6-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of ____August_______, 2011.

Commission File Number ________________

_________Genoil Inc._______________________________________________________________

(Translation of registrant’s name into English)

_________#1650, 777-8 Ave SW, Calgary, AB Canada T2P 3R5_________________________________

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F xForm 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	___Genoil Inc.
	(Registrant)
Date ____August 29, 2011______________________	By  /signed/ David Lifschultz
* Print the name and title under the signature of the signing officer.	(Signature) *
	David K. Lifschultz, CEO

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EX-1

Condensed Interim Consolidated Financial Statements June 30, 2011 (unaudited)

Notice of No Auditor Review of
Condensed Interim Consolidated Financial Statements

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed these unaudited condensed interim condensed consolidated financial statements as at and for the six months ended June 30, 2011 and 2010.

1

GENOIL INC.
Condensed Interim Consolidated Statement of Financial Position
(Unaudited)
(amounts in Canadian dollars)

	June 30	December 31
	2011	2010
ASSETS	(Note 19)	(Note 19)
CURRENT
Cash and cash equivalents	$ 53,860	$ 125,430
Trade and other receivables	64,759	12,009
Prepaid expenses and deposits	141,963	183,790
Due from related parties (Note 4)	18,334	31,400
	278,916	352,629
PROPERTY AND EQUIPMENT (Note 5)	1,610,593	1,719,227
INTANGIBLE ASSETS (Note 6)	3,304,262	3,388,790
	4,914,855	5,108,017
	$ 5,193,771	$ 5,460,646
LIABILITIES
CURRENT
Trade and other payables	$ 1,120,513	$ 931,097
Convertible notes – current portion (Note 9)	1,706,909	1,595,724
Promissory notes (Note 8)	332,320	51,662
	3,159,742	2,578,483
CONVERTIBLE NOTES (Note 9)	206,363	194,683
	3,366,105	2,773,166
SHAREHOLDERS’ EQUITY
Share capital (Note 10)	56,019,331	55,267,218
Contributed surplus (Note 14)	20,718,441	19,959,854
Cumulative translation adjustment (Note 19)	32,471	19,323
Accumulated deficit	(74,942,577)	(72,558,915)
	1,827,666	2,687,480
	$ 5,193,771	$ 5,460,646

Going concern (Note 2)
Commitments (Note 16)
Contingencies (Note 17)
Subsequent events (Note 18)

APPROVED BY THE BOARD
/signed/ D.K. Lifschultz___ D.K. Lifschultz - Director
/signed/ Thomas Bugg ___ Thomas Bugg - Director

See accompanying notes to condensed interim consolidated financial statements.

2

GENOIL INC.
Condensed Interim Consolidated Statements of Loss and Comprehensive Loss
Three and Six months ended June 30
(Unaudited)
(amounts in Canadian dollars)

	Quarter 2	Quarter 2	Year to Date	Year to Date
	2011	2010	2011	2010
	(Note 19)	(Note 19)	(Note 19)	(Note 19)
OPERATING EXPENSES
Administrative	$ 635,445	$ 496,592	$ 1,118,375	$ 937,575
Stock-based compensation	766	526,229	822,672	1,623,157
Depreciation	90,097	118,740	226,654	236,945
Development expenses	113,157	11,424	95,965	20,473
LOSS FROM OPERATIONS	839,466	1,152,984	2,263,666	2,818,150
FINANCE EXPENSE (Note15)	66,832	43,618	119,996	127,422
NET LOSS AND COMPREHENSIVE LOSS	$ 906,297	$ 1,196,603	$ 2,383,662	$ 2,945,572
Loss per share (Note 13)	$ (0.01)	$ (0.01)	$ (0.01)	$ (0.01)

See accompanying notes to condensed interim consolidated financial statements.

3

GENOIL INC.
CondensedInterimConsolidatedStatement of Changes in Shareholders’Equity
Six months ended June 30
(Unaudited)
(amounts in Canadiandollars)

			Cumulative
			Translation
	Share Capital	Contributed Surplus	Adjustment	Deficit	Total Equity
Balance, January 1, 2010 (Note 19)	$ 52,207,086	$ 16,146,998	$ -	$ (67,010,891)	$ 1,343,193
Issue of common shares	549,457	1,542,094	-	-	2,091,551
Stock based compensation	-	1,623,157	-	-	1,623,157
Cumulative translation adjustment	-	-	5,488	-	5,488
Loss for the period	-	-	-	(2,945,572)	(2,945,572)
Balance, June 30, 2010	$ 52,756,543	$ 19,312,249	$ 5,488	$ (69,956,463)	$ 2,117,817
Balance, January 1, 2011	$ 55,267,218	$ 19,959,854	$ 19,323	$ (72,558,915)	$ 2,687,480
Issue of common shares	752,113	(64,085)	-	-	688,028
Stock based compensation	-	822,672	-	-	822,672
Cumulative translation adjustment	-	-	13,148	-	13,148
Loss for the period	-	-	-	(2,383,662)	(2,383,662)
Balance, June 30, 2011	$ 56,019,331	$ 20,718,441	$ 32,471	$ (74,942,577)	$ 1,827,666

See accompanying notes to condensed interim consolidatedfinancialstatements.

4

GENOIL INC.
Condensed Interim Consolidated Statement of Cash Flows
Six months ended June 30
(Unaudited)
(amounts in Canadian dollars)

	2011	2010
	(Note 19)	(Note 19)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (2,383,662)	$ (2,945,572)
Adjustments for:
Stock based compensation	822,672	1,623,157
Depreciation	226,654	236,945
Finance expense	125,437	120,877
	(1,208,899)	(964,593)
Changes in non-cash working capital
Receivables	(52,751)	(1,232)
Prepaid expenses and deposits	41,826	36,436
Accounts payable and accrued liabilities	189,418	(45,582)
	178,493	(10,378)
Cash flows used by operating activities	(1,030,406)	(974,971)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment	(33,492)	-
CASH FLOWS FROM FINANCING ACTIVITIES
Related party proceeds (repayments)	13,066	(193,675)
Repayment of amount due to investor	-	(168,289)
Issuance of common shares	688,027	1,822,086
Funds received from promissory notes	278,087
	979,180	1,460,122
INCREASE (DECREASE) IN CASH	(84,718)	485,151
Cash and equivalents, beginning of period	125,430	9,140
Translation adjustment	13,148	5,488
CASH AND EQUIVALENTS, END OF PERIOD	$ 53,860	$ 499,779

See accompanying notes to condensed interim consolidated financial statements.

5

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

1. GENERAL INFORMATION

Genoil Inc. (the “Company”) was incorporated under the Canada Business Corporations Act in September 1996. 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.

2. BASIS OF PREPARATION

(a) Statement of compliance

These condensed interim consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). These consolidated condensed interim financial statements were authorized for issue by the Board of Directors on August 29, 2011.

(b) Basis of presentation

The preparation of condensed interim consolidated financial statements in conformity with International Accounting Standard (“IAS”) 34 Interim Financial Reporting requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. These condensed interim consolidated financial statements include all of the information required for first-time adoption of IFRS.

The preparation of these condensed interim consolidated financial statements resulted in changes to the accounting policies as compared with the most recent annual consolidated financial statements prepared under Canadian Generally Accepted Accounting Principles (“GAAP”). These condensed interim consolidated financial statements should be read in conjunction with the Company’s audited December 31, 2010 consolidated financial statements prepared in accordance with GAAP.

The accounting policies set out in Note 3 have been applied consistently to all periods presented in these condensed interim consolidated financial statements. They also have been applied in preparing an opening IFRS consolidated statement of financial position at January 1, 2010 for the purposes of the transition to IFRS, as required by IFRS 1 First Time Adoption of International Financial Reporting Standards (“IFRS 1”). The impact of the transition from GAAP to IFRS is explained in Note 19.

(c) Basis of measurement

The condensed interim consolidated financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for assets.

6

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(d) Going concern

These condensed interim consolidated financial statements have been prepared on a going concern basis, which presumes the Company will be able to realize its assets and discharge its liabilities in the normal course of operations for the foreseeable future. During the six months ended June 30, 2011, the Company incurred a loss of $2,383,662 (six months ended June 30, 2010 – $2,945,572) and has a working capital deficiency of $2,880,826 (December 31, 2010 –$2,225,854).

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 failure of the Company to achieve one or all of the above items may have a material adverse impact on the Company's financial position, results of operations and cash flows.

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 period the Company secured equity financing of $966,114, net of issue costs.

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

(e) Functional and presentation currency

These condensed interim consolidated financial statements are presented in Canadian dollars, 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
• All resulting changes are recognized in other comprehensive income as cumulative translation adjustments.

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 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

7

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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.

(f) Use of estimates and judgments

The preparation of condensed interim 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. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected.

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

(i) 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.

(ii) 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 clearly indicate impairment, property, plant and equipment 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 and discounting of cash flows which involves key assumptions that consider all information available on the respective testing date. Management exercises judgment, considering past and actual performances 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.

(iii) Share-based payments

The fair value of employee stock options is measured using the Black-Scholes option pricing model. Measurement inputs include share price on measurement date, exercise

8

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

price of the instrument, expected 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 (based on government bonds).

(iv) Income taxes

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.

(v) 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.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these condensed interim consolidated financial statements and in preparing the opening IFRS statement of financial position at January 1, 2010 for the purposes of the transition to IFRS, unless otherwise indicated.

(a) Basis of Consolidation:

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

9

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

The Company has the following subsidiaries:

• Genoil USA, incorporated in Delaware, United States, which is a wholly-owned subsidiary of the Company.
• Genoil Emirates LLC (the “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. The Emirates LLC is jointly-owned by S.B.K. Commercial Business Group LLC and the Company. Costs related to the establishment of the LLC have been capitalized and included in intangible assets. These costs will be amortized over the expected life of the joint arrangement or sooner if their recovery is uncertain. As at June 30, 2011, the 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 the Company.

The financial results of the Company’s subsidiaries are included in the condensed interim 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 the Company.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

(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 statement of income.

(c)	Financial instruments
	(i)	Non-derivative financial instruments:
		Non-derivative financial instruments comprise cash and cash equivalents, trade and other receivables, deposits, 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 as fair value

10

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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, deposits, due from related parties, trade and other payables, due to related parties, due to investors and promissory notes are measured at amortized cost using the effective interest method, less any impairment losses. Due to the short-term nature of these other non-derivative financial, their carrying values approximate fair value.
(ii)	Derivative financial instruments:
	The Company has not entered into any financial derivative contracts.
(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 maturities, at inception, of less than three months and that are not subject to any risk of change in value.

(e) 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 condensed interim 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:

Type	Method	Rate
Office Equipment	Straight line	5 years
Upgrader	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

11

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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 is determined by comparing the proceeds from disposal with the carrying amount of the property and equipment and are included as part of other gains and losses in the statement of loss.

(f) 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 and are tested for impairment annually. Any impairment is identified by comparing the fair value of the indefinite life 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 over their estimated useful life (5 to10 years). Pending patent costs are not amortized until patents are registered.

(g)	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 the present value of the estimated future cash flows discounted at the original effective interest rate.
	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 operations.
	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 operations.

12

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(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 these 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 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 condensed interim consolidated statement of loss.

Assets that have an indefinite useful life and goodwill are not subject to depreciation and are tested for impairment on an annual basis and when there is an indication of potential impairment. Impairment of goodwill is not reversed.

(h) 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.

(i) Income tax

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the statement of 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

13

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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.

(j) Finance income and expenses

Finance expense encompass interest expense on financial liabilities, accretion expense on debt issuance costs, and impairment losses recognized on financial assets which are recognized in the period in which they are incurred.

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

Interest income is recognized as it accrues in the consolidated statement of operations.

(k) Share-based payment transactions

The Company grants options to purchase common shares to employees and directors 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.

(l) 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.

(m) 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

14

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

segment.

(n) New standards and interpretations adopted

Accounting standards effective for periods beginning on or after January 1, 2011 have been adopted as part of the transition to IFRS.

(o) New standards and interpretations not yet adopted:

As of January 1, 2013, the Company will be required to adopt IFRS 9, “Financial Instruments”, as the first phase of the IASB’s project to replace IAS 39, “Financial Instruments: Recognition and Measurement”. The new standard replaces the current multiple classification and measurement models for financial assets and liabilities with a single model that has only two classification categories: amortized cost and fair value. The adoption of this standard should not have a material impact on the Company’s financial statements.

In May 2011, the IASB issued the following standards which have not yet been adopted by the Company: IFRS 10 Consolidated Financial Statements (IFRS 10), IFRS 11 Joint Arrangements (IFRS 11), IFRS 12 Disclosure of Interests in Other Entities (IFRS 12), IAS 27 Separate Financial Statements (IAS 27), IFRS 13 Fair Value Measurement (IFRS 13) and amended IAS 28 Investments in Associates and Joint Ventures (IAS 28). Each of the new standards is effective for annual periods beginning on or after January 1, 2013 with early adoption permitted. The Company has not yet begun the process of assessing the impact that the new and amended standards will have on its financial statements or whether to early adopt any of the new requirements.

15

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

4. RELATED PARTY TRANSACTIONS
	June 30	December 31	January 1
	2011	2010	2010
Due from (to) related parties	$18,334	$ 31,400	$ (172,124)

Funds were advanced to the Company in 2009 from officers and companies controlled by officers totaling $172,124. These loans were repaid through the private placement that was conducted in February 2010.

In 2010, an advance of $31,400 was made to an officer of the Company. This loan is non-interest bearing with no set terms of repayment. During the six months ended June 30, 2011, the Company received $13,066 of repayments resulting in a balance of $18,334 outstanding as at June 30, 2011, which approximates fair value.

Included in administrative expenses for the six months ended June 30, 2011 are consulting fees of $104,960 (six months ended June 30, 2010 – $nil) paid to companies controlled by officers of the Company.

Key management compensation is comprised of the following:

	Six months ended June 30
	2011	2010
Salaries and wages	$ 45,500	$ 31,500
Short-term employee benefits	1,609	1,188
Share-based payments (1)	–	–
	$ 17,109	$ 32,688

⁽¹⁾      Represents stock-based compensation expense associated with options granted to key management as recognized in the condensed interim consolidated statement of loss.

16

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

5. PROPERTY AND EQUIPMENT
	Land	Office
	(Note 7)	equipment	Upgrader	Total
Cost or deemed cost
As at January 1, 2010	$ –	$ 258,757	$ 4,153,455	$ 4,412,212
Additions	54,060	4,423	–	58,483
As at December 31, 2010	54,060	263,180	4,153,455	4,470,695
Additions	–	3,492	30,000	33,492
As at June 30, 2011	$ 54,060	$ 266,672	$ 4,183,455	$ 4,504,187
Accumulated depreciation
As at January 1, 2010	$ –	$ 240,096	$ 2,223,346	$ 2,463,442
Depreciation	–	11,128	276,898	288,026
As at December 31, 2010	–	251,224	2,500,244	2,751,468
Depreciation	–	2,678	139,448	142,126
As at June 30, 2011	$ –	$ 253,901	$ 2,639,692	$ 2,893,594
Net book value
As at January 1, 2010	$ –	$ 18,661	$ 1,930,109	$ 1,948,770
As at December 31, 2010	$ 54,060	$ 11,956	$ 1,653,211	$ 1,719,227
As at June 30, 2011	$ 54,060	$ 12,771	$ 1,543,763	$ 1,610,593

17

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

6. INTANGIBLE ASSETS
				Emirates
			Mineral	LLC
	Technology		Rights	(Note
	Rights	Patents	(Note 7)	3(a))	Total
Cost or deemed cost
As at January 1, 2010	$ 3,833,437	$ 856,649	$ –	$ –	$ 4,690,086
Additions	–	–	1,628,685	64,901	1,693,856
As at December 31, 2010	3,833,437	856,649	1,628,685	64,901	6,383,672
Additions	–	–	–	–	–
As at June 30, 2011	$ 3,833,437	$ 856,649	$ 1,628,685	$ 64,901	$ 6,383,672
Accumulated depreciation
As at January 1, 2010	$ 2,298,175	$ 508,351	$ –	$ –	$ 2,806,526
Depreciation	153,526	34,830	–	–	188,356
As at December 31, 2010	2,451,701	543,181	–	–	2,994,882
Depreciation	68,898	15,630	–	–	84,528
As at June 30, 2011	$ 2,520,599	$ 558,811	$ –	$ –	$ 3,079,410
Net book value
As at January 1, 2010	$ 1,535,262	$ 348,298	$ –	$ –	$ 1,883,560
As at December 31, 2010	$ 1,381,736	$ 313,468	$ 1,628,685	$ 64,901	$ 3,388,790
As at June 30, 2011	$ 1,312,838	$ 297,838	$ 1,628,685	$ 64,901	$ 3,304,262

7. ACQUISITION OF TWO HILLS ENVIRONMENTAL INC.

In December 2010, the Company acquired 100% of the issued and outstanding common shares of Two Hills Environmental Inc. (“Two Hills”). This acquisition conveys to the Company 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.

The Company paid a cash deposit of $100,000, issued 2,750,000 common shares of the Company to the former shareholder of Two Hills and 2,500,000 common shares of the Company to a debtor the Company plus a total of 250,000 share purchase warrants at a deemed price of C$0.295 for both common shares and share purchase warrants. A total of 5,000,000 shares of the Company were issued in December 2010. $73,750 was included in trade and other payables at December 31, 2010 representing the value of the remaining 250,000 shares issued in January 2011.

The $1,682,475 purchase price was arrived at through an arm's length negotiation process with the shareholder of Two Hills from whom such shares were purchased, of which $54,060 was allocated to land (Note 5) and $1,628,685 was allocated to mineral rights (Note 6).

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 very large

18

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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.

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 is due on April 6, 2011. The promissory notes were extended for another six months with the conditions unchanged. As at June 30, 2011, the reported amount of promissory notes includes $3,045 of accrued interest (December 31, 2010 – $962).

In June 2011, the Company issued promissory notes in the amount of C$278,088. The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011. As at June 30, 2011, the reported amount of promissory notes includes $487.61 of accrued interest.

9. CONVERTIBLE NOTES
	Series A	Series E	Total
Gross amount received	$ 5,638,220	$ 1,227,356	$ 6,865,576
Value of warrants and conversion option	(3,822,864)	(166,216)	(3,989,080)
Fair value of repayment obligation	$ 1,815,356	$ 1,061,140	$ 2,876,496
Balance, January 1, 2010	$ 173,823	$ 1,379,275	$ 1,553,098
Accretion	20,860	45,030	65,890
Interest accrued	–	171,419	171,419
Balance, December 31, 2010	$ 194,683	$ 1,595,724	$ 1,790,407
Accretion	11,680	15,269	26,949
Interest accrued	–	95,916	95,916
June 30, 2011	$ 206,363	$ 1,706,909	$ 1,913,272

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

19

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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

Series E

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

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

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

The notes were again renewed at October 6, 2010 for another year. This extension was considered a modification of the debt and the $30,455 fair value of the warrant extension was recorded as a reduction to the note payable and is to be 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.

20

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

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, January 1, 2010	276,673,669	$ 52,207,086
Private placements (i)	13,559,228	298,623
Shares issued for debt (ii)	3,647,139	724,575
Acquisition of Two Hills Environmental (iii)	5,000,000	1,475,000
Exercise of warrants (iv)	1,328,893	379,093
Exercise of options (v)	936,500	224,686
Share issue expenses	–	(41,845)
Balance, December 31, 2010	301,145,429	$ 55,267,218
Private placement (vi)	1,550,000	187,481
Acquisition of Two Hills Environmental (iii)	250,000	73,750
Exercise of warrants (vii)	1,703,846	470,906
Exercise of options (viii)	100,000	23,992
Share issue expenses	–	(4,016)
Balance, June 30, 2011	304,749,275	$ 56,019,331

(i)	In February 2010, the Company raised US$762,900 through a private placement, issuing 5,866,920 common shares at US$0.13 and 5,866,920 warrants with an exercise price of US$0.20 and a two-year term. C$128,426 of the proceeds was allocated to share capital and C$678,895 was attributed to the warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes pricing model with expected volatility of 121%, a risk-free rate of 1.21% and a dividend yield of nil over their expected life of 2 years.
	In June 2010, the Company completed a private placement for US$1,000,000 at US$0.13 per common share, issuing 7,692,308 common shares with an attached warrant exercisable at US$0.18 with a two-year term. Proceeds of C$170,198 were allocated to share capital and C$858,903 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes pricing model with expected volatility of 123%, risk-free rate of 1.44% and dividend yield of nil over their expected life of 2 years.
(ii)	The Company also completed two shares-for-debt transactions in February 2010. One transaction issued 1,308,486 common shares at US$0.13 with no warrants, and the other transaction issued 149,258 common shares at US$0.13 and 37,314 non- transferable share purchase warrants with an exercise price of US$0.20. C$196,540

21

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

was allocated to share capital and C$4,296 attributed to the warrants, which was credited to contributed surplus, was calculated using the Black-Scholes model with expected volatility of 121%, risk free rate of 1.21% and dividend yield of nil over the expected life of 2 years.

On May 13, 2010 Genoil Inc. announced that it proposed to issue 810,279 common shares at a deemed price of $0.09 per share to conclude a definitive shares for debt settlement agreement with related parties for unpaid salaries; the transaction was completed in June 2010. The total amount of indebtedness settled in this regard is $72,925.

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$455,110 to share capital.

(iii)	Consideration for the Two Hills acquisition (Note 7) included 5,250,000 common shares and 250,000 share purchase warrants at a deemed price of C$0.295 for both common shares and share purchase warrants, of which 5,000,000 common shares were issued in 2010 with a total of $1,475,000 allocated to share capital and 250,000 common shares were issued in 2011 for $73,750 allocated to share capital. C$33,995 attributed to the warrants, which was credited to contributed surplus in 2010, was calculated using the Black-Scholes model with expected volatility of 125%, risk free rate of 1.7% and dividend yield of nil over the expected life of one year.
(iv)	During 2010, the Company issued 1,328,893 common shares on the exercise of the same number of warrants for cash proceeds of $265,136 and a pro-rata portion of fair value of $113,957 reclassified from contributed surplus.
(v)	During 2010, the Company issued 936,500 common shares on the exercise of the same number of stock options for cash proceeds of $131,110 and a pro-rata portion of fair value of $93,576 reclassified from contributed surplus.
(vi)	In March 2011, the Company completed a private placement for US$300,000 at US$0.20 per common share, issuing 1,500,000 common shares with an attached warrant exercisable at US$0.20 with a two-year term. Proceeds of C$182,896 were allocated to share capital and C$108,494 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes pricing model with expected volatility of 108%, risk-free rate of 1.69% and dividend yield of nil over their expected life of 2 years.
(vii)	During the three months ended March 31, 2011, the Company issued 1,553,846 common shares on the exercise of the same number of warrants for cash proceeds of $274,013 and a pro-rata portion of fair value of $157,116 reclassified from contributed surplus.
(viii)	During the three months ended March 31, 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 $9,991 reclassified from contributed surplus.

22

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(ix)

In April 2011, the Company completed a private placement for US$10,000 at US$0.20 per common share, issuing 50,000 common shares with an attached warrant exercisable at US$.20 with a two year term. Proceeds of C$4,585 were allocated to share capital and C$5,090 was attributed to warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes pricing model with expected volatility of 108%, risk-free rate of 1.72% and dividend yield of nil over the their expected life of 2 years.

(x)

During the three months ended June 30, 2011, the Company issued 150,000 common shares on the exercise of the same number of warrants for cash proceeds of C$29,046 and a pro-rate portion of fair value of C$10,561 reclassified from contributed surplus

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 56,799,667. 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, 2010	43,730,000	$0.35
Granted	19,199,667	0.18
Exercised	(936,500)	(0.14)
Expired	(6,130,000)	(0.75)
Balance, December 31, 2010	55,863,167	0.25
Granted	6,315,333	0.20
Exercised	(100,000)	(0.14)
Expired	(6,200,000)	(0.45)
Balance, June 30, 2011	55,878,500	0.23

The following is a summary of options outstanding and exercisable as at June 30, 2011:

	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	50,928,500	3.26	0.19	50,861,832	3.26	0.19
$0.40 to $0.79	4,950,000	1.42	0.68	4,950,000	1.42	0.68
$1.60 to $2.00	-	-	-	-	-	-
	55,878,500	3.10	0.23	55,811,832	3.10	0.23

23

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

The fair value of stock options granted during the six months ended June 30, 2011 and the year ended December 31, 2010 was estimated on the dates of grant using the Black-Scholes pricing model based on the following assumptions:

	2011	2010
Volatility	114% - 115%	106% - 108%
Expected life	4.6 – 4.8 years	1.8 – 4.9 years
Risk-free rate	1.84% - 2.31%	1.35% - 2.22%
Dividend yield	nil	nil
Forfeiture rate	8 – 20%	8 – 20%
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, January 1, 2010	1,136,442	$0.41
Issued	1,386,442	0.39
Expired	(1,136,442)	(0.41)
Balance, December 31, 2010
and June 30, 2011	1,386,442	$0.39
US $ Warrants
	Number of	Weighted-Average
	US$ Warrants	Exercise Price
Balance, January 1, 2010	16,855,697	$0.26
Issued	13,596,542	0.19
Exercised	(1,328,893)	(0.20)
Expired	(4,071,372)	(0.44)
Balance, December 31, 2010	25,051,974	0.20
Issued	1,500,000	0.20
Exercised	(1,703,846)	(0.18)
Expired	(10,328,936)	(0.20)
Balance, June 30, 2011	14,569,192	0.20

The following is a summary of the total of C$ and US$ warrants outstanding and exercisable as at June 30, 2011:

		Remaining
	Total Number	Contractual Life
Range of Exercise Prices	of Warrants	(Years)
$0.000 to $0.390	14,724,496	1.07
$0.400 to $0.790	1,136,442	0.27
$0.800 to $1.190	94,696	1.68
	15,955,634	1.02

24

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

13. PER SHARE AMOUNTS
Basic net loss per share is calculated as follows:
	Six months ended
	June 30
	2011	2010
Loss for the period	$ (2,383,662)	$ (2,945,572)
Weighted average number of shares – basic:
Common shares issued as at January 1	301,145,429	276,673,669
Effect of shares issued during the period	1,217,566	3,052,216
	302,362,995	279,725,885
Loss per share – basic:	$ (0.01)	$ (0.01)

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

14. CONTRIBUTED SURPLUS

Balance, January 1, 2010	$ 16,146,998
Stock-based compensation	2,451,915
Options exercised	( 93,576)
Warrants issued	1,545,633
Equity portion of convertible notes, net of $7,614 tax	22,841
Warrants exercised	( 113,957)
Balance, December 31, 2010	$ 19,959,854
Stock-based compensation	822,642
Options exercised	( 9,992)
Warrants issued	113,584
Warrants exercised	( 167,677)
Balance, June 30, 2011	$ 20,718,441

15. FINANCE EXPENSE

	Six months ended
	June 30
	2011	2010
Interest on convertible notes	$ 77,742	$ 87,658
Interest on promissory notes	2,571	–
Accretion of convertible notes	26,950	35,397
Foreign exchange loss	12,733	4,367
	$ 119,996	$ 127,422

25

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

16. COMMITMENTS

The Company has entered into lease agreements which require minimum lease payments summarized below.

Pursuant to the Shareholders Agreement pertinent to the formation of Genoil Emirates LLC, the Company may be required to contribute an annual amount of approximately $150,000 to cover third party charges relative to this company.

Contractual obligation repayment schedule:

2011	$ 237,274
2012	181,200
2013	150,000
2014	150,000
2015	150,000
17. 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.

18. SUBSEQUENT EVENTS

In August 2011, the Company completed a share for debt settlement agreement for C$194,703 at C$0.20 per common share with related parties for unpaid salaries of for unpaid salaries of C$119,543 included in trade and other payables.

19. RECONCILIATION FROM CANADIAN GAAP TO IFRS

The Company’s accounting policies under IFRS differ from those followed under previous GAAP as described in note 3. These accounting policies have been applied for the six months ended June 30, 2011, as well as to the opening consolidated statement of financial position on the transition date, January 1, 2010, the comparative information for the six months ended June 30, 2010 and the comparative information for the year ended December 31, 2010.

On transition to IFRS on January 1, 2010, the Company used the IFRS mandatory exception for the retrospective application of certain IFRS whereby hindsight was not used to create or revise estimates and accordingly, the estimates previously made by the Company under GAAP are consistent with their application under IFRS.

The Company also applied the following exemptions to full retrospective application of IFRS in accordance with IFRS 1:

• Business combinations
  The Company had the option to apply IFRS 3 Business Combinations eitherretrospectively for all business combinations from a particular pre-transition date electedby the Company or prospectively from the transition date of January 1, 2010. TheCompany has elected the latter option.

26

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

• Share-based payments
  The Company has elected not to apply IFRS 2 Share-based Payments to equityinstruments granted after November 7, 2002 that had not vested by the transition date.
• Borrowing costs
  The Company has applied the borrowing cost exemption in IFRS 1. It has applied therequirement of IAS 23 Borrowing Costs to borrowing costs relating to qualifying assets ona prospective basis from the date of transition to IFRS.
• Compound financial instruments
  The Company has elected to not separate two portions of equity for convertible notes forwhich the liability component is no longer outstanding at the date of transition to IFRS..
• Cumulative translation adjustment
  In accordance with IFRS 1, the Company elected to deem all foreign currency translationdifferences that arose prior to the transition date in respect of foreign operations and theCompany‘s share of associate‘s translation differences to be nil.

The remaining IFRS 1 exemptions were not applicable or material to the preparation of the Company’s consolidated statement of financial position at the date of transition on January 1, 2010.

27

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(a) Reconciliation of consolidated statement of financial position – June 30, 2010

		Effect of
		transition to
	GAAP	IFRS	IFRS
ASSETS
CURRENT
Cash and cash equivalents	$ 499,779	$ -	$ 499,779
Trade and other receivables	15,536	-	15,536
Prepaid expenses and deposits	239,043	-	239,043
Due to related parties	21,551		21,551
	775,909	-	775,909
PROPERTY AND EQUIPMENT (Note 19(f)(i))	1,818,512	(13,285)	1,805,227
INTANGIBLE ASSETS	1,790,156	-	1,790,156
	3,608,668	(13,285)	3,595,383
	$ 4,384,577	$ (13,285)	$ 4,371,292
LIABILITIES
CURRENT
Trade and other payables	$ 579,501	$ -	$ 579,501
Convertible notes – current portion	1,489,721	-	1,489,721
	2,069,222	-	2,069,222
CONVERTIBLE NOTES	184,253	-	184,253
	2,253,475	-	2,253,475
SHAREHOLDERS’ EQUITY
Share capital	52,756,543	-	52,756,543
Contributed surplus (Note 19(f)(v))	20,521,878	(1,209,629)	19,312,249
Cumulative translation adjustment (Note 19(f)(iii))	-	5,488	5,488
Accumulated deficit (Note 19(f)(v))	(71,147,319)	1,190,856	(69,956,463)
	2,131,102	(13,285)	2,117,817
	$ 4,384,577	$ (13,285)	$ 4,371,292

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GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(b) Reconciliation of consolidated statement of loss and comprehensive loss – six months ended June 30, 2010:

		Effect of
		Transition to
	GAAP	IFRS	IFRS
OPERATING EXPENSES
Administrative	$ 958,048	$ -	$ 958,048
Stock-based compensation (Note 19(f)(ii))	1,832,286	(209,129)	1,623,157
Depreciation (Note 19(f)(i))	192,829	44,116	236,945
Development expenses	-	-	-
LOSS FROM OPERATIONS	2,983,163	(165,013)	2,818,150
FINANCE EXPENSE (Note 19(f)(iii))	121,934	5,488	127,422
NET LOSS AND
COMPREHENSIVE LOSS	$ 3,105,097	$ (159,525)	$ 2,945,572
Loss per share - basic and diluted	$ (0.01)	$ -	$ (0.01)

(c) Reconciliation of consolidated statement of loss and comprehensive loss – three months ended June 30, 2010:

		Effect of
		Transition to
	GAAP	IFRS	IFRS
OPERATING EXPENSES
Administrative	$ 496,592 $	-	$ 496,592
Stock-based compensation (Note 19(f)(ii))	598,439	(72,210)	526,229
Depreciation (Note 19(f)(i))	96,943	21,797	118,740
Development expenses	11,424		11,424
LOSS FROM OPERATIONS	1,203,398	(50,413)	1,152,985
FINANCE EXPENSE (Note 19(f)(iii))	43,618		43,618
NET LOSS AND
COMPREHENSIVE LOSS	1,247,016	(50,413)	1,196,603
Loss per share - basic and diluted	$ (0.01) $	-	$ (0.01)

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GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

(d)	Notes to reconciliations
	(i)	Property and equipment
		Under GAAP, the Company followed the declining balance method of amortizing the upgraders. Under IFRS, the Company has elected to change the depreciation rate to straight line for 15 years. As a result, an adjustment was made to increase property and equipment by $30,831 as at January 31, 2010 with a corresponding decrease in deficit. During the six months ended June 30, 2010 and year ended December 31, 2010, depreciation expense increased by $44,116 and $86,669, respectively, with a corresponding decrease to property and equipment.
	(ii)	Share-based payments
		Under GAAP, the Company accounted for share-based payments on a straight-line basis over the term of the vesting period. Under IFRS each tranche in an award is considered a separate grant with different vesting date and fair value. Each grant is separately accounted for using applicable assumptions for those specific dates and different fair values and accounted for using graded vesting recognition of expense. Under GAAP, forfeitures of awards are recognized as they occur. The calculation of stock-based compensation under IFRS reflects an estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate. As a result, the Company adjusted accumulated deficit by $8,290 on the transition date and stock-based compensation expense by $209,129 for the six months ended June 30, 2010 and $184,192 for the year ended December 31, 2010 and recognized the corresponding adjustments to contributed surplus.
	(iii)	Cumulative translation adjustment
		For the six months ended June 30, 2010 and the year ended December 31, 2010, the Company reclassified amounts under GAAP from translating the operations of Genoil USA from foreign exchange gain/loss in the condensed interim consolidated statement of loss to cumulative translation adjustment for $5,488 and $19,323, respectively, under IFRS.
	(iv)	Deferred income tax
		Under IFRS deferred income tax is substantially similar to GAAP and arises from differences between the accounting and tax bases of assets and liabilities. To the extent that assets and liabilities have changed from transition to IFRS, the amount of deferred income tax assets would be impacted, however, they are offset by a valuation allowance resulting in no financial statement impact.
		Under IFRS, there is a deferred income tax effect on the equity component of convertible notes which was not recognized under GAAP. On the transition date, the Company reduced contributed surplus by $1,008,790 for the tax effect of the equity component of convertible notes outstanding on January 1, 2010, with a corresponding

30

GENOIL INC.
Notes to Condensed Interim Consolidated Financial Statements
(Unaudited)
(in Canadian dollars)
For the six months ended June 30, 2011 and 2010

adjustment to accumulated deficit. An additional $7,614 was recognized in 2010 for the tax effect of the $30,455 fair value of the extension of warrants in October 2010 (Note 9).

(v) Statements of cash flow

The adoption of IFRS had no significant impact on the Company’s statements of cash flow.

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EX-2

Management’s Discussion and Analysis

June 30, 2011

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Management’s Discussion and Analysis

Dated as of August 29, 2011

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 interim financial statements of the Company for the three and six months ended June 30, 2011 and 2010 and the audited financial statements and MD&A for the year ended December 31, 2010. The reader is cautioned that the aforementioned audited financial statements and MD&A for the year ended December 31, 2010 are presented using Canadian generally accepted accounting principles (“Canadian GAAP”) accounting standards whereas the financial statements for the three and six months ended June 30, 2011 and the 2010 comparatives have been prepared in accordance with International Financial Reporting Standards (“IFRS”). All references to “Previous GAAP” refer to Canadian GAAP before the adoption of IFRS. This MD&A is presented in Canadian dollars (except where otherwise noted). 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.

Transition to International Financial Reporting Standards

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”) representing generally accepted accounting principles (“GAAP”) for publicly accountable enterprises in Canada. The transition date to IFRS was January 1, 2010 and comparative figures for 2010 and Genoil’s financial position as at January 1, 2010 have been restated to IFRS from the previous Canadian generally accepted accounting principles (“Previous GAAP”). Reconciliations to IFRS from Previous GAAP financial statements including the impact of the transition on the Company’s reported financial position and financial performance, including the nature and effect of significant changes in accounting policies from those used in the Company’s financial statements for the year ended December 31, 2010, are summarized in note 19 to the unaudited financial statements.

Basis of Presentation – The reporting and measurement currency is the Canadian dollar.

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.

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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, undeveloped 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 favourable 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.

Non-IFRS Measures – Certain measures in this document do not have any standardized meaning as prescribed by IFRS such as operating netback, funds flow, funds flow from operations, funds flow per share, net debt and capitalization and, therefore, are considered non-IFRS measures. The Company presents funds flow from operations per share whereby per share amounts are calculated using weighted average shares outstanding consistent with the calculation of earnings per share. These measures may not be comparable to similar measures presented by other issuers. These measures have been described and presented in this document in order to provide shareholders and potential investors with additional information regarding the Company’s liquidity and its ability to generate funds to finance its operations. Management’s use of these measures has been disclosed further in this document as these measures are discussed and presented.

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

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

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.

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.

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® 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.

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

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 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 (IMO) 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

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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 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.

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.

BUSINESS PROSPECTS

The Company does not expect to generate significant revenue or cash flow from its technologies or services for the 2011 year, and possibly beyond.

The Corporation has accumulated losses of $74.9 million to date and is not realizing any cash flow as it has not to date attained commercial operations in connection with its various patents and technology rights.

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

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

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

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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 to developing and upgrading heavy oil is around the corner.

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 oilburns, the process gives off excessive smoke due to the high percentage of the carbon element, which is environmentally unfriendly. Heavy oil is presently being burned for the most part without upgrading, as bunker fuel by ships on the seas and in certain countries that have not adopted stringent environmental standards. In addition, most of these heavy oil reserves contain sulphur which characterizes the oil as “sour”, as that is how it “taste-tested”in ancient times.

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

Genoil is pleased to announce that the United States Patent and Trademark Office has alloweda 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

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.

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

7

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 coastal waters. These MOU’s with Qinhuangdao, Tianjin and Tangshan ports are for the implementation of Genoil’s oil-water separation system to treat and clean bilge water with on shore based separators. These three ports are some of the busiest and largest in China.

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

Qinhuangdao Port is the eleventh largest port in the world, in terms of tonnage shipped. It is strategically located for transporting coal from the north to the south of China, handling approximately 50 percent of China’s coal shipments, or 200 million tons annually making the port the world’s largest coal loading port.

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 beproduced 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.

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DongHwa will license Genoil’s Bilge Water Separation technology for all ships, industrial fields and offshore rigs manufactured or retrofitted in Korea, China and Japan, and additionally, DongHwa will also manufacture the Genoil Bilge Water Separator units for sale by Genoil.

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

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.

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 any financing shall be used to implement the utilization of Genoil’s oily water separation technology to treat and clean bilge water. More specifically, the proceeds will be used for Crystal Sea installations on formal finalization of the MOUs at the three ports that have signed MOUs with Genoil – the Tangshan Port, Tianjin and Qinhuangdao Port.

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”.

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.

Heavy oil upgrading technology

Hayitiong refinery project

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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.

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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 June 30, 2011 and the seven preceding quarters:

	2009 – Q3	2009 – Q4	2010 – Q1	2010 – Q2	2010 – Q3	2010 – Q4	2011 – Q1	2011 – Q2
Working capital (deficiency)	(1,936,201)	(2,315,314)	(1,820,495)	(1,293,313)	(2,042,739)	(2,225,854)	(2,133,657)	(2,880,826)
Long term debt	169,167	173,823	179,038	184,253	189,468	194,683	200,524	206,363
Total assets	4,346,205	4,110,422	4,087,628	4,384,577	3,864,865	5,616,484	5,447,210	5,193,771
Accumulated deficit	66,561,206	68,042,222	69,890,511	71,147,318	72,317,279	73,676,060	74,033,921	74,942,577
Cash used in operations	557,497	662,291	458,420	500,684	687,520	723,123	478,794	730,105
SELECTED EXPENSES
	2009 – Q3	2009 – Q4	2010 – Q1	2010 – Q2	2010 – Q3	2010 – Q4	2011 – Q1	2011 - Q2
Human resources	250,246	212,956	228,210	197,998	237,923	233,516	244,020	260,654
Business development	39,236	8,673	9,899	32,670	84,030	44,880	67,603	57,294
Professional fees	25,864	206,567	39,075	72,431	157,255	29,146	14,219	188,299
Stock-based compensation	50,857	642,430	1,136,092	598,438	323,743	480,048	821,905	766
Net Loss	809,779	1,391,016	1,772,851	1,256,817	1,169,918	1,358,814	1,475,006	908,656
Net Loss per share-basic &
diluted	0.01	0.01	0.01	0.01	0.01	0.02	0.01	0.01

LIQUIDITY

The Company used $730,105 in cash for its operations(Non-IFRS Measure) during the second quarter. Cash use increased from the comparable quarter of 2010 as a consequence of the increase in professional fees. Cash flow provided by operating activities, the comparable IFRS measure was $(531,912) in 2011 (2010 – $(441,306)). The difference in the two measures is a consequence of changes in non-cash working capital

In February 2010, the Company raised US$762,900 through a private placement, issuing 5,866,920 common shares at US$0.13 and 5,866,920 warrants with an exercise price of US$0.20 and have a two year term. C$128,425 of the proceeds was allocated to share capital and C$678,895 was attributed to the warrants and credited to contributed surplus. The value attributed to the warrants was calculated using the Black-Scholes option-pricing model with expected volatility of 121%, risk free rate of 1.21% and dividend yield nil over their expected life of 2 years.

The Company also completed two shares-for-debt transactions in February 2010. The first one issued 1,308,486 common shares at US$0.13 with no warrants, and the second one issued 149,258 common shares at US$0.13 and 37,314 non-transferable share purchase warrants with an exercise price of US$0.20. C$196,540 was allocated to share capital and C$4,296 attributed to the warrants, which was credited to contributed surplus, was calculated using the Black-Scholes model with expected volatility of 121%, risk free rate of 1.21% and dividend yield nil over the expected life of 2 years.

On May 13, 2010 Genoil Inc. announced that it proposed to issue 810,279 common shares at a deemed price of $0.09 per share to conclude a definitive shares for debt settlement agreement with related parties for unpaid salaries; the transaction was completed in June 2010. The total amount of

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indebtedness settled in this regard is $72,925. The shares issued in connection with the settlement of this debt are subject to a four month hold period from their date of issuance.

In June 2010, the Company completed a private placement for US$1,000,000 at US$0.13 per common share, issuing 7,692,308 common shares with an attached warrant at US$0.18. The Warrants are exercisable until 24 months following their issue. Proceeds of C$170,197 were allocated to share capital and C$858,903 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 123%, risk free rate of 1.44% and dividend yield of nil over their expected life of 2 years. The common shares and warrants issued in connection with this offering are subject to a four month hold period.

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 August 2011, the Company completed a shares for debt settlement agreement for C$194,703 at C$0.20 per common share with related parties for unpaid salaries of for unpaid salaries of C$119,542. included in trade and other payables.

In August 2011, the Company filed a shares for debt application in the amount of C$690,000 with the TSX Venture Exchange to satisfy outstanding amounts to creditors including employees, consultants and professional services. The shares are being issued pursuant to debt cancellation agreements, whereby the creditors have agreed to forgive and cancel all debts currently owing to them by the Corporation, being C$690,000 in exchange for common shares of the Corporation. The shares to be issued in satisfaction of this debt will be based on a price per share of C$0.10, such price being the closing price on the TSX Venture Exchange on August 16, 2011. The Agreement for Creditors of $300,000 includes common shares at a price of C$0.10 a share and one Warrant exercisable into one Common Share at a price of $0.11 per Common Share at anytime prior to August 31, 2016. The Creditors of the remaining $400,000 will not receive warrants

In June 2011, the Company issued promissory notes in the amount of C$278,088. The promissory notes are unsecured and bear interest at 8% per annum. The notes are due on December 31, 2011.

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 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.

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The Company’s use of cash may increase in the future as it expands operations to meet near term business opportunities. The Company will continue to review the prospects of raising additional debt and equity financing to support its operations until such time that its operations become self-sustaining. While the Company is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.

COMMITMENTS AND CAPITAL EXPENDITURES

The Company currently has no outstanding commitments for capital expenditures.Pursuant to the Shareholders Agreement pertinent to the formation of Genoil Emirates LLC, the Company may be required to contribute an annual amount of approximately $150,000 to cover third party charges relative to this company

RELATED PARTY TRANSACTIONS

These amounts constitute expense advances to the Chief Executive Officer. See Note 4 to Interim Consolidated Financial Statements.

OUTSTANDING SHARE DATA

The following table sets out the number of common voting shares if all convertible securities were converted into shares on August 29, 2011:

	Number
Shares outstanding	305,496,990
Issuable under:
Options	57,618,500
Warrants	15,955,634
Convertible notes	5,372,495
	388,443,619

On November 3, 2009, the Board of Directors of the Corporation approved the grant of stock options for a total of 5.6 million shares to the Company's employees, directors and consultants. All of the 5.6 million options were approved with an exercise price of 14 cents, being the closing price of the Corporation's shares on the TSX Venture Exchange on the date preceding the date such grants were approved by the board. A total of 4,325,000 of the options issued to directors and officers vest immediately. All of such options issued to directors and officers have a term of five years from the date of issuance.

In January 2010, the Company issued 4,700,000 options to the CEO and Chairman and 500,000 to Board Directors and 500,000 to a consultant. The options have a strike price of C$0.18 and a total fair value of C$714,889.

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

In April 2010, the Company issued 2,500,000 options to the CEO and Chairman, 500,000 to Board Directors and 1,500,000 to consultants. The options have a strike price of C$0.14 and a total fair value of C$494,528.

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In May 2010, the Company issued 1,500,000 options to the CEO and Chairman, 1,500,000 to Board Director and 1,000,000 to consultants. The options have a strike price of C$0.20 and a total fair value of C$517,401.

In August 2010, the Company issued 1,000,000 options to the CEO to replace expired options and 1,665,000 to consultants. The options have strike price of C$0.16 and a total fair value of C$310,904.

Options in the amount of 500,000 were issued in October 2010 to a director and a consultant for a partial repayment of loans they made to the Company. The strike price is US$0.20 and the options have a total fair value of C$42,894.

In November 2010, 2,500,000 options were issued to the Directors, 750,000 options were issued to consultants and 250,000 were issued to an employee. The strike price for these options was C$0.29 and total fair value of C$187,062.

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.

On August 22, 2011, the Company filed a shares for debt application with the TSX Venture Exchange to satisfy amounts outstanding to creditors-including consultants, employees and professional services firms. The shares are being issued pursuant to debt cancellation agreements, whereby the creditors have agreed to forgive and cancel all debts currently owing to them by the Corporation, being C$690,000 in exchange for common shares of the Corporation. The shares to be issued in satisfaction of this debt will be based on a price per share of C$0.10, such price being the closing price on the TSX Venture Exchange on August 16, 2011. The Agreement for Creditors of $300,000 includes common shares at a price of C$0.10 a share and one Warrant exercisable into one Common Share at a price of $0.11 per Common Share at anytime prior to August 31, 2016. The Creditors of the remaining $400,000 will not receive warrants.

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.

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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.

International Financial Reporting Standards

Canadian publicly accountable enterprises have implemented International Financial Reporting Standards (“IFRS”) for the fiscal years beginning on or after January 1, 2011. The transition date to IFRS was January 1, 2010 and comparative figures for 2010 and Genoil’s financial position as at January 1, 2010 have been restated to IFRS from the previous Canadian generally accepted accounting principles (“Previous GAAP”). Reconciliations to IFRS from Previous GAAP financial statements including the impact of the transition on the Company’s reported financial position and financial performance, including the nature and effect of significant changes in accounting policies from those used in the Company’s financial statements for the year ended December 31, 2010, are summarized in note 19 to the unaudited interim consolidated financial statements. The following discussion explains the significant differences between IFRS and the Previous GAAP followed by the Company.

a) Property and equipment

Under Previous GAAP, the Company stated balances at cost less accumulated amortization. Renewals and betterments were capitalized. Repairs and maintenance costs were charged to operations as incurred.

Property and equipment were amortized over their estimated useful lives.

Patents and technology rights were recorded at cost.

Under IFRS:

(i) Recognition and measurement:

Items of property and equipment are measured at cost less accumulated depreciation and accumulated impairment losses, unless items were acquired in a business combination. Items of property and equipment acquired in a business combination are measured at fair value at date of acquisition less accumulated depreciation and accumulated impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the assets to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and borrowing costs on qualifying assets for which the commencement date for capitalization is on or after January 1, 2010.

Purchased software that is integral to the functionality of the related equipment is capitalized as part of that equipment.

When parts of an item of property and equipment have different useful lives, they are accounted for as separate items (major components) of property and equipment.

Gains and losses on disposal of an item of property and equipment are determined by comparing the proceeds from disposal with the carrying amount of property and equipment, and are recognized net within other income in profit or loss.

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(ii) Subsequent costs:

The cost of replacing a part of an item of property and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group, and its cost can be measured reliably. The carrying amount of the replaced part is derecognized. The costs of the day-to-day servicing of property and equipment (repair and maintenance) are recognized in profit or loss as incurred.

b) Amortization and depreciation

For Previous GAAP purposes, Property and equipment were amortized over their estimated useful lives at the following methods and annual rates:

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

Patents and technology rights were amortized at 10% on a declining-balance basis over theirestimated useful life. Pending patent costs were not amortized until patents were registered.

Under IFRS:

The estimated useful life, residual value and depreciation methods chosen are the Company’s best estimate of such and are based on industry norms, historical experience and other estimates including the period and distribution of future cash inflows.

c) Impairment of Assets

Under Previous GAAP, the Company assessed the impairment of long-lived assets, which consist of property and equipment and intangible assets, whenever events or changes in circumstances indicated that the carrying value of these assets may not be recoverable. Recoverability of assets to be held and used was measured by comparison of the carrying value of the assets to future undiscounted net cash flows expected to be generated by the assets. An impairment loss was measured as the amount by which the carrying amount exceeded its fair value. Fair value was based on discounted cash flows.

Under IFRS:

At the end of each reporting period, the Company assesses whether there is an indication that an asset group may be impaired. If any indication of impairment exists, the Company estimates the recoverable amount of the asset group. External triggering events include, for example, changes in customer or industry conditions, technological advances and economic climate deterioration. Internal triggering events for impairment include lower profitability or utilization.

The Company’s impairment tests compare the carrying amount of the asset or cash generating unit (“CGU”) to its recoverable amount. The recoverable amount is 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 and discounting of cash flows which involves key assumptions that consider all information available on the respective testing date. Management exercises judgment, considering past and actual performances 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. Discounted cash flow projections contain key assumptions such as discount rates, terminal value growth rates and EBITDA margins.

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d) Share based Payments

Under Previous GAAP, the Company accounted for stock-based compensation plans on a straight-line basis over the term of the vesting period. Under IFRS each tranche in an award is considered a separate grant with different vesting date and fair value. Each grant is separately accounted for using applicable assumptions for those specific dates and different fair values and accounted for using graded vesting recognition of expense.

Under Previous GAAP, forfeitures of awards are recognized as they occur. The calculation of share-based compensation under IFRS reflects an estimate of the number of awards expected to vest, which is revised if subsequent information indicates that actual forfeitures are likely to differ from the estimate.

e) Deferred Income Taxes

Deferred income tax calculated according to IFRS is substantially similar to Previous GAAP and arises from differences between the accounting and tax bases of assets and liabilities. To the extent that assets and liabilities have changed from transition to IFRS, the amount of deferred income tax liability has been impacted. Additionally, under Previous GAAP deferred income tax liabilities were required to be disclosed as either current or long-term. Under IFRS, all deferred income tax liabilities are considered to be noncurrent liabilities.

f) First Time Adoption of International Financial Reporting Standards

IFRS 1 provides the framework for the first time adoption of IFRS and specifies that an entity shall apply the principles under IFRS retrospectively. IFRS 1 also specifies that the adjustments that arise on retrospective conversion to IFRS from other GAAP should be directly recognized in retained earnings. Certain optional exemptions and mandatory exceptions to retrospective application are provided under IFRS 1. The Company has taken the following exemptions:

• IFRS 3 Business Combinations has not been applied to acquisitions of subsidiaries or of interests in associates and joint ventures that occurred before January 1, 2010.

• IFRS 2 Share-based Payment has not been applied to any equity instruments that vested before January 1, 2010.

• IAS 23 Borrowing Costs will not be applied before January 1, 2010.

h) New standards and interpretations not yet adopted

IFRS 13 - Fair Value Measurement

IFRS 13 is a comprehensive standard for fair value measurement and disclosure requirements for use across all IFRS standards. The new standard clarifies that fair value is the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants, at the measurement date. It also establishes disclosures about fair value measurement. Under existing IFRS, guidance on measuring and disclosing fair value is dispersed among the specific standards requiring fair value measurements and in many cases does not reflect a clear measurement basis or consistent disclosures. The Company has yet to assess the full impact of IFRS 13.

Standards issued but not yet effective up to the date of issuance of the Company’s financial statements are listed below. This listing is of standards and interpretations issued which the Company reasonably

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expects to be applicable at a future date. The Company intends to adopt those standards when they become effective.

IFRS 9 Financial Instruments: Classification and Measurement

IFRS 9 was issued in November 2009. This standard is the first step in the process to replace IAS 39 Financial Instruments:

Recognition and Measurement. IFRS 9 introduces new requirements for classifying and measuring assets and liabilities, which may affect the Company’s accounting for its financial assets. The standard is not applicable until January 1, 2013 but is available for early adoption. The Company has yet to assess the full impact of IFRS 9.

j) Internal Controls

In accordance with the Company’s approach to certification of internal controls required under Canadian Securities Administrators’ National instrument 52-109 and SOX 302 and 404, all entity level, information technology, disclosures and business process controls will require updating and testing to reflect changes arising from our conversion to IFRS. Upon review, we have determined there to be minimal updating of processes, controls and documentation required.

EVALUATION OF DISCLOSURE CONTROLS

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 quarter ended June 30, 2011 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in National Instrument 52-109 of the Canadian Securities Administrators and as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) and have concluded that such controls and procedures were not effective because of the material weaknesses described in Management’s Report on Internal Control over Financial Reporting.

MANAGEMENT REPORT ON INTERNAL CONTROL

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

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

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

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

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

Based on this evaluation, management concluded that the Company's internal control over financial reporting was not effective as of June 30, 2011 due to the following material weakness:

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

Remediation to Address Material Weakness

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

Changes in Internal Control over Financial Reporting

There has been no change in Genoil’s ICFR that occurred during the period beginning on April 1, 2011 and ended on June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the Company’s ICFR.

RISKS

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

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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 June 30, 2011, the Company had certain obligations and assets denominated in U.S. dollars and there were no contracts in place to manage this exposure.

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EX-3

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, David K. Lifschultz, the Chief Executive Officer of Genoil Inc., certify the following:

1.	Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Genoil Inc. (the “issuer”) for the interim period ended June 30, 2011.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
	(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

 (i)  material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 (ii)   information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 (b)   designed ICFR, or caused it 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 the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s

ICFR is the COSO Framework.

5.2	ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period
	(a)	a description of the material weakness;
	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and
	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material
	weakness.
5.3	N/A

6.      Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2011 and ended on June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 29, 2011

_/signed/ David Lifschultz___
[Signature]
Chief Executive Officer

EX-4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE

I, Brian Korney, the Chief Financial Officer of Genoil Inc., certify the following:

1.	Review: I have reviewed the interim financial statements and interim MD&A (together, the “interim filings”) of Genoil Inc. (the “issuer”) for the interim period ended June 30, 2011.
2.	No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.	Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.	Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.
5.	Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings
	(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i)  material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

 (ii)   information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

 (b)  designed ICFR, or caused it 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 the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s

ICFR is the COSO Framework.

5.2	ICFR – material weakness relating to design: The issuer has disclosed in its interim MD&A for each material weakness relating to design existing at the end of the interim period
	(a)	a description of the material weakness;
	(b)	the impact of the material weakness on the issuer’s financial reporting and its ICFR; and
	(c)	the issuer’s current plans, if any, or any actions already undertaken, for remediating the material
	weakness.
5.3	N/A

6.      Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2011 and ended on June 30, 2011 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: August 29, 2011

_/signed/ Brian Korney_
[Signature]
Chief Financial Officer