Exhibit
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Financial Statements
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Management's Discussion and
Analysis
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Certification of Interim Filings - CEO and
CFO
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Genoil
Inc.
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(Registrant)
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Date: September 29, 2020
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By:
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/s/ David Lifschultz
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Name:
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David Lifschultz
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Title:
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CEO
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Page
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Consolidated
Balance Sheets as of June 30, 2020 and December 31,
2019
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F-2
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Consolidated
Statements of Operations for the three and six months ended June
30, 2020 and 2019
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F-3
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Consolidated
Statements of Stockholders’ Deficit for the three and six
months ended June 30, 2020 and 2019
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F-4
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Consolidated
Statements of Cash Flows for the six months ended June 30, 2020 and
2019
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F-5
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Notes
to Consolidated Financial Statements
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F-6
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GENOIL
INC.
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Consolidated
Balance Sheets
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(Expressed
in US Dollars)
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ASSETS
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June
30,
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December
31,
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2020
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2019
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(Unaudited)
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CURRENT
ASSETS
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Cash and cash
equivalents
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$34,414
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1,359
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Due from
related-parties
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1,848,156
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1,675,625
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Total Current
Assets
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1,882,570
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1,676,984
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Land
located in Alberta Canada
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43,163
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43,163
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OTHER
ASSETS
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Intangible assets,
net
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1
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1
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TOTAL
ASSETS
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$1,925,734
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1,720,148
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CURRENT
LIABILITIES
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Trade and other
payables
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$60,654
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60,167
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Accrued interest
payable, to related parties
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1,933,297
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1,782,472
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Convertible notes,
current portion
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-
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2,513,748
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Due to related
parties
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3,906,250
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3,875,000
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Total Current
Liabilities
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5,900,201
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8,231,387
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NON-CURRENT
LIABILITIES
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Convertible notes,
non current portion
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2,513,748
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-
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Total Non-Current
Liabilities
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2,513,748
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-
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TOTAL
LIABILITIES
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8,413,949
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8,231,387
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STOCKHOLDERS'
DEFICIT
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Common Stock, no
par value; issued and outstanding 580,328,029 and 547,303,029
shares , respectively
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50,214,104
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49,847,884
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Contributed
surplus
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32,193,255
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32,114,075
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Accumulated
other
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-
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comprehensive
income (loss)
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(221,860)
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(221,860)
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Accumulated
deficit
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(88,673,714)
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(88,251,338)
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Total Stockholders'
Deficit
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(6,488,215)
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(6,511,239)
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TOTAL
LIABILITIES AND
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STOCKHOLDERS'
DEFICIT
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$1,925,734
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1,720,148
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GENOIL
INC.
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Consolidated
Statements of Operations
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(Expressed
in US Dollars)
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For the Six
Months Ended
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For the Three
Months Ended
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June
30,
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June
30,
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June
30,
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June
30,
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2020
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2019
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2020
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2019
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REVENUES
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$0.00
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$0.00
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$0.00
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$0.00
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COST
OF SALES
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-
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-
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-
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-
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GROSS
PROFIT
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-
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-
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-
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-
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OPERATING
EXPENSES
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Stock based
compensation to officers, directors, and consultants
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150,430
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219,048
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51,107
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29,667
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Occupancy
Arrangements with related parties
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31,250
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31,250
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15,625
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15,625
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Other Operating
Expenses
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89,871
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118,490
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35,269
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48,794
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Total Operating
Expenses
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271,551
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368,788
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102,001
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94,086
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LOSS
FROM OPERATIONS
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(271,551)
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(368,788)
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(102,001)
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(94,086)
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Other
Income (Expense)
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Finance
expense
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(150,825)
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(168,924)
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(75,413)
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(84,462)
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Total Other Income
(Expense) - Net
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(150,825)
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(168,924)
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(75,413)
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(84,462)
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INCOME
(LOSS) BEFORE INCOME TAXES
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(422,376)
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(537,712)
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(177,414)
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(178,548)
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PROVISION
FOR INCOME TAXES
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-
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-
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-
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-
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NET
INCOME (LOSS)
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$(422,376)
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$(537,712)
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$(177,414)
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$(178,548)
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Weighted
average shares outstanding - Basic and Diluted
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565,509,073
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534,441,742
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571,000,312
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535,378,908
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NET
LOSS PER SHAE - Basic and Diluted
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$0.00
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$0.00
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$0.00
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$0.00
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GENOIL INC.
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Consolidated Statements of Stockholders' Deficit
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(Expressed in US Dollars)
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(Unaudited)
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Accumulated
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Other
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Total
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Common
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Share
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Contributed
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Comprehensive
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Accumulated
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Stockholders'
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Shares
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Capital
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Surplus
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Income (Loss)
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Deficit
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Deficit
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Balance as of January 1, 2019
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532,312,029
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$49,463,347
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$29,209,720
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$(221,860)
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$(84,619,176)
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$(6,167,969)
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Sale of common
shares (and warrants) in private placements
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3,316,667
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96,500
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-
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-
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-
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96,500
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Issuance of
common shares for services
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3,529,333
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91,047
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-
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-
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-
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91,047
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Stock based
compensation
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-
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-
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128,001
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-
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128,001
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Net loss for
the six-months ended June 30, 2019
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-
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-
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-
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-
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(537,712)
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(537,712)
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Balance as of June 30 , 2019
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539,158,029
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49,650,894
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29,337,721
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(221,860)
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(85,156,888)
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(6,390,133)
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Balance as of January 1, 2020
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547,303,029
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$49,847,884
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$32,114,075
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$(221,860)
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$(88,251,338)
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$(6,511,239)
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Sale of common
shares (and warrants) in private placements
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20,950,000
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209,480
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-
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-
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-
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209,480
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Issuance of
common shares for services
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3,375,000
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69,750
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-
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-
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-
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69,750
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Stock based
compensation
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-
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-
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29,573
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-
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-
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29,573
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Net loss for
the three-months ended March 31, 2020
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-
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-
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-
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-
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(244,963)
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(244,963)
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Balance as of March 31 , 2020
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571,628,029
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$50,127,114
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$32,143,648
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$(221,860)
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$(88,496,300)
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(6,447,398)
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Sale of common
shares (and warrants) in private placements
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8,550,000
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85,490
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-
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-
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-
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85,490
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Issuance of
common shares for services
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150,000
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1,500
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-
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-
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-
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1,500
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Stock based
compensation
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-
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-
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49,607
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-
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-
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49,607
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Net loss for
the three-months ended June 30, 2020
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-
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-
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-
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-
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(177,414)
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(177,414)
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Balance as of June 30 , 2020
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580,328,029
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$50,214,104
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$32,193,255
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$(221,860)
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$(88,673,714)
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$(6,488,215)
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GENOIL
INC.
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Consolidated
Statements of Cash Flows
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(Expressed
in US Dollars)
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For the Six
Months Ended
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Unaudited
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2020
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2019
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OPERATING ACTIVITIES
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Net
income (loss)
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$(422,376)
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$(537,711)
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Adjustments
to reconcile loss
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to
cash flows from operating activities:
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Stock
based compensation
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150,430
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219,048
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Changes
in operating assets and liabilities
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Accrued
interest payable
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150,825
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168,923
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Trade
and other payables
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487
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-
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Net
Cash Used in Operating Activities
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(120,634)
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(149,740)
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FINANCING ACTIVITIES
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Net
change in related party receivables
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(172,531)
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21,994
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Net
change in related party payables
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31,250
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31,250
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Cash
received from equity investors
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294,970
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96,500
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Net
cash provided by Financing Activities
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153,689
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149,744
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Increase (Decrease) in Cash
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33,055
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4
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Cash at beginning of year
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1,359
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1,557
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Cash at end of period
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$34,414
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$1,561
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June, 30
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December, 31
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Borrower
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2020
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2019
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Lifschultz
Enterprise Company LLC (an entity controlled by David Lifschultz,
Genoil chief executive officer, and Bruce Abbott, Genoil chief
operating officer)
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$165,900
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$100
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David
Lifschultz
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844,433
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837,763
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Bruce
Abbott
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837,823
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837,762
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Totals
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$1,848,156
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$1,675,625
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June, 30
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December , 31
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Lender
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2020
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2019
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Lifeschultz
Enterprise Company LLC
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$1,152,885
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$1,062,943
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Sidney
B. Lifschultz 1992 Family Trust (an entity controlled by David
Lifschultz)
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416,349
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383,868
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David
Lifschultz
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182,036
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167,835
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Bruce
Abbott
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182,027
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167,826
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Totals
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$1,933,297
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$1,782,472
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June, 30
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December, 31
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Lender
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2020
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2019
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Lifeschultz
Enterprise Company LLC
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$1,499,026
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$1,499,026
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Sidney
B. Lifschultz 1992 Family Trust
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541,353
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541,353
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David
Lifschultz
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236,691
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236,691
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Bruce
Abbott
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236,678
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236,678
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Totals
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$2,513,748
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$2,513,748
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June 30,
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December 31,
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Creditor
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2020
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2019
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Occupancy
costs payable to Estate of Sidney B. Lifschultz (an entity
controlled by David Lifschultz) for use of, Larchmont New York
property from 2003 to 2017
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$3,750,000
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$3,750,000
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Occupancy
costs payable to Bruce Abbott and David Lifschultz for use of
Mamaroneck New York property in 2018, 2019, and 2020
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156,250
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125,000
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Totals
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$3,906,250
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$3,875,000
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Number
outstanding at December 31, 2018
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79,282,171
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Granted
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8,836,667
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Cancelled
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-
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Number
outstanding at December 31, 2019
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88,118,838
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Granted
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29,500,000
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Cancelled
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-
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Number
outstanding at June 30, 2020
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117,618,838
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For the Six Months Ended
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June, 30
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June, 30
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Type of Security
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2020
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2019
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Price
Appreciation Certificates issued to David Lifschultz (CEO) and
Bruce Abbott (COO).
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$-
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$-
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Options
issued to outside directors and consultants
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79,180
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128,001
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Common
stock issued for services
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71,250
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91,047
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Totals
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$150,430
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$219,048
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For the Three Months Ended
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June, 30
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June, 30
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Type of Security
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2020
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2019
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Price
Appreciation Certificates issued to David Lifschultz (CEO) and
Bruce Abbott (COO).
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$-
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$-
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Options
issued to outside directors and consultants
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49,607
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-
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Common
stock issued for services
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1,500
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29,667
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Totals
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$51,107
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$29,667
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Common stock equivalent
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Price Appreciation Certificates
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Options
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Total
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Number
outstanding at December 31, 2018
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362,400,000
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33,140,000
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395,540,000
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Granted
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123,700,000
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22,950,000
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146,650,000
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Cancelled
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-
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-
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-
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Number
outstanding at December 31, 2019
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486,100,000
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56,090,000
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542,190,000
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Granted
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-
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6,500,000
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6,500,000
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Cancelled
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-
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(4,100,000)
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(4,100,000)
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Number
outstanding at June 30, 2020
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486,100,000
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58,490,000
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544,590,000
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2020
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Volatility
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218.7%-237.5%
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Expected life
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5 years
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Risk-free rate
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0.39% - 0.66%
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Dividend yield
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-
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Forfeiture rate
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0%
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Stock Price at Valuation
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0.01 - 0.02
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Exercise Price
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$0.01
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EVALUATION OF DISCLOSURE CONTROLS
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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, 2020 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.
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MANAGEMENT REPORT ON INTERNAL CONTROL
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The
Chief Executive Officer and Chief Financial Officer are responsible
for establishing and maintaining adequate internal control over
financial reporting of the Company. Internal control over financial
reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with accounting principles generally accepted in the
United States (GAAP).
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The
Company's internal control over financial reporting includes those
policies and procedures that
(i)
pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
the assets of the company;
(ii)
provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of the
Company are being made only in accordance with authorizations of
management and directors of the Company; and
(iii)
provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use or disposition of the
Company's assets that could have a material effect on the financial
statements.
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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.
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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.
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1.
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Review: I have reviewed the
interim financial report and interim MD&A (together, the
“interim filings”) of Genoil Inc (the “issuer”)
for the interim period ended June
30, 2020.
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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.
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3.
|
Fair presentation: Based on my
knowledge, having exercised reasonable diligence, the interim
financial report together with the other financial information
included in the interim filings fairly present in all material
respects the financial condition, financial performance and cash
flows of the issuer, as of the date of and for the periods
presented in the interim filings.
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NOTE
TO READER
|
|
In contrast to the
certificate required for non-venture issuers under National
Instrument 52-109 Certification of
Disclosure in Issuers’ Annual and Interim Filings (NI
52-109), this Venture Issuer Basic Certificate does not include
representations relating to the establishment and maintenance of
disclosure controls and procedures (DC&P) and internal control
over financial reporting (ICFR), as defined in NI 52-109. In
particular, the certifying officers filing this certificate are not
making any representations relating to the establishment and
maintenance of
|
|
i)
|
controls and other
procedures designed to provide reasonable assurance that
information required to be disclosed by the issuer in its annual
filings, interim filings or other reports filed or submitted under
securities legislation is recorded, processed, summarized and
reported within the time periods specified in securities
legislation; and
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ii)
|
a process 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.
|
The issuer’s
certifying officers are responsible for ensuring that processes are
in place to provide them with sufficient knowledge to support the
representations they are making in this certificate. Investors
should be aware that inherent limitations on the ability of
certifying officers of a venture issuer to design and implement on
a cost effective basis DC&P and ICFR as defined in NI 52- 109
may result in additional risks to the quality, reliability,
transparency and timeliness of interim and annual filings and other
reports provided under securities legislation.
|
|
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