Genoil Inc 20-F, filed Apr 30, 2025
Genoil Inc (GNOLF)
About this 20-F
Genoil Inc filed this 20-F on April 30, 2025, covering the fiscal year ended December 31, 2024.
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| UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 20-F | OMB APPROVAL |
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(Mark One)
| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OFTHE SECURITIES EXCHANGE ACT OF 1934 |
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| ☒ | ANNUALREPORT PURSUANT TO SECTION 13 OR 15(d) OFTHE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal years ended December 31, 2024, 2023 and 2022 |
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| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| Date of event requiring this shell company report . . . . . . . . . . . . . . . . . . . |
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| For the transition period from to |
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| Genoil Inc. |
| (Exact name of Registrant as specified in its charter) |
Genoil Inc.
(Translation of Registrant’s name into English)
Canada
(Jurisdiction of incorporation or organization)
270 Bellevue Avenue
Newport RI 02840
(Address of principal executive offices)
David Lifschultz,
Tel 212-688-8868,
e-mail – david@lifschultzorganization.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act. None
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
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Securities registered or to be registered pursuant to Section 12(g) of the Act.
Common Stock, Fully Paid and Non-Assessable Common Shares Without Par Value quoted on the OTC Markets Quotation System.
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(Title of Class)
| SEC 1852 (05-21) | Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number. |
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(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None.
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(Title of Class)
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
Common Shares: 1,969,322,429 as of December 31, 2024, 1,913,137,429 as of December 31, 2023 and 696,013,029 as of December 31, 2022.
Preferred shares: (zero) as of December 31, 2024.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ Yes ☒ No
Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒ Yes ☐ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer,"accelerated filer,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Non-accelerated filer | ☒ |
| Accelerated filer | ☐ | Emerging growth company | ☐ |
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
| U.S. GAAP ☒ | International Financial Reporting Standards as issued | Other ☐ |
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| by the International Accounting Standards Board ☐ |
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If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. ☐ Yes ☐ No
Indicate by check mark, if securities are registered pursuant to Section 12(b) of the Act, whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Yes ☐ No
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive- based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Yes ☒ No
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| Material Modifications to the Rights of Security Holders and Use of Proceeds. |
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| Item I Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
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| Table of Contents |
PART I
Item 1. Identity of Directors, Senior Management and Advisers
A. Directors and senior management.
Not required as this is an annual report under the Exchange Act.
B. Advisers.
Not required as this is an annual report under the Exchange Act.
C. Auditors.
Not required as this is an annual report under the Exchange Act.
Item 2. Offer Statistics and Expected Timetable
Not required as this is an annual report under the Exchange Act.
A. [Reserved]
B. Capitalization and indebtedness.
Not required as this is an annual report under the Exchange Act.
C. Reasons for the offer and use of proceeds.
Not required as this is an annual report under the Exchange Act.
D. Risk factors.
Going Concern
To date Genoil has not attained commercially viable operations from its various patents and technology rights.
The ability of the Company to continue as a going concern is dependent on commercializing its technologies, achieving profitable operations 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.
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General Risk Factors
An investment in the Corporation's common shares ("Common Shares") should be considered highly speculative. In addition to other information in this Form 20-F, you should carefully consider the following factors when evaluating Genoil and its business.
Much of the information included in this annual report includes or is based upon estimates, projections or other "forward-looking statements". Such forward-looking statements include any projections or estimates made by the Corporation and its management in connection with its business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect Genoil's current judgment regarding the direction of its business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this document.
The section that follows addresses several of the risk factors related to the Corporation's operations in more detail.
Genoil has a history of substantial losses and negative cash flows. It expects these losses and negative cash flows to continue in the future. If it is unable to make a profit, the Corporation may not be able to continue to operate its business.
Genoil has not earned profits to date and it may not earn profits in the future. Profitability, if achieved, may not be sustained. The commercialization of its technologies requires financial resources and capital infusions and future revenues may not be sufficient to generate the funds required to continue its business development and marketing activities. If the Corporation does not obtain sufficient capital to fund its operations, it may be required to forego certain business opportunities or discontinue operations entirely.
Genoil has incurred significant losses and expects to continue to incur significantly greater costs than revenue received. Consequently, the Corporation expects to incur losses in the near term. If Genoil achieves profitability, it may not be able to sustain it. The business of initiating, developing and implementing inventive or innovative processes is inherently risky. Manpower and capital employed may not result in the development of a commercial or economic process. Once successfully developed, there is no certainty that the intended market will be receptive to the Corporation's technology. In all areas of its business, Genoil may compete against entities that may have greater technical and financial resources. The Corporation is completely dependent upon external sources of financing which may not be available on acceptable or economic terms.
The intellectual property and technology developed by Genoil may not work in the manner anticipated or the market may not be receptive to its technology or other new technologies might be more feasible to implement.
Genoil develops technology for use in various industries. Part of the risk in this type of undertaking is that the technology may not perform as expected or its use may not be economical. The development of intellectual property is expensive and time consuming and if the developed product is not marketable, then no revenues will be realized from its development.
The marketability of Genoil's technologies depends on the ability of those technologies to meet and adapt to the needs of industry customers. The markets for Genoil's technologies may not develop further and the current level of market acceptance of its products may decrease or may not be sustainable. In order to continue marketing its technology, the Corporation must adapt to rapid changes in technology and customer requirements. The Corporation's success will depend, in part, on its ability to enhance its existing technology, gain market acceptance, and continue to develop its products to meet increasingly demanding customer requirements.
Genoil's technology is still experimental so the demand for it is unknown. The Corporation's potential market may not develop as it anticipates and, accordingly, it may not be able to expand its business or operate it profitably.
The Corporation's technology has not been proven in any commercial venture and, as such, any market for its technology will depend significantly on its own efforts. As a result, future demand for its technology is unknown. Genoil believes that many of its potential customers are not fully aware of the benefits of its technology. The Corporation must educate potential customers regarding these benefits and convince them of its ability to provide complete and reliable services. The market for its technology may never become viable or grow further. If the market for its technology does not grow or grows more slowly than it currently anticipates, its business, financial condition and operating results would be materially adversely affected.
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Key contractors may terminate their engagements.
Skilled and educated professionals are a fundamental component of the development of intellectual property. If these key contractors terminate their engagements with Genoil, the development of its intellectual property may be hindered or delayed, increasing the expenses associated with technology development. The Corporation's success is dependent on the services of members of its senior management team. The experience and talents of this team will be a significant factor in its continued success and growth. The loss of any senior management member could have a material adverse effect on its operations and business prospects. Given its financial situation, Genoil may not be able to retain or replace its key personnel. The Corporation has no key man insurance.
Genoil has issued common share purchase warrants, options, price appreciation certificates(PACs) and convertible debt, the conversion and/or exercise of which would have a dilutive effect on its earnings per share.
As of December 31, 2024, the following potentially dilutive instruments were outstanding:
| Warrants |
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| 262,795 |
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| Options |
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| 85,966,000 |
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| PACs |
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| 749,400,000 |
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| Notes |
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| 214,375 |
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| 835,843,170 |
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| Shares o/s |
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| 1,969,322,429 |
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| Pot'l Dil'n |
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| 42 | % |
Furthermore, the Corporation may enter into commitments in the future which would require the issuance of additional Common Shares, and it may grant additional stock options. The Corporation is authorized to issue an unlimited number of Common Shares. Genoil issues Common Shares for the purpose of raising funds for general working capital requirements, to acquire additional technology, to accommodate strategic partnerships, or for the satisfaction of debts.
Third parties may claim that Genoil infringes their proprietary rights.
Genoil potentially may be subjected to claims that it has infringed the intellectual property rights of others. As the number of products in the oil and gas technology industry increases, the Corporation may become increasingly subject to infringement claims, including patent and copyright infringement claims. In addition, previous employers of its former, current or future employees may assert claims that such employees have improperly disclosed to Genoil the confidential or proprietary information belonging to those employers. Any such claim, with or without merit, could be time consuming to defend, result in costly litigation, divert management's attention from its core business, require it to stop selling or delay shipping, or cause the redesign of its product. In addition, Genoil may be required to pay monetary amounts as damages, for royalty or licensing arrangements, or to satisfy indemnification obligations that it has with some of its customers.
Genoil may not be able to protect its proprietary information.
Genoil relies on a combination of copyright, patents and trade secret laws, confidentiality procedures, contractual provisions and other measures to protect its proprietary information. All of these measures afford only limited protection. These measures may be invalidated, circumvented or challenged, and others may develop technologies or processes that are similar or superior to the Corporation's technology. Despite its efforts to protect its proprietary rights, unauthorized parties may attempt to copy Genoil's products or to obtain or use information that it regards as proprietary. Given its size and financial situation, Genoil may not be ultimately effective in preventing misappropriation of its proprietary rights.
Genoil's intellectual property may become outdated or surpassed by industry improvements.
Genoil is a technology-based company and is involved in developing, improving, and marketing its technology to customers. There is a risk that new developments in Genoil's field of specialty will arise, making its technology products less marketable. To enhance its position in the technology industry, the Corporation must continue to develop and improve its current products and develop product extensions. There may not be a demand for the products or capital available to finance their development in the future.
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Genoil operates in a competitive market.
The business of providing technology-based solutions to industry is highly competitive. Some of Genoil's competitors may have greater financial and marketing resources, greater market share and name recognition than it has, which would allow them to quickly develop market presence in the markets Genoil serves or allow them to expand into new markets that Genoil intends to serve. Given its size and financial position, the Corporation may not be able to effectively compete with these competitors.
Potential expansion and opportunities may arise.
Genoil may continue to expand its operations or product lines through the acquisition of additional businesses, products or technologies. It may not be able to identify, acquire or profitably manage additional businesses or successfully integrate any acquired businesses, products or technologies without substantial expenses, delays or other operational or financial challenges. Furthermore, acquisitions may involve a number of additional risks, including the diversion of management's attention, failure to retain key personnel, unanticipated events or circumstances and legal liabilities, some or all of which could have a material adverse effect on Genoil's business, results of operations and financial condition. In addition, acquired businesses, products or technologies, if any, may not achieve anticipated revenues and profitability. Acquisitions could also result in potentially dilutive issuances of equity securities. The Corporation's failure to manage its acquisition strategy could have a material adverse effect on its business, results of operations and financial condition.
U.S. investors may have difficulty enforcing judgments against Genoil or its management.
Genoil is incorporated in Canada. Substantially all of its assets are located outside the United States. As a result, U.S. investors may not be able to:
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| • | effect service of process upon the Corporation or these persons within the United States; or |
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| • | enforce against the Corporation or these persons in United States courts, judgments obtained in United States courts, including judgments predicated on the civil liability provisions of the federal securities laws of the United States; or |
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| • | initiate a derivative suit on the Corporation's behalf. |
Climate Disclosures
It is presently undetermined how climate change may affect Genoil’s business affairs. The Company presently has no Greenhouse Gas Emissions.
A. Genoil's history and development.
The Company
Genoil was created from an amalgamation on September 5, 1996 under the Canada Business Corporations Act of Genoil Inc. and Continental Fashion Group Inc., a public company whose shares traded on the Alberta Stock Exchange. At the time of the merger, Continental Fashion Group Inc. had no assets, no liabilities and did not carry on any business.
The address of its head office is
270 Bellevue Avenue
Newport RI 02840
and its phone number is 212-688-8868.
Recent History
2024
During the fourth quarter of 2024, the Company evaluated the land located in Alberta, Canada and determined that it no longer possesses any realizable value. Accordingly, the carrying amount of the land has been written off, and the loss has been recognized in the consolidated statement of operations for the period.
Effective December 31, 2024, as a result of the inflation protection provision, the principal balance due Lifschultz Enterprise Company LLC increased 2.950% or $6,143 (from $208,232 to $214,375) and the accrued interest balance due Lifschultz Enterprise Company LLC increased 2.950% or $1,106 (from $37,506 to $38,612). The $6,143 total increase in the principal and accrued interest balances has been included in Finance expense.
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During the first quarter of 2024, the Company sold a total of 15,730,000 shares of common stock (and warrants) in private placements for total proceeds of $ 157,300.
During the second quarter of 2024, the Company sold a total of 14,390,000 shares of common stock (and warrants) in private placements for total proceeds of $143,800.
During the third quarter of 2024, the Company sold a total of 16,610,000 shares of common stock (and warrants) in private placements for total proceeds of $166,100.
During the fourth quarter of 2024, the Company sold a total of 8,265,000 shares of common stock (and warrants) in private placements for total proceeds of $75,650.
During the fourth quarter of 2024, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
2023
The Company has restated the consolidated Financial Statements at December 31, 2022 and December 31, 2021 and for the years then ended (which were included in the Company’s December 31, 2022 Form 20-F filed with the SEC on May 2, 2023) in order to correct the amount of operating expenses previously recorded from January 1, 2021 to December 31, 2022.
Periodically the Company transfers money to Lifschultz Enterprise Company LLC (“LEC”), an affiliated entity controlled by David Lifschultz (Genoil chief financial officer). Some of the transfers are loans to LEC and some of the transfers are Genoil reimbursements of Genoil expenses paid by LEC. As previously reported, the Company erroneously reported all transfers in 2021 and 2022 as loans to LEC. As restated, the Company has reclassified these transfers which were Genoil reimbursements of Genoil expenses paid by LEC ($104,494 in 2021 and $66,636 in 2022).
During the first quarter of 2023, the Company sold a total of 11,800,000 shares of common stock (and warrants) in private placements for total proceeds of $118,000.
During the first quarter of 2023, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
During the second quarter of 2023, the Company sold a total of 12,520,000 shares of common stock (and warrants) in private placements for total proceeds of $125,200.
During the second quarter of 2023, the Company issued a total of 2,450,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $24,500.
During the third quarter of 2023, the Company sold a total of 12,960,000 shares of common stock (and warrants) in private placements for total proceeds of $129,600.
During the third quarter of 2023, the Company issued a total of 4,305,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $43,050.
During the fourth quarter of 2023, the Company sold a total of 27,850,000 shares of common stock (and warrants) in private placements for total proceeds of $ 278,500.
During the fourth quarter of 2023, the Company issued a total of 3,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $32,000.
2022
During the first quarter of 2022, the Company sold a total of 11,630,000 shares of common stock (and warrants) in private placements for total proceeds of $116,300.
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During the first quarter of 2022, the Company issued 105,000,000 Price Appreciation Certificates, which were composed of 60,000,000 new PACs and 45,000,000 expiration replacement PACs to senior officers of the Company.
During the first quarter of 2022, the Company issued 9,500,000 five year Stock Options at $0.01 per share, which vested immediately, to Directors of the Company.
During the first quarter of 2022, the Company issued a total of 1,120,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $11,200.
During the first quarter of 2022, the Company granted a total of 60,000 warrants to certain investors as deemed dividends. The fair value of the warrants (at dates of issuance) totaled $780 and was estimated using the Black-Scholes options pricing model based on the following assumptions: (1) stock prices of $0.01 per share, (2) exercise prices of $0.025 per share, (3) expected volatility of 368.5%, (4) expected term of 5 years, (5) risk-free interest rate of 1.62%, and (6) dividend rate of 0%.
On May 10, 2022, Genoil announced that it had completed the bankable feasibility study for the planned refinery in Oman. The company is proceeding to finalize the project. Ras Madrakah owns the only private refinery license ever granted by the Government of Oman and the project has received strong local support. Eight hundred hectares of land has been reserved for the project. Government gas supply is in place, there are three crude feedstock agreements in place for up to 200,000 barrels per day and three refined product offtake contracts have been secured as well. Eight square kilometers of land has been secured in the Special Economic Zone Authority of Duqm (SEZAD). The local licenses allow for export and import of products, sea and coastal oil and gas water transport and construction of petrochemical complexes. The local licenses have no limitation on project capacity and will allow for expansion in the future.
During the second quarter of 2022, the Company sold a total of 13,030,000 shares of common stock (and warrants) in private placements for total proceeds of $130,300.
During the second quarter of 2022, the Company issued a total of 6,120,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $61,200.
During the third quarter of 2022, the Company sold a total of 16,830,000 shares of common stock (and warrants) in private placements for total proceeds of $168,300.
During the third quarter of 2022, the Company issued a total of 2,500,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $25,000.
For Personal reasons, on October 27, 2022, Bengt Koch resigned as a Director of the Company.
During the fourth quarter of 2022, the Company sold a total of 4,150,000 shares of common stock (and warrants) in private placements for total proceeds of $41,500.
Effective December 31, 2022, as a result of the inflation protection provision, the principal balances of Convertible Notes were increased 8.003% or a total of $394,798 (from $4,933,122 to $5,327,920) and the accrued interest balances were increased 8.003% or a total of $417,071 (from $5,211,424 to $5,628,495).
B. Business overview.
General Development of the Business
Genoil's principal business is the development of technologies relating to the oil and gas industry. Its present goal is to commercialize its technologies internationally.
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The Corporation owns rights to several patented and proprietary technologies. A number of products that have been created from these technologies are under development. None of its technologies have been commercialized. A discussion of these products follows.
No consideration has been given to consumer boycotts as a result of operations in Countries of Particular Concern as defined by the International Religious Freedom Act of 1998. Genoil is a Canadian company and as such the International Religious Freedom Act of 1998 does not apply to its operations. The Corporation does not produce consumer products.
Genoil formed a corporation in the Middle East with SBK Commercial Business Group in the United Arab Emirates. The corporation is named “Genoil Emirates”.
The purpose of this new corporation is to create projects in the U.A.E. for all of Genoil’s technologies, including: desulfurization, oil upgrading and recycling, water purification port technologies, well testing, and sand cleaning. Currently the United Arab Emirates has the seventh largest oil reserves in the world and is looking to expand production.
The Genoil Emirates joint venture between Genoil and SBK Commercial Business Group has significant promise. Genoil Emirates has established its head office in Riyadh, 11321 Kingdome of Saudi Arabia. The address is Building B, Near Gulf Commercial Complex Olaya, P.O. Box: 230032. It also has a branch location at Khober DAMAM, Block 7 Office 32 Khober, Telephone: +96614633181 Facsimile: +96614664763.
Genoil has no exposure to areas of political conflict relating to the Israel-Hamas circumstance or the fall of the Assad regime in Syria.
Pilot Heavy Oil Upgrader
Genoil has been primarily involved in the development and commercial applications of its proprietary heavy oil upgrading technology – the Genoil Hydroconversion Upgrader (GHU®).
The GHU® converts sour (high sulphur), heavy hydrocarbon feed stocks into lighter oil with higher quality distillates for conventional refining. The GHU® process uses a hydrogen enrichment methodology based on catalytic hydrogenation and flash separation.
The GHU®’s unique intellectual property is in its hydroconversion design and mixing devices. A GHU® provides greater mass/heat transfer between hydrogen, crude and catalyst. As a result, hydroconversion can be achieved at mild operating conditions.
Sour, acidic, heavy crude and residual by-products are converted into lighter distillates, increasing the API (or lowering the density), while maximizing denitrogenation, desulphurisation and demetalisation to meet new regulatory requirements. The upgraded crude product will have higher yields of naphtha, distillates and vacuum gas oil with reduced levels of contaminants such as sulphur, nitrogen and metals. Genoil’s process is designed specifically to eliminate most of the sulphur from the feed stocks.
The Genoil GHU Upgrader has been designed to remove 99.5% of the sulphur, as shown in its latest tests, while lightening the oil at the same time, significantly raising its API gravity.
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%.
Oil/Water Separation
The Genoil Water Treatment Department has increased its significance in the business model of the Corporation. Initially developed for the bilge area of a ship, the Crystal Separator is suitable for a wide range of applications, including off-shore oil platforms, wastewater treatment plants, refineries, gasoline service stations and ports. Genoil’s Crystal Sea oil and water separator is a compact unit that is able to handle small volumes from 2 GPM to 20 GPM using a compartmental process.
Revenues from Product Sales
The majority of Genoil's products continue to be at the commercialization stage and have not recently produced revenues.
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Expenditures Relating to the Sale of Products
Genoil is primarily involved in the development of its technologies for commercial application. The Company has been building its internal capabilities. Genoil utilizes independent contractors to provide engineering and other services for projects as needed.
Genoil does not intend to commit to any expenditures of any other nature, beyond expenditures necessary for the development and maintenance of its technologies, in the near future.
Geographic Markets
The Company markets its technology mainly to potential customers in the Middle East, Russia and China. The markets for Genoil’s products are global.
Intellectual Property Rights
Genoil has been granted 7 US patents (Patent nos. 6,527,960; 7,001,502; 7,014,756; 5,603,825, 7,510,689, 7,704,400, and, 7,754,076), 2 Canadian patents (No. 2,243,142 and 2,306,069). Genoil either owns or licenses the rights to all intellectual properties used in its products.
Genoil has copyright, patent rights and trademarks, which are necessary and contribute significantly to the preservation of its competitive position in the markets which it addresses. It is possible that the Corporation's patents and other intellectual property will be challenged, invalidated or circumvented by third parties in the future. In the future, it may not be able to obtain necessary licenses on commercially reasonable terms. Genoil enters into nondisclosure agreements with its suppliers, contractors and employees, as appropriate, so as to limit access to and disclosure of its proprietary information. These measures may not suffice to deter misappropriation or independent third party development of similar technologies, which may adversely affect the Corporation.
Sales, Marketing and Distribution
Genoil intends to market its products and license its GHU technology throughout the world's oil refining and production industry
Competition
Genoil is aware that several other companies may be presently pursuing the development of technologies in the oil and gas industry. It acknowledges that it is possible that some of these technologies may be similar in nature to its products and technologies. Such companies, should they be involved in selling or developing the same technology as Genoil, may be potential competitors to the Corporation. The Company believes that its patented fixed bed catalyst hydroprocessing technology in the GHU is competitively advantaged in the market by virtue of the expected comparatively low capital and operating costs and high product yields for operators relative to other coking or hydroprocessing products.
Government Regulations
There are several government regulations with which Genoil must comply. Failure to comply with these regulations could adversely affect its business. Certain government regulations require the imposition of standards that are normally a part of industry knowledge, and as such, would be understood and acted upon by the Corporation in the normal course of doing business.
Genoil, as a producer of technology and intellectual property, is not generally subject to environmental regulations. Genoil specializes in mechanical processes and as such its regular operations do not fall within the scope of environmental protection legislation.
The Corporation was subject to securities regulation in the Canadian jurisdictions in which it was a reporting issuer. As an issuer with securities traded on the TSX Venture Exchange, the Company was subject to its rules. The Corporation's shares are now quoted on the Over the Counter (OTC) Markets Quotation System and as such, the Corporation is subject to the OTC listing requirements.
Plan of Operation
The Company does not expect to generate significant revenue or cash flow from its technologies or services for the 2025 year, and possibly beyond.
The Company expects revenue and cash flow to be generated in staged phases following the execution of definitive agreements.
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Genoil expects to generate revenues for the design, implementation and procurement of its GHU® systems and/or the licensing of its intellectual property.
The Corporation has accumulated losses of $105.9 million to year ended December 31, 2024 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. In the recent past, 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 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, Mexico, Canada, Russia 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.
Genoil is aggressively marketing its GHU Upgrader technology to those countries and companies that have substantial heavy oil reserves as “peak oil” in light oil already has arrived in our estimation, and a move developing and upgrading heavy oil is around the corner.
Genoil has announced that the USPTO has allowed a patent for the reactor of its sand decontamination process. The sand decontamination system has also been patented recently and the two patents form a valuable addition to the intellectual property of Genoil. The reactor plays a key role in the sand decontamination process and its features are designed to effectively remove oil from sand, separate oil from sand and water and recover the oil in the reactor for reuse. An innovative method is utilized for extracting oil from sand and removing the oil from the path of the sand.
C. Organizational structure.
David Lifschultz has headed Genoil as CEO since 2001. Since working for Genoil, David has not received any cash compensation nor has he sold any Genoil stock. No executives or board members of Genoil receive any cash compensation. They receive only shares and options or Price Appreciation Certificates.
The Company has been building its internal capabilities. Genoil utilizes independent contractors to provide engineering and other services for projects as needed.
The company seeks to work through commission agents who will receive compensation only when revenues are generated.
Some consultants and agents generally act as representatives on Genoil’s behalf with respect to commercial opportunities in their respective cities and countries. The Corporation intends to rely upon the services of these representatives and to remunerate them by means of sales commissions and incentive stock options.
Genoil has the following subsidiaries:
| · | Genoil USA Inc., incorporated in Delaware, United States, which is a wholly owned subsidiary of Genoil. |
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| · | Genoil Emirates LLC, incorporated in the United Arab Emirates, which will focus upon the fields of oil and water processing and treatment in the United Arab Emirates. Emirates LLC is jointly owned by S.B.K. Commercial Business Group LLC and Genoil. As of December 31, 2022, Emirates LLC had not yet commenced operations and holds no assets. |
D. Property, plant and equipment.
Human Resources and Facilities
The Company has been building its internal capabilities. Genoil utilizes independent contractors to provide engineering and other services for projects as needed. The Company seeks to work through commission agents who will receive compensation when revenues are generated. Management has been aggressive in attracting talented individuals who are very experienced, knowledgeable and will assist Genoil in realizing its objectives in different markets.
Item 4A. Unresolved Staff Comments
Not applicable.
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Item 5. Operating and Financial Review and Prospects
Forward-Looking Statements
Statements in this report, or any document filed by Genoil with the different governing authorities, by or on behalf of it, to the extent not directly and exclusively based on historical events, constitute "forward-looking statements". These statements represent the Corporation's intentions, plans, expectations, and beliefs, and no assurance can be given that the results described in such statements will be achieved.
Forward-looking statements include, without limitation, statements evaluating market and general economic conditions in the following sections, and statements regarding future-oriented revenues, costs and expenditures. Investors are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date of this document. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties with respect to the Corporation include the effects of general economic conditions, changing foreign exchange rates and actions by government authorities, uncertainties associated with legal proceedings and negotiations, industry supply levels, competitive pricing pressures and misjudgements in the course of preparing forward-looking statements.
Genoil disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
A. Operating results
Overview
Genoil's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), audited in accordance with the standards of the Public Company Accounting Oversight Board (United States), and are presented in US dollars unless otherwise indicated.
Genoil is actively involved in the marketing, development and commercial applications of its proprietary technologies.
To December 31, 2024, the Corporation has incurred significant operating losses. The Corporation expects to continue to have operating losses during the next year and expects to fund its operations in the near term from capital stock offerings and project loans.
As Genoil’s business has not yet generated revenue from operations, the Company requires cash infusions on a regular basis as it seeks to grow, develop and market its technologies.
The Corporation will continue to review the prospects of raising additional debt and equity financing to support its operations until such time that its operations become self-sustaining, fund any further research and development activities, and ensure the commercial realization of its assets and discharge of its liabilities. While the Corporation is expending its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for operations.
Acquisition
No recent acquisitions.
B. Liquidity and Capital Resources
Genoil’s business is capital intensive, requiring cash infusions on a regular basis as it seeks to grow its business. The Corporation expects to be able to fund its capital expenditure program to the end of 2025 using working capital and, to the extent required or desirable, through funds raised in the capital markets and short term loans.
During the first quarter of 2024, the Company sold a total of 15,730,000 shares of common stock (and warrants) in private placements for total proceeds of $ 157,300.
During the second quarter of 2024, the Company sold a total of 14,390,000 shares of common stock (and warrants) in private placements for total proceeds of $143,800.
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During the third quarter of 2024, the Company sold a total of 16,610,000 shares of common stock (and warrants) in private placements for total proceeds of $166,100.
During the fourth quarter of 2024, the Company sold a total of 8,265,000 shares of common stock (and warrants) in private placements for total proceeds of $75,650.
During the fourth quarter of 2024, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
During the first quarter of 2023, the Company sold a total of 11,800,000 shares of common stock (and warrants) in private placements for total proceeds of $118,000.
During the first quarter of 2023, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
During the second quarter of 2023, the Company sold a total of 12,520,000 shares of common stock (and warrants) in private placements for total proceeds of $125,200.
During the second quarter of 2023, the Company issued a total of 2,450,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $24,500.
During the third quarter of 2023, the Company sold a total of 12,960,000 shares of common stock (and warrants) in private placements for total proceeds of $129,600.
During the third quarter of 2023, the Company issued a total of 4,305,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $43,050.
During the fourth quarter of 2023, the Company sold a total of 27,850,000 shares of common stock (and warrants) in private placements for total proceeds of $ 278,500.
During the fourth quarter of 2023, the Company issued a total of 3,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $32,000.
During the first quarter of 2022, the Company sold a total of 11,630,000 shares of common stock (and warrants) in private placements for total proceeds of $116,300.
During the first quarter of 2022, the Company issued a total of 1,120,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $11,200.
During the second quarter of 2022, the Company sold a total of 13,030,000 shares of common stock (and warrants) in private placements for total proceeds of $130,300.
During the second quarter of 2022, the Company issued a total of 6,120,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $61,200.
During the third quarter of 2022, the Company sold a total of 16,830,000 shares of common stock (and warrants) in private placements for total proceeds of $168,300.
During the third quarter of 2022, the Company issued a total of 2,500,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $25,000.
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During the fourth quarter of 2022, the Company sold a total of 4,150,000 shares of common stock (and warrants) in private placements for total proceeds of $41,500.
There are no restrictions on the ability of the Subsidiaries to transfer funds to Genoil in the form of cash dividends, loans or advances. However, the Subsidiaries are not yet generating income and the Corporation does not consider them as a source of revenue.
C. Research and development, patents and licenses, etc.
Genoil does not presently plan to conduct any major new research and development, but will continue to refine and fine-tune its present complement of technologies.
D. Trend information.
Currently Genoil has no sales inventory or production.
E. Critical Accounting Estimates.
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. By their nature, judgments, estimates and assumptions are subject to measurement uncertainty and changes in such judgments, estimates and assumptions in future periods could result in a material change in future financial statements. Actual results may differ from these estimates. Judgment is used in situations where there is a choice or assessment required by management. Estimates and underlying assumptions are required on an ongoing basis and revisions are recognized in the year in which such estimates are revised.
G. Safe Harbour.
Not applicable.
Item 6. Directors, Senior Management and Employees
A. Directors and senior management.
At year end, the following were directors and officers of Genoil, their residence, their principal occupations within the past five years, and the periods during which each has served in such capacity.
| Name and Office Held | Principal Occupation For Past Five Years | Date of Birth | Appointment | Number of Securities Controlled by Director and Percentage of Total (*) | |||||
| David K. Lifschultz Chairman and CEO New York, NY | Chief Executive Officer of Genoil Inc. from 2002 to present Chairman of the board of directors of Genoil Inc. from 2002 to present. | 23-Nov-45 | 25-Feb-02 | 757,606,362 38.47% | |||||
| Bruce S. Abbott Director and COO New York, NY | President, COO and Director | 27-Sep-76 | 10-Oct-13 | 446,742,210 22.69% | |||||
| Thomas F. Bugg Director Calgary, Alberta | Business Consultant | 30-Sep-50 | 02-Sep-20 | 2,000,000 0.10% | |||||
| Rolando Ramon Director Lucas, TX | Business Consultant | 16-Jan-17 | 28-Jan-19 | 750,000 0.04% | |||||
| Marco Quintela Director Spruce Grove, Alberta | Facility Operator | 19-May-78 | 07-12-23 | Nil |
(*) The “Numbers of Securities Controlled” are comprised of common shares as of December 31, 20243.
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B. Compensation.
Share-Based Awards
An important part of the Corporation's current compensation program is the granting of share-based awards to the Named Executive Officers (NEOs). These share-based awards have been granted in replacement, or in lieu, of options to purchase Common Shares pursuant to the Corporation's Option Plan. The granting of such awards is approved by the Board upon recommendation from the Compensation Committee. The Board considers previous grants when considering new grants.
Further, in lieu of cash compensation the Company has entered into agreements (“Price Appreciation Certificates”) with David Lifschultz and Bruce Abbott whereby, at the request of the executives, the Company agrees to pay the equivalent sum of the rise in the Company’s stock price based on the agreed upon number of shares, from a fixed per share amount to the average of the last 10 trading days (volume weighted average price).
The number of shares reflect a potential salary for the two executives that only exist if the price of the shares rise above the price appreciation base amount. The Company has no obligation to pay the two executives if the stock does not rise. The Company, at its exclusive option and benefit, can proceed with a private placement at the share price on the date of exercise and the executive will subscribe to this private placement for the entire sum advanced by the Company.
Due to financial constraints, neither of the NEOs has ever received any cash compensation. Historically, the Corporation granted the NEOs option-based awards which were to be renewed upon expiration. The share-based awards granted to Messrs. Lifschultz and Abbott were granted: (i) as current compensation in lieu of options; or (ii) in certain instances, in replacement of expired options granted as compensation for previous years. The outstanding share-based awards represent 20 years of compensation to Messrs. Lifschultz and Abbott, the latter of whom was Mr. Lifschultz's aide before becoming an officer and director of the Corporation. Accordingly, their endeavors for the Corporation are to be rewarded only if the Corporation is successful and that success is reflected in the trading value of the Common Shares, thereby aligning management and Shareholder objectives.
Summary Compensation Table
The following table and notes thereto set out information concerning the compensation paid to the NEOs for the five most recently completed financial years ended December 31, 2024.
| Non-equity incentive plan compensation ($) | |||||||||||||||||||
| Name and Principal Position | Year | Salary ($) | Share-based awards ($) (1) | Option-based awards ($) | Annual incentive plans | Long-term incentive plans | Pension value ($) | All Other Compensation ($) | Total Compensation ($) | ||||||||||
| David Lifschultz, | 2024 2023 | - - | 665,899 1,276,980 | - | - | - | - | - | 665,899 1,276,980 | ||||||||||
| Chairman, Chief Executive Officer and Chief Financial Officer | 2022 2021 2020 | - - - | 524,892 299,892 1,556,415 | - - - | - - - | - - - | - - - | - - - | 524,892 299,892 1,556,415 | ||||||||||
| Bruce Abbott, President and Chief Operating Officer | 2024 2023 2022 2021 2020 | - - - - - | 639,999 1,349,979 524,892 299,892 1,197,243 | - - - - - | - - - - - | - - - - - | - - - - - | - - - - - | 639,999 1,349,979 524,892 299,892 1,197,243 | ||||||||||
Notes:
| (1) | The Company accounts for Price Appreciation Certificates as an equity instrument due to its exclusive option to require a subscription to the private placement as determined by the fair value of the instruments using a Black-Scholes pricing model. |
| The fair value of Price Appreciation Certificates granted during 2024, 2023, 2022, 2021 and 2020 was estimated on the dates of grant using the Black-Scholes pricing model. |
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C. Board practices.
Directors are elected annually to the Board of Directors (the “Board”) at the Corporation's Annual General Meeting. Directors may also, between Annual General Meetings, appoint one or more additional Directors, provided such number of additional directors does not exceed 1/3 of the existing number, to serve until the next Annual General Meeting. No Director has a service contract with Genoil providing for benefits upon termination of employment.
Duties and Obligations of the Board of Directors
The general duty of Genoil's Board of Directors is to oversee the management of Genoil's business and affairs. In particular, the Board of Directors is responsible for the following matters:
(a) adopting a strategic planning process which establishes the Corporation's long-term goals and strategies, and monitoring the success of its management in achieving those goals and implementing the strategy;
(b) identifying the principal risks with respect to all aspects of the Corporation's business, ensuring that there are systems in place to effectively monitor and manage such risks with a view to its long-term viability, and achieving a proper balance between the risks incurred and the potential return to its members;
(c) engaging in succession planning, including appointing, training and monitoring senior management (which includes ensuring that objectives are in place against which management's performance can be measured), establishing and maintaining programs to train and develop management, providing for the orderly succession of management, and assessing the performance and contribution of Genoil's Chief Executive Officer against mutually established objectives;
(d) ensuring that there are effective controls and information systems in place for the Board of Directors to discharge its responsibilities, such as an audit system which can inform the Board of Directors about the integrity of the data and the compliance of the financial information with appropriate accounting principles, and the timely reporting of developments material to the Corporation.
Composition of the Board of Directors
As of December 31, 2024, Genoil's Board of Directors consisted of Messrs. David Lifschultz, Rolando Ramon, Bruce Abbott, Thomas F. Bugg and Marco Quintela. Of the Board, Messrs. Ramon, Quintela and Bugg are "independent". Mr. David Lifschultz is not independent as he is the Chairman and Chief Executive Officer of the Corporation. Bruce Abbott is not considered to be independent as he is the President.
The definition of "independence" that Genoil uses when determining a director's independence is derived from National Instrument 58-101, published by the Canadian Securities Administrators and adopted in all Canadian jurisdictions.
The Board facilitates its exercise of independent supervision over management by attempting to meet independently from management when warranted, determining what additional information it needs from management and seeking outside advice and support as it considers appropriate. Generally, the Board attempts to ensure that all board committees are composed in the majority by non-management directors with consideration being had to the Corporation's current size and board composition.
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Committees of the Board of Directors
There are currently two committees of the Board of Directors. The Audit Committee is comprised of two directors, one of whom is a related party. The Compensation Committee is comprised of all directors. The mandate and activities of each committee are as follows:
Audit Committee - The Audit Committee consists of Thomas F. Bugg and David Lifschultz. The responsibilities of the Audit Committee include:
(a) assisting the directors with meeting their responsibilities with respect to financial reporting;
(b) reviewing and reporting to the Board of Directors on all audited financial statements the Corporation prepares and enhancing the credibility and objectivity of all financial reports;
(c) reviewing with management and with the external auditor any proposed changes in major accounting policies, in the presentation and impact of significant risks and uncertainties, and in key estimates and judgments of management that may be material to financial reporting;
(d) questioning management and the external auditor regarding significant financial reporting issues discussed during the fiscal period and the method of resolution;
(e) reviewing any problems experienced by the external auditor in performing the audit, including any restrictions imposed by management or significant accounting issues on which there was a disagreement with management; and
(f) reviewing the post-audit or management letters containing the recommendations of the external auditor and management's response, and following up any identified weaknesses.
Relevant Education and Experience
The members of the Audit Committee have the following relevant education and experience:
| David K. Lifschultz - | Mr. Lifschultz is the former CEO of Lifschultz Industries which was publicly traded on the NASDAQ Exchange. He had extensive experience on the Lifschultz Industries audit committee. He is presently CEO of the Corporation. |
| Mr. Lifschultz has experience in finance and supervising the Treasury Department of three public companies: the Corporation, Lifschultz Industries, and Trans-Air Freight System. | |
| Mr. Lifschultz's educational experience includes working in the Treasury Department of Arrow-Lifschultz Freight Forwarders working in and supervising the accounting, bookkeeping and all other Treasury functions. | |
| Thomas F. Bugg | Mr. Bugg is the former President of Beau Canada Exploration Ltd. Part of his responsibilities included overseeing the finance, accounting and treasury functions of the Company. |
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Audit Committee Oversight
Since the commencement of the Corporation's most recently completed financial year, there have been no recommendations of the Audit Committee to nominate or compensate an external auditor, which were not adopted by the Board.
Compensation Committee - The Compensation Committee consists of the entire Board.
The Compensation Committee assists the Board in carrying out its oversight responsibility with respect to corporate governance and compensation matters, including making recommendations to the Corporation's Board in respect of compensation issues relating to directors, management and employees of the Corporation. The Board has approved and adopted a formal charter for the Compensation Committee. The Compensation Committee's primary duties and responsibilities include, but are not limited to, the following:
- reviewing the organization's structure;
- management's succession plans for executive management;
- developing compensation philosophies and principles; and
- reviewing and reporting to the Board its recommendations and determinations of appropriate compensation for the Corporation's executive officers.
Decisions Requiring the Prior Approval of the Board of Directors
Each committee of the Board of Directors makes recommendations to the Board on an ongoing basis. Generally, recommendations from a committee of the Board of Directors require the approval of the full Board before they are implemented.
D. Employees.
The Company has been building its internal capabilities.
Genoil utilizes independent contractors to provide engineering and other services for projects as needed.
The Company seeks to work through commission agents who will receive compensation when revenues are generated.
Genoil has no labour unions and no temporary staff.
E. Share ownership.
There were 1,969,322,429 Common Shares issued and outstanding as of December 31, 2024 (2023 – 1,913,137,429). Information as to share and option information for directors, officers and key employees is discussed above in "Item 6. (A) Directors and Senior Management" and in "Item 6. (B) Compensation."
Genoil has established a stock option plan with the objective of advancing its interests by encouraging and enabling the acquisition of a share interests by its directors, officers, employees and consultants, in accordance with the policies and rules of the applicable regulatory authorities. The full text of Genoil's stock option plan is attached as an Exhibit to the Form 20-F for 2006
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Item 7. Major Shareholders and Related Party Transactions
A. Major shareholders.
The following table sets forth information as of April 30, 2025, with respect to each person known to the Corporation to own more than 5% of its Common Shares. As used in this table, "beneficial ownership" means the sole or shared power to vote or direct the voting or to dispose or direct the disposition of any security. For purposes of this table, a person is deemed to be the beneficial owner of securities that can be acquired within 60 days from December 31, 2024, through the exercise of any option or warrant. Shares subject to options or warrants that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the ownership percentage of the person holding such options or warrants, but are not deemed outstanding for computing the ownership percentage of any other person. The amounts and percentages are based upon 1,969,322,429 Common Shares issued and outstanding.
| Class of Share | Identity of Person or Group | Number of Shares Beneficially Owned | Percentage of Share Stock Beneficially Owned | ||||
| Common Shares | David K. Lifschultz | 757,606,362 | 38.47% | ||||
| Common Shares | Bruce Abbott | 446,742,210 | 22.69% |
David Lifschultz has acquired his shareholdings incrementally during the past years through companies under his control and personally by way of a series of purchases on the open market and private placement subscriptions made for the purpose of providing financial assistance to the Corporation so as to ensure it continues to meet its financial obligations. Mr. Lifschultz is a resident in New York.
As of the date of this form and to the knowledge of our directors and officers, there is no other person or entity who beneficially owns, directly or indirectly, over more than 5% of the issued and outstanding Common Shares.
To the best of its knowledge, Genoil is not directly owned or controlled by another corporation, by any foreign government or by any natural or legal person.
To the best of its knowledge, Genoil is not aware of any arrangements which may result in a change of control of Genoil at a subsequent date.
B. Related party transactions.
| December 31 2024 | December 31 2023 | |||||||
| Due from related parties | $ | 37,181 | $ | 102,330 | ||||
| Accrued interest payable to related parties | (38,612 | ) | (10,406 | ) | ||||
| Convertible notes | (214,375 | ) | (208,232 | ) | ||||
| Due to related parties | (46,875 | ) | (46,875 | ) | ||||
| Net | $ | (262,681 | ) | $ | (163,183 | ) | ||
Transactions with Affiliates, Directors or Officers
Genoil's approach for transactions with affiliates is that they must be on terms no less favourable to the Corporation than could be obtained from unaffiliated third parties.
In the case of transactions involving a director, any of the Corporation's directors who, in any way, whether directly or indirectly, have an interest in a proposed contract or transaction with it, must disclose the nature and extent of his interest to the Corporation's Board and abstain from voting on the approval of the proposed contract or transaction. If he or she fails to do so, he or she must account to the Corporation for any profit made as a consequence of entering into the contract or transaction, unless the contract was fair and reasonable to the Corporation at the time it was entered into, and after full disclosure of the nature and extent of his or her interest, it is approved by the Corporation's shareholders by way of a resolution passed by a majority of not less than two-thirds of the votes cast at a duly convened shareholders' meeting. In addition, any of the Corporation's directors and officers who holds any office or possesses any property whereby, whether directly or indirectly, duties or interests might be created in conflict with his or her duties or interests as a director or officer, must disclose that fact and the nature and extent of the conflict. In the case of a director, the disclosure must be made at a Board meeting.
In the case of transactions involving an officer, the disclosure must be made in writing to the Corporation's Chairman at a Board meeting.
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C. Interests of experts and counsel.
Not required as this is an annual report under the Exchange Act.
A. Consolidated statements and other financial information.
Please see "Item 3 Financial Statements" and Exhibit 19(a) for a list of the financial statements filed as part of this annual report statement.
Genoil has neither declared nor paid dividends on any of its outstanding Common Shares, and does not intend to do so in the foreseeable future. It intends to retain any future earnings to finance the expansion of its business. Any future determination to pay dividends will be at the discretion of the Board of Directors and will be dependent upon its earnings, capital requirements and financial position, as well as any other factors deemed relevant by the Board of Directors.
B. Significant changes.
At the annual and special meeting of the shareholders of Genoil held on November 14, 2016, a special resolution was passed authorizing the continuance of the Corporation from a corporation existing under the laws of Canada to a corporation existing under the laws of the Country of Curaçao. On May 29, 2019 the Company finally received a letter of satisfaction from Corporations Canada approving Genoil's move to Curacao. However, no such move has been implemented to date.
A. Offer and listing details.
The following is a summary of the trading history of the Common Shares on the OTC Bulletin Board (in US dollars) for:
| • | the annual high and low market prices for the five most recent full financial years; |
| • | the quarterly high and low market prices for the two most recent full financial years and any subsequent period; and |
| • | the monthly high and low market prices for the most recent six months. |
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| Price per share on OTC Bulletin Board (US $) | ||||||||
| Year | High | Low | ||||||
| Fiscal year ended December 31, 2024 | 0.02 | 0.00 | ||||||
| Fiscal year ended December 31, 2023 | 0.00 | 0.00 | ||||||
| Fiscal year ended December 31, 2022 | 0.01 | 0.00 | ||||||
| Fiscal year ended December 31, 2021 | 0.02 | 0.01 | ||||||
| Fiscal year ended December 31, 2020 | 0.03 | 0.02 | ||||||
| Quarter | High | Low | ||||||
| Fiscal year ended December 31, 2024 | ||||||||
| First Quarter | 0.00 | 0.00 | ||||||
| Second Quarter | 0.00 | 0.00 | ||||||
| Third Quarter | 0.00 | 0.00 | ||||||
| Fourth Quarter | 0.00 | 0.00 | ||||||
| Fiscal year ended December 31, 2023 | ||||||||
| First Quarter | 0.00 | 0.00 | ||||||
| Second Quarter | 0.00 | 0.00 | ||||||
| Third Quarter | 0.00 | 0.00 | ||||||
| Fourth Quarter | 0.01 | 0.00 | ||||||
| Most Recent Six Months | High | Low | ||||||
| November 2024 | 0.01 | 0.00 | ||||||
| December 2024 | 0.01 | 0.01 | ||||||
| January 2025 | 0.01 | 0.01 | ||||||
| February 2025 | 0.02 | 0.01 | ||||||
| March 2025 | 0.01 | 0.01 | ||||||
| April 2025 | 0.02 | 0.00 | ||||||
B. Plan of distribution.
Not required as this is an annual report under the Exchange Act.
C. Markets.
The issued and outstanding Common Shares are listed and posted for trading on the OTC Bulletin Board under the symbol "GNOLF". The Corporation's Common Shares are registered shares.
D. Selling shareholders.
Not required as this is an annual report under the Exchange Act.
E. Dilution.
Not required as this is an annual report under the Exchange Act.
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F. Expenses of the issue.
Not required as this is an annual report under the Exchange Act.
Item 10. Additional Information
A. Share capital.
Not required as this is an annual report under the Exchange Act.
B. Memorandum and articles of association.
Genoil was formed by the amalgamation under the Canada Business Corporations Act (the "CBCA") of Genoil Inc. and Continental Fashions Group Inc. ("CFG"), a public company whose shares traded on the Alberta Stock Exchange. At the time of the merger CFG had no assets, no liabilities and did not carry on any business. Genoil was incorporated in April of 1996 under Certificate of Incorporation no. 324649-3. In June of 1996, it amended and altered its Memorandum and Articles of Association. This amendment was made to facilitate a reorganization of its share capital in accordance with the amalgamation referenced above. The Articles of Amalgamation, adopted in September of 1996, replaced the Articles of Incorporation, as amended.
At the Annual and Special Meeting of Shareholders of the Corporation, held on May 31, 2006, shareholders of the Corporation passed a special resolution authorizing the Corporation to amend its Articles to create an additional class of share to be designed as "Class A Preferred Shares" and to allow for the appointment of additional directors of the Corporation between shareholder meetings.
The Articles of Amalgamation are subject to all the provisions of the CBCA. The CBCA provides that a company incorporated under that Act has all the powers and capacities of a natural person. The CBCA further stipulates that a company must not carry on a business that its articles prohibit. The Corporation's articles contain no prohibitions on the nature of businesses that it may carry out. Thus, it has the power and capacity of a natural person.
The following brief description of provisions of the CBCA, the Corporation's amended and restated articles of incorporation and by-laws do not purport to be complete and are subject in all respects to the provisions of the CBCA, the Corporation's restated articles of incorporation and by-laws.
Regulation SK Item 702 requires the Corporation to state the general effect of any statute, charter provisions, by-laws, contract or other arrangements under which any controlling persons, director or officer of the registrant is insured or indemnified in any manner against liability which he may incur in his capacity as such.
Furthermore, the by-laws of the Corporation provide that except in respect of an action by or on behalf of the Corporation or other entity to procure a judgment in its favour, the Corporation will indemnify a director or officer of the Corporation against all costs, charges, and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the Corporation or other entity.
Directors' Conflicts of Interest
Section 120 of the CBCA requires every director who is, in any way, directly or indirectly, interested in one of Genoil's proposed material contracts or transactions, to disclose the nature and extent of the director's interest in writing or by requesting to have it entered in the minutes of the meeting of directors or of meetings of committees of directors.
The CBCA further provides that a director or officer who is required to disclose an interest may not vote on any resolution to approve the contract or transaction unless the contract or transaction, (i) relates primarily to the director's or officer's remuneration as one of the Corporation's directors, officers, employees or agents or that of an affiliate, (ii) is for indemnity or insurance for the director against liability incurred by the director or officer acting in his or her capacity as a director or officer, or (iii) is with an affiliate.
The Corporation's By-Law No. 3 states that the Board of Directors may exercise borrowing powers provided for in this by-law. These powers include borrowing money on credit, issuing bonds, debentures, notes and other indebtedness, giving guarantees on behalf of the Corporation and granting mortgages by the Corporation, among others.
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The number of directors shall be not less than one and not more than nine. The number of directors may be determined from time to time by an ordinary resolution of the shareholders passed at a duly convened general meeting. A director is not required to own any of the Corporation's shares to be qualified to serve as a director. A director is not required to retire under any age-limit requirement.
Upon the termination of each annual general meeting, all the directors are deemed to cease serving as directors. The number of directors to be elected at any such meeting will be the number of directors then in office unless the directors or shareholders otherwise determine.
If the shareholders remove any director before the expiration of his or her period of office and appoint another person in his or her place, that person so appointed shall hold office only during the remainder of the time that the director in whose place he or she is appointed would have held the office if he or she had not been removed. If the shareholders do not appoint another director to replace the removed director the vacancy may be filled by the directors.
The directors of the Corporation, between annual meetings, may appoint one or more additional directors of the Corporation to serve until the next annual meeting, provided that the number of additional directors of the Corporation shall not at any time exceed one-third of the number of directors who held office at the expiration of the last annual meeting of the Corporation.
The directors, or any committee of directors, may take any action required or permitted to be taken by them and may exercise any of the authorities, powers and discretions for the time being vested in or exercisable by them by way of a resolution either passed at a meeting at which a quorum is present or consented to in writing under the applicable section of the CBCA.
The directors may appoint a president, one or more vice-presidents, a secretary, a treasurer and other officers as determined by the Board, including assistants to the Board. The directors may specify the duties of and delegate powers to manage the business and affairs of the directors to these officers. The Corporation may also appoint a chairman of the Board, who must also be a director, and assign the powers and duties assigned to the managing director or president, under the by-laws, or other powers and duties.
The following is a description of the rights, preferences, and restrictions attached to each class of the Corporation's shares:
(a) Unlimited Common Shares – Each Common Share carries the right to one vote at any meeting of the Corporation's shareholders. Dividends are payable on the Common Shares in the discretion of the Board of Directors. After a period of six years, dividends that have been paid but remain unclaimed by shareholders shall be forfeited to the Corporation. In the event of the liquidation, dissolution or winding-up of the Corporation or any distribution of Genoil's assets for the purpose of winding up its affairs, the Common Shares shall be entitled to receive Genoil's remaining property. The Common Shares are not redeemable at the Corporation's option or at the option of the holders. There are no sinking fund provisions respecting the Common Shares. The holders of the Common Shares are not liable for any further capital calls on such shares.
(b) Up to 10,000,000 Class A Preferred Shares – The Class A Preferred Shares may at any time and from time to time be issued in one or more series, each series consisting of such number of shares as may, before their issuance, be determined by resolution of the directors of the Corporation. Subject to the provisions of the CBCA, the directors of the Corporation may by resolution fix before the issue of Class A Preferred Shares the designation, rights, privileges, restrictions and conditions attaching to each series of the Class A Preferred Shares.
Alteration of the Rights of Shareholders
No rights, privileges or restrictions attached to the Common Shares may be altered except with the approval by resolution passed by the vote of the holders of not less than two-thirds of the votes cast in respect of a resolution to alter such rights.
There are no limitations in Genoil's charter on the rights of non-resident or foreign owners to hold Common Shares of Genoil.
The CBCA requires the directors to call an annual general meeting of shareholders not later than fifteen months after the last annual general meeting and no later than six months after the end of the Corporation's preceding financial year. The directors may, whenever they think fit, convene a special meeting.
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Notice of a meeting must specify the time and place of a meeting, and, in case of special business, the general nature of that business and the text of any resolution. The accidental omission to give notice of any meeting to, or the non-receipt of any notice by any of the shareholders entitled to receive notice does not invalidate any proceedings at that meeting.
All business that is transacted at meetings of shareholders, with the exception of consideration of the financial statements and auditor's report, election of directors, appointment of Genoil's auditor is deemed to be special business.
Genoil's Articles stipulate that business shall be conducted at any general meeting if there is quorum present at the opening of the meeting notwithstanding that there ceases to be a quorum present throughout the meeting. A quorum is shareholders entitled to vote or proxy holders representing more than 10% of Genoil's outstanding shares entitled to vote at the meeting.
Genoil's Articles stipulate that the Chairman of the Board, or in his absence, the Corporation's Managing Director, or in his absence the Corporation's President shall preside as chairman of every general meeting.
Unless the directors otherwise determine, the instrument appointing a proxyholder shall be deposited at a place specified for that purpose in the notice convening the meeting, not less than forty-eight hours before the time for holding the meeting at which the proxyholder proposes to vote.
Notice of every general meeting should be sent to:
(a) each director;
(b) the Corporation's auditor;
(c) every shareholder entered in the securities registrar as the holder of a share or shares carrying the right to vote at such meetings on the record date or, if no record date was established by the directors, on the date of mailing such notice; and
(d) every person upon whom the ownership of a share devolves by reason of his being a legal personal representative or a trustee in bankruptcy of a shareholder where the shareholder, but for his death or bankruptcy, would be entitled to vote.
No other person is entitled to receive notice of general meetings.
There are no limitations to the rights of non-resident or foreign shareholders to hold or exercise voting rights associated with Genoil's securities.
These provisions do not deviate significantly from U.S. law, insofar as the following matters are concerned:
According to Rule 405 of the Securities Act, the term "foreign private issuer" means any foreign issuer other than a foreign government except an issuer meeting the following conditions:
(a) More than 50 percent of the outstanding voting securities of such issuer are directly or indirectly owned of record by residents of the United States; and
(b) Any of the following:
| (I) | The majority of the executive officers or directors are United States citizens or residents; | |
| (ii) | More than 50 percent of the assets of the issuer are located in the United States; or | |
| (iii) | The business of the issuer is administered principally in the United States. |
Further, the predominant rule in most U.S. jurisdictions is that an annual meeting must be held every 13 months.
C. Material contracts.
Genoil has entered into no material contracts in the ordinary course of business for the two years preceding this registration statement.
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D. Exchange controls.
There is no law or governmental decree or regulation in Canada that restricts the export or import of capital or affects the remittance of dividends, interest or other payments to a non-resident holder of Common Shares, other than withholding tax requirements. See "Taxation".
E. Taxation.
Genoil has provided the following summary of the material Canadian federal and U.S. federal income tax considerations generally applicable in respect of the holding or disposing of Common Shares. This summary does not address all possible tax consequences relating to an investment in its Common Shares. There may be provincial, territorial, state and local taxes applicable to a potential shareholder, depending on the shareholder's particular circumstances, which are not addressed in this summary. The tax consequences to any particular holder, including a U.S. Holder of common shares (defined below) will vary according to the status of that holder as an individual, trust, corporation, or member of a partnership, the jurisdiction in which the holder is subject to taxation, the place where the holder is resident and generally, according to the holder's particular circumstances.
References to a "U.S. Holder of common shares" in this section include individuals, corporations, trusts or estates who are holders of Common Shares and who:
| • | for purposes of the Income Tax Act (Canada) (the "ITA") and the Canada-United States Income Tax Convention (1980), as amended by the protocol signed on July 29, 1997, (the "Treaty") are residents of the U.S. and have never been residents of Canada; |
| • | for purposes of the U.S. Internal Revenue Code of 1986 (the "Code") are U.S. persons; |
| • | deal at arm's length with Genoil for purposes of the ITA; |
| • | will hold the Common Shares as capital property for purposes of the ITA; |
| • | will hold the Common Shares as capital assets for purposes of the Code; |
| • | do not and will not hold the Common Shares in carrying on a business in Canada; |
| • | will not perform independent personal services from a fixed base situated in Canada; and |
| • | are not or will not be subject to special provisions of Canadian or U.S. federal income tax law, including, without limiting the generality of the foregoing, financial institutions, real estate investment trusts, shareholders that have a functional currency other than the U.S. dollar, shareholders that own shares through a partnership or other pass-through entity, shareholders that hold shares as part of a straddle, hedge or conversion transaction, tax-exempt organizations, qualified retirement plans, insurance companies, shareholders who acquired their shares through the exercise of employee stock options or otherwise as compensation and mutual fund companies. |
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The following summary of Canadian federal and U.S. federal income tax considerations generally applicable to a U.S. Holder of Genoil's Common Shares is based on the following, as at the time of this statement:
| • | the ITA and the Income Tax Regulations (Canada) (the "Regulations"); |
| • | published proposals to amend the ITA and the Regulations; |
| • | published administrative positions and practices of the Canada Customs and Revenue Agency; |
| • | the Code; |
| • | Treasury Regulations; |
| • | published Internal Revenue Service ("IRS") rulings; |
| • | published administrative positions of the IRS; |
| • | published jurisprudence that is considered applicable; and |
| • | the Treaty. |
All of the foregoing is subject to material or adverse change, on a prospective or retroactive basis, at any time. The tax laws of the various provinces or territories of Canada and the tax laws of the various state and local jurisdictions of the U.S. are not considered in this summary.
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This summary is not exhaustive of all possible income tax consequences. The following discussion is for general information only and is not intended to be, nor should it be construed to be, legal or tax advice to any holder or prospective holder of Genoil's Common Shares and no opinion or representation with respect to any such holder or prospective holder with respect to the income tax consequences to any such holder or prospective holder is made. Accordingly, it is recommended that holders and prospective holders of the Corporation's Common Shares consult their own tax advisors about the Canadian federal and provincial and U.S. federal, state, local, and foreign tax consequences of purchasing, owning and disposing of the Corporation's Common Shares.
Canadian Federal Income Tax Consequences
Disposition of Common Shares
Provided that the Common Shares are listed on a "prescribed stock exchange", which currently includes the TSX Venture Exchange but does not include the OTC Markets, a U.S. Holder of Common Shares will not be subject to tax in Canada under the ITA on capital gains realized on the disposition of such Common Shares unless the shares are "taxable Canadian property." Such Common Shares will be taxable Canadian property if, in general, at any time during the sixty month period immediately preceding the disposition, 25% or more of Genoil's issued shares of any class (or an option to acquire 25% or more of the issued shares of any class) were owned by such holder, or by such holder and persons with whom such holder did not deal at arm's length. If the Corporation's shares are taxable Canadian property to a U.S. Holder of Common Shares, 50% of any resulting capital gain realized on the disposition of such shares may be subject to tax in Canada. However, the Treaty provides that gains realized by a U.S. Holder of Common Shares on the disposition of shares of a Canadian corporation will be exempt from federal tax in Canada unless the value of the Canadian corporation is derived principally from real property situated in Canada. It is the current position of the Canada Revenue Agency that a U.S. limited liability company is not entitled to the benefits of the Treaty.
Dividend Distributions on Genoil's Shares
Dividends paid on Genoil's Common Shares held by a U.S. Holder of Common Shares will be subject to Canadian non-resident withholding tax. The Corporation is required to withhold taxes at source. Under the Treaty, a withholding rate of 5% is applicable to corporations resident in the United States and who are beneficial owners of at least 10% of the voting shares of the Corporation. Under the Treaty, a withholding rate of 15% is applicable in all other cases.
United States Federal Income Tax Consequences
The U.S. federal income tax consequences related to the disposition and ownership of Common Shares, subject to the Foreign Personal Holding Company Rules, Passive Foreign Investment Company and Controlled Foreign Corporation Rules contained in the Code, are generally as follows:
Disposition of Common Shares
On a disposition of Common Shares, a U.S. Holder of Common Shares generally will recognize a gain or loss. The gain or loss will be equal to the difference between the amount realized on the sale and the U.S. Holder of Common Share's adjusted tax basis in those shares. Any such gain or loss will be a long-term capital gain or loss if the shareholder has held the shares for more than one year. Otherwise the gain or loss will be a short-term capital gain or loss. However, a gain realized on the disposition of Common Shares may be treated as ordinary income if the company was a "collapsible corporation" within the meaning of the Code. The gain or loss will generally be a U.S. source gain or loss.
A collapsible corporation is usually formed to give a short-term venture the appearance of a long-term investment in order to portray income as capital gain rather than profit. Such a corporation is typically formed for the sole purpose of purchasing property and usually dissolved before the property has generated substantial income. The Internal Revenue Service treats the income earned through a collapsible corporation as ordinary income rather than as capital gain.
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Dividend Distributions on Shares
Dividend distributions (including constructive dividends) paid by Genoil will be required to be included in the income of a U.S. Holder of Common Shares to the extent of the Corporation's current or accumulated earnings and profits ("E&P") attributable to the distribution without reduction for any Canadian withholding tax withheld from such distributions. Even if such payment is in fact not converted to U.S. dollars, the amount of any cash distribution paid in Canadian dollars will be equal to the U.S. dollar value of the Canadian dollars on the date of distribution based on the exchange rate on such date. To the extent distributions the Corporation pays on the Common Shares exceed the Corporation's current or accumulated E&P, they will be treated first as a return of capital up to a shareholder's adjusted tax basis in the shares and then as capital gain from the sale or exchange of the shares.
Dividends paid on the Common Shares generally will not be eligible for the "dividends received" deduction provided to corporations receiving dividends from certain U.S. corporations. These dividends generally may be subject to backup withholding tax, unless a U.S. Holder of Common Shares furnishes the Corporation with a duly completed and signed Form W-9. The U.S. Holder of Common Shares will be allowed a refund or a credit equal to any amount withheld under the U.S. backup withholding tax rules against the U.S. Holder of Common Share's U.S. federal income tax liability, provided the shareholder furnishes the required information to the IRS.
Foreign Tax Credit
A U.S. Holder of Common Shares will generally be entitled to a foreign tax credit or deduction in an amount equal to the Canadian tax withheld. Dividends paid by Genoil generally will constitute foreign source dividend income and "passive income" for purposes of the foreign tax credit, which could reduce the amount of foreign tax credits available to shareholders. There are significant and complex limitations that apply to the credit.
Foreign Personal Holding Company Rules
Special U.S. tax rules apply to a shareholder of a foreign personal holding company ("FPHC"). Genoil would be classified as a FPHC in any taxable year if both of the following tests are satisfied:
| • | at least 60% of Genoil's gross income consists of "foreign personal holding company income", which generally includes passive income such as dividends, interest, royalties, gains from shares and commodity transactions and rents; and |
| • | more than 50% of the total voting power of all classes of voting shares or the total value of outstanding shares is owned directly or indirectly by five or fewer individuals who are U.S. citizens or residents. |
Passive Foreign Investment Company Rules
Special U.S. tax rules apply to a shareholder of a Passive Foreign Investment Company ("PFIC"). Genoil could be classified as a PFIC if, after the application of certain "look through" rules, for any taxable year, either:
| • | 75% or more of the Corporation's gross income for the taxable year is "passive income," which includes interest, dividends and certain rents and royalties; or |
| • | the average quarterly percentage, by fair market value of the Corporation's assets that produce or are held for the production of "passive income" is 50% or more of the fair market value of all of its assets. |
To the extent Genoil owns at least 25% by value of the shares of another corporation, it is treated for purposes of the PFIC tests as owning its proportionate share of the assets of such corporation, and as receiving directly its proportionate share of the income of such corporation.
Distributions which constitute "excess distributions" from a PFIC and dispositions of Common Shares of a PFIC are subject to the following special rules:
| • | the excess distributions (generally any distributions received by a U.S. Holder of Common Shares on the shares in any taxable year that are greater than 125% of the average annual distributions received by such U.S. Holder of Common Shares in the three preceding taxable years, or the U.S. Holder of Common Share's holding period for the shares, if shorter) or gain would be allocated on a pro rata basis over a U.S. Holder of Common Share's holding period for the shares; |
| • | the amount allocated to the current taxable year and any taxable year prior to the first taxable year in which the Corporation is a PFIC would be treated as ordinary income in the current taxable year; and |
| • | the amount allocated to each of the other taxable years would be subject to the highest rate of tax on ordinary income in effect for that year and to an interest charge based on the value of the tax deferred during the period during which the shares are owned. |
U.S. Holders of Common Shares who actually or constructively own shares in a PFIC may be eligible to make certain elections which require them to include income for the PFIC on an annual basis.
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Controlled Foreign Corporation Rules
Generally, if more than 50% of the voting power or total value of all classes of Genoil's shares are owned, directly or indirectly, by U.S. shareholders, who individually own 10% or more of the total combined voting power of all classes of the Corporation's shares, the Corporation could be treated as a controlled foreign corporation ("CFC") under Subpart F of the Code. This classification would require such 10% or greater shareholders to include in income their pro rata shares of its "Subpart F Income," as defined in the Code. In addition, a gain from the sale or exchange of shares by a U.S. Holder of Common Shares who is or was a 10% or greater shareholder at any time during the five year period ending with the sale or exchange will be deemed ordinary dividend income to the extent that the Corporation's E&P is attributable to the shares sold or exchanged.
F. Dividends and paying agents.
Not required as this is an annual report under the Securities Act.
G. Statement by experts.
Not required as this is an annual report under the Securities Act.
H. Documents on display.
No longer required
I. Subsidiary information.
Genoil has the following subsidiaries:
| · | Genoil USA Inc., incorporated in Delaware, United States, which is a wholly owned subsidiary of Genoil. |
| · | Genoil Emirates LLC, incorporated in the United Arab Emirates, which will focus upon the fields of oil and water processing and treatment in the United Arab Emirates. Emirates LLC is jointly owned by S.B.K. Commercial Business Group LLC and Genoil. As of December 31, 2023, Emirates LLC had not yet commenced operations and holds no assets. |
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Genoil is not exposed to cash flow and translation risk due to changes in the Canadian/United States dollar exchange rate and interest rate fluctuations at this time due to the fact it does not currently conduct any material business in Canada or the United States.
Item 12. Description of Securities Other than Equity Securities
Not required as this is an annual report under the Securities Act.
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PART II
Item 13. Defaults, Dividends Arrearages and Delinquencies
There have been no material defaults in the payment of interest or principal or any dividend or arrearages or material delinquencies.
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
There has been no material modification to the rights of Genoil's security holders.
Item 15. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to senior management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), on a timely basis so that appropriate decisions can be made regarding public disclosure.
For the year ended December 31, 2024 the CEO and CFO have evaluated the effectiveness of the Company’s disclosure controls and procedures as defined in National Instrument 52-109 of the Canadian Securities Administrators and as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)). The Company did not maintain effective segregation of duties over certain transactions leading to ineffective supervision and monitoring; and potential misappropriation of assets. This material weakness affects all significant accounts.
(b) Management's annual report on internal control over financial reporting.
Management is responsible for establishing and maintaining adequate internal controls over financial reporting of the Company. Internal controls over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The Company's internal controls over financial reporting includes those policies and procedures that
| I. | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; |
| II. | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with US 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, such that there is a reasonable possibility that material misstatements of the financial statements will not be prevented or detected on a timely basis by the Company.
We note, however, that a control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues including instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, our control systems may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected and could be material and require a restatement of our financial statements.
Management conducted an evaluation of the effectiveness of internal controls over financial reporting based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
Based on this evaluation, management concluded that the Company's internal controls over financial reporting were not effective as of December 31, 2024 due to the following material weakness:
| · | The Company’s staff does not have sufficient technical accounting knowledge relating to accounting for income taxes, complex financial instruments and US GAAP and relied on the assistance of its auditors and financial consultants in understanding the related accounting and disclosure requirements on these matters. |
(c) Changes in internal controls over financial reporting.
There has been no change in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal period that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
A. Audit Committee Financial Expert
The Board of Directors has determined that Thomas F. Bugg qualifies as a financial expert. He is an independent director for this purpose.
Genoil has adopted a Code of Conduct that meets the requirements of the definition of a "Code of Ethics" as that term is defined in Item 16B(b) of Form 20-F. Genoil's Code of Conduct is applicable to all of its employees, including its principal executive officer and principal financial officer. The Corporation does not currently employ a principal accounting officer. Its Code of Conduct has been amended end of December 2007 and copy was attached as Exhibit 11.1 to Form 20-F in that year.
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Michael T. Studer CPA P.C. served as the Corporation’s auditors from 2020 to 2023. The Corporation’s auditors were changed to HHP LLP for the 2024 financial year. The following table summarizes the aggregate fees for professional audit services and other services rendered by the respective firms in the past two years.
In US dollars
| 2024 | 2023 | |||||||
| Audit Fees | $ | 15,000 | $ | 30,000 | ||||
| Audit-Related Fees | - | - | ||||||
| Tax | - | - | ||||||
| All Other Fees | - | - | ||||||
| Total | $ | 15,000 | $ | 30,000 | ||||
Audit Fees
Audit fees include fees for professional services rendered in connection with the audit of Genoil's annual financial statements and services provided by the independent auditors in connection with statutory and regulatory filings or engagements.
Audit Related Fees
Audit-related fees are generally fees billed for services that are closely related to the performance of the audit or review of the financial statements.
Tax Fees
Tax fees are fees for professional services rendered related to tax compliance, tax advice and tax planning.
All Other Fees
The Company's audit committee is required to pre-approve all audit and non-audit services rendered by and approve the engagement fees and other compensation to be paid to the independent accountant and its affiliates. When deciding whether to approve these items, Genoil's audit committee takes into account whether the provision of any non-audit service is compatible with the independence standards under the guidelines of the SEC and of the Independent Standards Board. To assist in this undertaking, the audit committee requires the independent accountant to submit a report describing all relationships the independent accountant has with the Company and relevant third parties to determine the independent accountant's independence.
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Exemptions from the Listing Standards for Audit Committees
Not applicable.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Not applicable.
The Company has not repurchased any shares.
F. Change in registrant’s Certifying Accountant
The Company’s Board of Directors appointed HHL LLP as its new independent registered public accounting firm, effective as of December 26, 2024. Pursuant to Rule 2-01 (17 CFR 210.2-01(c)(6)) of the Sarbanes-Oxley Act of 2002, public companies are required to rotate their audit partners every five years.The Company filed Form 6-K on April 21, 2025.
I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not Applicable
The registrant has not formally adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of the registrant’s securities by directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, due to the intimate composition of the Company’s personnel. There are only two officers of the Company.
Cybersecurity incident means an unauthorized occurrence, or a series of related unauthorized occurrences, on or conducted through a registrant’s information systems that jeopardizes the confidentiality, integrity, or availability of a registrant’s information systems or any information residing therein. Cybersecurity threat means any potential unauthorized occurrence on or conducted through a registrant’s information systems that may result in adverse effects on the confidentiality, integrity, or availability of a registrant’s information systems or any information residing therein.
Due to the intimate nature of the Company, its limited resources and the assessed minimal risk of such an occurrence, the Company has no formal processes for assessing, identifying, and managing material risks from cybersecurity threats.
| 33 |
| Table of Contents |
PART III
The Consolidated Financial Statements for years ended December 31, 2024, 2023 and 2022 are attached as Exhibit 15.1.
Financial Statements
The registrant has elected to provide financial statements using accounting principles generally accepted in the United States of America (“GAAP”) for the 2024, 2023 and 2022 year ends.
(a) The Consolidated Financial Statements for the years ended December 31, 2024, 2023 and, 2022
(b) Exhibits
| Exhibit Number | Description | |
| Articles of Incorporation of Genoil Inc. dated April 1, 1996 | ||
|
|
|
|
|
| Certificate and Articles of Amalgamation of Genoil Inc. dated September 5, 1996 | |
|
|
|
|
| Certificate and Articles of Amendment of Genoil Inc. dated May 31, 2006 | ||
|
|
|
|
| 2.2** | Note and Warrant Purchase Agreement and form of Convertible Note dated December 23, 2004 | |
| $750,000 Convertible Promissory Note Dated October 24, 2005 with Lifschultz Enterprises Co., LLC. | ||
| 2.4*** | $750,000 Convertible Promissory Note Dated December 23, 2005 with Lifschultz Terminal and Leasing Ltd. | |
|
|
|
|
|
|
|
|
| 4.1* | Sample Marketing Agreement | |
__________
* These exhibits were filed with Genoil's 2003 Form 20‑F.
** This exhibit was filed with Genoil's 2004 Form 20-F.
*** These exhibits were filed with Genoil's 2005 Form 20‑F.
**** These exhibits were filed with Genoil’s 2006 Form 20-F.
*****These exhibits were filed with Genoil’s 2007 Form 20-F.
*/ This exhibit was filed with Genoil’s 2009 Form 20-F.
*// This exhibit is filed with Genoil’s 2012 Form 20-F/
| 34 |
| Table of Contents |
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.
| GENOIL INC. | |||
| Dated April 30, 2025. | By: | /s/ David K. Lifschultz | |
|
|
| David K. Lifschultz | |
| Chief Executive Officer | |||
| 35 |
EXHIBIT 12.1
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT
I, David Lifschultz, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Genoil Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
|
|
|
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
|
| a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| c. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| d. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
|
| a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
| Date: April 30, 2025 |
|
|
|
|
| /s/ David Lifschultz |
|
| David Lifschultz |
|
| Chief Executive Officer |
|
EXHIBIT 12.2
CERTIFICATION OF THE CHIEF FINANCIAL OFFICER UNDER SECTION 302 OF THE SARBANES-OXLEY ACT
I, David Lifschultz, certify that:
| 1. | I have reviewed this annual report on Form 20-F of Genoil Inc.; |
|
|
|
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
|
|
|
| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
|
|
|
| 4. | The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
|
| e. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
|
|
|
|
| f. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
|
|
|
|
|
| g. | Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
|
|
|
|
| h. | Disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and |
| 5. | The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions): |
|
| c. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and |
|
|
|
|
|
| d. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting. |
Date: April 30, 2025
| /s/ David Lifschultz |
|
| David Lifschultz |
|
| Principal Accounting Officer |
|
EXHIBIT 13.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Genoil Inc. (the “Company”) hereby certifies, to such officer’s knowledge that:
| 1. | The accompanying Annual Report on Form 20-F of the Company for the year ended December 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 30, 2025
| /s/ David Lifschultz |
|
| David Lifschultz |
|
| Chief Executive Officer |
|
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 13.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF THE SARBANES-OXLEY ACT
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Genoil Inc. (the “Company”) hereby certifies, to such officer’s knowledge that:
|
| 1. | The accompanying Annual Report on Form 20-F of the Company for the year ended December 31, 2022 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
|
|
|
|
|
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: April 30, 2025
| /s/ David Lifschultz |
|
| David Lifschultz |
|
| Principal Accounting Officer |
|
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
EXHIBIT 14.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the inclusion in this Form 20-F to the Annual Report of Genoil Inc. (the “Company”) of our report dated April 30, 2025 relating to the consolidated financial statements of the Company for the years ended December 31, 2024.
/s/ HHL LLP
New York, New York
April 30, 2025
EXHIBIT 15.1
December 31, 2024
FORM 20-F
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
| F-1 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of Genoil Inc.,
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Genoil Inc. (the “Company”) as of December 31, 2024 and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Genoil Inc. as of December 31, 2024 and the results of its operations and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
| Tel: 212-228-1098 | 733 3rd Ave Suite 1825, New York, NY 10017 | www.hhlllp.com |
| F-2 |
| Table of Contents |
Emphasis of Matter Regarding Going Concern
The accompanying financial statements referred to above have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company’s present financial situation raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to this matter are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Stock-Based Compensation – Valuation of Share-Based Awards
As described in Note 10 to the consolidated financial statements, the Company grants share-based awards to consultants and directors, including price appreciation certificates, options and common stocks. The Company measures stock-based compensation cost at fair value on the grant date, which involves significant management judgment, particularly in estimating the fair value of stock options using valuation models that require assumptions such as expected volatility, expected term, risk-free interest rate, and expected dividends.
Auditing the fair value of stock-based compensation was complex and involved a high degree of subjectivity because (1) the valuation models utilized are sensitive to underlying assumptions, and (2) the Company’s assumptions, particularly those related to expected volatility and expected term, involve judgment based on historical data and management expectations for future performance.
How the Matter Was Addressed in the Audit
Our audit procedures related to the valuation of share-based awards included, among others:
|
| · | Evaluating the design and implementation of relevant controls over the Company’s stock-based compensation process, including controls over management’s review of the valuation assumptions and models. |
|
|
|
|
|
| · | Assessing the reasonableness of the valuation models used to estimate the fair value of the awards. |
|
|
|
|
|
| · | Testing the significant assumptions used in the valuation models, including: |
| Tel: 212-228-1098 | 733 3rd Ave Suite 1825, New York, NY 10017 | www.hhlllp.com |
| F-3 |
| Table of Contents |
|
| ○ | Comparing the expected volatility assumption to the historical volatility of the Company’s stock and that of similar companies. |
|
|
|
|
|
| ○ | Evaluating the expected term assumption by analyzing historical exercise patterns of the Company’s awards. |
|
|
|
|
|
| ○ | Verifying the risk-free interest rates and expected dividend yields against publicly available data. |
/s/ HHL LLP
New York, New York
April 30, 2025
We have served as the Company’s auditor since 2024
| Tel: 212-228-1098 | 733 3rd Ave Suite 1825, New York, NY 10017 | www.hhlllp.com |
| F-4 |
| Table of Contents |
Consolidated Balance Sheets
(Expressed in US Dollars)
|
|
| December 31, |
|
| December 31, |
| ||
|
|
| 2024 |
|
| 2023 |
| ||
| ASSETS |
|
|
|
|
|
| ||
| CURRENT ASSETS |
|
|
|
|
|
| ||
| Cash and cash equivalents |
| $ | 12,036 |
|
| $ | 10,464 |
|
| Prepaid expenses and other current assets |
|
| 84,396 |
|
|
| 84,762 |
|
|
|
|
|
|
|
|
|
|
|
| Total Current Assets |
|
| 96,432 |
|
|
| 95,226 |
|
|
|
|
|
|
|
|
|
|
|
| Land located in Alberta Canada |
|
| - |
|
|
| 43,163 |
|
|
|
|
|
|
|
|
|
|
|
| OTHER ASSETS |
|
|
|
|
|
|
|
|
| Due from related party |
|
| 37,181 |
|
|
| 102,330 |
|
| Intangible assets, net |
|
| 1 |
|
|
| 1 |
|
|
|
|
|
|
|
|
|
|
|
| TOTAL ASSETS |
| $ | 133,614 |
|
| $ | 240,720 |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
|
|
|
|
|
|
|
|
|
|
| CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
| Trade and other payables |
| $ | 158,627 |
|
| $ | 110,527 |
|
| Accrued interest payable to related parties |
|
| 38,612 |
|
|
| 10,406 |
|
| Due to related parties |
|
| 46,875 |
|
|
| 46,875 |
|
| Total Current Liabilities |
|
| 244,114 |
|
|
| 167,808 |
|
|
|
|
|
|
|
|
|
|
|
| NON-CURRENT LIABILITIES |
|
|
|
|
|
|
|
|
| Convertible notes to related parties, non-current portion |
|
| 214,375 |
|
|
| 208,232 |
|
|
|
|
|
|
|
|
|
|
|
| Total Non-Current Liabilities |
|
| 214,375 |
|
|
| 208,232 |
|
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES |
|
| 458,489 |
|
|
| 376,040 |
|
|
|
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ EQUITY (DEFICIT) |
|
|
|
|
|
|
|
|
| Preferred Stock, no par value; authorized 10,000,000 shares, issued and outstanding 0 and 0 shares, respectively |
|
| - |
|
|
| - |
|
| Common Stock, no par value; issued and outstanding 1,969,322,429 and 1,913,137,429 shares, respectively |
|
| 64,197,068 |
|
|
| 63,642,218 |
|
| Contributed surplus |
|
| 41,622,643 |
|
|
| 40,280,745 |
|
| Accumulated other comprehensive income (loss) |
|
| (221,860 | ) |
|
| (221,860 | ) |
| Accumulated deficit |
|
| (105,922,726 | ) |
|
| (103,836,423 | ) |
|
|
|
|
|
|
|
|
|
|
| Total Stockholders’ Deficit |
|
| (324,875 | ) |
|
| (135,320 | ) |
|
|
|
|
|
|
|
|
|
|
| TOTAL LIABILITIES AND |
|
|
|
|
|
|
|
|
| STOCKHOLDERS’ EQUITY (DEFICIT) |
| $ | 133,614 |
|
| $ | 240,720 |
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated financial statements | ||||||||
| F-5 |
| Table of Contents |
Consolidated Statements of Operations
(Expressed in US Dollars)
|
|
| Year ended December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| REVENUES |
| $ | - |
|
| $ | - |
|
| COST OF SALES |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| GROSS PROFIT |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| OPERATING EXPENSES |
|
|
|
|
|
|
|
|
| Stock based compensation to officers, directors, and consultants |
|
| 1,353,898 |
|
|
| 3,095,169 |
|
| Other Operating Expenses |
|
| 654,893 |
|
|
| 560,480 |
|
| Total Operating Expenses |
|
| 2,008,791 |
|
|
| 3,655,649 |
|
|
|
|
|
|
|
|
|
|
|
| LOSS FROM OPERATIONS |
|
| (2,008,791 | ) |
|
| (3,655,649 | ) |
|
|
|
|
|
|
|
|
|
|
| Other Income (Expense) |
|
|
|
|
|
|
|
|
| Finance expense |
|
| (34,349 | ) |
|
| (670,645 | ) |
| Write-off of land in Alberta Canada |
|
| (43,163 | ) |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| Total Other Income (Expense) - Net |
|
| (77,512 | ) |
|
| (670,645 | ) |
|
|
|
|
|
|
|
|
|
|
| INCOME (LOSS) BEFORE INCOME TAXES |
|
| (2,086,303 | ) |
|
| (4,326,294 | ) |
| PROVISION FOR INCOME TAXES |
|
| - |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET INCOME (LOSS) |
|
| (2,086,303 | ) |
|
| (4,326,294 | ) |
|
|
|
|
|
|
|
|
|
|
| Deemed dividends for warrants |
|
| - |
|
|
| - |
|
|
|
|
|
|
|
|
|
|
|
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS |
| $ | (2,086,303 | ) |
| $ | (4,326,294 | ) |
|
|
|
|
|
|
|
|
|
|
| Weighted average shares outstanding - Basic and Diluted |
|
| 1,939,666,008 |
|
|
| 1,182,641,871 |
|
|
|
|
|
|
|
|
|
|
|
| Foreign Currency Translation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| NET LOSS PER SHARE - Basic and Diluted |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated Financial Statements | ||||||||
| F-6 |
| Table of Contents |
Consolidated Statements of Stockholders’ Equity (Deficit)
(Expressed in US Dollars)
|
|
|
|
| Accumulated |
|
|
|
|
| |||||||||||||||
|
|
|
|
|
|
|
|
| Other |
|
|
|
| Total |
| ||||||||||
|
|
| Common |
|
| Share |
|
| Contributed |
|
| Comprehensive |
|
| Accumulated |
|
| Stockholders’ |
| ||||||
|
|
| Shares |
|
| Capital |
|
| Surplus |
|
| Income (Loss) |
|
| Deficit |
|
| Equity (Deficit) |
| ||||||
| Balance as of December 31, 2022 |
|
| 696,013,029 |
|
| $ | 51,470,944 |
|
| $ | 37,297,127 |
|
| $ | (221,860 | ) |
| $ | (99,510,130 | ) |
| $ | (10,963,919 | ) |
| Sale of common shares (and warrants) in private placements |
|
| 65,130,000 |
|
|
| 651,300 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 651,300 |
|
| Issuance of common shares for services |
|
| 11,155,000 |
|
|
| 111,550 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 111,550 |
|
| Stock based compensation |
|
| - |
|
|
| - |
|
|
| 2,983,618 |
|
|
| - |
|
|
| - |
|
|
| 2,983,619 |
|
| Conversion of notes payable and accrued interest for common stock |
|
| 1,140,839,400 |
|
|
| 11,408,424 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 11,408,424 |
|
| Net loss for the year ended December 30, 2023 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (4,326,294 | ) |
|
| (4,326,294 | ) |
| Balance as of December 31, 2023 |
|
| 1,913,137,429 |
|
| $ | 63,642,218 |
|
| $ | 40,280,745 |
|
| $ | (221,860 | ) |
| $ | (103,836,424 | ) |
| $ | (135,320 | ) |
| Sale of common shares (and warrants) in private placements |
|
| 54,985,000 |
|
|
| 542,850 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 542,850 |
|
| Issuance of common shares for services |
|
| 1,200,000 |
|
|
| 12,000 |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| 12,000 |
|
| Stock based compensation |
|
| - |
|
|
| - |
|
|
| 1,341,898 |
|
|
| - |
|
|
| - |
|
|
| 1,341,898 |
|
| Net loss for the year ended December 31, 2024 |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (2,086,303 | ) |
|
| (2,086,303 | ) |
| Balance as of December 31, 2024 |
|
| 1,969,322,429 |
|
|
| 64,197,068 |
|
|
| 41,622,643 |
|
| $ | (221,860 | ) |
|
| (105,922,726 | ) |
|
| (324,875 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated Financial Statements | ||||||||||||||||||||||||
| F-7 |
| Table of Contents |
Consolidated Statements of Cash Flows
(Expressed in US Dollars)
|
|
| Years ended December 31, |
| |||||
|
|
| 2024 |
|
| 2023 |
| ||
| OPERATING ACTIVITIES |
|
|
|
|
|
| ||
| Net income (loss) |
|
| (2,086,303 | ) |
|
| (4,326,294 | ) |
| Adjustments to reconcile net loss to cash flows used in operating activities: |
|
|
|
|
|
|
|
|
| Stock based compensation |
|
| 1,353,898 |
|
|
| 3,095,169 |
|
| Write-off of land in Alberta Canada |
|
| 43,163 |
|
|
| - |
|
| Interest expense added to convertible notes |
|
| 6,143 |
|
|
| 8,232 |
|
|
|
|
|
|
|
|
|
|
|
| Changes in operating assets and liabilities |
|
|
|
|
|
|
|
|
| Prepaid expenses and other current assets |
|
| 366 |
|
|
| (80,375 | ) |
| Accrued interest payable |
|
| 28,206 |
|
|
| 662,414 |
|
| Trade and other payables |
|
| 48,100 |
|
|
| (4,814 | ) |
|
|
|
|
|
|
|
|
|
|
| Net Cash Used in Operating Activities |
|
| (606,427 | ) |
|
| (645,668 | ) |
|
|
|
|
|
|
|
|
|
|
| FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
| Net change in related party receivables |
|
| 65,149 |
|
|
| (212 | ) |
| Cash received from equity investors |
|
| 542,850 |
|
|
| 651,300 |
|
|
|
|
|
|
|
|
|
|
|
| Net cash provided by Financing Activities |
|
| 607,999 |
|
|
| 651,088 |
|
|
|
|
|
|
|
|
|
|
|
| Increase in Cash |
|
| 1,572 |
|
|
| 5,420 |
|
| Cash at beginning of year |
|
| 10,464 |
|
|
| 5,044 |
|
|
|
|
|
|
|
|
|
|
|
| Cash at end of period |
|
| 12,036 |
|
|
| 10,464 |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest Paid |
|
| - |
|
|
| - |
|
| Income taxes paid |
|
| - |
|
|
| - |
|
| Deemed dividends related to issuance of warrants. |
|
| - |
|
|
| - |
|
| Issuance of common stock for conversion of notes payable and accrued interest |
|
| - |
|
|
| 11,408,424 |
|
|
|
|
|
|
|
|
|
|
|
| The accompanying notes are an integral part of these consolidated Financial Statements | ||||||||
| F-8 |
| Table of Contents |
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2024, and 2023
(Expressed in US Dollars)
1. REPORTING ENTITY AND GOING CONCERN
Genoil Inc. (“Genoil”) was incorporated under the Canada Business Corporations Act in September 1996. The consolidated financial statements of Genoil Inc. comprise Genoil Inc. and its subsidiaries, Genoil USA Inc., Genoil Emirates LLC (“Emirates LLC”) and Two Hills Environmental Inc. (“Two Hills”) (collectively the “Company”). The Company is a technology development company focused on providing innovative solutions to the oil and gas industry through the use of proprietary technologies. The Company’s business activities are primarily directed to the development and commercialization of its hydro-conversion upgrader technology, which is designed to economically convert heavy crude oil into light synthetic crude. The Company is quoted on the OTC Markets under the symbol GNOLF. The Company’s registered address is care of Bennett Jones LLP, Suite 4500, 855 - 2nd Street SW, Calgary, Alberta.
These consolidated financial statements have been presented on a going concern basis. The Company reported net losses of $2,086,303 and $4,326,294 for the years ended December 31, 2024, and 2023, respectively. The Company used funds in operating activities of $606,427 and $645,668 for the years ended December 31, 2024, and 2023, respectively. The Company had a net working capital deficiency of $147,682 and $72,582 at December 31, 2024, and 2023, respectively. The Company had a stockholders’ deficit of $324,875, and $135,320 at December 31, 2024, and 2023, respectively. These factors raise substantial doubt about the Company’s ability to continue as a going concern.
The ability of the Company to continue as a going concern is dependent on commercializing its technologies, achieving profitable operations 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 expanding its best efforts to achieve the above plans, there is no assurance that any such activity will generate sufficient funds for future operations.
The Company is not expected to be profitable during the ensuing twelve months and therefore must rely on securing additional funds from either issuance of debt or equity financing for cash consideration. During the years ended December 31, 2024, and 2023, the Company received net proceeds of $607,999 and $651,088, respectively, pursuant to financing activities.
Management, utilizing close personal relationships, has been successful in raising capital through periodic private placements of the Company’s common shares. Although these shares are subject to a “hold” period on the United States stock markets, the investors’ confidence in the undertakings of management, with respect to future positive market performance of the Company’s common stock, permits this avenue of financing to exist. External sources of debt financing are not available to the Company due to its precarious financial position.
The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue its operations. Such adjustments could be material.
| F-9 |
| Table of Contents |
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.
(a) Principles of Consolidation:
The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States and incorporate the financial statements of Genoil and entities controlled by it. Control is achieved where Genoil has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.
Genoil has the following subsidiaries:
|
| · | Genoil USA Inc., incorporated in Delaware, United States, which is a wholly owned subsidiary of Genoil. |
|
| · | Genoil Emirates LLC, incorporated in the United Arab Emirates, which will focus upon the fields of oil and water processing and treatment in the United Arab Emirates. Genoil Emirates LLC is jointly owned by S.B.K. Commercial Business Group LLC and Genoil. As of December 31, 2024, Emirates LLC had not yet commenced operations and holds no assets. |
|
| · | Two Hills Environmental Inc., incorporated in Canada and registered in Alberta, which is a wholly owned subsidiary of Genoil. Two Hills was formed to enter into the oilfield waste disposal industry by capitalizing upon its current undeveloped asset base. The asset base comprises a site under which three salt caverns have been formed in the Lotsberg Formation beneath the earth’s surface. Such caverns are used in the oilfield disposal industry as a destination for oilfield wastes. |
The financial results of Genoil’s subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. The accounting policies of subsidiaries have been changed where necessary to align them with the policies adopted by Genoil.
Intercompany balances and transactions, and any unrealized income and expenses arising from intercompany transactions, are eliminated in preparing the consolidated financial statements.
(b) Foreign currency translation
The reporting currency of the Company is the United States Dollar. The functional currency of Genoil and its subsidiaries is the United States Dollar. Transactions denominated in currencies other than the functional currency are translated at the exchange rates prevailing at the dates of the transactions. Exchange gains and losses are reflected in income.
(c) Use of estimates and judgments
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. By their nature, judgments, estimates and assumptions are subject to measurement uncertainty and changes in such judgments, estimates and assumptions in future periods could result in a material change in future financial statements. Actual results may differ from these estimates.
| F-10 |
| Table of Contents |
Judgment is used in situations where there is a choice or assessment required by management. Estimates and underlying assumptions are required on an ongoing basis and revisions are recognized in the year in which such estimates are revised.
(d) Cash and cash equivalents
The Company considers all short-term investments with original maturities of three months or less to be cash equivalents.
(e) Stock-based compensation
The Company grants common stock, stock options, and Price Appreciation Certificates to employees, directors, and consultants for various services rendered to the company. Share-based payments to these individuals are measured at the fair value of the securities 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.
(f) Income tax
Income tax expense comprises current and deferred tax. Income tax expense is recognized in profit or 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 period, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is recognized using the liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized on the initial recognition of assets or liabilities in a transaction that is not a business combination. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.
A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
(g) Loss per share
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 (loss) 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 and warrants are used to repurchase shares at the current market price. All options and warrants are anti-dilutive when the Company is in a loss position.
| F-11 |
| Table of Contents |
(h) Recent accounting pronouncements:
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact on the Company’s financial position or operations.
3. DETERMINATION OF FAIR VALUES
A number of the Company’s accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. The Company is required to classify fair value measurements using a hierarchy that reflects the significance of the inputs used in making the measurements.
The fair value hierarchy is as follows:
|
| ■ | Level 1 – quoted prices in active markets for identical assets or liabilities; |
|
| ■ | Level 2 – inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and, |
|
| ■ | Level 3 – inputs for the asset or liability that are not based on observable market data. |
Cash and cash equivalents have been measured using level 1 inputs.
The fair value of cash and cash equivalents, due from related parties, trade and other payables, accrued interest payable, convertible notes, and due to related parties approximates their carrying value due to their short term to maturity.
The fair values of stock options and Price Appreciation Certificates are measured using the Black-Scholes pricing model. Measurement inputs include share price on measurement date, exercise price of the instrument, expected forfeiture rate (based on historic forfeitures), expected volatility (based on weighted average historic volatility adjusted for changes expected due to publicly available information), weighted average expected life of the instruments (based on historical experience and general option holder behavior), expected dividends, and the risk-free interest rate.
4. LAND IMPAIRMENT – ALBERTA, CANADA
During the fourth quarter of 2024, the Company evaluated the land located in Alberta, Canada and determined that it no longer possesses any realizable value. Accordingly, the carrying amount of the land has been written off, and the loss has been recognized in the consolidated statement of operations for the period.
| F-12 |
| Table of Contents |
5. DUE FROM RELATED PARTY
Due from related party consists of:
|
|
| December 31, |
|
| December 31, |
| ||
| Borrower |
| 2024 |
|
| 2023 |
| ||
| Lifschultz Enterprise Company LLC (an entity controlled by David Lifschultz, Genoil chief executive officer, and Bruce Abbott, Genoil chief operating officer) |
| $ | 37,181 |
|
| $ | 102,330 |
|
| Current portion |
|
| - |
|
|
| - |
|
| Non-current portion |
|
| 37,181 |
|
|
| 102,330 |
|
| Total |
| $ | 37,181 |
|
| $ | 102,330 |
|
The receivable is non-interest bearing and is due on demand.
The receivable from Lifschultz Enterprise Company, LLC (“LEC”) represents ongoing advances from the Company to LEC. LEC had no business revenues in 2021, 2022, 2023 and 2024. At December 31, 2024, LEC’s principal assets consisted of a convertible note receivable from the Company due January 1, 2016, in the amount of $214,375 (see Note 6), accrued interest thereon of $38,612 (see Note 5), and ownership of $462,471,800 shares of Company common stock. Effective December 31, 2023, the Company reclassified this receivable from a current asset to a non-current asset.
6. ACCRUED INTEREST PAYABLE TO RELATED PARTIES
Accrued interest payable to related parties consist of:
|
|
| December 31, |
|
| December 31, |
| ||
| Lender |
| 2024 |
|
| 2023 |
| ||
| Lifschultz Enterprise Company LLC |
| $ | 38,612 |
|
| $ | 10,406 |
|
| Totals |
| $ | 38,612 |
|
| $ | 10,406 |
|
The accrued interest payable relates to the convertible notes outstanding (see Note 6).
7. CONVERTIBLE NOTES
Convertible notes consist of:
|
|
| December 31, |
|
| December 31, |
| ||
| Lender |
| 2024 |
|
| 2023 |
| ||
| Lifschultz Enterprise Company LLC |
| $ | 214,375 |
|
| $ | 208,232 |
|
| Totals |
|
| 214,375 |
|
|
| 208,232 |
|
| Current portion |
|
| - |
|
|
| - |
|
| Non-current portion |
| $ | 214,375 |
|
| $ | 208,232 |
|
| F-13 |
| Table of Contents |
The notes bear interest at 12% compounded semi-annually and their maturity was extended on April 27, 2020 to April 27, 2022 and effective January 1, 2023 to January 1, 2026. The notes are convertible into shares of Genoil common stock at a price of $0.01 per share. The notes are secured by the assets of the Company.
The notes provide that in the event that the inflation rate (based on the US CPI) exceeds 3%, the principal and accrued interest balances are increased by such inflation rate. Effective December 31, 2021, this inflation protection provision was triggered. The principal balances were increased 4.698% or a total of $221,358 (from $4,711,764 to $4,933,122) and the accrued interest balances were increased 4.698% or a total of $183,770 (from $3,911,705 to $4,095,475). The $405,128 total increase in the principal and accrued interest balances has been included in finance expense in the accompanying consolidated statement of operations for the year ended December 31, 2021.
Effective December 31, 2022, as a result of the inflation protection provision, the principal balances were increased 8.003% or a total of $394,798 (from $4,933,122 to $5,327,920) and the accrued interest balances were increased 8.003% or a total of $417,071 (from $5,211,424 to $5,628,495). The $811,869 total increase in the principal and accrued interest balances has been included in finance expense in the accompanying consolidated statement of operations for the year ended December 31, 2022.
On July 30, 2023, a total of $5,041,327 of convertible notes payable to related parties ($3,020,721 in principal and $2,020,606 in accrued interest) was converted into 504,129,700 shares of common stock. David K. Lifschultz converted $2,520,686 of convertible notes ($1,510,368 in principal and $1,010,318 in accrued interest) into 252,065,600 shares of common stock. Bruce S. Abbott converted $2,520,641 of convertible notes ($1,510,353 in principal and $1,010,288 in accrued interest) into 252,064,100 shares of common stock.
On August 1, 2023, a total of $6,367,097 of convertible notes payable to related parties ($2,107,199 in principal and $4,259,898 in accrued interest) was converted into 636,709,700 shares of common stock. Lifschultz Enterprise Company LLC converted $4,624,718 of convertible notes ($1,495,053 in principal and $3,129,665 in accrued interest) into 462,471,800 shares of common stock. Sidney B. Lifschultz 1992 Family Trust converted $1,742,379 of convertible notes ($612,146 in principal and $1,130,233 in accrued interest) into 174,237,900 shares of common stock.
Effective December 31, 2023, as a result of the inflation protection provision, the principal balance due Lifschultz Enterprise Company LLC increased 4.116% or $8,232 (from $200,000 to $208,232) and the accrued interest balance due Lifschultz Enterprise Company LLC increased 4.116% or $411 (from $9,995 to $10,406). The $8,643 total increase in the principal and accrued interest balances has been included in Finance expense in the accompanying consolidated statement of operations for the year ended December 31, 2023.
Effective December 31, 2024, as a result of the inflation protection provision, the principal balance due Lifschultz Enterprise Company LLC increased 2.950% or $6,143 (from $208,232 to $214,375) and the accrued interest balance due Lifschultz Enterprise Company LLC increased 2.950% or $1,106 (from $37,506 to $38,612). The $6,143 total increase in the principal and accrued interest balances has been included in Finance expense in the accompanying consolidated statement of operations for the year ended December 31, 2024.
| F-14 |
| Table of Contents |
8. DUE TO RELATED PARTIES
Due to related parties consist of:
|
|
| December 31, |
|
| December 31, |
| ||
| Creditor |
| 2024 |
|
| 2023 |
| ||
| Occupancy costs payable to Bruce Abbott and David Lifschultz for use of Mamaroneck New York property from January 1, 2018 to September 30, 2020 |
| $ | 46,875 |
|
| $ | 46,875 |
|
| Totals |
| $ | 46,875 |
|
| $ | 46,875 |
|
The payables are non-interest bearing and are due on demand.
9. SHARE CAPITAL
Preferred Stock
There are 10,000,000 shares of Class A Preferred Stock authorized but none are outstanding.
Common Stock
There are an unlimited number of shares of common stock, no par value, authorized to be issued.
During the first quarter of 2023, the Company sold a total of 11,800,000 shares of common stock (and warrants) in private placements for total proceeds of $118,000.
During the first quarter of 2023, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
During the second quarter of 2023, the Company sold a total of 12,520,000 shares of common stock (and warrants) in private placements for total proceeds of $125,200.
During the second quarter of 2023, the Company issued a total of 2,450,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $24,500.
During the third quarter of 2023, the Company sold a total of 12,960,000 shares of common stock (and warrants) in private placements for total proceeds of $129,600.
During the third quarter of 2023, the Company issued a total of 4,305,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $43,050.
During the fourth quarter of 2023, the Company sold a total of 27,850,000 shares of common stock (and warrants) in private placements for total proceeds of $ 278,500.
During the fourth quarter of 2023, the Company issued a total of 3,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $32,000.
During the first quarter of 2024, the Company sold a total of 15,730,000 shares of common stock (and warrants) in private placements for total proceeds of $ 157,300.
During the second quarter of 2024, the Company sold a total of 14,390,000 shares of common stock (and warrants) in private placements for total proceeds of $143,800.
During the third quarter of 2024, the Company sold a total of 16,610,000 shares of common stock (and warrants) in private placements for total proceeds of $166,100.
| F-15 |
| Table of Contents |
During the fourth quarter of 2024, the Company sold a total of 8,265,000 shares of common stock (and warrants) in private placements for total proceeds of $75,650.
During the fourth quarter of 2024, the Company issued a total of 1,200,000 shares of common stock as compensation for services. The fair value of the shares issued (at dates of issuance) totaled $12,000.
The number of outstanding shares include 2,475,000 shares of common stock not issued as of December 31, 2024, which management will issue in subsequent periods.
Warrants
In conjunction with the private placements, the Company issued warrants to purchase common stock. The following is a summary of the warrant activity for the period January 1, 2023 to December 31, 2024.
| Number outstanding at January 1, 2023 |
|
| 174,691,174 |
|
| Granted |
|
| 65,130,000 |
|
| Cancelled |
|
| (17,425,507 | ) |
| Number outstanding at December 31, 2023 |
|
| 222,395,667 |
|
| Granted |
|
| 61,750,000 |
|
| Cancelled |
|
| (21,350,667 | ) |
| Number outstanding at December 31, 2024 |
|
| 262,795,000 |
|
At December 31, 2024, the 262,795,000 warrants outstanding had a weighted average exercise price of $0.03 per share, a weighted average remaining contractual life of 2.72 years, and an aggregate intrinsic value of $0.
Deemed Dividends related to issuance of warrants
During the second quarter of 2021, the Company granted a total of 6,560,000 warrants to certain investors as deemed dividends. The fair value of the warrants (at dates of issuance) totaled $61,664 and was estimated using the Black-Scholes options pricing model based on the following assumptions: (1) stock prices ranging from $0.007 to $0.01 per share, (2) exercise prices of $0.03 per share, (3) expected volatility ranging from 318.6% to 319.1%, (4) expected term of 5 years, (5) risk-free interest rate of 0.39%, and (6) dividend rate of 0%.
During the third quarter of 2021, the Company granted a total of 500,000 warrants to certain investors as deemed dividends. The fair value of the warrants (at dates of issuance) totaled $5,000 and was estimated using the Black-Scholes options pricing model based on the following assumptions: (1) stock prices of $0.01 per share, (2) exercise prices of $0.03 per share, (3) expected volatility of 348.6%, (4) expected term of 5 years, (5) risk-free interest rate of 0.96%, and (6) dividend rate of 0%.
During the fourth quarter of 2021, the Company granted a total of 1,926,666 warrants to certain investors as deemed dividends. The fair value of the warrants (at dates of issuance) totaled $19,267 and was estimated using the Black-Scholes options pricing model based on the following assumptions: (1) stock prices of $0.01 per share, (2) exercise prices of $0.03 per share, (3) expected volatility ranging from 362.4% to 394.8%, (4) expected term of 5 years, (5) risk-free interest rate ranging from 1.05% to 1.18%, and (6) dividend rate of 0%.
| F-16 |
| Table of Contents |
During the first quarter of 2022, the Company granted a total of 60,000 warrants to certain investors as deemed dividends. The fair value of the warrants (at dates of issuance) totaled $780 and was estimated using the Black-Scholes options pricing model based on the following assumptions: (1) stock prices of $0.01 per share, (2) exercise prices of $0.025 per share, (3) expected volatility of 368.5%, (4) expected term of 5 years, (5) risk-free interest rate of 1.62%, and (6) dividend rate of 0%.
10. STOCK-BASED COMPENSATION
Stock-based compensation consists of:
|
|
| December 31, |
|
| December 31, |
| ||
| Type of Security |
| 2024 |
|
| 2023 |
| ||
| Price Appreciation Certificates |
| $ | 1,285,898 |
|
| $ | 2,626,959 |
|
| Options issued to outside directors and consultants |
|
| 56,000 |
|
|
| 356,660 |
|
| Common stock issued for services |
|
| 12,000 |
|
|
| 111,550 |
|
| Totals |
| $ | 1,353,898 |
|
| $ | 3,095,169 |
|
The following is a summary of the compensatory securities activity for the period January 1, 2023 to December 31, 2024:
| Common stock equivalent |
| Price Appreciation Certificates |
|
| Options |
|
| Total |
| |||
| Number outstanding at January 1, 2022 |
|
| 589,400,000 |
|
|
| 49,200,000 |
|
|
| 638,600,000 |
|
| Granted |
|
| 262,700,000 |
|
|
| 55,666,000 |
|
|
| 318,366,000 |
|
| Cancelled |
|
| (162,700,000 | ) |
|
| (19,650,000 | ) |
|
| (184,350,000 | ) |
| Number outstanding at December 31, 2023 |
|
| 689,400,000 |
|
|
| 85,216,000 |
|
|
| 774,616,000 |
|
| Granted |
|
| 183,700,000 |
|
|
| 8,000,000 |
|
|
| 191,700,000 |
|
| Cancelled |
|
| (123,700,000 | ) |
|
| (7,250,000 | ) |
|
| (130,950,000 | ) |
| Number outstanding at December 31, 2024 |
|
| 749,400,000 |
|
|
| 85,966,000 |
|
|
| 835,366,000 |
|
PRICE APPRECIATION CERTIFICATES
In lieu of compensation the Company has entered into agreements (“Price Appreciation Certificates”) with David Lifschultz and Bruce Abbott whereby, at the request of the executives, the Company agrees to pay the equivalent sum of the rise in the Company’s stock price based on the agreed upon number of shares, from a fixed per share amount to the average of the last 10 trading days (volume weighted average price).
The number of shares reflect a potential salary for the two executives that only exist if the price of the shares rise above the price appreciation base amount. The Company has no obligation to pay the two executives if the stock does not rise. The Company, at its exclusive option and benefit, can proceed with a private placement at the share price on the date of exercise and the executive will subscribe to this private placement for the entire sum advanced by the Company.
| F-17 |
| Table of Contents |
The Company accounts for these Price Appreciation Certificates as an equity instrument due to its exclusive option to require a subscription to the private placement as determined by the fair value of the instruments using a Black-Scholes pricing model.
At December 31, 2023, the 689,400,000 Price Appreciation Certificates outstanding had a weighted average exercise price of $0.01 per share, a weighted average remaining contractual life of 2.85 years, and an aggregate intrinsic value of $0.
At December 31, 2024, the 749,400,000 Price Appreciation Certificates outstanding had a weighted average exercise price of $0.01 per share, a weighted average remaining contractual life of 2.91 years, and an aggregate intrinsic value of $0.
OPTIONS
The Company has a stock option plan for directors, officers, employees and consultants. The term and vesting conditions of each option may be fixed by the Board of Directors when the option is granted, but the term cannot exceed 10 years. The maximum number of shares that may be reserved for issuance under the plan is fixed at 200,000,000. 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. The options granted in 2023 and 2024 all vested immediately.
The fair value of stock options granted during 2024 and 2023 was estimated on the dates of grant using the Black-Scholes pricing model based on the following assumptions:
|
|
| 2024 |
| 2023 |
|
| Volatility |
| 412.55% |
| 382.6% - 385.8% |
|
| Expected life |
| 5 years |
| 5 years |
|
| Risk-free rate |
| 4.26% |
| 3.6% - 4.4% |
|
| Dividend yield |
| - |
| - |
|
| Forfeiture rate |
| 0% |
| 0% |
|
| Stock Price at Valuation |
| $0.01 |
| $0.01 |
|
| Exercise Price |
| 0.01 |
| 0.01 - 0.001 |
|
On August 2, 2023, the Company modified options held by its current directors to reduce the exercise price of 17,000,000 options from $0.01 to $0.001; no other terms were modified. No expense was recorded for this modification since the fair value of the options pre modification and post modification were not different.
On August 16, 2023, the Company delivered 20,000,000 options (exercisable at $0.001 per share and expiring August 16, 2028) to a director in exchange for the cancellation of 20,000,000 Price Appreciation Certificates held by this director. No expense was recorded for this transaction since the fair value of the PAC’s pre-cancellation and the fair value of the options was not different.
At December 31, 2023, the 85,216,000 stock options outstanding had a weighted average exercise price of $0.008 per share, a weighted average remaining contractual life of 4.03 years, and an aggregate intrinsic value of $553,194.
At December 31, 2024, the 8,000,000 stock options outstanding had a weighted average exercise price of $0.003 per share, a weighted average remaining contractual life of 3.49 years, and an aggregate intrinsic value of $625,194.
| F-18 |
| Table of Contents |
11. INCOME TAXES
The provision for (benefit from) income taxes reflects the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for tax purposes. The provision for (benefit from) income taxes differs from that computed by applying the statutory United States federal income tax rate of 21% for 2024, and 2023 to loss before income taxes. The sources of the differences are as follows:
|
|
| 2024 |
|
| 2023 |
| ||
| Income (loss) before income taxes |
| $ | (2,086,303 | ) |
| $ | (4,326,294 | ) |
| Expected recovery at statutory tax rate |
| $ | 438,124 |
|
| $ | 908,522 |
|
| Non-deductible stock-based compensation |
|
| (284,319 | ) |
|
| (649,985 | ) |
| Increase in valuation allowance |
|
| (153,805 | ) |
|
| (258,537 | ) |
| Provision for Income Taxes |
| $ | - |
|
| $ | - |
|
Based on management’s present assessment, the Company has not yet determined that a deferred tax asset attributable to the future utilization of the net operating loss carryforward as of December 31, 2024 will be realized. Accordingly, the Company has maintained a 100% valuation allowance against the deferred tax asset in the financial statements at December 31, 2024. The Company will continue to review this valuation allowance and make adjustments as appropriate.
Current United States income tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited.
All tax years remain subject to examination by major taxing jurisdictions.
12. SUBSEQUENT EVENTS
None
| F-19 |