GENOIL INC (Form: 20-F, Received: 05/07/2013 06:03:56)

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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, 2012

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

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

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

For the transition period from

Commission file number:

GENOIL INC.

(Exact name of Registrant as specified in its charter)

Canada
(Jurisdiction of incorporation or organization)

727 – 7 Avenue S.W., Suite 1580 Calgary, Alberta, Canada T2P 0Z5 (Address of principal executive offices)

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

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 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

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: 350,456,719 as of December 31, 2012 and 360,608,835 as of April 30, 2013 Preferred shares: (zero) as of December 31, 2012.

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 has submitted electronically and posted on its corporate Web site, any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

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 basis of accounting the registrant has used to prepared the financial statements

included in this filing:
U.S. GAAP ¨	International Financial Reporting Standards as i s sued by the International Accounting Standards Board x	Other	¨

If “Other” has been checked in response to the previous question, Indicate by check mark which financial statement item the registrant has elected to follow

¨ 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		11
Item 5.	Operating and Financial Review and Prospects		24
Item 6.	Directors, Senior Management and Employees		30
Item 7.	Major Shareholders and Related Party Transactions		34
Item 8.	Financial Information		36
Item 9.	The Offer and Listing		36
Item 10. Additional Information			37
	Directors' Conflicts of Interest		38
	Borrowing Powers		38
	Directors		39
	Rights Attached to Shares		39
	Alteration of the Rights of Shareholders		40
	Shareholders' Meetings		40
	U.S. Holder of Common Shares		44
	Canadian Federal Income Tax Consequences		45
	United States Federal Income Tax Consequences		45
Item 11. Quantitative and Qualitative Disclosures About Market Risk			48
Item 12. Description of Securities Other than Equity Securities			48
Item 13. Defaults, Dividends Arrearages and Delinquencies			48
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds			48
Item 15. Controls and Procedures			48
Item 16. [Reserved]			49
	Item A	Audit Committee Financial Expert	49
	Item B	Code of Ethics	50
	Item C	Audit Fees	50
Item 17. Financial Statements			51
Item 19. Exhibits			51

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 International Financial Reporting Standard (IFRS). 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, 2012, 2011, 2010, 2009, and 2008 and for the years ended December 31, 2012, 2011, 2010, 2009, and 2008 have been derived from Genoil's audited Consolidated Financial Statements, which are included elsewhere. The selected financial data for the years ended December 31, 2012, 2011and 2010 is presented in accordance with IFRS. The Company’s transition date to IFRS was January 1, 2010. The financial data for dates and periods prior to January 1, 2010 have not been restated and have been prepared under Canadian GAAP. Reference is made to note 24 to the Company’s consolidated financial statements for a description of the transition from Canadian GAAP to IFRS.

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 (based on IFRS)

(All amounts in Canadian dollars)

	Years ended December 31

	2012	2011	2010
Revenue	-	-	-
Loss from continuing operations
IFRS	(5,432,081)	(1,758,748)	(7,856,827)
Loss for the period
IFRS	(5,432,081)	(1,758,748)	(7,856,827)
Loss per share from continuing operations: Basic and
diluted
IFRS	(0.02)	(0.01)	(0.03)
Income (loss) per share: Basic and diluted
IFRS	(0.02)	(0.01)	(0.03)
Total assets
IFRS	2,685,243	4,570,764	5,395,745
Net assets
IFRS	(1,892,630)	101,339	(1,482,707)
Share Capital
Number of Shares Outstanding	350,456,719	318,264,541	301,145,429
IFRS	58,276,791	56,966,166	55,359,595
Retained earnings (deficit)
IFRS	(81,245,828)	(75,813,747)	(74,054,999)

Note: Information based on previous GAAP is not comparable to information prepared in accordance with IFRS as issued by the IASB..

Selected Consolidated Financial Information (based on Canadian & US GAAP)

(All amounts in Canadian dollars)

	2009	2008
Revenue	-	41,340

Loss from continuing operations
Canadian GAAP	(5,152,996)	(7,767,173)
US GAAP	(5,052,672)	(7,727,562)
Loss for the period
Canadian GAAP	(5,152,996)	(7,767,173)
US GAAP	(5,052,672)	(7,727,562)
Loss per share from continuing operations: Basic and
diluted
Canadian GAAP	(0.02)	(0.03)
US GAAP	(0.02)	(0.03)
Income (loss) per share: Basic and diluted
Canadian GAAP	(0.02)	(0.03)
US GAAP	(0.02)	(0.03)
Total assets
Canadian GAAP	4,100,422	4,933,724
US GAAP	4,100,422	4,933,724

Net assets
Canadian GAAP	1,312,362	2,294,715
US GAAP	1,280,080	2,146,719
Share Capital
Number of Shares Outstanding	276,673,669	262,283,150
Canadian GAAP	52,207,086	51,077,866
US GAAP	84,858,153	83,728,933

Retained earnings (deficit)
Canadian GAAP	(68,042,222)	(62,889,226)
US GAAP	(124,768,544)	(119,715,872)

Adjustments to Consolidated Statements of Loss

	2009	2008

Loss from operations - Canadian GAAP	(5,152,996)	(7,767,173)

Adjustments	-	-

Accretion of convertible notes (a)	4,383	9,252

Accretion of convertible notes (b)	-	-

Accretion of convertible notes (c)	95,941	30,359

Accretion of convertible notes (d)	-	-

Loss on conversion of debt (a)	-	-

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

Loss per share - basic and diluted	$0.02	$0.03

Adjustments to Consolidated Balance sheets

Adjustments to Liabilities

	2009	2008

Total liabilities - Canadian GAAP	2,788,060	2,639,009

Proceeds of convertible notes (a)	43,984	48,368

Procees of convertible notes (c)	-	-

Proceeds of convertible notes (d)	(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)	-	-

Proceeds of convertible notes (d)	11,702	(99,628)

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

Adjustment to Share Capital

	2009	2008

Share Capital – Canadian GAAP	52,207,086	51,077,866

Adjustment due to reduction of stated capital	32,641,067	32,641,067

Share Capital – US GAAP	84,848,153	83,718,933

Adjustments to Retained Earnings

	2009	2008

Retained Earnings – Canadian GAAP	68,042,222	62,889,225

Adjustments

Reduction of share capital	53,745,436	53,745,436

Cumulative adjustment in stock-based compensation	1,202,402	1,202,402

Loss on conversion of debt – Series A notes	1,540,990	1,545,373

Accretion of convertible notes – Series B & C	(51,368)	(51,368)

Accretion of convertible notes – Series D	415,163	415,163

Accretion of convertible notes – Series E	(126,300)	(30,359)

Retained Earnings – US GAAP	124,768,544	119,715,872

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

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

Number of Shares Issued

	Years ended December 31

	2012	2011	2010	2009	2008

Shares outstanding	350,456,719	318,264,541	301,145,429	276,673,669	262,283,150
Shares issued	32,192,178	17,119,112	24,471,760	14,390,519	29,370,393

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

Average exchange rate	2012	0.9996
	2011	0.9891
	2010	1.0299
	2009	1.1420
	2008	1.0660

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

	High	Low
March 2013	1.0315	1.0160
February 2013	1.0314	0.9955
January 2013	1.0065	0.9838
December 2012	0.9965	0.9837
November 2012	1.0038	0.9918
October 2012	1.0008	0.9780
.

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

The Company reported a net loss of $5,432,081 (2011 - $1,758,748) and used funds for operating activities of $1,158,085 (2011 - $1,744,467) for the year ended December 31, 2012. The Company had a net working capital deficiency of $3,519,943 (2011 – $3,300,571) and a cumulative deficit equal to $81,245,828 (2011 - $75,813,747) as at December 31, 2012.

The ability of the Company to continue as a going concern is in substantial doubt and is dependent on achieving profitable operations, commercializing its technologies, and obtaining the necessary financing in order to develop these technologies 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 2012, the Company received net cash proceeds of $1,481,442 (2011 - $1,853,941) pursuant to financing activities.

At the close of 2012, the Company recorded an impairment charge equal to $1,900,000 as a consequence of:

The current state of disrepair of the pilot upgrader ($900,000); and
The impairment of technology rights and patents related to the GHU.

Subsequent to year-end, the Company entered into an arrangement with Pointsource Processing Inc. to market land and sea based oil/water separators. Pointsource spent months investigating the technology and rated it as “cutting edge”, economically priced, with very low operating expense, due to the relative lack of consumables. Pointsource has identified the current, below-listed marketing opportunities:

Royal Canadian military – destroyers and submarines;
Saudi Arabian oilfields;
Emirate of Dubai;
Pulp and paper companies in Canada;
USA processing facility; and
Waste management applications.

On April 2, 2013, the Company received a demand letter, from the landlord of the Company’s former Sherwood Park, Alberta location, stating that should the Company not pay $100,068, in rental arrears, in a certified fashion, by April 12, 2013, the landlord would commence legal proceedings against the Company to satisfy this debt. The Company has not made this payment; however, an offer, to which no response has been received, to settle this liability, utilizing the “shares for debt” avenue has been proffered to the landlord.

On April 4, 2013, the Board of Directors of the Corporation completed a review of compensation levels for the Corporation's officers. Recognizing the Corporation’s scarce cash resources and resultant inability to pay cash compensation, the Board approved the grant of an aggregate of 5,500,000 stock appreciation rights relating to the market performance of Genoil’s common shares, at base price of $0.06, being superior to the closing price of the Corporation's shares on the TSX Venture Exchange on the day prior to the day this grant was made. Of the 5,500,000 rights approved for grant, 4,000,000 have been approved for grant to the Corporation's Chief Executive Officer and 1,500,000 to the Corporation's President, as an inducement for their continued efforts and their compensation, in lieu of any salary compensation, for 2013. All rights described above vest immediately and have a term of five years from the date of grant.

Management, utilizing close personal relationships, has been successful in raising capital through periodic private placements of the Corporation's common shares. Although these shares are subject to a "hold" period on both the United States and Canadian stock markets, the investors' confidence in the undertakings of management, with respect to future positive market performance of the Corporation's common stock, permits this avenue of financing to exist. External sources of debt financing are not available to the Company due to its precarious financial position.

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 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 may continue to incur significantly greater costs than revenue received. Consequently, the Corporation may incur additional 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.

At the close of 2012, the Company recorded an impairment charge equal to $1,900,000 as a consequence of:

The current state of disrepair of the pilot upgrader ($900,000); and
The impairment of technology rights and patents related to the GHU .

Although the Company suffered the above charges, due to the provisions of IAS36 (International Accounting Standard #36), which requires an entity to assess at the end of each reporting period whether there is any indication that an asset may be impaired, when this asset is proven to have value, such charge can be reversed.

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, 2012, the following potentially dilutive instruments were outstanding:

Options outstanding		58,418,500
Warrants outstanding		31,679,621
Notes convertible		20,471,638

		110,569,759


Common shares outstanding		350,456,719

Potential dilution		32%

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 1580, 727 – 7 Avenue S.W., Calgary, Alberta, T2P 0Z5, Tel (403) 750-3450, Fax (403) 290-0592.

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, 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 to 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 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
2010		On June 22, 2010, Genoil announced that it closed a non-brokered private placement, pursuant to which it
		has issued an aggregate of 7,692,308 units at a price of US$0.13 per unit to raise aggregate gross proceeds
		of US$1 million. Each unit is comprised of one common share in the capital of Genoil, and one Share
		purchase warrant exercisable for two years following the date of issue at an exercise price of US$0.18.
		The terms of the other previously announced private placement on May 25 ^th 2010 was not approved by
		the TSX Venture Exchange
		On June 30, 2010, Genoil announced it has been awarded a major patent for its breakthrough sand
		decontamination technology by the United States patent office. The patent recognized the unique
		positioning of Genoil for Gulf of Mexico disaster cleanup. As a result of continued research and
		development, the sand decontamination patent constitutes a major advancement of the reactor design.
		The improved reactor enhances the sand cleaning process in three stages and increases the rate of
		hydrocarbons extracted from the sand. Consequently, the amount of hydrocarbons removed increases
		while resulting in more separation in less time. In addition, the amount of heat energy is also drastically
		reduced resulting in greater operational savings. The reactor features a method for retaining the dissolved
		contaminants and blocking their transfer downstream in order to minimize the total dissolved solids in the

		decontaminated sand. This patent is a result of Genoil’s long term commitment to environmental
		technologies offering practical solutions to cleanup environmental disasters. Our sand cleaning units,
		which are completely portable, are able to reclaim enough contaminants to return the earth to agricultural
		grade soil
		On November 3, 2010, Genoil agreed to the extension of the term of an aggregate $1,544,543.82 principal
		amount of convertible notes and an aggregate 1,136,442 common share purchase warrants which were
		previously issued. The Notes and Warrants were originally issued to a group of four investors in October,
		2008 which included Lifschultz Enterprises Co., LLC , Sidney B. Lifschultz 1992 Family Trust and David
		K. Lifschultz, having a conversion price equal to $0.27 in respect of the Notes, and an exercise price of
		$0.41 in respect of the Warrants
		On November 29, 2010, Genoil announced that it had entered into an agreement to acquire 100% of the
		issued and outstanding common shares of Two Hills Environmental Inc. This acquisition conveys to
		Genoil surface title to 147 acres of land, together with certain subsurface mineral rights contained within
		2,500 adjacent acres and access to 388,550 cubic meters of water to be derived yearly from the North
		Saskatchewan River. This water is critical to the development of local brine production, environmentally
		acceptable disposal of oil sands and oil well production waste. These multiple salt caverns could
		potentially be utilized for a variety of purposes including waste oil disposal, gas storage reservoirs and
		waste water disposal
2011		On February 14, 2011, Genoil advised that it had paid a cash deposit of $100,000, issued 2,500,000
		common shares of Genoil to the former shareholder of Two Hills, issued 2,500,000 common shares of
		Genoil to a debtor and issued an option to purchase 250,000 common shares of Genoil, at market price to
		an agent as commission for structuring the acquisition. Concurrent with the closing of this transaction,
		Thomas F. Bugg, President of Genoil, acquired from the aforementioned debtor 1,000,000 common
		shares of the Corporation, at a deemed price of $0.295 per common share. The acquisition was effective
		December 2010
		On March 31, 2011 Genoil Inc. also announced on the aforementioned date that the Board of Directors of
		the Corporation has approved a grant of an aggregate 4,250,000 options to consultants to acquire up to
		4,250,000 common shares of the Corporation as compensation for services provided. These options were
		approved with an exercise price of C$0.20, being above the closing price of Genoil's shares on the TSX
		Venture Exchange on the date preceding the press release. All of the options approved have a term of five
		years from the date of grant and vest immediately
		On March 31, 2011 Genoil advised that it continues to work on oil water separation technology for the
		VLCC (Very large Crude Carriers) and is making adjustments to the Crystal test unit to meet required
		specifications. Genoil continues to work on other projects in the Middle East for both GHU upgrading
		business and Crystal Sea projects and at this stage does not feel that the recent political activity in the
		region will interfere with any of its projects
		On April 6, 2011, Genoil announced that it had closed a non-brokered private placement, pursuant to
		which it issued an aggregate of 1,575,000 units at a price of US$0.20 per unit to raise aggregate gross
		proceeds of US$315,000. Each unit is comprised of one common share in the capital of Genoil (a
		"Share"), and one Share purchase warrant (a "Warrant") exercisable for two years following the date of
		issue at an exercise price of US$0.20
		In June 2011, the Company issued promissory notes in the amount of C$346,018. The promissory notes
		are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011
		In 2011, the Company completed three shares-for-debt transactions. In the first transaction, the Company
		issued 747,714 shares at $0.20 and allocated $149,543 to share capital. For the second transaction, the
		Company issued 7,067,089 shares at $0.10 and 3,000,000 warrants at with an exercise price of $0.11;
		$706,709 was allocated to share capital and an estimated fair value on the warrants of $270,379 was
		credited to contributed surplus. The third transaction issued 557,255 common shares at $0.115 and
		allocated $64,084 to share capital
		During November 2011, Genoil received ABS certification for all Crystal Sea models. This accreditation
		is in addition to obtaining the US Coast Guard/IMO MEPC 107 49 certification for Crystal MU 30 and
		MU 40 of 5 m3/h and 10 m3/h
2012		In April 2012, a private placement was completed. The Company issued 6,732,898 shares at $0.09 per
		common share and allocated $248,901 to share capital. The attached warrants are exercisable at $0.10
		with a 5 year term and the estimated fair value of $362,378 was credited to contributed surplus.
		In September 2012, a shares for debt transaction was completed. The Company issued 10,300,460
		common shares at a fair market value of $0.08 per share and allocated $824,037 to share capital.

In October 2012, a private placement was completed. The Company issued 15,158,820 shares at $0.07
per common share and allocated $195,860 to share capital. The attached warrants are exercisable at $0.10
with a 5 year term and the estimated fair value of $865,257 was credited to contributed surplus
In October 2012, promissory notes in the amount of $386,313 were repaid to the note holders.
On October 22, 2012 Genoil Emirates announced that it had successfully obtained a Professional License
to perform pollution and environmental protection services in the United Arab Emirates, and has been
added to the Commercial Register in the Emirate of Dubai.
On October 31, 2012, the Company announced that it granted marketing, manufacturing and distribution
rights to Donghwa Entec, a reputable Korean manufacturer of marine equipment. The rights pertain to the
Crystal Sea oily-water separators designed for the new shipbuilding industry together with retrofitting of
existing ships. Genoil models feature one of the most compact bilge separators worldwide with
throughputs ranging from 0.25 m3/hr. capacity to 10 m3/hr. units.
On November 15, 2012, the Company appointed Italtec Ghana Limited as sole representative for Genoil
Products in Ghana and Senegal. The appointment allows Italtec Ghana to market all of Genoil’s products
to these regions, which includes the Genoil Desulfurization Heavy Oil Upgrader, the Genoil Diamond,
Genoil Sand Decontamination Technology and Slop/Waste Oil Treatment System Technology.
In the first quarter of 2013, the Company entered into an arrangement with Pointsource Processing Inc. to
market land and sea based oil/water separators. Pointsource spent months investigating the technology
and rated it as “cutting edge”, economically priced, with very low operating expense, due to the relative
lack of consumables. Pointsource has identified the current, below-listed marketing opportunities:

•		Royal Canadian military – destroyers and submarines;
•		Saudi Arabian oilfields;
•		Emirate of Dubai;
•		Pulp and paper companies in Canada;
•		USA processing facility; and
		Waste management applications.

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.

Genoil has formed a new corporation in the Middle East with SBK Commercial Business Group in the United Arab Emirates. The corporation is named “Genoil Emirates”.

The purpose of this new corporation is to create projects in the U.A.E. for all of Genoil’s technologies, including: desulfurization, oil upgrading and recycling, water purification port technologies, well testing, and sand cleaning. Currently the United Arab Emirates has the seventh largest oil reserves in the world and is looking to expand production.

The Genoil Emirates joint venture between Genoil and SBK Commercial Business Group has significant promise. Genoil Emirates has established its head office in Riyadh, 11321 Kingdome of Saudi Arabia. The address is Building B, Near Gulf Commercial Complex Olaya, P.O. Box: 230032. It also has a branch location at Khober DAMAM, Block 7 Office 32 Khober, Telephone: +96614633181 Facsimile: +96614664763.

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.

At the close of 2012, the Company recorded an impairment charge equal to $1,900,000 as a consequence of:

The current state of disrepair of the pilot upgrader ($900,000); and
The impairment of technology rights and patents related to the GHU.

Oil/Water Separation

The Genoil Water Treatment Department has recently increased its significance in the business model of the Corporation. 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.

During the first quarter of 2013, the Company entered into an arrangement with Pointsource Processing Inc. to market land and sea based oil/water separators. Pointsource spent months investigating the technology and rated it as “cutting edge”, economically priced, with very low operating expense, due to the relative lack of consumables. Pointsource has identified the current, below-listed marketing opportunities:

Royal Canadian military – destroyers and submarines;
Saudi Arabian oilfields;
Emirate of Dubai;
Pulp and paper companies in Canada;
USA processing facility; and
Waste management applications.

During 2010, Genoil was awarded a major patent for its breakthrough sand decontamination technology by the United States patent office. Genoil provides one of the best commercial, economic and environmentally approved off the shelf solutions for soil and water decontamination. As a result of continued research and development, the sand decontamination patent constitutes a advancement of the reactor design. The improved reactor enhances the sand cleaning process in three stages and increases the rate of hydrocarbons extracted from the sand. Consequently, the amount of hydrocarbons removed increases while resulting in more separation in less time. In addition, the amount of heat energy is also drastically reduced resulting in greater operational savings. The reactor features a method for retaining the dissolved contaminants and blocking their transfer downstream in order to minimize the total dissolved solids in the decontaminated sand. This patent is a result of Genoil’s long term commitment to environmental technologies offering practical solutions to cleanup environmental disasters.

The acquisition 100% of the issued and outstanding common shares of Two Hills Environmental Inc. conveys to Genoil surface title to 147 acres of land, together with certain subsurface mineral rights contained within 2,500

adjacent acres. These multiple salt caverns could potentially be utilized for a variety of purposes including waste oil disposal, gas storage reservoirs and waste water disposal.

This site has potential as a waste oil/water disposal and treatment facility due its convenient proximity to several waste disposal companies. Alternatively, several of these massive salt caverns could become natural gas storage facilities. Any development is subject to obtaining the proper permits from the necessary regulatory agencies, further detailed economic analysis and obtaining appropriate financing.

Two Hills was initially formed to enter into the oilfield waste disposal industry by capitalizing upon its current undeveloped asset base. This asset base is comprised of a site under which very large salt caverns have been formed in the Lotsberg Formation beneath the earth’s surface. Such caverns are prized in the oilfield disposal industry due to their efficacy and safety as a destination for oilfield wastes.

Revenues from Product Sales

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

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.

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 2012. Payroll expenditures and the magnitude of the workforce have been purposefully limited as time has progressed to constrain expenditures.

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

	2012	2011	2010	2009	2008

Business development	44,326	186,218	171,480	114,526	201,246
Travel expenses	160,167	154,201	211,316	319,260	489,854

In this table, there are no differences between IFRS and Canadian GAAP, therefore the numbers are comparable.

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. Other major expenses for business development are marketing and website development

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.

Historically, Genoil’s primary commercial focus has been on the GHU, however, it has recently shifted to potential near term revenue opportunities from its Crystal oil/water separator products. Genoil anticipates sales of 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 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 been granted 8 US patents (Patent nos. 6,527,960; 7,001,502; 7,014,756; 5,603,825, 7,510,689, 7,704,400, 7,754,076 and 8,147,677), and 2 Canadian patents (No. 2,243,142 and 2,306,069). 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.

During 2012, the Company incurred a loss on impairment of $856,412 and $143,588 on technology rights and patents, respectively, relating to the GHU. During 2011, the Company incurred a loss on impairment of intangible assets of $291,994 for technology rights no longer is use by the Company.

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.

A third-party marketing agent spent months investigating the Company’s Crystal oil/water separating technology and rated it as “cutting edge”, economically priced, with very low operating expense, due to the relative lack of consumables

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 Over the Counter Bulletin Board (“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 2013 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 and oil reclamation sites.

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 $81.2 million to year ended December 31, 201 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 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.

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.

C. Organizational structure.

Genoil has a total of 8 full time employees, and also hires outside consultants as required in the cities of Calgary and Edmonton, Alberta, New York, New York, 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 six subsidiaries: Genoil (USA) Inc., Velox Corporation, Hydrogen Solutions Inc., Genoil Technology International C.A., Crystal Clear Solutions Inc. (the "Subsidiaries"), Genoil Emirates and Two Hills Environmental Inc. 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 Emirates has established its head office in Riyadh, 11321 Kingdom of Saudi Arabia. The address is Building B, Near Gulf Commercial Complex Olaya, P.O. Box: 230032. It also has a branch location at Khober DAMAM, Block 7 Office 32 Khober, Telephone: +96614633181 Facsimile: +96614664763.

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 one employee based at its office in Edmonton, Alberta. During 2012, the Corporation leased 8,300 square feet and rent paid was $15,604 for the first 8 months, then moved to smaller premises of 3,560 square feet and paid rent of $3,560 per month for the next 4 months. Genoil uses its Edmonton office for engineering, research and development.

The Corporation has three employees based at its office in Calgary, Alberta. During 2012, Genoil Calgary was able to decrease its rent from $12,290 per month to $5,889 per month for 5 months by moving into temporary smaller premises. but then increasing to $11,331 per month for 6 months with a move to new offices with a 3 year lease. Calgary has been able to recover a portion of rental expense by subleasing some of the empty offices. Genoil uses its Calgary office for corporate administration and marketing.

Genoil had no employees based at its facilities located in Two Hills, Alberta, at December 31, 2012. It uses its Two Hills facilities for research and development.

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 International Financial Reporting Standards, and are presented in Canadian dollars unless otherwise indicated.

The Company adopted IFRS on January 1, 2011. The Company’s financial statements as at and for the year ended December 31, 2010 were restated to conform with IFRS. Reference is made to note 24 to the Company’s consolidated financial statements for a description of the transition from Canadian GAAP to IFRS.

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, 2012 in comparison with those for the fiscal year ended December 31, 2011. 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, 2012, 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, 2012

*Significant items*

(based on IFRS)	2012	2011	2010
	IFRS	IFRS	IFRS

Revenue	$ -	$ -	$ -
Interest received	-	-	-

General & Administration costs
Human resources	$ 628,502	$ 744,717	$ 897,100
Business development	44,326	186,218	171,480
Travel	160,167	154,201	211,316
Professional fees	941,924	788,691	297,862
Rent	195,173	347,908	452,020
Shareholder services	123,695	73,344	88,654

Research & Development costs
Development costs	$ 50,098	$ 158,186	$ 67,637

Other items
Loss on repayment of debt	$ -	$ 58,891	$ -
Loss on disposal of assets	-	201,092	-
Loss on impairment of assets	1,900,000	291,994	-
Loss on change in conversion price on debentures	844,533	-	-
	103,005	-	-
Stock-based compensation	55,550	1,744,590	2,635,046

Net loss	$ (5,432,081)	$ (1,758,748)	$ (7,856,827)
Per share - basic & diluted	(0.02)	( 0.01)	( 0.03)

Note: Information based on previous GAAP is not comparable to information prepared in accordance with IFRS.

(based on Canadian GAAP)		2009
		CGAAP

Revenue		$ -
Interest received		-

General & Administration costs
Human resources		$ 1,063,179
Business development		114,526
Travel		319,260
Professional fees		312,181
Rent		302,763
Shareholder services		99,762

Research & Development costs
Development costs		$ 28,370

Other items
Loss on repayment of debt		$ -
Loss on disposal of assets		-
Loss on impairment of intangible assets		-
Stock-based compensation		1,859,202

Net loss		$ (3,308,946)
Per share - basic & diluted		(0.02)

Total administration expenses decreased by 7.1% in 2012 as compared to 2011. The Company is making pronounced efforts to reduce monthly cash expenses. The significant subcategories thereof are shown above.

During 2009, in order to reduce it’s cash burn rate, the Company reduced its headcount, resulting in a significant reduction in human resource costs. In 2009 directors were remunerated with stock options, which were classified as stock-based compensation.

Business development consists mainly of travel and accommodation expenses to China and the Middle East. Also included are marketing and website development costs. Please refer to the financial statements for details on other unusual items.

Acquisition

On November 29, 2010, Genoil announced that it had entered into an agreement to acquire 100% of the issued and outstanding common shares of Two Hills Environmental Inc. This acquisition conveys to Genoil surface title to 147 acres of land, together with certain subsurface mineral rights contained within 2,500 adjacent acres and access to 388,550 cubic meters of water to be derived yearly from the North Saskatchewan River. This water is critical to the development of local brine production, environmentally acceptable disposal of oil sands and oil well production waste. These multiple salt caverns could potentially be utilized for a variety of purposes including waste oil disposal, gas storage reservoirs and waste water disposal. The Company is currently pursuing an opportunity that has arisen to utilize this site as a disposal reservoir for contaminated soil.

On February 14, 2011, Genoil advised that it had paid a cash deposit of $100,000, issued 2,500,000 common shares of Genoil to the former shareholder of Two Hills, issued 2,500,000 common shares of Genoil to a debtor and issued an option to purchase 250,000 common shares of Genoil, at market price to an agent as commission for structuring the acquisition.

In consideration of acquiring a 100% interest in Two Hills, the Corporation is required to pay a cash deposit of $100,000, issue 2,500,000 common shares of Genoil and also issue a warrant to purchase 250,000 common shares at market price upon closing to the former shareholder of Two Hills. To satisfy a debtor and litigant in the amount of $800,000 against Two Hills, Genoil will issue 2,500,000 common shares to that party.

The purchase price for the acquired common shares of Two Hills was arrived at through an arm's length negotiation process with the shareholder of Two Hills from whom such shares were purchased. This was further complemented by due diligence work conducted by Genoil which included, but was not limited to; (i) due diligence searches; (ii) review of the financial statements and records of Two Hills; (iii) interviews with Two Hills management; and (iv) review of the Two Hills minute book.

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.

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 2008 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$ 212,192 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.

On June 22, 2010, Genoil announced that it closed a non-brokered private placement, pursuant to which it has issued an aggregate of 7,692,308 units at a price of US$0.13 per unit to raise aggregate gross proceeds of US$1 million. Each unit is comprised of one common share in the capital of Genoil, and one Share purchase warrant exercisable for two years following the date of issue at an exercise price of US$0.18. The terms of the other previously announced private placement on May 25 ^th 2010 was not approved by the TSX Venture Exchange.

On November 3, 2010, Genoil agreed to the extension of the term of an aggregate $1,544,543.82 principal amount of convertible notes and an aggregate 1,136,442 common share purchase warrants which were previously issued. The Notes and Warrants were originally issued to a group of four investors in October, 2008 which included Lifschultz Enterprises Co., LLC, Sidney B. Lifschultz 1992 Family Trust and David K. Lifschultz, having a conversion price equal to $0.27 in respect of the Notes, and an exercise price of $0.41 in respect of the Warrants. The Notes and Warrants had an original term expiring on October 6, 2009, which had been amended and extended to October 6, 2010, and will be further amended and extended to October 6, 2011. The Notes and Warrants will remain substantially unamended in all other respects. In the absence of such extension the Notes would be overdue and payable immediately upon demand. The Company is currently negotiating to renew or extend the Series E notes, which matured October 6, 2011, for an additional year .

The Company completed a shares-for-debt transaction in December 2010 issuing 1,379,116 common shares at C$0.33 with no warrants and allocating C$455,111 to share capital.

The Two Hills Environmental Inc. share purchase price included 5,000,000 common shares at C$0.295 per common share with a total of $1,475,000 allocated to share capital.

On April 6, 2011, Genoil announced that it had closed a non-brokered private placement, pursuant to which it issued an aggregate of 1,550,000 units at a price of US$0.20 per unit to raise aggregate gross proceeds of US$310,000. Each unit is comprised of one common share and one share purchase warrant exercisable for two years following the date of issue at an exercise price of US$0.20.

In June 2011, the Company issued promissory notes in the amount of C$346,018. The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011.

In 2011, the Company completed three shares-for-debt transactions. In the first transaction, the Company issued 747,714 shares at $0.20 and allocated $149,543 to share capital. For the second transaction, the Company issued 7,067,089 shares at $0.10 and 3,000,000 warrants at with an exercise price of $0.11; $706,709 was allocated to share capital and an estimated fair value on the warrants of $270,379 was credited to contributed surplus. The third transaction issued 557,255 common shares at $0.115 and allocated $64,084 to share capital.

During November 2011, the Company completed a private placement for US$514,321 at US$0.10 per common shares, issuing 5,143,207 common shares with an attached warrant exercisable at US$0.10 with a five year term. $188,401 was allocated to share capital and the estimated $350,041 fair value of warrants was credited to contributed surplus.

In April 2012, a private placement was completed. The Company issued 6,732,898 shares at $0.09 per common share with an attached warrant exercisable at $0.10 with a five year term. $248,901 was allocated to share capital and the estimated fair value on the warrants of $362,378 was credited to contributed surplus.

In September 2012, a shares for debt transaction was completed. The Company issued 10,300,460 common shares at $0.08 per share and allocated $824,037 to share capital.

In October 2012, the Company closed a private placement that raised $1,061,117. Common share units were issued in the amount of 15,158,820 units valued at C$0.07 per unit each with an attached warrant with an exercise price of C$0.10 per share with a five year term. $195,860 was allocated to share capital and the estimated fair value on the warrants of $865,257 was credited to contributed surplus.

The Company reported a net loss of $5,432,081 and negative funds generated from operating activities of negative $1,158,085 for the year ended December 31, 2012. The Company had a net working capital deficiency of $3,519,943 and a cumulative deficit equal to $81,245,828 at year end.

In February 2013, the company closed a private placement that raised $408,947 and issued 6,815,783 common shares at $0.06 per common share. No warrants were issued and the full amount was allocated to share capital.

In April 2013, the company closed a private placement that raised $200,180 and issued 3,336,333 common shares at $0.06 per common share. No warrants were issued and the full amount was allocated to share capital.

The Company’s operations continue to consume cash. As it has in the past, the Company will rely on other sources to provide 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’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.

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 2012, the Company incurred a loss on impairment of $856,412 and $143,588 on technology rights and patents, respectively, relating to the GHU. These impairment losses have been reflected in the consolidated statement of loss and comprehensive loss. During 2011, the Company incurred a loss on impairment of intangible assets of $291,994 for technology rights no longer is use by the Company. Management wrote-off these technology rights in the consolidated statement of loss as they related to technologies that were no longer being actively pursued by the Company.

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	132,273	132,273	-	-	-
Pymt to SBK Commercial Business Group	900,000	150,000	450,000	300,000	-
Convertible notes	2,165,856	2,012,343	153,513

	3,198,129	2,294,616	603,513	300,000	-

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 Past			and Percentage of Tot
Held	Five Years	Date of Birth	Appointment	*()**

David K. Lifschultz*	Chief Executive Officer of Genoil	23-Nov-45	25-Feb-02	85,514,696
Larchmont, New	Inc. from 2002 to present.			23.7%
York

Chairman and CEO	Chairman of the board of directors
	of Genoil Inc. from 2002 to
	present.
	President and Chief Executive
	Officer of Lifschultz Terminal and
	Leasing, Inc. (Joint Venture
	Investment Company) from 1987
	to present.
	Chairman and Chief Executive
	Officer of Lifschultz Industries,
	Inc. (Manufacturer of scientific
	and industrial temperature
	measurement systems) from 1991
	to 2000.

Thomas Bugg	President and Director since June	30-Sep-50	6-Jun-08	1,000,000
Calgary, Alberta	6, 2008			0.03%
Canada
Director

Timothy Bojar	Director since November 22, 2012	19-Dec-75	22-Nov-12	Nil
New York, NY
USA
Director

Ron Hutzal	Director since November 22, 2012	21-Sep-44	22-Nov-12	Nil
Calgary, Alberta
Canada
Director

Brian Korney	Chief Financial Officer of Genoil	2-Dec-50	1-May-09	Nil
Chief Financial	Inc. from May 1, 2009
Officer
Calgary, 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, 2012. 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	$ -	-	-
Chairman & CEO

Thomas Bugg	$ -	-	-
Director

Brian Korney	$ 84,000		-
CFO

Timothy Bojar	$ -	-	-
Director

Ron Hutzal	$ -	-	-
Director

The approval of the grant of these rights resulted from a recommendation made by the Corporation's Chairman and Chief Executive Officer with the unanimous approval of the Board. The recommendation was based upon a review of the current, competitive industry conditions and with the objective being the retention of the Corporation’s key individuals. Consideration was also given to the recent movement in the Corporation's share trading price.

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, 2012, Genoil's Board of Directors consisted of Messrs. David Lifschultz, Timothy Bojar, Tom Bugg and Ron Hutzal. Of the Board, Messrs. Bojar and Hutzal 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. Timothy Bojar was appointed to the board as well as its audit committee on November 22, 2012. Ron Hutzal was appointed to the Board as well as the audit committee on November 22, 2012.

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 executive director. The Compensation Committee is comprised of three directors – one of whom is executive director. The mandate and activities of each committee are as follows:

Audit Committee . The Audit Committee consisted of Tim Bojar, Ron Hutzal 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 and unaudited 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 consists of Tom Bugg Tim Bojar and Ron Hutzal. 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, 2012, there were a total of 10 employees and consultants working for Genoil. Of these, 3 are senior management, 2 are middle management, 1 is an advisor to the Board, 1 is employed in an administrative capacity, 2 are engineers, 1 is a technologist and operator. The Corporation currently has 3 employees in the Calgary, Alberta, office, 1 employee in the Edmonton office, 1 employee in Romania and the rest work from the USA. Genoil has no labour unions and no temporary staff.

As at December 31, 2011, there were a total of 10 employees working for Genoil and as at December 31, 2010, Genoil employed a total of 14 employees.

E. Share ownership.

There were 350,456,719 Common Shares issued and outstanding as of December 31, 2012 (2011 – 318,264,541). 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 April 30, 2013, 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, 2012, 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 350,456,719 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	85,514,696	23.7%

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 3,798,213 Common Shares over which he exercises control as a trustee and through corporations that he controls, 22,100,000 stock options, no warrants and 2,160,595 shares convertible from notes that he currently holds. Mr. Lifschultz is a resident in New York.

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 April 30, 2013, CDS & Co. was the registered owner of 153,732,365 Common Shares, which represents approximately 43% of the issued and outstanding Common Shares and CEDE & Co. was the registered owner of 86,789,487 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 years ended December 31, 2012 and 2011.

During the year ended December 31, 2012, the Company advanced a net amount of $78,482 to an officer of the Company resulting in a balance of $172,574 outstanding as at December 31, 2012 (2011 - $94,092), which approximates fair value. This loan is non-interest bearing with no set terms of repayment

Included in administrative expenses for the year ended December 31, 2012 are consulting fees of $70,000 in the form of shares (December 31, 2011 – $nil) paid to companies controlled by an officer of the Company. Also included are rent recoveries in the amount of $661 (December 31, 2011 – $nil) receivable from a company controlled by an officer of the Company.

These transactions occurred in the normal course of operations and have been recognized at the agreed to exchange amount which in the opinion of management approximates fair value of the services rendered.

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, 2008	$0.88	$0.10	$0.88	$0.08
Fiscal year ended December 31, 2009	$0.31	$0.10	$0.29	$0.10
Fiscal year ended December 31, 2010	$0.36	$0.12	$0.34	$0.18
Fiscal year ended December 31, 2011	$0.30	$0.07	$0.31	$0.07
Fiscal year ended December 31, 2012	$0.16	$0.05	$0.14	$0.05

Quarter	High	Low	High	Low


Fiscal year ended December 31, 2011
First Quarter	$0.30	$0.17	$0.31	$0.17
Second Quarter	$0.21	$0.14	$0.22	$0.14
Third Quarter	$0.18	$0.09	$0.18	$0.10
Fourth Quarter	$0.13	$0.07	$0.13	$0.07

Fiscal year ended December 31, 2012
First Quarter	$0.16	$0.08	$0.14	$0.09
Second Quarter	$0.09	$0.06	$0.09	$0.06
Third Quarter	$0.10	$0.06	$0.09	$0.05
Fourth Quarter	$0.08	$0.05	$0.08	$0.05



Most Recent Six Months	High	Low	High	Low


October 2012	$0.08	$0.06	$0.08	$0.06
November 2012	$0.08	$0.05	$0.07	$0.05
December 2012	$0.06	$0.05	$0.06	$0.05
January 2013	$0.06	$0.04	$0.06	$0.04
February 2013	$0.05	$0.04	$0.05	$0.04
March 2013	$0.06	$0.04	$0.05	$0.03

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.

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. 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.

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.

11. On June 22, 2010, Genoil announced that it closed a non-brokered private placement, pursuant to which it has issued an aggregate of 7,692,308 units at a price of US$0.13 per unit to raise aggregate gross proceeds of US$1 million. Each unit is comprised of one common share in the capital of Genoil, and one Share purchase warrant exercisable for two years following the date of issue at an exercise price of US$0.18. The terms of the other previously announced private placement on May 25 ^th 2010 was not approved by the TSX Venture Exchange.

12. On November 3, 2010, Genoil agreed to the extension of the term of an aggregate $1,544,543.82 principal amount of convertible notes and an aggregate 1,136,442 common share purchase warrants which were previously issued. The Notes and Warrants were originally issued to a group of four investors in October, 2008 which included Lifschultz Enterprises Co., LLC, Sidney B. Lifschultz 1992 Family Trust and David K. Lifschultz, having a conversion price equal to $0.27 in respect of the Notes, and an exercise price of $0.41 in respect of the Warrants.

The Notes and Warrants had an original term expiring on October 6, 2009, which had been amended and extended to October 6, 2010, and will be further amended and extended to October 6, 2011. The Notes and Warrants will remain substantially unamended in all other respects. In the absence of such extension the Notes would be overdue and payable immediately upon demand.

13. On November 29, 2010, Genoil entered into an agreement to acquire 100% of the issued and outstanding common shares of Two Hills Environmental Inc.

On February 14, 2011, Genoil paid a cash deposit of $100,000, issued 2,500,000 common shares of Genoil to the former shareholder of Two Hills, issued 2,500,000 common shares of Genoil to a debtor and issued an option to purchase 250,000 common shares of Genoil, at market price to an agent as commission for structuring the acquisition.

14. On April 6, 2011, Genoil closed a non-brokered private placement, pursuant to which it s issued an aggregate of 1,575,000 units at a price of US$0.20 per unit to raise aggregate gross proceeds of US$315,000. Each unit is comprised of one common share in the capital of Genoil (a "Share"), and one Share purchase warrant (a "Warrant") exercisable for two years following the date of issue at an exercise price of US$0.20.

15. In June 2011, the Company issued promissory notes in the amount of C$346,018. The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011.

16. In 2011, the Company completed three shares-for-debt transactions. In the first transaction, the Company issued 747,714 shares at $0.20 and allocated $149,543 to share capital. For the second transaction, the Company issued 7,067,089 shares at $0.10 and 3,000,000 warrants at with an exercise price of $0.11; $706,709 was allocated to share capital and an estimated fair value on the warrants of $270,379 was credited to contributed surplus. The third transaction issued 557,255 common shares at $0.115 and allocated $64,084 to share capital.

17. During November 2011, the Company completed a private placement for US$514,321 at US$0.10 per common shares, issuing 5,143,207 common shares with an attached warrant exercisable at US$0.10 with a five year term. $188,401 was allocated to share capital and the estimated $350,041 fair value of warrants was credited to contributed surplus.

18. In April 2012, a private placement was completed. The Company issued 6,732,898 shares at $0.09 per common share and allocated $248,901 to share capital. The attached warrants are exercisable at $0.10 with a 5 year term and the estimated fair value of $362,378 was credited to contributed surplus.

19. In September 2012, a shares for debt transaction was completed. The Company issued 10,300,460 common shares at a fair market value of $0.08 per share and allocated $824,037 to share capital. As a result of this transaction, a loss of $103,005 was recorded in the consolidated statement of loss and comprehensive loss.

20. In October 2012, a private placement was completed. The Company issued 15,158,820 shares at $0.07 per common share and allocated $195,860 to share capital. The attached warrants are exercisable at $0.10 with a 5 year term and the estimated fair value of $865,257 was credited to contributed surplus.

21. In February 2013, the company closed a private placement that raised $408,947 and issued 6,815,783 common shares at $0.06 per common share. No warrants were issued and the full amount was allocated to share capital.

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 six subsidiaries; Genoil (USA) Inc., Velox Corporation, Hydrogen Solutions Inc., Crystal Clear Solutions Ltd., Genoil Technology International C.A. and Genoil Emirates Genoil owns 100% of Genoil (USA) Inc., Hydrogen Solutions Inc, Crystal Clear Solutions Ltd., Genoil Technology International C.A, and Genoil

Emirates. None of these aforementioned subsidiaries has any material assets. Genoil owns 50.1% of Velox Corporation. Genoil (USA) Inc., incorporated in the United States, is owned 100% by Genoil.

Genoil has formed a new corporation in the Middle East with SBK. Commercial Business Group in the United Arab Emirates. The corporation is named “Genoil Emirates”.

The Genoil Emirates joint venture between Genoil and SBK Commercial Business Group has enormous promise. Genoil Emirates has established its head office in Riyadh, 11321 Kingdome of Saudi Arabia.

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, 2012 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 consolidated financial statements for external purposes in accordance International Financial Reporting Standards (“IFRS”)

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 IFRS, 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, 2012 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, 2012 consolidated financial statements.

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

(c) Changes in internal controls over financial reporting .

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 Tim Bojar and Ron Hutzal qualify as financial experts. They are independent directors for this purpose.

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 that year.

Item C Audit Fees

MNP LLP has served as the Corporation’s auditors from August 2008 onwards. The following table summarizes the aggregate fees for professional audit services and other services rendered by MNP LLP in the past two years.

In Canadian dollars

	2012	2011


Audit Fees	$165,529	$149,800
Audit-Related Fees	23,540	36,915
Tax	-	-
All Other Fees	-	-


Total	$189,069	$186,715

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 Genoil’s shareholders on August 14, 2008, MNP LLP was appointed as auditor of Genoil; BDO Dunwoody LLP was not reappointed or proposed for reappointment in that role.

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, 2012 and 2011 attached as Exhibit 19(a).

Item 18. Financial Statements

The registrant has elected to provide financial statements using International Financial Reporting Standards for the 2012 and 2011 year end.

Item 19. Exhibits

(a)	The Consolidated Financial Statements for the year ended December 31, 2012.

(b)	Management Analysis & Discussion for the year ended December 31, 2012.

(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.

*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
*2.8 //**		Convertible Promissory Notes Dated October 6, 2011 with Lifschultz Enterprises Co,
		LLC, Sidney B. Lifschultz 1992 Family Trust, David K Lifschultz and Bruce Abbott

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 MNP LLP

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

* 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

*/ This exhibit was filed with Genoil’s 2009 Form 20-F.

*// This exhibit is filed with Genoil’s 2012 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 May 6, 2013

GENOIL INC .

By: /s/ David K. Lifschultz

David K. Lifschultz
Chief Executive Officer

Management’s Responsibility

To the Shareholders of Genoil Inc.:

Management is responsible for the preparation and presentation of the accompanying consolidated financial statements, including responsibility for significant accounting judgments and estimates in accordance with International Financial Reporting Standards. This responsibility includes selecting appropriate accounting principles and methods, and making decisions affecting the measurement of transactions in which objective judgment is required.

In discharging its responsibilities for the integrity and fairness of the consolidated financial statements, management designs and maintains the necessary accounting systems and related internal controls to provide reasonable assurance that the transactions are authorized, assets are safeguarded and financial records are properly maintained to provide reliable information for the preparation of the consolidated financial statements.

The Board of Directors, through its Audit Committee, is responsible for overseeing management in the performance of its financial reporting responsibilities, and for approving the financial information included in the annual report. The Audit Committee has the responsibility of meeting with management and external auditors to discuss the internal controls over the financial reporting process, auditing matters and financial reporting issues. The Committee is also responsible for recommending the appointment of the Company’s external auditors.

MNP LLP, an independent firm of Chartered Accountants, is appointed by the shareholders to audit the consolidated financial statements and report directly to them; their report follows. The external auditors have full and free access to, and meet periodically and separately with, the Audit Committee and management to discuss their audit findings.

May 2, 2013

(signed) “ D.K. Lifschultz ”
________________________________
D.K. Lifschultz, Chairman and
Chief Executive Officer

(signed) “ B. Korney ”
________________________________
B. Korney, Chief Financial Officer

Independent Auditors’ Report of Registered Public Accounting Firm

To the Shareholders and Directors of Genoil Inc.:

We have audited the accompanying consolidated financial statements of Genoil Inc. and its subsidiaries (the “Company”), which comprise the consolidated statements of financial position as at December 31, 2012 and 2011, and the consolidated statements of loss and comprehensive loss, changes in equity and cash flows for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits 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 comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as at December 31, 2012 and 2011, and its financial performance and its cash flows for the years then ended, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Emphasis of Matter

Without qualifying our opinion, we draw attention to Note 1 in the consolidated financial statements which indicates that the Company has a net loss and negative cash flows from operating activities for the year-ended December 31, 2012 and, as at that date, its current liabilities exceeded its current assets. These conditions indicate the existence of material uncertainties that cast substantial doubt about the Company’s ability to continue as a going concern.

Calgary, Canada

May 2, 2013

1500, 640 – 5 ^th Ave. S.W., Calgary, Canada T2P 3G4 (403) 263-3385 Fax: (403) 269-8450

GENOIL INC.
Consolidated Statements of Financial Position

(amounts in Canadian dollars)

	December 31	December 31
	2012	2011

ASSETS
CURRENT
Cash and cash equivalents	$ 334,407	$ 37,208
Trade and other receivables	16,967	16,604
Prepaid expenses and deposits	118,963	117,290
Due from related parties (Note 5)	172,574	94,092

	642,911	265,194

PROPERTY AND EQUIPMENT (Note 6)	303,326	1,443,196
INTANGIBLE ASSETS (Note 7)	1,739,006	2,862,374

	2,042,332	4,305,570

	$ 2,685,243	$ 4,570,764


LIABILITIES
CURRENT
Trade and other payables	1,619,917	$ 1,165,053
Convertible notes - current portion (Note 9)	2,012,343	1,787,941
Due to investors	433,820	224,018
Promissory notes (Note 8)	96,774	388,753

	4,162,854	3,565,765
CONVERTIBLE NOTES (Note 9)	133,445	120,357
DERIVATIVE LIABILITY (Note 10)	281,574	783,303

	4,577,873	4,469,425


EQUITY (DEFICIT)
Share capital (Note 10)	58,276,791	56,966,166
Contributed surplus (Note 14)	21,043,968	18,927,972
Accumulated other comprehensive income	32,439	20,948
Accumulated deficit	(81,245,828)	(75,813,747)

	( 1,892,630)	101,339

	$ 2,685,243	$ 4,570,764

Going concern (Note 1)
Commitments (Note 20)
Contingencies (Note 21)
Subsequent events (Note 22)

Approved by the Board of Directors

(signed)	D.K. Lifschultz	David K. Lifschultz, Director

(signed)	Thomas Bugg	Thomas Bugg, Director

See accompanying notes to consolidated financial statements.

GENOIL INC.
Consolidated Statements of Loss and Comprehensive Loss
Years ended December 31

(amounts in Canadian dollars)

	2012	2011


OPERATING EXPENSES
Administrative	$ 2,259,499	$ 2,431,380
Share-based payments (Note 11)	55,550	1,744,590
Depreciation	400,888	443,780
Development expenses	50,098	158,186


LOSS FROM OPERATIONS	2,766,035	4,777,936


Derivative liability fair value adjustment
(Note 10)	(462,208)	(3,905,625)

OTHER INCOME/EXPENSES
Finance expense (Note15)	280,716	334,460
Loss on repayment of debt	-	58,891
Loss on disposal of assets	-	201,092
Loss on impairment of assets	1,900,000	291,994
Loss on change in conversion price on
debentures (Note 9)	844,533	-
Loss on shares for debt (Note 10)	103,005	-

	3,128,254	886,437



NET LOSS	5,432,081	1,758,748
Foreign currency translation	(11,491)	(1,625)


COMPREHENSIVE LOSS	$ 5,420,590	$ 1,757,123


Loss per share (Note 13)	$ (0.02)	$ (0.01)

See accompanying notes to consolidated financial statements.

GENOIL INC.
Consolidated Statements of Changes in Equity
Years ended December 31

(amounts in Canadian dollars)

			Accumulated
			Other
		Contributed	Comprehensive
	Share Capital	Surplus	Income	Deficit	Total Equity


Balance, January 1, 2011	$ 55,359,595	$ 17,193,374	$ 19,323	$ (74,054,999)	$ (1,482,707)
Issue of common shares (Note 10)	1,606,571		-	-	1,606,571
Share-based payments	-	1,744,590	-	-	1,744,590
Options exercised	-	(9,992)	-	-	(9,992)
Other Compreshensive Income	-	-	1,625	-	1,625
Loss for the year	-	-	-	(1,758,748)	(1,758,748)

Balance, December 31, 2011	$ 56,966,166	$ 18,927,972	$ 20,948	$ (75,813,747)	$ 101,339



Issue of common shares (Note 10)	1,310,625	2,060,446	-	-	3,371,071
Share-based payments	-	55,550	-	-	55,550
Other Compreshensive Income	-	-	11,491	-	11,491
Loss for the year	-	-	-	(5,432,081)	(5,432,081)

Balance, December 31, 2012	$ 58,276,791	$ 21,043,968	$ 32,439	$ (81,245,828)	$ (1,892,630)

See accompanying notes to consolidated financial statements.

GENOIL INC.
Consolidated Statements of Cash Flows
Years ended December 31

(amounts in Canadian dollars)

	2012	2011


CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (5,432,081)	$ (1,758,748)
Adjustments for:
Share-based payments	55,550	1,744,590
Depreciation	400,888	443,780
Finance expense (Note 15)	258,368	261,292
Loss on disposal of asset	-	201,092
Loss on repayment of debt	-	58,891
Loss on impairment on assets	1,900,000	291,994
Loss on shares for debt	103,005	-
Loss on change in conversion price of debentures	844,533	-
Derivative liability fair value adjustment (Note 10)	(462,208)	(3,905,625)

	(2,331,945)	(2,662,734)


Changes in non-cash working capital
Trade and other receivables	(363)	(4,595)
Prepaid expenses and deposits	(1,673)	66,500
Trade and other payables	1,175,896	856,362

	1,173,860	918,267

Cash flows used by operating activities	(1,158,085)	(1,744,467)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment	(37,649)	(208,229)
Proceeds of disposal of asset	-	8,908

Cash flows used by investing activities	(37,649)	(199,321)


CASH FLOWS FROM FINANCING ACTIVITIES
Increase in due from related parties (Note 5)	(78,482)	(62,692)
Increase in due to investors	209,802	224,018
Issuance of common shares	1,662,980	987,560
Proceeds from issuance of promissory notes	-	373,567
Repayment of promissory notes	(312,858)	(27,549)
Repayment of convertible notes	-	(153,213)
Issuance of warrants included in derivative liability	-	512,250

Cash flows provided by financing activities	1,481,442	1,853,941


INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	285,708	(89,847)
Cash and cash equivalents, beginning of year	37,208	125,430
Foreign exchange translation	11,491	1,625


CASH AND EQUIVALENTS, END OF YEAR	$ 334,407	$ 37,208

See accompanying notes to consolidated financial statements.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

1. REPORTING ENTITY AND GOING CONCERN

Genoil Inc. (“Genoil”) was incorporated under the Canada Business Corporations Act in September 1996. The consolidated financial statements of Genoil Inc. as at and for the years ended December 31, 2012 and 2011 comprise Genoil Inc. and its subsidiaries, Genoil USA Inc., Genoil Emirates LLC (“Emirates LLC”) and Two Hills Environmental Inc. (“Two Hills”) (collectively the “Company”). 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 commercialization of its upgrader technology, which is designed to economically convert heavy crude oil into light synthetic crude. 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. The Company’s registered address is care of Bennett Jones LLP, Suite 4500, 855 - 2 ^nd Street SW, Calgary, Alberta.

These consolidated financial statements have been presented on a going concern basis. The Company reported a net loss of $5,432,081 (2011 - $1,758,748) and used funds for operating activities of $1,158,085 (2011 - $1,744,467) for the year ended December 31, 2012. The Company had a net working capital deficiency of $3,519,943 (2011 – $3,300,571) and a cumulative deficit of $81,245,828 (2011 - $75,813,747) as at December 31, 2012. These factors indicate material uncertainties that cast substantial doubt about to the Company’s ability to continue as a going concern.

The ability of the Company to continue as a going concern is dependent on achieving profitable operations, commercializing its technologies, and obtaining the necessary financing in order to develop these technologies 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 2012, the Company received net cash proceeds of $1,481,442 (2011 -$1,853,941) pursuant to financing activities.

At the close of 2012, the Company recorded an impairment charge of $1,900,000 as a consequence of:

The current state of disrepair of the pilot upgrader ($900,000); and
The impairment of technology rights and patents related to the upgrader.

Subsequent to year-end, the Company entered into an arrangement with Pointsource Processing Inc. to market land and sea based oil/water separators. Pointsource spent months investigating the technology and rated it highly as it is economically priced with very low operating expense due to the relative lack of consumables. Pointsource has identified the current, below-listed marketing opportunities:

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

1.	REPORTING ENTITY AND GOING CONCERN (cont’d)

		Royal Canadian military – destroyers and submarines;

		Saudi Arabian oilfields;

		Emirate of Dubai;

		Pulp and paper companies in Canada;

		USA processing facility; and

		Waste management applications.

On April 4, 2013, the Board of Directors of the Company completed a review of compensation levels for the Company's officers. Recognizing the Company’s scarce cash resources and resultant inability to pay cash compensation, the Board approved the grant of an aggregate of 5,500,000 stock appreciation rights relating to the market performance of Genoil’s common shares, at base price of $0.06, being superior to the closing price of the Company's shares on the TSX Venture Exchange on the day prior to the day this grant was made. Of the 5,500,000 rights approved for grant, 4,000,000 have been approved for grant to the Company's Chief Executive Officer and 1,500,000 to the Company's President, as an inducement for their continued efforts and their compensation, in lieu of any salary compensation, for 2013. All rights described above vest immediately and have a term of five years from the date of grant.

Management, utilizing close personal relationships, has been successful in raising capital through periodic private placements of the Company's common shares. Although these shares are subject to a "hold" period on both the United States and Canadian stock markets, the investors' confidence in the undertakings of management, with respect to future positive market performance of the Company's common stock, permits this avenue of financing to exist. External sources of debt financing are not available to the Company due to its precarious financial position.

The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue its operations. Such adjustments could be material.

2. BASIS OF PREPARATION

(a) Statement of compliance

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). These consolidated financial statements were authorized for issue by the Board of Directors on April 30, 2013.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

2. BASIS OF PREPARATION (cont’d)

(b) Basis of presentation

The accounting policies set out in Note 3 have been applied consistently to all periods presented in these consolidated financial statements.

The consolidated financial statements have been prepared on the historical cost basis except for held for trading financial assets and the derivative liability which are measured at fair value with changes in fair value recorded in earnings. The methods used to measure fair values are disclosed in Note 4.

(d) Functional and presentation currency

These consolidated financial statements are presented in Canadian dollars (“CAD”), which is the Company’s functional currency and presentation currency.

The financial statements of subsidiaries that have a functional currency different from that of Company (“foreign operations”) are translated into Canadian dollars as follows:

§	Assets and liabilities – at the closing rate at the date of the statement of financial position;

§	Income and expenses – at the average rate of the period which is considered a reasonable approximation to actual rates; and,

§	Foreign currency translation differences are recognized in other comprehensive income.

When the Company disposes of its entire interest in a foreign operation, or loses control, joint control, or significant influence over a foreign operation, the foreign currency transaction gains or losses accumulated in other comprehensive income related to the foreign operation are recognized in profit or loss. If the Company disposes of part of an interest in a foreign operation which remains a subsidiary, a proportionate amount of foreign currency gains or losses accumulated in other comprehensive income related to the subsidiary is reallocated between controlling and non-controlling interests.

(e) Use of estimates and judgments

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. By their nature, judgments, estimates and assumptions are subject to measurement uncertainty and changes in such judgments, estimates and assumptions in future periods could result in a material change in future financial statements. Actual results may differ from these estimates.

Judgment is used in situations where there is a choice or assessment required by management. Estimates and underlying assumptions are required on an ongoing basis and revisions are recognized in the year in which such estimates are revised.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

2. BASIS OF PREPARATION (cont’d)

In the process of applying the Company’s accounting policies, management has made the following judgments, and estimates, which may have the most significant effect on the amounts recognized in the consolidated financial statements.

(i) Going concern

These consolidated financial statements have been prepared in accordance with IFRS on a going concern basis, which assumes the realization of assets and discharge of liabilities in the normal course of business within the foreseeable future. As discussed in Note 1, a number of conditions exist that indicate the existence of material uncertainties, which cast substantial doubt about the Company’s ability to continue as a going concern, and, therefore, that the Company may be unable to realize its assets and discharge its liabilities in the normal course of business. The ability of the Company to operate on a going concern basis is also dependent upon achieving profitable operations, commercializing its technologies, and obtaining the necessary financing in order to develop these technologies further. These consolidated financial statements do not include any adjustments in the carrying values of assets and liabilities, the reported revenues and expenses, and the statement of cash flow classifications used, that might result from the outcome of this uncertainty, and such adjustments may be material.

(ii) Depreciation

Depreciation expense is an estimate designed to apportion the value of depreciable assets over their estimated useful lives. The Company estimates the useful life of its property and equipment and intangible assets based on past experience, industry practices and the market for these assets. Differences between the actual useful lives of these assets and estimates can materially affect future results and depreciation expense.

(iii) Determination of Cash Generating Units (“CGUs”)

Management makes judgments in determining its CGUs based on their ability to generate independent cash flows and are used for impairment testing. The Company’s CGU’s are geographically separate and use different technology and personnel. The determination of the Company’s CGUs is subject to management’s judgment.

(iv) Impairment indicators and calculation of impairment

At the end of each reporting period, the Company assesses whether there is an indication that the carrying values of property and equipment and intangible assets are not recoverable or impaired. Such circumstances include incidents of physical damage and changes in the regulatory and/or operating environment. When management judges that circumstances possibly indicate impairment, property, plant and equipment and intangible assets are tested for impairment by comparing the carrying values to their recoverable amounts. The recoverable amounts of cash generating units (“CGU”) are the higher of fair value less costs to sell (“FVLCS”) and value in use (“VIU”). FVLCS is the amount obtainable from the sale of an asset or CGU in an arm’s length transaction between knowledgeable, willing parties, less the costs of disposal. The determination of VIU requires the estimation

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

2. BASIS OF PREPARATION (cont’d)

and discounting of cash flows which involves key assumptions that consider all information available on the respective testing date. Management exercises judgment, considering past performance as well as expected developments in the respective markets and in the overall macro-economic environment and economic trends to model and discount future cash flows.

(v) Stock options and warrants

The Company uses the Black-Scholes pricing model to estimate the fair value of stock options, warrants, and the related derivative liability which is based on significant assumptions such as volatility, dividend yield and expected term.

(vi) Deferred income taxes

Tax interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change. As such income taxes are subject to measurement uncertainty.

The Company recognizes deferred income tax assets to the extent that it is probable that taxable profit will be available to allow the benefit of that deferred income tax asset to be utilized. Assessing the recoverability of deferred income tax assets requires the Company to make significant estimates related to expectations of future taxable income. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realize the deferred income tax assets recorded at the reporting date could be impacted. Additionally, future changes in tax laws in the jurisdictions in which the Company operates could limit the ability of the Company to obtain tax deductions in future periods.

(vii) Contingencies

By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events.

(viii) Allowance for doubtful accounts

The Company recognized that some accounts receivable amounts could not be collected and set up an allowance for these amounts.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(a) Basis of Consolidation:

The consolidated financial statements incorporate the financial statements of Genoil and entities controlled by it. Control is achieved where Genoil has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Genoil has the following subsidiaries:

§	Genoil USA Inc., incorporated in Delaware, United States, which is a wholly-owned subsidiary of the Genoil.

§	Genoil Emirates LLC, incorporated in the United Arab Emirates, which will focus upon the fields of oil and water processing and treatment in the United Arab Emirates.

	Emirates LLC is jointly-owned by S.B.K. Commercial Business Group LLC and Genoil. As at December 31, 2012, Emirates LLC had not yet commenced operations and holds no assets.

§	Two Hills Environmental Inc., incorporated in Canada and registered in Alberta, which is a wholly-owned subsidiary of Genoil. Two Hills was formed to enter into the oilfield waste disposal industry by capitalizing upon its current undeveloped asset base. The asset base comprises a site under which three salt caverns have been formed in the Lotsberg Formation beneath the earth's surface. Such caverns are used in the oilfield disposal industry as a destination for oilfield wastes.

The financial results of Genoil’s subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by Genoil.

Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.

(b) Foreign currency transactions

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Generally, foreign exchange gains and losses resulting from the settlement of foreign currency transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in currencies other than an operation‘s functional currency are recognized in the consolidated statement of loss and comprehensive loss.

All financial instruments are initially recognized at fair value on the consolidated statement of financial position. The Company has classified each financial instrument into one of the following categories: fair value through profit or loss (assets and liabilities), loans and receivables, financial assets available-for-sale, financial assets held–to-maturity, and other financial liabilities. Subsequent measurement of financial instruments is based on their classification.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

	(i) Non-derivative financial instruments:

	Non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables, due from related parties, trade and other payables, due to related parties, due to investors, promissory notes and convertible notes. Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs. Subsequent to initial recognition non- derivative financial instruments are measured as described below:

	Financial assets at fair value through profit or loss:

	An instrument is classified at fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s risk management or investment strategy. Upon initial recognition, attributable transaction costs are recognized in profit or loss when incurred. Financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognized in profit or loss. The Company has classified cash and cash equivalents at fair value through profit or loss.

	Compound Instruments:

Compound instruments, such as convertible notes, are separated into their liability and equity components using the effective interest method. The liability component accretes up to the principal balance at maturity. The equity component will be reclassified to share capital upon conversion. Any balance in equity that remains after the settlement of the liability is transferred to contributed surplus. The equity portion is recognized net of deferred income taxes and deferred issue costs.

Other:

Other non-derivative financial instruments, such as trade and other receivables, due from related parties, trade and other payables, due to related parties, due to investors, the liability component of warrants issued, and promissory notes are measured at amortized cost using the effective interest method, less any impairment losses.

	(ii) Derivative financial instruments:

	The Company evaluates all financial instruments for freestanding and embedded derivatives. Warrants and options do not have readily determinable fair values and therefore require significant management judgment and estimation. The Company uses the Black-Scholes pricing model to estimate the fair value of warrants at the end of each reporting period. Inputs into the Black-Scholes pricing model require estimates, including such items as estimated volatility of the Company’s stock and the estimated life of the financial instruments being fair valued.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

	The warrants issued in currencies other than the functional currency are considered derivative liabilities as the warrants are convertible into CAD denominated common shares at a United States dollar (“USD”) exercise price. As a result, the Company recognizes the fair values of the derivative components at the date of issuance, with the remainder of the proceeds attributed to the derivative liability. The derivative liability is marked-to-market at each reporting date using the Black-Scholes pricing model to estimate the fair value. Movement in the fair value of the derivative liability are charged to the consolidated statement of loss during the financial period in which they are incurred.

	(iii)	Share capital:

		Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares and share options are recognized as a deduction from equity, net of any tax effects.

(d) 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 original maturities of less than three months and that are not subject to any risk of change in value.

(e) Trade and other receivables

Trade and other receivables, except for taxes prepaid and advances to suppliers, are initially recognized at fair value and subsequently accounted at amortized cost using the effective interest method less provision for impairment of such receivables. Taxes prepaid and advances to suppliers are accounted for at actually paid amounts. A provision for impairment of trade and other receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. An allowance is made for all receivables outstanding in excess of 90 days. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The amount of the provision is recognized in the consolidated statement of loss. The primary factors that the Company considers whether a receivable is impaired is its overdue status.

(f) Property and equipment

Property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost is determined as the expenditure directly attributable to the asset at acquisition, only when it is probable that future economic benefits will flow to the Company and the cost can be reliably measured. When an asset is disposed of, its carrying cost is derecognized. All repairs and maintenance costs are charged to the consolidated statement of loss during the financial period in which they are incurred.

Depreciation over the estimated useful life of assets is provided on the following bases and annual rates:

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)


Type		Method	Rate
Office Equipment		Straight line	5 years
Upgrader		Straight line	15 years
Crystal Sea Unit		Straight line	15 years

The Company allocates the amount initially recognized in respect of an item of property and equipment to its significant components and depreciates separately each such component, where applicable. The estimated residual value and useful lives of the property and equipment are reviewed at the end of each reporting period and adjusted if required.

The gains or losses on disposal of an item of property or equipment are determined by comparing the proceeds from disposal with the carrying amount of the property and equipment and are included as part of other comprehensive income/expenses in the consolidated statement of comprehensive loss.

(g) Intangible assets

Intangible assets acquired outside business combinations are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated depreciation and any accumulated impairment losses. Internally generated intangible assets are not capitalized and the expenditure is reflected in the consolidated statement of loss in the period in which the expenditure is incurred.

Intangible assets resulting from an acquisition are recorded at fair value. Fair value is estimated by management based on the expected discounted future cash flows associated with the intangible asset. Intangible assets with a finite life are amortized over the estimated useful life and intangible assets with an indefinite life are not subject to depreciation. Intangible assets are tested for impairment at each reporting period. Any impairment is identified by comparing the fair value of the intangible asset to its carrying value. Any excess of the carrying value of the intangible asset over the implied fair value is the impairment amount and will be charged to profit in the period of the impairment.

Patents and technology rights are recorded at cost and are amortized at 10% on a declining-balance basis. Pending patent costs have been included in the consolidated statement of loss and are not amortized until patents are registered.

(h)	Impairment of assets

	(i) Financial assets

	A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

	An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and its recoverable amount.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3.	SIGNIFICANT ACCOUNTING POLICIES (cont’d)

	Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

	All impairment losses are recognized in the consolidated statement of comprehensive loss.

	An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognized. For financial assets measured at amortized cost the reversal is recognized in the consolidated statement of comprehensive loss.

	(ii) Non-financial and intangible assets

	The carrying amount of the Company’s property and equipment and intangible assets with a finite useful life are assessed for impairment indicators at each reporting date to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the assets is estimated in order to determine the extent of the impairment loss, if any.

	An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's, or group of assets’, estimated fair value less cost to sell and its value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable independent cash inflows (a cash generating unit or "CGU").

	Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but limited to the carrying value that would have been determined had no impairment loss been recognized for the asset (or CGU) in prior years. A reversal of an impairment loss is recognized immediately in the consolidated statement of comprehensive loss.

	Assets that have an indefinite useful life and goodwill are not subject to depreciation and are tested for impairment at each reporting date and when there is an indication of potential impairment. Impairment of goodwill is not reversed.

(i) Provisions

Provisions are recognized when the Company has a present obligation as a result of a past event that can be estimated with reasonable certainty and are measured at the amount that the Company would rationally pay to be relieved of the present obligation. To the extent that provisions are estimated using a present value technique, such amounts are determined by discounting the expected future cash flows at a risk-free pre-tax rate and adjusting the liability for the risks specific to the liability.

(j) Trade and other payables

Trade and other payables are accrued when the counterparty performed its obligations under the contract. Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(k) Operating leases

Where the Company is a lessee in a lease which does not transfer substantially all the risks and rewards incidental to ownership from the lessor, the total lease payments are charged to profit or loss on a straight-line basis over the term of the lease.

(l) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the consolidated statement of loss and comprehensive loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(m) Finance income and expenses

Finance expenses include interest expense on financial liabilities, accretion expense on convertible notes, and foreign exchange losses. Interest expense is recognized as amounts accrued in the consolidated statement of loss using the effective interest rate method.

Foreign currency gains and losses, reported under finance income and expenses, are reported on a net basis.

GENOIL INC
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

(n) Share-based payments

The Company grants options to purchase common shares to employees, directors, and consultants under its stock option plan. Share-based payments to these individuals are measured at the fair value of the options issued and amortized over the vesting periods. The amount recognized as a share-based payment expense during a reporting period is adjusted to reflect the number of awards expected to vest. The offset to this recorded cost is to contributed surplus. A forfeiture rate is estimated on the grant date and is subsequently adjusted to reflect the actual number of options that vest. At the time of exercise, the consideration and related contributed surplus recognized to the exercise date are credited to share capital.

(o) Per share amounts

Basic earnings (loss) per share is calculated by dividing the income (loss) attributable to common shareholders of the Company by the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined by adjusting the income (loss) attributable to common shareholders and the weighted average number of common shares outstanding for the effects of dilutive instruments such as stock options and warrants. The calculation assumes the proceeds on exercise of options are used to repurchase shares at the current market price.

(p) Segment reporting

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 commercialization of both technologies, which are currently considered one industry and reportable operating segment.

(q) New standards and interpretations not yet adopted:

Standards and amendments effective in the current year

The International Accounting Standards Board (“IASB”) issued the following standards and amendments effective for the current year:

		Effective for Annual
		Periods Beginning on
		or After

IFRS 7	Financial Instruments: Disclosures (amended)	July 1, 2011
IAS 12	Income Taxes (amended)	January 1, 2012

The adoption of these amendments has not led to any changes in the Company’s accounting policies.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

Standards and amendments in issue not yet adopted

At the date of authorization of these consolidated financial statements, certain new standards, amendments and interpretations to existing IFRS standards have been published but are not yet effective, and have not been adopted early by the Company. Management anticipates that all of the pronouncements will be adopted in the Company’s accounting policies for the first period beginning after the effective date of the pronouncement. Information on new standards, amendments and interpretations that are expected to be relevant to the Company’s consolidated financial statements is provided below. Certain other new standards and interpretations have been issued but are not expected to have a material impact on the Company’s consolidated financial statements.

IAS 1, Presentation of financial statements was amended by the IASB in June 2011 in order to align the presentation of items in other comprehensive income with US GAAP standards. Items in other comprehensive income will be required to be presented in two categories: items that will be reclassified into profit or loss and those that will not be reclassified. The flexibility to present a statement of comprehensive income as one statement or two separate statements of profit and loss and other comprehensive income remains unchanged. The amendments to IAS 1 are effective for annual periods beginning on or after July 1, 2012. The Company is currently assessing the impact of these amended standards.

Amendments to IFRS 7, Financial Instruments: Disclosures and IAS 32, Financial Instruments: Presentation were issued in 2011 to clarify the current offsetting model and develop common disclosure requirements to enhance the understanding of the potential effects of offsetting arrangements. Amendments to IFRS 7 are effective for the Company on January 1, 2013 with required retrospective application and early adoption permitted. Amendments to IAS 32 are effective for the Company on January 1, 2014 with required retrospective application and early adoption permitted. The Company is currently assessing the impact of these amended standards.

IFRS 9 Financial Instruments , was issued in 2009 which addresses the classification and measurement of financial assets. The new standard defines two instead of four measurement categories for financial assets, with classification to be based partly on the Company’s business model and partly on the characteristics of the contractual cash flows from the respective financial asset. An embedded derivative in a structured product will no longer have to be assessed for possible separate accounting treatment unless the host is a non-financial contract. A hybrid contract that includes a financial host must be classified and measured in its entirety. Application of IFRS 9 is mandatory for financial periods beginning on or after January 1, 2015. The Company is currently assessing the impact of this standard.

IFRS 10 Consolidated Financial Statements , which supersedes IAS 27 Consolidation and Separate Financial Statements and SIC-12 Consolidation – Special Purpose Entities was issued in 2010. This standard provides a single model to be applied in control analysis for all investees, including special purpose entities. IFRS 10 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. The Company is currently assessing the impact of this standard.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d)

IFRS 11 Joint Arrangements was issued in 2011 and will supersede existing IAS 31 Joint Ventures effective for annual periods beginning on or after January 1, 2013, with early application permitted. IFRS 11 provides for the accounting of joint arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form (as is currently the case). The standard also eliminates the option to account for jointly controlled entities using the proportionate consolidation method. The Company is currently assessing the impact of this standard.

IFRS 12 Disclosure of Interests in Other Entities was issued in 2011, which is a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013, with earlier application permitted. The Company is currently assessing the impact of this standard.

IFRS 13 Fair Value Measurement was issued in 2011 , which is effective prospectively for annual periods beginning on or after January 1, 2013. IFRS 13 replaces fair value measurement guidance contained in individual IFRSs, providing a single source of fair value measurement guidance. The standard provides a framework for measuring fair value and establishes new disclosure requirements to enable readers to assess the methods and inputs used to develop fair value measurements and for recurring valuations that are subject to measurement uncertainty and the effect of those measurements on the financial statements. The Company is currently assessing the impact of this standard.

The amendment to IAS 16, Property, Plant and Equipment was issued in May 2012, and clarified the classification of servicing equipment and spare parts. As a result, some items previously classified as property, plant and equipment may be reclassified as inventory and vice versa. The amendment is effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of this standard.

The amendment to IAS 19, Employee Benefits was issued in June 2011 which revises the accounting for defined benefit plans to eliminate the option to defer recognition of actuarial gains and losses (the “corridor approach”) by recognizing these in other comprehensive income as they occur; immediately recognize all past service costs; replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit liability (asset); and revise the disclosure requirements. Accounting for termination benefits was also revised. The amendment is effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of this standard.

IAS 27 Consolidated and Separate Financial Statements replaced the existing IAS 27 and contains accounting and disclosure requirements for investments in subsidiaries, joint ventures and associates when an entity prepares separate financial statements. IAS 27 requires an entity preparing separate financial statements to account for those investments at cost or in accordance with IFRS 9 Financial Instruments. IAS 27 is effective for annual periods beginning on or after January 1, 2013. Earlier application is permitted. The Company is currently assessing the impact of this standard.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

3. SIGNIFICANT ACCOUNTING POLICIES (cont’d

IAS 28 Investments in Associates and Joint Ventures was issued in 2011 , which are effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. Amendments to IAS 28 provide additional guidance applicable to accounting for interests in joint ventures or associates when a portion of an interest is classified as held for sale or when the Company ceases to have joint control or significant influence over an associate or joint venture. When joint control or significant influence over an associate or joint venture ceases, the Company will no longer be required to remeasure the investment at that date. When a portion of an interest in a joint venture or associate is classified as held for sale, the portion not classified as held for sale shall be accounted for using the equity method of accounting until the sale is completed at which time the interest is reassessed for prospective accounting treatment. The Company is currently assessing the impact of this standard.

The amendment to IAS 32 Financial Instruments: Presentation , issued in May 2012, clarified the income tax consequences of distributions to holders of an equity instrument and of transaction costs of an equity transaction by requiring that these items be accounted for in accordance with IAS 12 Income taxes. The amendment is effective for annual periods beginning on or after January 1, 2013. The company is currently assessing the impact of this standard.

The amendment to IAS 34 Interim Financial Reporting , issued in August 2012, clarify the requirements on segment information for total assets and total liabilities for each reportable segment. The amendment is effective for annual periods beginning on or after January 1, 2013. The Company is currently assessing the impact of this standard.

4. DETERMINATION OF FAIR VALUES

A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. The Company is required to classify fair value measurements using a hierarchy that reflects the significance of the inputs used in making the measurements.

The fair value hierarchy is as follows:

§	Level 1 – quoted prices in active markets for identical assets or liabilities;

§	Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and,

§	Level 3 – inputs for the asset or liability that are not based on observable market data.

Cash and cash equivalents have been measured using level 1 inputs. The derivative liability has been measured using level 3 inputs.

GENOIL INC
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

4. DETERMINATION OF FAIR VALUES (cont’d)

(a) Current assets and current liabilities

The fair value of cash and cash equivalents, trade and other receivables, trade and other payables, due to investors, promissory notes and amounts due to/from related parties is estimated as the present value of future cash flows, discounted at the market rate of interest at the reporting date. At December 31, 2012 and December 31, 2011, the fair value of these balances approximated their carrying value due to their short term to maturity.

(b) Convertible notes

The carrying value of convertible notes includes the liability component and the equity component related to the conversion feature of the debentures. The liability component is recognized at its fair value on the date of issuance based on the discounted present value of future cash flows, with the remainder of the proceeds attributed to the equity component.

Subsequent to issuance, the liability component is accreted up to face value using the effective interest method.

The fair values of stock options and warrants are measured using the Black-Scholes pricing model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected forfeiture rate (based on historic forfeitures), expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behaviour), expected dividends, and the risk-free interest rate.

During 2012, the Company advanced a net amount of $78,482 to an officer of the Company resulting in a balance of $172,574 outstanding as at December 31, 2012 (2011 - $94,092), which approximates fair value.

Included in administrative expenses for the year ended December 31, 2012 are consulting fees of $70,000 (2011 – $nil) paid, through issuance of shares, to companies controlled by an officer of the Company. Also included are rent recoveries in the amount of $661 (2011 – nil) receivable from a company controlled by an officer of the Company.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

5. RELATED PARTY TRANSACTIONS (cont’d)

Key management compensation is comprised of the following:
	Year ended December 31
	2012	2011

Salaries and wages	$ 84,000	$ 87,500
Short-term employee benefits	3,416	3,283
Share-based payment ⁽¹⁾	-	227,541

	$ 87,416	$ 318,324

(1) Represents share based payment expense associated with options granted to key management as
recognized in the consolidated statement of loss.

6.	PROPERTY AND EQUIPMENT

			Office		Crystal Sea
		Land	equipment	Upgrader	unit	Total
	Cost or deemed cost
	As at December 31, 2010	$ 54,060	$ 263,180	$ 4,153,455	$ -	$ 4,470,695
	Additions	-	3,492	30,000	174,736	208,228
	Disposals	-	-	( 300,000)	-	( 300,000)

	As at December 31, 2011	54,060	266,672	3,883,455	174,736	4,378,923
	Additions	-	14,590	-	23,059	37,649
	Impairment	-	-	( 900,000)	-	( 900,000)

	As at December 31, 2012	$ 54,060	$ 281,262	$ 2,983,455	$ 197,795	$ 3,516,572


	Accumulated depreciation
	As at December 31, 2010	$ -	$ 254,229	$ 2,497,239	$ -	$ 2,751,468
	Depreciation	-	5,363	268,896	-	274,259
	Disposals	-	-	( 90,000)	-	( 90,000)

	As at December 31, 2011	-	259,592	2,676,135	-	2,935,727
	Depreciation	-	5,436	258,897	13,186	277,519

	As at December 31, 2012	-	265,028	2,935,032	13,186	3,213,246


	Net book value
	As at December 31, 2011	54,060	7,080	1,207,320	174,736	1,443,196
	As at December 31, 2012	54,060	16,234	48,423	184,609	303,326

During 2012, the company incurred costs of $23,059 (2011 - $174,736) to produce an additional demonstration crystal sea unit.

During 2012, the Company incurred a loss on impairment of $900,000 relating to the state of disrepair of the upgrader. This loss has been included in the consolidated statement of loss and comprehensive loss. The remaining value of $48,423 represents salvage value of the upgrader. During July 2011, the Company disposed of ancillary redundant parts of the bitumen upgrader plant that was purchased in December 2007. These parts approximated 50% of the original cost and were sold as scrap metal for $8,908. The net book value of parts sold for scrap was $210,000, with a loss on disposal of $201,092.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

7. INTANGIBLE ASSETS

	Technology		Mineral
	Rights	Patents	Rights	Total

Cost of deemed cost
As at December 31, 2010	$ 3,833,437	$ 856,649	$ 1,628,685	$ 6,318,771
Additions	-	-	-	-
Impairment	(881,507)	-	-	(881,507)

Ast at December 31, 2011	2,951,930	856,649	1,628,685	5,437,264
Additions	-	-	-	-
Impairment	(856,412)	(143,588)	-	(1,000,000)

As at December 31, 2012	$ 2,095,518	$ 713,061	$ 1,628,685	$ 4,437,264


Accumulated depreciation
As at December 31, 2010	$ 2,451,701	$ 543,181	$ -	$ 2,994,882
Depreciation	138,174	31,347	-	169,521
Impairment	( 589,513 )	-	-	( 589,513 )

Ast at December 31, 2011	2,000,362	574,528	-	2,574,890
Depreciation	95,156	28,212	-	123,368

As at December 31, 2012	$ 2,095,518	$ 602,740	$ -	$ 2,698,258


Net book value
As at December 31, 2011	$ 951,568	$ 282,121	$ 1,628,685	$ 2,862,374
As at December 31, 2012	$ -	$ 110,321	$ 1,628,685	$ 1,739,006

During 2012, the Company incurred a loss on impairment of $856,412 and $143,588 on technology rights and patents, respectively, relating to the GHU. These impairment losses have been reflected in the consolidated statement of loss and comprehensive loss. During 2011, the Company incurred a loss on impairment of intangible assets of $291,994 for technology rights no longer in use by the Company. Management wrote-off these technology rights in the consolidated statement of loss.

8. PROMISSORY NOTES

In October 2010, the Company issued promissory notes in the amount of $50,700. The promissory notes are unsecured and bear interest at 8% per annum. The principal amount and accrued interest was due on April 6, 2011. The promissory notes were extended for another six months with the provision that interest on one of the notes increases to 12% until repayment. One of the promissory notes was repaid in November 2011 in the amount of $27,549 leaving one note outstanding in the amount of $25,746. During 2012 a partial payment was made on the outstanding promissory note of $14,941. As at December 31, 2012, the reported amount of promissory notes includes $5,470 of accrued interest (2011 – $3,002).

In June 2011, the Company issued promissory notes in the amount of $346,018 (US$340,000). The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011. As at December 31, 2012, the reported amount of promissory notes includes $5,295 (2011 - $33,658) of accrued interest. In October 2012, promissory notes in the amount of $386,313 were repaid to the note holders.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

9. CONVERTIBLE NOTES

	Series A	Series E	Total


Balance, December 31, 2010	$ 194,683	$ 1,595,724	$ 1,790,407
Accretion	19,996	22,946	42,942
Interest accrued	-	169,271	169,271
Redemption	(94,322)	-	(94,322)

Balance, December 31, 2011	$ 120,357	$ 1,787,941	$ 1,908,298
Accretion	13,088	-	13,088
Interest accrued	-	224,402	224,402

Balance, December 31, 2012	$ 133,445	$ 2,012,343	$ 2,145,788

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. 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

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

9. CONVERTIBLE NOTES (cont’d)

was reduced by $4,432,786. Had the Company used a market rate of 18%, a gain of $94,312 would have been recorded.

In September 2011, two notes with a book value of $94,322 were repaid in the amount of $153,213 resulting in a loss on repayment of $58,891.

Series E

On October 6, 2008, series E notes were issued with a face value of $1,227,356. Approximately 32% of the amount is due to companies controlled by the Chairman and CEO. The notes had 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 is being 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. As a result of this extension, the $49,798 fair value of the warrant extension was recorded as a reduction to the note payable and accreted over the term of the debt.

The notes were again renewed at October 6, 2010 for another year. As a result of this extension, the $30,455 fair value of the warrant extension was recorded as a reduction to the note payable and is being accreted over the term of the debt. $22,841 was credited to contributed surplus for the fair value of the extension net of $7,614 of deferred taxes.

In July 2012, the Company received regulatory approval to extend the notes for one year maturing at October 6, 2013. As a result of this extension, no warrants were issued or recorded. The extended notes carry interest at 12% per annum, accrued semi-annually, and are convertible into common shares of the Company at $0.10 per share at the option of the holder. The incremental value resulting from the change in the conversion price is $844,533. This amount has been recognized as a loss in the year.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

10. SHARE CAPITAL

(a) Authorized

Unlimited number of common shares without par value

10,000,000 Class A Preferred shares, issuable in series, none of which are outstanding

(b) Issued and outstanding common shares

	Number	Amount

Balance, December 31, 2010	301,145,429	$ 55,359,595

Private placements (i), (iv)	6,693,207	330,219
Shares issued for debt (v)	8,372,059	649,957
Acquisition of Two Hills Environmental	250,000	73,750
Exercise of warrants (ii)	1,703,846	532,668
Exercise of options (iii)	100,000	23,992
Share issue expenses	-	(4,015)

Balance, December 31, 2011	318,264,541	$ 56,966,166

Private placements (vi), (viii)	21,891,718	496,005
Shares issued for debt (vii)	10,300,460	824,037
Share issue expenses	-	(9,417)


Balance, December 31, 2012	350,456,719	$ 58,276,791

(i)	In April 2011, the Company completed a private placement for US$310,000 at US$0.20 per common share, issuing 1,550,000 common shares with an attached warrant exercisable at US$0.20 with a two-year term. $141,818 was allocated to share capital and the estimated $162,207 fair value of warrants was recorded as a derivative liability.

(ii)	During 2011, the Company issued 1,703,846 common shares on the exercise of the same number of warrants for cash proceeds of $303,228 and a pro-rata portion of fair value of $179,153 reclassified from contributed surplus.

(iii)	In January 2011, the Company issued 100,000 common shares on the exercise of the same number of stock options for cash proceeds of $14,000 and a pro-rata portion of fair value of $9,992 reclassified from contributed surplus.

(iv)	In November 2011, the Company completed a private placement for US$514,321 at US$0.10 per common shares, issuing 5,143,207 common shares with an attached warrant exercisable at US$0.10 with a five year term. $188,401 was allocated to share capital and the estimated $350,041 fair value of warrants was recorded as a derivative liability.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

10.	SHARE CAPITAL (cont’d)

	(v)	In 2011, the Company completed three shares-for-debt transactions. In the first transaction, the Company issued 747,714 shares at $0.20 and allocated $149,543 to share capital. For the second transaction, the Company issued 7,067,089 shares at $0.10 and 3,000,000 warrants at with an exercise price of US$0.11; $436,330 was allocated to share capital and an estimated fair value on the warrants of $270,379 was credited to contributed surplus. The third transaction issued 557,256 common shares at $0.115 and allocated $64,084 to share capital.

	(vi)	In May 2012, a private placement was completed. The Company issued 6,732,898 shares at $0.09 per common share and allocated $300,144 to share capital. The 6,732,898 attached warrants are exercisable at $0.10 with a 5 year term and the estimated fair value of $311,135 was credited to contributed surplus.

	(vii)	In September 2012, a shares for debt transaction was completed to settle a number of outstanding liabilities. The Company issued 10,300,460 common shares at a fair market value of $0.08 per share and allocated $824,037 to share capital. As a result of this transaction, a loss of $103,005 was recorded in the consolidated statement of loss and comprehensive loss.

	(viii)	In October 2012, a private placement was completed. The Company issued 15,158,820 shares at $0.07 per common share and allocated $195,860 to share capital. The 15,158,820 attached warrants are exercisable at $0.10 with a 5 year term and the estimated fair value of $904,778 was credited to contributed surplus.

Upon transition to IFRS, the warrants issued in US dollars represented a derivative financial instrument recognized at fair value on the date of issuance with the remainder of the proceeds attributed to the derivative liability.

As at December 31, 2012, the derivative component was determined to be $281,574 (2011 -$783,303). The fair value adjustment on derivative liability was a gain of $462,208 (2011 -$3,905,625) which represents the movement in the fair value of the derivative liability during the period plus the net issuance/exercise of warrants of $nil (2011 - $194,080).

The fair value of warrants issued during 2012 and 2011 were estimated on the dates of grant using the Black-Scholes pricing model based on the following assumptions:

	2012	2011


Volatility	118% - 126%	110% - 115%
Expected life	5 years	2 years
Risk-free rate	1.34%-1.60%	1.08% - 1.81%
Dividend yield	-	-
Weighted average fair value	$0.05	$0.08

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

11. SHARE-BASED PAYMENTS

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 69,819,579 (2011 – 60,949,855). 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.

A continuity of stock options is as follows:

	Number of	Weighted-Average
	Options	Exercise Price

Balance, January 1, 2011	55,863,167	$0.25
Granted	12,105,333	0.19
Exercised	(100,000)	(0.14)
Cancelled	(550,000)	(0.23)
Expired	(6,650,000)	(0.45)

Balance, December 31, 2011	60,668,500	0.22
Granted	500,000	0.12
Expired	(2,750,000)	(0.40)

Balance, December 31, 2012	58,418,500	0.21

The following is a summary of options outstanding and exercisable as at December 31, 2012:

	Outstanding			Exercisable

			Weighted			Weighted
	Number of	Remaining	Average		Remaining	Average
	Options	Contractual	Exercise	Number of	Contractual	Exercise
Range	Outstanding	Life	Price	Options Vested	Life	Price

$0.00 to $0.39	54,968,500	2.05	0.18	54,968,500	2.05	0.18
$0.40 to $0.79	3,450,000	0.12	0.73	3,450,000	0.12	0.73

	58,418,500	1.93	0.21	58,418,500	1.93	0.21

During 2012, the Company recognized $55,550 (2011 – $1,744,590) of share-based payment compensation. As at December 31, 2012, the Company’s remaining unvested share-based payment compensation is $ nil (December 31, 2011 – $nil).

The fair value of stock options granted during 2012 and 2011 was estimated on the dates of grant using the Black-Scholes pricing model based on the following assumptions (no options were issued in the first quarter):

	2012	2011


Volatility	113%	106% - 121%
Expected life	5 years	0.9 – 2.9 years
Risk-free rate	1.18%	1.57% - 2.31%
Dividend yield	-	-
Forfeiture rate	0%	0%
Weighted average fair value	$0.12	$0.14

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

12. WARRANTS

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

C$ Warrants
	Number of	Weighted-Average
	C$ Warrants	Exercise Price

Balance, December 31, 2010	1,386,442	C$0.39
Issued	-	-
Expired	(1,386,442)	(0.39)

Balance, December 31, 2011	-	-
Issued	21,891,718	0.10

Balance, December 31, 2012	21,891,718	C$0.10


US $ Warrants
	Number of	Weighted-Average
	US$ Warrants	Exercise Price

Balance, December 31, 2010	25,051,974	US$0.20
Issued	9,693,207	0.12
Exercised	(1,703,846)	(0.18)
Expired	(11,728,820)	(0.20)

Balance, December 31, 2011	21,312,515	0.16
Expired	(11,524,612)	(0.19)

Balance, December 31, 2012	9,787,903	US$0.13

The following is a summary of C$ warrants outstanding and exercisable as at December 31, 2012:

		Weighted-	Remaining
	Total Number	Average	Contractual Life
Range of Exercise Prices	of Warrants	Exercise Price	(Years)

C$0.00 to $0.79	21,891,718	C$0.10	4.25

The following is a summary of US$ warrants outstanding and exercisable as at December 31, 2012:

		Weighted-	Remaining
	Total Number	Average	Contractual Life
Range of Exercise Prices	of Warrants	Exercise Price	(Years)

US$0.00 to $0.79	9,693,207	US$0.12	3.24
US$0.80 to $1.19	94,696	US$0.99	0.17

	9,787,903	US$0.13	3.21

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

13. LOSS PER SHARE

Basic loss per share is calculated as follows:

	Year ended
	December 31
	2012	2011

Net loss for the period	$ (5,432,081)	$ (1,758,748)

Weighted average number of shares – basic
and diluted:	329,336,646	306,996,842

Loss per share – basic and diluted:	$ (0.02)	$ (0.01)

The effect of warrants and options is anti-dilutive in loss periods.

14. CONTRIBUTED SURPLUS

Balance, December 31, 2010		$ 17,193,374
Stock-based compensation (Note 11)		1,744,590
Options exercised (Note 11)		(9,992)

Balance, December 31, 2011		$ 18,927,972
Stock-based compensation (Note 11)		55,550
Warrants issued (Note 10)		1,215,913
FMV adjustment on debt share conversion price (Note 9)		844,533

Balance, December 31, 2012		$ 21,043,968

15. FINANCE EXPENSE

	Year ended
	December 31
	2012	2011


Interest on convertible notes	$ 224,402	$ 199,727
Interest on promissory notes	20,879	18,623
Accretion of convertible notes	13,088	42,942
Interest expense	17,268	3,052
Foreign exchange loss	5,079	70,116

	$ 280,716	$ 334,460

16. INCOME TAXES

The provision for income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The provision for taxes differs from that computed using combined Canadian federal and provincial statutory corporate tax rates as follows:

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

16. INCOME TAXES

	2012	2011

Loss before income taxes	$ 5,432,081	$ 1,758,748

Expected (recovery) expense at statutory tax rate of
25% (201 – 26.5%)	(1,358,000)	(466,100)
Adjustments to tax filings for tax pools	566,100	-
Non-deductible share-based compensation	13,900	462,300
Non-deductible derivative liabilities fair value adjustment	(115,600)	(1,035,000)
Other non-deductible items	232,400	29,100
Change in corporate tax rates and other	(13,100)	28,300
Change in unrecognized deferred tax assets	674,300	981,400

	$ -	$ -

The tax effects on major temporary differences that give rise to the deferred tax asset are as follows:

	December 31	December 31
	2012	2011

Tax losses available for carry forward	$ 11,615,700	$ 10,340,800
Long-term assets	757,100	1,356,400
Share issuance and financing costs	9,300	13,800
Convertible debenture	(5,000)	(8,200)
Unrecognized deferred tax assets	(12,377,100)	(11,702,800)

	$ -	$ -

The Company's deferred tax assets include approximately $37,000 (2011 – $55,000) related to deductions for share issue costs in excess of amounts deducted for financial reporting purposes.

The Company has approximately $2,350,300 (2011 – $2,901,541) of exploration and development costs which are available for deduction against future income for Canadian tax purposes.

The Company has incurred estimated losses in its Canadian and United States operations of $45,655,218 and $573,900 respectively for tax purposes which are available to reduce future taxable income and which expire in various amounts from 2014 to 2032. Such benefits will be recorded as an adjustment to the tax provision in the year realized.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

16. INCOME TAXES (CONTINUED)

Loss carryforwards relating to the Canadian operations are as follows:

2014		$ 3,679,863
2015		5,743,653
2026		9,342,800
2027		5,332,167
2028		8,841,143
2029		2,524,677
2030		2,483,948
2031		4,140,472
2032		3,566,495

		$ 45,655,218

17. SUPPLEMENTAL CASH FLOW DISCLOSURE

(a)	Interest and taxes

	During 2012, the Company paid $17,268 (2011 – $3,114) of interest in cash.

	The Company did not pay any income taxes in 2012 or 2011.

(b)	Settlement of liabilities

	During 2012, the Company settled $721,032 (2011 – $649,957) of trade and other payables through the issuance of common shares.

(c)	Acquisition

	In 2011, the Company issued 250,000 common shares valued at $73,750 as consideration for the acquisition of Two Hills Environmental (Note 10).

18. FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks that arise as a result of its technology development and financing activities such as credit risk, liquidity risk and market risk.

This note presents information about the Company’s exposure to each of the above risks, the Company’s objectives, policies and processes for measuring and managing risk, and the Company’s management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors oversees management’s establishment and execution of the Company’s risk management framework. Management has implemented and monitors compliance with risk management policies which are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

18. FINANCIAL RISK MANAGEMENT (cont’d)

(a) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s trade and other receivables relates to rent recoveries of which $19,546 might not be recoverable, and Goods and Services Tax. Amounts due from related parties are considered to be fully collectible. The Company’s cash and cash equivalents consist of cash in bank accounts and highly liquid bank deposits with original maturities of less than three months. Accordingly, the Company views credit risk as minimal.

The maximum exposure to credit risk is as follows:

	December 31	December 31
	2012	2011
Current assets:

Cash and cash equivalents	$ 334,407	$ 37,208
Trade and other receivables	16,967	16,604
Due from related parties	172,574	94,092

	$ 523,948	$ 147,904

(b) Liquidity risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. There is presently significant liquidity risk in that the Company will not be able to meet its financial obligations as they come due (Note 1). The Company aims to maintain sufficient capital in order to meet short-term business requirements, after taking into account cash flows from operations and the Company’s holdings of cash and cash equivalents. The Company’s cash and cash equivalents are invested in business accounts, which are available upon demand for the Company’s requirements. Cash and cash equivalents are not invested in any asset-backed deposits or investments.

The following are contractual maturities of financial liabilities, including estimated interest payments as at December 31, 2012:

		Total
	Carrying	contractual			2015 and
	Amount	cash flows	2013	2014	beyond
	$ $		$ $		$
Trade and other payables	1,619,917	1,619,917	1,619,917	-	-
Due to investors	433,820	433,820	433,820	-	-
Promissory notes	96,774	96,774	98,774	-	-
Convertible notes	2,145,788	2,145,788	2,012,343	133,445	-

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

18. FINANCIAL RISK MANAGEMENT (cont’d)

Currency risk is the risk that a variation in exchange rates between the Canadian dollar and foreign currencies will affect the Company’s operating and financial results. The Company is exposed to currency risk arising from the translation of USD and other currency denominated monetary assets and liabilities into Canadian dollars.

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 December 31, 2012, the Company had certain obligations denominated in US dollars and there are no contracts in place to manage the exposure. As at December 31, 2012 the Company had US$33,089 (2011 -US$19,104) in cash and US$164,452 (2011 - US$5,000) included in trade and other payables which are subject to foreign exchange fluctuation. The Company's operations are not significantly exposed to foreign exchange risk and therefore a 1% movement in the USD would not have a material impact on the Company’s profit or loss.

(d) Interest rate risk:

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates. 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. The Company has no variable interest-bearing financial liabilities. The Company had no interest rate swaps or financial contracts in place at December 31, 2012 or December 31, 2011. A 1% movement in interest rates would not have a material impact on the Company’s profit or loss.

19. CAPITAL MANAGEMENT

The Company's objectives when managing its capital are:

to maintain an appropriate balance between debt and equity sources of capital;
to manage a strong capital base so as to maintain investor, creditor and market confidence; and
to sustain future development of the business.

The Company defines its capital as follows:

equity; and
debt, including long and short-term portions.

	December 31	December 31
	2012	2011

Equity	(1,892,630)	101,339
Debt	4,296,299	3,686,122

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

19. CAPITAL MANAGEMENT (cont’d)

The Company is a public company and has established access to both public and private debt and equity markets. The Company anticipates 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 of 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.

20. COMMITMENTS

The Company has entered into rental lease agreements ranging from one year to three years which require minimum lease payments of $177,266 in 2013. The Calgary office will be paying rent in 2013 of $137,063, for 2014 rent of $139,248 and for 2015 rent of $70,171 for six months to lease end. The Edmonton office will be paying rent for 2013 and 2014 of $39,160 and in 2015 rent of $26,107 for six months to lease end. The New York office will be paying virtual office rent of US$2,148 for the year; this lease agreement is done on an annual basis. All rent payments are recognized as an expense in the period.

Pursuant to the Shareholders Agreement pertinent to the formation of Emirates LLC in 2010, the Company is required to contribute an annual amount of approximately US$150,000 to cover third party charges relative to this company. As at December 31, 2012, this amount was included in trade and other payables.

Contractual obligation repayment schedule:

2013		327,594
2014		327,643
2015		245,512
2016		149,235
2017		149,235

21. CONTINGENCIES

The Company is involved in legal claims associated with the normal course of operations. Management believes they have made adequate provision for such legal claims.

GENOIL INC.
Notes to Consolidated Financial Statements

For the years ended December 31, 2012 and 2011

22. SUBSEQUENT EVENTS

In January 2013, the Company issued 7,250,200 options at Cdn$0.10 to new directors elected at the November 22, 2012 annual general meeting and consultants that had helped raise capital.

In February 2013, the Company closed a private placement that raised $408,947 and issued 6,815,783 common shares at $0.06 per common share. No warrants were issued and the full amount was allocated to share capital.

In April 2013, the Company closed a private placement that raised $200,180 and issued 3,336,333 common shares at $0.06 per common share. No warrants were issued and the full amount was allocated to share capital.

The approval of the grant of these rights resulted from a recommendation made by the Company's Chairman and Chief Executive Officer with the unanimous approval of the Board. The recommendation was based upon a review of the current, competitive industry conditions and with the objective being the retention of the Company’s key individuals. Consideration was also given to the recent movement in the Company's share trading price.

Management’s Discussion and Analysis

December 31, 2012

Management’s Discussion and Analysis

Dated as of April 30, 2013

INTRODUCTION

The following Management Discussion and Analysis (“MD&A”) is management’s assessment of Genoil Inc.’s financial and operating results and should be read in conjunction with the audited consolidated financial statements and notes for the years ended December 31, 2012 and 2011. This commentary is based upon information available to April 30, 2013.

This MD&A complements and supplements the disclosures in our audited consolidated financial statements which have been prepared according to International Financial Reporting Standards

(“IFRS”).

Additional information relating to Genoil, including Genoil’s financial statements can be found on

SEDAR at www.sedar.com as well as EDGAR at www.sec.gov . or the Company’s website at www.genoil.ca

The Company’s principal activity is the development of innovative hydrocarbon and oil and water separation technologies.

Basis of Presentation – The financial statements, MD&A and comparative information have been prepared in Canadian dollars unless otherwise indicated and in accordance with International Financial

Reporting Standards (“IFRS”).

FORWARD-LOOKING STATEMENTS

Certain statements contained in this MD&A constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to our future outlook and anticipated events or results and may include statements regarding the future financial position, business strategy, budgets, projected costs, capital expenditures, financial results, taxes and plans and objectives of or involving Genoil. Particularly, statements regarding our future operating results and economic performance are forward-looking statements. In some cases, forward-looking information can be identified by terms such as “may”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “estimate”, “predict”, “potential”, “continue” or other similar expressions concerning matters that are not historical facts.

These statements are based on certain factors and assumptions regarding expected growth, results of operations, performance and business prospects and opportunities. While we consider these assumptions to be reasonable based on information currently available to us, they may prove to be incorrect.

Forward looking-information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what we currently expect. These factors include risk associated with loss of market, volatility of commodity prices, currency fluctuations, environmental risk, and competition from other producers and ability to access sufficient capital from internal and external resources.

Other than as required under securities laws, we do not undertake to update this information at any particular time.

All statements, other than statements of historical fact, which address activities, events, or developments that Genoil expects or anticipates will or may occur in the future, are forward-looking statements within the meaning of applicable securities laws. These statements are subject to certain risks and uncertainties, and may be based on estimates or assumptions that could cause actual results to differ materially from those anticipated or implied.

Further, the forward-looking statements contained in this MD&A are made as of the date hereof, and the Company does not undertake any obligation to update publicly or to revise any of the included forward-looking statements, as a result of new information, future events or otherwise, except as may be required by applicable securities laws. The Company’s forward -looking statements are expressly qualified in their entirety by this cautionary statement. Certain risk factors associated with these forward-looking statements include, but are not limited to, the following:

Adverse changes in foreign currency exchange rates and/or interest rates;
Competition for capital, asset acquisitions, undevelope d lands, and skilled personnel;
Adverse changes in general economic conditions in Western Canada, Canada more generally, North America or globally;
Adverse weather conditions;
The inability of Genoil to obtain financing on favo urable terms, or at all;
Adverse impacts from the actions of competitors; and
Adverse impacts of actions taken and/or policies established by governments or regulatory authorities including changes to tax laws, incentive programs, and environmental laws and regulations.

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 6 full time employees and 2 full time contracted consultants located in three principal offices – Calgary, AB, Edmonton AB, and New York, NY. In addition, the Company has an heavy oil upgrading pilot facility in Two Hills, AB, with a capacity of 10 barrels per day where heavy oil and residue samples can be upgraded, subsequent to mobilization, for potential clients ’ testing.

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

Genoil established a jointly-owned subsidiary corporation in the United Arab Emirates (Genoil Emirates LLC), which corporation will focus upon the fields of oil and water processing and treatment in the UAE.

The corporation is jointly-owned by S.B.K. Commercial Business Group LLC and Genoil. This strategic allegiance significantly enhances Genoil’s access to capital and operational prospects through political affiliation within the UAE.

On October 22, 2012 Genoil Emirates announced that it had successfully obtained a Professional License to perform pollution and environmental protection services in the United Arab Emirates, and has been added to the Commercial Register in the Emirate of Dubai.

Genoil Emirates has established its head office in Riyadh, 11321 Kingdome of Saudi Arabia. The address is Building B, Near Gulf Commercial Complex Olaya, P.O. Box: 230032. It also has a branch location at Khober DAMAM, Block 7 Office 32 Khober, Telephone: +96614633181 Facsimile: +96614664763.

On October 31, 2012, the Company announced that it granted marketing, manufacturing and distribution rights to Donghwa Entec, a reputable Korean manufacturer of marine equipment. The rights pertain to the Crystal Sea oily-water separators designed for the new shipbuilding industry together with retrofitting of existing ships. Genoil models feature one of the most compact bilge separators worldwide with throughputs ranging from 0.25 m3/hr. capacity to 10 m3/hr. units.

On November 15, 2012, the Company appointed Italtec Ghana Limited as sole representative for Genoil

Products in Ghana and Senegal. The appointment allows Italtec Ghana to market all of Genoil’s products to these regions, which includes the Genoil Desulfurization Heavy Oil Upgrader, the Genoil Diamond, Genoil Sand Decontamination Technology and Slop/Waste Oil Treatment System Technology.

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®).

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.

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. Its pilot plant in Alberta has progressed through the development stage and the costs of commercialization have been expensed.

At the close of 2012, the Company recorded an impairment charge equal to $1,900,000 as a consequence of:

The current state of disrepair of the pilot upgrader ($900,000); and
The impairment of technology rights and patents related to the GHU.

Crystal Oil and Water Separators

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 Crysta l 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’s Crystal Sea ^TM separators are state-of-the-art bilge separators which have been certified by the US Coast Guard in accordance with the International Maritime Organization Resolution MEPC 107 (49). Crystal Sea water separators utilize a patented, unique gravity driven process for multi-stage separation of immiscible phases with different densities such as heavier or light oils and water. Crystal Sea ^TM separators do not require a filter medium making it possible for customers to significantly reduce their cost of ownership by eliminating the need to purchase the expensive replacement filters required by competitive water separation products.

During November 2011, Genoil received ABS certification for all Crystal Sea models. This accreditation is in addition to obtaining the US Coast Guard/IMO MEPC 107 49 certification for Crystal MU 30 and MU 40 of 5 m3/h and 10 m3/h.

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 por t’s water and is l ooking into solutions to prevent shipping companies from contaminating the waterways close to ports and beaches in several countries.

Genoil continues to work on oil water separation technology for the VLCC (Very Large Crude Carriers) and is making adjustments to the Crystal test unit to meet required specifications. The Company also continues to work on other projects in the Middle East for both GHU upgrading business and Crystal Sea projects and at this stage does not feel that the recent political activity in the region will interfere with any of its projects.

Royal Canadian military – destroyers and submarines;
Saudi Arabian oilfields;
Emirate of Dubai;
Pulp and paper companies in Canada;
USA processing facility; and
Waste management applications.

BUSINESS PROSPECTS

The Company does expect to initiate generating revenue and cash flow from its technologies or services during 2013, but to date, does not have any signed contracts, which, in fact, may not materialize.

The Corporation has accumulated losses of $81.2 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, comm ercialization 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.

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 pleased to announce that the United States Patent and Trademark Office 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.

The improved reactor enhances the sand cleaning process in three stages and increases the rate of hydrocarbons extracted from the sand. Consequently, the amount of hydrocarbons removed increases while resulting in more separation in less time. In addition, the amount of heat energy is also drastically reduced resulting in greater operational savings. The reactor features a method for retaining the dissolved contaminants and blocking their transfer downstream in order to minimize the total dissolved

solids in the decontaminated sand. This patent is a result of Genoil’s long term commitment to environmental technologies offering practical solutions to cleanup environmental disasters. Our sand cleaning units, which are completely portable, are the only units able to reclaim enough contaminants to return the earth to agricultural grade soil meeting the most stringent environmental and agricultural health standards

Genoil’s Crystal Sea is US Coast Guard approved. Genoil is in discussions in the Middle East regarding oil spills from the first Gulf War of 1991 for extensive oil contamination that covers an astounding 800 miles of beaches at a depth of six feet stemming from tactical military decisions of Saddam Hussein which created one of the greatest ecological disasters in history.

During 2010, Genoil acquired 100% of the issued and outstanding common shares of Two Hills

Environmental Inc. (“Two Hills”). The Company paid a cash deposit of $100,000 issued 2,500,000 common shares from treasury to a former shareholder of Two Hills, issued 2,500,000 common shares from treasury to a debtor and issued an option to purchase 250,000 common shares of Genoil, at market price, to an agent as commission for structuring the acquisition. The acquisition was effective December 2010.

This acquisition conveys to Genoil surface title to 147 acres of land, together with certain subsurface mineral rights contained within 2,500 adjacent acres and access to 388,550 cubic meters of water to be derived yearly from the North Saskatchewan River. This water is critical to the development of local brine production, environmentally acceptable disposal of oil sands and oil well production waste.

Two Hills was formed to enter into the oilfield waste disposal industry by capitalizing upon its undeveloped asset base. This asset base is comprised of a site under which three very large salt caverns have been formed in the Lotsberg Formation beneath the earth’s surface. Such caverns are prized in the oilfield disposal industry due to their efficacy and safety as a destination for oilfield wastes. These multiple salt caverns could potentially be utilized for a variety of purposes including waste oil disposal, gas storage reservoirs and waste water disposal.

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 co astal 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.

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.

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 off shore 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.

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 o f understanding (“MOU”) with Tangshan Port, in

C hina, 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 separ ation 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.

Genoil is in the process of determining 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 a ny 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.

Genoil continues to work on oil water separation technology for the VLCC (Very large Crude Carriers) and is making adjustments to the Crystal test unit to meet required specifications. Genoil continues to work on other projects in the Middle East for both GHU upgrading business and Crystal Sea projects and at this stage does not feel that the recent political activity in the region will interfere with any of its projects.

Genoil has formed a new corporation in the Middle East with S.B.K. Commercial Business Group LLC in the United Arab Emirates. The corporation is named “Genoil Emirates LLC ”.

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 to Genoil ’s 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., LLC, Sidney B. Lifschultz 1992 Family Trust and David K. Lifschultz, having a conversion price equal to $0.27 in respect of the notes, and an exercise price of $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. On October 6, 2010, the notes and attached warrants were extended for another year to October 6, 2011. The notes and warrants remain substantially unamended in all other respects. In July 2012, the company received regulatory approval to extend the notes for one year maturing at October 6, 2013. With this extension, the conversion price has been lowered to $0.10 and no warrants issued.

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, 2012 and the seven preceding quarters:

	2011 – Q1	2011 – Q2	2011 – Q3	2011 – Q4	2012 – Q1	2012 – Q2	2012 – Q3	2012 – Q4

Working capital (deficiency)	(2,133,657)	(2,880,826)	(2,865,363)	(3,300,571)	(3,781,370)	(3,740,770)	(3,726,063)	(3,519,943)

Long term debt	200,524	206,363	212,204	120,357	123,629	126,901	130,173	133,445

Total assets	5,447,210	5,193,771	5,061,844	4,570,764	4,517,657	4,393,774	4,421,995	2,685,243

Accumulated deficit	74,033,921	74,942,577	76,301,097	75,813,747	76,230,152	76,736,626	77,612,723	81,245,828

Cash flow used by operating
activities	498,494	531,912	384,993	365,068	438,191	342,890	318,291	58,713


SELECTED EXPENSES

	2011 – Q1	2011 - Q2	2011 – Q3	2011 – Q4	2012 – Q1	2012 – Q2	2012 Q3	2012 – Q4

Human resources	244,020	260,654	233,599	140,231	131,011	174,915	176,780	145,796

Business development	67,603	57,294	39,703	21,618	12,458	10,657	7,395	13,816

Professional fees	14,219	188,299	252,043	339,075	118,372	123,408	316,843	383,301

Stock-based compensation	821,905	766	246,479	675,440	55,550	-	-	-

Net Loss	1,475,006	908,656	1,346,098	(1,971,012)	(416,405)	506,520	875,696	4,466,270

Net Loss per share-basic &
diluted	0.01	0.01	0.01	(0.02)	(0.00)	0.00	0.00	0.02

Pursuant to the pronouncements of IFRS, the warrants constitute a financial liability with an embedded derivative (which is the conversion feature of this instrument). Revaluation of the derivative component of the Company’s warrants from 2011 year end to 2012 year end has resulted in an unrealized gain equal to $462,208 as the fair value of the exercise option has decreased due to the deteriorating market value per share of the Company’s common shares.

LIQUIDITY

The Company completed a shares-for-debt transaction in December 2010 issuing 1,379,116 common shares at C$0.33 with no warrants and allocating C$455,111 to share capital.

The Two Hills Environmental Inc. share purchase price included 5,000,000 common shares at C$0.295 per common share with a total of $1,475,000 allocated to share capital.

In June 2011, the Company issued promissory notes in the amount of C$346,018. The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011.

$270,379 was credited to contributed surplus. The third transaction issued 557,255 common shares at $0.115 and allocated $64,084 to share capital.

In September 2012, a shares for debt transaction was completed. The Company issued 10,300,460 common shares at $0.08 per share and allocated $824,037 to share capital. As a result of this transaction, a loss of $103,005 was recorded in the consolidated statement of loss and comprehensive loss.

On April 2, 2013, the Company received a demand letter, from the landlord of the Company’s former

Sherwood Park, Alberta location, stating that should the Company not pay $100,068, in rental arrears, in a certified fashion, by April 12, 2013, the landlord would commence legal proceedings against the Company to satisfy this debt. The Company has not made this payment; however, an offer, to which no response has been received, to settle this liability, utilizing th e “shares for debt” avenue has been proffered to the landlord.

Management, utilizing close personal relationships, has been successful in raising capital through periodic private placements of the Corporation's common shares. Although these shares are subject to

a "hold" period on both the United States and Canadian stock markets, the investors' confidence in the undertakings of management, with respect to future positive market performance of the Corporation's common stock, permits this avenue of financing to exist. External sources of debt financing are not available to the Company due to its precarious financial position.

The Company’s operations continue to c onsume cash. As it has in the past, the Company will rely on other sources to provide its working capital requirements for the foreseeable future.

COMMITMENTS AND CAPITAL EXPENDITURES

The Company currently has no outstanding commitments for capital expenditures.

RELATED PARTY TRANSACTIONS

Included in administrative expenses for the year ended December 31, 2012 are consulting fees of $70,000 (December 31, 2011 – $nil) paid in the form of shares to companies controlled by an officer of the Company. Also included are rent recoveries in the amount of $661 (December 31, 2011 – nil) receivable from a company controlled by an officer of the Company.

OUTSTANDING SHARE DATA

The following table sets out the number of common voting shares if all convertible securities were converted into shares on April 30, 2013:

		Number
Shares outstanding		360,608,835
Issuable under:
Options		62,218,700
Warrants		31,679,621
Convertible notes		20,471,638

		474,978,794

On March 31, 2011, Genoil announced that the Board of Directors of the Corporation has approved a grant of an aggregate 4,250,000 options to consultants to acquire up to 4,250,000 common shares of the corporation as compensation for services provided. These options were approved with an exercise price of C$0.20. All of the options approved have a term of five years from the date of grant and vest immediately.

On August 15, 2011, the Board of Directors of the Corporation approved a grant of an aggregate 3,500,000 options to directors and consultants to acquire up to 3,500,000 common shares of the Corporation as compensation. 2,950,000 options were approved with an exercise price of C$0.11 and the balance of 250,000 options were approved with an exercise price of C$0.20. All of the options approved have a term of five years from the date of grant and vest immediately.

During the first quarter of 2012, the Company issued 500,000 options at C$0.12 to consultants that had helped with raising capital.

In January 2013, the Company issued 7,250,200 options at Cdn$0.10 to new directors elected at the November 22, 2012 annual general meeting and consultants that had helped raise capital.

Critical Accounting Estimates

The preparation of financial statements in accordance with IFRS requires Management to make certain judgments and estimates. Changes in these judgments and estimates could have a material impact on the Company’s financial results and financial condition.

Management’s process of determining the fair values assigned to any acquired assets and liabilities in a business combination is based on estimates. These estimates are significant and can include future costs, future interest rates, future tax rates and other relevant assumptions. Revisions or changes in any of these estimates can have either a positive or a negative impact on asset and liability values and net income.

The fair value of stock options is based on estimates using the Black-Scholes option pricing model and is recorded as share-based payments expense in the financial statements.

EVALUATION OF DISCLOSURE CONTROLS

For the quarter ended December 31, 2012 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure contro ls 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

The Chief Executive Officer and Chief Financial Officer are 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 International Financial Reporting Standards (IFRS).

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 IFRS, 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.

The Chief Executive Officer and Chief Financial Officer 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, 2012 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

The re has been no change in Genoil’s ICFR that occurred during the period beginning on October 1, 2012 and ended on December 31, 2012 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 di scharge 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.

LIQUIDITY RISK

The Company is subject to liquidity risk attributed from accounts payable and other accrued liabilities and other liabilities. Accounts payable and other accrued liabilities are primarily due within one year of the balance sheet date.

INTEREST RATE RISK

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in market interest rates.

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, 2012, the Company had certain obligations and assets denominated in U.S. dollars and there were no contracts in place to manage this exposure.

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 company as of, and for, the periods presented in this report;

4.	The company’ 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 company 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 company, 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 company'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 company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5.	The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.

Date: May 6, 2013

/ signed / David Lifschultz
_________________________________________

David K. Lifschultz
Chief Executive 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, 2012 as filed with the

Securities and Exchange Commission on the date hereof (the “Report”), I, David K. Lifschultz, Chairman and Chief Executive O fficer 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: May 6, 2013

By: / signed / David Lifschutlz

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

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 company as of, and for, the periods presented in this report;

4.	The company'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 company 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 company, 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 company'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 company's internal control over financial reporting that occurred during during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company's internal control over financial reporting; and

5.	The company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company's auditors and the audit committee of the company'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 company'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 company's internal control over financial reporting.

Date: May 6, 2013

/ signed / Brian Korney

Brian Korney
Chief Financial Officer

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, 2012 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: May 6, 2013

By: / signed / Brian Korney

Brian Korney,
Chief Financial Officer
Genoil Inc.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use of our report dated May 2, 2013 with respect to the
consolidated financial statements of Genoil Inc., which comprise the consolidated
statements of financial position as at December 31, 2012 and 2011 and the
consolidated statements of loss and comprehensive loss, changes in equity and
cash flows for the years then ended, and a summary of significant accounting
policies and other explanatory information, included in the Annual Report (Form
20-F) as at December 31, 2012.

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