GENOIL INC (Form: 20-F, Received: 07/01/2010 06:05:46)

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FORM 20-F

(Mark One)

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, 2009

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

777 – 8 Avenue S.W., Suite 1650

Calgary, Alberta, Canada T2P Y5

(Address of principal executive offices)

Tel (403) 750-3450 Fax (403) 290-0592 Contact: Brian Korney

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: 276,673,669 as of December 31, 2009 and 283,998,333 as of May 25, 2010
Preferred shares: (zero) as of December 31, 2009.

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):

Large accelerated filer ¨	Accelerated filer ¨	Non-accelerated filer x

Indicate by check mark which financial statement item the registrant has elected to follow
x Item 17	¨ Item 18

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		¨ No

Contents
Item 1. Identity of Directors, Senior Management and Advisers		2
Item 2. Offer Statistics and Expected Timetable		2
Item 3. Key Information		2
Item 4. Genoil's Information		7
Item 5. Operating and Financial Review and Prospects		18
Item 6. Directors, Senior Management and Employees		23
Item 7. Major Shareholders and Related Party Transactions		27
Item 8. Financial Information		29
Item 9. The Offer and Listing		29
Item 10. Additional Information		31
Directors' Conflicts of Interest		32
Borrowing Powers		32
Directors		32
Rights Attached to Shares		32
Alteration of the Rights of Shareholders		33
Shareholders' Meetings		33
U.S. Holder of Common Shares		36
Canadian Federal Income Tax Consequences		38
United States Federal Income Tax Consequences		38
Item 11. Quantitative and Qualitative Disclosures About Market Risk		40
Item 12. Description of Securities Other than Equity Securities		40
Item 13. Defaults, Dividends Arrearages and Delinquencies		40
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds		40
Item 15. Controls and Procedures		41
Item 16. [Reserved]		42
Item A	Audit Committee Financial Expert	42
Item B	Code of Ethics	42
Item C	Audit Fees	42
Item 17. Financial Statements		43
Item 19. Exhibits		44

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 ("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 23 to the Consolidated Financial Statements. The following summary financial data should be read together with the Consolidated Financial Statements and the respective notes, the other information contained in this document.

The following selected consolidated financial data as of December 31, 2009, 2008, 2007, 2006, and 2005 and for the years ended December 31, 2009, 2008, 2007, 2006, and 2005 have been derived from Genoil's audited Consolidated Financial Statements, which are included elsewhere, 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 23 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.

Selected Consolidated Financial Information

(All amounts in Canadian dollars)

		Years ended December 31

	2009	2008	2007	2006	2005
Revenue	758	41,340	108,333	23,393	19,484
Loss from continuing operations
Canadian GAAP	(5,152,996)	(7,767,173)	(11,342,560)	(13,906,047)	(10,923,321)
US GAAP	(5,052,672)	(7,727,562)	(13,348,048)	(13,922,447)	(10,901,392)
Loss for the period
Canadian GAAP	(5,152,996)	(7,767,173)	(11,342,560)	(13,906,047)	(10,923,321)
US GAAP	(5,052,672)	(7,727,562)	(13,348,048)	(13,922,447)	(10,901,392)
Loss per share from continuing operations:
Basic and diluted
Canadian GAAP	(0.02)	(0.03)	(0.05)	(0.07)	(0.06)
US GAAP	(0.02)	(0.03)	(0.06)	(0.07)	(0.06)
Income (loss) per share: Basic and diluted
Canadian GAAP	(0.02)	(0.03)	(0.05)	(0.07)	(0.06)
US GAAP	(0.02)	(0.03)	(0.06)	(0.07)	(0.06)
Total assets
Canadian GAAP	4,100,422	4,933,724	5,239,657	6,481,575	6,155,904
US GAAP	4,100,422	4,933,724	5,239,657	6,481,575	6,155,904
Net assets
Canadian GAAP	1,312,362	2,294,715	2,482,629	2,699,148	867,375
US GAAP	1,280,080	2,146,719	2,459,775	2,032,796	(197,740)
Share Capital
Number of Shares Outstanding	276,673,669	262,283,150	232,912,757	223,054,604	196,051,227
Canadian GAAP	52,207,086	51,077,866	45,676,239	34,809,229	21,665,406
US GAAP	84,858,153	83,728,933	78,327,306	67,460,296	54,316,473
Retained earnings (deficit)
Canadian GAAP	(68,042,222)	(62,889,226)	(55,122,053)	(43,779,493)	(29,873,446)
US GAAP	(124,768,544)	(119,715,872)	(112,064,011)	(98,715,962)	(84,793,515)

To date, the Corporation has not issued any dividends to shareholders.
Number of Shares Issued
		Years ended December 31
	2009	2008	2007	2006	2005

Shares outstanding	276,673,669	262,283,150	232,912,757	223,054,604	196,051,227
Shares issued	14,390,519	29,370,393	9,858,153	27,003,377	17,171,171

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

Average exchange rate	2009	1.1420
	2008	1.0660
	2007	1.0747
	2006	1.1304
	2005	1.2114

High / Low in last six months (1 US$ = C$)

	High	Low
March 2010	1.0560	1.0128
February 2010	1.0772	1.0441
January 2010	1.0695	1.0278
December 2009	1.0748	1.0445
November 2009	1.0839	1.0525
October 2009	1.0961	1.0315
.

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, 2010 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 in this document.

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, preferred shares and convertible debt, the conversion and/or exercise of which would have a dilutive effect on its earnings per share.

As of December 31, 2009, the following potentially dilutive instruments were outstanding:

Options outstanding		43,730,000
Warrants outstanding		17,992,139
Notes convertible		5,372,495
Convertible Preferred Shares		-

		67,094,634


Common shares outstanding		276,673,669

Potential dilution		24%

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 1650, 777 – 8 Avenue S.W., Calgary, Alberta, T2P 3R5 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 Zhongjie”) to jointly develop and build the first major commercial heavy
		oil upgrader in China based on the GHU® technology.
	-	Genoil's GHU® 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.
2007	-	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 Zhongjie for testing of their heavy oil
		at the Company’s pilot plant to determine 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 a total of $223,000 in unpaid director’s fees in exchange for 660,740 common
		shares of the Corporation.
	-	In May 2007, Genoil entered into a funding agreement with the Chairman and CEO of the Corporation,
		who received 600,000 common share purchase warrants in lieu of interest on a line of credit of $
		1,000,000 made available to the Company. Each warrant is exercisable for one common share of the
		Corporation at a price of $0.58 per share at any time within one year from its date of issue.
		- In July 2007, the company finalized a private placement receiving $ 2.8 million and issuing 5,130,382
		common shares. Additionally, 0.25 common share purchase warrants are being issued for each common
		share, which are exercisable until three years following their issue date at a price of US$0.78.
		- Genoil issued 107,825 shares to satisfy amounts outstanding to a consultant of the Corporation.
		- In August 2007 the Corporation granted 1,000,000 incentive stock options for an officer at a strike price
		of $0.57,
		- In September 2007, Genoil announced the completion of the heavy oil testing for Hebei Zhongjie
		refinery.
		- The Genoil Crystal Sea bilge cleaner received final US Coast Guard certification for marine oil
		pollution prevention equipment.
		- By the end of September, the Canadian patent application for the GHU upgrading technology was
		approved by the Canadian Intellectual Property Office.
		- In October 2007, Genoil and the holders of the convertible notes and warrants that had been extended in
		April, agreed to another extension of six months to April 6, 2008, and on the same terms.
		- In October 2007, Genoil announced it signed a binding Memorandum of Understanding with Stone &
		Webster International, subsidiary of The Shaw Group, for marketing and technical assistance for further
		development of the GHU technology and future projects.
		- In November 2007, Genoil agreed to convert long term convertible notes held by a major investor into
		2,785,681 convertible preference shares. Each preferred share will be convertible into four common
		shares of Genoil at $1.76.

		- In November 2007, Genoil started working on two gas metering plant projects together with
		Aquamation Inc., a Houston-based process equipment company. Under a Joint Operating Agreement
		Genoil will supply Aquamation with Engineering Services on an hourly billing rate plus expenses.

2008		- In August 2008, Genoil signed a Memorandum of Understanding OCM Tasimacilik Lojistik Madencilik
		Ticaret Ve Sanayi A.S. (‘OCM’0, one of the largest conglomerates in Turkey, to jointly develop oil water
		separation projects. This MOU establishes that OCM will assist Genoil in marketing efforts in different
		countries where they have exposure, such as Russia, the former Soviet Republics, the Middle East and
		Africa.
		- Short term notes (and attached warrants) from entities affiliated with the Corporation’s Chairman and
		Chief Executive Officer, expired on October 6, 2008 and were replaced with new notes and warrants that
		mature in October 2009. The new notes have a face value of $1,227,356, a term of one year, carry
		interest at 12% and are convertible into common shares at $0.27. The notes have 1,136,442 warrants
		attached that have an exercise price of $0.41 and a term of one year.
		- In order to reduce it’s cash burn rate, the company has reduced its headcount, resulting in a significant
		reduction in human resource costs.
		- On March 3, 2008, the Company raised C$247,075 in a private placement. The Company issued
		378,787 shares at US$0.66 and 94,696 warrants with an exercise price of US$0.99 and a term of 5 years.
		- At the beginning of May 2008, Genoil announced a new bridge financing from the company’s CEO.
		The previous $1 million credit facility was replaced by a one year, $5 million facility that bears interest at
		12% and has 1,200,000 warrants attached; the warrants have an exercise price of $0.37 and a term of one
		year. Under the terms of this agreement the CEO agreed to lend to the Company up to an aggregate of
		$5 million, provided that the amounts have been pre-approved by the CEO. Any amounts repaid shall
		not be subject ot being redrawn and shall reduce the aggregate commitment. Upon the repayment of all
		advances at any time, this facility shall terminate immediately.
		- During July the company, through a private placement, raised US$2,565,682 by issuing 11,155,132
		common shares at US$0.23 with 2,788,777 warrants at $0.29 and a term of two years attached. Of this
		US$1,036,410 was used to repay the balance outstanding under the funding agreement from the CEO.
		- On January 15, 2009, Genoil announced it signed an exclusive five year licensing agreement with
		DongHwa Entec Co., Ltd. located in Busan, South Korea – the leading manufacturers of heat exchangers
		and related multi-stage water generators for a number of industries, including marine. DongHwa will
		license Genoil’s Bilge Water Separation technology for all ships, industrial fields and offshore rigs
		manufactured or retrofitted in Korea, China and Japan, and additionally, DongHwa will also manufacture
		the Genoil Bilge Water Separator units for sale by Genoil.
		- The Company also signed a joint venture agreement with The Clarendon Group to co-operate
		internationally in the promotion, marketing, sales, service provision and logistics of Genoil’s Crystal
		Oily Water Separators. The Clarendon Group, based in London, England, provides international
		financial expertise having extensive knowledge and experience in new technologies and key contacts in
		ports and ports servicing companies internationally. Clarendon Group has made significant contacts in
		Malaysia, Indonesia, Turkey, United States, Bahamas and China, and has an extended sales pipeline in
		the United Kingdom and other parts of Europe.

2009		- On March 2, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tianjin Port, one of
		China’s major shipping harbours.
		- The MOU with Tianjin Port is for the introduction and implementation of Genoil’s oil-water separation
		system to treat and clean bilge water of oil, contaminants, chemicals and pathogens. This is the second
		Chinese port to sign an agreement with Genoil to use its oil-water separation technology. Tianjin Port is
		located 170 km southeast of Beijing and east of Tianjin City – China’s third largest city. During 2007,
		Tianjin Port was the fourth largest port in China and sixth largest in the world with over 300 million tons
		of annual throughput. Tianjin Port’s total container throughput reached 7.1 million twenty-foot
		equivalent units (“TEUs”) last year, making the Port one of the world’s top 20 container ports.
		- On March 10, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tangshan Port, in
		China, for the implementation of Genoil’s bilge water treatment system.
		- This is the third major Chinese port to sign an agreement with Genoil to test and implement the
		utilization of Genoil’s oily water separation technology to treat and clean bilge water. Stringent
		environmental regulations with increased penalties for untreated bilge water discharged overboard are in
		place to protect the oceans and coastal waters from illegal dumping of waste oil. Genoil’s Crystal oily

water separator meets the port’s goal to minimize the impact of contaminated bilge water on the aquatic

ecosystem and complies with existing environmental laws.

- On April 30, 2009, Genoil received an additional and new patent from the US Patent and Trademark

Office (USPTO) for its hydroconversion upgrader technology. The patent is a valuable addition its

Genoil upgrading process that economically upgrades and significantly increases the yields from high

sulphur, acidic, heavy crude, bitumen, and refinery residues.

- Genoil closed a private placement on May 6, 2009. The Corporation issued a total of 10,725,443 units,

at a price of US$0.13 per unit, each unit consisting of one common share and one common share

purchase warrant for total gross proceeds of US$1,394,308. These warrants are exercisable until two

years following their issue date at a price of US$0.20. The common shares and warrants issued in

connection with this private placement are subject to a four-month hold period pursuant to the rules of the

TSX Venture Exchange and Canadian securities legislation.

- On October 22, 2009, the Company announced that it had agreed to the extension of the term of an

aggregate $1,227,355.84 principal amount of convertible notes and an aggregate 1,136,442 common

share purchase warrants which were previously issued and are outstanding. The notes and warrants were

originally issued to a group of four investors in October, 2008 which included Lifschultz Enterprises Co.,

Sidney B. Lifschultz 1992 Family Trust, David K. Lifschultz and Bruce Abbott, having a conversion

price equal to C$0.27 in respect of the notes, and an exercise price of C$0.41 in respect of the warrants.

The notes and warrants had an original term expiring on October 6, 2009, which term was amended and

extended to October 6, 2010. The notes and warrants remain substantially unamended in all other

respects.

- The Company also closed a shares-for-debt transaction on May 1, 2009 to satisfy amounts outstanding

to certain creditors. A total of US$ 212,191.74 debt has been cancelled in exchange for an aggregate of

1,367,319 common shares and 564,302 warrants of the Company. Genoil granted certain of the creditors

warrants which are exercisable at any time prior to 2 years after the date of issuance at a price of US

$0.21, and granted other creditors warrants which are exercisable at any time prior to 2 years after the

date of issuance at a price of US $0.20.

- In October 2009, the Company raised US$181,985 through a private placement, issuing 1,399,884

common shares at US$0.13 and 1,399,884 warrants with an exercise price of US$0.20 per common share

and have a 2 year term. Proceeds of C$91,078 were allocated to share capital and C$99,278 was

attributed to warrants and credited to contributed surplus. The value attributed to the warrants was

calculated using the Black-Scholes model with expected volatility of 120%, risk free rate of 1.3% and

dividend yield nil over their expected life of 2 years.

- The Company also did a shares-for-debt transactions issuing a total of 2,265,192 common shares at

C$0.13. There were no warrants issued with the shares-for-debt transaction.

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 has been primarily involved in the development and commercial applications of its proprietary heavy oil upgrading technology – the Genoil Hydroconversion Upgrader (GHU®).

The GHU® converts sour (high sulphur), heavy hydrocarbon feed stocks into lighter oil with higher quality distillates for conventional refining. The GHU® process uses a hydrogen enrichment methodology based on catalytic hydrogenation and flash separation.

The GHU®’s unique intellectual property is in its hydroconversion design and mixing devices. A GHU® provides greater mass/heat transfer between hydrogen, crude and catalyst. As a result, hydroconversion can be achieved at mild operating conditions.

Sour, acidic, heavy crude and residual by-products are converted into lighter distillates, increasing the API (or lowering the density), while maximizing denitrogenation, desulphurisation and demetalisation to meet new regulatory requirements. The upgraded crude product will have higher yields of naphtha, distillates and vacuum gas oil with reduced levels of contaminants such as sulphur, nitrogen and metals. Genoil’s process is designed specifically to eliminate most of the sulphur from the feed stocks.

The Genoil GHU Upgrader has been designed to remove 99.5% of the sulphur, as shown in its latest tests, while lightening the oil at the same time, significantly raising its API gravity. In a January 12, 2009 press release, the cost model, based on data from December 8, 2008, during the height of the market crash, showed a margin of profit of over $15.00 per bbl with a 30% IRR. $15.00 was the low point in relation to the historical margins during the period that oil was over $100.00 per barrel WTI. International regulations will soon require bunker fuel to be upgraded and desulphurized due to serious environmental concerns.

The Genoil Upgrading Process yields zero waste and consumes no external energy or hydrogen, deriving its hydrogen and energy from its own residue. The cost structure is therefore much lower than standard upgrading processes in hydrogenation and does not give off a waste byproduct such as coking of 30%.

Upgrading heavy oil is essentially a very undeveloped industry in relation to the 900 billion barrels of world heavy oil reserves. Most of the oil presently coming out of the ground is light, in the vicinity of 76 million barrels a day, or 27.5 billion barrels a year. It is readily seen that even if you allow for new oil discoveries and further advances of recovery through technological enhancements in field recovery, the time limit for this light oil reserve will last no more than twenty or thirty years. As light oil productive capability declines, a world pricing crisis may occur. Genoil’s pilot plant in Alberta has progressed through the development stage and the costs of commercialization have been expensed.

Oil/Water Separation

The Genoil Water Treatment Department has recently increased its significance in the business model of the Company. Initially developed for the bilge area of a ship, the Crystal Separator is suitable for a wide range of applications, including off-shore oil platforms, wastewater treatment plants, refineries, gasoline service stations and ports. Genoil’s Crystal Sea oil and water separator is a compact unit that is able to handle small volumes from 2 GPM to 20 GPM using a compartmental process. The Company is in the process of developing scaled up units that can handle larger volumes.

Genoil has successfully completed testing on its improved Crystal Sea bilge water separator at Testing Service, Inc., in Salt Lake City, Utah. The Crystal Sea units are state-of-the-art bilge separators that have been certified by the US Coast Guard in accordance with the International Maritime Organization Resolution MEPC 107 (49) in 2007. IMO regulations require bilge water separators to have an effluent discharge of less than 15 ppm impurities for territorial water and less than 5 ppm for discharge into inland waters. Subsequently, our bilge oily water separators have been certified by the American Bureau of Shipping (ABS).

New built ships are required to have bilge water cleaning systems that meet the higher international pollution standards. Also, all ships built prior to 2007 had to meet those standards by the close of 2009. A ship’s bilge is the lowest compartment of a ship that collects water from different areas of the boat, such as the engine room. This water is heavily contaminated and often pumped out as boats enter ports. The oily water released into the water of harbours and bays significantly pollutes the environment. Genoil is focusing on this market’s growing need for bilge water separators to prevent large marine vessels from having to dump waste oil into the ocean. The Company is marketing the Crystal Sea globally, targeting shipyards, ship designers, ship owners, cruise lines, and navies.

Genoil also expects to address the global contamination of a port’s water and is looking into solutions to prevent shipping companies from contaminating the waterways close to ports and beaches in several countries.

In the view of management, the Crystal Sea has advantages over competing models including a smaller footprint, a simple operating system, no requirement for back washing or flushing with fresh water or sea water, therefore reduced maintenance, very little use of water and no moving parts, except for a pump. In addition to that, the oil removed using the Genoil bilge cleaner is dry enough and of a quality that it can be reused by other utilities onboard.

Genoil is partnering with a Canadian testing advisor to the cruise ship and ferry industries in order to set up testing agreements with various ship owners. Genoil has also partnered with international agents and a manufacturer to roll out the Crystal technology for ports in Asia, Middle East and other areas. As the oily water separator market is a mature market with several well-known and established companies who dominate sales, Genoil believes future testing agreements will help overcome the challenge.

Genoil has both a US and a Canadian patent for the Crystal technology, as well as a PCT application. There are at least 10 separators in operation in Romania, which were sold by the inventor, before Genoil acquired the rights to the technology.

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.

During 2008 and 2007 the Company generated revenues of $36,109 and 83,456 respectively, by providing engineering consulting services to Aquamation Ltd pursuant to a Joint Operating Agreement.

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 five fiscal years, by source:

	2009	2008	2007	2006	2005

Business development	433,786	691,101	828,349	1,172,098	1,739,788

Business development expenses consist largely of traveling expenses as officers traveled, mainly to China, USA and Middle Eastern countries, to negotiate contracts and present at conferences.

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 increasingly strict environmental regulations. 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 8 patent applications under review in Canada, the United States, Europe, Venezuela and Brazil 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), 2 Canadian patents (No. 2,243,142 and 2,306,069), 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

The Company does not expect to generate significant revenue or cash flow from its technologies or services for the 2010 year, and possibly beyond.

The Company expects revenue and cash flow to be generated in staged phases following the execution of definitive agreements for the implementation of the oily water separation technology for marine use or on-shore units for ports.

On a larger scale, Genoil also expects to generate revenues for the design, implementation and procurement of its GHU® systems and/or the licensing of its intellectual property.

The Corporation has accumulated losses of $68.0 million to date and is not realizing any cash flow as it has not to date attained commercial operations in connection with its various patents and technology rights.

Since inception, Genoil has principally been a technology development company. Since 2005, commercialization efforts have been underway for Genoil’s GHU®. Genoil is marketing its GHU® (and related engineering and design services) to refiners and producers of sour, heavy crude around the world. The Company believes that there is strong market potential for this technology. The commercialization of Genoil’s Crystal units is Genoil’s key short-term goal, while the GHU® represents the next phase in the Company’s long-term growth.

The Company continues to focus its efforts on securing commercial applications for its heavy oil upgrading and oil-water separation technologies and exploring new avenues in energy related industries.

At the present time intensive efforts are being made in the Middle East, Africa, the Caribbean, Canada, and Asia to market the GHU Upgrader and Crystal Sea Bilge Cleaning Units for ports. Agents that are not performing are being changed and new agents are being signed up to accelerate our efforts to roll out the technologies. At the present time David K. Lifschultz, the CEO, is spending most of his time marketing these technologies in the Middle East and Africa, and much progress is being made.

Genoil is aggressively marketing its GHU Upgrader technology to those countries and companies that have substantial heavy oil reserves as “peak oil” in light oil already has arrived in our estimation, and a move developing and upgrading heavy oil is around the corner. The potential of this industry is greater when you calculate an estimated 900 billion barrels of world heavy oil reserves based on margins of say $30.00 per barrel than the Internet era that was only in the imagination twenty years ago.

The market potential for the GHU is 900 billion barrels of world heavy oil reserves. Presently, only nine million barrels a day of this oil is coming out of the ground, or 3.5 billion barrels a year. Oil is a hydrocarbon and it is composed of both hydrogen, which is the light element, and carbon which is the heavy element. When heavy oil burns, the process gives off excessive smoke due to the high percentage of the carbon element, which is environmentally unfriendly. Heavy oil is presently being burned for the most part without upgrading, as bunker fuel by ships on the seas and in certain countries that have not adopted stringent environmental standards. In addition, most of these heavy oil reserves contain sulphur which characterizes the oil as “sour”, as that is how it “taste-tested” in ancient times.

Genoil is making presentations at the highest levels for both the Crystal units and GHU Upgraders to countries and companies in Asia, North and South America, Turkey, the Middle East, and Africa among others, so that it will be in a position to benefit during the transition to heavy oil, which it regards as occurring in the very near future. Planning has to be done well in advance to effectuate this change and that should start nearly immediately.

Also, there is greater urgency to do this as many of the light oil reserves are in precarious regions of the world which puts the world economy at risk, and we suggest the reader review the Energy Risk Conference Keynote Address by David K. Lifschultz, the CEO of Genoil, that can be found under technology at the genoil.ca website.

Genoil is pleased to announce that the USPTO has allowed a patent for the reactor of its sand decontamination process. The sand decontamination system has also been patented recently and the two patents form a valuable addition to the intellectual property of Genoil. The reactor plays a key role in the sand decontamination process and its features are designed to effectively remove oil from sand, separate oil from sand and water and recover the oil in the reactor for reuse. An innovative method is utilized for extracting oil from sand and removing the oil from the path of the sand.

Also novel is the formation of a blanket of sand of controlled thickness at the bottom of the reactor in order to minimize the carryover of contaminants between adjacent reactors There is a significant reduction of the amount of water that is being transferred upstream by way of an entirely innovative approach in conveying sand from one reactor to the adjacent one. The reactor is designed to effectively operate at relatively low temperatures resulting in important savings in energy. The reactor also operates in conjunction with means for reducing oil and dissolved contaminants to very low levels in order to meet the most stringent environmental standards. Based on Genoil’s previous experience with the sand washing system of Bear Trap, Alberta, the newly patented reactor and the original approach in sand decontamination should place the technology at the forefront of current efforts to clean and protect the environment.

This patent and process can commercially clean sand on beaches from oil spills and major presentations of this technology at very high levels are now being presented. Some of the contamination for these spills span hundreds of miles of beaches presenting huge opportunities for Genoil.

C. Organizational structure.

Genoil has a total of 10 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 50.1% 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 five employees and one consultant based at its office in Edmonton, Alberta. During 2009, the Corporation leased 8,300 square feet and paid $ 14,988.42 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 2009, Genoil Calgary paid $2,000 per month in rent. Genoil uses its Calgary office for corporate administration and marketing.

Genoil had two employees based at its facilities located in Two Hills, Alberta, at December 31, 2009. It uses its Two Hills facilities for research and development and for client demonstrations.

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.

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 of this document. 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 23 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, 2009 in comparison with those for the fiscal year ended December 31, 2008. This discussion should be read in conjunction with the Consolidated Financial Statements of the Company, attached hereto (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, 2009, 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, 2009

Significant items

	2009	2008	2007

Revenue	$ -	$ 36,109	$ 83,456
Interest received	$ 758	$ 5,231	$ 24,877

General & Administration costs
Human resources	$ 1,063,179	$ 1,751,667	$ 2,447,727
Business development	433,786	691,101	828,349
Professional fees	312,181	439,843	621,600
Rent	302,763	301,535	307,322
Shareholder services	99,762	185,210	132,262

Research & Development costs
Development costs	$ 28,370	$ 417,102	$ 468,366

Other items
Impairment of long term assets	$ -	$ 39,945	$ 253,351
Accounts payable written off	-	-	(86,916)
Repurchase of royalty agreement	-	-
Stock-based compensation	1,954,930	2,861,867	4,669,555

Net loss	$ (5,152,996)	$ (7,767,173)	$ (11,342,560)

Total administration expenses decreased by 34.6% in 2009. The significant subcategories thereof are shown above.

In order to reduce it’s cash burn rate, the company has reduced its headcount, resulting in a significant reduction in human resource costs. Severance payments mitigated the decrease. In 2006 directors were remunerated with stock options, which were classified as stock-based compensation while their fees in 2007 were classified under human resources and settled with shares for debt agreements.

Business development consists mainly of travel expenses to China and the Middle East. Costs decreased due to a decrease in attendance at conferences and the related printing of marketing material.

Professional fees are positively correlated with the level of activity and a corporate undertaking to limit the use of third party experts. During 2007, the newly appointed full time consultants also received options, resulting in an increase in stock-based compensation.

Development expenses in 2007 increased due to the cost of testing oil for Hebei Zhongjie Petro-Chemical Group in China..

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

Acquisitions

Genoil did not make any significant acquisitions in 2009.

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 2008 using working capital and, to the extent required or desirable, through funds raised in the capital markets and short term loans.

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 on substantially similar terms to the October 2005 private placement. The Corporation received $750,000 and issued a convertible debenture, accruing interest at a rate of 12% per annum and 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 $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. Genoil also received $1,862,483 from the exercise of options and warrants during 2006.

In October 2006, Genoil completed a non-brokered private placement, through which it received $968,825.19, issued a convertible debenture carrying a 12% annual interest rate and 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. The term of the notes and attached warrants were extended by six months in April and October 2007 under the same terms and conditions. In April 2008 it was extended by another six months to October 2008, while the conversion price was changed to $0.49 and the exercise price of the warrants to $0.64. These agreements are with entities affiliated to the Company’s Chairman and CEO.

In May 2007, Genoil entered into shares-for-debt agreements with several of Genoil’s outside directors, who agreed to forgive a total of $223,000 in unpaid director’s fees in exchange for 660,740 common shares of the Corporation. The shares were issued at a 25% discount to market price, the cost of which was also recorded as director’s fees. In June the Company also entered into a shares-for-debt agreement with Emil Pena, issuing 107,825 shares for US$63,617 of consulting fees.

Genoil announced at the end of May it was entering into a $1,000,000 funding agreement with the Chairman and CEO of the Corporation. In lieu of interest on this line of credit, he received 600,000 common shares purchase warrants. Each warrant is exercisable for one common share of the Corporation at a price of $0.61 per share at any time within one year from its date of issue. During the third quarter 2007, a short term advance was repaid in the amount of $388,672. At year end the amount owed under this agreement was $98,527

In June 2007, the company raised funds through a private placement receiving $2,839,731 and issuing 5,130,382 units. Each unit consisted of one share and 0.25 common share purchase warrant attached to each common share. The warrants are exercisable until three years following their issue date at a price of US$0.78

In November 2007, Genoil entered into a cancellation of debt agreement with a major investor whereby the long term convertible notes issued in December 2004 were converted into preferred shares with essentially the same terms and conditions. The convertible notes with a value of $ 4,902,800 were cancelled with the issuance of 2,785,681 Class A preferred shares in the capital of the Corporation. Each preferred share may be convertible into four common shares of Genoil, being redeemable at any time at a price of $1.76 per preferred share.

The Company also received $778,000 from the exercise of options during 2007. During the year ended December 31, 2007, Genoil's operations used $4.6 million 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.

On March 3, 2008, the Company raised C$247,075 in a private placement. The Company issued 378,787 shares at US$0.66 and 94,696 warrants with an exercise price of US$0.99 and a term of five years

At the beginning of May 2008, Genoil announced a new bridge financing from the company’s CEO. The previous $1 million credit facility was replaced by a one year, $5 million facility that bears no interest and has 1,200,000 warrants attached; the warrants have an exercise price of $0.37 and a term of one year. Under the terms of this agreement, CEO agreed to lend to the Company up to an aggregate of $5 million, provided that the amounts have been pre-approved by the CEO. Any amounts repaid shall not be subject to being redrawn and shall reduce the aggregate commitment. Upon the repayment of all advances at any time, this facility shall terminate immediately. Any amounts not repaid on May 12, 2009 will accrue interest at 12%.

During July the Company, through a private placement, raised US$2,565,682 by issuing 11,155,132 common shares at US$0.23 with 2,788,777 warrants at $0.29 and a term of two years attached. Of this US$1,036,410 was used to repay the balance outstanding under the funding agreement from the CEO.

At the beginning of May 2008, Genoil announced a new bridge financing from the Company’s CEO. The previous $1 million credit facility was replaced by a one year, $5 million facility that bears no interest and has 1,200,000 warrants attached; the warrants have an exercise price of $0.37 and a term of one year. Under the terms of this agreement, the CEO agreed to lend to the Company up to an aggregate of $5 million, provided that the amounts have been pre-approved by the CEO. Any amounts repaid shall not be subject to being redrawn and shall reduce the aggregate commitment. Upon the repayment of all advances at any time, this facility shall terminate immediately. Any amounts not repaid on May 12, 2009 will accrue interest at 12%.

The Company also closed a shares-for-debt transaction on May 1, 2009 to satisfy amounts outstanding to certain creditors. A total of US$ 212,191.74 debt has been cancelled in exchange for an aggregate of 1,367,319 common shares and 564,302 warrants of the Company. Genoil granted certain of the creditors warrants which are exercisable at any time prior to 2 years after the date of issuance at a price of US $0.21, and granted other creditors warrants which are exercisable at any time prior to 2 years after the date of issuance at a price of US $0.20.

Genoil closed a private placement on May 6, 2009. The Corporation issued a total of 10,725,443 units, at a price of US$0.13 per unit, each unit consisting of one common share and one common share purchase warrant for total gross proceeds of US$1,394,308. These warrants are exercisable until two years following their issue date at a price of US$0.20. The common shares and warrants issued in connection with this private placement are subject to a four-month hold period pursuant to the rules of the TSX Venture Exchange and Canadian securities legislation.

In October 2009, the Company raised US$181,985 through a private placement, issuing 1,399,884 common shares at US$0.13 and 1,399,884 warrants with an exercise price of US$0.20 per common share and have a 2 year term. Proceeds of C$91,078 were allocated to share capital and C$99,278 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 120%, risk free rate of 1.3% and dividend yield nil over their expected life of 2 years.

The Company also did a shares-for-debt transactions issuing a total of 2,265,192 common shares at C$0.13. There were no warrants issued with the shares-for-debt transaction.

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 2008 the Company spent $23,000 on the maintenance of its pilot plant.

	2009	2008	2007


Pilot Heavy Oil Upgrader – Patent	-	-	-
Catalyst Development license	-	-	-

	-	-	-

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	385,988	236,651	149,337
Convertible notes	1,723,219	1,416,794		306,425

	2,109,207	1,653,445	149,337	306,425	-

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

Controlled by Director

Name and Office

Principal Occupation For

Date of

and Percentage of

Held

Past Five Years

Birth

Appointment

Total (*)

David K. Lifschultz*

Chief Executive Officer of Genoil

23-Nov-45

25-Feb-02

82,645,632

Inc. from 2002 to present.

29%

Chairman and CEO

Chairman of the board of directors

of Genoil Inc. from 2002 to

present.

Larchmont, New

President and Chief Executive

York

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.

David Johnson

Attorney and Trade-mark Agent,

01-Nov-69

26-Feb-08

Nil

Montreal, Quebec

Director and Secretary-Treasurer

Canada

of the International Law

Director

Association, Canadian Branch

Thomas Bugg

President and Director since June

30-Sep-50

06-Jun-08

Nil

Calgary, Alberta

6, 2008

Canada

Director

Alan Heller

Mr. Heller is President and

13-May-40

09-Mar-10

1,538,461

New York, NY

Founder of Heller Inc. since 1971,

0.5%

USA

international

furniture

Director

manufacturer in the United States

and Europe. He is also a

successful real estate investor with

properties throughout the New

York area

				Number of Securities
				Controlled by
Name and	Principal Occupation For	Date of		Director and
Office Held	Past Five Years	Birth	Appointment	Percentage of Total

Brian Korney,	Chief Financial Officer of	02-Dec-50	1-May-09	N/A
Chief Financial	Genoil Inc. from May 1, 2009
Officer, Calgary,
Alberta

Peter Chung, VP	Vice President Engineering	20-Mar-51	1-Sep-06	N/A
Engineering,	since September 2006
Edmonton, Alberta

(*) The “Numbers of Securities Controlled” are comprised by common shares as of the most recent date, and options, warrants and convertible notes exercisable/convertible within 60 days from December 31, 2009. More information on insider holdings is available on SEDI www.sedi.ca .

B. Compensation.


Name and Office Held	Compensation paid	Options granted	Exercise price	Expiration date
David Lifschultz	-	1,000,000	0.15	31/05/2014
Chairman & CEO		2,700,000	0.215	27/01/2014
		2,700,000	0.14	20/10/2014

Thomas Bugg		1,500,000	0.155	05/05/2014
Director	-	1,625,000	0.14	20/10/2014

David Johnson
Director	-	250,000	0.15	13/05/2014

Brian Korney	$ 49,000	1,000,000	0.155	05/05/2014
CFO		75,000	0.14	20/10/2014

Hendrik Lombard,
Former CFO	$ 49,600

Peter Chung, VP
Engineering	$ 87,315



C. Board practices.

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

Composition of the Board of Directors

As of December 31, 2009, Genoil's Board of Directors consisted of Messrs. David Lifschultz, John O’Donnell, Tom Bugg and David Johnson. Of the Board, Messrs. Johnson and O’Donnell are "independent". Mr. David Lifschultz is not independent as he is the Chairman and Chief Executive Officer of the Corporation. Tom Bugg is not considered to be independent as he is the President. David Johnson was appointed to the board as well as its audit committee on February 26, 2008.

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 three directors. The mandate and activities of each committee are as follows:

Audit Committee . The Audit Committee consisted of, John O’Donnell, David Johnson 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 Tom Bugg and David Johnson. 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, 2009, there were a total of 15 employees and consultants working for Genoil. Of these, 3 are senior management, 3 are middle management, 1 is an advisor to the Board, 1 is employed in an administrative capacity, 4 are engineers, 2 are technologists and operators. The Corporation currently has 3 employees and consultant in the Calgary, Alberta, office, 8 employees and consultants in the Edmonton office, 2 operators at its Two Hills, Alberta, facility, 1 employee in Romania and the rest works from the USA. Genoil has no labour unions and no temporary staff.

As at December 31, 2008, there were a total of 15 employees working for Genoil and as at December 31, 2007, Genoil employed a total of 25 employees.

E. Share ownership.

There were 276,673,669 Common Shares issued and outstanding as of December 31, 2009 (2008 –262,283,150). 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 2006.

Item 7. Major Shareholders and Related Party Transactions

A. Major shareholders.

The following table sets forth information as of May 27, 2010, 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, 2009, 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 283,998,333 Common Shares issued and outstanding.

			Percentage of Share
		Number of Shares	Stock Beneficially
Class of Share	Identity of Person or Group	Beneficially Owned	Owned


Common Shares	David K. Lifschultz	82,645,632	29.1%
	Cipher06LLP	16,299,200	5.7%

David Lifschultz has acquired his shareholdings incrementally during the past five 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. His beneficial holdings include 10,110,410 Common Shares over which he exercises control as a trustee and through corporations that he controls, 23,100,000 stock options, 2,268,046 warrants and 627,350 shares convertible from notes that he currently holds. Mr. Lifschultz is a resident in New York.

In February 2009, Cipher06LLC of New York, filed a Statement of Beneficial Ownership – Schedule 13G with the SEC stating that it held 16,299,200 Common Shares of Genoil, which at that time, constituted 6.1% of the issued and outstanding Common Shares.

As of the date of this form and to the knowledge of our directors and officers, there is no other person or entity who beneficially owns, directly or indirectly, over more than 5% of the issued and outstanding Common Shares.

Additionally, as at May 27, 2010, CDS & Co. was the registered owner of 130,914,199 Common Shares, which represents approximately 46% of the issued and outstanding Common Shares and CEDE & Co. was the registered owner of 68,735,329 Common Shares, representing 24% 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.

On May 12, 2008, the CEO and Chairman of the Company signed a one year $5 million funding agreement. Prior to expiry of the agreement on May 12, 2009, $56,131(2008 - $254,051) of funds were drawn for a total of $310,182 received. The entire amount of $310,182 was repaid before the expiration date through the private placement that was concluded on May 1, 2009.

Additional funds were advanced to the Company in 2009 from officers and companies controlled by officers totaling $172,124. These loans are non-interest bearing with no set terms of repayment.

Included in administrative expenses for the year are consulting fees of $136,915 (2008 - $384,942, 2007 -$538,050) paid to companies controlled by officers of the Company.

These transactions occurred in the normal course of operations and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties

The Company’s operations continue to consume cash. As it has in the past, the Company will rely on its CEO to infuse further funding to support its working capital requirements for the foreseeable future.

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 monthly high and low 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, 2005	$0.44	$0.24	$0.25	$0.24
Fiscal year ended December 31, 2006	$1.87	$0.24	$1.62	$0.20
Fiscal year ended December 31, 2007	$0.75	$0.40	$0.77	$0.36
Fiscal year ended December 31, 2008	$0.88	$0.10	$0.88	$0.08
Fiscal year ended December 31, 2009	$0.31	$.10	$0.29	$0.10


Quarter	High	Low	High	Low


Fiscal year ended December 31, 2008
First Quarter	$0.88	$0.48	$0.88	$0.47
Second Quarter	$0.54	$0.15	$0.53	$0.15
Third Quarter	$0.42	$0.15	$0.43	$0.15
Fourth Quarter	$0.28	$0.10	$0.25	$0.08

Fiscal year ended December 31, 2009
First Quarter	$0.26	$0.17	$0.24	$0.13
Second Quarter	$0.20	$0.12	$0.17	$0.11
Third Quarter	$0.31	$0.11	$0.29	$0.10
Fourth Quarter	$0.20	$0.10	$0.19	$0.10



Most Recent Six Months	High	Low	High	Low


October 2009	$0.20	$0.12	$0.19	$0.12
November 2009	$0.14	$0.11	$0.14	$0.10
December 2009	$0.14	$0.10	$0.13	$0.10
January 2010	$0.19	$0.12	$0.19	$0.12
February 2010	$0.19	$0.15	$0.18	$0.14
March 2010	$0.18	$0.13	$0.18	$0.13

B. Plan of distribution.

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

C. Markets.

The issued and outstanding Common Shares 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 proxy holders 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. 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.

2. In May 2007, Genoil entered into a funding agreement with the Chairman and CEO of the Corporation, who received 600,000 common share purchase warrants in lieu of interest on a line of credit of $ 1,000,000 made available to the Company. Each warrant is exercisable for one common share of the Corporation at a price of $0.58 per share at any time within one year from its date of issue.

3. In July 2007, the company finalized a private placement receiving $ 2.8 million and issuing 5,130,382 common shares. Additionally, 0.25 common share purchase warrants are being issued for each common share, which are exercisable until three years following their issue date at a price of $ 1.06.

4. In October 2007, the maturity date of convertible notes with a face value of $760,785 and the expiry date of 253,595 attached warrants were again extended by six months, without changing any of the other conditions of the agreements. The first such extension happened in April 2007. In April 2008, the notes and warrants were again extended by six months, this time also lowering the conversion price to $0.49 and the exercise price to $0.64.

5. In October 2007, Genoil announced it signed a binding Memorandum of Understanding with Stone & Webster International, subsidiary of The Shaw Group, for marketing and technical assistance for further development of the GHU technology and future projects.

6. In November 2007, Genoil agreed to convert a long term convertible notes and warrants held by a major investor into 2,785,681 convertible preference shares. Each preferred share will be convertible into four common shares of Genoil at $1.76.

7. In November 2007, Genoil and Aquamation, Inc. signed a Joint Operating Agreement to jointly collaborate in industrial water treatment projects and process plants for the oil and gas, and petrochemical industries. Both companies started work on two gas metering projects in Nigeria.

8. On January 15, 2009, Genoil announced it signed an exclusive five year licensing agreement with DongHwa Entec Co., Ltd. located in Busan, South Korea – the leading manufacturers of heat exchangers and related multi-stage water generators for a number of industries, including marine. DongHwa will license Genoil’s Bilge Water Separation technology for all ship, industrial fields and offshore rigs manufactured or retrofitted in Korea, China and Japan, and additionally, DongHwa will also manufacture the Genoil Bilge Water Separator units for sale by Genoil.

9. In February 2009, the Company signed a joint venture agreement with the Clarendon Group to cooperate internationally in the promotion, marketing, sales, service provision and logistics of Genoil’s Crystal Oily Water Separators. The Clarendon Group, based in London, England, provides international financial expertise having extensive knowledge and experience in new technologies and key contacts in ports and port servicing companies internationally. Clarendon Group has made significant contacts in Malaysia, Indonesia, Turkey, United States, Bahamas and China, and has an extended sales pipeline in the United Kingdom and other parts of Europe.

10. On March 2, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tianjin Port, one of China’s major shipping harbours.

The MOU with Tianjin Port is for the introduction and implementation of Genoil’s oil-water separation system to treat and clean bilge water of oil, contaminants, chemicals and pathogens. This is the second Chinese port to sign an agreement with Genoil to use its oil-water separation technology. Tianjin Port is located 170 km southeast of Beijing and east of Tianjin City – China’s third largest city. During 2007, Tianjin Port was the fourth largest port in China and sixth largest in the world with over 300 million tons of annual throughput. Tianjin Port’s total container throughput reached 7.1 million twenty-foot equivalent units (“TEUs”) last year, making the Port one of the world’s top 20 container ports.

11. On March 10, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tangshan Port, in China, for the implementation of Genoil’s bilge water treatment system.

This is the third major Chinese port to sign an agreement with Genoil to test and implement the utilization of Genoil’s oily water separation technology to treat and clean bilge water. Stringent environmental regulations with increased penalties for untreated bilge water discharged overboard are in place to protect the oceans and coastal waters from illegal dumping of waste oil. Genoil’s Crystal oily water separator meets the port’s goal to minimize the impact of contaminated bilge water on the aquatic ecosystem and complies with existing environmental laws.

12. On April 30, 2009, Genoil received an additional and new patent from the US Patent and Trademark Office (USPTO) for its hydroconversion upgrader technology. The patent is a valuable addition its Genoil upgrading process that economically upgrades and significantly increases the yields from high sulphur, acidic, heavy crude, bitumen, and refinery residues.

13. Genoil closed a private placement on May 6, 2009. The Corporation issued a total of 10,725,443 units, at a price of US$0.13 per unit, each unit consisting of one common share and one common share purchase warrant for total gross proceeds of US$1,394,308. These warrants are exercisable until two years following their issue date at a price of US$0.20. The common shares and warrants issued in connection with this

private placement are subject to a four-month hold period pursuant to the rules of the TSX Venture Exchange and Canadian securities legislation.

14. On October 22, 2009, the Company announced that it had agreed to the extension of the term of an aggregate $1,227,355.84 principal amount of convertible notes and an aggregate 1,136,442 common share purchase warrants which were previously issued and are outstanding. The notes and warrants were originally issued to a group of four investors in October, 2008 which included Lifschultz Enterprises Co., Sidney B. Lifschultz 1992 Family Trust, David K. Lifschultz and Bruce Abbott, having a conversion price equal to C$0.27 in respect of the notes, and an exercise price of C$0.41 in respect of the warrants. The notes and warrants had an original term expiring on October 6, 2009, which term was amended and extended to October 6, 2010. The notes and warrants remain substantially unamended in all other respects.

15. The Company also closed a shares-for-debt transaction on May 1, 2009 to satisfy amounts outstanding to certain creditors. A total of US$ 212,191.74 debt has been cancelled in exchange for an aggregate of 1,367,319 common shares and 564,302 warrants of the Company. Genoil granted certain of the creditors warrants which are exercisable at any time prior to 2 years after the date of issuance at a price of US $0.21, and granted other creditors warrants which are exercisable at any time prior to 2 years after the date of issuance at a price of US $0.20.

16.In October 2009, the Company raised US$181,985 through a private placement, issuing 1,399,884 common shares at US$0.13 and 1,399,884 warrants with an exercise price of US$0.20 per common share and have a 2 year term. Proceeds of C$91,078 were allocated to share capital and C$99,278 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 120%, risk free rate of 1.3% and dividend yield nil over their expected life of 2 years.

17. The Company also did a shares-for-debt transactions issuing a total of 2,265,192 common shares at C$0.13. There were no warrants issued with the shares-for-debt transaction.

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, 2009 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in National 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)). The Company did not maintain effective segregation of duties over certain transactions leading to ineffective supervision and monitoring; and potential misappropriation of assets. This material weakness affects all significant accounts

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

Management is responsible for establishing and maintaining adequate internal controls over financial reporting of the Company. Internal controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consol financial statements for external purposes in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”), including a reconciliation to US Generally Accepted Accounting Principles (“US GAAP”).

The Company's internal controls 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, such that there is a reasonable possibility that material misstatements of the financial statements will 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 controls over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on this evaluation, management concluded that the Company's internal controls over financial reporting were not effective as of December 31, 2009 due to the following material weakness:

The Company's accounting staff does not have sufficient technical accounting knowledge relating to accounting for income taxes, complex financial instruments and US GAAP and relied on the assistance of its auditors in understanding the related accounting and disclosure requirements on these matters.
Management corrected any errors prior to the release of the Company's December 31, 2009 consolidated financial statements.

In future the company will engage an independent accounting firm to provide the required expertise on complex accounting matters.

There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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 amended end of December 2007 and copy was attached as Exhibit 11.1 to Form 20-F in the prior year.

Item C Audit Fees

BDO Dunwoody LLP served as the Corporation’s auditors from the 3 ^rd quarter of 2006 until August 2008. Meyers Norris Penny LLP served as the Corporations’s auditors from August 2008 onwards.. The following table summarizes the aggregate fees for professional audit services and other services rendered by BDO Dunwoody LLP and Meyers Norris Penny LLP in the past two years.

In Canadian dollars

	2009	2008


Audit Fees	$120,298	$170,400
Audit-Related Fees	8,571	-
Tax	-
All Other Fees	-	-


Total	$128,869	$170,400

Audit Fees

Audit fees include fees for professional services rendered in connection with the audit of Genoil's annual financial statements 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 .

Item F Change in registrant’s Certifying Accountant

At a meeting of the Genoil’s shareholders on August 14, 2008, Meyers Norris Penny LLP was appointed as auditor of Genoil; BDO Dunwoody LLP was not reappointed or proposed for reappointment in that role.

In connection with this change,

It was approved by Genoil’s board of directors

There were no reservations contained in the Former Auditor’s reports on any of Genoil’s financial statements for the period commencing at the start of the financial year ended December 31, 2006 to December 31, 2007 and

In the opinion of Genoil, no reportable event occurred prior to the change.

PART III

Item 17. Financial Statements

The Consolidated Financial Statements for years ended December 31, 2009 and 2008 attached as Exhibit 19(a).

Item 18. Financial Statements

The registrant has elected to provide financial statements pursuant to Item 17 that include, as Note 23, the differences between Canadian and US GAAP.

Item 19. Exhibits

(a)		The Consolidated Financial Statements for the year ended December 31, 2009.
(b)		Management Analysis & Discussion for the year ended December 31, 2009.
(c)		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
2.2**		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
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.
4.1*		Sample Marketing Agreement
4.2*****		Funding Agreement with David K Lifschultz
11.1*****		Amended Code of Conduct as adopted on December 15, 2007
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

14.1		Independent Auditor’s Consent of Meyers Norris Penny LLP

14.2		Independent Auditor’s Report &;Comments by Auditors for US Readers on Canada-
		United States Reporting Differences of BDO Dunwoody LLP

2.7		$1,227,355.84 Convertible Promissory Notes Dated October 6, 2009 with Lifschultz
		Enterprises Co., LLC, Sidney B. Lifschultz 1992 Family Trust, David K. Lifschultz
		and Bruce Abbott

* 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.

**** These exhibits were filed with Genoil’s 2006 Form 20-F.

*****These exhibits were filed with Genoil’s 2007 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 30, 2010_____________

GENOIL INC .

By: /s/ David K. Lifschultz


David K. Lifschultz
Chief Executive Officer

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 30, 2010

/s/ David K. Lifschultz

David K. Lifschultz

Chief Executive Officer

Exhibit 12.2

CERTIFICATION

I, Brian Korney, 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 30, 2010

/s/ Brian Korney

Brian Korney

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, 2009 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 30, 2010

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, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian Korney, 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 30, 2010

By: /s/ Brian Korney

Brian Korney,

Chief Financial Officer

Genoil Inc.

GENOIL INC.
Index to Consolidated Financial Statements
Year Ended December 31, 2009

		Page
AUDITORS' REPORTS		1
FINANCIAL STATEMENTS
Management's Responsibility for Financial Reporting		3
Consolidated Balance Sheets		4
Consolidated Statements of Loss, Comprehensive loss and Deficit		5
Consolidated Statements of Cash Flows		6
Notes to Consolidated Financial Statements		7 - 36

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OPINION ON THE CONOLIDATED FINANCIAL STATEMENTS

To the Shareholders of Genoil Inc.:

We have audited the consolidated balance sheet of Genoil Inc. as at December 31, 2009and 2008 and the consolidated statements of loss, comprehensive loss and deficit and cash flows for the years then ended. 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 Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an 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 consolidated financial statement presentation.

In our opinion, these financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2009 and 2008, and the results of its operations and its cash flows for the years then ended in accordance with Canadian generally accepted accounting principles.

The financial statements as at and for the year ended December 31, 2007 were audited by other auditors, who expressed an opinion without reservation on these statements in their report dated April 18, 2008.

Calgary, Alberta
	/signed/	MEYERS NORRIS PENNY LLP
April 20, 2010		Chartered Accountants

COMMENTS BY AUDITORS FOR US READERS ON CANADA – UNITED STATES REPORTING DIFFERENCES

The reporting standards of the Public Company Accounting Oversight Board (United States) for auditors require the addition of an explanatory paragraph (following the opinion paragraph) when the financial statements are affected by conditions and events that cast substantial doubt on the Company’s ability to continue as a going concern, such as those described in Note 1 to the

consolidated financial statements.

Although we conducted our audit in accordance with both

Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States), our report to the shareholders on the Consolidated Financial Statements dated April 20, 2010 is expressed in accordance with Canadian reporting standards which do not permit a reference to such conditions and events in the auditors’ report when these are adequately disclosed in the financial statements.

Calgary, Alberta
	/signed/	MEYERS NORRIS PENNY LLP
April 20, 2010		Chartered Accountants

Management's Responsibility for Financial Reporting

Management, in accordance with Canadian generally accepted accounting principles, has prepared the accompanying consolidated financial statements of Genoil Inc. Financial and operational information presented throughout this Annual Report is consistent with that shown in the consolidated financial statements.

Management is responsible for the integrity of the financial information. Internal control systems are designed and maintained to provide reasonable assurance that assets are safeguarded from loss or unauthorized use and to produce reliable accounting records for financial reporting purposes.

Meyers Norris Penny LLP, the Company's independent auditors, performed an audit of the financial statements in accordance with Canadian generally accepted auditing standards. This audit includes an examination, on a test basis, of evidence supporting the amounts and disclosures in the financial statements. As well, they assess the accounting principles used and significant estimates made by management, and they evaluate the overall financial statement presentation.

The Board of Directors is responsible for ensuring that management fulfills its responsibilities for financial reporting and internal control. The Board exercises this responsibility through the Audit Committee. The Audit Committee meets with management and the independent auditors to ensure that management’s responsibilities are properly discharged, to review the consolidated financial statements and recommend that the consolidated financial statements be presented to the Board of Directors for approval.

The Audit Committee also considers the independence of the external auditors and reviews their fees. The external auditors have access to the Audit Committee without the presence of management.

/signed/ D.K. Lifschultz		/signed/ B. Korney

Chairman and CEO		Chief Financial Officer

Calgary, AB

April 20, 2010

GENOIL INC.
Consolidated Balance Sheets
As at December 31, 2009 and 2008

(Expressed in Canadian Dollars)

	2009	2008


ASSETS
CURRENT
Cash and cash equivalents	$ 9,140	$ 446,891
Receivables	14,304	10,499
Prepaid expenses and deposits	275,479	211,489

	298,923	668,879
PROPERTY AND EQUIPMENT (Note 3)	1,917,939	2,172,001
INTANGIBLE ASSETS (Note 4)	1,883,560	2,092,844

	$ 4,100,422	$ 4,933,724


LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT
Accounts payable and accrued liabilities	$ 894,549	$ 972,320
Due to related parties (Note 5)	172,124	254,051
Convertible Notes - current portion (Note 6)	1,379,275	1,135,639
Due to Investors	168,289	121,800

	2,614,237	2,483,810
CONVERTIBLE NOTES (Note 6)	173,823	155,199

	2,788,060	2,639,009

SHAREHOLDERS' EQUITY
Share capital (Note 8)	52,207,086	51,077,866
Contributed surplus (Note 7)	17,147,498	14,106,075
Accumulated deficit	(68,042,222)	(62,889,226)

	1,312,362	2,294,715

	$ 4,100,422	$ 4,933,724

COMMITMENTS (Note 16)

CONTINGENCIES ( Note 17)

SUBSEQUENT EVENTS (Note 20)

GOING CONCERN (Note 1)

APPROVED BY THE BOARD

/signed/ D.K. Lifschultz__D.K. Lifschultz Director

/signed/ T. Bugg _______T Bugg Director

See Notes to Consolidated Financial Statements

GENOIL INC.
Consolidated Statements of Loss, Comprehensive loss and Deficit
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

	2009	2008	2007

REVENUES	$ -	$ 36,109	$ 83,456

EXPENSES
Administrative expenses	2,427,724	3,714,871	4,738,449
Stock-based compensation (Note 13)	1,954,930	2,861,867	4,669,555
Amortization	465,017	518,805	574,812
Accretion (Note 6)	157,804	55,903	327,475
Development expenses	28,370	417,102	468,366
Interest and financing costs	160,158	296,657	273,113
Foreign exchange (gain)/loss	(40,249)	(96,637)	56,238

Total expenses	5,153,754	7,768,568	11,108,008

LOSS FROM OPERATIONS	(5,153,754)	(7,732,459)	(11,024,552)
INTEREST INCOME	758	5,231	24,877

LOSS BEFORE OTHER EXPENSES	(5,152,996)	(7,727,228)	(10,999,675)
OTHER EXPENSES (Note 14)	-	39,945	342,885

LOSS & COMPREHENSIVE LOSS	(5,152,996)	(7,767,173)	(11,342,560)
DEFICIT - BEGINNING OF YEAR	(62,889,226)	(55,122,053)	(43,779,493)

DEFICIT - END OF YEAR	$ (68,042,222)	$ (62,889,226)	$ (55,122,053)

Loss per share - Basic & Diluted	$ (0.02)	$ (0.03)	$ (0.05)
Weighted avg. number common shares	270,751,159	297,381,757	228,067,695

See Notes to Consolidated Financial Statements

GENOIL INC.
Consolidated Statements of Cash Flows
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

	2009	2008	2007



OPERATING ACTIVITIES
Net loss	$ (5,152,996)	$ (7,767,173)	$ (11,342,560)
Items not affecting cash:
Amortization	465,017	518,805	574,812
Non-cash interest and financing costs	154,254	276,871	252,819
Accretion of convertible notes	157,804	55,903	327,475
Stock-based compensation	1,954,930	2,861,867	4,669,555
Other expenses	-	39,945	342,885


	(2,420,991)	(4,013,782)	(5,175,014)


Changes in non-cash working capital:
Receivables	(3,805)	73,387	(51,501)
Accounts payable and accrued liabilities	298,312	(426,751)	691,730
Prepaid expenses and deposits	(63,990)	(16,888)	(105,322)


	230,517	(370,252)	534,907


Cash flow used by operating activities	(2,190,474)	(4,384,034)	(4,640,107)


INVESTING ACTIVITIES
Purchase of office equipment	(1,669)	(14,098)	(39,107)
Purchase of upgrader equipment	-	-	(168,296)


Cash flow used by investing activities	(1,669)	(14,098)	(207,403)


FINANCING ACTIVITIES
Due to related parties	(81,927)	155,524	98,527
Due to Investors	46,489	121,800	-
Issuance of common shares	1,789,830	4,416,013	3,465,998


Cash flow from financing activities	1,754,392	4,693,337	3,564,525


INCREASE (DECREASE) IN CASH FLOW	(437,751)	295,205	(1,282,985)

Cash - beginning of year	446,891	151,686	1,434,671


CASH - END OF YEAR	$ 9,140	$ 446,891	$ 151,686


CASH FLOWS SUPPLEMENTARY INFORMATION
Interest paid	$ 5,904	$ 19,786	$ 20,294


Income taxes paid	$ -	$ -	$ -

Non-cash items not included in the statements of cash flows are detailed in note18.

See Notes to Consolidated Financial Statements

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

1.	NATURE OF BUSINESS AND ABILITY TO CONTINUE AS A GOING CONCERN

	Genoil Inc. (the “Company”) was incorporated under the Canada Business Corporations Act. The Company is a technology development company focused on providing innovative solutions to the oil and gas industry through the use of proprietary technologies. The Company’s business activities are primarily directed to the development and commercialisation of its upgrader technology, designed to convert heavy crude oil into light synthetic oil, and oil and water separation technology to treat and clean bilge water. The Company is listed on the TSX Venture Exchange under the symbol GNO as well as the Nasdaq OTC Bulletin Board using the symbol GNOLF.OB.

	These financial statements have been prepared in accordance with Canadian generally accepted accounting principles on a going concern basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future As at December 31, 2009, the Company has incurred a loss of $5,152,996 (2008 - $7,767,173; 2007 - $11,342,560) for the year and has accumulated losses of $68,042,222 (2008 - $62,889,226, 2007 - $55,122,053) since inception.

	The ability of the Company to continue as a going concern is in substantial doubt and is dependent on achieving profitable operations, commercialising its upgrader technology, and obtaining the necessary financing in order to develop this technology further. The outcome of these matters cannot be predicted at this time. The Company 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, to fund its research and development activities and to ensure the realization of its assets and discharge of its liabilities. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for future operations.

	The Company is not expected to be profitable during the ensuing twelve months and therefore must rely on securing additional funds from either issuance of debt or equity financing for cash consideration. During the year the Company secured net debt and equity financing of $2,083,987.

	The consolidated financial statements do not include any adjustments that might result from the outcome of these uncertainties.

2.	SIGNIFICANT ACCOUNTING POLICIES

	Basis of presentation

	These consolidated financial statements are prepared in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which differ in certain respects from those in the United States. These differences are described in note 23.

	These consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions and balances have been eliminated.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

2.	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Use of estimates

	The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the period. Significant estimates and assumptions include the ability to continue as a going concern, stock-based compensation, amortization and valuation of property and equipment, patents and technology rights and assumptions and estimates used in the fair values of multiple element arrangements. Actual results could differ from these estimates. These estimates are reviewed periodically and, as adjustments become necessary, they are reported in earnings in the periods in which they become known.

	Cash and cash equivalents

	Cash includes cash on hand and cash at banks. Cash equivalents include short term deposits held in money market funds with maturities, at inception, of less than three months and that are not subject to any risk of change in value.

	Property and equipment

Property and equipment are stated at cost less accumulated amortization. Renewals and betterments are capitalized. Repairs and maintenance costs are charged to operations as incurred. Property and equipment are amortized over their estimated useful lives at the following methods and annual rates:

Office equipment		5 years		straight-line method
Upgrader		10%		declining balance method

Patents and technology rights

Patents and technology rights are recorded at cost and are amortized at 10% on a declining-balance basis. Pending patent costs are not amortized until patents are registered.

Impairment of long-lived assets

The Company assesses the impairment of long-lived assets, which consist of upgraders, patents and technology rights and office equipment, whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of assets to be held and used is measured by comparison of the carrying value of the assets to future undiscounted net cash flows expected to be generated by the assets. An impairment loss is measured as the amount by which the carrying amount exceeds its fair value. Fair value is based on discounted cash flows.

Foreign currency translation

Accounts of foreign operations, which are considered financially and operationally integrated, have been translated into Canadian dollars using the temporal method. Under this method, monetary assets and liabilities have been translated at the year end exchange rate. Non-monetary assets have been translated at the rate of exchange prevailing at the date of transaction. Revenues and expenses have been translated at the average rates of exchange during the year, except for amortization, which has been translated at the historical rate applicable to the related assets. Foreign exchange gains and losses are recognized in earnings.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

2.	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Research and development costs

	Research costs are expensed in the period incurred. Development costs are expensed in the period unless the Company believes the development project meets Canadian generally accepted accounting criteria for deferral and amortization. In evaluating these criteria, the Company considers technological feasibility to be established only when a product demonstrates it operates under conditions which are acceptable to target customers. If management determines that the development of products to which such costs have been capitalized is not reasonably certain, or that costs exceed recoverable value, such costs are charged to operations.

	Stock-based compensation

	The Company has a stock option plan as described in note 9. The fair value method is used to determine the expense for options granted. Under this method, compensation cost is measured at the date of grant using the Black-Scholes model with assumptions described in note 13. The cost is expensed over the vesting period with a corresponding credit to Contributed Surplus. Consideration received on exercise of options plus the amount previously credited to contributed surplus is credited to share capital.

	Future income taxes

	The liability method of tax allocation is used in accounting for income taxes. Under this method, future tax assets and liabilities are determined based on differences between the carrying value and tax basis of assets and liabilities, and are measured using the substantively enacted tax rates and laws that will be in effect when the differences are expected to reverse. Future tax assets are recorded if realization is considered more likely than not. A valuation allowance is recorded for the amount not expected to be realized.

	Loss per share

	Basic loss per share amounts are calculated using the weighted average number of shares outstanding during the year. The Company uses the treasury stock method for calculating diluted earnings per share. For the year ended December 31, 2009, potentially dilutive common shares (relating to convertible notes, options and warrants outstanding) totaling 67,094,632 (2008 - 49,515,729; 2007 - 59,248,690) were not included in the computation of loss per share because the effect was anti-dilutive.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

2.	SIGNIFICANT ACCOUNTING POLICIES (continued)

	Financial instruments

	Financial instruments are measured at fair value on initial recognition of the instrument, except for certain related party transactions. Measurement in subsequent periods depends on whether the financial instrument has been classified as "held-for-trading", "available-for-sale", "held-to-maturity", "loans and receivables", or "other financial liabilities" as defined by the accounting standard.

	Financial assets and financial liabilities "held-for-trading" are measured at fair value with changes in those fair values recognized in net earnings.

	Financial assets "available-for-sale" are measured at fair value, with changes in those fair values recognized in Other Comprehensive Income (“OCI”).

	Financial assets "held-to-maturity", "loans and receivables" and "other financial liabilities" are measured at amortized cost using the effective interest method of amortization.

	Cash and cash equivalents are designated as "held-for-trading". Receivables are designated as "loans and receivables". Accounts payable, accrued liabilities, convertible notes, due to related parties and due to investors are designated as "other financial liabilities".

	The Company capitalizes transaction costs, premiums and discounts. These costs are capitalized within long-term debt and amortized using the effective interest method.

	Convertible instruments

	The equity and liability components of convertible instruments are presented separately in accordance with their substance. The liability component is accreted to the amount payable at maturity by way of a charge to earnings using the effective interest method. Warrants are recorded at fair value using the Black-Scholes model and classified as a component of shareholder's equity.

	Capital disclosures

	Capital disclosures provide information about (i) the company's objectives, policies and processes for managing capital, (ii) quantitative data about what the Company regards as capital, (iii) whether the Company has complied with any capital requirements, and (iv) if it has not complied, the consequences of such non compliance.

	Comprehensive Income

	Comprehensive income (loss) is the change in shareholders' equity during a period from transactions and other events and circumstances from non-owner sources and includes unrealized gains and losses on financial assets classified as held available-for-sale. The Company has reported a statement of comprehensive loss combined with a statement of loss. When related amounts are recorded in accordance with this new standard, a new category for accumulated other comprehensive income will be presented in the shareholders' equity section of the balance sheet.

	Adoption of new accounting standards

	In 2009, the Company adopted the following new standards and abstracts:

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

1. Section 2855, "Financial Instruments - Recognition and Measurement" has been amended to add guidance concerning the assessment of embedded derivatives upon reclassification of a financial asset out of the held-for-trading category. These amendments apply to reclassifications made on or after July 1, 2009. This Section has also been amended to change the categories into which a debt instrument is required or permitted to be classified; change the impairment model for held-to-maturity investments to the incurred credit loss model of impaired loans; and, require reversal of previously recognized impairment losses on available-for-sale financial assets in specified circumstances. Such amendments apply to annual financial statements relating to fiscal years beginning on or after November 1, 2008.

This amendment has no significant impact to the consolidated financial statements.

2. Section 3862, "Financial Instruments - Disclosure" has been amended to include additional disclosure requirements about fair value measurements of financial instruments and to enhance liquidity risk disclosure requirements. The amendments apply to annual financial statements relating to fiscal years ending after September 30, 2009. The consolidated financial statements contain disclosures related to the adoption of these amendments.

3. EIC 173 "Credit Risk and the Fair Value of Financial Assets and Financial Liabilities". This guidance clarified that an entity's own credit risk and the credit risk of the counterparty should be taken into account in determining the fair value of financial assets and financial liabilities, including derivative instruments. This guidance is applicable to fiscal years ending on or after January 20, 2009. This standard did not have a material impact on the consolidated financial statements.

4. Section 3064 "Goodwill and Intangible Assets" which replaces the previous goodwill and intangible asset standard and revises the requirement for recognition, measurement, presentation and disclosure of intangibles. This standard did not have a material impact on the consolidated financial statements

Future accounting changes

The Accounting Standards Board has confirmed the convergence of Canadian GAAP with IFRS. The Company will be required to adopt IFRS for the year beginning January 1, 2011. This Company is currently assessing the impact of the convergence of Canadian GAAP and IFRS on the Company's results of operations, financial position and disclosures.

Business combinations and non-controlling interests

In January 2009, the AcSB issued Section 1582 "Business Combinations", Section 1601 "Consolidations" and Section 1062 "Non-controlling Interests". Section 1582 replaces section 1581 "Business Combinations" and provides the Canadian equivalent to IFRS 3 "Business Combinations". Section 1602 replaces Section 1600 "Consolidated Financial Statements". Section 1602 provides the Canadian equivalent to International Accounting Standard ("IAS") 27 "Consolidated and Separate Financial Statements", for non-controlling interests. These standards are effective January 1, 2011. The adoption of these standards is not expected to have a material impact on the Company's financial statements.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (continued)

Equity

An August 2009, the AcSB issued amendments to Section 3251 "Equity" as a result of issuing Section 1602 "Non-controlling Interests". The amendments require non-controlling interests to be recognized as a separate component of equity. The amendments apply only to entities that have adopted Section 1602 and are not expected to have an impact on the Company's financial statements.

Comprehensive Revaluation of Assets and Liabilities

In August 2009, the AcSB issued amendments to Section 1625 "Comprehensive Revaluation of Assets and Liabilities" for consistency with new Section 1582 "Business Combinations". The amendments apply prospectively to comprehensive revaluations of assets and liabilities occurring in fiscal years beginning on or after January 1, 2011 and are not expected to have an impact on the Company's financial statements.

Accounting changes

In June 2009, the AcSB issued an amendment to Section 1506 "Accounting Changes" which is effective for fiscal years beginning on or after July 1, 2009. The amendment excludes from the scope of Section 1506 changes in accounting policies upon the complete replacement of an entity's primary basis of accounting, as will occur when an entity adopts IFRS.

3.	PROPERTY AND EQUIPMENT
		2009		2008

		Cost	Accumulated	Cost	Accumulated
			amortization		amortization


	Office equipment	$ 258,757	$ (243,101)	$ 257,087	$ (198,734)
	Upgrader	4,153,455	(2,251,172)	4,153,455	(2,039,807)


		$ 4,412,212	$ (2,494,273)	$ 4,410,542	$ (2,238,541)


	Net book value		$ 1,917,939		$ 2,172,001

Included in amortization expense is $255,732 (2008 - $246,923; 2007 - $247,934) related to property and equipment.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

INTANGIBLE ASSETS

2009

2008

Accumulated

Cost

amortization

Cost

amortization

Technology rights

$ 3,833,437

$ (2,298,175)

$ 3,833,437

$ (2,127,590)

Patents

856,649

(508,351)

856,649

(469,652)

$ 4,690,086

$ (2,806,526)

$ 4,690,086

$ (2,597,242)

Net book value

$ 1,883,560

$ 2,092,844

The patents relate to fluid gas integration, crude oil and bitumen treatment and oil-water separation. These patents expire between 2019 and 2021.

The Company has the worldwide rights, except for Europe, for certain separation technologies. The term of these rights ranges from 5 to 10 years, depending on country.

Recovery of the patents and technology rights costs remain uncertain. It depends on the commercial application thereof and ultimately attaining profitable operations.

Included in amortization expense is $209,284 (2008 - $232,539; 2007 - $188,470) related to intangible assets.

On May 12, 2008, the CEO and Chairman the Company signed a one year $5 million funding agreement. Prior to expiry of the agreement on May 12, 2009, $56,131 (2008 - $254,051) of funds were drawn for a total of $310,182 received. The entire amount of $310,182 was repaid before the expiration date thru the private placement that was concluded on May 1, 2009.

Additional funds were advanced to the Company 2009 from officers and companies controlled by officers totaling $172,124. These loans are non-interest bearing with no set terms of repayment. Included in administrative expenses for the year are consulting fees of $136,915 (2008 - $384,942, 2007 - $538,050) paid to companies controlled by officers of the Company.

These transactions occurred in the normal course of operations and are measured at the exchange amount which is the amount of consideration established and agreed to by the related parties.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

6.	CONVERTIBLE NOTES

		Series A	Series D	Series E	Total


	Gross amount received	$ 5,638,220	$ 968,825	$ 1,227,356	$ 7,834,401
	Value of warrants and conversion option	(3,822,864)	(51,036)	(166,216)	(4,040,116)

	Fair value of repayment obligation	$ 1,815,356	$ 917,789	$ 1,061,140	$ 3,794,285



	2007
	Accretion	301,611	25,862	-	327,473
	Interest accrued	-	124,226	-	124,226
	Conversions	(2,320,505)	-	-	(2,320,505)

	Ending balance	$ 138,611	$ 1,120,823	$ -	$ 1,259,434


	2008
	New issuances	-	-	1,061,140	1,061,140
	Accretion	16,588	-	39,315	55,903
	Interest accrued	-	106,533	35,184	141,717
	Redemption	-	(1,227,356)	-	(1,227,356)

	Ending balance	$ 155,199	$ -	$ 1,135,639	$ 1,290,838


	2009
	Accretion	18,624		139,180	157,804
	Interest accrued			104,456	104,456

	Ending balance	$ 173,823	$ -	$ 1,379,275	$ 1,553,098

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

6. CONVERTIBLE NOTES (continued)

Series A

On December 23, 2004, the Company issued $5,638,220 of non-interest bearing convertible notes. These convertible notes are due on December 23, 2014. The note holders also received 3,203,534 warrants entitling them to purchase the same number of shares at a price of $0.85 per share at any time prior to December 23, 2009. At the holder’s option, the note may be converted to common shares of the Company at a rate of $0.44 per share at any time prior to maturity. The convertible note may also be converted at the Company’s option if the Company’s common share trading price exceeds $1.55 per share for 30 consecutive trading days during the term of the note.

The fair value of the repayment obligation, being the present value of the future principal and interest payments using a discount factor of 12%, was estimated to be $1,815,356 on the date the agreement was signed. To estimate the fair value of the warrants, the Company used the Black-Scholes option-pricing model with the following assumptions: zero dividend yield; expected volatility of 100%; risk-free rate of 3%; and expected life of 5 years, resulting in a fair value of $834,153. The residual portion of the proceeds of $2,988,711 was allocated to the conversion option. Both the warrants and conversion option were recorded as debt discounts and are being accreted over the term of the debt.

During 2007, notes with a face value of $132,679 were converted into common shares of the Company at a price of $0.44 per share and 301,543 shares were issued.

During November 2007, at the request of a large note holder, notes with a face value of $4,902,800 were converted into 2,785,681 preferred shares of the Company. The preferred shares are convertible into 11,142,724 common shares - the same number the convertible notes would have been convertible to. Per EIC - 96 the preferred shares were valued using the market price ($0.61) of the common shares on date of conversion. This value was allocated between long term debt and equity using the same basis as at the original issue of the notes. The fair value of the debt portion was calculated by discounting the face value at 16%, the estimated market rate for the Company. This resulted in a loss of $176,450 being recorded, while contributed surplus was reduced by $4,432,786. Had the Company used a market rate of 18%, a gain of $94,312 would have been recorded.

(continues)

GENOIL INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

6.	CONVERTIBLE NOTES (continued)

	Series D

	On October 6, 2006, the Company issued $968,825 of convertible notes to entities controlled by a director and officer of the Company in settlement of debt owed to them. This convertible note is due on April 6, 2007 and has an interest rate of 12% per annum. The note holders also received 322,941 warrants entitling them to purchase the same number of shares at a price of $0.98 per share at any time prior to April 6, 2007. At the holder’s option, the note may be converted to common shares of the Company at a rate of $0.75 per share at any time prior to maturity. The convertible note may also be converted at the Company’s option if the Company’s common share trading price exceeds $1.55 per share for 30 consecutive trading days during the term of the note.

	The fair value of the repayment obligation, being the present value of the future principal and interest payments using a discount factor of 24%, was estimated to be $917,789 on the date the agreement was signed. The residual amount, being $51,036, was allocated to the fair value of the warrants and no value was allocated to the conversion option. The debt discount will be accreted over the term of the debt. To estimate the fair value of the warrants, the Company used the Black-Scholes option- pricing model with the following assumptions: zero dividend yield; expected volatility of 86%; risk- free rate of 4.37%; and expected life of 0.5 years.

	On April 6, 2007, the term of 78% of the notes and attached warrants was extended by six months to October 6, 2007. On that date it was again extended by six months. These notes have an original face value of $760,785 and 253,595 warrants attached. The extension was considered a renegotiation of the debt and the fair value ($25,484) of the warrant extension was expensed as interest paid. The balance of the notes, with a face value of $208,040 and accrued interest of $32,640, is now callable. The attached 69,346 warrants have expired. The Company has entered into a one year funding agreement that would provide the required capital, should this portion of the debt be called. The terms of this agreement is substantially the same as the original notes. One of the parties to this agreement is a director and officer of the Company.

	On October 6, 2008 the series D notes matured and were replaced with series E notes.

	Series E

	On October 6, 2008, series E notes, with a face value of $1,227,356, were issued to replace the series D notes plus accrued interest that matured on that date. About 90% of the amount is due to companies controlled by the Chairman and CEO. The notes have a term of one year, carry interest at 12% p.a., accrued semi-annually, and are convertible into common shares of the Company at $0.27 per share at the option of the holder. The note holders also received 1,136,442 warrants to purchase the same number of common shares of the Company at $0.41 per share.

	The fair value of the repayment obligation, being the present value of the future principal and interest payments using a discount factor of 28%, was estimated to be $1,061,140 on the date the agreement was signed. A total of $32,275, was allocated to the fair value of the warrants and $133,941 was allocated to the conversion option. The debt discount will be accreted over the term of the debt. To estimate the fair value of the warrants, the Company used the Black-Scholes option- pricing model with the following assumptions: zero dividend yield; expected volatility of 127%; risk- free rate of 2.93%; and expected life of 1 year.

	At October 6, 2009, the notes were extended for another year. The extension was considered a modification of the debt and the fair value ($49,798) of the warrant extension was recorded as reduction to the note payable. The debt discount was accreted over the term of the debt..

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

7.	CONTRIBUTED SURPLUS

		2009	2008


	Balance, beginning of year	$ 14,106,075	$ 11,928,443
	Options granted	2,065,540	3,763,176
	Options exercised	-	(1,322,205)
	Options cancelled	(110,610)	(901,300)
	Warrants granted	1,086,493	504,020
	Conversion option	-	133,941


	Balance, end of year	$ 17,147,498	$ 14,106,075

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

8.	SHARE CAPITAL

	Authorized:

		An unlimited number of common shares without par value.

		10,000,000 Class A Preferred shares, issuable in series.

Issued and outstanding common shares:
	Number	Amount
2007
Balance, beginning of year	223,054,604	$ 34,809,229
Private placement (2)	5,130,382	2,399,621
Shares for debt	768,565	364,939
Stock options exercised	3,657,663	1,400,699
Conversion of notes	301,543	132,679
Share issue expenses		(227,990)

Balance, end of year	232,912,757	38,879,177


2008
Private placement (4)	11,533,919	2,501,098
Stock options exercised	6,693,750	2,931,891
Conversion of preferred shares	11,142,724	6,797,062
Share issue expenses		(31,362)

Balance, end of year	262,283,150	51,077,866


2009
Private placement (2)	12,125,327	852,044
Shares for debt	2,265,192	329,072
Share issue expenses		(51,896)

Balance, end of year	276,673,669	$ 52,207,086


Issued and outstanding Class "A' Preferred shares:
	Number	Amount
2007
Balance, beginning of year	-	$ -
Issued on conversion of convertible notes (3)	2,785,681	6,797,062

Balance, end of year	2,785,681	$ 6,797,062

2008
Conversion into common shares	(2,785,681)	(6,797,062)

Balance, end of year	-	$ -


TOTAL SHARE CAPITAL		$ 52,207,086

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

8.	SHARE CAPITAL (continued)

	1.	In September 2006, the Company issued 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.

		Each full warrant entitles the holder to purchase one common share at US$1.10 for a period of two years. C$3,425,270 of the proceeds was allocated to share capital and C$522,497 to warrants. The value attributed to the warrants were calculated using the Black-Scholes model with volatility of 106%, risk free rate of 3.95% and dividend yield nil over their expected life of 2 years.

		The Company issued 236,311 warrants with an exercise price of $0.82 as a finders fee in connection with this private placement. The $113,085 value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 106%, risk free rate of 3.95% and dividend yield nil over an expected life of 2 years.

	2.	In June 2007, the Company issued 5,130,382 units at US$0.52 per unit. Each unit consisted of one common share and one-quarter non-transferable share purchase warrant. Each full warrant entitles the holder to purchase one common share at US$0.78 for a period of three years. C$2,399,621 of the proceeds was allocated to share capital and C$440,110 to warrants. The value attributed to the warrants were calculated using the Black-Scholes model with expected volatility of 93%, risk free rate of 3.93% and dividend yield nil over their expected life of 3 years.

		The Company issued 234,692 warrants with an exercise price of $0.52 as a finders fee in connection with this private placement. The $76,157 value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 95%, risk free rate of 4.71% and dividend yield nil over an expected life of 2 years.

	3.	During 2007, the Company issued Class "A" Preferred shares in connection with the conversion of long term notes. The preferred shares can be converted into common shares at a ratio of four common shares for each preferred share. This can be done at the option of the holder of the preferred shares or, after five years, at the option of the Company. The preferred shares carry no voting power and can be redeemed by the Company at $1.76 per share at any time. In the event of liquidation, dissolution or winding up of the Company, the preferred shares shall have preference to receive up to $1.76 per share, before any distribution to any other share holders of the Company.

	4.	In March 2008, the Company issued 378,787 units at US$0.66 per unit. Each unit consisted of one common share and one-quarter non-transferable share purchase warrant. Each full warrant entitles the holder to purchase one common share at US$0.99 for a period of five years. C$206,158 of the proceeds was allocated to share capital and C$40,917 to warrants.

		The value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 96%, risk free rate of 3.35% and dividend yield nil over their expected life of 5 years.

	5.	In July 2008, the Company issued 11,155,132 units at US$0.23 per unit. Each unit consisted of one common share and one-quarter non-transferable share purchase warrant. Each full warrant entitles the holder to purchase one common shares at US$0.29 for a period of two years. C$2,294,940 of the proceeds was allocated to share capital and C$295,666 to warrants. The value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 95%, risk free rate of 3.27% and dividend yield nil over their expected life of 2 years.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

8.	SHARE CAPITAL (continued)

	6.	In May 2009, the Company raised US$1.39 million through a private placement, issuing 10,725,443 common shares at US$0.13 and 10,725,443 warrants with an exercise price of US$0.20 per common share and have a 2 year term. C$760,966 of the proceeds was allocated to share capital and C$890,403 was attributed to the warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black- Scholes model with expected volatility of 114%, risk free rate of 0.80% and dividend yield nil over their expected life of 2 years.

		In October 2009, the Company raised US$181,985 through a private placement, issuing 1,399,884 common shares at US$0.13 and 1,399,884 warrants with an exercise price of US$0.20 per common share and have a 2 year term. Proceeds of C$91,078 were allocated to share capital and C$99,278 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes model with expected volatility of 120%, risk free rate of 1.3% and dividend yield nil over their expected life of 2 years.

	7.	The Company also completed three shares-for-debt transactions: the first one issuing 860,997 common shares at US$0.17 and 57,981 non-transferable share purchase warrant with an exercise price of US$0.21, and second one issuing 506,322 common shares at US$0.13 and 506,322 warrants with an exercise price of US$0.20, and the third one issuing 897,873 common shares at C$0.13. The C$47,013 value attributed to the warrants, which was credited to contributed surplus, was calculated using the Black-Scholes model with expected volatility of 114%, risk free rate of 0.80% and dividend yield nil over their expected life of 2 years. There were no warrants issued in the third shares-for-debt transaction

9. STOCK OPTIONS

The Company has a stock option plan for directors, officers, employees and consultants. The term and vesting conditions of each option may be fixed by the Board of Directors when the option is granted, but the term cannot exceed 10 years. The maximum number of shares that may be reserved for issuance under the plan is fixed at 52,944,600. The maximum number of shares that may be optioned to any one person is 5% of the shares outstanding at the date of the grant.

Details of the stock options are as follows:

				Weighted		Weighted
		Weighted		Average		Average
		Average		Exercise		Exercise
		Exercise Price		Price		Price
	Number	2009	Number	2008	Number	2007

Balance, beginning of year	34,202,500	$ 0.45	39,091,250	$ 0.49	27,213,502	$ 0.45
Granted	16,950,000	0.16	12,950,000	0.33	16,478,750	0.51
Cancelled	(7,422,500)	0.37	(11,145,000)	0.60	(943,339)	0.35
Exercised	-	-	(6,693,750)	0.24	(3,657,663)	0.21

Balance, end of year	43,730,000	$ 0.35	34,202,500	$ 0.45	39,091,250	$ 0.49


Exercisable, end of year	41,377,916	$ 0.35	30,455,416	$ 0.43	27,553,749	$ 0.46

The following is a summary of options outstanding and exercisable as at December 31, 2009:

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

9.	STOCK OPTIONS (continued)


		Outstanding			Vested

			Remaining	WA		Remaining	WA
		Outstanding	Contractual	Strike	Vested	Contractual	Strike
	Range	Options	Life	Price	Options	Life	Price

	$0.00 to $0.39	27,050,000	4.00	$0.17	25,866,666	4.01	$0.17
	$0.40 to $0.79	14,080,000	1.52	$0.53	12,936,250	1.53	$0.54
	$0.80 to $1.19	-	-	-	-	-	-
	$1.20 to $1.59	2,500,000	0.41	$1.20	2,500,000	0.41	$1.20
	$1.60 to $2.00	100,000	1.34	$1.65	75,000	1.34	$1.65

		43,730,000	2.99	$0.35	41,377,916	3.01	$0.35

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

10.	WARRANTS

	A summary of the changes in share purchase warrants outstanding and exercisable at the end of the year is as follows:

C$ Warrants


	2009		2008		2007


	Total	WA Strike	Total	WA Strike	Total	WA Strike
	Warrants	Price	Warrants	Price	Warrants	Price

Balance, beginning of year	5,539,976	$0.66	4,057,129	$0.82	3,526,475	$0.86

Issued	1,136,442	$0.41	2,590,037	$0.45	600,000	$0.61

Exercised	-	-	-	-	-	-

Expired	5,539,976	$0.66	1,107,190	$0.78	69,346	0.98

Forfeited	-	-	-	-	-	-

Balance, end of year	1,136,442	$0.41	5,539,976	$0.66	4,057,129	$0.82



US$ Warrants


	2009		2008		2007


	Total	WA Strike	Total	WA Strike	Total	WAStrike
	Warrants	Price	Warrants	Price	Warrants	Price

Balance, beginning of year	4,400,759	$0.46	2,969,399	$0.89	1,452,113	1.04

Issued	12,689,630	$0.20	2,883,473	$0.31	1,517,286	$0.74

Exercised	-	-	-	-	-	-

Expired	-	-	-	-	-	-

Forfeited	234,692	$0.52	1,452,113	1.04	-	-

Balance, end of year	16,855,697	$0.26	4,400,759	$0.46	2,969,399	$0.89


Total	17,992,139		9,940,735		7,026,528

The following is a summary of warrants as at December 31, 2009:

	Outstanding



	Outstanding	Remaining
Range	Warrants	Contractual Life

$0.000 to $0.390	15,478,406	1.23

$0.400 to $0.790	2,419,036	0.62

$0.800 to $1.190	94,697	3.17
$0.000 to $2.000	17,992,139	1.16

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

11. INCOME TAXES

The tax effects of the temporary differences that give rise to the Company's future tax assets and liabilities are as follows:

	2009	2008

Net operating and capital losses	$ 9,633,100	$ 8,603,300
Long term assets	1,014,200	898,400
Undeducted financing costs	31,800	32,200
Valuation allowance	(10,679,100)	(9,533,900)

Future tax assets	$ -	$ -

The tax benefit of net operating losses carried forward and the associated valuation allowance were reduced by $666,000 (2008 - $460,300), representing the tax effect of losses which expired during the year.

The income tax provision recorded differs from the income tax obtained by applying the statutory income tax rate of 29.0% (2008 - 29.5%; 2007 - 32.12%) to the income for the year and is reconciled as follows:

	2009	2008	2007

Benefit at Canadian statutory rate	$ (1,494,400)	$ (2,291,300)	$ (3,643,200)
Permanent differences	227,400	1,306,800	1,703,000
Effect of reduction in Statutory rate	121,800	217,200	3,156,300
Increase in valuation allowance	1,145,200	767,300	(1,216,100)

Future tax recovery	$ -	$ -	$ -

The Company's future tax assets include approximately $31,800 (2008 - $32,200) related to deductions for share issue costs in excess of amounts deducted for financial reporting purposes. The valuation allowance as at December 31, 2009 was increased by $13,000 (2008 - $7,800), representing the effect of the unamortized share issuance costs incurred in the period.

The Company has approximately $1,272,900 (2008 and 2007 - $1,272,900) of undeducted exploration and development costs which are available for deduction against future income for Canadian tax purposes.

The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management's judgement about the recoverability of future tax assets, the impact of the change on valuation allowance is reflected in current income.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

12. NON-CAPITAL TAX LOSSES CARRIED FORWARD

The Company has incurred estimated losses in its Canadian and United States operations of $38,327,529 and $215,111 respectively for tax purposes which are available to reduce future taxable income and which expire in various amounts from 2010 to 2029. Such benefits will be recorded as an adjustment to the tax provision in the year realized. Loss carryforwards relating to the Canadian operations are as follows:

2010		$ 3,271,665
2014		3,679,863
2015		5,743,653
2026		9,342,800
2027		5,332,167
2028		8,525,351
2029		2,432,030


		$ 38,327,529

13. STOCK-BASED COMPENSATION

The fair value of each stock option granted (note 9) was estimated on the date of grant using the Black-Scholes option-pricing model with the following range of assumptions:

	2009	2008	2007


Volatility	102% - 111%	92% - 104%	89% - 99%
Expected life (years)	2.25 - 3.75	2.25 - 3.75	3 - 3.75
Risk-free rate	1.4% - 2.5%	2.4% - 3.45%	3.9% - 4.7%
Dividend yield	0%	0%	0%

The weighted average fair value of options granted in 2009 was $0.11 (2008 - $0.22; 2007 - $0.32) .

14.	OTHER EXPENSES
		2009	2008	2007


	Impairment of assets	$ -	$ 39,945	$ 253,351
	Loss on conversion of debt	-	-	176,450
	Accounts payable written off	-	-	(86,916)

		$ -	$ 39,945	$ 342,885

Impairment of assets

In 2008 and 2007, the Company determined that the carrying amounts of certain assets exceeded their fair value and wrote them down to fair value.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

Loss on conversion of debt

In 2007, at the request of a large investor, the Company agreed to convert most of its long term convertible notes into convertible preference shares. (See note 6) The terms of the preference shares are essentially the same as those of the notes they replaced.

Canadian GAAP requires that the preference shares issued should be valued at the market price of the common shares they can be converted into. This market value should then be allocated to the component parts of the convertible notes (debt and conversion option) using their relative fair values, consistent with the original approach taken when the convertible notes were first recorded.

The Company valued the debt component by discounting the face value at 16% (considered market related rate). The difference between this value and the carrying value of the debt was recorded as a loss on conversion. The residual amount was allocated to contributed surplus.

Accounts payable written off

The accounts payable written off in 2007 relates to a 2004 balance on a vendor account. It originated from lease payments for an asset that did not perform as expected and the Company refused further payments. We believe the statute of limitations will prevent the vendor from claiming this amount in future.

15.	CAPITAL MANAGEMENT

	The Company's objectives when managing its capital are:

	a)	to maintain an appropriate balance between debt and equity sources of capital;

	b)	to manage a strong capital base so as to maintain investor, creditor and market confidence; and

	c)	to sustain future development of the business.

	The Company defines its capital as follows: - capital stock; and - debt, including long and short-term portions.

	2009	2008
Shareholders' equity	$ 1,312,362	$ 2,294,715
Debt	2,778,060	2,639,009

	$ 4,090,422	$ 4,933,724

As the Company does not have commercial operations, all its capital to date has resulted from the issuance of equity or debt, both long and short-term.

Genoil is a public company and has established access to both public and private debt and equity markets. The Company anticipate continued long-term access to these markets to fund future operations and growth, although access in the current market may be restricted or unavailable.

All the Company's debt is from parties related to the Company and has no covenants. Internally the Company strives to maintain sufficient capital to cover working capital needs, while avoiding undue dilution to shareholders. To date the Chairman and CEO has provided short term funding. In addition the Company raised capital via private placements on a regular basis.

16. COMMITMENTS

The Company has entered into lease agreements which require minimum lease payments summarized as follows:

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

16.	COMMITMENTS (continued)

	Contractual obligation repayment schedule:

2010		$ 236,651
2011		127,337
2012		22,000

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

17.	CONTINGENCIES

	The Company is involved in legal claims associated with the normal course of operations. It believes it has made adequate provision for such legal claims.

18.	NON-CASH ITEMS NOT INCLUDED IN STATEMENTS OF CASH FLOWS

	2009	2008	2007


Shares issued to settle debts	$ 376,084	$ -	$ 364,939
Shares issued to settle convertible debts	-	-	132,679
Notes converted into preferred shares	-	-	2,187,826


	$ 376,084	$ -	$ 2,685,444

19.	SEGMENTED INFORMATION

	The Company specializes in two technologies: proprietary upgrader technology for use in the oil industry and technology in oil and water separation systems. Substantially all of the Company's operations and assets are in Canada and are focused on development and commercialisation of both technologies, which are currently considered one industry segment.

20.	SUBSEQUENT EVENTS

	In January 2010, the Company issued 5,700,000 options to directors and consultants of the Company. The options have a strike price of $0.18 and a 5 year term

	In January 2010, the Company completed a private placement that raised US$762,700, issuing 5,866,920 common shares at US$0.13 and 5,866,920 warrants with an exercise price of $0.20 per common share and have a 2 year term. Included in this amount is C$168,289 that was received prior to year end. This has been recorded as due to investors in the 2009 financial statements.

	A shares-for-debt transaction was also completed in January 2010 whereby 1,457,744 common shares and 37,314 common share purchase warrants were issued to settle debt in the amount of US$191,000. The warrants have an exercise price of US$0.20 per common share and have a 2 year term.

	In April 2010, the Company issued 4,500,000 options to directors, consultants and employees of the Company. The options have an exercise price of $0.14 and a 5 year term.

21.	COMPARATIVE FIGURES

	Certain of the comparative figures have been reclassified to conform to the current year's presentation.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

22.	FINANCIAL INSTRUMENTS

	Credit Risk

	The Company is exposed to credit risk with respect to its receivables and cash. Receivables are comprised substantially of goods and services tax credits receivable from a Canadian tax agency and cash is placed with major financial institutions. Management believes this mitigates the risks associated with these financial instruments. Accordingly, the Company views credit risk as minimal.

	Fair Value

	The Company's financial instruments consist of cash and cash equivalents, receivables, due to investors, accounts payable and accrued liabilities, amounts due to related parties and convertible notes. The fair value of the convertible notes was calculated using discounted cashflow analysis and approximates the carrying value as the implicit interest rate is similar to current market rates. The fair value of the financial instruments, other than long-term convertible notes, approximates their carrying values due to their short term nature. The fair value of the long-term convertible note, using a discount rate of 24% (2008 - 24%, 2007 - 16%) at December 31, 2009, is approximately $105,000 (2008 - $84,700, 2007 - $108,400).

	The Company categorizes its financial assets and liabilities using a three-level hierarchy that reflects the significance of the inputs used in making fair value measurements for these assets and liabilities. The fair values of assets and liabilities included in Level 1 are determined by reference to quoted prices in active markets for identical assets and liabilities. Fair values of assets and liabilities in Level 2 are based on inputs other than Level 1 quote3d prices that are observable for the asset or liability either directly (as prices) or indirectly (derived from prices). The fair values of Level 3 assets and liabiliti4es are not based on observable market data. The disclosure of the fair value hierarchy excludes financial assets and liabilities where book value approximates fair value due to the liquid nature of the asset or liability.

	Currency Risk

	The Company translates the results of its foreign operations into Canadian dollars using rates approximating the average exchange rate for the year. The exchange rate may vary from time to time and create foreign currency risk. As at year-end the Company had certain obligations denominated in US dollars and there are no contracts in place to manage the exposure. As at December 31, 2009 the Company had US$5 (2008 - US$279,690) in cash and US$48,216 (2008 - US$964) included in accounts payable which is subject to foreign exchange fluctuation. The Company's operations are not significantly exposed to foreign exchange risk.

	Interest rate risk

	The Company is not exposed to significant interest rate risk due to the short-term nature of its monetary assets and liabilities and due to the long-term convertible notes not bearing interest.

	Liquidity Risk

	Liquidity risk is the risk that the Company will incur difficulties meeting its financial obligations as they are due. The Company's approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions without incurring unacceptable losses or risking harm to the Company's reputation. To facilitate its expenditures, the Company raises funds through private equity placements. As at December 31, 2009, the Company's financial liabilities were comprised of accounts payable and accrued liabilities, liabilities to related parties, and convertible notes which have a maturity of less than one year.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

23.	DIFFERENCES BETWEEN US AND CANADIAN GAAP

	The Company prepares the consolidated financial statements in accordance with Canadian generally accepted accounting principles ("Canadian GAAP"), which conform in all material respects to those in the United States ("US GAAP"), except as follows:

	a)	Under US GAAP, the conversion feature of the convertible debenture Series A and the detachable warrants described in Note 6, issued by the Company meet the criteria to be exempt from Topic 815 Derivatives and Hedging (formerly SFAS 133 "Accounting for Derivative Instruments and Hedging Activities") and were not required to be bifurcated. As a result, the Company followed Topic 470-20 Debt – Debt with Conversion and Other Options (formerly Emerging Issue Task Force (“EITF”) No. 00 27 "Application of Issue No.

		98 5 to Certain Convertible Instruments") and recorded the proceeds of the convertible debenture based on the relative fair value of the convertible debenture and the detachable warrants. For US GAAP purposes, the relative value of the detachable warrants and the intrinsic value of the conversion option were determined to be $1,775,098 and $1,006,250, respectively. Also, the conversion of Series A convertible debentures with a face value of $4,902,800 into 2,785,681 Class A preferred notes as described in Note 6 resulted in a loss on extinguishment that was different under Canadian GAAP and U.S. GAAP.

		For Canadian GAAP purposes, the Company followed EIC 96, "Accounting for the early extinguishment of convertible securities through (1) early redemption or repurchase and (2) induced early conversion”. Therefore, the consideration transferred (i.e. the value of the preferred shares) to settle the Series A convertible debt was allocated to the carrying value of the debt and the conversion option element on the same basis as was used to allocate the original debt proceeds. The resulting loss relating to the debt element ($176,450) was charged to the consolidated statement of loss and the portion of the consideration allocated to the conversion option ($4,432,785) was charged to contributed surplus.

		For US GAAP purposes, the Company followed Topic 470-20 Debt – Debt with Conversion and Other Options and 470-50 Debt – Modifications with Extinguishment (formerly EITF 98 5, “Accounting for Convertible Securities with Beneficial Conversion Features or Contingently Adjustable Conversion Ratios” and EITF 96 19, “Debtors Accounting for Modification and Convertible Debt Instruments”, respectively). Therefore, the consideration transferred (i.e. the value of the preferred shares) was allocated to the conversion element of the convertible security based on the intrinsic value of the debt’s conversion feature at the date of extinguishment, and the residual consideration was allocated to the debt. As a result of this difference in the allocation of the consideration, the loss on conversion relating to the debt element would increase by $1,706,845 and the charge to contributed surplus would be reduced by $2,538,521.

		As a result of the difference in discount amounts, the value of the convertible debentures and the debt extinguishment described above, the carrying value of the convertible debentures under US GAAP would be increased by $43,984 in 2009 (2008 – $48,368; 2007 – $51,781) (net of related accretion expense) and the accretion expense would have decreased by $4,383 (2008 – $9,252; 2007 – $59,990).

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

23.	DIFFERENCES BETWEEN US AND CANADIAN GAAP (continued)

	b)	Under US GAAP, the conversion feature of the convertible notes - Series D and the detachable warrants described in Note 6 met the criteria to be exempt from Topic 815 (formerly SFAS 133) and are not required to be bifurcated. As a result, the Company followed Topic 470-20 (formerly EITF 00 27) and recorded the proceeds on the convertible notes based on the relative fair value of the convertible notes and detached warrants. For US GAAP purposes the relative fair value of the detachable warrants and the intrinsic value of the conversion option were determined to be $78,087 and $388,111, respectively, at the time of issuance.

		On April 6, 2007, the maturity date of the convertible notes with a face value of $760,785 and the expiry date of the 253,595 attached warrants were extended by six months to October 6, 2007. On that date, the notes and warrants were again extended by six months. For Canadian GAAP purposes, the Company followed EIC-88, “Debtor’s Accounting for a Modification or Exchange of Debt Instruments” and considered both extensions to be modifications of the debt with the incremental fair value of the warrants, in the amount of $25,484 expensed as additional interest expense.

		For US GAAP purposes, the Company followed Topic 470-50 Debt - Modifications and Extinguishment (formerly EITF No. 96 19 “Debtors Accounting for Modification and Convertible Debt Instruments”). In applying the guidance in Topic 470-50, the Company determined that the extension on both dates were modifications because each extension did not result in a substantial change (defined as greater than 10%) in the cash flows between the original and modified notes. The extensions also did not cause the fair value of the embedded conversion option to change by more than 10% of the carrying amount of the original notes immediately before and after the extensions.

		The Company determined the change in the fair value of the embedded conversion option immediately before and after the April and October extensions to be $55,892 and $54,574, respectively, using the Black-Scholes pricing model using the following assumptions:

	April 6, 2007		October 6, 2007
	Before	After	Before	After
Expected life	1 day	183 days	1 day	183 days
Volatility	0.00%	63.90%	0.00%	64.99%
Dividend yield	0.00%	0.00%	0.00%	0.00%
Risk free rate	0.00%	4.14%	0.00%	4.43%

The increase in the fair value of the embedded conversion option immediately after the extensions was then adjusted to the carrying value of the debt and amortized over the remaining term of the debt using a new effective interest rate.

As a result of the differences described above, under US GAAP, the carrying value of the convertible notes liability as at December 31, 2009 would decrease by $nil (2008 - $nil; 2007 - $28,927) (net of related accretion expense) with a corresponding increase in shareholders’ equity. The accretion expense for US GAAP for these convertible notes was $nil (2008 - $nil; 2007 - $384,496) and the accretion expense would have increased by $nil (2008 - $nil; 2007 - $358,633) under US GAAP

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

23.	DIFFERENCES BETWEEN US AND CANADIAN GAAP (continued)

	c)	Under US GAAP, the conversion of the convertible notes – Series E and the detachable warrants described in Note 6, issued by the Company meet the criteria to be exempt from Top 815 (formerly SFAS 133) and were not required to be bifurcated. As a result, the Company followed Topic 470-20 (formerly EITF No. 00 27) and recorded the proceeds of the convertible notes based on the relative fair value of the convertible notes and the detachable warrants. Accordingly, management has determined that the embedded conversion option within the debt instrument did not result in any beneficial conversion option value. In addition, the Company determined that the portion of the proceeds allocated to the detachable warrants was $36,229.

		On October 6, 2009, the maturity date of the convertible notes - Series E and the expiry date of the 1,136,442 attached warrants were extended by one year to October 6, 2010. For Canadian GAAP purposes, the Company followed EIC 88, "Debtor's Accounting for a Modification or Exchange of Debt Instruments" and considered both extensions to be modifications of the debt with the incremental fair value of the warrants, in the amount of $49,978 expensed as additional interest expense.

		For USA GAAP purposes, the Company followed Topic 470-50 Debt - Modifications and Extinguishment (formerly EITF No. 96 19 "Debtors Accounting for Modification and Convertible Debt Instruments"). In applying the guidance in Topic 470-50, the Company determined that the extension was a modification because it did not result in a substantial change (defined as greater than 10%) in the cash flows between the original and modified note. The extension also did not cause the fair value of the embedded conversion option to change by more than 10% of the carrying amount of the original notes immediately before and after the extension.

		As a result of the differences described above, under US GAAP, the carrying value of the convertible notes liability as at December 31, 2009 would decrease by $11,702 (2008 - increase $99,628) with a corresponding increase (2008 - decrease) in shareholder's equity. The accretion expense under US GAAP for these convertible notes was $49,940 (2008 - $8,956) and as such, accretion expense would have decreased $95,941 for 2009 (2008 - $30,359) under US GAAP.

	d)	Accounting for Uncertainty in Income Taxes

		The implementation of ASC 740 - "Income Taxes" (formerly, FASB Interpretation Number ("FIN") 48) did not result in any adjustment to the beginning tax positions of the Company.

		The Company’s income tax filings are subject to audit by taxation authorities and as at December 31, 2009 the following tax years remained subject to examination; (i) Canada – 2004 to date; and (ii) United States - 2005 to date.

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

23.1. Adjustments to Consolidated Statements of Loss

	2009	2008	2007


Loss from operations - Canadian GAAP	$ (5,152,996)	$ (7,767,173)	$ (11,342,560)
Accretion of convertible notes (a)	4,383	9,252	59,990
Accretion of convertible notes (b)	-	-	(358,663)
Accretion of convertible notes (c)	95,941	30,359	-
Loss on conversion of debt (a)	-	-	(1,706,845)


Loss - US GAAP	$ (5,052,672)	$ (7,727,562)	$ (13,348,078)

Loss per share - basic and diluted	$ 0.02	$ 0.03	$ 0.06




23.2. Adjustments to Consolidated Balance sheets

		2009	2008


Adjustments to Liabilities
Total liabilities - Canadian GAAP		$ 2,788,060	$ 2,639,009
Proceeds of convertible notes (a)		43,984	48,368
Proceeds of convertible notes (c)		(11,702)	99,628


Total liabilities - US GAAP		$ 2,820,342	$ 2,787,005


Adjustments to Shareholders' Equity (Capital deficit)
Total shareholders' equity - Canadian GAAP		$ 1,312,362	$ 2,294,715
Proceeds of convertible notes (a)		(43,984)	(48,368)
Proceeds of convertible notes (c)		11,702	(99,628)


Total shareholders' equity (capital deficit) - US GAAP		$ 1,280,080	$ 2,146,719


The consolidated assets and cashflows are the same under Canadian and US GAAP.

24.	NEW US ACCOUNTING PRONOUNCEMENTS



	a)	In August 2009, the FASB issued Accounting Standards Update ("ASU") 2009-05 - "Fair Value Measurements and Disclosures (Topic 820) - Measuring Liabilities at Fair Value" ("ASU 09-05"), which became effective the first reporting period (including interim periods) beginning after issuance. ASU 09-05 requires entities to measure the fair value of liabilities using one or more of several prescribed valuation techniques with the ASU when quoted prices in an active market for the identical liability are not available. The ASU also clarifies that: entities are not required to include separate inputs or adjustments to other inputs relating to the existence of restrictions that prvent the transfer of liabilities when estimating their fair value; and quoted prices in active markets for identical liabilities at the measurement date and the quoted prices for identical liabilities traded as assets in active markets ehen adjustments to the quoted prices of assets are required are Level 1 fair value measurements. The adoption of this standard did not have a material impace on the Company's financial statements.

(continues)

GENOIL INC.

Notes to Consolidated Financial Statements

Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

24.	NEW US ACCOUNTING PRONOUNCEMENTS (continued)

	b)	In June 2009, the FASB issued guidance now codified as ASC Topic 105, "Generally Accepted Accounting Principles," as the single source of authoritative nongovernmental U.S. GAAP. ASC Topic 105 does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all authoritative literature related to a particular topic in one place. All existing accounting standard documents will be superseded and all other accounting literature not included in the FASB Codification will be considered non-authoritative. These provisions of ASC Topic 105 are effective for interim and annual periods ending after September 15, 2009 and, accordingly, are effective for our current fiscal reporting period. The adoption of this pronouncement did not have an impact on the Company's financial position or sresults of operations, but did impact our financial reporting process by eliminating all references to pre-codification standards. On the effective date of this Statement, the Codification superseded all then existing non-SEC accounting and reporting standards and all other non-grandfathered non-SEC accounting literature not included in the Codification became non-authoritative. As a result of the Company's implementation of this codification during 2009, previous references to new accounting standards and literature are no longer applicable. In these annual financial statements, the Company has provided reference to both new and old guidance to assist in understanding the impacts of recently adopted accounting literature, particularly for guidance adopted since the beginning the current fiscal year but prior to the ASC.



	c)	In June 2009, the FASB issued guidance for "Amendments to FAS 46R" in ASC Topic 810 (formerly SFAS No. 167) of the Codification, which improves financial reporting by enterprises involved with variable interest entities. The amendments replace the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which entity has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and: (1) the obligation to absorb losses of the entity; or, (2) the right to receive benefits from the entity. The amendments are effective as of the beginning of the first annual reporting period that begins after November 15, 2009, and shall be applied prospectively. The Company is currently reviewing the potential impact, if any, this guidance will have on the consolidated financial statements upon adoption.

	d)	In June 2009, the FASB issued guidance for “Accounting for Transfers of Financial Assets, an Amendment to FAS 140” in ASC Topic 860 (formerly SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities-a replacement of FASB Statement No. 125, as amended by SFAS No. 166, Accounting for Transfers of Financial Assets – An Amendment of FASB Statement No. 140) of the Codification, which is effective for fiscal years beginning after November 15, 2009, which amends prior principles to require more disclosure about transfers of financial assets and the continuing exposure, retained by the transferor, to the risks related to transferred financial assets, including securitization transactions. It eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. It also enhances information reported to users of financial statements by providing greater transparency about transfers of financial assets and an entity’s continuing involvement in transferred financial assets. The Company is currently reviewing the potential impact, if any, this guidance will have on the Company’s consolidated financial statements upon adoption.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

24.	NEW US ACCOUNTING PRONOUNCEMENTS (continued)

	e)	In May 2009, the FASB issued guidance in the ASC Topic 855 – Subsequent Events (formerly SFAS No. 165) of the Codification, which establishes the accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date, that is, whether that date represents the date the financial statements were issued or were available to be issued. The guidance was effective for interim or annual periods ending after June 15, 2009. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements

		In February 2010, the FASB issued Accounting Standards Update No. 2010-09 Subsequent Events (Topic 855) Amendments to Certain Recognition and Disclosure Requirements which provides amendments to Subtopic 855-10 to alleviate potential conflicts between Subtopic 855-10 and the SEC’s requirements with regard to subsequent event disclosures. An entity that is an SEC filer is required to evaluate subsequent events through the date that the financial statements are issued and is not required to disclose the date through which subsequent events have evaluated.

	f)	In April 2009, the FASB issued guidance in the ASC Topic 820 – Fair Value Measurements and Disclosures (formerly FASB Staff Position (“FSP”) FAS 157-4) of the Codification on determining fair value when the volume and level of activity for an asset or liability have significantly decreased and identifying transactions that are not orderly. The guidance emphasizes that even if there has been a significant decrease in the volume and level of activity, the objective of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants. The guidance provides a number of factors to consider when evaluating whether there has been a significant decrease in the volume and level of activity for an asset or liability in relation to normal market activity. In addition, when transactions or quoted prices are not considered orderly, adjustments to those prices based on the weight of available information may be needed to determine the appropriate fair value. The guidance was effective for interim or annual reporting periods ending after June 15, 2009, and shall be applied prospectively. The implementation of this guidance did not have a material impact on the Company’s consolidated financial statements.

	g)	In February 2008, FASB issued guidance in the Effective Date of FASB Statement No. 157 ASC Topic 820 (formerly FSP FAS 157- 2) of the Codification, which amended SFAS No. 157 to delay the effective date of SFAS No. 157 for non-financial assets and nonfinancial liabilities until fiscal years beginning after November 15, 2008, and interim periods within those fiscal years, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The implementation of this Topic, which was effective January 1, 2009, did not have a material impact on the Company’s consolidated financial statements

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

24.	NEW US ACCOUNTING PRONOUNCEMENTS (continued)

	h)	In December 2007, the FASB issued guidance in ASC Topic 805 – Business Combinations (formerly SFAS No. 141(R), “Business Combinations”). The standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition date fair value as the measurement objective for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination. In April 2009, the FASB issued FSP FAS 141(R)-1 which amends and clarifies SFAS No. 141(R) to address application issues raised by preparers, auditors and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. This statement shall be applied prospectively. The implementation of SFAS No. 141(R) and FSP FAS 141(R)-1, effective January 1, 2009, did not have a material impact on the company’s consolidated financial statements.



	i)	In December 2007, the FASB issued guidance in the ASC Topic 810 – Consolidation (formerly SFAS No. 160) of the Codification on the accounting for non-controlling (minority) interests in consolidated financial statements. This guidance clarifies the classification of non- controlling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the reporting entity and holders of such non-controlling interests. This guidance was effective as of the beginning of an entity’s first fiscal year that began on or after December 15, 2008 and was required to be adopted prospectively, except for the reclassification of non-controlling interests to equity and the recasting of net income (loss) attributable to both the controlling and noncontrolling interests, which were required to be adopted retrospectively. The Company adopted this guidance effective January 1, 2009, and did not have a material impact on the consolidated financial statements.

	j)	FSP FAS 142 3

		In April 2008, the FASB issued FSP FAS 142 3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142 3”). FSP FAS 142 3 requires companies estimating the useful life of a recognized intangible asset to consider their historical experience in renewing or extending similar arrangements or, in the absence of historical experience, to consider assumptions that market participants would use about renewal or extension as adjusted for the entity specific factors in SFAS No. 142, “Goodwill and Other Intangible Assets”. FSP FAS 142 3 will be effective for the Company beginning January 1, 2009. The adoption of FSP FAS 142 3 will not have a material impact on the Company’s consolidated financial statements.

	k)	FSP APB 14 1

		In May 2008, the FASB issued FSP APB No. 14 1, “Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement)”. The FSP will require cash settled convertible debt to be separated into debt and equity components at issuance and a value to be assigned to each. The value assigned to the debt component will be the estimated fair value of similar bonds without the conversion feature. The difference between the bond cash proceeds and this estimated fair value will be recorded as a debt discount and amortized to interest expense over the life of the bond.

(continues)

GENOIL INC.
Notes to Consolidated Financial Statements
Years Ended December 31, 2009, 2008 and 2007

(Expressed in Canadian Dollars)

24.	NEW US ACCOUNTING PRONOUNCEMENTS (continued)

	l)	SFAS 162

		In May 2008, FASB issued SFAS No. 162 (“SFAS No. 162”), “The Hierarchy of Generally Accepted Accounting Principles”. SFAS No. 162 identifies the sources of account principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles (GAAP) in the United States. SFAS No. 162 is effective 60 days following the SEC approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” Adoption of SFAS 162 will not be a change in the Company’s current accounting practices; therefore, it will not have a material impact on the Company’s consolidated financial condition or results of operations.

Management’s Discussion and Analysis

December 31, 2009

This Management’s Discussion and Analysis (MD&A) is dated April 30, 2010, and should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2009. This and other information relating to Genoil Inc. are available on SEDAR at www.sedar.com, as well as EDGAR at www.sec.gov.

BUSINESS OF THE CORPORATION

Genoil Inc. is a technology development company based in Alberta, Canada. The Company has developed innovative hydrocarbon and oil and water separation technologies.

The Company specializes in heavy oil upgrading, oily water separation, process system optimization, development, engineering, design and equipment supply, installation, start up and commissioning of services to specific oil production, refining, marine and related markets.

Genoil has designed and developed the Genoil Hydroconversion Upgrader (GHU®) , an improved hydrogenation process that upgrades and increases the yields from high sulphur, acidic, heavy crude oils and heavy refinery feed stocks, bitumen and refinery residues into light, clean transportation fuels; and the Crystal Sea separator, a unique process for multi-stage separation of immiscible phases with different densities. Our Crystal Sea product is a bilge water separation system and the newest generation of our existing Crystal technology designed for marine use.

The Company currently has 10 full time employees and 1 full time contracted consultant located in three principal offices – Calgary, AB, Edmonton, AB, and New York, NY. In addition, the Company operates an heavy oil upgrading pilot facility in Two Hills, AB, with a capacity of 10 barrels per day where heavy oil and residue samples are upgraded for potential clients’ testing.

Genoil’s sales and marketing operations are run through a worldwide network of commissioned technical sales agents.

The Company’s securities trade on both the TSX Venture Exchange (Symbol: GNO) and the NASDAQ OTC Bulletin Board (Symbol: GNOLF).

The Company has not generated revenues from its technologies to date and has funded its near term operations by way of capital stock private placements and short-term loans.

Genoil Hydroconversion Upgrader

Genoil has been primarily involved in the development and commercial applications of its proprietary heavy oil upgrading technology – the Genoil Hydroconversion Upgrader (GHU®).

distillates and vacuum gas oil with reduced levels of contaminants such as sulphur, nitrogen and metals. Genoil’s process is designed specifically to eliminate most of the sulphur from the feed stocks.

Crystal Oil and Water Separators

BUSINESS PROSPECTS

The Company does not expect to generate significant revenue or cash flow from its technologies or services for the 2010 year, and possibly beyond.

On a larger scale, Genoil also expects to generate revenues for the design, implementation and procurement of its GHU® systems and/or the licensing of its intellectual property.

move developing and upgrading heavy oil is around the corner. The potential of this industry is greater when you calculate an estimated 900 billion barrels of world heavy oil reserves based on margins of say $30.00 per barrel than the Internet era that was only in the imagination twenty years ago.

ACTIVITIES

Oily-water separation technologies

Several entities are looking at the Crystal Sea technology to clean their heavily oil-contaminated ports and coastal waterways. Genoil has recently signed Memorandums of Understanding (“MOU”) with three major Chinese ports to protect ocean and coastal waters. These MOU’s with Qinhuangdao, Tianjin and Tangshan ports are for the implementation of Genoil’s oil-water separation system to treat and clean bilge water with on shore based separators. These three ports are some of the busiest and largest in China.

Genoil's treatment reduces oil content from bilge water to well below 15 parts per million so it meets strict international standards for discharges into the ocean. The Crystal bilge water separator was developed by Genoil for the commercial marine industry. It has been approved by US Coast Guard, according to the International Maritime Organization standards (Resolution MEPC 107 (49)), and the American Bureau of Shipping.

Qinhuangdao Port is the eleventh largest port in the world, in terms of tonnage shipped. It is strategically located for transporting coal from the north to the south of China, handling approximately 50 percent of China’s coal shipments, or 200 million tons annually making the port the world’s largest coal loading port. Tianjin Port is located 170 km south east of Beijing and east of Tianjin city – China’s third largest city. During 2008, Tianjin Port handled 354 million tons of cargo making it the largest port in north China, and one of the largest in the world. Tangshan Port is located southeast of Tangshan City, at Bohai Bay in Hebei province, east of Tianjin and west of Qinhuangdao.

To speed up the final implementation of these projects, Genoil expects to have at least one unit installed in the near future to demonstrate the efficiency of Genoil’s equipment at eliminating oil from the water in a ship’s bilge, and return clean water back to the waterway. This unit will be produced by Genoil’s manufacturing partner DongHwa Entec Co., Ltd.

On January 15, 2009, Genoil announced it signed an exclusive five year licensing agreement with DongHwa Entec Co., Ltd. Located in Busan, South Korea – the leading manufacturers of heat exchangers and related multi-stage water generators for a number of industries, including marine. DongHwa will license Genoil’s Bilge Water Separation technology for all ships, industrial fields and offshore rigs manufactured or retrofitted in Korea, China and Japan, and additionally, DongHwa will also manufacture the Genoil Bilge Water Separator units for sale by Genoil.

On March 2, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tianjin Port, one of China’s major shipping harbours.

On March 10, 2009, Genoil signed a memorandum of understanding (“MOU”) with Tangshan Port, in China, for the implementation of Genoil’s bilge water treatment system.

The Company’s plan is to organize manufacturing facilities for regional locations to reduce transportation costs and expedite deliveries by shorter shipping distances. With DongHwa covering the Pacific Rim, Genoil is in the process of determining other low-cost manufacturing centers to serve the Caspian Sea area, Europe, and other major markets. As a result, this should allow Genoil to efficiently manufacture and ship at competitive prices.

The Company seeks to finance the rollout of the Crystal Sea Units to various ports. The proceeds of any financing shall be used to implement the utilization of Genoil’s oily water separation technology to treat and clean bilge water. More specifically, the proceeds will be used for Crystal Sea installations on formal finalization of the MOUs at the three ports that have signed MOUs with Genoil – the Tangshan Port, Tianjin and Qinhuangdao Port. The proceeds can also be utilized for other Ports that the Clarendon team is in negotiations with. These three ports mentioned are some of the busiest and largest in China.

Heavy oil upgrading technology

Hayitiong refinery project

Hayitiong (HYT), formerly Hebei Zhongjie Petrochemical Group Company Ltd. and Genoil Inc. signed a letter of intent (LOI) in October 2006 for a 19,000 barrel per day upgrader that is planned to be built at the HYT refinery in Nampaihe Town, Huanghua City, Hebei, China. Genoil tested oil samples of the feedstock to be processed in the upgrader during the third quarter of 2007 with expected results, showing a significant improvement in the quality of upgraded oil versus the feed stock after processing through the GHU®. After completing all laboratory analysis, our engineering team completed the first level of design of the planned upgrading unit (Front End Engineering and Design (FEED) study).

The completion of the FEED study allows for the detailed design of the GHU® upgrader setup specifically required for the configuration at this refinery and enabled Genoil to obtain quotes to manufacture and install the plant components. This enabled our Chinese Engineering, Procurement and Construction ("EPC") firm to estimate the cost to build the plant and to estimate profitability with 75% accuracy. Additionally, the FEED study aids in calculation of the economics and ability to finance the project, allowing for better estimation of the full cost of the plant. At present, the cost for the Genoil Hydroconversion Upgrader system to be built in HYT’s refinery is estimated at a total of $170 million.

HYT and Genoil have signed a revised LOI that reflects more favourable terms for this deal, especially with respect to the financing. Genoil’s initial contribution has been considerably reduced, with the balance of the project expected to be raised jointly by the parties using the project’s assets as collateral for a loan from local financial institutions. The Company believes that these new LOI terms will help enhance the marketability of the financing for the project.

Construction of this first GHU commercial unit remains subject to appropriate project financing and subsequent completion of the definitive agreement between the parties. Once the project funding is secured, Genoil will hand the design to the EPC contractor to complete the detailed design, to procure all the parts and oversee the construction of the plant.

The HYT Genoil Upgrader will combine the proprietary Genoil Hydroconversion Unit (GHU®) and an Integrated Gasification Combined Cycle section (IGCC), which will result in a bottomless, self-sufficient (hydrogen, power, steam, etc.) upgrading facility.

On April 30, 2009, Genoil received an additional and new patent from the US Patent and Trademark Office (USPTO) for its hydroconversion upgrader technology. The patent is a valuable addition its Genoil upgrading process that economically upgrades and significantly increases the yields from high sulphur, acidic, heavy crude, bitumen, and refinery residues.

Convertible Notes

Short term notes (and attached warrants) from entities affiliated with the Corporation's Chairman and Chief Executive Officer, expired on October 6, 2008 and were replaced with new notes and warrants that mature in October 2009. On October 22, 2009, the Company announced that it had agreed to the extension of the term of an aggregate $1,227,355.84 principal amount of convertible notes and an aggregate 1,136,442 common share purchase warrants which were previously issued and are outstanding. The notes and warrants were originally issued to a group of four investors in October, 2008 which included Lifschultz Enterprises Co., Sidney B. Lifschultz 1992 Family Trust, David K. Lifschultz and Bruce Abbott, having a conversion price equal to C$0.27 in respect of the notes, and an exercise price of C$0.41 in respect of the warrants. The notes and warrants had an original term expiring on October 6, 2009, which term was amended and extended to October 6, 2010. The notes and warrants remain substantially unamended in all other respects.

OVERALL PERFORMANCE

As the Company has no significant sales, cost of sales, discontinued operations or extraordinary items, discussion will focus on expenses and liquidity.

SUMMARY OF QUARTERLY RESULTS

The following table provides a summary of the Company’s key financial performance measures for the quarter ended December 31, 2009 and the seven preceding quarters:

	2008 - Q1	2008 - Q2	2008 - Q3	2008 - Q4	2009 - Q1	2009 – Q2	2009 – Q3	2009 – Q4

Working capital (deficiency)	(1,578,687)	(2,861,951)	(1,145,591)	(1,814,931)	(2,527,317)	(1,300,454)	(1,936,201)	(2,315,314)

Long term debt	142,758	146,905	151,052	155,199	159,855	164,511	169,167	173,823

Total assets	5,102,569	5,300,680	5,324,045	4,933,724	4,473,110	4,527,830	4,346,205	4,110,422

Accumulated deficit	58,585,694	59,719,412	61,727,950	62,889,226	64,340,800	65,751,427	66,561,206	68,042,222

Cash used in operations	1,192,578	1,247,897	816,004	757,303	623,039	578,165	557,497	662,291




SELECTED EXPENSES

	2008 - Q1	2008 - Q2	2008 - Q3	2008 - Q4	2009 - Q1	2009 – Q2	2009 – Q3	2009 – Q4

Human resources	562,335	474,263	339,713	375,356	305,805	294,171	250,246	212,956

Business development	201,833	128,670	262,807	97,791	48,047	18,543	39,236	8,673

Professional fees	117,051	196,121	7,652	119,019	26,954	52,796	25,864	206,567

Stock-based compensation	2,106,373	(409,600)	987,291	177,803	630,570	631,072	50,857	642,430

In order to reduce its cash burn rate, the Company has reduced its headcount, resulting in a significant reduction in human resource costs. Severance payments caused the increase in the fourth quarter of 2008.

Professional fees are seasonal due to audit fees being incurred at the end of the year.

LIQUIDITY

The Company used $662,291 in cash for its operations during the fourth quarter, down from the comparable quarter of 2008 due to efforts to reduce expenses in all areas. Cash flow used by operating activities, the comparable GAAP measure was $398,673 in 2009 (2008 - $502,867).

The Company also did a shares-for-debt transactions issuing a total of 2,265,192 common shares at C$0.13. There were no warrants issued with the shares-for-debt transaction.

The Company’s operations continue to consume cash. As it has in the past, the Company will rely on its CEO to arrange financing to support its working capital requirements for the foreseeable future.

Genoil’s business is capital intensive, requiring cash infusions on a regular basis as it seeks to grow, develop and market its technologies. The Company is actively pursuing contracts for its GHU® and as

a consequence, the demand for cash will not diminish in the short-run and cash flow is expected to continue to be negative for the foreseeable future.

The Company is not expected to be profitable during the ensuing twelve months and therefore must rely on securing additional funds from either issuance of debt or equity financing for cash consideration.

The Company’s use of cash may increase in the future as it expands operations to meet near term business opportunities. The Company 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. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.

COMMITMENTS AND CAPITAL EXPENDITURES

The Company currently has no outstanding commitments for capital expenditures.

RELATED PARTY TRANSACTIONS

See “Liquidity” above for details of funding arrangements made with the Chairman and CEO of the Company.

ACCOUNTING POLICIES

There were no changes in accounting policies or adoption of new policies during the period.

ADDITIONAL DISCLOSURES

International Financial Reporting Standards

The Canadian Institute of Chartered Accountants (“CICA”) proposes to implement International Financial Reporting Standards (“IFRS”) as part of Canadian GAAP. The adoption of IFRS in Canada will result in significant changes to current Canadian GAAP and to financial reporting practices followed by Genoil. IFRS accounting standards are scheduled to be implemented for years beginning after December 31, 2010. Genoil will be required to adopt the standard for the year beginning January 1, 2011. The Company’s IFRS adoption date of January 1, 2011 will require the restatement, for comparative purposes, of amounts reported by the Company for the year ended December 31, 2010, including the opening balance sheet as at January 1, 2010.

Management has commenced its IFRS conversion process which consists of the below-listed three phases:

1. Preliminary Phase

This phase commenced with a review of the Company’s significant accounting policies relative to current and proposed IFRS. The outcome of this review resulted in an array of issues and circumstances of varying complexity with respect to the adoption of the new standards.

2. Evaluation Phase

The Company is currently preparing an analysis for the potential impact and the gravity of that impact of the policies in the Preliminary Phase that may be affected by the conversion to IFRS. The issues

identified have been priority ranked. This phase involves analysis of policy choices allowed under IFRS and the impact on the financial statements.

3. Implementation Phase

This final phase manifests itself in the execution of the Evaluation Phase.

Upon completion of the Preliminary Phase, management determined that the differences most likely to have the greatest degree of complexity and impact on the Company’s consolidated financial statements were:

First-time adoptions exemption (IFRS 1) – the International Accounting Standards Board has approved additional exemptions from the retrospective application of IFRS for first time adopters. Management will consider this exemption in the preparation of its opening balance sheet.
Impairment of PP&E – under IFRS, impairment of PP&E must be calculated at a more detailed level than what is currently required under Canadian GAAP. Impairment calculations will be performed at the Cash Generating Unit level using either total proved or proved plus probable reserves.
Foreign currency translation methods and the functional currency of the Company’s US subsidiary – under IFRS, the functional currency emphasizes the currency that determines the pricing of the transactions that are undertaken, rather than focusing on the currency in which those transactions are denominated.
IAS 12 - Income Taxes is similar to Canadian GAAP in that the Company has to recognize deferred (future) taxes on temporary differences between the carrying value of assets and liabilities and the tax value. The adoption of IFRS will have a significant impact on the Company’s tax accounting in the period of adoption and in subsequent periods for new temporary differences arising on the conversion to IFRS as a result of changes in carrying values of assets, differences in depreciation and depletion expense, residual values, capitalization of borrowing and direct costs and impairment charges and reversals.
IAS 37 – Provisions, Contingent Liabilities and Contingent Assets - Management is still determining the impact of this revised standard.

During the Evaluation Phase, certain potential policy differences between IFRS and Canadian GAAP are currently being investigated to assess whether or not there may be a broader impact on the Company’s:

Disclosure controls – throughout the transition process, the Company will be assessing stakeholders’ information requirements and will ensure that adequate and timely information is provided so that all stakeholders are kept apprised.
Internal controls over financial reporting (“ICFR”) – as the adoption of IFRS policies is completed, an assessment will be made to determine changes required for ICFR.
Contracts and lending agreements – management has been cognizant of the upcoming transition to IFRS and will ensure that agreements that reference Canadian GAAP statements or financial covenants are modified to allow for IFRS statements and calculations made in accordance with IFRS statements, respectively. Based upon the expected changes to the

Company’s accounting policies at this time, there are no foreseen issues with existing wording in agreements into which the Company may enter as a result of the conversion to IFRS.

The conclusion of the Evaluation Phase will require the audit committee of the Board of Directors to review and approve all accounting policy changes as proposed and recommended by management. The final Implementation Phase involves implementing all changes approved in the Evaluation Phase.

Management has not yet finalized its accounting policies and as such is unable to quantify the impact of adopting IFRS on the financial statements. In addition, due to anticipated changes to IFRS and IAS prior to the Company’s adoption of IFRS, management’s plan is subject to change based upon new facts and circumstances that arise after the date of this MD&A. The transition from Canadian GAAP to IFRS is a significant undertaking that may materially affect the Company. Management’s timeframe to complete the third and final Implementation Phase of its IFRS adoption efforts is scheduled during the second half of 2010, which will allow the Company to adopt IFRS in place of Canadian GAAP effective January 1, 2011.

OUTSTANDING SHARE DATA

The following table sets out the number of common voting shares if all convertible securities were converted into shares on December 31, 2009:

		Number
Shares outstanding		276,673,669
Issuable under:
Options		43,730,000
Warrants		17,992,138
Convertible notes		5,372,495

		343,768,302

On November 3, 2009, the Board of Directors of the Corporation approved the grant of stock options for a total of 5.6 million shares to the Company's employees, directors and consultants. All of the 5.6 million options were approved with an exercise price of C$0.14, being the closing price of the Corporation's shares on the TSX Venture Exchange on the date preceding the date such grants were approved by the board. A total of 4,325,000 of the options issued to directors and officers vest immediately. All of such options issued to directors and officers have a term of five years from the date of issuance.

In January 2010, the Company issued 4,700,000 options to the CEO and Chairman and 500,000 to Board Directors and 500,000 to a consultant. The options have a strike price of C$0.18.

In January 2010, the Company completed a private placement that raised US$762,700, issuing 5,866,920 common shares at US$0.13 and 5,866,920 warrants with an exercise price of US$0.20 per common share and have a 2 year term. Shares-for-debt transactions were also completed in January 2010 for US$191,000, issuing 1,457,744 common shares and 37,314 warrants with an exercise price of US$0.20 per common share and have a 2 year term.

EVALUATION OF DISCLOSURE CONTROLS

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, 2009 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in National 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 were not effective because of the material weaknesses described in Management’s Report on Internal Control over Financial Reporting.

MANAGEMENT REPORT ON INTERNAL CONTROL

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.

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, 2009 due to the following material weakness:

Due to the small size of the Company, it did not maintain effective segregation of duties over certain transactions leading to ineffective monitoring, supervision and potential misappropriation of assets.

Remediation to Address Material Weakness

The Company does not plan to remediate the above mentioned weakness as the cost would outweigh the benefits.

Changes in Internal Control over Financial Reporting

There has been no change in Genoil’s ICFR that occurred during the period beginning on January 1, 2009 and ended on December 31, 2009 that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.

RISKS

The ability of the Company to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on the Company’s ability to continue to raise the necessary capital to fund the commercialization of its patents and technology rights. There is no certainty that the Company will be able to raise the necessary capital.

To date the Company has not achieved commercial operations from its various patents and technology rights. The future of the Company is dependent upon its ability to obtain additional financing to fund the development of commercial operations.

The Company has not earned profits to date and there is no assurance that it will earn profits in the future, or that profitability, if achieved, will be sustained. The commercialization of the Company’s technologies requires financial resources and there is no assurance that capital infusions or future revenues will be sufficient to generate the funds required to continue the Company’s business development and marketing activities. If the Company does not have sufficient capital to fund its operations, it may be required to forego certain business opportunities or discontinue operations entirely.

INTEREST RATE RISK

The Company is not exposed to significant interest rate price risk due to the short-term maturity of its monetary assets and liabilities and due to the long term convertible debenture not bearing interest.

FOREIGN CURRENCY RISK

The Company translates the results of its foreign operations into Canadian currency using rates approximating the average exchange rate for the year. The exchange rates may vary from time to time creating foreign currency risk. At December 31, 2009, the Company had certain obligations and assets denominated in U.S. dollars and there were no contracts in place to manage this exposure.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or the Company's future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “budget”, “plan”, “continue”, “estimate”, “expect”, “forecast”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar words suggesting future outcomes or statements regarding an outlook.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking statements contained in this MD&A.

The forward-looking statements contained in this MD&A are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

Exhibit 14.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the use of our report dated April 20, 2010 with respect to the consolidated balance sheets of Genoil Inc. as at December 31, 2008 and 2009 and the consolidated statements of loss, comprehensive loss and deficit and cash flows for the years ended December 31, 2008 and 2009 which is included in the Company’s Annual Report Form 20-F filing.

/s/ MEYERS NORRIS PENNY LLP

Chartered Accountants

Calgary, Canada

June 21, 2010

Exhibit 14.2

Tel: 604 688 5421

Fax: 604 688 5132

vancouver@bdo.ca

www.bdo.ca

BDO Canada LLP

600 Cathedral Place

925 West Georgia Street

Vancouver BC V6C 3L2 Canada

To The Shareholders of Genoil Inc.

We have audited the consolidated statements of loss, comprehensive loss and deficit and cash flows of Genoil Inc. for the year ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

With respect to the consolidated financial statements for the year ended December 31, 2007 we conducted our audit in accordance with Canadian generally accepted auditing standards and the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements present fairly, in all material respects, the Company’s operations and its cash flows for the year ended December 31, 2007 in accordance with Canadian generally accepted accounting principles.

/s/ BDO Canada LLP

Chartered Accountants

Vancouver, Canada April 18, 2008