
under this Agreement, whether in respect of interest, costs, principal (including
amortization of discount) or otherwise shall be made free and clear of, and
without deduction or withholding for, any Tax (other than a Tax on the overall net
income of a Holder) imposed, levied, collected, withheld or assessed by a
Governmental Authority (as defined below). In addition, the Issuer shall pay all
Other Taxes (as defined below). If the Issuer shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to any Holder, then (i) the sum payable shall be increased as necessary
so that after making all required deductions or withholdings (including, without
limitation, deductions and withholdings applicable to additional sums payable
under this Section 2(d) ) such Holder receives an amount equal to the sum it would
have received had no such deductions or withholdings been made; (ii) the Issuer

shall make such deductions and withholdings; and (iii) the Issuer shall pay the full amount deducted or withheld to the relevant taxing authority or other authority in accordance with any applicable requirement of law.

(II) Indemnification. The Issuer shall indemnify and hold harmless each Holder for the full amount of Taxes (including any Taxes imposed by any jurisdiction on amounts payable under this Section 2(d) ) incurred, paid by or assessable against the Holder and any liability (including penalties, additions to tax, and expenses) arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally asserted. Payment under this indemnification shall be made within thirty days after the date the Holder makes written demand therefor.

(III) Receipts. Within thirty days after the date of any payment by the Issuer of Taxes or Other Taxes, the Issuer shall provide the Holder with the original or a certified copy of a receipt evidencing payment thereof, or other evidence of payment satisfactory to the Holder.

(IV)	Definitions. In this section:

	" Other Taxes " means any present or future recordation, transfer, mortgage, stamp or documentary taxes or any other excise or property taxes, charges or similar levies imposed by Canada, the United States of America or any political subdivision thereof or any other jurisdiction from or through which any payments under this Note are made that arise from any payment made hereunder or from the execution, delivery, or registration of, performance under, or otherwise with respect to this Note.

	" Tax " or " Taxes " means any present or future tax, assessment, fees, levy, impost, duty or other charges imposed by any Governmental Authority.

	" Governmental Authority " – means any nation or government, any state, province, municipality, region or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government, any corporation or other entity owned or controlled, through stock or capital ownership or otherwise, by any of the foregoing and any department, agency, board, commission, tribunal, committee or instrumentality of any of the foregoing.

3. Events of Default and Remedies and Acceleration Upon a Sale Transaction .

In case one or more of the following events (each, an " Event of Default ") (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body) shall have occurred and be continuing:

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(a) except as set out in section 3.2 hereof, default in the payment of all or any part of the principal of any of this Note as and when the same shall become due and payable, at maturity, by acceleration or otherwise; or

(b) except as set out in section 3.2 hereof, default in the payment of all or any part of the interest on any of this Note as and when same shall become due and payable and on appropriate notice hereunder; or

(c) failure on the part of Issuer duly to observe or perform any other of the covenants or agreements on the part of Issuer contained in this Note (other than those covered by clauses (a) and (b) above) for a period of ten (10) Business Days after the date on which written notice specifying such failure, stating that such notice is a "Notice of Default" hereunder and demanding that Issuer remedy the same, shall have been given by registered or certified mail, return receipt requested, to Issuer; or

(d) any event or condition shall occur which results in the acceleration of the maturity of any Debt or enables or, with the giving of notice or lapse of time or both, would enable the holder of such Debt or any Person acting on such holder’s behalf to accelerate the maturity thereof; or

(e)	the Issuer pursuant to or within the meaning of any Bankruptcy Law:

	(i)	commences a voluntary case or proceeding,

	(ii)	consents to the entry of an order for relief against it in an involuntary case or proceeding,

	(iii)	consents to the appointment of a Custodian of it or for all or substantially all of its property,

	(iv)	makes a general assignment for the benefit of its creditors, or

	(v)	admits in writing its inability to pay its debts as the same become due; or

(f)	a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

	(i)	is for relief against Issuer in an involuntary case,

	(ii)	appoints a Custodian of Issuer or for all or substantially all of the property of Issuer, or

	(iii)	orders the liquidation of Issuer,

and such order or decree remains unstayed and in effect for 30 days;

then, in each case where an Event of Default occurs, the Holder, by notice in writing to the Issuer (the " Acceleration Notice "), may, at their option, declare the outstanding principal hereunder

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and all accrued and unpaid interest hereon and thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable; provided that if an Event of Default specified in Section 3(e) or 3(f) occurs, the principal hereunder and all accrued and unpaid interest hereon and thereon shall become and be immediately due and payable without any declaration or other act on the part of the Noteholder.

The Issuer shall reimburse the Noteholder, on demand, for any and all costs and expenses, including (but not limited to) reasonable attorney fees and court costs, incurred by the Noteholder in collecting or otherwise enforcing this Note or in attempting to do any of the foregoing.

Notwithstanding anything contained herein to the contrary, upon the first to occur of (i) the Maturity Date or (ii) a Sale Transaction, the Noteholder, by notice in writing to the Issuer, may, at its option, declare the outstanding principal hereunder and all accrued and unpaid interest hereon to become due and payable immediately. Subject to applicable securities laws, the Issuer shall use its reasonable best efforts to notify the Holders of pending or proposed Sale Transactions as soon as possible.

Unless an Event of Default has occurred and is continuing, the Issuer may, at its option, subject to giving not more than 90 days and not less than 75 days’ prior written notice, and subject to any required regulatory approval, elect to satisfy its obligation to pay the amount of principal (but, for greater certainty, not interest, which shall be payable in cash) due hereunder upon acceleration by the Noteholder resulting from a Sale Transaction by issuing and delivering to the Noteholder that number of freely tradeable Common Shares obtained by dividing the amount to be paid by 95% of the weighted average trading price of the Issuer’s Common Shares on the TSX Venture Exchange for the 20 consecutive trading days on which at least two board lots have traded ending five trading days prior to the date on which the Sale Transaction shall have occurred. Notwithstanding such election by the Issuer, the Noteholder shall have the right to convert the outstanding principal hereunder at the lower of the price contemplated by this paragraph or the Conversion Price by notice otherwise given in accordance with Section 6 at any time prior to the completion of the Issuer-initiated settlement of the principal amount hereof in shares.

3.1. Extension of Maturity Date . The Holder hereby covenants and agrees to enter into discussions with the Issuer not less than 30 days prior to the Maturity date and to use its reasonable best efforts to negotiate the extension of the Maturity Date, such extension to be for a term of at least six months from the original Maturity Date and to be on terms mutually agreeable to the Holder and the Issuer, acting reasonably. Notwithstanding the above, the Holder shall be under no obligation to discuss an extension of the Maturity Date with the Issuer if the Holder has been informed by the Issuer that such extension is not desirable to the Issuer.

3.2. Notice Regarding Due and Payable Date . The Holder hereby covenants and agrees that notwithstanding anything else contained herein, the Holder shall not take any action whatsoever in respect of the collection or payment of amounts due and payable hereunder, whether relating to principal or interest, unless and until the later of: (i) the date that is thirty (30) days from the Maturity Date; and (ii) the Holder has provided thirty (30) days written notice to the Issuer that it intends to enforce such collection and payment.

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4. Powers and Remedies Cumulative; Delay or Omission Not Waiver of Default . No right or remedy herein conferred upon or reserved to the Noteholder is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

No delay or omission of the Noteholder to exercise any right or power accruing upon any Default or Event of Default occurring and continuing as aforesaid shall impair any such right or power or shall be construed to be a waiver of any such Default or Event of Default or an acquiescence therein; and every power and remedy given by this Note or by law may be exercised from time to time, and as often as shall be deemed expedient, by the Noteholder.

5. Waiver of Past Defaults . The Noteholder may waive in writing any past Default or Event of Default hereunder and its consequences. In the case of any such waiver, the Issuer and the Noteholder shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred, and any Default or Event of Default arising therefrom shall be deemed to have been cured, and not to have occurred for every purpose of this Note, and the interest rate hereon shall not be deemed to have increased; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon.

6.	Conversion .

	(a) Optional Conversion . The outstanding principal hereunder plus all interest

accrued thereon may, at the Noteholder’s option, be converted, at any time, in whole or in part, into Common Shares of the Issuer, at a conversion rate of Cdn.$0.75 per share (subject to adjustment for stock splits, consolidations, stock dividends and the like, as provided in Section 6(d) hereof) (the "Conversion Price") , all on and subject to the terms and conditions set forth in this Section 6.

The Issuer’s obligation to issue Common Shares upon conversion of Note shall be absolute, is independent of any covenant of any Noteholder, and shall not be subject to: (i) any offset or defense; or (ii) any claims against the holder of this Note whether pursuant to this Note, the Articles of Incorporation or otherwise.

(b) Mandatory Conversion . In the event that the Common Shares trade at a price equal to or greater than Cdn.$1.55 per share (subject to adjustment for stock splits, consolidations, stock dividends and similar reorganization transactions), based on the weighted average trading price for the particular day on the TSX Venture Exchange, for 30 consecutive trading days on which at least ten (10) board lots are traded, and provided that no Event of Default has occurred and is then continuing, the Issuer may, at its option by delivery of written notice to such effect to the Noteholder, which notice shall provide not more than 90 days and not less than 75 days’ prior written notice, and subject to any required regulatory approval, elect to

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cause the conversion of all outstanding amounts of principal due hereunder into freely tradeable Common Shares at the Conversion Price. Notwithstanding such election by the Issuer, the Noteholder shall have the right to convert the outstanding principal hereunder into Common Shares pursuant to Section 6(a), by notice otherwise given in accordance with Section 6 at any time prior to the completion of the Issuer-initiated settlement of the principal amount hereof pursuant to the Mandatory Conversion contemplated by this Section 6(b).

(c)	Mechanics of Conversion .

(i)	Such right of conversion shall be exercised by the Purchaser by delivering

to the Issuer a conversion notice in the form attached hereto as Exhibit A (the " Conversion Notice "), appropriately completed and duly signed, and by surrender not later than ten (10) business days thereafter of this Note. The Conversion Notice shall also contain a statement of the name or names (with addresses and applicable tax identification or social security numbers) in which the certificate or certificates for Common Shares shall be issued, if other than the name in which the Note in respect of which such conversion is taking place are registered. Promptly after the receipt of the Conversion Notice, the Issuer shall issue and deliver, or cause to be delivered, to the Purchaser or such Purchaser’s nominee, a certificate or certificates for the number of Common Shares issuable upon such conversion. Such conversion shall be deemed to have been effected as of the close of business on the date of receipt by the Issuer of the Conversion Notice (the " Conversion Date "), and the person or persons entitled to receive the Common Shares issuable upon conversion shall be treated for all purposes as the holder or holders of record of such Common Shares as of the close of business on the Conversion Date. If the Noteholder has not converted the entire amount of the Note pursuant to the Conversion Notice, then the Company shall execute and deliver to the Noteholder a new Note instrument identical in terms to this Note, but with a principal amount reflecting the unconverted portion of this Note. The new Note instrument shall be delivered subject to the same timing terms as the certificates for the Common Shares.

(ii) The Issuer shall effect such issuance of Common Shares as soon as practicable after the Conversion Date and shall transmit the certificates by messenger or reputable overnight delivery service to the address designated by such holder. The person or persons entitled to receive the Common Shares issuable upon such conversion shall be treated for all purposes as the record holder or holders of such Common Shares at the close of business on the Conversion Date.

(d) Adjustments to Conversion Price . The Conversion Price, and/or the number of Common Shares or successor securities issuable on conversion shall be appropriately adjusted in the manner and circumstances provided in Schedule "A" hereto.

(e) Fractional Shares . Upon the conversion of this Note pursuant to this Section 6, fractional shares of Common Shares shall not be issued and the Noteholder shall be paid the cash equivalent instead.

(f) Obligation of Issuer to Obtain Regulatory Approvals. In the event the Issuer is prohibited from issuing Common Shares pursuant to this Section 6 as a result of any restrictions or prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization, the Issuer shall as

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soon as possible seek the approval of its shareholders and take such other action to authorize the issuance of the full number of Common Shares issuable upon exercise of conversion rights of the Noteholder.

7.	Notices to Note Holders .

7.1.	Certificate as to Adjustments . Upon the occurrence of each adjustment or

readjustment of the current Conversion Price, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder of this Note a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder of this Note, furnish or cause to be furnished to such Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the current Conversion Price at the time in effect and (iii) the number of Common Shares and the amount, if any, or other property which at the time would be received upon the conversion of Notes owned by such Holder.

7.2.	Notice of Corporate Action . If at any time:

	(a) the Company shall take a record of the holders of its Common Shares for

the purpose of entitling them to receive a dividend (other than a cash dividend payable out of earnings or earned surplus legally available for the payment of dividends under the laws of the jurisdiction of incorporation of the Company) or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or

(b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or

then, in any one or more of such cases, the Company shall give to the Holder (i) at least 20 days’ prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up; and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days’ prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Shares shall be entitled to any such dividend, distribution or right, and the amount and character thereof; and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Shares shall be entitled to exchange their Common Shares for securities or other property deliverable upon such reorganization,

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reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company.

7.3. No Rights as Shareholder . This Note does not entitle the Holder to any voting or other rights as a shareholder of the Company prior to conversion in accordance with the terms hereof.

8. No Impairment . The Company shall not by any action, including, without limitation, amending its articles of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Note, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will, (a) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Shares upon the conversion of this Note; and (b) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Note. Upon the request of the Holder, the Company will at any time during the period this Note is outstanding acknowledge in writing, in form satisfactory to the Holder, the continuing validity of this Note and the obligations of the Company hereunder.

9. Reservation and Authorization of Common Shares; Registration With Approval of Any Governmental Authority . From and after the Closing Date, the Company shall at all times reserve and keep available for issue upon the conversion of Notes such number of its authorized but unissued Common Shares as will be sufficient to permit the conversion in full of all outstanding Notes. All Common Shares which shall be so issuable, when issued upon conversion of any Note in accordance with the terms of such Note, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive rights. Before taking any action which would result in an adjustment in the number of Common Shares for which this Note is convertible or in the current Conversion Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. If any Common Shares required to be reserved for issuance upon conversion of Notes require registration or qualification with any governmental authority under any federal or state law before such shares may be so issued (other than as a result of a prior or contemplated distribution by the Holder of this Note), the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered.

10. Taking of Record; Stock and Warrant Transfer Books . In the case of all dividends or other distributions by the Company to the holders of its Common Shares with respect to which any provision of Section 1 of Schedule "A" refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Note transfer books so as to result in preventing or delaying the exercise or transfer of any Note.

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11.	Liquidation Rights; No Restricted Payments .

	(a) In the event of any voluntary or involuntary liquidation, dissolution or

winding up of the Issuer, this Note shall be entitled to a claim in liquidation before participation by the holders of any debt subordinate hereto or of any capital stock of the Issuer. The amount of the claim in liquidation shall equal the cash amount to which the Noteholder would be entitled in the case of payment in cash. If upon such liquidation, dissolution, or winding up, the assets available for distribution among the holders of the Promissory Notes shall be insufficient to permit the payment of the full amounts of their claims in liquidation, then the entire assets of the Issuer to be distributed to the holders of the Promissory Notes shall be distributed pro-rata among the holders of the Promissory Notes based upon the amounts of their respective claims in liquidation.

(b) Issuer shall not declare or make any Restricted Payments prior to conversion or payment in full of this Note.

12. Modification of Note . This Note may be modified with the written consent of the Issuer and the Holder.

13. Miscellaneous .

(a) This Note shall be governed by and be construed in accordance with the laws of the Province of Alberta without regard to the conflicts of law rules of such Province. Each of the Issuer and Noteholder hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of the courts of the Province of Alberta, and any appellate court from any thereof, in respect of actions brought against it as a defendant, in any action, suit or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action, suit or proceeding may be heard and determined in such courts. Provided, however, that the Noteholder shall be entitled to commence proceedings against the Issuer in such other jurisdiction as it considers advisable and the Issuer shall be deemed to have, in accordance with this Section 13, submitted to the jurisdiction of and waived protest of the forum for all purposes. Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. The Issuer and the Noteholder hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Note, or in any court referred to above. Each of the parties hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action, suit or proceeding in any such court and waives any other right to which it may be entitled on account of its place of residence or domicile.

(b) Issuer hereby waives presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance and enforcement of this Note, except as specifically provided herein, and assents to extensions of the time of payment, or forbearance or other indulgence without notice.

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(c) The Section headings herein are for convenience only and shall not affect the construction hereof. This Note contains the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and shall supersede any prior agreements and understandings between the parties hereto with respect to such subject matter. The parties agree that this Note shall be deemed to have been jointly and equally drafting by them, and that the provisions of this Note therefore should not be construed against a party or parties on the grounds that such party or parties drafted or was more responsible for the drafting of any such provision(s).

IN WITNESS WHEREOF , the Issuer has caused this Convertible Promissory Note to be duly executed as of the date first set forth above.

GENOIL INC.

By:
_________________________________
Name:
Title:

LIFSCHULTZ ENTERPRISES CO., LLC

By:
__________________________________
Name: David K. Lifschultz
Title:

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SCHEDULE "A"

ADJUSTMENTS

1. Adjustments . The number of Common Shares for which this Note is convertible, and the price at which such shares may be purchased upon conversion of this Note, shall be subject to adjustment from time to time as set forth in this Schedule. The Company shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4.

1.1. Stock Dividends, Subdivisions and Combinations . If at any time while this Note is outstanding the Company shall:

(i) declare a dividend or make a distribution on its outstanding Common Shares in Common Shares,

(ii) subdivide its outstanding Common Shares into a larger number of Common Shares, or

(iii) combine its outstanding Common Shares into a smaller number of Common Shares, then:

(1) the number of Common Shares acquirable upon exercise of this Note immediately after the occurrence of any such event shall be adjusted to equal the number of Common Shares which a record holder of the same number of Common Shares that would have been acquirable under this Note immediately prior to the record date for such dividend or distribution or the effective date of such subdivision or combination would own or be entitled to receive after such record date or the effective date of such subdivision or combination, as applicable, and

(2)	the current Conversion Price shall be adjusted to equal:

	(A)	the current Conversion Price in effect at the time of the record date for

	such dividend or distribution or at the time of the effective date of such subdivision or combination, multiplied by the number of Common Shares into which this Note is convertible immediately prior to the adjustment, divided by

	(B)	the number of Common Shares into which this Note is convertible

	immediately after such adjustment.

Any adjustment made pursuant to clause (i) of this Section 1.1 shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this Section 1.1 shall become effective immediately after the effective date of such subdivision or combination.

1.2. Certain Other Distributions . If at any time while this Note is outstanding the Company shall cause the holders of its Common Shares to be entitled to receive any dividend or other distribution of:

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(i)	cash,

(ii)	any evidences of its indebtedness, any shares of any class or any other

securities or property or assets of any nature whatsoever (other than cash or additional Common Shares as provided in Section 1.1 hereof), or

(iii) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of any class or any other securities or property or assets of any nature whatsoever, then:

(1) the number of Common Shares acquirable upon conversion of this Note shall be adjusted to equal the product of the number of Common Shares acquirable upon conversion of this Note immediately prior to the record date for such dividend or distribution, multiplied by a fraction (a) the numerator of which shall be the current Conversion Price per Common Share at the date of taking such record (for greater certainty, prior to the adjustment contemplated by paragraph (2) below) and (b) the denominator of which shall be such current Conversion Price minus the amount allocable to one Common Share of any such cash so distributable and of the fair value (as determined in good faith by the Board of Directors of the Company) of any and all such evidences of indebtedness, shares, other securities or property or warrants or other subscription or purchase rights so distributable; and

(2) the current Conversion Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution shall be adjusted to equal (a) the current Conversion Price multiplied by the number of Common Shares acquirable upon conversion of this Note immediately prior to the adjustment, divided by (b) the number of Common Shares acquirable upon conversion of this Note immediately after such adjustment.

A reclassification of the Common Shares into Common Shares and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Shares of such shares of such other class of stock within the meaning of this Section 1.2 and, if the outstanding Common Shares shall be changed into a larger or smaller number of Common Shares as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding Common Shares within the meaning of Section 1.1.

1.3.	Issuance of Additional Common Shares .

	(i) If at any time while this Note is outstanding the Company shall issue or

sell any Additional Common Shares in exchange for no consideration or for consideration in an amount per Additional Common Share less than Cdn.$0.75 (as adjusted for stock splits, stock dividends and the like) at the time the Additional Common Shares are issued or sold, then:

(A) the current Conversion Price immediately prior to such issue or sale shall be reduced to a price determined by dividing

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(1) an amount equal to the sum of (a) the number of Common Shares outstanding immediately prior to such issue or sale multiplied by the then existing current Conversion Price, plus (b) the consideration, if any, received by the Company upon such issue or sale, by

(2) the total number of Common Shares outstanding immediately after such issue or sale; and

(B) the number of Common Shares acquirable upon conversion of this Note shall be adjusted to equal the amount obtained by

(1) multiplying the current Conversion Price in effect immediately prior to such issue or sale by the number of Common Shares acquirable upon conversion of this Note immediately prior to such issue or sale and

(2) dividing the product thereof by the current Conversion Price resulting from the adjustment made pursuant to clause (A).

(ii) The provisions of paragraph 1.3(i) shall not apply to any issuance of additional Common Shares for which an adjustment is provided under Section 1.1 or 1.2. No adjustment of the number of Common Shares acquirable upon conversion of this Note shall be made under paragraph 1.3(i) upon the issuance of any additional Common Shares which are issued pursuant to the conversion of any Notes or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any convertible securities, if any such adjustment shall previously have been made upon the issuance of such Notes or other rights or upon the issuance of such convertible securities (or upon the issuance of any warrant or other rights therefor) pursuant to Section 1.4.

1.4. Issuance of Common Share Equivalents . If at any time while this Note is outstanding the Company shall issue or sell any warrants or other rights to subscribe for or purchase any additional Common Shares or any securities convertible into or exchangeable for Common Shares (other than the Additional Common Shares) (collectively, " Common Share Equivalents "), whether or not the rights to exchange or convert thereunder are immediately exercisable, and the effective price per share for which Common Shares is issuable upon the exercise, exchange or conversion of such Common Share Equivalents shall be less than the current Conversion Price in effect immediately prior to the time of such issue or sale, then the number of Common Shares acquirable upon the conversion of this Note and the current Conversion Price shall be adjusted as provided in Section 1.3 on the basis that the maximum number of additional Common Shares issuable pursuant to all such Common Share Equivalents shall be deemed to have been issued and outstanding and the Company shall have received all of the consideration payable therefor, if any, as of the date of the actual issuance of such Common Share Equivalents. No further adjustments to the current Conversion Price shall be made under this Section 1.4 upon the actual issue of such Common Shares upon the exercise, conversion or exchange of such Common Share Equivalents.

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1.5.	Superseding Adjustment .

	(i) If, at any time after any adjustment of the number of Common Shares into

which this Note is convertible and the current Conversion Price shall have been made pursuant to Section 1.4 as the result of any issuance of Common Share Equivalents, (a) the right to exercise, convert or exchange all or a portion of such Common Share Equivalents shall expire unexercised, or (b) the conversion rate or consideration per share for which Common Shares are issuable pursuant to such Common Share Equivalents shall be increased solely by virtue of provisions therein contained for an automatic increase in such conversion rate or consideration per share upon the occurrence of a specified date or event, then any such previous adjustments to the current Conversion Price and the number of Common Shares for which this Note is convertible shall be rescinded and annulled and the additional Common Shares which were deemed to have been issued by virtue of the computation made in connection with the adjustment so rescinded and annulled shall no longer be deemed to have been issued by virtue of such computation.

(ii) Upon the occurrence of an event set forth in Section 1.5(i) above there shall be a recomputation made of the effect of such Common Share Equivalents on the basis of: (i) treating the number of additional Common Shares or other property, if any, theretofore actually issued or issuable pursuant to the previous exercise, conversion or exchange of such Common Share Equivalents, as having been issued on the date or dates of any such exercise, conversion or exchange and for the consideration actually received and receivable therefor, and (ii) treating any such Common Share Equivalents which then remain outstanding as having been granted or issued immediately after the time of such increase of the conversion rate or consideration per share for which Common Shares or other property are issuable under such Common Share Equivalents; whereupon a new adjustment to the number of Common Shares for which this Note is convertible and the current Conversion Price shall be made, which new adjustment shall supersede the previous adjustment so rescinded and annulled.

(iii) Provided, however, that notwithstanding anything to the contrary in this Section 1.5, no superceding adjustment shall affect, or require the re-computation or entitlements, refund of monies, return or cancellation of shares or other such conveyances, transfers and settlements, with respect to any conversions of this Note that have been completed prior to the event giving rise to the superceding adjustment.

1.6. Other Provisions Applicable to Adjustments . The following provisions shall be applicable to the making of adjustments of the number of Common Shares into which this Note is convertible and the current Conversion Price provided for in Section 1:

(a) When Adjustments to Be Made . The adjustments required by Section 1 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Shares, as provided for in Section 1.1) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% of the Common Shares into which this Note is convertible immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other

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adjustments required by this Section 1 and not previously made, would result in a minimum adjustment, or otherwise on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence.

(b) Fractional Interests . In computing adjustments under this Section 1, fractional interests in Common Shares shall be taken into account to the nearest 1/100th of a share.

(c) When Adjustment Not Required . If the Company undertakes a transaction contemplated under this Section 1 and as a result takes a record of the holders of its Common Shares for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights or other benefits contemplated under this Section 1 and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights or other benefits contemplated under this Section 1, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(d) Escrow of Stock . If after any property becomes distributable pursuant to Section 1 by reason of the taking of any record of the holders of Common Shares, but prior to the occurrence of the event for which such record is taken, a holder of this Note converts the Note during such time, then such holder shall continue to be entitled to receive any Common Shares issuable upon conversion hereunder by reason of such adjustment and such shares or other property shall be held in escrow for the holder of this Note by the Company to be issued to holder of this Note upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Company and escrowed property returned to the Company.

	1.7.	Reorganization, Reclassification, Merger, Consolidation or Disposition of
Assets .

		(a) If there shall occur a Change of Control and if pursuant to the terms of such

Change of Control, Common Shares of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of Common Shares of the successor or acquiring corporation (" Other Property "), are to be received by or distributed to the holders of Common Shares of the Company, then the Holder of this Note shall have the right thereafter to receive, upon the conversion of the Note, the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and the Other Property receivable upon or as a result of such Change of Control by a holder of the number of Common Shares into which this Note is convertible immediately prior to such event.

(b) In case of any such Change of Control described above, the successor or acquiring corporation (if other than the Company) and, if an entity different from the successor or surviving entity, the entity whose capital stock or assets the holders of Common Shares of the Company are entitled to receive as a result of such transaction, shall expressly assume the due and punctual observance and performance of each and every covenant and condition of the Company contained in this Note to be performed and observed by the Company and all the

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obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the Board of Directors of the Company) in order to provide for adjustments of the Common Shares into which this Note is convertible which shall be as nearly equivalent as practicable to the adjustments provided for in Section 1. For purposes of Section 1, Common Shares of the successor or acquiring corporation shall include shares of such corporation of any class which is not preferred as to dividends or assets on liquidation over any other class of shares of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares or other securities which are convertible into or exchangeable for any such shares, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such shares. The foregoing provisions of this Section 1 shall similarly apply to successive Change of Control transactions.

1.8. Other Action Affecting Common Shares . In case at any time or from time to time the Company shall take any action in respect of its Common Shares, other than the payment of dividends permitted by Section 1 or any other action described in Section 1, then, unless such action will not have a materially adverse effect upon the rights of the holder of this Note, the number of Common Shares or other stock into which this Note is convertible and/or the purchase price thereof shall be adjusted in such manner as may be equitable in the circumstances.

1.9. Stock Transfer Taxes . The issue of stock certificates upon conversion of this Note shall be made without charge to the holder for any tax in respect of such issue. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares in any name other than that of the holder of this Note, and the Company shall not be required to issue or deliver any such stock certificate unless and until the person or persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid.

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Exhibit 2.6

GENOIL INC.

STOCK OPTION PLAN

as amended
May 14, 2007

ARTICLE 1
PURPOSE OF PLAN

1.1 The purpose of the Plan is to attract, retain and motivate persons as directors, officers, key employees and consultants of the Corporation and its Subsidiaries and to advance the interests of the Corporation by providing such persons with the opportunity, through share options, to acquire an increased proprietary interest in the Corporation.

ARTICLE 2
DEFINED TERMS

Where used herein, the following terms shall have the following meanings, respectively:

2.1 “ Board ” means the board of directors of the Corporation or, if established and duly authorized to act, the Executive Committee or another Committee appointed for such purpose by the board of directors of the Corporation;

2.2 “ Business Day ” means any day, other than a Saturday or a Sunday, on which the Exchange is open for trading;

2.3 “ Consultant ” means an individual (including an individual whose services are contracted through a personal holding corporation) with whom the Corporation or any Subsidiary has a contract for substantial services;

2.4	“ Corporation ” means GENOIL INC. and includes any successor corporation thereto;

2.5	“ Eligible Person ” means any director, officer, employee (part-time or full-time) or

Consultant of the Corporation or any Subsidiary;

2.6 “ Exchange ” means the TSX Venture Exchange and, where the context permits, any other exchange on which the Shares are or may be listed from time.

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2.7 “ Exchange Requirements ” means and includes the articles, by-laws, policies, circulars, rules, guidelines, orders, notices, rulings, forms, decisions and regulations of the TSX Venture Exchange as from time to time enacted, any instructions, decisions and directions of a Regulation Services Provider or the TSX Venture Exchange, the Alberta Securities Act, S.A. 1981 c. S-61 and rules and regulations thereunder as amended, the British Columbia Securities Act R.S.B.C. 1996, c. 418 and rules and regulations thereunder as amended and any policies, rules, orders, rulings, forms or regulations from time to time enacted by the Alberta Securities Commission or the British Columbia Securities Commission and all applicable provisions of the Securities Laws of any other jurisdiction.

2.8	“ Insider ” means:

	(a)	an Insider as defined under Section 1(1) of the Securities Act (Ontario), other than a person who falls within that definition solely by virtue of being a director or senior officer of a Subsidiary; and

	(b)	an associate as defined under Section 1(1) of the Securities Act (Ontario) of any person who is an insider by virtue of (i) above;

2.9	“ Investor Relations Activities ” means any activities, by or on behalf of the Corporation or

Shareholder of the Corporation, that promote or reasonably could be expected to promote the purchase or sale of securities of the Corporation, but does not include:

(a)	the dissemination of information provided, or records prepared, in the ordinary course of business of the Corporation

	(i)	to promote the sale of products or services of the Corporation, or

	(ii)	to raise public awareness of the Corporation,

	that cannot reasonably be considered to promote the purchase or sale of securities of the Corporation;

(b)	activities or communications necessary to comply with the requirements of

	(i)	applicable Securities Laws,

	(ii)	Exchange Requirements or the by-laws, rules or other regulatory instruments of any other self regulatory body or exchange having jurisdiction over the Corporation;

(c)	communications by a publisher of, or writer for, a newspaper, magazine or business or financial publication, that is of general and regular paid circulation, distributed only to subscribers to it for value or to purchasers of it, if

	(i)	the communication is only through the newspaper, magazine or publication, and

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(ii)	the publisher or writer receives no commission or other consideration other than for acting in the capacity of publisher or writer; or

(d) activities or communications that may be otherwise specified by the Exchange.

2.10 “ Market Price ” at any date in respect of the Shares shall be the greatest closing price of such Shares on any Exchange on the last Business Day preceding the date on which the Option is approved by the Board (or, if such Shares are not then listed and posted for trading on the Exchange, on such stock exchange in Canada on which the Shares are listed and posted for trading as may be selected for such purpose by the Board). In the event that such Shares did not trade on such Business Day, the Market Price shall be the average of the bid and ask prices in respect of such Shares at the close of trading on such date. In the event that such Shares are not listed and posted for trading on any stock exchange, the Market Price shall be the fair market value of such Shares as determined by the Board in its sole discretion;

2.11	“ Option ” means an option to purchase Shares granted under the Plan;

2.12	“ Option Price ” means the price per Share at which Shares may be purchased under the

Option, as the same may be adjusted from time to time in accordance with Article 8;

2.13	“ Optionee ” means an Eligible Person to whom an Option has been granted;

2.14	“ Outstanding Issue ” means the number of Shares outstanding on a non-diluted basis,

determined on the basis of the number of shares that are outstanding immediately prior to the share issuance under Article 5 herein, excluding shares issued pursuant to share compensation arrangements over the preceding one-year period;

2.15 “ Person ” means an individual, a corporation, a partnership, an unincorporated association or organization, a trust, a government or department or agency thereof and the heirs, executors, administrators or other legal representatives of an individual and an associate or affiliate of any thereof as such terms are defined in the Business Corporations Act (Alberta);

2.16 “ Plan ” means this GENOIL INC. Stock Option Plan, as the same may be amended or varied from time to time;

2.17 “ Regulation Services Provider ” has the meaning ascribed in National Instrument 21-101 Marketplace Operation and refers to Market Regulation Services Inc. (RS Inc.) or any other Regulation Services Provider retained by the TSX Venture Exchange.

2.18 “ Securities Laws ” means securities legislation, securities regulation and securities rules, as amended, and the policies, notices, instruments and blanket orders in force from time to time that are applicable to the Corporation,

2.19 “ Share Compensation Arrangement ” means any stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Shares, including a share purchase from treasury which is financially assisted by the Corporation by way of a loan, guarantee or otherwise;

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2.20 “ Shareholde r” means a registered or beneficial holder of Shares or, if the context requires, other securities of the Corporation.

2.21 “ Shares ” means the common shares of the Corporation or, in the event of an adjustment contemplated by Article 8, such other shares or securities to which an Optionee may be entitled upon the exercise of an Option as a result of such adjustment; and

2.22 “ Subsidiary ” means any corporation which is a subsidiary as such term is defined in section 4 of the Business Corporations Act (Alberta) (as such provision is from time to time amended, varied or re-enacted) of the Corporation.

ARTICLE 3
ADMINISTRATION OF THE PLAN

3.1 The Plan shall be administered in accordance with the rules and policies of the Exchange in respect of employee stock option plans by the Board. The Board shall receive recommendations of management and shall determine and designate from time to time those directors, officers, employees and Consultants of the Corporation or its Subsidiaries to whom an Option should be granted and the number of Shares, which will be optioned from time to time to any individual and the terms and conditions of the grant.

3.2 The Board shall have the power, where consistent with the general purpose and intent of the Plan and subject to the specific provisions of the Plan,

(a)	to establish policies and to adopt, prescribe, amend or vary rules and regulations for carrying out the purposes, provisions and administration of the Plan and make all other determinations necessary or advisable for its administration;

(b)	to interpret and construe the Plan and to determine all questions arising out of the Plan and any Option granted pursuant to the Plan and any such interpretation, construction or determination made by the Board shall be final, binding and conclusive for all purposes;

(c)	to determine which Eligible Persons are granted Options and to grant Options;

(d)	to determine the number of Shares covered by each Option;

(e)	to determine the Option Price;

(f)	to determine the time or times when Options will be granted and exercisable;

(g)	to determine if the Shares which are subject to an Option will be subject to any restrictions upon the exercise of such Option; and

(h)	to prescribe the form of the instruments relating to the grant, exercise and other terms of Options.

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ARTICLE 4

SHARES SUBJECT TO THE PLAN

4.1 Options may be granted in respect of authorized and unissued Shares provided that, subject to increase by the Board, the receipt of the approval of the Exchange and the approval of Shareholders of the Corporation, the maximum aggregate number of Shares reserved by the Corporation for issuance and which may be purchased upon the exercise of all Options shall equal 44,961,229 Shares in respect of which Options are not exercised shall be available for subsequent Options under the Plan. No fractional Shares may be purchased or issued under the Plan.

ARTICLE 5

ELIGIBILITY; GRANT; TERMS OF OPTIONS

5.1	Options may be granted to Eligible Persons.

5.2	Options may be granted by the Corporation pursuant to the recommendations of the

Board from time to time provided and to the extent that such decisions are approved by the Board.

5.3 Subject to the provisions of this Plan, the number of Shares subject to each Option, the Option Price, the expiration date of each Option, the extent to which each Option is exercisable from time to time during the term of the Option and other terms and conditions relating to each such Option shall be determined by the Board. At no time shall the period during which an Option shall be exercisable exceed 10 years.

5.4 In the event that no specific determination is made by the Board with respect to the following matter:

(a)	the period during which an Option shall, subject to any other specific provisions of the Plan, be exercisable shall be five years from the date the Option is granted to the Optionee; and

(b)	unless otherwise determined by the Board, if any Option granted hereunder is scheduled to expire (i) at a time when the Optionee is subject to restrictions on trading of securities of the Corporation under a trading "blackout" established by the Corporation (pursuant to the Code of Business Conduct of the Corporation then in effect or otherwise) (a "Blackout Period"); or (ii) within five business days after the termination of a Blackout Period, the Option will, notwithstanding the scheduled expiry date of such Option, expire as of the date that is 10 Business Days following the end of the applicable Blackout Period (the "Revised Expiry Date") and shall be exercisable by the holder at any time up to the applicable time on the Revised Expiry Date.

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5.5 The Option Price of Shares which are the subject of any Option shall in no circumstances be lower than the Market Price of the Shares at the date of the grant of the Option.

5.6 Except as otherwise permissible pursuant to the rules of the Exchange, the maximum number of Shares which may be reserved for issuance to any one Optionee under this Plan or under any other Share Compensation Arrangement shall not exceed 5% of the Outstanding Issue in any 12 month period, unless the Corporation has obtained the requisite disinterested Shareholder approval.

5.7 Except as otherwise permissible pursuant to the rules of the Exchange, the aggregate number of Shares which may be reserved for issuance to Insiders under the Plan and any other Share Compensation Arrangement may not exceed 10% of the Outstanding Issue; and the number of Shares which may be reserved for issuance to Insiders under the Plan within any 12 month period, may not exceed 10% of the Outstanding Issue.

5.8 Any entitlement to acquire Shares granted pursuant to the Plan or any other Share Compensation Arrangement prior to the Optionee becoming an Insider shall be excluded for the purposes of the limits set out in 5.7 and 5.8 above.

5.9	An Option is personal to the Optionee and is non-assignable and non-transferable.

5.10	Except as otherwise permissible pursuant to the rules of the Exchange, no more than 2%

of the Outstanding Issue may be granted to any one Consultant in any 12 month period.

5.11 Except as otherwise permissible pursuant to the rules of the Exchange, no more than an aggregate of 2% of the Outstanding Issue may be granted in any 12 month period to an employee (part-time or full-time) conducting Investor Relations Activities.

5.12 At time of grant, the Corporation will represent that the Optionee is a bona fide director, officer, employee or Consultant of the Corporation or any Subsidiary, as the case may be.

ARTICLE 6
EXERCISE OF OPTIONS

6.1 Subject to the provisions of the Plan, an Option may be exercised from time to time by delivery to the Corporation at its registered office of a written notice of exercise addressed to the Secretary of the Corporation specifying the number of Shares with respect to which the Option is being exercised and accompanied by payment in full of the Option Price of the Shares to be purchased. Certificates for such Shares shall be issued and delivered to the Optionee within a reasonable period of time following the receipt of such notice and payment.

6.2 Notwithstanding any of the provisions contained in the Plan or in any Option, the Corporation’s obligation to issue Shares to an Optionee pursuant to the exercise of an Option shall be subject to:

(a)	completion of such registration or other qualification of such Shares or obtaining approval of such governmental or regulatory authority as counsel to the

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Corporation shall reasonably determine to be necessary or advisable in connection with the authorization, issuance or sale thereof;

(b)	the listing of such Shares on the Exchange, if applicable; and

(c)	the receipt from the Optionee of such representations, agreements and undertakings, including as to future dealings in such Shares, as the Corporation or its counsel reasonably determines to be necessary or advisable in order to safeguard against the violation of the Securities Laws of any jurisdiction.

In this connection the Corporation shall, to the extent necessary, take all reasonable steps to obtain such approvals, registrations and qualifications as may be necessary for the issuance of such Shares in compliance with applicable Securities Laws and for the listing of such Shares on the Exchange.

6.3 Notwithstanding anything else contained herein, at or after the time that any Option could be exercised by a Participant, the Participant may elect to surrender, in whole or in part, his or her rights under any Option by written notice given to the Corporation stating that such Participant wishes to surrender his or her Option in exchange for a payment by the Corporation of a cash amount per optioned Share equal to the difference between the exercise price of the Option and the closing price of the Shares on the TSX Venture Exchange on the trading day prior to such exercise (the "Cash Amount"). The Board at its sole discretion may either pay such Cash Amount or satisfy its obligations pursuant to this Section 6.3 by issuing Shares to the Optionee with a value equal to the Cash Amount, such Share to be issued at a value per Share equal to the closing price of the Shares on the TSX Venture Exchange on the trading day prior to such exercise. The Board additionally has the sole discretion to consent to or disapprove of the election of the Participant to receive the Cash Amount pursuant to this Section 6.3. If the Board disapproves of the election, the Participant may (i) exercise the Option under Section 6.1 or (ii) retract the request to exercise such Option.

ARTICLE 7

RESIGNATION; TERMINATION; DEATH; DISABILITY; RETIREMENT

7.1 Subject to any express resolution passed by the Board with respect to an Option, if an Optionee who is an officer, employee (part-time or full-time), director or Consultant of the Corporation ceases to be an officer, employee (part-time or full-time), director or Consultant of the Corporation such that the Optionee holds none of such positions with the Corporation (in each case, the "Departure") and does not continue in at least one of such capacities, each Option held by the Optionee will terminate and be deemed to have been terminated:

(a)	if the reason for Departure is resignation or termination without cause, and the Departure is in respect of a director or officer, as applicable, at 4:00 p.m. (Calgary time) on the earlier of: (i) the expiry date of the Option; and (ii) the date that is 180 days after the date of Departure;

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(b)	if the reason for Departure is resignation or termination without cause, and the Departure is in respect of an employee (part-time or full-time), at 4:00 p.m.

	(Calgary time) on the earlier of: (i) the expiry date of the Option; and (ii) the date that is 60 days after the date of Departure;

(c)	if the reason for Departure is resignation or termination without cause, and the Departure is in respect of a Consultant, in accordance with the terms of the Consulting agreement entered into between the Corporation or the Subsidiary and the Consultant, or, if not expressly indicated in such Consulting agreement, at 4:00 p.m. (Calgary time) on the earlier of: (i) the expiry date of the Option; and (ii) the date that is 60 days after the date of Departure;

(d)	if the reason for Departure is death, permanent disability or normal retirement of the Optionee, at 4:00 p.m. (Calgary time) on the earlier of: (i) the expiry date of the Option; and (ii) the date that is 180 days after the date of Departure; and

(e)	if the reason for Departure is termination for cause, at 12:01 a.m. (Calgary time) on the date of Departure;

provided that in the circumstances described in clauses (a), (b), (c) and (d) above, the Option may be exercised or surrendered during the respective periods only to the same extent, in the same manner, and subject to the same restrictions and limitations that the Optionee was entitled to exercise or surrender the Option as at the date of Departure. Notwithstanding anything else contained herein, no Option shall vest following the date of Departure of the Optionee.

7.2 In the event of an Optionee’s death or permanent disability, any Option held by the Optionee at the time of his death or permanent disability may be exercised or surrendered only:

(a)	by the person to whom the Optionee’s rights under the Option shall pass by the Optionee’s legal will or pursuant to applicable law; and

(b)	to the same extent, in the same manner and subject to the same restrictions and limitations that the Optionee was entitled to exercise or surrender the Option as at the date of death or permanent disability.

ARTICLE 8

CHANGE IN CONTROL AND CERTAIN ADJUSTMENTS

8.1 Notwithstanding any other provision of this Plan in the event that the Corporation receives an offer (the “Offer”) for:

(a)	the acquisition by any Person of Shares or rights or options to acquire Shares of the Corporation or securities which are convertible into Shares of the Corporation or any combination thereof such that after the completion of such acquisition such Person would be entitled to exercise 30% or more of the votes entitled to be cast at a meeting of the Shareholders; or

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(b)	the sale by the Corporation of all or substantially all of the property or assets of the Corporation;

then notwithstanding that at the effective time of the Offer the Optionee may not be entitled to all the Shares granted by the Option, the Optionee shall be entitled to exercise the Options to the full amount of the Shares remaining at that time from the date of the Offer to the date of the close of any such transaction. If such transaction is not completed within 90 days of the date of the Offer and the Optionee has not so exercised that portion of the Option relating to Shares to which the Optionee would not otherwise be entitled, this provision shall cease to apply to the Offer.

8.2 Appropriate adjustments with respect to Options granted or to be granted, in the number of Shares optioned and in the Option Price, shall be made by the Board to give effect to adjustments in the number of Shares of the Corporation resulting from subdivisions, consolidations or reclassifications of the Shares of the Corporation, the payment of stock dividends or cash dividends by the Corporation (other than dividends in the ordinary course), the distribution of securities, property or assets by way of dividend or otherwise (other than dividends in the ordinary course), or other relevant changes in the capital stock of the Corporation or the amalgamation or merger of the Corporation with or into any other entity, subsequent to the approval of the Plan by the Board. The appropriate adjustment in any particular circumstance shall be conclusively determined by the Board in its sole discretion, subject to approval by the Shareholders of the Corporation and to acceptance by the Exchange respectively, if applicable.

ARTICLE 9

AMENDMENT OR DISCONTINUANCE OF PLAN

9.1 The Board may amend or discontinue the Plan at any time upon receipt of requisite regulatory approval including without limitation, the approval of the Exchange, provided, however, that no such amendment may, without the consent of the Shareholders, increase the maximum number of Shares that may be optioned under the Plan, change the manner of determining the minimum Option Price, reduce the Option Price for Options granted to Insiders or, without the consent of the Optionee, alter or impair any of the terms of any Option previously granted to an Optionee under the Plan. Any amendments to the terms of an Option shall also require regulatory approval, including without limitation, the approval of the Exchange.

ARTICLE 10
MISCELLANEOUS PROVISIONS

10.1 The holder of an Option shall not have any rights as a Shareholder of the Corporation with respect to any of the Shares covered by such Option until such holder shall have exercised such Option in accordance with the terms of the Plan (including tendering payment in full of the Option Price of the Shares in respect of which the Option is being exercised) and the issuance of Shares by the Corporation.

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10.2 Nothing in the Plan or any Option shall confer upon an Optionee any right to continue in the employ of the Corporation or any Subsidiary or affect in any way the right of the Corporation or any Subsidiary to terminate his employment at any time; nor shall anything in the Plan or any Option be deemed or construed to constitute an agreement, or an expression of intent, on the part of the Corporation or any Subsidiary to extend the employment of any Optionee beyond the time which he would normally be retired pursuant to the provisions of any present or future retirement plan of the Corporation or any Subsidiary or any present or future retirement plan of the Corporation or any Subsidiary, or beyond the time at which he would otherwise be retired pursuant to the provisions of any contract of employment with the Corporation or any Subsidiary.

10.3 To the extent required by law or regulatory policy or necessary to allow Shares issued on exercise of an Option to be free of resale restrictions, the Corporation shall report the grant, exercise or termination of the Option to the Exchange and the appropriate securities regulatory authorities.

ARTICLE 11

SHAREHOLDER AND REGULATORY APPROVAL

11.1 The Plan shall be subject to the approval of the Shareholders of the Corporation to be given by a resolution passed at a meeting of the Shareholders of the Corporation in accordance with the Business Corporations Act (Alberta), and to acceptance by the Exchange. Any Options granted prior to such approval and acceptances shall be conditional upon such approval and acceptance being given and no such Options may be exercised unless such approval and acceptance is given.

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Exhibit 2.7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of Genoil Inc.

We have audited the consolidated statements of loss, deficit and cash flows of Genoil Inc. for the year ended December 31, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit 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 whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2004 in accordance with Canadian generally accepted accounting principles .

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, the Company has suffered recurring losses, is not realizing any cash from operations and requires financing in order to develop its technologies that raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

Canadian generally accepted accounting principles vary in certain significant respects from accounting principles generally accepted in the United States of America. Information relating to the nature and effect of such differences is presented in note 22 to the accompanying consolidated financial statements.

KPMG LLP

Chartered Accountants
Calgary, Canada
June 30, 2005

Exhibit 12.1
CERTIFICATION

I, David K. Lifschultz, certify that:

1.	I have reviewed this annual report on Form 20-F of Genoil Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 22, 2007

/s/ David K. Lifschultz
David K. Lifschultz
Chief Executive Officer

Exhibit 12.2

CERTIFICATION

I, David Kippen, certify that:

1.	I have reviewed this annual report on Form 20-F of Genoil Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.	The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.	The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: June 22, 2007

/s/ David Kippen
David Kippen
Chief Financial Officer

Exhibit 13.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Genoil Inc. (the “Company”) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David K. Lifschultz, Chairman and Chief Executive Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATED: June 22, 2007

By: /s/ David K. Lifschultz

David K. Lifschultz, Chairman and
Chief Executive Officer
Genoil Inc.

Exhibit 13.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF
THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report on Form 20-F of Genoil Inc. (the “Company”) for the year ended December 31, 2006 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Kippen, Chief Financial Officer of the Company, certify, pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.	The Report fully complies with the requirements of Rule 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

DATED: June 22, 2007

By: /s/ David Kippen

David Kippen,
Chief Financial Officer
Genoil Inc.